INITIAL STATEMENT OF REASONS FOR 

PROPOSED RULEMAKING

PROPOSED AMENDMENTS TO THE REGULATIONS “FUEL 

SULFUR AND OTHER OPERATIONAL REQUIREMENTS FOR 

OCEAN-GOING VESSELS WITHIN CALIFORNIA WATERS AND 

24 NAUTICAL MILES OF THE CALIFORNIA BASELINE”

Stationary Source Division

Emissions Assessment Branch

May 2011
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i

State of California

AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS

FOR PROPOSED RULEMAKING

Public Hearing to Consider

PROPOSED AMENDMENTS TO THE REGULATIONS FOR FUEL SULFUR AND 

OTHER OPERATIONAL REQUIREMENTS FOR OCEAN-GOING VESSELS WITHIN 

CALIFORNIA WATERS AND 24 NAUTICAL MILES OF THE 

CALIFORNIA BASELINE

To be considered by the Air Resources Board on June 23-24, 2011, at:

California Environmental Protection Agency

Headquarters Building

1001 “I” Street

Byron Sher Auditorium

Sacramento, California

Stationary Source Division:

Richard Corey, Chief

Daniel Donohoue, Chief, Emissions Assessment Branch

Peggy Taricco, Manager, Technical Analysis Section

This report has been prepared by the staff of the Air Resources Board. Publication 

does not signify that the contents reflect the views and policies of the Air Resources 

Board, nor does mention of trade names or commercial products constitute 

endorsement or recommendation for use.
ii

State of California

AIR RESOURCES BOARD

PROPOSED AMENDMENTS TO THE REGULATIONS FOR FUEL SULFUR AND 

OTHER OPERATIONAL REQUIREMENTS FOR OCEAN-GOING VESSELS WITHIN 

CALIFORNIA WATERS AND 24 NAUTICAL MILES OF THE 

CALIFORNIA BASELINE

Contributing Authors

Bonnie Soriano (Lead)

Paul Milkey

Ryan Huft

Layla Gonzalez

Andrew Alexis 

Jin Lu

Steve Zelinka

Jeff Austin

Legal Counsel

Deborah Kerns, Office of Legal Affairs

Supporting Divisions

Planning and Technical Support Division

Research Division

Acknowledgements

This report was prepared with the assistance and support from the other divisions and 

offices of the Air Resources Board. In addition, we would like to acknowledge the 

assistance and cooperation that we have received from many individuals and 

organizations.
iii

TABLE OF CONTENTS

Contents Page

Executive Summary .................................................................................................. ES-1

I. Introduction......................................................................................................... I-1

A. Description of Ocean-going Vessels........................................................ I-1

B. Regulatory Authority ................................................................................ I-2

C. Ocean-going Vessel Clean Fuel Regulation ............................................ I-3

D. Implementation Status ............................................................................. I-3

E. International and Federal Actions .......................................................... I-10

F. Need for OGV Clean Fuel Regulation.................................................... I-13

G. ARB Staff Actions and Process to Develop the Proposed

Amendments ......................................................................................... I-14

II. Need for Amendments....................................................................................... II-1

A. Changes in Vessel Traffic Patterns in Southern California ..................... II-1

B. Implementation Date for Phase 2 Requirements .................................. II-12

C. New Revisions to ISO 8217.................................................................. II-19

D. Noncompliance Fee Option .................................................................. II-19

III. Proposed Amendments .................................................................................... III-1

A. Regulatory Boundary ............................................................................. III-1

B. Phase 2 Implementation Date................................................................ III-2

C. Noncompliance Fee Provision ............................................................... III-2

D. Other Proposed Amendments ............................................................... III-4

E. Regulatory Alternatives.......................................................................... III-5

F. Necessity for Proposed Amendments.................................................... III-6

IV. Emissions and Environmental Impacts from the Proposed Amendments ........IV-1

A. Legal Requirements...............................................................................IV-1

B. Baseline.................................................................................................IV-2

C. Methodology for Estimating Emissions ..................................................IV-2

D. Emission Impacts from the Proposed Amendments ..............................IV-5

E. Public Health Impacts ..........................................................................IV-12

F. Other Environmental Impacts ..............................................................IV-13

G. Reasonably Foreseeable Environmental Impacts as a Result

of Potential Compliance Methods ........................................................IV-15 

H. Reasonably Foreseeable Mitigation Measures ....................................IV-20

I. Environmental Justice..........................................................................IV-23

V. Economic Impacts .............................................................................................V-1

A. Summary ................................................................................................V-1
iv

B. Legal Requirements................................................................................V-3

C. Methodology ...........................................................................................V-4

D. Total Regulatory Costs ...........................................................................V-9

E. Estimated Cost to Businesses ..............................................................V-10

F. Potential Business Impacts...................................................................V-12

G. Potential Costs to Local, State, and Federal Agencies .........................V-15

H. Cost-Effectiveness................................................................................V-15

I. Analysis of Alternatives.........................................................................V-17

APPENDICES

Appendix A Proposed Amendments to the Regulation for Fuel Sulfur and Other 

Operational Requirements for Ocean-Going Vessels within California 

Waters and 24 Nautical Miles of the California Baseline

Appendix B Point Mugu Sea Range Overview 

Appendix C Air Quality Modeling to Determine the Impacts of OGV Clean Fuel 

Regulation and Shipping Routes on South Coast Air Basin Air Quality 

and Public Health 

Appendix D Emissions Estimation Methodology for Ocean-going Vessels
v

TABLE OF CONTENTS (CONT.)

List of Tables Page

Table ES-1: Estimated Fuel Costs, Distance and Transit Time for Vessels

Using the Santa Barbara Channel and the Outer Route ................... ES-5

Table ES-2: Comparison of the Fuel Requirements for the OGV Clean Fuel 

Regulation and the North American ECA.......................................... ES-7

Table I-1: New Engine NOx Emissions Limits Under IMO Annex VI ................... I-12

Table II-1: Average Speeds (knots) for Vessel Using the Channel Route 

and Outer Route Before and After Implementation of the

Vessel Fuel Rule in 2009 ..................................................................... II-4

Table II-2: Estimated Fuel Costs, Route Distance and Transit Time for the

Channel and Outer Route Through the Santa Barbara Channel

Region with the 24 nm Regulatory Zone .............................................. II-5

Table II-3: Estimated OGV Statewide Emissions in Tons Per Day 

(100 nm Zone, 2010)............................................................................ II-8

Table II-4: SCOS Domain-wide Annual Avoided Premature Mortality 

Estimates Due To OGV Clean Fuel Regulation ................................... II-9

Table II-5: Estimated Fuel Costs, Distance and Transit Time for Channel and 

Possible Amended Outer Routes through the Santa Barbara 

Channel Region with the Proposed Amended Zone .......................... II-12

Table II-6: Fuel Requirements for the OGV Clean Fuel Rule and the 

North American ECA.......................................................................... II-13

Table II-7: Bunkering Records by Region Obtained During Inspection Activity 

Between July 2009 through January 2011 ......................................... II-17

Table II-8: Noncompliance Fee Schedule, Per Vessel ........................................ II-21

Table III-1: Noncompliance Fee Schedule ............................................................ III-3

Table IV-1: OGV Emission Inventory based on the 2008 OGV Emission 

Inventory Methodology........................................................................IV-5

Table IV-2: OGV Emission Inventory based on the 2011 OGV Emission

Inventory Methodology........................................................................IV-5

Table IV-3: Estimated Statewide OGV Emissions (Tons/Day) with Current 

Regulation (100 nm)............................................................................IV-7

Table IV-4: Estimated Statewide OGV Emissions (Tons/Day) with Proposed 

Amendments (100 nm)........................................................................IV-7

Table IV-5: Estimated Statewide OGV SOx Emissions in the South Coast 

AQMD (Tons/Day).............................................................................IV-11

Table IV-6: Estimated Statewide OGV PM2.5 and SOx Emissions in the Bay Area 

AQMD (Tons/Day).............................................................................IV-11

Table IV-7: Estimated Fuel Costs, Distance and Transit Time for Channel,

Outer, and Alternative Routes through the Santa Barbara 

Channel Region with the Proposed Amended Zone .........................IV-17

Table IV-8: Estimated Statewide OGV Emissions (tons/day) with 25% 

Transit Along the Outer Route...........................................................IV-17
vi

TABLE OF CONTENTS (CONT.)

List of Tables Page

Table IV-9: Estimated Statewide OGV Emissions (tons/day) with 25% 

Transit Along the Alternative Route...................................................IV-18

Table IV-10: Estimated Statewide OGV Emissions (tons/day) with 100% 

Transit Along the Alternative Route...................................................IV-19

Table V-1: Marine Fuel Prices ($/tonne)................................................................V-7

Table V-2: Total Statewide Annual Fuel Consumption and 

Cost (Current Regulation) ....................................................................V-8

Table V-3: Total Statewide Annual Fuel Consumption and 

Cost (Proposed Amendments).............................................................V-8

Table V-4: Estimated Additional Fuel Costs with the Proposed Amendments.......V-9

Table V-5: Estimated Total Cost (2011 Present Value).........................................V-9

Table V-6: Estimated Average Cost per Port Call................................................V-11

Table V-7: Estimated Average Added Annual Fuel Costs per Company.............V-12

Table V-8: Return on Owners Equity Analysis of Businesses..............................V-13

Table V-9: Cost-Effectiveness of the Proposed Amendments

(Attributes All Costs to Diesel PM Reductions) .................................V-16

Table V-10: Cost-Effectiveness of the Proposed Amendments 

(Attributes Half of the Costs to PM)....................................................V-16

Table V-11: PM Cost-Effectiveness of the Proposal and Other Diesel 

Regulations (Attributes Half of All Costs to PM).................................V-17

Table V-12: Diesel PM Cost-Effectiveness Comparison for Alternative 4

and the Proposed Amendments (Attributes All Costs to PM

Reductions).......................................................................................V-19

List of Figures Page

Figure ES-1: Vessel Traffic Routes by the Channel Islands in Southern 

California........................................................................................... ES-4

Figure ES-2: Marine Exchange Vessel Traffic Data - Percent of POLA 

and POLB Vessel Traffic that use the Outer Route Through 

the Point Mugu Sea Range ............................................................. ES-6

Figure ES-3: Comparison of Expected PM Emissions Reductions Between

the Adopted OGV Clean Fuel Regulation and the North

American ECA (100nm Zone)............................................................ ES-8

Figure ES-4: Proposed Amended Regulated California Waters

in Southern California...................................................................... ES-10

Figure ES-5: Estimated Statewide OGV PM2.5 Emissions (100 nm)................... ES-12

Figure ES-6: Estimated Statewide OGV SOx Emissions (100 nm)...................... ES-12

Figure I-1: Use of the OGV Clean Fuel Regulation Safety Exemption ................... I-5

Figure I-2: Vessel Traffic Routes by the Channel Islands in Southern

California............................................................................................... I-6
vii

TABLE OF CONTENTS (CONT.)

List of Figures Page

Figure I-3: Marine Exchange Vessel Traffic Data –Percent of POLA and

POLB Vessel Traffic that use the Outer Route Through

the Point Mugu Sea Range ................................................................... I-7

Figure I-4: United States Coast Guard District 11 Loss of Propulsion

Statistics................................................................................................ I-8

Figure I-5: North American Emission Control Area............................................... I-13

Figure II-1: Channel and Outer Vessel Routes to the Ports of Long Beach

and Los Angeles .................................................................................. II-2

Figure II-2: Marine Exchange Vessel Traffic Data Listing Vessel Traffic using

the Outer Route Through the Point Mugu Sea Range ......................... II-3

Figure II-3: Proposed Amended Zone in Southern California............................... II-10

Figure II-4: Channel, Outer, and Alternative Vessel Routes to the Ports of

Long Beach and Los Angeles with the Proposed Amended Zone ..... II-11

Figure II-5: MGO Fuel Viscosity Levels from Bunker Delivery Notes 

Obtained During Enforcement Activity between July 2009

through January 2011 ........................................................................ II-15

Figure III-1: Proposed Amended Regulated California Waters in Southern 

California ............................................................................................ III-1

Figure IV-1: Estimated Statewide OGV PM2.5 Emissions (100 nm).......................IV-6

Figure IV-2: Estimated Statewide OGV SOx Emissions (100 nm)..........................IV-6

Figure IV-3: Estimated Bay Area AQMD OGV PM2.5 and SOx Emission

Impacts ...............................................................................................IV-8

Figure IV-4: Estimated San Diego APCD OGV PM2.5 and SOx Emission

Impacts ...............................................................................................IV-8

Figure IV-5: Estimated Santa Barbara County APCD OGV PM2.5 and 

SOx Emission Impacts ........................................................................IV-9

Figure IV-6: Estimated South Coast AQMD OGV PM2.5 and SOx Emission 

Impacts ...............................................................................................IV-9

Figure IV-7: Estimated Ventura AQMD OGV PM2.5 and SOx Emission

Impacts .............................................................................................IV-10

Figure IV-8: Possible Southern California Shipping Routes..................................IV-16

Figure IV-9: Relationship Between Vessel Speed and Probability of Mortality

for Whale Strikes (ARB, 2009) ..........................................................IV-22

Figure V-1: Major Shipping Routes in Southern California .....................................V-5
viii

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ES - 1

EXECUTIVE SUMMARY

The Air Resources Board (ARB or Board) staff is proposing amendments to the 

Regulations for Fuel Sulfur and Other Operational Requirements for OceanGoing Vessels within California Waters and 24 Nautical Miles of the California 

Baseline (OGV Clean Fuel Regulation or regulation). The primary purpose of the 

amendments is to adjust the offshore regulatory boundary in Southern California 

to lessen the potential for vessels to interfere with operations at the United States 

Navy’s Point Mugu Sea Range and to recapture emission reductions from the 

regulation. In addition, amendments are proposed to facilitate a successful 

transition to very low sulfur fuels by aligning implementation dates more closely 

with recently approved federal requirements. 

Presented below is an overview that briefly discusses the information presented 

in this document. 

When was the OGV Clean Fuel Regulation adopted and what does it 

require?

The ARB adopted the OGV Clean Fuel Regulation in 2008 (title 13, California 

Code of Regulation (CCR) section 2299.2 and title 17, CCR section 93118.2).1

(ARB, 2008) This regulation is one of many steps being taken to reduce diesel 

particulate matter (PM) emissions from goods movement activities. It also is a 

key measure in meeting the goals of California’s State Implementation Plan (SIP)

and Goods Movement Emission Reduction Plan. (ARB, 2006) 

The OGV Clean Fuel Regulation requires operators of ocean-going vessels 

(OGVs) to use less polluting marine distillate fuels instead of heavy fuel oil (HFO) 

in their diesel engines and auxiliary boilers while operating within approximately 

24 nautical miles (nm) of the California coastline (Regulated California Waters or 

regulatory boundary or zone). The fuel requirements are implemented in two 

phases. The Phase 1 fuel requirements, which began implementation on 

July 1, 2009, require the use of either marine gas oil (MGO) or marine diesel oil 

(MDO). Under the Phase 1 requirements, the MGO has a maximum sulfur limit 

of 1.5 percent (%), and the MDO has a maximum sulfur limit of 0.5%. The

Phase 2 requirements, which are scheduled to begin on January 1, 2012, specify 

the use of either MGO or MDO at 0.1% sulfur. 

The regulation includes several exemptions to accommodate special 

circumstances or situations where it may not be feasible or practical to use the 

required fuel. For example, a safety exemption is included for situations where 

the master of the vessel determines that compliance would endanger the safety 

of the vessel, crew, cargo, or passengers. The regulation also includes a 

 1 Two essentially identical regulations were adopted to reflect the authorities granted to the ARB 

in the California Health and Safety Code to regulate sources of toxic air contaminants and to 

regulate marine vessel emissions. Throughout this report the regulations are collectively referred 

to as “the OGV Clean Fuel Regulation” or “the regulation.”
ES - 2

noncompliance fee provision that allows the operator to pay a fee in lieu of direct 

compliance with the regulation under special circumstances where direct 

compliance would be difficult. Finally, the regulation contains a “sunset” 

provision that would allow the fuel requirements to cease if the United States 

adopts and enforces requirements that will achieve equivalent emission 

reductions within the regulatory zone covered by the ARB regulation. 

Emissions from OGVs are significant sources of air pollution and have an 

adverse impact on public health and air quality. Ocean-going vessels also 

contribute significantly to community health risks. The use of the marine distillate 

fuels instead of the heavy fuel oil typically used by OGVs significantly reduces 

emissions of diesel PM, PM, sulfur oxides (SOx), oxides of nitrogen (NOx), and 

“secondarily” formed PM (PM formed in the atmosphere from NOx and SOx). 

What is the implementation status of the OGV Clean Fuel Regulation?

The Phase 1 fuel requirements began implementation on July 1, 2009 and have 

been in effect for over 20 months. ARB enforcement staff has actively enforced 

the regulation and have conducted over 450 vessel inspections. The compliance 

rate, as determined by ARB enforcement staff, is about 95%. Most violations are 

the result of fuel switching conducted in the wrong offshore location or 

recordkeeping violations. Enforcement staff report that the distillate fuels used 

are almost always within the sulfur content limits specified in the regulation, less 

than 1.5% sulfur for MGO, and less than 0.5% sulfur for MDO. 

The information collected during the inspections is providing useful information 

on fuel qualities such as fuel sulfur content and viscosity as well as providing an 

indication of the types of fuels provided at ports throughout the world. The 

analysis of the collected fuel samples demonstrates that the fuels being used 

typically have much lower sulfur content than the Phase 1 fuel sulfur limits. Of 

the 444 fuel samples analyzed as of March 2011, the actual fuel sulfur content of 

the marine distillate fuels being used by OGV operators averages less than 

0.3% sulfur. 

Based on the data gathered to date, OGV operators have been able to obtain 

and operate on the Phase 1 fuels. Since the OGV Clean Fuel Regulation began 

implementation in July 2009, we estimate that there have been over 18,000 

vessel visits to California ports. Complying fuel has proved to be readily 

available as evidenced by no OGV operators having to pay the noncompliance 

fee because they were not able to find compliant fuel. In addition, with few 

exceptions, almost all vessels have successfully switched to the cleaner marine 

distillate fuels prior to entering the regulated zone. 
ES - 3

During the initial months of implementation, there was an increase in reported 

loss of propulsion (LOP)2 incidents to the United States (U.S.) Coast Guard, 

some of which may be attributable to the use of the lower sulfur marine distillate 

fuels. However, over a period of six months, between July 2009 and December 

2009, the frequency of LOP incidents related to the use of lower sulfur marine 

distillate fuels returned to pre-regulation levels. Out of the estimated 18,000 

vessel visits to California ports between July 2009 and March 2011, there have 

been 37 LOP incidents that were attributable to the use of the low-sulfur distillate 

fuels. During that same time, there have also been 71 LOP incidents that have 

not been attributed to the use of low sulfur marine distillate fuels. 

ARB staff has worked closely with the U.S. Coast Guard and ship operators to 

better understand any operational difficulties experienced by vessel operators 

while on the required fuels. In addition, the California Maritime Academy was 

brought under contract by ARB to help investigate the root causes of any LOP 

incidents related to the use of low sulfur marine distillate fuels. Preliminary 

findings from the study indicate that for vessels having low fuel pressure related

problems, the reported fuel-related LOP incidents may be related to the condition 

of worn fuel injection pumps combined with the lower fuel viscosity. At this time, 

the U.S. Coast Guard is continuing to investigate LOP from all causes and 

considering if recommendations for best practices are needed. 

What has happened to vessel traffic patterns in Southern California since 

the OGV Clean Fuel Regulation began implementation?

Prior to the implementation of the OGV Clean Fuel Regulation, the majority of 

OGVs going into and out of the Port of Los Angeles (POLA) and Port of Long 

Beach (POLB) traveled along the California coastline through the Santa Barbara 

Channel. About 50% of the vessel visits to California come through these two 

ports. In the Santa Barbara Channel, there is a traffic separation scheme3

established by the Commandant of the U.S. Coast Guard under the Ports and 

Waterways Safety Act and in accordance with international agreements. 

However, soon after the effective date of the OGV Clean Fuel Regulation, a large 

number of OGVs chose to move from the traditional route through the Santa 

Barbara Channel (Channel Route), which lies within the regulatory boundary of 

the OGV Clean Fuel Regulation, to a route (Outer Route) on the southern side of 

the Channel Islands, an area outside of the regulatory boundary and in the 

U.S. Navy’s Point Mugu Sea Range (Sea Range). The vessel routes are shown 

in Figure ES-1. 

 2 A reportable marine casualty, in accordance with 46 CFR 4.05-1(a)(3), includes a loss of main 

propulsion, primary steering, or any associated component or control system that reduces the 

maneuverability of the vessel. 

3 Traffic separation schemes are used to promote vessel safety by regulating the flow of traffic in 

busy or congested waterways. 
ES - 4

Figure ES-1: Vessel Traffic Routes by the Channel Islands in Southern 

California

Data provided by the U.S. Navy demonstrate that prior to implementation of the 

regulation, about 30 ships per month, primarily tanker vessels, traveled through 

the Sea Range. Since implementation of the regulation began, there has been a 

steady increase with over 200 ships a month choosing to transit through the Sea 

Range in December 2010. (U.S. Navy, 2011) ARB staff estimates that 

approximately 50% of the vessel traffic in and out of the POLA and POLB that 

historically traveled through the Santa Barbara Channel is now transiting through 

the Sea Range on the southern side of the Channel Islands. 

Why have vessel operators chosen to transit through the Sea Range 

instead of the established shipping lanes in the Santa Barbara Channel?

ARB staff believes the cost of the marine distillate fuel required by the OGV 

Clean Fuel Regulation has prompted the change in traffic patterns. Because 

vessels on the southern side of the Channel Islands do not have to use the 

cleaner marine distillate fuels required by the OGV Clean Fuel Regulation, it 

reduces the transit costs for the vessel operator on this segment of travel (Port 

Conception to the POLA and POLB) by about 20% relative to the costs that 

would be incurred transiting inside the Santa Barbara Channel. While the Outer 

Route is slightly longer than the Channel Route through the Santa Barbara 

Channel, resulting in a longer transit time, ship operators have weighed the 

added travel time and distance against the lower fuel costs and the majority of 

ship operators have chosen to use the Outer Route. 

Current 24 nm 

Regulatory 

Zone

Outer 

Route

Channel 

Route

Point Mugu 

Sea Range
ES - 5

Table ES-1 presents a comparison between the fuel costs, time, and distance 

between the Channel Route and the Outer Route. As is shown, a one-way 

transit using the Outer Route is about 13 nm longer, saves approximately 

$2,750 dollars and takes about 1 hour longer relative to the Channel Route. 

Table ES-1: Estimated Fuel Costs, Distance and Transit Time for Vessels 

Using the Santa Barbara Channel and the Outer Route

Route Distance (nm) Cost Time (hrs)

Channel Route 

(150 nm)

MGO:150 nm $14,390 9.6

Outer Route

(163 nm)

MGO: 31 nm

HFO: 132 nm

$11,640 10.5

Estimated Distance/Cost 

and Time Differential

13 nm $2,750 0.9

(54 minutes)

Unfortunately, this change in routes has reduced the expected emissions 

reductions from the regulation. Statewide, ARB staff estimate that this change in 

vessel routing has resulted in about 3 tons per day (T/D) less diesel PM and 

21 T/D less SOx emission reductions in 2010 than what could be realized if 

vessels used the Channel Route as originally anticipated when the regulation 

was adopted in 2008. It has also raised concerns for the U.S. Navy. 

What are the U.S. Navy’s concerns regarding the increased vessel traffic 

through the Point Mugu Sea Range? 

During the development of the OGV Clean Fuel Regulation, U.S. Navy 

representatives expressed concerns about the potential for vessels to shift traffic 

patterns in Southern California and to transit through the Point Mugu Sea Range 

to avoid having to use the more expensive marine distillate fuels. At that time, 

ARB staff did not find sufficient evidence that there would be a significant shift in 

vessel traffic but agreed to monitor the situation and, at the Board’s direction, 

return with amendments to address the issue if needed. 

As noted above, shortly after implementation of the Phase 1 fuel requirements 

began, vessels began traveling on the southern side of the Channel Islands 

through the Point Mugu Sea Range instead of using the traffic separation 

scheme within the Santa Barbara Channel. The U.S. Navy provided ARB staff 

with vessel traffic data showing the percentage of vessels that are using the 

Outer Route compared to the total vessels visiting POLA and POLB. (U.S. 

Navy, 2011) Figure ES-2 shows both the percentage of vessels inbound and 

outbound from July, 2009 to February, 2011. The data indicate an increase in 

traffic using the Outer Route traffic from the historical average of about 7.5% 

(about 30 vessels per month) prior to July 2009 to about 53% (about 200 vessels 
ES - 6

per month) inbound and 65% outbound by December 2010. In January and 

February 2011, there was a decrease in the percent of vessels using the Outer 

Route, possibly indicating that the percent of vessels using the Outer Route has 

stabilized.

Figure ES-2: Marine Exchange Vessel Traffic Data - Percent of POLA and 

POLB Vessel Traffic that use the Outer Route Through the Point Mugu 

Sea Range 

U.S. Navy representatives and members of the Regional Defense Partnership for 

the 21st Century (RDP-21), a Ventura County non-profit community organization 

that works to preserve and enhance the military value of Naval Base Ventura 

County, have raised concerns about the increased ship traffic and the potential 

impacts it may have on the ability of the Sea Range to accomplish its primary 

mission. (RDP-21, 2010) (U.S. Navy, 2010) 

What is the status of U.S. EPA’s efforts to secure an Emission Control Area 

for the United States?

When the OGV Clean Fuel Regulation was originally approved in 2008, the 

International Maritime Organization (IMO) was considering amendments to 

MARPOL Annex VI (International Convention for the Prevention of Air Pollution 

from Ships) to further reduce air emissions from ships. In October, 2008, the 

IMO adopted the amendments, enacting more robust new international standards 

for marine diesel engines and their fuels. The amendments also allowed for 

creation of Emission Control Areas (ECA) by member states allowing them to 

implement more stringent requirements upon approval by the IMO. 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

JUL 09

AUG 09

SEP 09

OCT 09

NOV 09

DEC 09

JAN 10

FEB 10

MAR 10

APR 10

MAY 10

JUN 10

JUL10

Percent of POLA and POLB Vessel Visits 

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

Sea Range Ship Traffic

Inbound %

Outbound % Historical Average
ES - 7

The United States and Canada jointly applied for an ECA designation in 

July, 2009. In the application for an ECA, the United States Environmental 

Protection Agency (U.S. EPA) provided extensive documentation on the air 

quality and public health impacts from the emissions of OGVs throughout the 

coastal and inland waters of the United States, including California. (U.S. EPA, 

2009) On March 26, 2010, the IMO officially designated waters of the United 

States and Canadian coastlines as an ECA, referred to as the North American 

ECA. Under the North American ECA, OGVs traveling within a 200 nm zone of 

the North American coastline are required to use fuels with no more than 1% 

sulfur beginning in August 2012 and no more than 0.1% sulfur beginning in 

January 2015. There are also requirements for more stringent engine exhaust 

standards beginning in 2016. Below in Table ES-2, we provide a comparison 

between the fuel sulfur requirements in the OGV Clean Fuel Regulation and the 

North American ECA. 

Table ES-2: Comparison of the Fuel Requirements for the OGV Clean Fuel 

Regulation and the North American ECA

ARB Requirements 

(24 nm zone)

July 1, 2009

(Phase 1)

Distillate fuel:

MGO max 1.5% S

MDO max 0.5% S

Jan 1, 2012

(Phase 2)

Distillate fuel:

MGO max 0.1%

MDO max 0.1%

North American ECA 

(200 nm zone)

Aug 1, 2012

(Phase 1)

Fuel Sulfur max 1.0%

Jan 1, 2015

(Phase 2)

Fuel Sulfur max 0.1%

As mentioned earlier, under the OGV Clean Fuel Regulation, the Executive 

Officer can “sunset” the OGV Clean Fuel Regulation when he or she determines 

that U.S. EPA enforces a measure that gets equivalent or greater emission 

reductions. With the North American ECA now approved, the OGV Clean Fuel 

Regulation should be able to “sunset” in 2015. However, it is important that the 

OGV Clean Fuel Regulation continue implementation until that time. As shown in 

Figure ES-3, the use of the marine distillate fuels required by the OGV Clean 

Fuel Regulation results in significantly more emissions reductions than the fuels 

with 1% sulfur limits that will be used to comply with the North American ECA 

beginning in August 2012. While the 1% sulfur requirement will provide some 

additional incremental benefit for California, it is not until the North American 

ECA’s 0.1% sulfur requirement is implemented and enforced that we will achieve 

equivalent benefits to California’s OGV Clean Fuel Regulation. 
ES - 8

Figure ES-3: Comparison of Expected PM Emissions Reductions Between 

the Adopted OGV Clean Fuel Regulation and the North American ECA

(100nm Zone) 

Notes: Emission estimates for the “Regulation” are based on the originally adopted regulation 

that did not incorporate any loss of benefits due to unforeseen route changes in Southern 

California or incorporate additional reductions from the North American ECA. 

Does ARB staff have any concerns regarding the transition to the Phase 2, 

0.1% sulfur standard in 2012? 

ARB staff is fully committed to reaching the Phase 2 limit of 0.1% sulfur fuel. The 

use of 0.1% sulfur marine distillate fuel is technologically and operationally 

feasible and is cost-effective. It is also consistent with the North American ECA 

Phase 2 limit which will come into effect in 2015. However, ARB staff does have 

concerns about the timing for implementation of the OGV Clean Fuel 

Regulation’s Phase 2 requirement and we believe there are valid reasons to 

delay the implementation date by two years. ARB staff believes that providing a 

two-year delay will help to ensure the successful implementation of the 

North American ECA’s Phase 1 fuel requirements and a successful transition to 

the 0.1% sulfur fuels. Below, we briefly discuss our rationale. 

Under the OGV Clean Fuel Regulation, the Phase 2 sulfur requirement is 

scheduled to begin implementation on January 1, 2012. As can be seen in 

Table ES-2 above, later in that same year, the North American ECA’s Phase 1 

requirement to use 1% sulfur fuel begins implementation. Because of this, ARB 

staff believes it is appropriate to adjust the implementation timeline for the OGV 

Clean Fuel Regulation’s Phase 2 requirements (0.1% sulfur beginning 

January 1, 2012) to more closely align with the Phase 2 North American ECA 

requirement (0.1% sulfur beginning January 1, 2015). In addition, by delaying 

the OGV Clean Fuel Regulation’s Phase 2 implementation date we believe that 

shippers may be able to more easily locate fuels with higher viscosity levels 

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2005 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

PM2.5 (Tons/Day)

Year

Without Regulation

Adopted Regulation

North American ECA
ES - 9

during the extension of the Phase 1 requirements. As alluded to earlier, for 

vessels that have experienced LOP incidents related to the use of low sulfur 

distillate fuels, on-board management of fuel viscosity is a very important 

parameter. 

The majority of the emissions reductions from the OGV Clean Fuel Regulation, 

over 90%, are achieved with the Phase 1 requirements. While the use of the 

Phase 2 fuels will provide additional benefits, a two-year delay will not impact the 

significant reductions achieved with Phase 1 fuels. For all these reasons, ARB 

staff believes delaying implementation of the 0.1% sulfur limit by two years will 

provide more flexibility to acquire fuels with higher viscosity and may help lessen 

the probability of operational difficulties, while still maintaining over 90% of the 

emission reduction benefits from the OGV Clean Fuel Regulation. 

Why is ARB staff proposing amendments?

ARB staff is proposing amendments to address the shift in vessel traffic patterns 

that resulted when the Phase 1 fuel requirements began implementation. As 

previously discussed, the shift in vessel traffic patterns in Southern California has 

raised concerns about potential impacts on the U.S. Navy’s Point Mugu Sea 

Range operations and has resulted in less emission reductions in Southern 

California than originally anticipated when the regulation was adopted. In 

addition, ARB staff is proposing amendments to reflect new information and 

provide additional time for industry to successfully transition to the 0.1% sulfur 

marine distillate fuels. 

What amendments are being proposed?

ARB staff is proposing the following amendments to the OGV Clean Fuel 

Regulation. The strike-out/underline version of the proposed amendments to the 

regulation is provided in Appendix A. 

Regulated California Waters: ARB staff is proposing to amend the regulatory 

boundary, by extending it further off shore by aligning it more closely in Southern 

California with the “Contiguous Zone,” which is 24 nm from the California 

Baseline (shoreline), which includes offshore islands. In addition, we are 

proposing to exempt vessels from the clean fuel requirements when transiting a 

small region (“window”) within the 24 nm boundary off Point Conception. This 

exemption window is being provided to encourage vessels to travel in the 

established shipping lanes in the Santa Barbara Channel when headed to or 

from the POLA and POLB. This proposed change in the boundary will lessen the 

economic incentive for OGVs to transit through the Point Mugu Sea Range 

instead of the Santa Barbara Channel and will help reestablish the emission 

reductions from the regulation. No changes are being proposed to the Regulated 

California Waters in Northern California. The proposed amended regulatory 

boundary is shown in Figure ES-4 below.
ES - 10

Figure ES-4: Proposed Amended Regulated California Waters

in Southern California

Phase 2 Implementation Date: The original regulation requires the use of Phase 

2 0.1% sulfur distillate fuel beginning January 1, 2012. We are proposing to 

extend the deadline to use the Phase 2 fuel by two years to January 1, 2014. As 

discussed above, ARB staff believes this two-year delay will help facilitate a more 

successful transition to the 0.1% sulfur distillate fuels. 

Noncompliance Fee Provision: ARB staff is proposing some minor modifications 

to the “noncompliance fee provision,” which in certain specified situations allows 

the payment of fees in lieu of direct compliance with the rule through the use of 

cleaner fuels. This provision has been used five times since the OGV Clean Fuel 

Regulation began implementation. The proposed amendments are based on 

experience gained through implementation of the regulation to date, and focus 

primarily on the way fees are assessed. The proposed amendments include 

adjusting the fee schedule specified in the regulation, reducing the fees by half 

for vessel operators that purchase and use complying fuels after arriving to a port 

on noncomplying fuel, and proposing that offshore anchorages made in 

conjunction with a port visit not be counted as a “port visit. We believe these 

changes will help to incentivize the use of the cleaner fuels as quickly as 

possible. 

Exemption 

Window

Proposed Regulatory 

Boundary

Traffic Separation Lanes
ES - 11

Other Proposed Amendments: ARB staff is proposing to amend the regulation to 

include a March 2007 update to the National Oceanic and Atmospheric 

Administration (NOAA) nautical chart 18740 covering California’s coastline from 

San Diego to Santa Rosa Island. These charts are used to help define California 

Regulated Waters. In addition, ARB staff is proposing to amend the definitions of 

the fuels required under the OGV Clean Fuel Regulation to reflect recent 

changes in how these fuels are specified under international standards. 

What are the environmental and public health impacts from the 

amendments?

The impacts from the proposed amendments on the statewide SOx and PM 

emissions from OGVs are shown in Figures ES-5 and ES-6.4 As is shown, 

compared to the current regulation where about 50% the vessels traveling to and 

from the POLA and POLB are using the Outer Route, statewide emissions with 

the proposed amendments will continue to decline. Statewide, the proposed 

amendments also will result in lower SOx and PM emissions than with the 

current regulation. However, in the San Francisco Bay Area, the amendments 

will result in a small loss of future projected emission reductions of SOx (1.2 T/D 

in 2012 and 1.4 T/D in 2013) and PM2.5 (0.1 T/D in 2012 and 2013) relative to 

the projected future emissions under the current regulation. In the South Coast 

Air Basin, there is also a small loss in the projected future emission reductions of 

SOx (0.4 T/D in 2013) relative to the emissions projections under the current 

regulation. While the proposed amendments would not result in an increase in 

the emissions from what currently exists, the foregone emission reductions in 

future years in the San Francisco Bay Area and the South Coast Air Basin could 

be viewed as a potential adverse environmental impact. However, OGV 

emissions in all areas of the State, including the San Francisco Bay Area and the 

South Coast Air Basin, will continue to decline in future years and the remaining 

emissions are far lower than expected when the regulation was originally 

adopted. This is in part due to the recession which has had an impact on the 

activity of OGVs and the adoption of the North American ECA. 

 4 In Figures ES-5 and ES-6, all the emissions trend lines are based on an updated 2011 OGV 

Emissions Inventory that reflects of the recession and assumes an average recession recovery 

scenario. This is discussed in more detail in Chapter IV and Appendix D.
ES - 12

Figure ES-5: Estimated Statewide OGV PM2.5 Emissions

(100 nm)

Figure ES-6: Estimated Statewide OGV SOx Emissions 

(100 nm)

With the proposed amendments, the OGV Clean Fuel Regulation will continue to 

provide significant health benefits by reducing premature mortality from PM2.5 

exposure and localized potential cancer risk from diesel PM. Because the 

proposed amendments lower projected emissions to levels below the 2008 

adopted regulation, the implementation of the proposed amendments will have 

similar public health benefits associated with the original OGV Clean Fuel 

Regulation. Extensive modeling was conducted when the OGV Clean Fuel 

Regulation was originally adopted and demonstrated that upon implementation, 

the regulation will avoid a significant number of premature deaths, about 3,600,

0.0

5.0

10.0

15.0

20.0

25.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

Implementation begins for 

proposed amendments

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

Implementation begins for 

proposed amendments
ES - 13

between 2009 and 2015 associated with the reduction in PM. (ARB, 2008) Since 

the baseline emissions have decreased due to recession related decrease in 

vessel calls, the magnitude of the premature deaths avoided that would be 

attributed to the adopted or proposed amended rule would not be as great as 

identified above. However, the avoided premature deaths due the adopted 

regulation with the proposed amendments will remain substantial. Moreover, as 

the economy rebounds, a greater percentage of the premature death avoided will 

be because of the rule, not the recession.

During the development of the OGV Clean Fuel Regulation, ARB staff worked 

with NOAA staff to investigate the potential impact on marine mammals if vessels 

chose to avoid the Santa Barbara Channel and instead transit on the southern 

side of the Channel Islands. At that time, based on the available data of 

densities of blue, fin, humpback, and sperm whales, the likelihood of ship strikes 

was similar or less if a ship did not use the Santa Barbara Channel. (ARB, 2009) 

Since that time, NOAA staff has been developing an analysis of the whale 

population densities in the Santa Barbara Channel and south of the islands and 

correlating this information with the vessel routes south of the Channel Islands. 

Based on a preliminary analysis of whale population densities by NOAA, the data 

suggests that there is a decreased risk to fin whales, an increased risk to 

humpback whales, and there is an unclear impact to blue whales if vessels return 

to the Santa Barbara Channel. Humpback whales have large concentration on 

the north end of the entrance to the Santa Barbara Channel. However, whale 

densities shift from year-to-year and variations in the number of ship strikes can 

change annually depending on the concentrations of whales in a given year. 

(NOAA, 2010b) Based on this information, ARB staff believes that there is a 

potential for an adverse environmental impact to humpback whales from the 

proposed amendments. 

What are the economic impacts?

The estimated total costs associated with the proposed amendments are 

approximately $10 million annually in 2012 and 2013, and $47 million in 2014. 

These estimated annual costs represent the net additional costs associated with 

the proposed amendments over and above compliance with the current 

regulation. 

A number of factors affect these net added costs. First, the majority of vessels 

that historically transited through the Santa Barbara Channel are now transiting 

outside the regulatory zone via the Outer Route to reduce fuel costs. Under the 

proposed amendments, we predict that these vessel operators will return to 

Channel Route and incur the higher costs associated with using the more 

expensive cleaner marine distillate fuels. These costs were originally attributed 

to the OGV Clean Fuel Regulation and were avoided by transiting outside the 

existing regulatory zone in Southern California. These estimated annual costs 

also represent the added fuel costs for vessels that historically used the Outer 

Route, such as the tankers. It also represents the cost saving due to the two 
ES - 14

year delay of the Phase 2 (0.1%) fuel sulfur limits. These estimated costs do not 

reflect the cost savings that vessels shifting to the Outer Route incurred from July 

2009 until the effective date of proposed amendments. For perspective, the staff 

report for the original OGV Clean Fuel Regulation estimated the total cost to the 

industry at about $350 million annually for the years 2012 through 2014. 

We estimate the overall total present value cost of the proposed amendments to 

be approximately $59 million dollars for the years 2012-2014, assuming the total 

annual costs mentioned above. The added cost to a typical ship operator is 

estimated to be about $20,000 in years 2012 and 2013, and about $90,000 in 

2014. We expect these added costs can be absorbed by typical affected 

businesses without a significant adverse impact. The average cost-effectiveness 

of the proposed amendments is estimated to be about $16 per pound of diesel 

PM reduced over the three year life of the regulation assuming all of the 

regulatory costs are assigned to the diesel PM reductions. This compares 

favorably to other diesel PM regulations the Board has adopted previously, as 

well as to the original regulation. 

How did staff develop the amendments?

ARB staff developed the proposed amendments to the OGV Clean Fuel 

Regulation through consultations with OGV operators and industry 

representatives, the U.S. Coast Guard, U.S. Navy, the California Office of Spill 

Prevention and Response, local Harbor Safety Committees, California’s Attorney 

General’s Office, and members of the public. Over the last year, the staff held 

two public workshops to discuss the proposed amendments. More than 2,500 

companies, organizations, and individuals were notified of these public 

workshops through email notification. Workshop notices were posted to ARB’s 

website and e-mailed to subscribers of the “maritime” electronic list serve. 

Individual meetings also were held with affected stakeholders. 

What are the impacts on the SIP?

The federal Clean Air Act (CAA) requires U.S. EPA to establish National Ambient 

Air Quality Standards (standards) for pollutants considered harmful to public 

health, including PM2.5 and ozone. Areas in the State that exceed the national 

standards are required by federal law to develop SIPs describing how they will 

attain the standards by certain deadlines. Diesel PM, NOx and SOx emission 

reductions are needed because they contribute to ambient concentrations of 

PM2.5; NOx emission reductions are needed because NOx leads to formation in 

the atmosphere of both ozone and PM2.5; and SOx emission reductions are 

needed because SOx leads to the formation in the atmosphere of PM2.5.

The OGV Clean Fuel Regulation originally adopted by ARB in 2008 provided 

critical emission reductions needed by the South Coast Air Quality Management 

District (SCAQMD) to fulfill the SIP obligations and attain the PM2.5 standard in 

the South Coast Air Basin. The proposed rule amendments will reestablish the 

emission reductions anticipated from the OGV Clean Fuel Regulation originally 
ES - 15

adopted by ARB in 2008. The South Coast Air Basin is required to attain the 

national standard for PM2.5 by April 5, 2015. Because attainment for the PM2.5 

national standard is based on calendar year annual averages, all reductions 

needed to meet the standard must be in place by January 1, 2014.

What is the status of the lawsuit filed by the Pacific Merchant Shipping 

Association?

The Pacific Merchant Shipping Association (PMSA) filed a complaint on 

April 28, 2009, seeking to invalidate the OGV Clean Fuel Regulation. PMSA 

alleges the regulation conflicts with the Submerged Lands Act and also suggests 

it is preempted under the Commerce Clause. The lower court denied PMSA’s 

motion for summary judgment on June 30, 2009. On December 11, 2009, the 

United States Court of Appeals, Ninth Circuit, granted PMSA’s petition seeking 

permission to appeal immediately the lower court’s order denying PMSA’s motion 

for summary judgment. The United States Court of Appeals, Ninth Circuit, held 

oral argument on December 9, 2010, in San Francisco. On March 28, 2011, the 

Ninth Circuit upheld California’s OGV Clean Fuel Regulation. The Court 

concluded that California can adopt reasonable regulations for air pollution that is 

emitted beyond our territorial boundaries (which generally are three miles out at 

sea) when the pollution has a substantial effect within the state and that 

California is not barred from combating the severe pollution caused by these 

vessels. (U.S. Court, 2011) 

What is staff’s recommendation?

We recommend that the Board approve the proposed amendments to the 

OGV Clean Fuel Regulation. ARB staff believes that the proposed amendments 

will help to restore the public health and air quality benefits that can be achieved 

by the regulation, eliminate the economic incentive to go through the Point Mugu 

Sea Range, will more closely align the OGV Clean Fuel Regulation’s Phase 2 

requirements with the North American ECA Phase 2 requirements for 0.1% sulfur 

fuels, and help facilitate a successful transition to the Phase 2 sulfur standards. 
ES - 16

REFERENCES

(ARB, 2006) State of California, Air Resources Board, Emission Reduction Plan 

for Ports and Goods Movement in California, April, 2006

(ARB, 2008) State of California, Air Resources Board, Staff Report: Initial 

Statement of Reasons for Proposed Rulemaking: Proposed Regulation for Fuel 

Sulfur and Other Operational Requirements for Ocean-Going Vessels Within 

California Waters and 24 Nautical Miles of the California Baseline, June 2008

(ARB, 2009) "Supplemental Environmental Anaysis of Poential Impacts From 

Changes in Southern California Vessel Routing as a Result of the ARB Oceangoing Vessel Fuel Rule." Attachment 4 to 2008 Staff Report of the OGV Fuel 

Rule. 2009

(NOAA, 2010b) Jessica V. Redfern, Megan E. McKenna, Thomas J. Moore, 

Whales and Ships in the Southern California Bight,

http://www.socalmarinemammals.org/program.html. Accessed on April 11, 2011

(RDP-21, 2010) RDP-21 Position Paper presented at California Air Resources 

Board Public Workshop, Long Beach, CA, October 12, 2010 

(U.S. Court, 2011) Pacific Merchant Shipping Association v. Goldstene (United 

States District Court, Eastern District of California (Sacramento), No. 2:09-CV01151-MCE-EFB), Interlocutory appeal to the United States Court of Appeals, 

Ninth Circuit, No. 09-17765

(U.S. EPA, 2009) Executive Summary and Technical Support Document for the 

proposal to Designate an Emission Control Area for Nitrogen Oxides, Sulfur 

Oxides, and Particulate Matter, April 2009 

http://www.epa.gov/otaq/regs/nonroad/marine/ci/mepc-59-eca-proposal.pdf

and http://www.epa.gov/otaq/regs/nonroad/marine/ci/420r09007.pdf

(U.S. Navy, 2010) Presentation by U.S. Navy at California Air Resources Board 

Public Workshop, Long Beach, CA, October 12, 2010

(U.S. Navy, 2011) Email communication from Randal Freidman, dated 

January 12, 2011
I - 1

I. INTRODUCTION

In this chapter, the Air Resources Board (ARB or Board) staff provides a brief 

description of ocean-going vessels (OGV or ships), an overview of the 

Regulations for Fuel Sulfur and Other Operational Requirements for OceanGoing Vessels within California Waters and 24 Nautical Miles of the California 

Baseline (OGV Clean Fuel Regulation or regulation), and recently adopted 

international and federal programs for fuels. Also included in this chapter is 

information on the implementation status for the OGV Clean Fuel Regulation, 

why the OGV Clean Fuel Regulation was originally adopted, and why it is 

important to reduce the emissions from ships. This chapter concludes with a 

discussion of the regulatory process and actions the ARB undertook to engage 

stakeholders in this rulemaking process to propose amendments to the OGV 

Clean Fuel Regulation. Additional information on these topics can also be found 

in the Staff Report prepared for the adoption of the regulation in 2008.

(ARB, 2008)

A. Description of Ocean-Going Vessels 

Ocean-going vessels are very large vessels designed for deep water navigation. 

Ocean-going vessels include large cargo vessels such as container vessels, 

tankers, bulk carriers, and car carriers, as well as passenger cruise vessels. 

These vessels transport containerized cargo; bulk items such as vehicles, 

cement, and coke; liquids such as oil and petrochemicals; and passengers.

Ocean-going vessels travel internationally and may be registered by the 

United States Coast Guard (U.S.-flagged), or under the flag of another country 

(foreign-flagged). The majority of vessels that visit California ports are foreignflagged vessels.

Ocean-going vessels have both main propulsion (main engines) and auxiliary 

diesel engines. Most OGVs are propelled by a single large slow-speed twostroke direct drive diesel engine, with smaller medium speed four stroke auxiliary 

engines providing electrical power for lighting, navigation equipment, and other 

ship-board uses. Diesel-electric vessels such as passenger cruise vessels use 

very large four-stroke medium speed engines coupled to generators to provide 

electrical power for both propulsion and ship-board electrical power.

Most OGVs also have auxiliary boilers that are fuel-fired combustion equipment 

designed primarily to produce steam for uses other than propulsion, such as 

heating of residual fuel and liquid cargo, heating of water for crew and 

passengers, powering steam turbine discharge pumps, freshwater generation, 

and space heating of cabins. Boilers used to provide propulsion (steam ships) 

are not included in the regulation or proposed amendments because there are 

very few steamships still in service.

Without regulatory requirements, the large main engine and boilers typically 

operate on heavy fuel oil (HFO), while the smaller auxiliary engines also typically 
I - 2

run on HFO but some operate on marine distillate fuels such as marine gas oil 

(MGO) or marine diesel oil (MDO). These vessels generally use HFO, although 

some have reported using marine distillate fuels close to shore to reduce their 

emissions. Under the requirements of the regulation and proposed amendments, 

the main engines, auxiliary engines, and auxiliary boilers are required to use 

cleaner MGO or MDO. 

B. Regulatory Authority 

Under State and federal law, ARB can regulate both criteria pollutants and toxic 

diesel particulate matter (PM) emissions from marine vessels. Health and Safety 

Code (H&S) sections 43013 and 43018 authorize ARB to regulate marine 

vessels to the extent such regulation is not preempted by federal law. Also, 

H&S section 39666 requires ARB to regulate emissions of toxic air contaminants 

(TAC) from nonvehicular sources, which include ocean-going vessels. The OGV 

Clean Fuel Regulation reduces emissions of diesel PM, which is both a TAC and 

criteria pollutant, and PM, oxides of nitrogen (NOx), oxides of sulfur (SOx), and 

“secondarily” formed PM (PM formed in the atmosphere from NOx and SOx) 

which are criteria pollutants.

The OGV Clean Fuel Regulation and the proposed amendments are neither 

preempted under federal law, nor do they violate the dormant Commerce Clause 

of the U.S. Constitution. Federal authorization under section 209(e) of the Clean 

Air Act (CAA) is required for regulating new nonroad engines and for requiring 

retrofits on existing engines. Ocean-going vessel engines fall within the category 

of nonroad engines. However, no federal authorization is required for 

implementing in-use operational requirements on existing marine vessels and 

their engines. The OGV Clean Fuel Regulation establishes an in-use operational 

requirement, rather than an emissions standard, because it does not apply a 

numerical emissions limit to be met (e.g., 10 grams NOx per brake horsepowerhour), does not require retrofits, or mandate design changes to the vessel. 

Rather, the regulation only requires that specified fuels be used on OGV engines 

and auxiliary boilers operating in Regulated California Waters. The proposed 

amendments to the OGV Clean Fuel Regulation do not change the existing inuse operational requirement. 

In addition, the proposed amendments to the OGV Clean Fuel Regulation do not 

conflict with the Ports and Waterways Safety Act (PWSA) and U.S. Coast Guard 

regulations. As a nondiscriminatory regulation with substantial benefits, OGV 

Clean Fuel Regulation and the amendments being proposed do not violate the 

dormant Commerce Clause. And, federal and state cases support our assertion 

of authority to regulate both U.S. and foreign-flagged vessels within the regulated 

California waters. Therefore, federal law does not preempt or otherwise prohibit 

the OGV Clean Fuel Regulation and the proposed amendments and their 

application in the waters off California’s coast. Further discussion on ARB’s 

regulatory authority is provided in the Staff Report prepared for the adoption of 

the regulation in 2008. (ARB, 2008)
I - 3

C. Ocean-going Vessel Clean Fuel Regulation

The OGV Clean Fuel Regulation was adopted by the ARB in 2008. The OGV 

Clean Fuel Regulation requires that operators of OGVs use marine distillate fuels 

in their diesel engines and auxiliary boilers while operating within approximately 

24 nautical miles (nm) of the California coastline. Using cleaner burning marine 

distillate fuels significantly reduces PM, diesel PM, NOx, and SOx emissions. 

The fuel requirements are implemented in two phases. The Phase 1 fuel 

requirements, which began implementation on July 1, 2009, require the use of 

either MGO or MDO. Under the Phase 1 requirements, the MGO has a sulfur 

limit of 1.5%, and the MDO has a sulfur limit of 0.5%. The Phase 2 

requirements, which are scheduled to begin on January 1, 2012, specify the use 

of either MGO or MDO at 0.1% sulfur. 

The regulation includes several exemptions to accommodate special 

circumstances or situations where it may not be feasible or practical to use the 

required fuel. For example, a safety exemption is included for situations where 

the master of the vessel determines that compliance would endanger the safety 

of the vessel, crew, cargo, or passengers. Exemptions are also provided for 

vessels that use alternative fuels, for military vessels, and for vessels that are 

evaluating technologies that will advance the state of knowledge pertaining to 

exhaust control technology or emissions characterization. 

In the event a vessel owner needs to undertake essential modifications to enable 

the vessel to use the low sulfur distillate fuel, the regulation includes a provision 

to grant an exemption from the fuel-use requirement provided certain criteria are 

met. The regulation also includes a noncompliance fee provision that allows the 

operator to pay a fee in lieu of direct compliance with the regulation under special 

circumstances where compliance would be difficult.

Finally, the regulation contains a “sunset” provision that would allow the fuel 

requirements to cease if the United States adopts and enforces requirements 

that will achieve equivalent emission reductions within the regulated zone 

covered by the ARB regulation.

D. Implementation Status

The Phase 1 fuel requirements began implementation on July 1, 2009 and have 

been in effect for over 20 months. ARB enforcement staff has actively enforced 

the regulation and have conducted over 450 vessel inspections. To enforce the 

regulation, ARB inspectors board vessels at dockside throughout California. 

Once on-board they collect fuel samples for testing and analysis and review 

records and fuel switching documentation. The compliance rate, as determined 

by ARB enforcement staff is about 95%. Most violations discovered by 

enforcement staff are the result of fuel switching conducted in the wrong offshore 

location or recordkeeping violations. Enforcement staff report that the distillate 

fuels used are almost always within the sulfur content limits specified in the 

regulation, less than 1.5% sulfur for MGO, and 0.5% sulfur for MDO. 
I - 4

The information collected during the inspections is providing useful data on fuel 

qualities such as fuel sulfur content and viscosity as well as providing an 

indication of the types of fuels provided at ports throughout the world. (ARB, 

2011) The analysis of the collected fuel samples demonstrates that the fuels 

being used typically have much lower sulfur content than the Phase 1 fuel sulfur 

limits. Of the 444 fuel samples analyzed as of March 2011, the actual fuel sulfur 

content of the marine distillate fuels being used by OGV operators averages less 

than 0.3% sulfur. This is discussed further in Chapter II of this report. Based on 

the information data gathered to date, OGV operators have been able to obtain 

and operate on the Phase 1 fuels. Since the OGV Clean Fuel Regulation began 

implementation in July 2009, we estimate that there have been over 18,000 

vessel visits to California ports. Below, we provide a summary of the use of the 

provisions in the OGV Clean Regulation that were incorporated to help manage 

implementation of the regulation. 

Essential Modifications Exemption

The “essential modifications” provision can provide vessel operators with an 

exemption from the fuel-use requirement provided they submit an application that 

demonstrates that the engine or boiler on board their vessel cannot use the low 

sulfur distillate fuel without making “essential” modifications. When an exemption 

is granted to the vessel operator, an Executive Order is issued specifying the 

specific vessels and equipment exempted, and other terms of the exemption. 

This provision has been used more frequently than anticipated for boilers. To 

date, over 400 vessels have been granted exemptions for some onboard 

equipment. Nearly all of the exemptions are for the large, steam-atomized 

boilers used on tanker vessels. Typically, the essential modifications necessary 

to these boilers includes installation of different burner equipment, flame 

detection sensors, and software modifications to adjust operation specific to the 

lighter distillate. Many of these vessel operators that have received these 

exemptions have committed to modify their equipment to use the distillate fuels. 

The Executive Orders that are issued for each essential modification exemption 

are posted on ARB’s website at 

http://www.arb.ca.gov/ports/marinevess/ogv/ogveos.htm.

Safety Exemption

The safety exemption provides the master of the vessel with an exemption from 

the regulation in those unusual cases where compliance would endanger the 

safety of the vessel, crew, or cargo. As shown below in Figure I-1, the safety 

exemption has been used in a limited number of cases (at most 5 times per 

month). The exemption has been used for a variety of reasons including 

inclement weather and heavy seas, engine malfunctions, operational difficulties, 

mechanical problems, and out-of-specification fuels. ARB staff has worked 

closely with the U.S. Coast Guard to ensure that vessel operators are aware of 

the safety exemption provisions. 
I - 5

Figure I-1: Use of the OGV Clean Fuel Regulation Safety Exemption

Noncompliance Fee Provision

There have been five noncompliance fees paid since the regulation began 

implementation. Three vessel operators used the noncompliance fee provision 

because they had an unplanned redirection to a California port and did not have 

sufficient compliant fuel on-board, one vessel operator had defective fuel, and 

one vessel operator paid the noncompliance because they had plans to take the 

vessel out of service to perform modifications. No OGV operators have had to 

pay the noncompliance fee because they were not able to find compliant fuels. 

Since implementation of the OGV Clean Fuel Regulation began, there has been 

a change in vessel traffic patterns, primarily in Southern California. In addition, 

some vessels have experienced operational difficulties when operating on the 

required fuels. These are discussed briefly below and in more detail in

Chapter II. 

Vessel Traffic Patterns 

Prior to the implementation of the OGV Clean Fuel Regulation, the majority of 

OGVs going into and out of the Ports of Los Angeles and Long Beach (POLA 

and POLB) traveled along the California coastline through the Santa Barbara 

Channel (the Channel Route). In the Santa Barbara Channel, there is a traffic 

separation scheme established by the Commandant of the U.S. Coast Guard 

under the Ports and Waterways Safety Act and in accordance with international 

agreements. However, soon after the effective date of the OGV Fuel Regulation, 

a large number of OGVs chose to move from the traditional route through the 

Santa Barbara Channel, which lies within the regulatory boundary of the OGV 

Clean Fuel Regulation, to an outer route (the Outer Route) on the southern side 

of the Channel Islands, an area outside of the regulatory boundary and in the 

0

1

2

3

4

5

6

Number of Saftey Exemptions 

Used
I - 6

U.S. Navy’s Point Mugu Sea Range (Sea Range). The vessel routes are shown 

in Figure I-2.5

Figure I-2: Vessel Traffic Routes by the Channel Islands in Southern 

California

Because vessels on the southern side of the Channel Islands do not have to use 

the cleaner marine distillate fuels required by the OGV Clean Fuel Regulation, it 

reduces the transit costs for the vessel operator by about 20% relative to the 

costs that would be incurred transiting inside the Santa Barbara Channel. In 

addition, this change in routes has reduced the emissions reductions from the 

regulation. Statewide, ARB staff estimate that this change in vessel traffic to the 

Outer Route has resulted in about 3 tons per day (T/D) less diesel PM and 

21 T/D less SOx emission reductions in 2010 than what could be realized if 

vessels used the Channel Route as originally anticipated when the regulation 

was adopted in 2008. 

The loss in emission reductions is significant because a large percentage of 

vessels are using this Outer Route. Prior to the implementation of the regulation, 

it was generally only petroleum tankers that used the Outer Route, while now the 

majority of cargo vessels are using this route. Figure I-3 shows the growth in the 

use of the Outer Route since the regulation was implemented.

 5 After implementation of the OGV Clean Fuel Regulation began, vessels have also altered transit 

routes in Northern California choosing to transit further offshore, outside the 24 nm regulatory 

boundary which is consistent with the Contiguous Zone in this region. There is also a region 

offshore San Diego where AIS data indicates vessels altered routes to an area outside the 24 nm 

regulatory zone as they approach the POLA and POLB from the south. 

Current 24 nm 

Regulatory 

Zone

Outer 

Route

Channel 

Route

Point Mugu 

Sea Range
I - 7

Figure I-3: Marine Exchange Vessel Traffic Data – Percent of POLA and 

POLB Vessel Traffic that use the Outer Route Through the Point Mugu Sea 

Range 

As noted above, vessels traveling on the southern side of the Channel Islands 

transit through the Point Mugu Sea Range. The data presented in Figure I-3 

show that since the OGV Clean Fuel Regulation began implementation in July 

2009, the percent of POLA and POLB vessel visits using the Outer Route has 

increased from the historical average of about 7.5% (about 30 vessels per 

month) to about 53% (about 200 vessels per month) inbound and 65% outbound 

by December 2010. In January and February 2011, there was a decrease in the 

percent of vessels using the Outer Route, possibly indicating that the percent of 

vessels using the Outer Route has stabilized.6

U.S. Navy representatives and members of the Regional Defense Partnership for 

the 21st Century (RDP-21), a Ventura County non-profit community organization 

that works to preserve and enhance the military value of Naval Base Ventura 

 6 50 percent of the vessel traffic visiting the POLA and POLB corresponds to about 75% of the 

total vessel traffic that historically uses the Santa Barbara Channel. 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

JUL 09

AUG 09

SEP 09

OCT 09

NOV 09

DEC 09

JAN 10

FEB 10

MAR 10

APR 10

MAY 10

JUN 10

JUL10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

Percent of POLA and POLB Vessel Visits

Sea Range Ship Traffic

Inbound %

Outbound %

Historical Average
I - 8

County, have raised concerns about the increased ship traffic and the potential 

impacts it may have on the ability of the Sea Range to accomplish its primary 

mission. (RDP-21, 2010) (U.S. Navy, 2010) 

Loss of Propulsion Incidents

During the initial months of implementation, there was an increase in reported 

loss of propulsion (LOP) incidents to the U.S. Coast Guard that may be 

attributable to the use of the lower sulfur marine distillate fuels. However, over a

period of six months, the frequency of LOP incidents related to the use of lower 

sulfur marine distillate fuels returned to pre-regulation levels. This is shown in 

the LOP data reported by the U.S. Coast Guard (see Figure I-4). Out of the 

estimated 18,000 vessel visits (July 1, 2009 through February 2011) to California 

ports since implementation began, there have been 37 LOP incidents that were

attributable to the use of the low-sulfur distillate fuels. During that same time, 

there have also been 71 LOP incidents that have not been attributed to the use 

of low sulfur marine distillate fuels. All of the LOP incidents were effectively 

managed with current procedures and practices and no accidents have occurred. 

Figure I-4: United States Coast Guard District 11 

Loss of Propulsion Statistics

ARB staff has worked closely with the U.S. Coast Guard and ship operators to 

better understand any operational difficulties experienced by vessel operators 

while on the required fuels. In the fall of 2009, the ARB conducted a survey of 

OGV vessel operators and vessel owners to collect information on operational 

experiences with the use of low sulfur distillate fuels. About 50 companies 

responded to the survey. In addition, the California Maritime Academy (CMA) 

0

2

4

6

8

10

12

14

Total Loss of Propulsion

Incidents

Loss of Propulsion - Fuel

Switching Related
I - 9

was brought under contract by ARB to help investigate any operational difficulties 

related to the use of low sulfur marine distillate fuels. 

Specifically, CMA was asked to investigate the root causes of operational 

difficulties or LOP incidents that could be related to the use of low sulfur distillate 

fuel and identify strategies or lessons learned that have been used to address or 

avoid operational issues. Preliminary findings from the study were presented at 

a public meeting of the Maritime Air Quality Technical Working Group in April 

2010. (MWG, 2010) To recap, the more commonly reported operational 

problems include: 

• Fail to start – the main engine will not start on the marine distillate fuel.

• Unstable at dead slow – the main engine RPM varies or the engine stalls 

when running at dead slow, the engine runs reliably at higher speeds.

• Fail to reverse – main engine can run at low loads and does start 

normally. However it cannot start in the astern direction.

• External leakages – leaking o-rings on fuel injectors cause excessive fuel 

leakage and leakage on high-pressure manifolds. 

CMA identified failure to maintain proper fuel viscosity as one of the key 

underlying issues in many of the operational problems. Low viscosity fuel can 

result in inadequate fuel injection pressures and incomplete combustion. Under 

these circumstances, LOP can result. Preliminary recommendations for 

improved practices to avoid operational issues include: 

• Ensure fuel viscosity is above minimum levels per engine manufacturer. 

When sourcing fuels, specify and verify distillate fuel viscosity.

• Monitor fuel injection pump wear, check condition of o-rings and seals, 

and other fuel system components prior to using distillate fuel to avoid 

external leaks.

• Adjust preventative maintenance schedule of fuel system components as 

determined by operational experience.

• Perform test run on distillate prior to California port visit.

• Have written vessel-specific fuel changeover procedures and crew 

training.

• Transfer control from the Bridge to Engine Control Room if the engine is 

difficult to start.

It is expected that the final CMA report will be available in summer 2011. 
I - 10

ARB Staff Outreach and Coordination Efforts 

ARB staff has conducted a number of activities to help vessel operators to 

comply with the regulation. ARB staff has issued six advisories providing 

guidance on complying with the general regulatory requirements, and on 

particular provisions in the regulation with regard to recordkeeping and the use of 

the safety exemption. These advisories are available on ARB’s website at the 

following location: http://www.arb.ca.gov/ports/marinevess/ogv/ogvadvisories.htm

On April 28, 2010, ARB staff held a Maritime Working Group Meeting to discuss 

the status of the regulation after several months of implementation. The meeting 

included presentations by the following:

• California Maritime Academy on preliminary findings with regard to the 

ARB contract to investigate LOP incidents;

• Air Resources Board on the results of an ARB Survey of vessel operators’ 

experiences with the use of low sulfur distillate fuel;

• U.S. Coast Guard on the LOP data and investigations;

• California Office of Spill Prevention and Response (OSPR)on their OSPR 

perspective on the implementation of the regulation; and

• Marine Engine Manufacturers (MAN Diesel and Wartsila) on technical 

issues and recommended practices when using low sulfur distillate fuel. 

The meeting was coordinated with a similar meeting held the following day by the 

Society of Naval Architects and Marine Engineers (SNAME) that focused on fuel 

switching under national and international Emission Control Areas. 

ARB staff also works closely with a number of key stakeholders regarding 

implementation of the regulation. ARB staff regularly attends meetings of the 

San Francisco Harbor Safety Committee, providing updates on the 

implementation of the regulation. ARB staff is in regular contact with the 

U.S. Coast Guard regarding LOP incidents that could be related to the use of the 

low sulfur fuel, and on uses of the safety exemption. ARB staff has also met with 

staff of the California Office of Spill Prevention and Response, the San Francisco 

Bar Pilots, and the manufacturers of marine engines.

E. International and Federal Actions

The staff report prepared for the original rule discussed the various international 

and federal regulations designed to reduce emissions from OGVs. (ARB, 2008). 

At the time, significant amendments to International Maritime Organization (IMO) 

regulations were under development, but had not yet been adopted. These 

amendments have since been adopted and are discussed below as the “2008 

Amendments to Annex VI.”

As discussed above, the California regulation includes a “sunset” provision under 

which the ARB would cease enforcement of the regulation if it is determined that 

the United States Environmental Protection Agency (U.S. EPA) adopts and 
I - 11

enforces regulations that will achieve equivalent or greater emission reductions. 

This is expected to occur in 2015. However, due to the significant public health 

impacts associated with these emissions, we believe it is appropriate to regulate 

these emissions at the state level until the U.S. EPA implements regulations that 

will achieve equivalent emission reductions. 

2008 Amendments to Annex VI

For background, IMO Annex VI (“Regulations for the Prevention of Air Pollution 

from Ships”) of the MARPOL Convention was adopted in 1997, and entered into 

force in May 2005. Annex VI established some relatively modest emission 

controls for OGVs. Specifically, Annex VI limited marine fuels to 4.5% fuel sulfur, 

and provided a process for the creation of sulfur emission control areas (SECAs), 

which require the use of 1.5% sulfur fuel (generally heavy fuel oil). Annex VI also 

established modest NOx standards for diesel engines greater than 130 kilowatts 

(kW) installed on vessels constructed on or after January 1, 2000. The United 

States ratified Annex VI on October 8, 2008, and it entered into force for the 

United States on January 8, 2009.

In October 2008, member states of the IMO adopted more robust new 

international standards for marine diesel engines and their fuels

(2008 amendments to Annex VI) that apply globally as of July 1, 2010. The 

amendments include additional (Tier II and Tier III) new engine NOx standards, 

additional requirements for pre-2000 engines that were previously not controlled, 

and fuel sulfur limits.

New Engine NOx Standards

Table I-1 below lists the new engine NOx standards under amended Annex VI. 

The Tier II standards will achieve approximately a 20% reduction in NOx 

emissions compared to the existing Tier I standards, while the Tier III standards 

will achieve an 80% reduction from the Tier I emissions levels. The Tier II 

standards apply globally, while the Tier III standards would apply only in NOx 

emission control areas (ECAs), where it is envisioned that add-on emission 

controls such as selective catalytic reduction would be activated as needed. As 

discussed below, the United States was granted approval for an ECA designation 

and therefore the Tier III standards will apply in 2016.
I - 12

Table I-1: New Engine NOx Emissions Limits Under IMO Annex VI

Emissions 

Tier

Date NOx Limit (g/kW-hr)*

n <130 130 ≤ n <2000 n ≥ 2000

Tier I 2000 17 45n-0.2 9.8

Tier II 2011 14.4 44n-0.23 7.7

Tier III** 2016 3.4 9n-0.2 2.0

* Where n is the rated engine rpm 

** Tier III standards apply only within NOx Emission Control Areas.

Amended Annex VI also specifies that the Tier I standards (previously applicable 

only to engines installed on ships beginning January 1, 2000) become applicable 

to existing engines installed on ships built between January 1, 1990 and 

December 31, 1999, for engines with a displacement greater than or equal to 90 

liters per cylinder and a rated power output greater than or equal to 5,000 kW, 

subject to the availability of approved engine upgrade kits.

Fuel Sulfur Standards

The amended Annex VI requirements phase in progressively more stringent fuel 

sulfur limits to control emissions of SOx and PM. On a global basis, the fuel 

sulfur limit is reduced from the present 4.5% to 3.5% in 2012, and then to 0.5% in 

2020, subject to a feasibility study to be performed in 2018 that could potentially 

delay the 0.5% sulfur standard until 2025.

Under the amendments to Annex VI, there are also special fuel sulfur limits for 

sensitive areas referred to as an “Emission Control Area” or ECA. Under the 

ECA, the sulfur level would drop from 1.5% sulfur in existing European ECAs to 

1% sulfur in July 2010, and then 0.1% in January 2015. The United States and 

Canada jointly applied for an ECA designation covering SOx and NOx in July 

2009. On March 26, 2010, the IMO officially designated waters of the United 

States and Canadian coastlines as an ECA referred to as the North American 

ECA. The region applies 200 nm offshore in the regions shown in Figure I-5 

below. The North American ECA is expected to be implemented here starting in 

August 2012, when the 1% sulfur limit would apply. The United States is also 

applying for a treaty amendment that would extend this ECA to the Caribbean 

waters around Puerto Rico and the U.S. Virgin Islands. If the treaty amendment 

is adopted at the next Marine Environment Protection Committee in July 2011, 

then the requirements could be implemented by January 2014. 
I - 13

Figure I-5: North American Emission Control Area

F. Need for OGV Clean Fuel Regulation

Air pollution from shipping activities in California is a major public health concern 

at both regional and community levels. The diesel-powered vessels used to 

transport goods emit soot, or diesel PM, and other air pollutants that can 

increase health risks to nearby residents. Two health risk assessments by ARB 

staff have shown that diesel PM emissions from ocean-going vessels are one of 

the largest contributors of toxic pollutants and diesel PM in neighboring 

communities. (ARB, 2006) (ARB, 2008b) Shipping activities are also a significant 

source of PM, SOx and NOx which can contribute to the formation of regional 

smog and fine particulate matter. As part of the rulemaking packages for the 

OGV Clean Fuel Regulation and its predecessor, the Auxiliary Engine 

Regulation7

, ARB staff provided extensive analysis and documentation on the 

health effects of the emissions from OGVs and their impacts on air quality and 

public health in California. (ARB, 2005) (ARB, 2008) Since that time, U.S. EPA 

has completed Integrated Science Assessments for SOx and PM which provide 

new information on the adverse health impacts from exposure to these 

pollutants. (U.S. EPA, 2008) (U.S. EPA, 2009) 

The OGV Clean Fuel Regulation is necessary to reduce the public’s exposure to 

diesel PM, which is a component of ambient PM. In addition, the regulation is 

needed to reduce emissions of PM, NOx, and SOx. NOx is a precursor to the 

 7 The Auxiliary Engine Regulation can be found at title 13, California code of Regulations (CCR) 

section 2299.1 “Emission Limits and Requirements for Auxiliary Diesel Engines and DieselElectric Engines Operated on Ocean-going Vessels within California Waters and 24 Nautical 

Miles of the California Baseline” and the identical section title 17, CCR, section 93118 “Airborne 

Toxic Control Measure for Auxiliary Diesel Engines and Diesel-Electric Engines Operated on 

Ocean-going Vessels within California Waters and 24 Nautical Miles of the California Baseline.” 

Due to a successful legal challenge of the regulation, enforcement was suspended in May 2008. 
I - 14

formation of ozone, and both NOx and SOx contribute to secondarily formed PM 

in the lower atmosphere. Implementation of the OGV Clean Fuel Regulation is 

resulting in significant air quality and public health benefits. Use of the Phase 1 

marine distillate fuels results in about an 80% reduction in SOx and a 75% 

reduction in PM relative to using HFO. The use of marine distillate fuels instead 

of HFO also reduces NOx by about 6%. These reductions in diesel PM, PM, 

NOx and SOx are helping to improve regional ambient air quality levels of PM 

and ozone. We also anticipate significant health benefits due to reduced 

incidences of cancer, premature mortality, and hospitalizations associated with 

PM exposure. When the OGV Clean Fuel Regulation was originally adopted, 

ARB staff estimated that the implementation of the regulation will avoid a 

significant number of premature deaths, about 3,600, between 2009 and 2015 

due to reduction in directly emitted and secondarily formed PM . (ARB, 2008)

With respect to potential cancer risk, the OGV Clean Fuel Regulation is resulting 

in significant reductions in exposures and potential cancer risks to residents that 

live near ports in California. For example, during the original rulemaking, based 

on an analysis of the predicted 2010 and 2015 ambient diesel PM levels 

statewide, we estimate that in 2010 there will be a 75% reduction in the 

population-weighted average risk relative to the predicted risk levels in 2010 from 

OGV diesel PM emissions and an 83% reduction in 2015. (ARB, 2008) 

G. ARB Staff Actions and Process to Develop the Proposed 

Amendments

ARB staff developed the proposed amendments to the OGV Clean Fuel 

Regulation through consultations with OGV operators and industry 

representatives, the U.S. Coast Guard, U.S. Navy, the California Office of Spill 

Prevention and Response, local air pollution control agencies, local Harbor 

Safety Committees, California’s Attorney General’s Office, the Ports of Los 

Angeles and Long Beach, environmental group representatives, the U.S. EPA 

and members of the public. In addition to discussions with these stakeholders, 

over the last year, staff held two public workshops to discuss the proposed 

amendments. Notification for these workshops had been distributed to more 

than 2,500 companies, organizations, and individuals through ARBs email 

notification. Workshop notices as well as all meeting materials were posted to 

ARB’s website and e-mailed to subscribers of the “maritime” electronic list serve. 
I - 15

REFERENCES

(ARB, 2005) State of California, Air Resources Board Staff Report: Initial 

Statement of Reasons for Proposed Rulemaking Proposed Regulation for 

Auxiliary Diesel Engines and Diesel-Electric Engines Operated On Ocean-Going 

Vessels Within California Waters and 24 Nautical Miles of the California 

Baseline, October 2005

(ARB, 2006) State of California, Air Resources Board, Diesel Particulate Matter 

Exposure Assessment Study for the Ports of Los Angeles and Long Beach, April 

2006 at http://www.arb.ca.gov/regact/marine2005/portstudy0406.pdf

(ARB, 2008) State of California, Air Resources Board, Staff Report: Initial 

Statement of Reasons for Proposed Rulemaking: Proposed Regulation for Fuel 

Sulfur and Other Operational Requirements for Ocean-Going Vessels Within 

California Waters and 24 Nautical Miles of the California Baseline, June 2008.

(ARB, 2008b) State of California, Air Resources Board, Diesel Particulate Matter 

Health Risk Assessment for the West Oakland Community 

(ARB, 2011) State of California, Air Resoruces Board, Database of OGV Clean 

Fuel Regulation Inspection Data July 2009 through January 2011

(MWG, 2010) Presentation by Robbie Jackson at the April 2010 Maritime Air 

Quality Technical Working Group Meeting, Oakland, CA, April 2010 at 

http://www.arb.ca.gov/ports/marinevess/meetings/042810/CMA_MWG_Presentat

ion.pdf

(RDP-21, 2010) RDP-21 Position Paper presented at California Air Resources 

Board Public Workshop, Long Beach, CA, October 12, 2010 

(U.S. EPA, 2008) U.S. Environmental Protection Agency, Integrated Science 

Assessment for Sulfur Oxides, September 2008 at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=198843

(U.S. EPA, 2009) U.S. Environmental Protection Agency, Integrated Science 

Assessment for Particulate Matter, December 2009 at 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546

(U.S. Navy, 2010) Presentation by U.S. Navy at California Air Resources Board 

Public Workshop, Long Beach, CA, October 12, 2010
I - 16

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II - 1

II. NEED FOR AMENDMENTS

In this chapter, ARB staff provides a discussion on the events and information 

that have necessitated the proposed amendments to the OGV Clean Fuel 

Regulation. In addition, ARB staff provides the rationale for the amendments 

being considered. 

A. Changes in Vessel Traffic Patterns in Southern California

As noted earlier, when the OGV Clean Fuel Regulation began implementation in 

2009, many vessel operators adjusted vessel routes and began using the Outer 

Route outside the regulatory zone where vessels could use HFO. Below, ARB 

staff provides a more detailed discussion on this change in traffic patterns 

including the impacts on vessel operation, the Point Mugu Sea Range, 

emissions, and public health.

Description of the Change in Vessel Traffic Patterns

Vessels using the portion of the north-south route along the California coastline 

from about Point Conception to the POLA and POLB have historically used the 

Channel Route within the Santa Barbara Channel Traffic Separation Scheme 

(TSS) as shown in Figure II-1.8

 

The Channel Route is within the regulatory zone of the OGV Clean Fuel 

Regulation which is approximately 24 nm offshore of the of the California 

coastline. Vessels travelling to and from the POLA and POLB using the Channel 

Route travel over 150 nm (one-way) within the regulatory zone along the 

California coastline from Point Conception going to and leaving POLA and POLB. 

After implementation of the OGV Clean Fuel Regulation began in July 2009, 

increasing numbers of vessel operators chose to use the Outer Route which is 

outside the regulatory zone in this region. 

 8

A TSS is a designated routing measure that reduces the risk of a collision by providing for the 

separation of arriving and departing traffic by the establishment of traffic lanes. The Santa 

Barbara TSS was established by the Commandant of the USCG under the Ports and Waterways 

Safety Act and in accordance with international agreements. 
II - 2

Figure II-1: Channel and Outer Vessel Routes to the Ports of Long Beach 

and Los Angeles

The Outer Route has a shorter portion within the regulatory zone, minimizing the 

amount of more expensive cleaner fuel used, and thereby reducing fuel costs. 

For example, vessels traveling to and from the POLA and POLB using the Outer 

Route will travel a total of about 163 nm, with about 132 nm on HFO outside the 

regulatory zone and about 31 nm on cleaner fuel within the regulatory zone. 

Vessels using the Channel Route would operate a total of about 150 nm within 

the regulatory zone on cleaner fuel. While ship operators typically weigh the 

added travel time and distance against the lower fuel costs, data collected from 

Automatic Identification System (AIS) vessel tracking reveals that the number of 

vessels that are using the Outer Route has increased since the OGV Regulation 

began implementation even though the Outer Route is longer.9

The U.S. Navy provided ARB staff with vessel traffic data showing the number of 

vessels that are using the Outer Route compared to the total vessels visiting 

POLA and POLB. (U.S. Navy, 2011) The vessel information was obtained from 

the Marine Exchange of Southern California. The Marine Exchange is a 

nonprofit organization that gathers and provides extensive information 

concerning vessel traffic in the POLA and POLB regions. Figure II-2 shows both 

 9 AIS is an automated tracking system used on ships and by Vessel Traffic Services (VTS) for 

identifying and tracking vessels. AIS provides information concerning vessel identification, 

position, course, and speed.

Current 24 nm 

Regulatory Zone

Channel Route

Outer Route

Point Mugu Sea 

Range
II - 3

the percentage and number of vessels inbound and outbound from July 2009 to 

February 2011. The data shows an increase in traffic using the Outer Route 

traffic from the historical average of about 7.5% prior to July 2009 to about 53% 

inbound and 65% outbound by December 2010. In January and February 2011, 

there was a decrease in the percent of vessels using the Outer Route, possibly 

indicating that the percent of vessels using the Outer Route has stabilized. 

Figure II-2: Marine Exchange Vessel Traffic Data Listing Vessel 

Traffic using the Outer Route Through the Point Mugu 

Sea Range 

The fuel cost differential between the Channel Route and the Outer Route may 

be a significant factor when the shippers chose to change routes. ARB staff 

performed a cost comparison between the two routes, with each route beginning 

near Point Conception and ending at POLA and POLB. 

To estimate the fuel costs and travel time for each route, a number of inputs, 

such as vessel speed, fuel consumption rate, and fuel price are necessary. 

(ARB, 2008 Appendix D) Fuel costs are highly dependent on vessel speed since 

fuel consumption is proportional to the cube of the vessel speed. To estimate the 

fuel costs, ARB staff developed an average vessel speed for each of the routes. 

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

JUL 09

AUG 09

SEP 09

OCT 09

NOV 09

DEC 09

JAN 10

FEB 10

MAR 10

APR 10

MAY 10

JUN 10

JUL10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

Percent of POLA and POLB Vessel Visits

Sea Range Ship Traffic

Inbound %

Outbound %

Historical Average
II - 4

ARB staff evaluated vessel speeds by analyzing vessel AIS telemetry data which 

provides vessel position and time information. The AIS data was evaluated by 

ship type and for two time periods, as listed in Table II-1. The first time period 

was January 2009 through June 2009 before the regulation was implemented 

and the second time period was July 2009 through December 2009, after 

implementation of the regulation. The data shows that vessels speeds vary 

somewhat by ship type and time period evaluated. However, the AIS data 

indicate that for the time period, after implementation of the regulation, the 

average vessel speeds are essentially the same for the Channel Route 

compared to the Outer Route (16 knots). 

Table II-1: Average Speeds (knots) for Vessel Using the Channel Route and 

Outer Route Before and After Implementation of the Vessel Fuel 

Rule in 2009

Prior to Regulation (January 2009-June 2009)

Inside the Channel Outside the Channel

Vessel Type Average Speed Vessel Type Average Speed

Bulker 13.0 Bulker 13.5

Container 19.9 Container 21.1

Dry Cargo 13.4 Dry Cargo 11.5

Miscellaneous 8.9 Miscellaneous 11.5

Pass./Ferry 14.8 Pass./Ferry 18.2

Reefer na Reefer na

Roro 16.3 Roro 18.0

Tanker 13.9 Tanker 13.5

All Vessels 17.7 All Vessels 14.9

After Implementation of Regulation (July 2009-December 2009)

Inside the Channel Outside the Channel

Vessel Type Average Speed Vessel Type Average Speed

Bulker 12.5 Bulker 13.4

Container 18.7 Container 19.3

Dry Cargo 12.8 Dry Cargo 13.5

Miscellaneous 7.8 Miscellaneous 8.4

Pass./Ferry 15.4 Pass./Ferry 17.1

Reefer 15.0 Reefer 16.0

Roro 14.8 Roro 15.8

Tanker 13.9 Tanker 12.6

All Vessels 16.2 All Vessels 16.1

Data Source: AIS telemetry data obtained from the University of California, San Diego 

and ARB’s telemetry equipment located near Santa Barbara. 

Therefore, while the speeds of individual ships may be different based on the 

route and type of fuel burned, on average, the speeds are similar for both routes 

after implementation of the OGV Clean Fuel Regulation in July 2009. In the 
II - 5

analysis of costs for the different routes, ARB staff used the same average transit 

speed of 16 knots for all of the routes.10 For the portion of the route within the 

20 nm voluntary POLA and POLB vessel speed reduction (VSR) zones, staff 

used an average of 12 knots, which is consistent with the requirement of the VSR 

program. 

The results indicate that for this segment of travel (one-way from Point 

Conception to the Ports), the cost of using the Channel Route is about 20% 

higher than using the Outer Route, due to the higher cost of the compliant 

distillate fuel, as shown in Table II-2. (ARB, 2010) In addition, for the inbound 

portion of the Channel Route, there is a requirement for a marine oil spill 

contingency plan in the region where the ships travel within three miles of 

Anacapa Island. (OSPR, 2009) The cost per inbound vessel trip is approximately 

$500. (Roloff, 2010) However, this cost is not reflected in the fuel cost estimates 

listed in Table II-2. 

Table II-2: Estimated Fuel Costs*, Route Distance and Transit Time for the 

Channel and Outer Route Through the Santa Barbara Channel 

Region with the 24 nm Regulatory Zone

Route Distance (nm) Cost Time (hrs)

Channel Route 

(150 nm)

MGO:150 nm $14,390 9.6

Outer Route

(163 nm)

MGO: 31 nm

HFO: 132 nm

$11,640 10.5

Estimated 

Distance/Cost/Time 

Differential

13 nm $2,750 0.9

(54 minutes)

*Estimates include fuel costs only for a one way transit from Point conception to the POLA or 

POLB. The oil spill contingency plan cost is not included.

U.S. Navy Concerns and Request

The U.S. Navy test and training ranges occupy vast overwater regions extending 

well offshore along the California coast from San Luis Obispo in the north, to San 

Diego and into international waters off the coast of Mexico in the south. 

(CCC, 2001) This region is comprised of the Operating Area of Southern 

California Range Complex (SOCAL OPAREA), to the south of POLA and POLB, 

and the Point Mugu Sea Range, northwest of the POLA and POLB. According to 

the U.S. Navy, most of their operations on the Point Mugu Sea Range are 

 10 Earlier cost estimates presented at the October 2010 public workshop had been based on a 

preliminary speed estimate of 17.4 knots. The average speed used in the analysis presented 

here has been adjusted to 16 knots to reflect the updated information as provided in Table II-1.
II - 6

conducted in the area surrounding a portion of the Outer Route: south and west 

of the Northern Channel Islands (San Miguel, Santa Rosa, Santa Cruz and 

Anacapa), and north and west of San Nicolas Island. 

Point Mugu is one of two bases comprising Naval Base Ventura County (NBVC). 

The Sea Range is an integral and foundational asset of NBVC. A 2006 

Economic Impact Study about NBVC, presented by the Workforce Investment 

Board of Ventura County, reported NBVC as the largest employer in the county, 

with over 19,000 personnel (military and civilian) working for, or stationed on the 

base in all categories, and contributing directly or indirectly to another 8,200 jobs 

throughout the county. (NBVC, 2006) NBVC contributes significantly to the 

economic health of the area, with an economic impact exceeding $1.2 billion in 

2006 and is the fifth-largest base in the country. The U.S. Navy states that the 

work in electronic warfare, naval weapons systems, and testing and evaluation of 

a host of technologies have added immeasurably to our national defense. (Parisi, 

2011) An additional description of the operational and economic importance of 

the Point Mugu Sea Range is provided in Appendix B.

According to U.S. Navy representatives, the Point Mugu Sea Range is utilized for 

military activities on a continual basis. The range is used by the Navy, Air Force, 

Coast Guard and other agencies and has approximately 17,000 events a year 

(ARB, 2009). Use is continuous throughout the year, but the intensity of use will 

vary based on the needs of the users. To ensure that all users meet their 

RDT&E, training, maintenance and operations requirements, access to the Point 

Mugu Sea Range must remain available throughout the year. 

Oil tankers have travelled through the portion of the Point Mugu Sea Range that 

is of concern due to an agreement negotiated in the early 1990s to stay 50 nm off 

the California coastline to avoid oil spills reaching shore, in response to the 

Exxon Valdez spill. (ARB,2009) An average of two ships per day (one in each 

direction) travelled through the range. According to the U.S. Navy, these vessels 

avoided range operations when requested. U.S. Navy representatives said 

historical interference problems had been mainly with stray pleasure craft or 

commercial fishing boats.

During the development of the OGV Clean Fuel Regulation rulemaking materials, 

the U. S. Navy expressed concerns that the OGV Clean Fuel Regulation 

requirements, alone or combined with proposed or future efforts to reduce vessel 

speed in the Santa Barbara Channel would cause commercial shippers to 

abandon existing transit routes through the Santa Barbara Channel. Although 

laden tank vessels and fishing boats have historically traveled within these test 

ranges, the U.S. Navy expressed concerns that their weapons testing and 

training activities would be more difficult if there is a large increase in vessel 

traffic to the Outer Route. Additionally, the U.S. Navy provided both written and 

oral comments at the July 2008 Board meeting. (U.S. Navy, 2008) (ARB, 2008b)
II - 7

At that time, ARB staff did not have sufficient information to find that a shift in 

traffic patterns would occur. However, in response to the U.S. Navy’s concerns, 

ARB staff prepared a supplemental environmental impact report that evaluated 

the environmental impacts if vessels did change traffic patterns and made that 

report available for public comment. (ARB, 2009) In addition, at the public 

hearing to consider adoption of the OGV Clean Fuel Regulation the Board asked 

that staff return to them in the event vessels posed problems for U.S. Navy 

operations at the Point Mugu Sea Range. (ARB, 2008b) 

As noted above, shortly after implementation of the Phase 1 fuel requirements 

began, vessels began traveling on the southern side of the Channel Islands 

through the Point Mugu Sea Range instead of using the traffic separation 

scheme within the Santa Barbara Channel. This change in vessel traffic patterns 

may potentially impact operations in the Point Mugu Sea Range. Both the 

U.S. Navy and members of the Regional Defense Partnership for the 21st Century 

(RDP-21), a Ventura County non-profit community organization that works to 

preserve and enhance the military value of Naval Base Ventura County, have 

raised concerns about the increased ship traffic and the potential impacts it may 

have on the ability of the Sea Range to accomplish its primary mission. 

(RDP-21, 2010) (U.S. Navy, 2010)

The U.S. Navy has a process in place to inform vessels of Point Mugu Sea 

Range activities such that operators of commercial and noncommercial vessels 

can plan for alternative routes or fishing locations to avoid military exercises. 

U.S. Navy representatives state that they publish a Notice to Mariners 

(NOTMARS) in the United States Coast Guard “Local Notice to Mariners” 

publications prior to test and training events and issue advisories to let the 

operators of tankers and other vessels know if the test range will be “active.” For 

example, ship operators can contact a unit known as “PLEAD Control” if they are 

planning to enter the Sea Range. If PLEAD Control states that the Point Mugu 

Sea Range is active, ships have historically delayed their travel or taken a longer 

route avoiding the active area. If a ship does not respond to PLEAD requests, 

range clearance aircraft are deployed to get the attention of the ship’s crew.

Since implementation of the Phase 1 fuel requirements, the Navy worked with 

the Marine Exchange of Southern California to provide additional information on 

Sea Range operations to ships. That enhanced communication has helped 

avoid impacts to operations. However, Navy representatives have indicated that 

this is only an interim solution and may not be sustainable. 
II - 8

Impacts on Anticipated Emission Reductions and Public Health

The historical Santa Barbara Channel shipping route was primarily chosen to 

minimize the overwater distances, travel time, and fuel use for the primary great 

circle route between Asia and Southern California. Because vessel operators 

have increasingly chosen the longer Outer Route which has a significant portion 

of the route where these vessels continue to use dirtier HFO, associated 

emissions have increased in this region, as shown in Table II-3, relative to the 

emissions that would have occurred if vessels had continued to use the Channel 

Route. The impact of the associated emissions increase will be mitigated to 

some extent by the fact that the emissions are occurring farther offshore. 

However, total emissions have increased by about 3 T/D for PM and 21 T/D for 

SOx as a result in the shift in vessel traffic to the Outer Route relative to what 

they could have been if the vessels continued to use the Channel Route. 

Table II-3: Estimated OGV Statewide Emissions in Tons Per Day 

(100 nm SIP Zone, 2010)

PM2.5

T/D

SOx

T/D

Baseline-No Rule

18.4 145

OGV Clean Fuel Rule with Anticipated 

Traffic Pattern (most Vessels using 

Channel Route) 7.7 50

OGV Clean Fuel Rule with Current 

Traffic Pattern 

(50% of Vessels using Outer Route) 10.3 71

To evaluate the public health impacts, the cardiopulmonary mortality associated 

with PM was estimated for each route, relative to the Baseline Scenario. 

Additional details of the evaluation are provided in Appendix C.

Using the model-simulated results, estimates of avoided premature cardiopulmonary mortality associated with changes in PM2.5 air quality for each route 

(i.e. relative to the no rule baseline) were generated. These results are 

presented in Table II-4 for the South Coast Ozone Study (SCOS) domain. 
II - 9

Table II-4: SCOS Domain-wide Annual Avoided Premature 

Mortality Estimates Due To OGV Clean Fuel Regulation

Scenario Annual Cardiopulmonary 

Mortality Avoided*

Low Mean High

Channel Route-OGV Clean Fuel Rule with 

Anticipated Traffic Pattern (most Vessels using 

Channel Route) 540 700 850

Outer Route-OGV Clean Fuel Rule with Current 

Traffic Pattern 

(50% of Vessels using Outer Route) 500 650 790

*Compared to no-rule baseline

As can be seen in Table II-4, the cardio-pulmonary premature deaths avoided 

are significant for both vessel routes. However, there is a small difference in the 

mean values for the two routes, with the Channel Route scenario having a higher 

mean value for avoided mortality, compared to the Outer Route scenario. 

Proposed Modifications to the Regulatory Zone to Reduce Impacts on the Point 

Mugu Sea Range 

To address the impacts of the shift in vessel traffic on the Point Mugu Sea Range 

and the loss of emissions reductions, ARB staff is proposing modifications to the 

regulatory zone that would:

• extend the regulatory zone (around the islands off Southern California) 

beyond the Outer Route to require vessels operating in this area to comply 

with the OGV Clean Fuel Regulation requirements, and 

• allow vessels accessing the Channel Route from the north and west to 

delay fuel switching so as to equalize the fuel costs for the Channel Route 

compared to the Outer Route. 

The proposed changes to the regulatory zone are shown in Figure II-3. The 

proposed modifications include extending the regulatory zone in Southern 

California out beyond the Channel Islands and excluding a small area, a 

“window”, near the north-western end of the Channel Route off Point Conception. 

As shown in Figure II-3, the modified zone is aligned with the Contiguous Zone 

except for the small window. The Contiguous Zone is a recognized NOAA 

maritime zone and is shown on many maritime charts. (NOAA, 2011) 

The window was included to equalize the fuel costs for vessel owner/owner 

operators that use the Channel Route instead of the Outer Route. The window is 

located as far offshore as possible to ensure that vessels are not fuel switching 
II - 10

close to shore. Since the start of the Santa Barbara TSS is within the regulatory 

zone, vessels will have completed the fuel switch prior to entering the TSS and, 

therefore, will not be switching fuels in the TSS. Additionally, removing the 

economic advantage of using the Outer Route should promote the return of the 

vessel traffic to the established traffic separation lanes in the Santa Barbara 

Channel. 

Figure II-3: Proposed Amended Zone in Southern California

To evaluate if there would be a cost incentive for vessel operators to shift to 

other, farther east, routes if the regulatory zone was extended, ARB staff 

evaluated the costs of three additional routes through the region ( #’s 3, 4, and 5 

on map),as shown in Figure II-4. These alternative outer routes maximize the 

portion of the route that is outside the regulatory zone. 

“Exemption 

Window” for 

Vessels Using the 

Channel Route

Proposed Regulatory Zone

Traffic Separation 

Lanes/Channel Route

Current 24 nm 

Regulatory zone
II - 11

Figure II-4: Channel, Outer, and Alternative Vessel Routes to the Ports of 

Long Beach and Los Angeles with the Proposed Amended Zone

Using the methodology described earlier in this chapter, ARB staff evaluated the 

costs, travel time, and distance associated with the Channel Route (#1 in 

Figure II-4), the Outer Route (#2 in Figure II-4) and each of the alternative routes 

(#’s 3, 4 and 5 in Figure II-4). As can be seen in Table II-5, the Outer Route and 

all of the alternative routes have higher costs, longer overall travel distance, and 

longer travel time compared to the Channel Route. Therefore, there is no cost or 

time benefit to using any of these outer routes unless ship owner/operators are 

trying to minimize the operation time or distance while using MGO or MDO. 

 

B

Window

3

2

4 5

1

A

Vessel Routes

1-Channel Route

2-Outer Route

3-Alternative Route

4-Alternative Route

5-Alternative Route
II - 12

Table II-5: Estimated Fuel Costs, Distance and Transit Time for Channel 

and Possible Amended Outer Routes through the Santa Barbara Channel 

Region with the Proposed Amended Zone

Route Cost

Distance 

HFO 

(nm)

Distance 

MGO 

(nm)

Total 

Distance 

(nm)

Time 

(hours)

Channel Route (#1 Pink 

Line)

11 $13,870 16 132 148 9.6

Outer Route (#2 Red 

Dash) $14,140 19 143 162 10.5

Alternative Outer Route

(#3, Orange Dot) $14,330 83 90 173 11.1

Alternative Outer Route

(#4, Black Dot Dash) $16,210 115 87 201 12.9

Alternative Outer Route

(#5, Green Long Dash) $16,700 166 56 222 14.2

Fuel costs, distances and time are for a one-way transit between Point Conception and the 

POLA/POLB. 

B. Implementation Date for Phase 2 Requirements

ARB staff is fully committed to reaching the Phase 2 limit of 0.1% sulfur fuel. The 

use of 0.1% sulfur marine distillate fuel is technologically and operationally 

feasible and is cost-effective. It is also consistent with the North American ECA 

Phase 2 limit which will come into effect in 2015. However, ARB staff does have 

concerns about the timing for implementation of the OGV Clean Fuel 

Regulation’s Phase 2 requirement and we believe there are valid reasons to 

delay the implementation date by two years. Specifically, ARB staff believes that 

adjustments to the Phase 2 implementation date are necessary for the following 

reasons:

• better alignment with the North American ECA, and

• greater flexibility to find compliant fuels with higher viscosity.

Providing a two-year delay will help to ensure the successful implementation of 

the North American ECA’s Phase 1 and a successful transition to the 0.1% sulfur 

fuels. Below, we briefly discuss our rationale. 

 11 The estimated fuel cost of the Channel Route as listed in listed in Table II-5 is lower than the 

cost of the Channel Route as listed in Table II-2 due to the “window” area allowing the use of the 

lower cost HFO for that portion the Channel Route as listed in Table ii-5. 
II - 13

Better Alignment with the North American ECA

Shippers have voiced concerns about the operational and logistical complexity of 

having California and federal OGV fuel requirements implemented on differing 

schedules. Table II-6 provides a comparison between the OGV Clean Fuel 

Regulation fuel requirements and those of the North American ECA which was 

approved subsequent to adoption of the ARB regulation. 

Table II-6: Fuel Requirements for the OGV Clean Fuel Rule and the 

North American ECA

ARB Requirements 

(24 nm zone)

July 1, 2009

(Phase 1)

Distillate fuel:

MGO max 1.5% sulfur

MDO max 0.5% sulfur

Jan. 1, 2012

(Phase 2)

Distillate fuel:

MGO max 0.1% sulfur

MDO max 0.1% sulfur

North American ECA 

(200 nm zone)

Aug. 1, 2012

(Phase 1)

Fuel Sulfur max 1.0% sulfur

Jan. 1, 2015

(Phase 2)

Fuel Sulfur max 0.1% sulfur

Additionally, delaying the ARB Phase 2 by two years provides additional flexibility 

when specifying and obtaining compliant fuel. We believe that shippers will be 

able to locate fuels with higher viscosity levels during the Phase 1 requirements 

since we are not excluding the use of MGO or MDO above 0.1% sulfur. 

Flexibility to Find Compliant Fuels with Higher Viscosity

Operational challenges may stem from running main propulsion engines, 

designed to operate primarily on HFO, on a cleaner marine distillate that has very 

different physical properties than HFO. These differences may include lower 

viscosity of the distillate fuel compared to HFO. Low fuel pressure related 

operational problems, possibly related to the condition of fuel pumps or fuel 

viscosity, have been reported by industry. (MWG, 2010) ARB staff proposes to 

extend the Phase 1 period to help interim issues with locating compliant fuel that 

has higher viscosity. (Kjeldson, 2011) Although fuel viscosity is not a function of 

fuel sulfur content, having a less restrictive cap will provide shippers with more 

selection and supply to find compliant fuels with higher viscosity levels. Because 

the sulfur levels are not as restrictive in Phase 1 compared to Phase 2, the 

operators will have more flexibility in specifying viscosity levels when purchasing 

compliant fuel at ports throughout the world. 

ARB staff evaluated fuel viscosity for MGO and MDO by analyzing bunker 

records obtained during ARB inspections. The information collected during the 

inspections provides useful information on fuel qualities such as fuel sulfur 
II - 14

content and viscosity as well as providing an indication of the types of fuels 

provided at ports throughout the world. ARB staff believes that the fuel 

properties identified from this data are representative of MGO and MDO fuels 

currently available to the global OGV fuel market. ARB staff compiled and 

evaluated the ARB Enforcement Division’s records for inspections of vessels 

from July 2009 to January 2011. About 450 vessel inspections were conducted 

over this 19 month period. Fuel sulfur content, bunker location, and fuel viscosity 

were compiled from the fuel bunker delivery notes (BDN) obtained during the 

inspections. Additionally, as part of the inspection procedure, ARB obtained fuel 

samples from the vessel, which were typically a mixture of fuels from multiple fuel 

bunkers, and tested for actual fuel sulfur content per ISO 8217. 

As shown in Table II-7, about 80 percent of the bunkered fuel came from six 

regions, USA-CA, Asia-Korea, Asia-China, Asia-Singapore, Northern Europe and 

USA-not including CA. The highest percentage of samples originated in 

California (22% percent), with an average bunkered fuel sulfur content of 0.03%. 

The next highest percentage of samples originated from Korea, at about 17%, 

with an average bunkered fuel sulfur content of 0.63%. The percent of samples 

originating from China and Japan were the third and fourth highest, with about 

4% each and with an average bunkered fuel sulfur content of 0.28% and 0.4% 

respectively. 

Fuel viscosity, as listed on the BDN, was evaluated by fuel sulfur content and by 

region. As shown in Figure II-5, the average fuel viscosity by sulfur content 

shows some variation between different fuel sulfur ranges. The fuels with sulfur 

levels in the range of 0.1 to 0.5% sulfur have a somewhat higher average fuel 

viscosity than those fuels with sulfur content below 0.1% sulfur.
II - 15

Figure II-5: MGO Fuel Viscosity* Levels from Bunker Delivery Notes 

Obtained During Enforcement Activity between July 2009 through 

January 2011

*Kinematic fuel viscosity as measured in centistokes (cSt)

Additionally, there may be bunkering regions where higher viscosity fuel is more 

readily available. MGO purchased in California and other U.S. ports has average 

sulfur levels below the ARB 0.1% sulfur Phase 2 requirement; however, the 

average viscosity is much lower than the other four top bunkering regions. For 

example, samples from fuel bunkered in China and Singapore have higher 

average viscosities, 4.8 and 4.1 respectively, but the average sulfur levels do not 

meet the Phase 2 requirements. Samples from fuel bunkered in Korea have 

intermediate viscosity levels; however, the average fuel sulfur level is the highest 

of all the regions at 0.63%. This data indicates that, for the bunkering regions 

with higher viscosity, the average fuel sulfur is well above 0.1% sulfur that is 

required in Phase 2. Therefore, to provide shippers more flexibility in 2012 and 

2013 to find fuels with higher viscosity, we propose to delay the 0.1% sulfur limit 

to January 1, 2014. 

As a component of the original rulemaking process, ARB staff performed an 

extensive analysis of fuel availability for Phase 2 compliant fuel (0.1% sulfur 

MGO or MDO in 2012). The analysis indicated that in 2007, the average sulfur 

content of MGO and MDO at 25 of the 31 Pacific Rim ports exceeded the Phase 

2 fuel sulfur requirements. Furthermore, findings indicated that it was unlikely 

that a sufficient supply of 0.1% sulfur fuel would be available prior to 2012 due to 

crude supply, refining capacity, and fueling infrastructure improvements that 

would have been necessary. However for 2012, these issues would be lessened 
II - 16

due to additional time available for fuel providers and suppliers to develop and 

implement the necessary fueling infrastructure. 

As the 2012 ARB 0.1% sulfur Phase 2 requirement nears, ARB staff evaluated 

fuel sulfur information obtained from ARB inspection records described above. 

Although the inspection period aligns with Phase 1 of the rule, we believe that the 

information is representative of the sulfur content of MGO and MDO fuels 

currently provided to the global OGV market. About 450 vessel inspections were 

conducted over a 19 month period from July 2009 through January 2011. 

(ARB, 2011) 

Fuel sulfur content, bunker location and fuel viscosity were compiled from the 

fuel bunker delivery notes obtained during the inspections. Additionally, as part 

of the inspection procedure, ARB obtained fuel samples from the vessel, which 

may be a mixture of fuels from multiple fuel bunkers, and tested for fuel sulfur 

content per ISO 8217. Based on the fuel sample sulfur test results, ARB has a 

sampling of the actual average fuel sulfur content, and bunkered sulfur content of 

the purchased fuel used to comply with the rule. The analysis of the collected 

fuel samples demonstrates that the fuels being burned typically have much lower 

sulfur content than the Phase 1 fuel sulfur limits. Of the 444 fuel samples 

analyzed as of March 2011, the actual fuel sulfur content of the marine distillate 

fuels being used by OGV operators averages less than 0.3% sulfur and 40% of 

all the samples were below 0.1% sulfur. In addition, the majority of fuel samples 

were MGO (402 samples MGO vs. 40 samples MDO).

These results indicate that on average, many of the most significant bunkering 

regions are providing fuel at or within a few tenths of a percent of 0.1% sulfur. 

The main exception is Korea, where the average sulfur content of the MGO is 

about 0.6%. While previous studies have found that the total quantity of fuel 

needed to meet the demands of this regulation are sufficient, there may be 

regional issues with the sulfur content of MGO or MDO in 2012. 
II - 17

Table II-7: MGO Bunkering Records by Region Obtained During Inspection Activity Between 

July 2009 through January 2011

Region Count (1) % of Total 

MGO 

Samples 

(1)

Average Reported 

Viscosity (cSt) (2)

Average Fuel 

Sulfur Content 

(%) (2)

Min Fuel 

Viscosity 

(cSt) (2)

Max Fuel 

Viscosity 

(cSt) (2)

Min Fuel 

Sulfur 

Content 

(%) (2)

Max Fuel 

Sulfur 

Content (%) 

(2)

USA-CA 102 25.4 2.71 0.03 2.00 3.70 0.00 0.74

Asia-Korea 75 18.7 3.55 0.63 2.20 5.56 0.01 1.28

Asia-China 65 16.2 4.78 0.28 2.34 5.50 0.00 0.51

Asia-Singapore 31 7.7 4.13 0.40 2.82 5.78 0.00 1.00

Northern Europe 26 6.5 3.80 0.13 2.00 5.50 0.01 0.95

USA-Not CA 22 5.5 2.76 0.03 2.00 3.60 0.00 0.17

Asia-Japan 18 4.5 3.94 0.14 3.04 5.32 0.00 0.93

Southern Europe 17 4.2 4.11 0.13 2.88 7.00 0.00 0.71

Central America 12 3.0 2.88 0.28 2.58 3.13 0.02 1.50

South America 9 2.2 3.16 0.21 2.68 4.26 0.00 1.50

Asia-other regions 8 2.0 3.35 0.13 2.80 4.34 0.03 0.39

Middle East 7 1.7 3.31 0.34 2.81 3.80 0.08 0.98

North America British 

Columbia

3 0.7 3.30 0.03 3.20 3.50 0.02 0.04

Australia 2 0.5 2.90 0.00 2.87 2.93 0.00 0.00

S. Africa 1 0.2 3.30 0.52 3.30 3.30 0.52 0.52

1. Only records for MGO are listed. Total of 402 samples, 4 samples did not have information on bunkering region.

2. Values reflect “as bunkered” fuel viscosity and fuel sulfur content as reported on fuel Bunker Delivery Notes
II - 18

Based on reviewing the average and minimum fuel sulfur content regionally, ARB staff 

has concluded that 0.1% fuel sulfur MGO is currently provided in most of the Pacific 

Rim bunkering regions where fuel is being purchased to comply with the rule. However, 

there are a small number of bunkering regions, such as Korea, where the current fuel 

sulfur averages are significantly higher than 0.1%, indicating that most of the MGO 

provided in that region currently does not meet the 0.1% Phase 2 requirement. ARB 

staff believes that while there is sufficient global availability of the 0.1% sulfur fuels, 

there may be isolated situations regionally where the 0.1% sulfur fuel may not be 

provided in 2012. (ARB, 2008 Appendix F) By delaying the Phase 2 implementation to 

January 1, 2014, any isolated fuel sulfur issues should further decline as supply 

increases due to crude supply, refining capacity, fueling infrastructure improvements 

and demands of the North American ECA requirements in 2015.

Proposed Modifications for Phase 2 Implementation

Based on the fuel samples obtained and analyzed from OGV enforcement inspections 

as of January 2011, the actual fuel sulfur content of the marine distillate fuels being 

used by OGV operators averages less than 0.3% sulfur and 40% of all the samples 

were below 0.1% sulfur. This information indicates that about 40% of vessels are 

currently operating on 0.1% sulfur distillate and that the use of 0.1% sulfur marine 

distillate fuel is technologically and operationally feasible and is cost effective. 

However, ARB staff believes it is appropriate to adjust the implementation timeline for 

the OGV Clean Fuel Regulation’s Phase 2 requirements (0.1% sulfur in 

January 1, 2012). Staff believes that adjustments to the Phase 2 implementation date 

are necessary for the following reasons:

• better alignment with the North American ECA, 

• greater flexibility to find compliant fuels with higher viscosity, and

• additional time for the marine fuel industry to provide distillate fuels with 

properties that meet the enhanced specifications of the newly revised ISO 8217. 

As discussed in the following section, the ISO 8217 marine fuels standard, which was 

recently revised in 2010, includes higher minimum fuel viscosity and newly added 

lubricity requirements. These revisions will take some time to be more widely integrated 

by industry, but should be more commonly applied as industry prepares for the 

demands of the Phase 2 ECA (0.1% sulfur fuel) in 2015. To provide better regulatory 

alignment, flexibility and additional time for industry’s integration of newly revised fuel 

standards, providing a two-year delay will help to ensure the successful implementation 

of the North American ECA’s Phase 1 and a successful transition to the 0.1% sulfur 

fuels. 

While complete alignment with the North American ECA Phase 2 would suggest that 

the ARB 0.1% sulfur Phase 2 be delayed to January 1, 2015, ARB staff does not 

recommend the delay past January 1, 2014. Reductions that can only be achieved with 

the ARB 0.1% sulfur Phase 2 requirement are necessary in 2014 for both the SIP and 

POLA and POLB Clean Air Plan (CAP). 
II - 19

C. New Revisions to ISO 8217

The International Organization for Standardization (ISO) sets standards for marine fuels 

under International Standard ISO 8217, including MGO, designated as DMA, and MDO, 

designated as DMB. In the original rulemaking, both MDO and MGO were required to 

meet all the specifications in ISO 8217, as revised in 2005. The ISO 8217 standard has 

since been revised and staff proposes to modify the definition of both MGO and MDO. 

The 2010 version has some additional specifications that will benefit the industry. A 

new distillate category designation DMZ has been added, due to the recent experiences 

with possible viscosity related operational issues. DMZ has increased minimum 

viscosity of 3 cSt at 40°C, but is otherwise identical to the DMA grade. Staff proposes 

to amend the definition of MGO to include both DMA and DMZ. In addition, the 

minimum viscosity of DMA has been raised to 2 cSt from 1.5 cSt in the 2005 version. In 

the 2005 version, DMB did not have a minimum viscosity, but this has been set to 2 cSt 

in the 2010 version. 

A lubricity requirement has been included in the 2010 version and is applicable to all 

distillate grades with sulfur contents below 500 mg/kg (500 ppm or 0.05% sulfur). The 

lubricity limit is based on the existing wear testing requirements for high speed 

automotive and heavy duty industrial diesel engines (a maximum 520 micrometer wear 

scar diameter). The lubricity requirements reflect industry’s concern of possible engine 

wear damage due to fuels without sufficient lubricity. 

Staff evaluated the option of referencing only the latest 2010 standard, but found that 

the 2005 standard is still used widely by industry. Therefore, staff proposes to allow 

compliant fuel to meet either the 2005 or the 2010 version.

D. Noncompliance Fee Option

Vessels Using the Noncompliance Fee That Can Obtain and Subsequently Operate on 

Compliant Fuel During a California Visit

In the prior rulemaking, the noncompliance fee option was developed to address events 

where: (1) a vessel operator cannot obtain the required fuel prior to coming into 

California; (2) the vessel has an unplanned redirection and does not have the required 

fuel on-board; (3) a vessel operator inadvertently purchases defective fuel; or (4) the 

vessel is to be taken out of service for modifications. Our experience implementing this 

rule showed that very few vessel operators needed to use the noncompliance fee 

provision. Over the 21 months between July 2009 and March 2011, vessel operators 

paid a noncompliance fee only five times out of the estimated 18,000 vessel visits in 

California. In each case, the vessel operator was required to pay a fee of $45,500, 

which is about twice the cost of using the compliant fuel for a typical visit. However, in 

most of these uses of the noncompliance fee, the operators requested a reduction in the 
II - 20

fee if they were able to bunker the fuel at the earliest opportunity and operate on the 

compliant fuel for the remainder of the visit. 

To address this issue and to encourage direct compliance with the rule where possible, 

ARB staff proposes to prorate the fee for these vessels. Since the vessel operators 

have indicated that they can typically bunker fuel at the first port or anchorage and 

switch to compliant fuel at the earliest safe opportunity, staff proposes to prorate the fee 

by half since the operators will use the compliant fuel for about half of the total visit. 

Compared to the cost of the fuel under direct compliance, the prorated fee is still about 

twice the cost of compliance because the distance travelled within the regulated zone 

on noncompliant fuel is about half of that for a round trip, while the fee is also halved. 

This will ensure that there is no cost advantage to using the noncompliance fee. 

Looked at another way, staff determined that a typical cargo vessel would have to travel 

about 300 nm within the regulatory zone a full cruising speed on noncompliant fuel to 

save $22,750 (one half the noncompliance fee). This compares with typical routes to or 

from the major California ports that range from about 40 to 150 nm within the regulatory 

zone.

Vessels that Anchor in Conjunction with a Noncompliant Port Visit.

Again, experience gained in implementing the rule showed that many times vessels, 

primarily tankers, may anchor prior to a port visit for such purposes as bunkering, 

waiting for a scheduled cargo discharge, or mandatory or voluntary inspection. In the 

prior rulemaking, except for mandatory inspections, the anchorage was considered a 

separate port visit for the noncompliance fee calculation. Staff proposes that when 

anchorage is made in conjunction with one or more noncompliant port visits, the 

anchorage is not included in calculating the noncompliance fee for the vessel visit. If, 

however, the vessel is only anchoring during the noncompliant visit, for example, 

waiting for redirection or tendering cruise passengers to shore, then the anchorage will 

be included in calculating the noncompliance fee. 

Noncompliance Fee Schedule

The noncompliance fees were designed such that they do not confer an economic 

advantage to participants relative to vessel operators who use the specified low sulfur 

fuels. The noncompliance fee for the first port visit is about two times the average fuel 

differential cost for a complete vessel visit. The graduating structure, where the fee 

doubles for each additional port stop during a visit, was incorporated to discourage 

multiple uses of the noncompliance fee provision and encourage direct compliance. 

Because of the possibility of regional issues with availability of 0.1% sulfur MGO or 

MDO Phase 2 fuel, staff proposes to modify the noncompliance fee schedule, beginning 

the graduation of the fee structure after the second port visit as shown in Table II-8. We 

do not believe that this option will be used in the remainder of Phase 1, since the 

noncompliance fee provision has only been used a few times to date, and has not been 

used for more than one port visit. The proposed amendment to the fee schedule does 
II - 21

not provide an economic advantage to participants, but does reduce the graduated fees 

when using the provision for multiple visits or multiple port stops in a single visit. 

Table II-8: Noncompliance Fee Schedule, Per Vessel

Port Visit Per-Port Visit Fee 

1st Port Visited $45,500 

2nd Port Visited $45,500 $91,000

3rd Port Visited $91,000 $136,500

4th Port Visited $136,500 $182,000

5th or more Port Visited $182,000 $227,500
II - 22

REFERENCES

(ARB, 2008b) State of California, Air Resources Board, Board Meeting Transcripts, July 

24, 2008. Available at:

http://www.arb.ca.gov/board/mt/2008/mt072408.pdf

(ARB, 2008 Appendix D) State of California, Air Resources Board, Staff Report: Initial 

Statement of Reasons for Proposed Rulemaking: Proposed Regulation for Fuel Sulfur 

and Other Operational Requirements for Ocean-Going Vessels Within California Waters 

and 24 Nautical Miles of the California Baseline, Appendix D, June 2008.

http://www.arb.ca.gov/regact/2008/fuelogv08/appdfuel.pdf

(ARB, 2008 Appendix F) State of California, Air Resources Board, Staff Report: Initial 

Statement of Reasons for Proposed Rulemaking: Proposed Regulation for Fuel Sulfur 

and Other Operational Requirements for Ocean-Going Vessels Within California Waters 

and 24 Nautical Miles of the California Baseline, Appendix F, June 2008.

http://www.arb.ca.gov/regact/2008/fuelogv08/appffuel.pdf

(ARB, 2009) State of California, Air Resources Board, Supplemental Environmental 

Analysis of Potential Impacts from Changes in Southern California Vessel Routing as a 

Result of the ARB Ocean-going Vessel Fuel Rule, February, 2009.

http://www.arb.ca.gov/regact/2008/fuelogv08/atta4.pdf

(ARB, 2010) California Air Resources: CARB Workshop Presentation, October 10, 

2012, Long Beach, California

http://www.arb.ca.gov/ports/marinevess/documents/101210.pdf

(ARB, 2011) State of California, Air Resoruces Board, Database of OGV Clean Fuel 

Regulation Inspection Data July 2009 through January 2011

(CCC, 2001) California Coastal Commission. Staff Recommendation on Consistency

Determination No. CD-002-01. U.S. Navy, Point Mugu Sea Range, offshore of southern

California. File Date, January 4, 2001. Available at:

http://www.coastal.ca.gov/cd/CD-002-01.pdf

(Kjeldson, 2011) Kjeldsen, Gunnar, Det Norske Veritas Petroleum Services, DNVPS 

Highlights Bunker Concerns, Sustainable Shipping, March 18, 2011

(MWG, 2010) Presentation by Robbie Jackson at the April 2010 Maritime Air Quality 

Technical Working Group Meeting, Oakland, CA, April 2010 at 

http://www.arb.ca.gov/ports/marinevess/meetings/042810/CMA_MWG_Presentation.pdf

(NBVC, 2006) Naval Base Ventura County 2006 Economic Impact Study, 

Commissioned by the Workforce Investment Board of Ventura County
II - 23

(NOAA, 2011) National Oceanic and Atmospheric Administration, Office of Coast 

Survey, Shape files for NOAA Contiguous Zone (24 naut. mi.) as represented on 

NOAA's nautical charts (visited March, 2011) 

http://www.nauticalcharts.noaa.gov/csdl/limits.html

(OSPR, 2009) Office of Spill Prevention and Response, Department of Fish and Game, 

Stephen L. Edinger, Administrator, Letter to All California Marine Oil Spill contingency 

Plan Holders, dated August 10, 2009

(Parisi, 2011) Email communication from Tony Parisi, dated April 21, 2011

(RDP-21, 2010) RDP-21 Position Paper presented at California Air Resources Board 

Public Workshop, Long Beach, CA, October 12, 2010 

(Roloff, 2010) Email communication from Todd Roloff, dated November 02, 2010

(U.S. Navy, 2008) Navy Region Southwest, Written Comment Presented to Air 

Resources Board by Randall Friedman, July, 2008

http://www.arb.ca.gov/lists/fuelogv08/7-randal_friedman.pdf

(U.S. Navy, 2010) U. S. Navy Presentation, Point Mugu Sea Range Overview, Captain 

Aaron Cudnohufsky, CARB Workshop, October 10, 2012, Long Beach, California

(U.S. Navy, 2011) Email communication from Randal Freidman, dated 

January 12, 2011
II - 24

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III-1

III. PROPOSED AMENDMENTS

In this chapter, we provide a plain English discussion of the key amendments we are 

proposing to the OGV Clean Fuel Regulation. For a discussion of the entire regulation, 

including the sections that we are not proposing to modify, please see the staff report 

for the original regulation. (ARB, 2008) This chapter is intended to satisfy the 

requirements of Government Code section 11346.2, which requires that a noncontrolling “plain English” summary of the regulation be made available to the public.

A. Regulatory Boundary

As discussed previously, we are proposing to amend the regulatory boundary, referred 

to as “Regulated California Waters,” to align more closely in Southern California with the 

“Contiguous Zone,” which is 24 nautical miles from the California Baseline (shoreline), 

which includes offshore islands. The proposed amendments to the regulatory boundary 

are found in subsections (b), “Applicability,” and (d) “Definitions.” The proposed 

amended regulatory boundary is shown in Figure III-1 below.

Figure III-1: Proposed Amended Regulated California Waters in 

Southern California

Exemption 

Window

Proposed Regulatory 

Boundary

Traffic Separation Lanes
III-2

In the original regulation, the regulatory boundary followed the Contiguous Zone in 

Northern California, but in Southern California it approximated a boundary 24nm from 

the mainland shore using two straight-line segments. This boundary was selected to 

maximize the emission reductions from the rule at the same time to lower the cost with 

the expectation that vessels would continue to use the Channel Route with the 

established TSS. The proposed amendments will follow the Contiguous Zone 

consistently throughout the length of California, including islands. The proposed 

amended regulatory boundary will extend farther offshore of the California mainland in 

Southern California because each of the Channel Islands has its own 24 nm boundary 

surrounding it. 

In addition, we are proposing to exempt a small ”window” within the 24 nm boundary to 

encourage vessels to travel in the established shipping lanes in the Santa Barbara 

Channel. This region falls within an area within the Contiguous Zone.12

B. Phase 2 Implementation Date

The existing OGV Clean Fuel Regulation requires the use of Phase 2 0.1% sulfur 

distillate fuel beginning January 1, 2012. We are proposing to extend the deadline to 

use the Phase 2 fuel by two years to January 1, 2014. ARB staff believes that 

adjustments to the Phase 2 implementation date are necessary to better align with the 

North American ECA, provide more flexibility to find compliant fuels with higher 

viscosity, and provide additional time for the marine fuel industry to provide distillate 

fuels with properties that meet enhanced specifications of the newly revised ISO 8217. 

As discussed earlier in the staff report, for vessels that have experienced LOP incidents

possibly related to the use of low sulfur distillate fuels, on-board management of fuel 

viscosity is an important parameter. Providing a two-year delay will help to ensure the 

successful implementation of the North American ECA’s Phase 1 and a successful 

transition to the 0.1% sulfur fuels. 

C. Noncompliance Fee Provision

Staff is proposing minor modifications to the “noncompliance fee provision,” which in 

certain specified situations allows the payment of fees in lieu of direct compliance with 

the rule through the use of cleaner fuels. These proposed amendments are based on 

experience gained through implementation of the regulation to date, and focus primarily 

on the way fees are assessed. 

First, staff is proposing to adjust the fee schedule specified in the regulation. As shown 

in Table III-1 below, under the current regulation, the fee for a first noncompliant port 

visit is $45,500, which helps to offset the economic advantage gained by using the less 

expensive noncomplying fuel. In addition, the fee escalates for subsequent port visits to 

encourage direct compliance with the rule. We are proposing to allow the fee to stay at 

 12 The Contiguous Zone is an internationally recognized over-water boundary that is adjacent to the 

Territorial Sea. The Territorial Sea extends 12 nm offshore of the California coastline, while the 

Contiguous Zone extends from the Territorial Sea to 24 nm offshore of the California coastline.
III-3

$45,500 for the second port visit to accommodate visiting vessels that may stop at two 

California ports in their voyage (e.g. visits to the ports of Los Angeles and Oakland). 

We have found the current fee to provide sufficient disincentive for ship operators to 

frequently use of the provision. It has only been used five times since the regulation 

began implementation in July, 2009. 

Table III-1: Noncompliance Fee Schedule

Port Visit Fee Under Current Regulation Fee Under Proposed 

Amendments*

1 $45,500 $45,500

2 $91,000 $45,500

3 $136, 500 $91,000

4 $182,000 $136,500

5 or more $227,500 $182,000

* Fees are halved if vessel operator purchases and uses compliant fuels as soon as possible.

In addition, staff is proposing that the applicable fees shown in Table III-1 be halved for 

vessel operators that purchase and use complying fuels after arriving to a port on 

noncomplying fuel. Under the current regulation, there is no incentive for vessel 

operators to purchase and use compliant fuels when using the noncompliance fee 

provision. In fact, there is a disincentive in that the noncompliant fuels are much less 

expensive, and there is no adjustment of the fees for operators to make the effort to 

come into compliance as soon as possible. The proposed modification would provide 

ship operators with the incentive to purchase and use compliant fuel in those situations 

where it is feasible. 

Finally, for the purpose of assessing the applicable noncompliance fees, staff is 

proposing that offshore anchorages made in conjunction with a port visit not be counted 

as another “port visit.” There are numerous situations where a vessel operator may 

conduct business at a port visit, but also conduct an offshore anchorage for secondary 

reasons. For example, the vessel operator may schedule a vessel inspection, take on 

fuel at anchorage, or perform other technical or logistical activities. In these situations, 

we believe that it is appropriate not to count this anchorage as a separate “port visit” for 

the purposes of calculating noncompliance fees.
III-4

D. Other Proposed Amendments

In addition to the proposed modification of “Regulated California Waters,” staff is 

proposing to amend two additional definitions to reflect recent updates to nautical charts 

and fuel specifications, as discussed below.

California Baseline

The California coastline is defined in the regulation as the “baseline,” the mean lower 

low water line along the California coast, as shown in seven NOAA nautical charts 

covering portions of California’s coastline. These NOAA charts are periodically updated 

to reflect changes in the coastline that occur over time. Since the adoption of the 

regulation, one of the charts (the April 2005 version of Chart 18740 covering California’s 

coastline from San Diego to Santa Rosa Island) was updated and we are proposing to 

include this updated (March 2007) chart in the amendments to the regulation.

Marine Fuels

Staff is proposing to amend the definitions of the fuels required under the ARB 

regulation to reflect recent changes in how these fuels are specified under international 

standards. For background, the regulation requires the use of either MGO or MDO. 

These fuels are defined in the regulation as specific grades of distillate fuels in the 2005 

version of international standard ISO 8217 under the International Organization for 

Standardization. Under the current regulation, MGO is defined as any fuel meeting the 

2005 ISO specifications for DMA or DMX fuel grades, and MDO is defined similarly as 

DMB grade fuel. However, since the adoption of the regulation, a new 2010 version of 

the ISO 8217 fuel specifications has been adopted. This new version was issued partly 

in response to the revised Annex VI fuel sulfur regulations under the International 

Maritime Organization. The new version includes some important changes to the 

specifications for distillate fuels, as well as a new grade of distillate fuel referred to as 

DMZ. The new specifications set higher minimum fuel viscosity levels, and a lubricity 

specification for distillate fuels with sulfur levels below 0.05%.

Staff is proposing to change the definitions of MGO and MDO in the regulation to allow 

fuels that meet the applicable grades of distillate fuel under either: (1) the older 2005 

version of the ISO 8217 specifications; or (2) the new June 15, 2010 version of the 

ISO 8217 specifications, which staff is proposing to incorporate into the regulation by 

reference. While staff strongly encourages the use of fuels meeting the new 2010 ISO 

8217 specifications, many fuel suppliers are not currently offering fuels meeting the new 

ISO 8217 specifications. Therefore, to ensure an adequate supply of the distillate fuels 

required under the regulation, staff is proposing to allow distillate fuels meeting either 

the 2005 or 2010 versions of the ISO 8217 standards.
III-5

E. Regulatory Alternatives

The Government Code section 11346.2 requires ARB to consider and evaluate 

reasonable alternatives to the proposed regulation and provide the reasons for rejecting 

those alternatives. ARB staff evaluated two alternative strategies to the proposed 

amendments. Based on the analysis, none of the alternative control strategies were 

considered more effective in reducing emissions than the proposed regulation. This 

section discusses each of the alternatives and provides reasons for rejecting those 

alternatives.

Alternative 1: Do Nothing/No Project (Do not amend the existing regulation)

This alternative would leave the situation as it currently exists. The existing OGV Clean 

Fuel Regulation would continue to be in effect. No action would be taken to address the 

loss in emission reductions anticipated by the original rule or the adverse impact on the 

U.S. Navy’s Point Mugu Sea Range operations due to the shift in vessel traffic. Further, 

no action would be taken to provide better alignment of the ARB OGV Clean Fuel 

Regulation with the 2015 requirement for the North America ECA. The adverse impacts 

of this alternative would be that a majority (and potentially even a greater percentage in 

the future) of vessel traffic coming into the Ports of Los Angeles and Long Beach would 

use the Outer Route resulting in greater emissions and a significant adverse impact on 

Point Mugu Sea Range Operations. We would also miss an opportunity to make 

adjustments to the Phase 2 schedule that is appropriate given our experience in the 

implementing Phase 1. Based on the adverse impacts identified above and discussed 

in greater detail in Chapter V, staff rejected Alternative 1.

Alternative 2: Suspend the original regulation and rely on international and federal 

regulations

This alternative would have the Board suspend the current rule and instead rely on the 

North America ECA OGV fuel standards and schedule. Prior to 2015, relying only on 

international and federal regulations would result in substantial increases in PM and 

SOx emissions. This is because under IMO/U.S. EPA regulations (i.e. an ECA zone), 

ship operators would be not be required to use lower sulfur OGV fuel until August 2012 

and the allowable fuel sulfur content would be 1% and most likely HFO. Under the 

ARB OGV Clean Fuel Regulation, Phase I fuel is currently averaging below 0.3% sulfur, 

and the Phase II fuel would be at or below 0.1% sulfur. In addition, the ARB rule 

specifies distillate fuels that burn cleaner than the HFO likely to be used to meet the 

1% sulfur fuel, independent of sulfur levels. An emissions analysis prepared in the 

original staff report that compares the original regulation to the then pending ECA 

requirements shows the dramatic difference in emission reductions between these two 

options. This analysis would be very similar to the difference between the proposed 

amended regulation and the currently adopted North American ECA. (ARB, 2008) 

The emission reductions that would be achieved under the proposed regulation are 

critical to reducing the cancer and non-cancer health risks to the public. They are also 
III-6

necessary to make progress toward compliance with State and federal air quality 

standards for ozone and PM in nonattainment areas throughout the State. Finally, 

these reductions are an important element of California’s Diesel Risk Reduction Plan, 

the California Goods Movement Emission Reduction Plan, and marine port clean air 

plans. For the above reasons, staff rejected Alternative 2. 

F. Necessity of Proposed Amendments

The need and rationale for the proposed amendments were discussed extensively in 

Chapter II. In addition, in this chapter, ARB staff provides a plain English description of 

the proposed amendments to the OGV Clean Fuel Rule. 

Pursuant to Government Code section 11349.1, Government Code section 

11346.2(b)(1), and title 1, California Code of Regulations, section 10, ARB staff is 

providing a brief summary below that identifies each section in the regulation where 

amendments are proposed and describes the rationale for each proposed amendment. 

California Code of Regulations, title 13, section 2299.2 and title 17, section 

93118.2

Section 2299.2(b)(1) and Section 93118.2(b)(1). Applicability

Summary of Section 2299.2(b)(1) and Section 93118.2(b)(1)

These sections identify the OGV Clean Fuel Regulation boundary wherein vessels must 

use the specified fuel.

Rationale for Proposed Amendments to Section 2299.2(b)(1) and Section 93118.2(b)(1)

The proposed amendments revise the regulated zone farther offshore in Southern 

California to be consistent with the Contiguous Zone (i.e. include zone around the 

Channel Islands) and add a small exemption area i.e. exemption window, for ships 

using the Channel Route. With these changes, ARB staff believes vessel operators will 

choose to transit of the Channel Route instead of the Outer Route because it is less 

costly and is a shorter distance. If they do choose to continue to use the Outer Route, 

under the proposed amendments they would have to use the cleaner marine distillate 

fuels. 

Section 2299.2(d)(18) and (19) and Section 93118.2(d)(18) and (19). Definitions

Summary of Section 2299.2(d)(18) and (19) and Section 93118.2(d)(18) and (19)

These sections define Marine Diesel Oil (MDO) and Marine Gas Oil (MGO) which are 

required by the regulation.
III-7

Rationale for Proposed Amendments to Section 2299.2(d)(18) and (19) and Section 

93118.2(d)(18) and (19)

The proposed amendments will revise the definition of MGO and MDO to refer to both 

the 2005 version of the ISO 8217 fuel standard, which is still commonly used by 

industry, or the 2010 revision which includes a higher viscosity MGO “DMZ” grade.

Section 2299.2(e)(1)(A) and Section 93118.2(e)(1)(A). Operational Requirements

Summary of Section 2299.2(e)(1)(A) and Section 93118.2(e)(1)(A)

These sections describe the fuel requirements for vessels entering the regulated zone.

Rationale for Proposed Amendments to Section 2299.2(e)(1)(A) and Section 

93118.2(e)(1)(A)

The proposed amendments will delay the Phase 2 (0.1% S) implementation by two 

years to January 1, 2014 to better align with the North American ECA and to provide 

more flexibility to vessel operators to find compliant fuels with higher viscosity. 

Section 2299.2(h)(5) and Section 93118.2(h)(5). Noncompliance Fee in Lieu of 

Meeting Subsection (e)(1)

Summary of Section 2299.2(h)(5) and Section 93118.2(h)(5)

These sections describe a provision in the rule, the Noncompliance Fee Provision, 

which in certain specified situations allows the payment of fees in lieu of direct 

compliance with the regulation through the use of cleaner fuels. 

Rationale for Proposed Amendments to 2299.2(h)(5) and Section 93118.2(h)(5)

The proposed amendments to these sections modify the fee structure to reduce the 

costs for vessel operators that purchase compliant fuel and use that fuel after arriving to 

a port on noncomplying fuel. This will help promote direct compliance with the 

regulations. The proposed amendments also adjust how the fee is assessed for 

vessels that bunker at anchorage prior to coming into a California port. 
III-8

REFERENCES

(ARB, 2008) State of California, Air Resources Board, Staff Report: Initial Statement of 

Reasons for Proposed Rulemaking: Proposed Regulation for Fuel Sulfur and Other 

Operational Requirements for Ocean-Going Vessels Within California Waters and 24 

Nautical Miles of the California Baseline, June 2008
IV-1

IV. EMISSIONS AND ENVIRONMENTAL IMPACTS FROM THE PROPOSED 

AMENDMENTS

This chapter describes the potential environmental impacts of the proposed 

amendments to the OGV Clean Fuel Regulation. The impacts on statewide and 

regional emissions estimates are presented as well as impacts on air quality and public 

health. In addition, the potential biological impacts and impacts on greenhouse gas 

emissions are described. 

A. Legal Requirements

The California Environmental Quality Act (CEQA) and ARB regulations require an 

analysis to determine the potential environmental impacts of proposed regulations. 

Because ARB's program involving the adoption of regulations has been certified by the 

Secretary of Resources pursuant to Public Resources Code section 21080.5, the CEQA 

environmental analysis requirements may be included in the Initial Statement of 

Reasons (ISOR) for this rulemaking. In the ISOR, ARB must include a “functionally 

equivalent” analysis rather than adhering to the format described in CEQA of an Initial 

Study, a Negative Declaration, and an Environmental Impact Report. Staff will respond 

to all significant environmental issues raised by the public during the public review 

period or at the Board public hearing in the Final Statement of Reasons for the 

proposed amendments. 

Public Resources Code section 21159 requires that the environmental impact analysis 

conducted by ARB include the following: 

• an analysis of reasonably foreseeable environmental impacts of the methods of 

compliance; 

• an analysis of reasonably foreseeable feasible mitigation measures; and 

• an analysis of reasonably foreseeable alternative means of compliance with the 

control measure. 

Compliance with the proposed amendments is expected to improve air quality overall 

and potentially affect other environmental media as well. A summary of the analysis of 

potential environmental impacts resulting of the methods of compliance are presented in 

the discussion below. Regarding reasonably foreseeable mitigation measures, CEQA 

requires an agency to identify and adopt feasible mitigation measures that would 

minimize any significant adverse environmental impacts described in the environmental 

analysis. 

The OGV Clean Fuel Regulation reduces the risk from exposures to diesel PM and 

helps to fulfill the goals of the Diesel Risk Reduction Plan, the State Implementation 

Plan, and the Goods Movement Emission Reduction Plan. Implementation of the OGV 

Clean Fuel Regulation is reducing emissions of directly-emitted diesel PM, NOx, SOx; 

and secondarily-formed PM from NOx and SOx. ARB staff is proposing amendments to 

the OGV Clean Fuel Regulation to adjust the offshore regulatory boundary in Southern 

California to lessen the potential for vessels to interfere with operations at the United 

States (U.S.) Navy’s Point Mugu Sea Range. In addition, the proposed amendments 
IV-2

will help to reestablish the emission reductions from the regulation and help facilitate a 

successful transition to very low sulfur fuels by aligning implementation dates more 

closely with recently approved federal requirements. As indicated in the above 

paragraph, compliance with the proposed amendments may result in impacts to other 

environmental media, such as biological resources, and ARB is employing an adaptive 

management approach to mitigating impacts associated with potential adverse impacts. 

A more detailed discussion in included in this analysis in Section F. 

CEQA also requires that a “No Project” Alternative be evaluated, which would mean that 

the proposed amendments would not be implemented. Alternatives to the proposed 

amendments, including a “No Project” alternative, were discussed previously in Chapter 

III of this report. Implementation of the “No Project” alternative was rejected because 

the adverse impacts of this alternative would be that a majority (and potentially even a 

greater percentage in the future) of vessel traffic coming into the POLA and POLB

would use the Outer Route resulting in greater emissions and a significant adverse 

impact on Point Mugu Sea Range Operations. We would also miss an opportunity to 

make adjustments to the Phase 2 schedule that is appropriate given our experience in 

implementing Phase 1. Section G of this chapter presents three additional potential 

alternative compliance methods which are characterized as routing scenarios. ARB 

staff has concluded that there are no alternative means of compliance with the 

requirements of H&S section 39666 that would result in equivalent or greater diesel PM 

emission reductions at a lower cost. 

B. Baseline

For the purposes of this environmental analysis, the physical environmental conditions 

that existed at the beginning of ARB’s informal rulemaking process to develop the 

proposed amendments constitute the environmental setting or “baseline” for purposes 

of analyzing whether the proposed amendments will result in significant adverse 

environmental effects. Work on the proposed amendments began in 2010 so the 

environmental baseline for purposes of ARB’s analysis are conditions as they existed in 

2010. Based on data supplied by the U. S. Navy, by early 2010, approximately 50% of 

the vessel traffic going to and from the POLA and POLB that historically had travelled 

within the Santa Barbara Channel had relocated to the Outer Route which was 

described previously in Chapter II. (U.S. Navy, 2010) For the baseline, it is assumed 

that all the relocated vessel traffic and any vessels that travel outside the regulated 

zone uses HFO with 2.5% sulfur content. All other traffic within the 24 nm regulatory 

zone uses the marine distillate fuels as required by the OGV Clean Fuel Regulation. In 

the analysis of the proposed amendments, it is assumed that 100% of the vessels will 

move back into the Santa Barbara Channel when they visit the POLB and POLA 

because the amendments will remove the financial incentive to use the Outer Route.

C. Methodology of Estimating Emissions

To estimate the emissions from OGV, ARB staff relied upon the methodology developed 

during the initial rulemaking for the OGV Clean Fuel Regulation. However, the emission 

inventory has been adjusted since that time and the changes are reflected in the 

emission inventory used for the development of the proposed amendments to the OGV 
IV-3

Clean Fuel Regulation. The adjustments to the emissions inventory include a number 

of minor revisions and corrections. These are: recoding the model to increase 

calculation speed, updating auxiliary engine information, updating ship routing, adding 

an adjustment factor to estimate the effects of the recession, and making improvements 

in the user interface of the model. These changes to the emission inventory are briefly 

described below and discussed in more detail in Appendix D. The updated inventory 

and emissions model, Marine Emissions Model, is also posted on ARB’s website at 

http://www.arb.ca.gov/ports/marinevess/ogv/ogv1085.htm. (ARB, 2011b)

Updated Auxiliary Engine Information

The inventory for the original OGV Clean Fuel Regulation rulemaking, referred to as the 

2008 OGV Inventory, relied on the average auxiliary engine power from the 2005 ARB 

Ocean Going Vessel Survey for estimating the emissions for auxiliary engines. In the 

updated inventory, referred to as the 2011 OGV Inventory, ARB staff used additional 

sources of information for auxiliary engine power in the emissions estimates. 

Approximately 60% of ship auxiliary engine power ratings are now based on auxiliary 

power generation capacity from the Lloyds-Fairplay PC Register database (2007). 

Another 15% of ships have auxiliary engine power ratings from the POLA and POLB 

vessel boarding program, and the remaining ships utilize the average power ratings 

from the 2005 survey. 

Updated Ship Routing

In both the 2008 OGV Inventory and the 2011 OGV Inventory, vessel routing between 

ports assumes that ships will take the shortest route between origin and destination on 

the vessel traffic network. 

For the 2011 OGV Inventory, minor adjustments to the shipping lane network have been 

made to ensure that vessel routes conform to known transit routes, such as in the Santa 

Barbara Channel. Vessel routes were verified with automated instrumentation system

(AIS) ship data to the extent possible. Additionally, in the 2011 OGV Inventory, tankers 

travelling to and from Northern and Southern California are routed further away from 

shore, to conform to existing practice. 

Other Revisions and Corrections

The coding for the 2011 OGV Inventory was updated to improve performance and 

reduce processing time. A number of minor corrections and refinements were also 

made. These include calculating low load adjustment factors rather than using a lookup 

table, implementing Tier 1 IMO NOx standards for auxiliary and propulsion engines 

based on ship age, excluding cruise ships from low load adjustments, and an improved 

graphic user interface for the model. The emissions model was also updated to 

calculate the benefits of the San Pedro Bay Ports 20 and 40 nm vessel speed reduction 

(VSR) programs, including revised compliance rates for the years after 2006. Finally, 

the model was updated to account for the benefits of the North American ECA. 
IV-4

Recession Adjustment 

The impact of the recession on net registered tonnage was estimated in August, 2009 

from California port calls and Twenty-foot Equivalent Unit (TEU) data spanning 

January 1, 2006 through July 31, 2009. Partial year totals for 2009 were scaled to the 

whole year. These totals were checked in 2011 with the final totals for 2009 and 2010. 

To forecast activity following the recession, staff developed three recovery scenarios to 

encompass the possible rate of growth (“fast”, “slow”, and “average”). The fast recovery 

scenario assumed that total activity would return to projected historically average levels 

in 2017 and then grow at the historical average rate. A return to trend by 2017 was 

based on the Congressional Budget Office forecast which indicated that real gross 

domestic product at a nationwide level will converge with potential gross domestic 

product trends no later than 2015. This forecast was modified with the assumption that 

California’s recovery will lag the nation by several years, yielding the 2017 recovery 

date assumed for the fast recovery scenario. For the slow recovery scenario, staff 

assumed that activity would be permanently depressed relative to historical levels, but 

continue to grow at the growth rate in the 2009 San Pedro Bay Ports Forecast Update 

beginning in 2011. (San Pedro Bay, 2009) The average scenario is the average of the 

fast and slow scenarios. 

The impact of the recession on net registered tonnage in 2009 was estimated from port 

call and TEU data spanning January 1, 2009 through July 31, 2009 and scaling the 

results to the entire year. These totals were then checked at the beginning of 2011 with 

the final totals from 2009 and 2010. 

Given the uncertainty in forecasting emissions after such a deep recession, staff relied 

on the average recovery scenario. This scenario, for the years of interest for these 

regulatory amendments, is also supported by the most recent San Pedro Bay forecasts. 

Comparison of Emissions Estimates

Table IV-1 and IV-2 provide a comparison between the 2008 OGV Emission Inventory 

and the 2011 OGV Emission Inventory for the years 2006, 2010, 2015, and 2020. To 

allow for comparison, the emission estimates in each table reflect the same 

assumptions for program implementation, in this case only the 2007 Shore Power 

Regulation and the 20 nm POLB and POLA VSR program at 2006 compliance levels 

are included in the projections. 
IV-5

Table IV-1: OGV Statewide Emission Inventory based on the 2008 OGV Emission 

Inventory Methodology

2008 Ocean Going Vessel Inventory (100 nm)

Tons/Day

Year CO2 NOx PM10 PM2.5 ROG SOx

2006 10,140 230 21.1 20.6 9.0 160

2010 11,750 270 24.7 24.1 10.5 190

2015 13,870 330 29.6 28.9 12.7 225

2020 16,950 400 36.6 35.7 15.8 275

Table IV-2: OGV Statewide Emission Inventory based on the 2011 OGV Emission 

Inventory Methodology13

2011 Ocean Going Vessel Inventory (100 nm)

Tons/Day

Year CO2 NOx PM10 PM2.5 ROG SOx

2006 10,530 230 21.8 21.2 9.6 170

2010 9,490 210 19.8 19.3 8.8 150

2015 12,400 290 26.4 25.6 11.8 200

2020 15,760 370 33.9 33.0 15.3 260

Because the recession did not officially begin until late 2007, a comparison between the 

emission inventories for 2006 provide an indication of the impacts of the updates to the 

ship routing, power assumptions for auxiliary engines, and the low load adjustment 

factor. As can be seen, these changes had a minor impact on the emissions estimates, 

in most cases the emissions increases are less than 5%. However, for the years 2010 

through 2020, it is clear that the recession is having a significant impact on the 

projected emissions of OGV, reducing emissions by about 20% in 2010 and 10% in 

2015 relative to what was expected in the 2008 OGV Emission Inventory. 

D. Emission Impacts from the Proposed Amendments

With the proposed amendments, statewide emissions of PM and SOx from OGV will 

continue to decline and will be lower than what would be expected without the 

amendments. Statewide, the emissions of PM and SOx will decrease about 30% 

between 2012 and 2014. This is shown graphically in Figures IV-1 and IV-2 and 

numerically in Tables IV-3 and IV-4. 

 13 The emissions estimates shown in Table IV-4 include the impacts of the 0 to 20 nm POLA and POLB 

VSR program, but do not include the impacts of the POLA and POLB 20 to 40 nm VSR program. 

Therefore, the estimates in Table IV-4 are higher than the estimates provided for 2010 in Table II-3 where 

the emission reducing impacts of both the 0 to 20 and the 20 to 40 nm VSR programs are included in the 

estimates.
IV-6

Figure IV-1: Estimated Statewide OGV PM2.5 Emissions 

(100 nm)*

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA.

Figure IV-2: Estimated Statewide OGV SOx Emissions

(100 nm)*

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA.

0.0

5.0

10.0

15.0

20.0

25.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

Implementation begins for 

proposed amendments

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

Implementation begins for 

proposed amendments
IV-7

Table IV-3: Estimated Statewide OGV Emissions (Tons/Day) with 

Current Regulation 

(100 nm)* 

Pollutant

Year

2010 2011 2012 2013 2014 2015

SOx 71 75 54 34 36 8

PM2.5 10.3 10.9 9.8 9.0 9.5 4.1

NOx 198 209 215 228 241 257

CO2 8,760 9,060 9,360 9,970 10,570 11,170

*Uses the updated inventory, assumes 0.5% sulfur distillate fuel until 2012 and 0.1% sulfur 

after 2012. 

Table IV-4: Estimated Statewide OGV Emissions (Tons/Day) with 

Proposed Amendments

(100 nm)* 

Pollutant

Year

2010** 2011** 2012 2013 2014 2015

SOx -- -- 44 32 25 8

PM2.5 -- -- 8.1 7.6 7.4 4.1

NOx -- -- 219 232 246 262

CO2 -- -- 9,360 9,970 10,570 11,170

*Uses the updated inventory, assumes 0.5% sulfur distillate fuel until 2012, 0.3% sulfur 

distillate fuel for 2012-2013 and 0.1% in 2014 and after.

**Implementation is anticipated to begin in 2012 for proposed amendments.

It should be noted that there is an anomaly in the emissions comparisons due to the 

100 nm boundary for the inventory and the fact that when vessels use the Outer Route 

there is a small region where they travel outside the inventory boundary. In other 

words, when OGV use the Outer Route, the emissions associated with the route that 

occur outside the inventory boundary are not reflected in the inventory. Because the 

use of the marine distillate fuels result in only a 5-6% difference in NOx emissions, this 

anomaly is most apparent in the emissions for NOx. Hence, as can be seen in Tables 

IV-3 and IV-4, it would appear that there is actually an increase in NOx when the 

vessels use the Channel Route. However, if the emission inventory boundary were 

increased beyond 100 nm, the comparison between the current regulation and the 

proposed amendments would reflect a small decrease in NOx emissions with the 

proposed amendments. 

Regional Emissions Impacts

ARB staff also investigated the impacts of the proposed amendments on the emissions 

in several coastal districts that are impacted by OGV emissions including the Bay Area 

Air Quality Management District (AQMD), the Ventura Air Pollution Control District 

(APCD), Santa Barbara APCD, San Diego APCD, and the South Coast AQMD. As 

shown in Figures IV-3 through IV-7, similar to the impacts Statewide, emissions of PM 
IV-8

and SOx from OGVs will continue to decline over the next four years and in most all 

cases will be lower than what would be expected without the amendments. However, in 

the Bay Area AQMD there are two years, 2012 and 2013, where there is a small loss in 

projected PM2.5 and SOx emission reductions with the proposed amendments when 

compared to the projected emissions under the current regulation. The same is true for 

the South Coast AQMD in 2013. In both regions, emissions continue to decline over 

time, however, under the proposed amendments they do not decrease as quickly as 

anticipated with the current regulation. This is discussed further after the figures below.

Figure IV-3: Estimated Bay Area AQMD OGV PM2.5 and SOx Emission Impacts* 

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA. Implementation is anticipated to begin in 

2012 for proposed amendments.

Figure IV-4: Estimated San Diego APCD OGV PM2.5 and SOx Emission Impacts*

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA. Implementation is anticipated to begin in 

2012 for proposed amendments.

0.0

1.0

2.0

3.0

4.0

5.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments
IV-9

Figure IV-5: Estimated Santa Barbara County APCD OGV PM2.5 and 

SOx Emission Impacts*

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA. Implementation is anticipated to begin in 

2012 for proposed amendments.

Figure IV-6: Estimated South Coast AQMD OGV PM2.5 and SOx Emission 

Impacts*

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA. Implementation is anticipated to begin in 

2012 for proposed amendments.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments
IV-10

Figure IV-7: Estimated Ventura AQMD OGV PM2.5 and SOx Emission Impacts* 

*All scenarios use the updated inventory to reflect the impacts of the recession. The current regulation 

and proposed amendments include impacts from the ECA. Implementation is anticipated to begin in 

2012 for proposed amendments.

In both the South Coast AQMD and the Bay Area AQMD, emissions of SOx and PM2.5 

from OGVs will continue to decline in future years with the proposed amendments. The 

resulting emissions in future years are far lower than what was originally anticipated 

when the OGV Clean Fuel Regulation was adopted in 2008 ensuring that the public 

health and air quality benefits originally anticipated are preserved. For the Bay Area

AQMD, the projected SOx emissions with the proposed amendments are 30% lower in 

2012 than originally anticipated and 50% lower in 2013. For PM2.5, the projected PM25 

emissions are about 20% lower in 2012 and 30% lower in 2013. In the South Coast 

AQMD, the projected SOx emissions in 2013 are over 40% lower than anticipated. This 

is due in part to the recession which has significantly affected the activity of OGVs and 

the adoption of the North American ECA. 

As noted earlier, the proposed amendments will result in a small loss of future projected 

PM2.5 and SOx emission reductions for the South Coast AQMD in 2013 and the Bay 

Area AQMD in 2013 and 2014. As is shown in Table IV-5, for the South Coast, the 

proposed amendments will result in the loss of about 0.4 T/D of projected SOx emission 

reductions in 2013. For the Bay Area, as shown in Table IV-6, the foregone emission 

reductions of SOx are about 1.4 T/D in 2012 and 1.6 T/D in 2013 and 0.1 T/D of PM2.5

in 2012 and 2013. While the proposed amendments would not result in an increase in 

the emissions that currently exist, the foregone emission reductions in 2012 and 2013 in 

the San Francisco Bay Area and 2013 in the South Coast will be treated as an adverse 

environmental impact for the purposes of this analysis. However, as noted above, 

because the emission are much lower today than originally anticipated when the current 

regulation was adopted in 2008, the potential adverse environmental impacts have been 

significantly lessened.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2010 2011 2012 2013 2014 2015

PM2.5 (Tons/Day)

Year

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2010 2011 2012 2013 2014 2015

SOx (Tons/Day)

Year

No Rule Baseline

Current Regulation

Proposed Amendments
IV-11

Table IV-5: Estimated Statewide OGV SOx Emissions in the South Coast AQMD 

(Tons/Day)*

Scenario 2010 2011 2012 2013 2014 2015

Baseline Inventory 36.6 37.7 38.6 39.9 41.1 43.3

2008 Adopted Rule 13.3 13.7 7.7 8.0 8.4 8.8

Current Rule 9.4 9.8 4.5 4.1 4.3 2.7

Proposed Amendments --** --** 4.4 4.5 2.5 2.7

Foregone Emission Reductions N/A N/A N/A 0.4 N/A N/A

Table IV-6: Estimated Statewide OGV PM2.5 and SOx Emissions in the Bay Area 

AQMD (Tons/Day)*

PM2.5

Scenario 2010 2011 2012 2013 2014 2015

Baseline Inventory 5.1 5.2 5.3 5.5 5.6 5.8

2008 Adopted Rule 2.1 2.2 1.9 2.0 2.1 2.1

Current Rule 1.6 1.7 1.4 1.3 1.4 0.8

Proposed Amendments --** --** 1.5 1.4 1.3 0.8

Foregone Emission Reductions N/A N/A 0.1 0.1 N/A N/A

SOx

Scenario 2010 2011 2012 2013 2014 2015

Baseline Inventory 28.5 29.8 31.0 32.6 34.2 36.1

2008 Adopted Rule 14.5 14.9 10.5 10.9 11.3 11.7

Current Rule 10.5 11.0 6.7 4.3 4.6 1.6

Proposed Amendments --** --** 7.9 5.7 4.4 1.6

Foregone Emission Reductions N/A N/A 1.2 1.4 N/A N/A

*All scenarios in Tables IV-5 and IV-6 use the 2011 inventory adjusted for the recession except for 

the 2008 Adopted Rule Scenario, which uses the 2008 inventory used in the original rulemaking. 

The Baseline Inventory and 2008 Adopted Rule scenarios do not account for the ECA.

**Implementation is anticipated to begin in 2012 for proposed amendments.

Potential Greenhouse Gas Impacts

In development of the original rulemaking, an in-depth analysis was done to determine 

the potential greenhouse gas (GHG) impacts from the OGV Clean Fuel Regulation. 

(ARB, 2008) ARB contracted with Dr. James Corbett and Dr. James Winebrake of 

Energy and Environmental Research Associates to do a study of the total fuel-cycle 

emissions. The study can be found in Appendix H of the 2008 Staff Report. Their 

analysis estimated the total fuel cycle for CO2 and SOx emissions associated with fuel 

extraction, fuel processing, fuel distribution, and fuel consumption. To estimate the 

emissions at each stage, they used a modification of the peer-reviewed Total Energy & 

Emissions Analysis for Marine Systems (TEAMS) model, which was originally based on 

Argonne National Laboratory’s, GREET model (Greenhouse Gases, Regulated 
IV-12

Emissions, and Energy Use in Transportation). The TEAMS model was modified to 

allow analyses for the particular set of fuels under study. 

Corbett and Winebrake estimated that requiring a switch from residual fuel to the 

distillate fuels specified in the regulation would correspond to a net increase in CO2

emissions of approximately 1 to 2 percent over the total fuel cycle (and an 86 to 97 

percent decrease in SOx emissions). This slight increase in net fuel-cycle CO2

emissions is primarily a function of the increased energy required at refineries that 

produce compliant distillate fuels. This offsets the localized decrease in CO2 emissions 

from ship operations (fuel combustion) in California due to the higher energy content of 

the distillate fuel, as compared to HFO. But this study assumes that refineries will make 

no efforts to improve energy efficiency while maintaining, upgrading, or expanding their 

capacity to produce distillate fuels. This is unlikely given rising energy costs and global 

efforts to reduce GHG.

The proposed amendments will result in OGV using slightly more marine distillate fuels 

relative to what is being used now. However, as seen in Tables IV-3 and IV-4 this small 

change does not impact the OGV CO2 emissions. As noted above, the net increase in 

GHG emissions attributed to the OGV Clean Fuel Regulation described in the previous 

paragraphs is largely attributed to the refining process. ARB staff believes the small 

increase in the use of marine distillate fuels under the proposed amendments will have 

a negligible impact on the production of fuel, thus the results of the study are still 

relevant. An increase of 1 to 2 percent over the total fuel cycle is still applicable to the 

proposed amendments.

E. Public Health Impacts

With the proposed amendments, the OGV Clean Fuel Regulation will continue to 

provide significant health benefits by reducing premature mortality from PM2.5 exposure 

and localized potential cancer risk from diesel PM. Because the proposed amendments 

reduce projected emissions to levels below the 2008 adopted regulation, the 

implementation of the proposed amendments will have similar public health benefits to 

the original rule. Extensive modeling was conducted when the OGV Clean Fuel 

Regulation was originally adopted and demonstrated that upon implementation, the 

OGV regulation will avoid about 3,600 premature deaths between 2009 and 2015 

associated with the reduction in PM.14 (ARB, 2008) Since the baseline emissions have 

decreased due to recession-related decreases in vessel calls, the magnitude of the 

premature deaths avoided that would be attributed to the adopted or proposed 

amended rule would not be as great as identified above. However, the avoided 

premature deaths due the adopted regulation with the proposed amendments will 

remain substantial. Moreover, as the economy rebounds, a greater percentage of the 

premature deaths avoided will be because of the rule, not the recession. 

 14 The methodology for estimating premature deaths was updated since the release of the estimate made 

in 2008. The basis of the updated methodology is the same as that of the U.S. EPA (U.S. EPA, 2010) 

which relies on the study by Krewski et.al. (Krewski, 2009) The application of the U.S. EPA method to the 

proposed amendments would result in a small increase (approximately 3%) in the number of premature 

deaths avoided compared to the estimate made in 2008.
IV-13

F. Other Environmental Impacts

In this section, ARB staff provides a discussion of other environmental impacts from the

proposed amendments including potential impacts on water quality, biological impacts, 

and oil spills. Since the regulation relies on the existing infrastructure which is operating 

at a lower level than prior to the recession, no new facilities, expansion of existing 

facilities, or changes in operations from the status quo are likely to occur due to the 

proposed amendments. Therefore, ARB staff finds that there will be no adverse 

impacts on aesthetics, land-use/planning, population and housing, transportation, 

agricultural and forestry resources, cultural resources, hazards and hazardous 

materials, mineral resources, public services, utility and service systems, geology and 

soils, hydrology and water quality, or recreation. 

Potential Water Quality Impacts

ARB staff does not expect these proposed amendments to have any adverse impacts 

on water quality. The proposed amendments to the OGV Clean Fuel Rule apply only to 

the fuel being used by the vessels. The proposed regulation’s requirements, particularly 

the reduction in sulfur content of the engine fuels, should result in reduced formation of 

sulfuric acid, nitric acid and other harmful compounds to the extent the vessel emissions 

actually come into contact with ocean or inland waters. And because scrubbers and 

other exhaust treatment technologies are not allowable methods of compliance with this 

proposal, there are no impacts that might otherwise result from the byproducts of such 

methods (e.g., ash, salts, heavy metals from catalytic oxidizers, etc.).

Biological Impacts

The Southern California Bight (SCB) is a coastal region of unique oceanographic 

conditions, marine ecosystems, and biodiversity. The SCB extends from Point 

Conception in Southern California to Cabo Colonett and Bahia de San Quintin in Baja 

California. Habitats within Southern California’s ocean ecosystem contain some of the 

most biologically diverse natural communities in the world. NOAA and other marine 

groups have carefully assessed the population of marine wildlife in Southern California. 

The 2008 staff report provided an in depth analysis which examined, at length, 

biological impacts to marine mammals due to ship strikes, the acoustic impacts of 

vessels on marine mammals, and the changes in risks of oil spills. (ARB, 2008) In this 

report, only derivations from the discussion in the 2008 staff report due to vessels 

returning to the Channel Route in the Santa Barbara Channel will be discussed in the 

following sections.

Risk of Marine Mammal Ship Strikes

The highest risk of ship strikes is to large mammals that are too large to move out of the 

way of the vessels in time. There are at least 34 species of cetaceans (marine 

mammal) that have been identified in the Southern California Bight. The most common 

species of large whales found in the region are blue, fin, humpback, gray, and sperm 

whales. All of these species, except for gray whales, are listed as endangered under 
IV-14

the U.S. Endangered Species Act (ESA) (16 U.S.C S 1531). Additionally, all marine 

mammals are protected by the Marine Mammal Protection Act (MMPA 1972, amended 

1994, 16 U.S.C. S 1431). 

During the development of the OGV Clean Fuel Regulation, ARB staff worked with 

NOAA staff to investigate the potential impact on marine mammals if vessels chose to 

avoid the Santa Barbara Channel and instead transit on the Southern side of the 

Channel Islands. At that time, based on the available data of population densities of 

blue, fin, humpback and sperm whales, the likelihood of ship strikes was similar or less 

if a ship did not use the Santa Barbara Channel. (ARB, 2008) Since that time, NOAA 

staff has been developing an analysis of the whale densities in the Santa Barbara 

Channel and south of the islands and correlating this information with the vessel routes 

south of the Channel Islands. Based on a preliminary analysis by NOAA, the whale 

density data suggests that there is a potential decreased risk to fin whales, a potential 

increased risk to humpback whales, and there is an unclear impact to blue whales if 

vessels return to the Santa Barbara Channel. Humpback whales have large 

concentrations on the northern end of the entrance to the Santa Barbara Channel. 

However, whale population densities shift from year to year and variations in the 

number of ship strikes can change annually depending on the concentrations of whales 

of a given year. (NOAA, 2010b) Based on this information, ARB staff believes that 

there is a potential for an adverse environmental impact to humpback whales from the 

proposed amendments. However, this impact existed before the regulation was adopted 

and is basically returning vessel traffic to the pre-regulation routes. 

Effects of Vessel Noise on Marine Mammals

In 2009, ARB published a Supplemental Environmental Analysis and the results of that 

study are still relevant to these amendments. It was found that ship noises, from 

container ships, tankers and other large OGVs, are the dominant source of underwater 

frequencies below 300 Hz and are pervasive in areas of high ship traffic. While the 

sound produced by ships is unlikely to cause direct acute physical harm (for example, to 

the ear or internal organs), it could cause disruption in diving patterns or cause hearing 

loss, and it may interfere with or mask important communication signals from marine 

mammals whose vocalizations are in the low frequency range. The impacts of shipping 

noise on marine mammals are not clearly understood and research is ongoing, but the 

impacts could result in stress or behavior pattern changes in the animals. However, 

NOAA staff believes that if there are impacts from vessel noise, it is likely to be related 

to cetacean population densities. Population densities of large whales can vary on an 

annual basis as migration patterns change. As a result, the impacts from vessel noise

can change each year as the population densities of whales shift. Since, as shown 

earlier, the population densities of humpback whales are generally higher in the Santa 

Barbara Channel; this may create a potential adverse impact to humpback whales. 

However, with ships moving back into the Channel there would be a beneficial impact to 

fin whales.
IV-15

Oil Spills Due to Ship Collisions or Groundings

Substantial volumes of petroleum products are transported off the California Coast from 

Alaska, foreign countries and between California production sources. POLA and POLB 

include some of the highest volume oil transfer facilities in the United States. Collisions 

or ship groundings can occur as a result vessels transiting to and from these facilities. 

While oil spills are disastrous any place that they occur, there are several programs and 

practices in place in the case of an oil spill in the Santa Barbara Channel. To prevent 

collision and potential spills, there are traffic separation lanes in the Santa Barbara 

Channel for northbound and southbound vessels to travel. This helps to organize 

vessels to ensure that there is less of a chance of collision or running aground. Vessels 

traveling southbound in the Channel will generally pass within three miles of the Santa 

Cruz and Anacapa Islands. Vessels must have a contingency plan in place providing 

for a response team being on the scene within six hours of a spill. Each contingency 

plan must be exercised and tested annually. (OSPR, 2009) There are no traffic lanes 

set up south of the Channel Islands. If a spill occurs, response time is longer because 

the vessels are farther out from the response facilities, and there is no requirement to 

have a contingency plan in place.

In 1992, major oil companies, members of the Western States Petroleum Association 

(WSPA), entered into a voluntary, non-binding agreement, with the guidance of Office of 

Spill Prevention and Response (OSPR) and the U.S. Coast Guard, to route all tankers 

carrying crude oil from Alaska to California ports at least 50 nm offshore. This 

agreement has resulted in approximately 90 percent of all tanker traffic transiting at 

least 25 nm offshore and approximately 50 percent transiting at least 50 nm offshore. 

As a result of this agreement, many of the tankers using the Ports of Los Angeles and 

Long Beach travel through the Point Mugu Sea Range in Southern California. (ARB, 

2009) ARB does not expect the traffic patterns of oil tankers to change as a result of 

the amendments. Before the original implementation of the regulation, oil tankers 

traversed the Point Mugu Sea Range to stay as far out as long as possible. As a result, 

there should be no adverse environmental impacts from oil spills due to the proposed 

amendments.

G. Reasonably Foreseeable Environmental Impacts as a Result of 

Potential Compliance Methods

The goal of the proposed amendments is to remove the financial incentive for vessels to 

avoid using the Channel Route. Because of this, ARB staff believes that once the 

proposed amendments are implemented, OGV operators will return to using the 

Channel Route instead of the Outer Route. However, in the event this does not occur, 

ARB staff evaluated the environmental impacts of three possible alternative compliance 

methods. These include:

• 75% of the vessels transit in the Channel Route and 25% continue to transit in 

the Outer Route;

• 75% use the Channel Route and 25% of vessels use an alternative route 

(Alternative Route), further offshore to minimize the amount of marine distillate 

fuels required; and 
IV-16

• 100% of vessels use the Alternative Route. 

The routes analyzed can be seen below in Figure IV-8. The Outer Route is shown as 

the dashed line and the Alternative Route is the dot and dashed line. Route #3 is a new 

Alternative Route that could be used if vessel operators want to minimize the time a 

vessel must operate on the marine distillate fuel. This route would follow the contour of 

the contiguous zone and ships would use HFO for as long as possible before they must 

switch to distillate fuel to transit the clean fuel zone. It is labeled as the Alternative 

Route in the following tables and charts. 

Figure IV-8: Possible Southern California Shipping Routes

Using the methodology described earlier in Chapter II, ARB staff evaluated the costs, 

travel time, and distance associated with the Outer Route, Alternative Route and the 

Channel Route. As can be seen in Table IV-7, both the Outer Route and the Alternative 

Route have higher costs, longer overall travel distance, and longer travel time compared 

to the Channel Route. Therefore, there is no cost or time advantage to using either of 

these routes.

 

1

A

B

Comparison of Vessel Routes in Santa 

Barbara Channel and Pt. Mugu Sea Range

Window

3 Alternative Route

2 Outer Route

1. Channel Route

Legend

 Channel Route

 Outer Route

 Alternative Route
IV-17

Table IV-7: Estimated Fuel Costs, Distance and Transit Time for Channel, Outer, 

and Alternative Routes through the Santa Barbara Channel Region with the 

Proposed Amended Zone

Route Cost Distance 

HFO (nm)

Distance 

MGO (nm)

Total 

Distance 

(nm)

Time 

(hours)

Channel Route

(#1, Solid) $13,870 16 132 148 9.6

Outer Route

(#2, Dashed) $14,140 19 143 162 10.5

Alternative Route 

(#3, Dot Dashed) $14,330 83 90 173 11.1

Scenario #1: 75% of Vessels Use Channel Route, 25% Use Outer Route

Impact on Emissions: For this scenario, ARB staff assumes that 75% of the vessels will 

travel in the Channel Route but 25% will choose to transit further offshore in the Outer 

Route. The emissions impacts for this scenario are presented below in Table IV-8. 

Emissions of SOx and PM2.5 are essentially equivalent relative to the expected 

emissions if all vessels use Channel Route (presented previously in Table IV-4). NOx 

and CO2 emissions also remain unchanged. 

Table IV-8: Estimated Statewide OGV Emissions (tons/day) with 25% Transit 

Along the Outer Route 

Pollutant

Year

2012 2013 2014 2015

SOx 44 31 25 8

PM2.5 8.1 7.6 7.4 4.1

NOx 216 229 242 259

CO2 9,400 9,930 10,380 11,150

Impact on Marine Mammals: Using the whale density information from NOAA 

discussed in the previous section, the 25% of vessels choosing to use the Outer Route 

could potentially present an adverse environmental impact to fin whales south of the 

Channel Islands. This change in traffic could result in a decreased risk to humpback 

whales in the Santa Barbara Channel. There is little impact on blue whales. 

Impact on Risk of Oil Spills: An analysis of the risk from oil spills was done in the 2009 

EIR Study. In 2002, a taskforce sponsored in part by the U.S. Coast Guard and OSPR 

issued recommendations to reduce the risk of vessel collisions or drift groundings off 

the U.S. West Coast. The project addressed four risk factors most amenable to 

change, including vessel distance offshore. The recommendations regarding the 
IV-18

distance offshore risk factor indicated that higher risks were generally within 25 miles 

from land along the West Coast of California. The workgroup found that vessels 

transiting within the higher risk areas have a greater potential for grounding than if they 

transited further offshore. The workgroup also found that for consistency with existing 

agreements, where there are not other prevention agreements, tank ships laden with 

crude oil or other petroleum cargo, transiting coastwise should voluntarily stay within a 

minimum distance of 50 nm offshore. Based on this assessment, it can be determined 

that there is no adverse impact if vessels choose to use the Outer Route.

Scenario #2: 75% of Vessels Use Channel Route, 25% Use Alternative Route

For this scenario, ARB staff assumes that 75% of the vessels will travel in the Channel 

Route but 25% will choose to transit further offshore in the Alternative Route. Because 

a significant portion of the Alternative Route is outside the Contiguous Zone using this 

route would minimize the distance where the vessel would need to operate on marine 

distillate fuel. As shown in Table IV-7, while the Alternative Route is about 25 nm 

longer, vessels using the Alternative Route would operate on marine distillate fuels for 

about 90 nm whereas vessels using the Channel Route would operate on marine 

distillate fuels for about 130 nm. However, transiting this route would take 

approximately an hour and a half longer to traverse than the Channel Route. 

Impact on Emissions: The emissions impacts for this scenario are presented in Table 

IV-9. A portion of the Alternative Route is located outside of the 100nm inventory zone. 

As a result, the emissions have to be adjusted to account for Scenario #2. ARB staff 

estimated that for this scenario there was approximately a 5% increase in emissions 

attributed to the portion outside of the inventory zone compared to Table IV-4. 

Table IV-9: Estimated Statewide OGV Emissions (tons/day) with 25% Transit 

Along the Alternative Route

Pollutant

Year

2012 2013 2014 2015

SOx 46 33 26 8

PM2.5 8.4 8.0 7.8 4.3

NOx 222 235 249 266

CO2 9,690 10,240 10,700 11,380

Impact on Marine Mammals: Similar to the discussion for the first scenario, based on 

the whale density information from NOAA, the 25% of vessels choosing to use the 

Alternative Route could potentially present an adverse environmental impact to fin 

whales south of the Channel Islands. This change in traffic could also result in a 

decrease in risk to humpback whales. There is little impact on blue whales. 

Impact on Risk of Oil Spills: As discussed in the previous section, when vessels move 

further out from shore it lowers the risk factor of vessels coming aground. The 

Alternative Route takes vessels further out than the Outer Route. As such, there would 
IV-19

be no harmful environmental impacts related to oil spills if ships choose to traverse the 

Alternative Route.

Scenario #3: 100% of Vessel Use Alternative Route

The third scenario evaluated assumed that all the vessels that historically used the 

Channel Route would choose to transit using the Alternative Route. 

Impact on Emissions: The emissions impacts for this scenario are presented in Table 

IV-10. A portion of the Alternative Route is located outside of the 100nm inventory 

zone. As a result, the emissions have to be adjusted to account for this scenario. ARB 

staff estimated that for Scenario #3 there was approximately a 15% increase in 

emissions attributed to the portion outside of the inventory zone compared to 

Table IV-4. 

Table IV-10: Estimated Statewide OGV Emissions (tons/day) with 100% Transit 

Along the Alternative Route

Pollutant

Year

2012 2013 2014 2015

SOx 52 36 30 8

PM2.5 9.3 8.6 8.5 4.4

NOx 224 238 252 268

CO2 9,960 10,520 10,970 11,660

Impact on Marine Mammals: Based on NOAA whale density data, this scenario could 

also potentially result in increased risks to fin whales south of the Channel Islands and 

decrease the risk to humpback whales. There is little impact on blue whales. 

Impact on Risk of Oil Spills: As discussed in the previous section, when vessels move 

further out from shore it lowers the risk factor of vessels coming aground. The 

Alternative Route takes vessels further out than the Outer Route. As such, there would 

be no adverse environmental impacts related to oil spills if ships choose to traverse the 

Alternative Route.

Conclusions

The emissions impacts from scenario 1 are similar to the emissions when it is assumed 

the vessels use the Channel Route. For the other scenarios, in each case, the resultant 

emissions are higher than what would be projected if the vessels transited the Channel 

Route. However, in each case, the resultant emissions are less than the current and 

projected emissions for the OGV Clean Fuel Regulation without the proposed 

amendments (see Table IV-3). For these reasons, ARB staff does not expect any 

adverse environmental impacts from the emissions should vessel operators choose one 

of the alternative routes. 

Based on the analysis presented above, if vessel operators choose to use either the 

Outer Route or the Alternative Route, ARB staff does not expect any adverse 
IV-20

environmental impacts related to oil spills. The use of the Alternative Route or the 

Outer Route may pose potential adverse environmental impacts to fin whales. In 

addition, the use of these routes could create operational issues for the U.S. Navy’s 

Point Mugu Sea Range. However, ARB staff does not believe any of these alternative 

compliance methods will be attractive to vessel operators due to the higher costs and 

longer transit times. As previously shown in Table IV-7, transiting the Outer Route will 

cost approximately $270 more than the using the Channel Route and require an 

additional hour of travel time. Use of the Alternative Route will cost about $460 more 

and will take an hour and a half longer to travel. Because of this, ARB staff believes 

that transiting the Channel Route will be the preferred method of compliance. 

H. Reasonably Foreseeable Mitigation Measures

In this section, ARB staff discusses reasonably foreseeable mitigation measures to 

address the potential adverse environmental impacts from the proposed amendments. 

As described earlier, with the proposed amendments statewide emissions of PM and 

SOx from OGV will continue to decline and also be lower than what would be expected 

without the amendments. However, the proposed amendments will result in a small 

loss of projected SOx emission reductions for the Bay Area AQMD and the South Coast 

AQMD. While the proposed amendments would not result in any adverse 

environmental impacts compared to the environmental conditions that currently exist, 

the foregone emission reductions in future years could be viewed as a significant 

adverse environmental impact. Additionally there is a potential for adverse impacts on 

humpback whales from potential vessel strikes when vessels transit the Channel Route 

instead of the Outer Route. 

Potential Mitigation Measures for PM2.5 and SOx Emissions Adverse Environmental 

Impacts in the Bay Area AQMD and South Coast AQMD 

The small foregone projected emission reductions in future years in the Bay Area 

AQMD and the South Coast AQMD are primarily due to the proposal to delay 

implementation of the Phase 2 requirements for two years. The only potential mitigation 

measure available to reduce the projected PM2.5 SOx emissions in the Bay Area 

AQMD and projected SOx emissions in South Coast AQMD is to implement the 

proposed amendments without the two year delay of Phase 2. However, ARB staff 

believes that the delay in the Phase 2 implementation date is necessary to provide:

• better alignment with the North American ECA,

• greater flexibility to find compliant fuels with higher viscosity, and

• additional time for the marine fuel industry to provide distillate fuels with 

properties that meet the enhanced specifications of the newly revised ISO 8217.

ARB staff believes that these considerations override any adverse environmental 

impacts that may result from the two-year implementation date delay. 
IV-21

Implement the proposed amendments, except keep the requirement to use the Phase 2 

fuel in 2012

Under this mitigation measure, the proposed amendments would be implemented as 

proposed, except that the Phase 2 (0.1% sulfur) fuel would be implemented in 2012 

rather than 2014. This option would result in additional reductions in PM and SOx in 

2012 and 2013 compared to the proposal. However, as previously discussed in this 

staff report, ARB staff has concerns about the timing for implementation of the OGV 

Clean Fuel Regulation’s Phase 2 requirement and believes there are valid reasons to 

delay the implementation date by two years. ARB staff believes that providing a twoyear delay will help to ensure the successful implementation of the North American 

ECA’s Phase 1 and a successful transition to the 0.1% sulfur fuels. This was discussed 

in detail in Chapter II and will be briefly summarized here. 

Under the OGV Clean Fuel Regulation, the Phase 2 (0.1%) sulfur requirement is 

scheduled to begin implementation on January 1, 2012. Later in that same year, the 

North American ECA’s Phase 1 requirement to use 1% sulfur fuel begins 

implementation. Because of this, ARB staff believes it is appropriate to adjust the 

implementation timeline for the OGV Clean Fuel Regulation’s Phase 2 requirements 

(0.1% sulfur beginning January 1, 2012) to more closely align with the Phase 2 North 

American ECA requirement (0.1% sulfur beginning January 1, 2015). 

In addition, ARB staff believes that shippers may be able to more easily locate fuels with 

higher viscosity levels during the extension of the Phase 1 requirements. As alluded to 

earlier, for vessels that have experienced LOP incidents related to the use of low sulfur 

distillate fuels, on-board management of fuel viscosity is a very important parameter. 

Because of this, ARB staff believes delaying implementation of the 0.1% sulfur limit by 

two years will provide more flexibility to acquire fuels with higher viscosity may help 

lessen the probability of operational difficulties. For all of these reasons, ARB staff does 

not believe it is feasible or appropriate to implement this mitigation measure, and that 

these considerations override any potential environmental impacts that may occur.

Potential Mitigation Measures for Adverse Environmental Impact to Humpback Whales 

There are multiple mitigation efforts already in place to help reduce the risk of ship 

strikes on humpback whales. Ship speed is an important factor when it comes to the 

lethality of ship strikes to whales. Figure IV-9 below shows the relationship of ship 

speed and the mortality of whale strikes. As shown, as the speed of vessels increases 

there is an increase in the mortality rate. NOAA recommends that vessels greater than 

300 gross tons slow to 10 knots during periods of high whale concentrations to reduce 

the mortality rate of ship strikes. Inside of the Santa Barbara Channel there are groups 

dedicated to the research and monitoring of whales and how traffic affects them. The 

Sanctuary Aerial Monitoring and Spatial Analysis or (SAMSAP) monitoring and sightings 

database provides nine years of sightings data. (NOAA, 2010) This project helps to 

alert vessel owners to whale densities and migrating patterns. This information could 

be used to help owners know when it would be best to slow down their vessel to help 

mitigate the threat of a lethal impact on a whale. 
IV-22

Figure IV-9: Relationship Between Vessel Speed and Probability of Mortality for 

Whale Strikes (ARB, 2009)

The POLA and POLB also have voluntary vessel reduction programs in place to offer 

incentives to vessels coming into port. To comply with the local programs vessels must 

travel at or below 12 knots within 20 nm or 40 nm depending on which incentives they 

want to obtain. In 2010, the POLA saw a 90% and 61% compliance rate at 20nm and 

40nm, respectively. (POLA, 2011) In 2010, the POLB saw a 96% and 74% compliance 

rate at 20nm and 40 nm, respectively. (POLB, 2011) To comply with the voluntary 

speed reduction programs, vessel operators must begin slowing their vessels down 

while they are in the Santa Barbara Channel such that they are at the required speed 

when they at the 40 nm or 20 nm mark. This reduction in ship speeds will help to 

mitigate the potential risk to humpback whales when OGV use the Channel Route. 

NOAA is proactive about warning mariners about whales in the Santa Barbara Channel. 

They work with the U.S. Coast Guard to include whale sightings in the Notice to 

Mariners. These Notices can be found on the U.S. Coast Guards website and are 

updated weekly. Vessel operators who observe live, injured or dead whales are 

encouraged to immediately notify NOAA with the position and time of the encounter. 

NOAA has an updated website that provides information to vessel operators about how 

to avoid whale ship strikes as well as a listing of current sightings of whales. This 

information is available at http://channelislands.noaa.gov/focus/alert.html. 

ARB will also use an adaptive management approach to ensure any potential adverse 

environmental impacts to fin or humpback whale are avoided or mitigated. Whale strike 

data is collected and monitored by NOAA. In the event that the data indicates that there 
IV-23

is an increase in strikes, ARB staff will work with NOAA, the U.S. Coast Guard, the 

shipping industry, and others to identify appropriate solutions that mitigate the impact.

I. Environmental Justice

The ARB is committed to evaluating community impacts of proposed regulations, 

including environmental justice concerns. As noted previously, many communities 

experience elevated exposures to toxic and criteria pollutants emitted from the 

regulated vessels. Because of this, it is a priority of ARB to ensure that full protection is 

afforded to all Californians. The proposed amendments to the OGV Clean Fuel 

Regulation are not expected to result in significant negative impacts in any community. 

Rather, with the proposed amendments the OGV Clean Fuel Regulation will continue to 

ensure that PM, SOx, and NOx emissions from OGV continue to decline in future years, 

resulting in decreased exposures to these pollutants and lowering their associated 

potential health risks for all communities, particularly those located near the ports.
IV-24

REFERENCES

(ARB, 2008) Air Resources Board, "Fuel Sulfur and Other Operational Requirements 

for Ocan-Going Vessels within California Waters and 24 Nautical Miles of the California 

Baseline," 2008

(ARB, 2011b) Air Resources Board. "Marine Emissions Model," 

http://www.arb.ca.gov/ports/marinevess/ogv/ogv1085.htm. 2011

(Krewski,2009) Krewski D, Jerrett M, Burnett RT, Ma R, Hughes E, Shi Y, Turner MC, 

Pope CA III, Thurston G, Calle EE, Thun MJ. 2009, Extended Follow-Up and Spatial 

Analysis of the American Cancer Society Study Linking Particulate Air Pollution and 

Mortality, HEI Research Report 140, Health Effects Institute, Boston, MA

(NOAA, 2010) Monica DeAngelis, Christina Fahy, and Joseph Cordaro, "Reducing 

Vessel Strikes of Large Whales in California," 2010

NOAA, 2010b) Jessica V. Redfern, Megan E. McKenna, Thomas J. Moore,Whales and

Ships in the Southern California Bight, 

http://www.socalmarinemammals.org/program.html, Accessed on April 11, 2011

(OSPR, 2009) Office of Spill Prevention and Response, Department of Fish and Game, 

Stephen L. Edinger, Administrator, Letter to All California Marine Oil Spill contingency 

Plan Holders, August 10, 2009

(POLA, 2011) Vessel Speed Reduction Program, 

http://www.portoflosangeles.org/environment/ogv.asp, Accessed April 11, 2011

(POLB, 2011) Green Flag Incentive Program, 

http://www.polb.com/environment/air/vessels/green_flag.asp, Accessed 

April 11, 2011

(San Pedro Bay, 2009) San Pedro Bay Container Forecast Update, The Tioga Group 

for the Ports of Los Angeles and Long Beach, July, 2009

(U.S. Navy, 2010) Presentation by U.S. Navy at California Air Resources Board Public 

Workshop, Long Beach, CA, October 12, 2010
V-1

V. ECONOMIC IMPACTS

In this chapter, we present the estimated costs and economic impacts associated with 

implementation of the proposed amendments to the OGV Clean Fuel Regulation. The 

costs presented are the estimated incremental costs relative to the baseline, which is 

the cost of industry compliance with the current OGV Clean Fuel Regulation, using 

current vessel traffic patterns. 

The cost analysis will present the total cost over the expected life of the regulation, total 

annual cost, and the cost-effectiveness of the proposed regulation. The economic 

impacts associated with the costs of the proposed amendments are also presented for 

typical businesses that operate OGVs. 

It should be noted that much of the cost associated with the proposal was accounted for 

in the original rulemaking. This is because the estimated cost of the original regulation 

assumed that vessel operators traveling to and from the Ports of Los Angeles and Long 

Beach would stay in the Santa Barbara Channel Route where use of the cleaner, low 

sulfur marine distillate fuel is required. Since the implementation of the original rule, 

many vessel operators have decided to travel by an “Outer Route” south of the Santa 

Barbara Channel, and outside the 24 nm regulatory boundary. Using this route is less 

expensive because the complying fuel is not required for a large portion of the route. In 

other words, vessel operators are avoiding some of the costs that were attributed to the 

original rule. These cost savings to the shipping industry are significant because this is 

among the most heavily travelled route to and from California. 

Because the new boundary in the proposed amendments will make “avoidance” of the 

OGV Clean Fuel Regulatory zone less attractive from a cost and time perspective, we 

believe that many vessel operators will elect to go back to the original Santa Barbara 

Channel route. As a result, the estimated cost of the regulation with the proposed 

amendments will be close to what we originally estimated for the OGV Clean Fuel 

Regulation rulemaking. However, for some vessels, such as those that historically 

transited on the southern side of the Channel Islands and those coming into the Ports of 

Los Angeles and Long Beach from the west will incur costs not anticipated in the 

original rulemaking due to the expanded regulatory boundary.

A. Summary

The estimated total annual cost associated with the proposed amendments is 

approximately $10 million annually in years 2012 and 2013, and about $47 million in 

2014. These estimated annual costs represent the net additional costs associated with 

the proposed amendments over and above compliance with the current regulation. 

A number of factors affect these net added costs. First, the majority of vessels that 

historically transited through the Santa Barbara Channel are now transiting outside the 

regulatory zone via the Outer Route to reduce fuel costs. Under the proposed 

amendments, we anticipate that these vessel operators would return to the Santa 

Barbara Channel Route and would incur the higher costs associated with using the 
V-2

more expensive cleaner marine distillate fuels. These costs were originally attributed to 

the OGV Clean Fuel Regulation and were avoided by transiting outside the existing 

regulatory zone in Southern California. As discussed in Chapter II, on a per trip basis, 

the added cost of transiting through the Santa Barbara Channel is about $2,750 more 

than the Outer Route (one-way) for an average vessel. As discussed below in more 

detail, moving vessels back to their historical shipping lanes in the Santa Barbara 

Channel where the low sulfur fuel is required accounts for most of the added costs of 

the proposed amendments. 

In addition, due to the larger regulated zone in the proposed amendments there are 

added costs for other vessel routes in Southern California. For example, vessels that 

visit the Ports of Los Angeles and Long Beach by a western route would travel a longer 

distance within the regulatory zone. Laden tankers, which travel to and from the Ports 

of Los Angeles and Long Beach by a route south of the Channel Islands in accordance 

with a voluntary agreement to stay 50 nm offshore of the coastline, would also incur 

higher costs.

Finally, the net cost estimates also reflect cost savings associated with the two-year 

delay of the Phase 2 fuel requirements. This accounts for the lower cost increases in 

years 2012 and 2013, relative to 2014.

We estimate the overall total present value ($2011) cost of the proposed amendments 

to be approximately $59 million dollars for the years 2012-2014, assuming the total 

annual costs mentioned above. For perspective, the staff report for the original OGV 

Clean Fuel Regulation estimated the total cost to the industry at about $350 million 

annually for the years 2012 through 2014. The added cost of the amendments to a 

typical ship operator is estimated to be about $20,000 in years 2012 and 2013, and 

about $90,000 in 2014. We expect these added costs can be absorbed by typical 

affected businesses without a significant adverse impact. The average costeffectiveness of the proposed amendments over the three year life of the regulation is 

estimated to be about $32,000 per ton or $16 per pound of diesel PM reduced, 

assuming all the regulatory costs are attributed to the diesel PM emission reductions. 

This compares favorably to other diesel PM regulations the Board has adopted 

previously, as well as to the original regulation. 

Impacts on Government Agencies and Business Competitiveness, Employment, 

Creation, Elimination or Expansion 

We do not expect significant economic impacts to the industry based on the added 

costs of the proposed amendments. The added costs of the proposed amendments are 

relatively small compared to the overall operating expenses of the businesses which 

operate OGVs. Based on an analysis of the change in “return on owner’s equity” (ROE) 

for typical businesses, the added costs of the proposed amendments would not result in 

a significant impact on profitability. 

Because the proposed amendments would not alter significantly the profitability of most 

businesses, we do not expect a noticeable change in employment, business creation, 

elimination, or expansion, and business competitiveness in California. We also do not 
V-3

expect significant economic impacts on governmental agencies on the local, state, or 

federal level. Military and government owned or operated vessels, used for government 

non-commercial purposes, are exempt from the proposed regulation. 

Impacts on Individuals

We do not expect significant impacts on the customers served by OGV operators, even 

assuming that all of the added costs of the proposed amendments are passed on to 

customers. We also expect that the value of health benefits will greatly outweigh the 

costs.

B. Legal Requirements

In this section, we will discuss the legal requirements that must be satisfied in analyzing 

the economic impacts of the proposal. 

Section 11346.3 of the Government Code requires State agencies to assess the 

potential for adverse economic impacts on California business enterprises and 

individuals when proposing to adopt or amend any administrative regulation. The 

assessment shall include a consideration of the impact of the proposed regulation on 

California jobs, business expansion, elimination or creation, and the ability of California 

business to compete with businesses in other states. This assessment is provided in 

subchapter F below.

State agencies are required to estimate the cost or savings to any State or local agency 

and school district in accordance with instructions adopted by the Department of 

Finance (DOF). The estimate must include any non-discretionary cost or savings to 

local agencies and the cost or savings in federal funding to the State. This is discussed 

in subchapter G.

H&S section 57005 requires the ARB to perform an economic impact analysis of 

submitted alternatives to a proposed regulation before adopting any major regulation. A 

major regulation is defined as a regulation that will have a potential cost to California 

business enterprises in an amount exceeding $10 million in any single year. The 

estimated cost of the proposed regulation exceeds $10 million in a single year, although 

much of the cost will be borne by businesses based outside of California. Nevertheless, 

we conducted the required economic impact analysis of submitted alternatives to the 

proposal. 

In addition, the ARB is required under H&S section 43013(b) to adopt standards and 

regulations, consistent with H&S section 43013(a), for marine vessels to the extent 

permitted by federal law. Health and Safety Code section 43013(a) authorizes ARB to 

adopt and implement “motor vehicle emission standards, in-use performance standards, 

and motor vehicle fuel specifications...which the State board has found to be 

necessary, cost-effective, and technologically feasible...”

A literal reading of H&S section 43013(a) would lead one to conclude that the criteria 

“necessary, cost-effective, and technologically feasible” do not apply to a marine vessel 
V-4

regulation because marine vessels are nonvehicular by definition.15 However, because 

the Legislature placed the authorization to regulate marine vessels in 

H&S section 43013(b), we will infer a legislative intent to require ARB to determine that 

its proposed regulations on marine vessels are “necessary, cost-effective, and 

technologically feasible.” The rulemaking for the original regulation extensively 

analyzed the necessity of the emission reductions and the technological feasibility of 

complying with the regulations (ARB, 2008). These analyses apply to the proposed 

amendments as well, which simply extend the regulatory boundary in Southern 

California, and delay the implementation of the Phase 2 fuel for two years. With regard 

to the cost-effectiveness of the proposed amendments, an analysis was performed 

below in subchapter H. The analysis estimates the average cost-effectiveness to be 

about $32,000 per ton ($16 per pound) of diesel PM reduced, assuming all costs are 

attributed to the PM reductions. This is lower than the cost-effectiveness of the original 

regulation and many other recent ARB rulemakings to control diesel PM emissions. 

C. Methodology

In this section, ARB staff describes the methodology used to estimate the economic 

impacts from the proposed amendments. The methodology is based on essentially the 

same approach that was used when estimating the costs associated with the original 

2008 rulemaking. That is, we estimated the fuel consumed by vessels within the 

regulatory zone, and compared the cost of using the more expensive low sulfur distillate 

fuel required by the regulation, to the less expensive standard HFO used prior to 

August, 2012, and the 1% sulfur HFO required under the newly established Emission 

Control Area) starting in August, 2012.

Under the proposed amendments to the OGV Clean Fuel Regulation, vessel operators 

would incur higher compliance costs on average due to the larger regulatory zone in 

Southern California. Due to this revised boundary, vessel operators would be required 

to use the more expensive distillate fuel for longer distances under the revised boundary 

of “Regulated California Waters.” Figure V-1 shows some of the major vessel routes 

that would be affected by the proposed amendments. The heavy gray lines show the 

portions of the routes that are currently covered by the regulation, while the checkered 

portions show the additional distances that would be covered under the proposed 

amendments. As shown in Figure V-1, the distances traveled through the regulatory 

zone where the cleaner fuel is required would be longer. 

However, it should be noted that the cost analysis for the original regulation assumed 

the vessels traveling to the Ports of Los Angeles and Long Beach would continue using 

the Santa Barbara Channel rather than the Outer Route that avoids the 24 nm 

regulatory zone. The proposed amendments seek to move vessels back to the 

established shipping lanes in the Santa Barbara, with costs similar to what was 

estimated for the original rule. This change would result in the majority of the costs 

estimated for the proposed amendments to the regulation, meaning that the regulatory 

cost of this proposal would be much lower otherwise. Specifically, to estimate the 

 15 See H&S § 39039.
V-5

increased cost of the larger regulatory zone, less the costs associated with moving 

vessels back to the Santa Barbara Channel, staff compared the cost of: (1) complying 

with the current regulation with no vessel re-routing to avoid the Santa Barbara 

Channel; and (2) the proposed amendments. Comparing these two scenarios showed 

cost savings on the order of $35 million annually in 2012 and 2013, and similar costs in 

2014. This compares to the much higher costs estimated in this chapter for the 

proposed amendments ($10 million in 2012 and 2013, and $47 million in 2014).

Figure V-1 – Major Shipping Routes in Southern California

The proposed amendments would also result in some cost savings that would offset the 

higher costs associated with the expansion of the boundary. Moving the 

implementation date of the Phase 2 (0.1% sulfur) fuel from 2012 to 2014 will result in 

significant savings during years 2012-2013, compared to what was estimated for the 

original rule. 

We estimated the net costs of complying with the proposed amendments to the 

regulation only for years 2012 through 2014. It is possible that the proposed regulation 

will be implemented a few months earlier, in late 2011. However, we are not analyzing 

these potential costs because they are uncertain, and would add unnecessary 

complexity to the analysis. In addition, we are only analyzing the costs through the end 

of 2014 because in 2015 we expect federal regulations established under the 

International Maritime Organization to require equivalent emission reductions to the 

OGV Clean Fuel Regulation. As specified in the current regulation, when the Executive 

Officer of the ARB issues written findings that federal requirements are in place that will 
V-6

achieve equivalent emission reductions in Regulated California Waters, then the fuel 

requirements in the ARB regulation shall cease to apply. In the following paragraphs, 

we provide a discussion on the expected capital and recurring costs associated with the 

proposed amendments. 

Capital Costs

We expect that the proposed amendments will result in no significant capital costs to 

ship operators. While the extension of “Regulated California Waters” in southern 

California will require the use of the complying distillate fuel over somewhat longer 

distances for some routes to California ports, we expect that most vessels will have 

sufficient tank capacity for distillate fuel. In addition, the current regulation includes an 

“Essential Modifications Exemption” that provides vessel operators with an exemption 

from the fuel requirements if they submit an application to ARB demonstrating that 

modifications to the vessel (such as increasing tank capacity) are essential to their 

ability to comply with the regulation. Under the current regulation, this provision has 

been used in only a few cases based on inadequate fuel tank capacity for distillate. 

Recurring Costs

The recurring (on-going) costs associated with the proposed amendments are due to 

the extended regulatory boundary in which vessel operators must use the more 

expensive marine distillate fuels. These costs are partially offset by the cost savings 

associated with delaying the implementation of the Phase 2 (0.1% sulfur) fuel until 

2014. We calculated the overall net costs based on the difference between: (1) the 

current estimated fuel consumption under the existing regulation, and (2) the estimated 

fuel consumption under the proposed amendments to the rule. This analysis uses 

current fuel prices, as discussed below. In addition, the types of fuels used will vary 

with the specific year. We did not attempt to forecast fuel price increases over the three 

years covered by this analysis given the highly volatile and unpredictable nature of 

petroleum prices. Our assumptions for fuel consumption rates and the fuel prices are 

described below.

Fuel Consumption and Cost Estimates

The estimated fuel consumption and cost of the relevant fuels was calculated for two 

scenarios: (1) The baseline case under the current regulation with current traffic 

patterns and vessel routes, including 50% of vessels visiting the Ports of LA/LB routing 

outside the Santa Barbara Channel; and (2) the proposed amended regulation with 

predicted vessel routes, assuming vessels return to the Santa Barbara Channel.

These estimates were calculated within the 100 nm offshore boundary used for 

emissions inventory purposes. While this boundary extends beyond the regulatory 

boundaries used in the current regulation and under the proposed amendments, this is 

appropriate because some vessels are using alternative routes outside the relevant 

regulatory boundaries, and because the difference between consumption under the 

current regulation and the proposed amendments is needed to determine the added 
V-7

cost of the proposed amendments. The estimated fuel consumption, in tonnes, was 

estimated based on the ARB’s Emissions Inventory (ARB Marine Emissions Model, 

version 2.3g). The estimate is based on: (1) the estimated energy consumed by 

vessels using vessel specific information and shipping lane distances within the 100 nm 

boundary; (2) the appropriate brake specific fuel consumption figures for mediumspeed, four-stroke auxiliary engines and slow-speed, two-stroke main engines; and (3) 

estimated average auxiliary boiler fuel consumption by vessel type. This analysis also 

accounts for the impact of the ARB Shore-side Power Regulation and the voluntary 

vessel speed reduction program at the Ports of Los Angeles and Long Beach. 

For this analysis, we assume that all fuel used by main engines and auxiliary boilers 

outside the regulatory zone is HFO. This is based on the ARB’s 2007 Ship Survey, 

which indicates that over 90 percent of main engines operate on HFO. For auxiliary 

engines outside the regulated zones, we assume that about 78 percent of the fuel used 

is HFO (ARB, 2007a). Regarding the use of HFO outside the California regulatory

zone, we assume that standard heavy fuel oil (grade IFO 380) will be used prior to 

implementation of the North American ECA in August 2012, and that 1% sulfur HFO

(grade IFO 380) will be used after the North American ECA is implemented. 

Fuel prices were estimated as shown in Table V-1 using the average of data from the 

previous five months (November 2010 through March 2011) at five major bunker ports 

(Petromedia Corporation, 2011). For some ports, not all of the fuels were offered or the 

data were unavailable, so the estimated average prices reflect only the data from the 

remaining ports. For 0.1% sulfur MGO, the price was estimated using regular MGO and 

adding a $60 premium, which was the adjustment used in the cost analysis for the 

original regulation (ARB, 2008). The Port of Los Angeles generally offers MGO at or 

below 0.1% sulfur, so in this case the MGO fuel prices were used without adjustment. 

Table V-1: Marine Fuel Prices ($/tonne)1

Fuel Type Los Angeles Rotterdam Fujairah Singapore Houston Average

Standard MGO -- $831 $867 $828 -- $842

0.1% S MGO2 $862 $891 $927 $888 -- $892

IFO 380 $564 $527 $560 $555 $538 $549

1.0% IFO 3803 -- $548 -- $590 -- $569

1 Petromedia, 2011. Overall average fuel prices are based on the prices on Nov. 10, 2010, Dec. 

10, 2010, Jan. 11, 2011, February 11, 2011, and March 11, 2011 at the listed ports, where 

available. (Petromedia, 2011). 

2 A $60/ metric tonne premium was added for 0.1% sulfur distillate fuel compared to standard 

distillate based on the estimate used in the staff report for the original Ocean-Going Vessel Fuel 

Rule (ARB, 2008). For Los Angeles, the MGO is generally at or below 0.1% sulfur, so the MGO 

prices were used as is without adjustment.

3 It is uncertain which type of 1% sulfur fuel will be used by ship operators to meet the ECA in 

North America. We used readily available price data for ports that offer 1% sulfur heavy fuel oil 

(IFO 380 grade). 
V-8

In Tables V-2 and V-3, we provide estimates of the fuel consumption and fuel cost 

within 100 nm of the California coastline for both the existing regulation and the 

proposed amended regulation. These estimates were made using the fuel price 

information from Table V-1. Note that the estimated fuel cost under the proposed 

amended regulation (Table V-3) is somewhat higher (about 1.5% higher in 2012 and 

2013, and 6% higher in 2014) than the estimated fuel cost under the current regulation 

(Table V-2) due to the expanded regulatory boundary in which the cleaner fuel is 

required.

Table V-2: Total Statewide Annual Fuel Consumption and 

Cost (Current Regulation)*

2012 2013 2014

Fuel Type Tonne Cost ($) Tonne Cost ($) Tonne Cost ($)

Standard MGO 5,300 4,457,100 5,700 4,769,300 6,000 5,088,700 

0.1% S MGO 501,400 447,345,200 524,800 468,233,700 547,200 488,261,100 

IFO 380 233,200 127,937,300 0 0 0 0 

1.0% S 166,600 94,791,700 428,500 243,855,200 458,000 260,623,600 

Totals 906,500 674,531,300 959,000 716,858,200 1,011,200 753,973,400 

*Includes the impact of 50% of vessels visiting the Ports of LA/LB rerouting to avoid the regulatory zone.

Table V-3: Total Statewide Annual Fuel Consumption and 

Cost (Proposed Amendments)*

2012 2013 2014

Fuel Type Tonne Cost ($) Tonne Cost ($) Tonne Cost ($)

Standard MGO 658,588 554,643,397 693,380.25 583,944,042 3,260 2,745,836

0.1% S MGO 0 0 0 0 724,229 646,178,728

IFO 380 136,479 74,877,964 0 0 0 0

1.0% S 97,485 55,478,807 250,096.39 142,329,857 266,558 151,697,959

Totals 892,553 685,000,167 943,476.64 726,273,898 994,047 800,622,523

*Assumes no vessel rerouting to avoid using the Santa Barbara Channel.

Total Annual Recurring (Fuel) Costs 

The total annual recurring costs of the proposed amendments above the baseline costs 

of the existing regulation are presented in Table V-4 for years 2012 through 2014. 

These estimates are based on the differences in estimated fuel cost using our best 

estimates of the resulting shipping routes. As shown in Table V-4, the added annual 

fuel costs are estimated at about $10 million in years 2012 and 2013, and about 

$47 million in 2014. The added costs are due to the longer distances that ship 

operators will use the low sulfur distillate fuels in the expanded regulatory zone in 

Southern California. In years 2012 and 2013, the additional costs are lower because 

the proposed amendments would delay the requirement to use the Phase 2 fuel to 

2014.
V-9

Table V-4: Estimated Additional Fuel Costs with the 

Proposed Amendments*

Year Total Estimated Fuel Cost 

Under Proposed 

Amendments ($)

Total Estimated Fuel Cost 

Under Current Rule ($)

Incremental Fuel Cost 

Increase Under Proposed 

Amendments ($)

2012 $685,000,000 $674,531,000 $10,469,000

2013 $726,274,000 $716,900,000 $9,416,000

2014 $800,622,000 $754,000,000 $46,649,000

*Fuel cost figures for usage within 100 nm of California mainland shoreline.

Added costs of the proposed amendments that were already accounted for in the 2008 

rulemaking for the original rule

The cost estimates above reflect the added cost of the proposed amendments over and 

above the actual baseline case, represented by vessels rerouting outside the regulated 

zone and reducing costs that were not accounted for in the original 2008 rulemaking. If 

vessels had continued to use the established shipping lanes in the Santa Barbara 

Channel as expected, the proposed amendments would have resulted in net cost 

savings in 2012 and 2013 compared to the existing rule due to the delay in the Phase 2 

fuel standard, and similar costs in 2014. 

D. Total Regulatory Costs

Total Industry Cost

We estimate the total statewide incremental additional cost of the proposed 

amendments to the regulation at about $59 million (2011 dollars). This estimated cost 

was derived from the 2011 present value of annual costs shown in Table V-4 for years 

2012-2014. The total estimated industry cost is shown in Table V-5. 

Table V-5: Estimated Total Cost (2011 Present Value)

Year Future Cost ($) Discount* Present Value ($)

2012 10,469,000 0.952 9,970,000

2013 9,416,000 0.907 8,540,000

2014 46,649,000 0.863 40,300,000

Total -- -- 58,800,000

*Discount = 1/(1+i)^n, where i=5% and n=years

Total Annual Cost

The total annual cost of the proposed regulation is the same as the added fuel costs 

shown in Table V-5 because we estimate no significant capital costs. 
V-10

Potential Additional Costs or Savings

There may be some other costs and potential cost savings that could be incurred under 

the proposed regulation, but data were not available to enable quantification of these 

possible impacts. Nevertheless, the net impact of these costs and savings is not 

expected to be significant. These are briefly described below. 

Capital costs

We expect that the proposed amendments to the regulation will result in no significant 

capital costs. Any capital costs to the industry due to the use of distillate fuel would 

probably have already been incurred under the current regulation. In addition, the 

regulation contains an Essential Modifications Exemption that provides an exemption for 

equipment that cannot use the complying distillate fuel without modifications. 

Nevertheless, it is possible that some ship operators may undertake certain equipment 

changes in response to the increased use of distillate fuel under the proposed 

amendments, even if these changes are not essential. For example, it is possible that 

some vessels that travel frequently within the expanded region of Regulated California 

Waters in Southern California (e.g. to the Ports of Los Angeles and Long Beach) may 

choose to add tanks and piping to allow for more extensive use of distillate fuel. 

However, we estimate that capital costs would not increase the overall cost of the 

proposal by more than ten percent. 

Greater Use of distillate fuel may result in lower or higher maintenance costs

As discussed in the staff report for the existing OGV Clean Fuel Regulation 

(ARB, 2008), the use of lower sulfur marine distillate fuel may result in a reduction in 

engine maintenance in some engines and boilers due to a reduction in deposit 

formation. On the other hand, the use of lower viscosity distillate fuel may lead to more 

frequent maintenance of fuel injection pumps, and may result in more leaks at pipe 

joints compared to the use of heavier fuels. Both of these effects, to the extent they 

occur, may be slightly more pronounced if vessels are operating for longer periods of 

time on the distillate fuels under the proposed amendments. ARB staff are not aware of 

any data to quantify these potential costs or savings.

E. Estimated Cost to Businesses

The proposed amendments would primarily impact businesses that operate large OGVs

that visit Southern California ports. Most of these businesses are foreign-owned 

businesses, or domestic businesses located outside of California. The additional costs 

of the proposed amendments compared to the existing regulation are estimated below 

for typical (average) businesses. However, the cost to individual businesses will vary 

widely based on factors such as the following:

• number of vessels visiting California ports;

• number of California port visits per vessel; 

• specific ports visited and the overwater route to these ports; and
V-11

• engine power and associated fuel consumption.

For example, since the proposed amendments extend the regulatory boundary only in 

Southern California, vessel operators that only visit Northern California ports would 

experience a net savings due to the delay of the Phase 2 0.1% sulfur fuel requirement 

until 2014. On the other hand, a vessel operator visiting the Ports of Los Angeles or 

Long Beach would incur additional costs due to the larger regulatory zone that may 

exceed the savings due to the extension of the Phase 2 fuel. 

Table V-6 below shows the estimated average additional cost per port call. The 

average cost per call is estimated at about $1,100 in 2012, $1,000 in 2013, and $4,800 

in 2014, when the Phase 2 (0.1% sulfur) fuel limit is proposed to be implemented. 

These costs per port call are estimated by dividing the total annual cost of the regulation 

by the estimated number of port visits. 

The cost to an individual company will vary widely based on the number of California 

port calls they make. Most ship operators make less than 10 California port calls in a 

year, while only a very few make over 100 calls annually.

Table V-6: Estimated Average Cost per Port Call

Year Total Annual Cost ($) Total Annual Port Visits* Average Cost/Port Call ($)

2012 $10,469,000 9,797 $1,100

2013 $9,416,000 9,797 $1,000

2014 $46,649,000 9,797 $4,800

*2009 California port visits. Assume no significant changes in 2012-2014.

We do not believe that the vessel operators affected by the proposed amendments to 

the OGV Clean Fuel regulation would qualify as small businesses due to the large 

capital and operating costs associated with vessel operation. Typical container vessels 

are estimated to cost on the order of $50 to $100 million (Mercator, 2005). In addition, 

Government Code section 11342.610 excludes businesses in transportation and 

warehousing with annual gross receipts exceeding one and a half million dollars from its 

definition of “small business.” We believe that the annual gross receipts for a vessel 

owner or operator would far exceed this level in order to be profitable. For example, a 

single Asia to U.S. West Coast voyage for a typical container vessel costs about $2 to 

$3 million. (Ibid) Therefore, we do not believe there are any small businesses directly 

affected by the proposed regulation. As such, we have only included costs in this 

analysis for typical businesses.

The costs to typical businesses are discussed below. However, it should be noted that 

the total cost to a particular company will vary widely, as discussed above. 

Recurring (Fuel) Costs to Typical Businesses 

The recurring cost for a typical business is presented below. To determine the average 

annual recurring cost for a typical business, we divided the total annual recurring cost of 

the proposed regulation for all vessels by our estimate of the number of shipping 

companies that operate in California, based on port visit data compiled by the California 
V-12

State Lands Commission (CSLC, 2011). As shown in Table V-7, the average cost per 

company ranged from about $20,000 to $90,000 annually. 

Table V-7: Estimated Average Added Annual Fuel Costs per Company

Year Total Annual Cost Number of 

Operators*

Average Annual Cost 

Per Company

2012 $10,469,000 524 $20,000

2013 $9,416,000 524 $18,000

2014 $46,649,000 524 $89,000

* Based on California State Lands Commission port visit data. 

F. Potential Business Impacts

In this section, we analyze the potential impacts of the estimated costs of the proposed 

regulation on business enterprises. Section 11346.3 of the Government Code requires 

that, in proposing to adopt or amend any administrative regulation, State agencies shall 

assess the potential for adverse economic impact on California business enterprises 

and individuals. The assessment shall include a consideration of the impact of the 

proposed or amended regulation on the ability of California businesses to compete with 

businesses in other states, the impact on California jobs, and the impact on California 

business expansion, elimination, or creation.

This analysis is based on a comparison of the annual ROE for affected businesses 

before and after the inclusion of the costs associated with the proposed regulation. The 

analysis also compares the estimated added costs of the proposed regulation to the 

overall operating costs of these vessels 

ARB staff does not have access to financial records for many of these companies. It 

should be noted that many of these businesses are not California-based businesses. 

As stated in subchapter E above, we do not believe that the businesses subject to this 

proposed regulation would qualify as small businesses due to the large capital and 

operating costs associated with vessel operation. 

Analysis of Return on Owner’s Equity (ROE)

In this section, we evaluate the potential economic impact of the proposed regulation on 

California businesses as follows:

(1) Typical businesses affected by the proposed regulation are identified from port 

visit data from the California State Lands Commission. The Standard Industrial 

Classification (SIC) codes associated with these businesses are listed in Table 

V-9 below;
V-13

(2) The annual costs of the proposed regulation are estimated for each of these 

businesses based on the SIC code. For ranges in cost estimates, the high end 

of the range was used;

(3) The total annual cost for each business is adjusted for both federal and state 

taxes; and

(4) The adjusted costs are subtracted from net profit data and the results used to 

calculate the ROE. The resulting ROE is then compared with the ROE before 

the subtraction of the adjusted costs to determine the impact on the profitability 

of the businesses. 

Using publicly available financial data from 2008 to 2010 for the representative 

businesses, staff calculated the ROEs, both before and after the subtraction of the 

adjusted annual costs, for the typical businesses from each industry category. These 

calculations were based on the following assumptions:

(1) All affected businesses are subject to federal and state tax rates of 35 percent 

and 9.3 percent, respectively; and

(2) Affected businesses neither increase the cost to their customers, nor lower their 

cost of doing business through cost-cutting measures due to the proposed 

regulation. 

These assumptions, though reasonable, might not be applicable to all affected 

businesses.

The results of the analysis are shown in Table V-8 below. Using the ROE to measure 

profitability, we found that the ROE range for typical businesses from all industry 

categories would have declined by less than one percent due to the proposed 

amendments. This represents a small decline in the average profitability of the affected 

businesses. Overall, most affected businesses will be able to absorb the costs of the 

proposed amendments to the OGV Clean Fuel Regulation with no significant impacts on 

their profitability.

Table V-8: Return on Owners Equity Analysis of Businesses

SIC Code Description of SIC Code Percent Change 

in ROE

4412 Deep Sea Foreign Transportation of Freight -0.020

4424 Deep Sea Domestic Transportation of Freight -0.357

4481 Deep Sea Passenger Transportation -0.017

Average -0.13

Potential Impact on Business Competitiveness

The proposed amendments would generally result in higher costs for vessel operators 

visiting ports in Southern California. However, ARB staff does not believe that the 
V-14

added costs of the proposed amendments to the regulation are high enough for vessel 

operators to consider alternative ports in Northern California, or ports outside California. 

There are several reasons for this. First, many vessel operators utilize Southern 

California ports because there is already a local market for their goods in the greater 

Los Angeles area, or because California exporters choose to utilize Southern California 

ports to transport their goods overseas. Second, other vessel operators find that the 

overall cost of transporting goods to their final destination beyond California is lowest by 

using Southern California ports because of the ports’ existing and well established 

infrastructure, including road and rail access. Third, in some cases, vessel operators 

would have to factor in the added costs of fuel and other costs of traveling greater 

distances to alternative ports, which may negate the cost savings in not purchasing the 

lower sulfur fuel. Finally, the added costs resulting from the proposed amendments to 

the regulation are a small fraction of the overall operating costs of these vessels, and 

these costs are not expected to result in a significant adverse impact on the profitability 

of typical companies. 

Most of the affected businesses that operate vessels are large businesses and can 

either absorb or pass-through the increased costs associated with the proposed 

amendments with no significant impact on their ability to compete with non-California 

businesses. For these reasons, we do not believe the relatively low costs of this 

proposal are high enough to significantly affect the competitiveness of those businesses 

that are integrally linked to the movement of goods through Southern California ports.

Potential Impact on Employment, Business Creation, Elimination, or Expansion

The proposal is not expected to have a noticeable impact on employment, or business 

creation, elimination, or expansion. As stated above, the added costs of the proposed 

amendments are a small percentage of the overall operating costs for both cargo and 

cruise vessels. In addition, an analysis of the impact of the proposal on the profitability 

of typical businesses indicated no significant adverse impacts. 

Potential Impacts on Individuals

We do not expect significant impacts on the customers served by OGV operators, even 

assuming that all of the added costs of the proposed amendments are passed on to 

customers. Under a typical scenario with the existing regulation, we estimated in the 

2008 rulemaking that the added cost of the OGV Clean Fuel Regulation would add 

about $6 per shipping container for importers or exporters shipping containerized goods 

overseas (ARB, 2008). We estimated that this represents less than one percent of the 

shipping cost. For passenger cruise ships, we estimated the added cost of the OGV 

Clean Fuel Regulation for a typical Los Angeles to Mexico cruise would be about $15 

per passenger, representing about a 3 to 4 percent fare increase. Under the proposed 

amendments, these costs would not change significantly.

In addition, the health benefits of implementing the original regulation were found to be 

substantial. The proposed amendments will achieve somewhat greater emission 

reductions than originally estimated for the rule, preserving and slightly increasing these 

benefits.
V-15

G. Potential Costs to Local, State, and Federal Agencies

Local Agencies

We do not expect any significant fiscal impacts on local agencies from the proposed 

amendments. We are not aware of any local government agency that operates an OGV

as defined in the proposed regulation, and there is an exemption in the regulation for 

government-owned or operated vessels. However, some minor impacts are possible on 

ports, which in California are established by state government and are operated by 

entities such as port authorities and departments of municipal governments. 

We do not expect significant fiscal impacts on local air pollution control agencies due to 

the proposed regulation because ARB intends to enforce the provisions of the proposal 

statewide.

State Agencies

We also do not expect any significant fiscal impacts on State agencies from the 

proposed amendments. Government owned or operated vessels are exempted from 

the regulation. In addition, ARB staff enforcement of the regulation will continue 

unchanged with implementation of the proposed amendments. 

Federal Agencies

We are not aware of any fiscal impacts on federal funding of State programs. 

H. Cost-Effectiveness

For the purposes of this section, cost-effectiveness is defined as the ratio of the cost of 

compliance per ton (or pound) of pollution reduced. Cost-effectiveness figures allow 

different regulations to be compared to determine the most economical way to reduce a 

given amount of emissions. 

In this section, we calculate the cost-effectiveness in two ways. First, we attribute the 

total annual cost of the proposed amendments to diesel PM alone. This results in the 

highest cost-effectiveness, and may overestimate the overall cost-effectiveness of the 

proposed amendments. For example, a regulation that resulted in the same costs and 

diesel PM emission reductions, but no reductions in other pollutants, would have the 

same cost-effectiveness in terms of diesel PM as the proposed amendments (which 

also reduce NOx and SOx). Therefore, consistent with rulemaking efforts for other 

regulations that control multiple pollutants, we also calculate the cost-effectiveness by 

attributing half of the costs of the proposed amendments to diesel PM reductions.

Cost-Effectiveness of the Proposed Amendments: All Costs Attributed to Diesel 

PM Reductions

The estimated cost-effectiveness of the proposed regulation is shown in Table V-9 

below. The cost-effectiveness is expressed in terms of dollars per ton of diesel PM, 
V-16

with the total annual cost attributed to diesel PM alone. As shown, the average costeffectiveness is estimated at about $16 per pound of PM reduced. The costeffectiveness values are lower prior to 2014 because of the savings derived from the 

delay in the implementation of the more expensive Phase 2 fuel to 2014. 

Table V-9: Cost-Effectiveness of the Proposed Amendments

(Attributes All Costs to Diesel PM Reductions)

Year Total Annual 

Cost (millions $)

Emission 

Reductions*

(TPD)

CostEffectiveness

($/ton)

CostEffectiveness 

($/lb)

2012 $10.5 1.7 $17,000 $8.50

2013 $9.4 1.4 $18,000 $9.00

2014 $46.6 2.1 $61,000 $30.50

Average Cost-Effectiveness $32,000 $16

* The emission reductions are based on the ARB Marine Emissions Model, version 2.3g 

Cost-Effectiveness of the Proposed Amendments: Half the Costs Attributed to 

PM 

In Table V-10 below, we calculate the cost-effectiveness by attributing half of the costs 

of the proposed amendments to PM reductions. This may reflect the overall costeffectiveness more accurately in that it accounts for the multiple benefits of the 

proposed regulation. As shown, the average cost-effectiveness is estimated at about 

$16,000 per ton (or $8.00/lb) of PM reduced. 

Table V-10: Cost-Effectiveness of the Proposed Amendments

(Attributes Half of the Costs to PM)

Year

Half of Total 

Annual Cost 

(millions $)

Emission 

Reductions*

(tons per day)

CostEffectiveness

($/ton)

CostEffectiveness 

($/lb)

2012 $5.2 1.7 $8,400 $4.20

2013 $4.7 1.4 $9,200 $4.50

2014 $23.3 2.1 $30,400 $15.00

Average Cost Effectiveness $16,000 $8.00

* The emission reductions are based on the ARB Marine Emissions Model, version 2.3g.

As shown in Table V-11 below, the cost-effectiveness of the proposed amendments for 

PM (as presented in Table V-10) is on the low end compared to other regulations 

recently adopted by the Board. For comparison purposes, all cost-effectiveness 
V-17

estimates shown attribute half of the costs to PM, except for the In-Use Off-road Diesel 

Vehicle Rule, as noted. Also note that the cost-effectiveness of the proposed 

amendments is significantly lower than that of the original regulation. 

Table V-11: PM Cost-Effectiveness of the Proposal and Other Diesel Regulations 

(Attributes Half of All Costs to PM)

Regulation or 

Airborne Toxic Control Measure

PM Cost-Effectiveness Source of 

Dollars/Ton Dollars/pound Estimate

Public Fleets Rule $320,000 $160 ARB, 2005b

In-Use Off-road Diesel Vehicle Rule* $80,000 $40 ARB, 2007b

Solid Waste Collection Vehicle Rule $64,000 $32 ARB, 2003a

Cargo Handling ATCM $42,000 $21 ARB, 2005c

OGV Clean Fuel Regulation (2008) $31,300 $16 ARB, 2008

Ship Auxiliary Engine Regulation (2005) $26,000 $13 ARB, 2005

Stationary Diesel Engine ATCM $15,400 $7.70 ARB, 2003b

Proposed Amendments to OGV Clean 

Fuel Regulation (2011)

$16,000 $8.00 Staff Report

*Attributes all regulation costs associated with diesel emission controls to PM, and splits other regulation 

costs equally between PM and NOx.

I. Analysis of Alternatives

In this section, we compare the proposed amendments to four alternative control 

options: (1) Do nothing; (2) Repeal the existing regulation and rely on existing U.S. EPA 

and international regulations; (3) Implement the proposed amendments but also allow 

alternative emission control strategies to the use of the specified cleaner fuels; and (4) 

Implement the proposed amendments, except keep the requirement to use the Phase 2 

fuel in 2012, rather than moving the implementation to 2014. We do not discuss the 

cost-effectiveness of the first two alternatives because there are no ARB imposed costs 

associated with them. We also do not discuss the cost-effectiveness of the third 

alternative because the cost of potential alternatives is unquantifiable, and we do not 

believe this option would be pursued to any significant extent during the 2012-2014 

timeframe of this analysis.

Alternative 1: No Project (Do not amend the existing regulation) 

As discussed in detail in Chapter III, the existing regulation is not achieving the emission 

reductions originally estimated by ARB staff, and the redirection of vessel traffic to stay 

out of Regulated California Waters has increased traffic through the U.S. Navy’s Point 

Mugu Sea Range operations. The proposed amendments to the original regulation will 

regain the emission reductions originally expected from the regulation, and we expect it 

to significantly reduce vessel traffic through the Navy Sea Range. In addition, as 

discussed in this chapter, the amendments would be more cost-effective than 

anticipated in the original rule due to the delay of the Phase 2 (0.1% sulfur ) fuel to 

2014. For these reasons, staff rejected Alternative 1.
V-18

Alternative 2: Suspend the original regulation and rely on international and federal 

regulations

Prior to 2015, relying only on international and federal regulations would result in 

substantial increases in PM and SOx emissions. This is because under IMO/U.S. EPA 

regulations (i.e. an ECA zone), ship operators would be able to use higher 1% sulfur 

fuel (likely HFO). This compares to the Phase I and Phase II distillate fuel specified in 

the amended regulation. The Phase I fuel is currently averaging below 0.3% sulfur, and 

the Phase II fuel would be at or below 0.1% sulfur. In addition, the ARB rule specifies 

distillate fuels that burn cleaner than the HFO likely to be used to meet the 1% sulfur 

fuel, independent of sulfur levels. An emissions analysis prepared in the original staff 

report that compares the original regulation to the then pending ECA requirements 

shows the dramatic difference in emission reductions between these two options. This 

analysis would be very similar to the difference between the proposed amended 

regulation and the currently adopted North American ECA (ARB, 2008).

The emission reductions that would be achieved under the proposed regulation are 

critical to reducing the cancer and non-cancer health risks to the public. They are also 

necessary to make progress toward compliance with State and federal air quality 

standards for ozone and PM in nonattainment areas throughout the State. Finally, 

these reductions are an important element of California’s Diesel Risk Reduction Plan, 

the California Goods Movement Emission Reduction Plan, and marine port clean air 

plans. For the above reasons, staff rejected Alternative 2. 

Alternative 3: Implement the proposed amendments but also allow alternative emission 

control strategies to the use of the specified cleaner fuels

Under this alternative, the proposed amendments would be implemented, except that 

OGVs visiting California would also be allowed to use alternative emission control 

strategies to the use of the marine distillate fuels specified in the regulation. However, 

ARB staff does not believe that vessel operators would utilize alternative emission 

control strategies to any significant degree, meaning that the option would not 

significantly alter the cost-effectiveness of the proposed amendments (as estimated 

earlier in this chapter). 

A similar OGV fuel regulation adopted by the Board in 2005 included the option to use 

alternatives to the distillate fuel. The regulation was implemented in 2007 and was in 

effect for 14 months until invalidated by a court ruling. During the 14 months the rule 

was in place, not a single ship operator opted to comply by alternative emission 

controls, despite a guidance document prepared by ARB staff to aid ship operators 

interested in using the option (ARB, 2006b). ARB staff believes that alternatives to the 

distillate fuel were not utilized due to uncertainty in their cost-effectiveness and technical 

feasibility on oceangoing vessels. In addition, the use of the cleaner fuels specified in 

the regulation results in dramatic reductions in diesel PM and SOx, as well as NOx 

reductions. It is difficult for any one technology to reduce all of these pollutants 
V-19

combined to the same levels as the use of the cleaner fuels. This would likely result in 

the necessity to consider multiple alternative control strategies

In addition, even if we expected alternatives (or combinations of alternatives) to be 

utilized, it would be extremely difficult to accurately estimate their cost due to the 

emerging nature of these technologies, the array of possible alternatives, and the 

unique nature of OGVs, where retrofit installation costs of the same technology would 

vary significantly between two vessels based on available space, and other design 

features. 

Finally, there are significant legal challenges to including an option to use alternative 

emission control options that achieve equivalent emission reductions. These challenges 

are discussed in detail in the staff report for the original regulation (ARB, 2008). 

For the above reasons, staff rejected Alternative 3. 

Alternative 4: Implement the proposed amendments, except keep the requirement to 

use the Phase 2 fuel in 2012

Under this alternative, the proposed amendments would be implemented as proposed, 

except that the Phase 2 (0.1% sulfur) fuel would be implemented in 2012 rather than 

2014. As shown in Table V-12, this option would result in additional reductions in PM 

emissions in 2012 and 2013 compared to the proposal. However, the cost of 

Alternative 4 is also higher in 2012 and 2013 due to the added cost of the Phase 2 

(0.1% sulfur fuel). Due to these added costs, Alternative 4 would have a significantly 

higher cost-effectiveness ratio in years 2012-2013. For this reason, as well as the other 

reasons discussed in Chapter II for extending the Phase II fuel requirement to 2014,

staff rejected Alternative 4.

Table V-12: Diesel PM Cost-Effectiveness Comparison for Alternative 4 and the 

Proposed Amendments (Attributes All Costs to PM Reductions)

Estimated Cost (millions $) Estimated Reductions 

(tons/year)

Cost-Effectiveness 

($/ton)

Year Alternative 4 Proposal Alternative 4 Proposal Alternative 4 Proposal

2012 43.3 10.5 2.4 1.7 $49,000 $17,000

2013 44.0 9.4 2.0 1.4 $60,000 $18,000

2014 46.6 46.6 2.1 2.1 $61,000 $61,000
V-20

REFERENCES

(ARB, 2003a) California Air Resources Board, Errata, Staff Report: Initial Statement of 

Reasons Supplemental Report, Proposed Diesel Particulate Matter Control Measure for 

On-Road Heavy-Duty Residential and Commercial Solid Waste Collection Vehicles, 

August 15, 2003

(ARB, 2003b) California Air Resources Board, Staff Report: Initial Statement of 

Reasons for Proposed Rulemaking, Airborne Toxic Control Measure for Stationary 

Compression-Ignition Engines, September, 2003

(ARB, 2005) California Air Resources Board, Staff Report: Initial Statement of Reasons 

for Proposed Rulemaking: Proposed Regulation for Auxiliary Diesel Engines and DieselElectric Engines Operated on Ocean-Going Vessels Within California Waters and 24 

Nautical Miles of the California Baseline, October, 2005

(ARB, 2005b) California Air Resources Board, Staff Report: Initial Statement of

Reasons for Proposed Rulemaking, Proposed Diesel Particulate Matter Control 

Measure for On-Road Heavy-Duty Diesel-Fueled Vehicles Owned or Operated by 

Public Agencies and Utilities, October, 2005

(ARB, 2005c) California Air Resources Board, Staff Report: Initial Statement of 

Reasons for Proposed Rulemaking, Adoption of the Proposed Regulation for Mobile 

Cargo Handling Equipment at Ports and Intermodal Rail Yards, October, 2005

(ARB, 2006b) California Air Resources Board, Implementation Guidance: Alternative 

Compliance Plan for Cargo Handling Equipment and Alternative Control of Emissions 

for Ship Auxiliary Engines, November, 2006

(ARB, 2007a) California Air Resources Board, Ocean-Going Vessel Survey. February, 

2007

(ARB, 2007b) California Air Resources Board, Staff Report: Initial Statement of 

Reasons for Proposed Rulemaking, Proposed Regulation for In-Use Off-Road Diesel 

Vehicles, April, 2007

(ARB, 2008) California Air Resources Board, Staff Report: Initial Statement of Reasons 

for Proposed Rulemaking, Fuel Sulfur and Other Operational Requirements for OceanGoing Vessels within California Waters and 24 Nautical Miles of the California Baseline, 

June, 2008 

(CSLC, 2011) California State Lands Commission, Ballast Water Reporting Data for 

2006 as provided in March 23, 2011 email. 

(Mercator, 2005) Mercator Transport Group, Forecast of Container Vessel 

Specifications and Port Calls within San Pedro Bay, February 10, 2005

(Petromedia Corporation, 2011) Electronic mail communication with ARB staff dated 

March 17, 2011