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###### Federal Maritime Commission

          - [FMC 2024-0008]

# AGENCY:

Federal Maritime Commission.

# ACTION:

Notice of closure of investigation.

# SUMMARY:

The Federal Maritime Commission (Commission) has closed its investigation, initiated pursuant to chapter 423, into conditions created by the Government of Canada (Canada) in connection with regulation of ballast water management systems that may adversely affect the operation of United States carriers in the United States/Canada Great Lakes trade. Although sufficient short-term improvements have been made to the conditions under review, the Commission's parallel long-term investigation of those conditions pursuant to chapter 421 will remain open.

# FOR FURTHER INFORMATION CONTACT:

                        For questions regarding this Notice, contact David Eng, Secretary; Phone: (202) 523-5725; Email:                         *Secretary@fmc.gov.*

# SUPPLEMENTARY INFORMATION:

## I. Introduction

                    On May 22, 2024, the Federal Maritime Commission (Commission) initiated an investigation, pursuant to 46 U.S.C. 42302, of whether conditions created by the Government of Canada (Canada) in connection with regulation of ballast water management systems adversely affected the operation of United States carriers in the United States/Canada Great Lakes trade, in particular the carriers operating vessels that were to become subject to regulation in September 2024, within the meaning of 46 U.S.C. chapter 423      ( print page 99262)                        (Foreign Shipping Practices) (46 U.S.C. 42301-42307). With respect to those vessels, Canada has now granted exemptions from the regulation, or issued determinations that exemptions were not needed. As a result, the Commission has determined to close this investigation but to keep open its parallel investigation pursuant to 46 U.S.C. chapter 421 (Regulations Affecting Shipping in Foreign Trade) (46 U.S.C. 42101-42109) in order to address potential longer-term issues involving Canadian ballast water management regulation.                

## II. Summary of Status of Investigation

                    In 2020, the Commission opened an investigation under 46 U.S.C. chapter 421 following a petition by the Lake Carriers Association (LCA).                     *See*                     FMC Docket No. 20-10. That petition alleged that Canadian regulation set to take effect in September 2024 would create conditions unfavorable to shipping by requiring U.S. vessels to install new ballast water management systems. It became apparent that only a small group of U.S. Lakers built after 2008 would be affected by the Canadian regulation in 2024, with about 50 older Lakers not subject to it until 2030.                     *See*                     Investigation into Conditions Affecting United States Carriers in Connection with Canadian Ballast Water Regulation in the United States/Canada Great Lakes Trade, FMC-2024-0008, 89 FR 44979 (May 22, 2024) (May 2024 Notice of Investigation).                

                    It also became apparent that the U.S. Environmental Protection Agency (EPA), in its rulemaking to implement the Vessel Incidental Discharge Act (VIDA), would likely issue rules as to ballast water management equipment that would be less restrictive than those of Canada.                     *See*                     May 2024 Notice of Investigation, 89 FR 44979. In October 2024, the EPA did issue such rules. Vessel Incidental Discharge National Standards of Performance, 89 FR 82074, 82094-82095 (Oct. 9, 2024).                

                    Meanwhile, in May 2024 the Commission on its own motion initiated a chapter 423 investigation into whether Canadian ballast water management regulation in the Great Lakes adversely affected the operation of United States carriers in violation of 46 U.S.C. 42302(a).                     *See*                     May 2024 Notice of Investigation, 89 FR 44979. Under the 120-day time limit set by 46 U.S.C. 42302(c), the initial deadline for the Commission to complete the chapter 423 investigation was in September 2024.                

In response to the May 2024 Notice of Investigation, the Commission received 14 comments. The Canadian government and those representing the interests of Canadian carriers, as well as those representing environmental interests, opposed the potential imposition of sanctions. On the other hand, those representing the interests of U.S. carriers and workers were supportive of such measures.

                    In late July 2024 Transport Canada, the responsible Canadian agency, made available to U.S. carriers a procedure for seeking exemptions to the relevant ballast water management requirements, although the Commission understands that a comparable process had been available to Canadian carriers much earlier.                     *See*                     Procedure to request an exemption to install Ballast Water Management Systems under Ballast Water Regulations for foreign-flagged vessels in Canadian waters, Transport Canada (July 25, 2024) (Exemption Procedure), available at                     *https://tc.canada.ca/​en/​marine-transportation/​marine-safety-management-system-tp-13585-e-tier-ii-procedures/​tier-ii-procedure-request-exemption-install-ballast-water-management-systems-under-ballast-water-regulations-foreign-flagged-vessels-canadian-waters.*                     At the time this detailed exemption procedure for U.S. carriers was established, there was relatively little time to complete the application process before the relevant compliance date of the Canadian rule, which was September 8, 2024.                

                    Accordingly, also in September 2024, the Commission extended the time for decision in its chapter 423 investigation by 90 days, to December 18, 2024. Extension of Time for Decision in Investigation Into Conditions Affecting United States Carriers in Connection With Canadian Ballast Water Regulation in the United States/Canada Great Lakes Trade, 89 FR 74273 (Sept. 12, 2024) (September 2024 Notice). At the same time, the Commission established a new comment period to gather more information on the apparent disparity between the exemption processes available to U.S. and Canadian carriers, and on whether those processes may have themselves led to adverse conditions in violation of 46 U.S.C. 42302(a).                     *Id.*

                    In response to the September 2024 Notice, the Commission received comments from six entities.                     *See*                     Comments, Investigation Into Conditions Affecting United States Carriers in Connection With Canadian Ballast Water Regulation in the United States/Canada Great Lakes Trade, Docket No. FMC-2024-0008, available at                     *https://www.regulations.gov/​document/​FMC-2024-0008-0018/​comment.*                     Comments from those representing the interests of U.S. entities argued that the Canadian exemption processes did create disparate effects, particularly in that the U.S. process was not available until late July 2024, shortly before the early September compliance date. There were also statements that the process for U.S. Lakers was more complex and time-consuming. But Canada and those representing Canadian carriers argued that there was no unlawful disparity. Canada asserted generally that there had been no differential treatment with regard to exemptions, although it did not specifically dispute the difference in the application availability dates.                

Information received to date indicates that the Canadian regulation at issue in this chapter 423 investigation may create conditions that adversely affect the operation of the U.S. Lakers, in a way that Canadian carriers do not face under current U.S. law, within the meaning of 46 U.S.C. 42302(a). First, such adverse conditions may exist as a result of the substantive Canadian regulation involved here. There appears to be no dispute that the EPA does not currently require, at least as part of its VIDA implementation, that U.S. Lakers meet the same ballast water management equipment standards as Canada does, although Canada and some other commenters have argued that the U.S. has imposed comparably burdensome ballast water regulation on Canadian carriers through other rules. Second, it may be that the procedures for exemptions from Canada's rule have themselves created such disparate conditions, most notably in the failure until late July 2024 to establish a detailed process for U.S. Lakers that is arguably comparable to the one available to Canadian carriers. That delay appears to have prevented the completion of the process by the early September 2024 compliance date for post-2008 Lakers.

                    However, due in part to the statutorily imposed deadline of December 18, 2024, the Commission will not, at this time, make an affirmative determination as to disparate treatment under 46 U.S.C. 42302(a). The immediate concerns that prompted this investigation have been temporarily resolved. Information received indicates that Canada has granted exemptions for certain U.S. vessels affected in September 2024, and has determined that the other affected vessels would not be subject to the rule in 2024. In its most recent comments, Canada stated that three of the six exemption requests by U.S. carriers were granted on October 14, 2024, and that the other three vessels “will be informed that they do not require an exemption based on the regulations.”                           ( print page 99263)                        Comments of Canada (Oct. 15, 2024) at 2. The LCA, in a public submission, provided an email attaching a chain of recent communications with Transport Canada. That email chain confirms that three of the six U.S. vessels had been granted exemptions and that two of the remaining vessels had been determined not to need an exemption.                     *See*                     LCA Submission (Oct. 28, 2024) at 2-6. The LCA's late October submission indicated that the sixth vessel had not yet received a final determination, but the Commission understands that that vessel received an exemption in early November 2024. However, the exemptions are only temporary in nature, so the vessels will be in a similar precarious operating position when the exemptions expire.                

The Commission notes that the exemption process, due both to the lateness of its availability and the seeming onerousness of its process, may have imposed negative effects on certain U.S. carriers. Accordingly, there are ongoing concerns with respect to specific elements of the above exemption determinations. Those issues will be pursued in the agency's longer-term chapter 421 investigation, which remains open. The Commission will continue to investigate these concerns and strongly encourages affected entities or anyone with relevant information to participate in the ongoing chapter 421 proceeding.

## III. Closure of Investigation

For the above reasons, the Commission has closed its Investigation into Conditions Affecting United States Carriers in Connection with Canadian Ballast Water Regulation in the United States/Canada Great Lakes Trade, FMC-2024-0008, 89 FR 44979 (opened May 22, 2024).

By the Commission.

Dated: December 5, 2024.

David Eng,

Secretary.

[FR Doc. 2024-28996 Filed 12-9-24; 8:45 am]

BILLING CODE 6730-02-P