Document ID: EPA-HQ-OAR-2011-0928-0001
Agency: epa
Document Type: Rule
Title: Great Lakes Steamship Repower Incentive Program; Direct Final Rule
Posted Date: 2012-01-18T05:00Z

[Federal Register Volume 77, Number 11 (Wednesday, January 18, 2012)]
[Rules and Regulations]
[Pages 2472-2478]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-819]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 1043

[EPA-HQ-OAR-2011-0928; FRL-9618-9]
RIN 2060-XXXX

Great Lakes Steamship Repower Incentive Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to simplify an existing 
provision in our marine diesel engine program that is intended to 
encourage owners of Great Lakes steamships to repower those steamships 
with cleaner marine diesel engines. The simplified program will 
automatically permit the use of residual fuel, through December 31, 
2025, in a steamship if it has been repowered with a certified Tier 2 
or later marine diesel engine, provided the steamship was operated 
exclusively on the Great Lakes and was in service on October 30, 2009. 
Steamships are powered by old, inefficient steam boilers. Voluntary 
replacement of these boilers with modern fuel-efficient marine diesel 
engines will result in reductions of particulate matter and sulfur 
oxides, even while the replacement diesel engines are operated on 
higher sulfur residual fuel, and will provide human health and welfare 
benefits for the people who live in the Great Lakes region. Conversion 
to new diesel engines will also result in considerable carbon dioxide 
reductions and fuel savings.

DATES: This rule is effective on March 19, 2012 without further notice, 
unless EPA receives adverse comment by February 17, 2012. If EPA 
receives adverse comment, we will publish a timely withdrawal in the 
Federal Register informing the public that the rule will not take 
effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2011-0928, by one of the following methods:
     www.regulations.gov: Follow the on-line instructions for 
submitting comments.
     Email: a-and-r-docket@epa.gov.
     Fax: (202) 566-9744.
     Mail: Environmental Protection Agency, Air Docket, Mail-
code 6102T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center (EPA/DC), EPA West, Room 
3334, 1301 Constitution Ave. NW., Washington, DC, Attention Docket No. 
EPA-HQ-OAR-2010-0928. Such deliveries are only accepted during the 
Docket's normal hours of operation, and special arrangements should be 
made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2011-0928. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or email. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm. For additional 
instructions on submitting comments, go to Unit III of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the ``Great Lakes Steamship 
Repower Incentive Program'' Docket, EPA/DC, EPA West, Room 3334, 1301 
Constitution Ave. NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Public Reading Room is (202) 
566-1744, and the telephone number for the ``Great Lakes Steamship 
Repower Incentive Program'' Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Jean Marie Revelt, Environmental 
Protection Agency, Office of Transportation and Air Quality, Assessment 
and Standards Division, 2000 Traverwood Drive, Ann Arbor, Michigan 
48105; telephone number: (734) 214-4822; fax number: (734) 214-4816; 
email address: revelt.jean-marie@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. Why is EPA using a direct final rule?

    EPA is publishing this rule without a prior proposed rule because 
we view this as a noncontroversial action and anticipate no adverse 
comment. However, in the ``Proposed Rules'' section of today's Federal 
Register, we are publishing a separate document that will serve as the 
proposed rule to adopt the provisions in this Direct Final Rule if 
adverse comments are received on this direct final rule. We will not 
institute a second comment period on this action. Any parties 
interested in commenting must do so at this time. For further 
information about commenting on this rule, see the ADDRESSES section of 
this document.
    If EPA receives adverse comment, we will publish a timely 
withdrawal in the Federal Register informing the public

[[Page 2473]]

that this direct final rule will not take effect. We would address all 
public comments in any subsequent final rule based on the proposed 
rule.

II. Does this action apply to me?

    This action will affect companies that own steamships operating 
exclusively on the Great Lakes that were in service on October 30, 
2009. The following table gives some examples of entities that may be 
affected by this rule; however, since these are only examples, you 
should carefully examine the regulations. You may direct questions 
regarding the applicability of this action as noted in FOR FURTHER 
INFORMATION CONTACT.

 
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                                                  NAICS codes
                   Category                           \a\          Examples of potentially regulated entities
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Industry......................................          483113  Coastal and Great Lakes Freight Transportation.
Industry......................................          483114  Coastal and Great Lakes Passenger
                                                                 Transportation.
Industry......................................          336611  Ship building and repairing.
Industry......................................          811310  Engine repair, remanufacture, and maintenance.
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\a\ North American Industry Classification System (NAICS).

III. What should I consider as I prepare my comments for EPA?

    A. Submitting CBI. Do not submit this information to EPA through 
www.regulations.gov or email. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as 
CBI and then identify electronically within the disk or CD-ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    B. Tips for Preparing Your Comments. When submitting comments, 
remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

IV. Summary of Rule

A. Overview

    EPA's final rule for Category 3 marine engines \1\ and their fuels 
(75 FR 22896, April 30, 2010) exempted steamships from the sulfur 
limits that apply to fuel used in ships operating on the Great Lakes 
\2\ beginning August 1, 2012 (40 CFR 1043.95(a)). This means steamships 
can continue to operate indefinitely on high sulfur residual fuel. 
However, because steamship engines have high emissions and low fuel 
efficiency, we included a provision to encourage owners of Great Lakes 
steamships to voluntarily replace their steam boilers with cleaner, 
more fuel-efficient marine diesel engines (40 CFR 1043.95(b)(4)(iv)). 
The current voluntary repower incentive is in the form of relief 
through EPA's economic hardship program, through which an owner may 
apply for a relaxation of the Great Lakes fuel sulfur limits for fuel 
used by the repowered diesel ship, for a defined period of time. The 
use of lower price, higher sulfur residual fuel can help offset vessel 
repower costs.
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    \1\ Category 3 marine engines are diesel engines with per 
cylinder displacement at or above 30 liters.
    \2\ For the purpose of this program, ``Great Lakes'' means all 
the streams, rivers, lakes, and other bodies of water that are 
within the drainage basin of the St. Lawrence River, west of 
Anticosti Island. (40 CFR 1043.20).
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    EPA believes that the goal of repowering the fleet of Great Lakes 
steamships will be achieved more effectively by adding a new incentive 
program to provide an automatic, time-limited fuel waiver for repowered 
steamships. Instead of applying for relief through the economic 
hardship program, Great Lakes steamship owners who voluntarily repower 
their steamships with diesel engines would automatically qualify for a 
waiver that will allow the use of residual fuel in the replacement 
diesel engines that exceeds the global and ECA sulfur limits that 
otherwise apply to the fuel used in marine diesel engines operated on 
the U. S. portions of the Great Lakes. This automatic Great Lakes 
steamship repower fuel waiver will be valid through December 31, 2025; 
after that date, repowered steamships will be required to comply with 
the Great Lakes ECA fuel sulfur limits for diesel engines.\3\ To 
qualify for this automatic fuel sulfur waiver, the steamship must be 
exempt from existing requirements pursuant to 40 CFR 1043.95(a) in that 
it must operate exclusively on the Great Lakes and must have been in 
service on October 30, 2009. In addition, the replacement engine must 
be a Tier 2 or cleaner marine diesel engine as specified in 40 CFR 
1042.104.
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    \3\ Compliance can be through switching to ECA-compliant fuel or 
through the installation and use of an exhaust gas cleaning system 
(scrubber) or other technology or procedure that achieves equivalent 
sulfur emissions. See Section V.C of the preamble for our Category 3 
FRM for a discussion of compliance strategies.
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    Voluntary replacement of steam engines with cleaner, more efficient 
Tier 2 or better marine diesel engines through this modification to our 
steamship repower incentive program will provide important air quality 
and energy benefits immediately, due to the improved fuel efficiency of 
the diesel engines, and even larger benefits in the long term, when the 
repowered ships will use fuel that complies with the 1,000 ppm sulfur 
limit on the Great Lakes.

B. Background

    The Great Lakes and St. Lawrence Seaway are the longest deep draft 
navigation system in the world. About 160 million tons of cargo is 
moved each year through the 110 ports located on this 2,300 mile 
system, which extends from the Gulf of St. Lawrence to the western 
shores of Lake Superior. According to a recent study, this

[[Page 2474]]

transportation system generated nearly 93,000 directly-related jobs and 
134,000 indirect jobs in the U.S. and Canada in 2010, providing about 
$34.5 billion in business revenue.\4\
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    \4\ The Economic Impacts of the Great Lakes-St. Lawrence Seaway 
System. Martin Associates. October 18. 2011. A copy of this report 
can be found at http://www.marinedelivers.com/economy.
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    The U.S. Great Lakes fleet consists of 57 vessels that carry about 
65 percent of Great Lakes cargo.\5\ This fleet is ``captive,'' meaning 
that many of these ships operate solely on the Great Lakes. For some 
ships, this is because they are too large to pass through the Welland 
Canal to the St. Lawrence Seaway; others service only Great Lakes 
ports. Operation in fresh water minimizes hull corrosion and therefore 
these captive cargo ships remain in service for a long time. The 
average age of the fleet of all U.S. cargo vessels operating on the 
Great Lakes today is about 44 years. The Canadian fleet of 96 ships 
carries about 25 percent of Great Lakes cargo. This fleet is different 
from the U.S. fleet in that the ships are younger, on average 35 years, 
tend to be smaller, and are more likely to operate in the brackish 
water of the lower end of the St. Lawrence Seaway, the Gulf of St. 
Lawrence, and the Atlantic Ocean. The remaining Great Lakes cargo is 
carried by foreign ocean-ships operating on the system temporarily.
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    \5\ Data in this section derived from Greenwoods Guide to Great 
Lakes Shipping 2010 (Harbor House Publishing, 2010), Lake Carriers' 
Association, the Canadian Shipowners Association, and the St. 
Lawrence Seaway Management Corporation. See http://www.lcaships.com/TONPAGE.HTM, http://www.shipowners.ca/index.php?page=annual-report-and-statistics, and http://www.seaway.ca/en/seaway/facts/traffic/index.html.
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    Steamships are the oldest segment of the Great Lakes fleet. There 
are thirteen U.S. steamships operating on the Great Lakes; twelve of 
these have boilers burning residual fuel oil and the thirteenth 
operates on coal. The average age of these steamships is about 58 
years, the youngest being built in 1960 and the oldest in 1942. The 
average age of the smaller fleet of 6 Canadian steamships is 57 years, 
with the youngest built in 1967. Because they operate primarily in 
fresh water, the U.S. steamships do not experience the corrosion of 
saltwater and are expected to remain in operation for several more 
decades.
    Steamships remaining in operation today, on both the Great Lakes 
and the ocean, are part of a legacy fleet that uses technology 
originally developed before the diesel engine became the dominant ship 
propulsion method worldwide. In steam technology engines, residual fuel 
or coal is burned to heat water in a boiler; the resulting steam is 
converted into energy to rotate the ship's main propellers. Steam 
engines are less efficient than internal combustion engines and can use 
30 to 50 percent more fuel than a diesel engine. This translates to 
high sulfur oxide (SOX) and particulate matter (PM) 
emissions. As discussed in our Category 3 marine rule, these emissions 
have important impacts on human health and the environment.
    Steamships that operate in salt water are retired from service as a 
result of hull corrosion, and much of today's fleet of ocean steamships 
is expected to be retired by 2020. Owners choose diesel engines for the 
replacement vessels because of their better fuel efficiency and 
performance characteristics; diesel engines have lower SOx and PM 
emissions as well. Increasing fuel prices have led some Great Lakes 
steamship owners to carry out repower projects to replace their 
inefficient steam engines with cleaner fuel-efficient diesel engines. 
This type of vessel modification can be expensive, with costs of $15 to 
$25 million or more (20 to 25 percent of the cost of a new vessel), 
because the steam engine is an integral part of the vessel and the hull 
must be cut away to remove it. Repowering also requires extensive 
engine room and propeller modifications. However, the fuel savings 
associated with a 30 percent improvement in fuel efficiency combined 
with the long service life of Great Lakes ships helps the owner recover 
these costs. The fuel savings can make repowering attractive to owners 
on a long-term basis, and several Great Lakes steamships were repowered 
in the last decade, including the Paul R. Tregurtha, the Charles M. 
Beeghly (now the James L. Oberstar), the Michipicoten, and the Saginaw. 
This dynamic was changed, however, with the designation of the North 
American Emission Control Area (ECA) and the application of the 
stringent ECA fuel sulfur limits to the Great Lakes through our 
Category 3 marine rule. As explained below, ECA-compliant fuel is 
expected to be higher price distillate fuel, and steamship owners may 
not be able to recover the cost of a repower even with the better fuel 
efficiency of diesel engines compared to steam engines. As a result, 
the incentives for repowering any one of the thirteen remaining 
steamships became less compelling.

C. EPA's Coordinated Strategy for Ships and Steamship Repowers

    In our 2010 Category 3 marine rulemaking, EPA adopted a Coordinated 
Strategy for ships that will reduce emissions from all foreign and 
domestic vessels that affect U.S. air quality. The Coordinated Strategy 
applies to all ships that operate in the United States, including those 
that operate on the U.S. portions of the Great Lakes and St. Lawrence 
Seaway. The Coordinated Strategy consists of three parts:
    (i) Addition of new tiers of Clean Air Act (CAA) emission standards 
that apply to Category 3 marine engines installed on U.S. vessels, and 
certain compliance requirements that are consistent with our regulatory 
program for Category 1 and Category 2 marine engines;
    (ii) Designation of U.S. coastal waters as an Emission Control Area 
(ECA) through amendment to Annex VI of the International Convention for 
the Prevention of Pollution from Ships (MARPOL Annex VI); ships 
operating in a designated ECA are required to meet the most stringent 
engine and marine fuel sulfur requirements contained in MARPOL Annex 
VI; and
    (iii) Adoption of the engine emission and fuel sulfur limits 
contained in the amendments to MARPOL Annex VI that are applicable to 
all vessels regardless of flag and implementation of those requirements 
in the U.S. through the Act to Prevent Pollution from Ships (APPS) and 
regulations issued under APPS.
    The North American ECA was designated through amendment to MARPOL 
Annex VI that was adopted by the Parties to Annex VI in March 2010.\6\ 
A fuel sulfur limit of 10,000 ppm will begin to apply in this 
designated ECA starting in August 2012; this is reduced to 1,000 ppm 
beginning January 1, 2015.\7\
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    \6\ MEPC.1/Circ.723, 13 May 2010. Information on North American 
Emission Control Area (ECA) Under MARPOL Annex VI. A copy of this 
document can be found at http://www.epa.gov/otaq/regs/nonroad/marine/ci/mepc1-circ-re-na-eca.pdf.
    \7\ See http://www.epa.gov/otaq/fuels/dieselfuels/documents/420b11002.pdf for a summary of the EPA and MARPOL Annex VI fuel 
sulfur limits and their effective dates.
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    Our 2010 Category 3 marine rulemaking finalized regulations 
implementing the MARPOL Annex VI and North American ECA requirements 
for U.S. vessels under the CAA and for U.S. and foreign vessels under 
APPS. That rule also adopted regulatory text to clarify that vessels 
operating in U.S. internal waters, shoreward of an ECA, that can be 
accessed by ocean-going vessels must meet the MARPOL Annex VI ECA 
requirements. This includes ports and internal waters such as the Great 
Lakes. In the regulatory text we refer to the internal waters in which 
we are applying the ECA requirements as

[[Page 2475]]

the ``ECA associated area.'' The regulatory text applies the ECA 
requirements for these internal waters beginning at the same time as 
the ECA takes effect under MARPOL Annex VI.
    We received many comments from Great Lakes stakeholders during our 
Category 3 rulemaking process about the application of the ECA 
standards to the Great Lakes. Steamship owners raised technical and 
safety issues associated with operating Great Lakes steamships on 
distillate fuel, since these steamships were designed specifically to 
operate on residual fuel oils. In response to these comments, we 
considered a number of options to address the safety concerns for these 
vessels. However, Congress placed a prohibition on EPA's use of funds 
to issue a final rule that included fuel sulfur standards applicable to 
existing steamships that operate exclusively in the Great Lakes. 
Therefore, under our APPS section 1903 authority to ``prescribe any 
necessary or desired regulations to carry out the provisions'' of 
MARPOL Annex VI, our final regulations exclude Great Lakes steamships 
from the final fuel sulfur requirements (40 CFR 1043.95(a)). This means 
that steamships can continue to use high sulfur residual fuel 
indefinitely.\8\
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    \8\ Steamships operated in the coastal areas of the North 
American ECA are exempt from the fuel sulfur requirements through 
December 31, 2019, by amendment to MARPOL Annex VI. See MEPC 62/24, 
Annex 14, page 4 (July 26, 2011). These ships are expected to be 
retired from service as of that date as a result of hull corrosion 
from operating in salt water.
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    At the same time, however, we recognized that the steamship fuel 
sulfur exemption, combined with the application of ECA fuel sulfur 
requirements to diesel ships operating on the Great Lakes, would reduce 
the incentives for steamship owners to repower their ships. This is 
because once the steamship is repowered with diesel engines it would no 
longer be exempt from the fuel sulfur requirements. In addition, the 
higher price of fuel that is compliant with ECA and global fuel 
requirements would make it harder to recover the costs of the repower 
project through fuel savings from the more fuel efficient diesel 
engines.
    As a result, we added a provision to our economic hardship waiver 
program that would allow EPA to consider ``the ability of an individual 
vessel to recover capital investments incurred to repower or otherwise 
modify a vessel to reduce air emissions'' (40 CFR 1043.95(b)(4)(iv)). 
Using this provision, EPA intended that steamship owners who 
voluntarily repower their steamships with diesel engines could apply 
for an economic hardship waiver that would allow the ship to use lower-
price residual fuel in the repowered diesel engine for a specified 
period of time, which can help offset the capital costs of a repower 
project.
    Since EPA finalized the Category 3 marine rule, we recognized that 
the goal of encouraging voluntary Great Lakes steamship repowers can be 
achieved more effectively by providing an automatic fuel sulfur waiver 
for a defined period of time for Great Lakes steamships that are 
repowered with a Tier 2 or better diesel engine.\9\
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    \9\ In certain cases EPA may approve the use of an engine that 
meets a less stringent tier of standards, if the owner can 
demonstrate that the engine was purchased for a steamship repower 
prior to October 30, 2009 and it meets the criteria set out in the 
regulations.
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    A waiver is appropriate and reasonable due to the significant 
emissions and energy benefits from repowering a steamship with a diesel 
engine, both immediately and in the long run. A diesel engine is 30 to 
50 percent more fuel-efficient than a steam power plant, due to better 
combustion technology. In a typical steamship, replacing the steam 
power plant with a diesel engine will immediately reduce SOX 
emissions by about 34 percent; PM emissions would be about the same for 
both engines when operating on high sulfur residual fuel. In the long 
term, beginning January 1, 2026 when the replacement diesel engines 
will be required to use fuel that complies with the 1,000 ppm sulfur 
limit on the Great Lakes, the estimated emission reductions will be 
even more significant: About 97 percent reduction in SOX and 
about 84 percent reduction in PM emissions compared to the steam 
engine. These SOX and PM emission reductions are 
extraordinary, especially given that Great Lakes steamships, repowered 
or not, will have many years of service life remaining even after the 
expiration of the fuel sulfur waiver. Steam engines have inherently low 
NOX emissions due to their inefficient combustion process, 
and replacing a steam engine with a diesel engine may result in several 
times more NOX emissions. However, the diesel marine engines 
that would replace the steam engine have NOX emissions 
comparable to diesel engines used in other marine and land-based 
applications, and would be required to meet at least EPA's Tier 2 
standards. In addition, the health and human welfare benefits of 
reducing PM and SOX emissions overwhelm the impacts of the 
NOX emission increase of the repowered engine compared to 
the original steam engine. Therefore, the impacts of repowering Great 
Lakes steamships are expected to be significantly beneficial.
    An automatic waiver is appropriate because it will give owners 
greater flexibility with regard to how and when they repower. A ship 
repower is a lengthy process that requires significant redesign of the 
ship engine room and propulsion system. Also, the scheduling of dry 
dock time must be timed with the order and delivery of the replacement 
engine and other important ship components. An automatic waiver will 
avoid an additional review and approval phase for a repower project. It 
also may facilitate financing as the waiver is available for any 
qualifying steamship repower.
    Consistent with our existing steamship fuel sulfur waiver (40 CFR 
1043.95(a)), this steamship incentive program fuel waiver is available 
only to steamships that were operating exclusively on the Great Lakes 
and that were in service on October 30, 2009 \10\ and therefore are 
otherwise exempt from the requirements of Part 1043. In addition, the 
steam engine must be replaced with an engine that meets the EPA 
standards in effect at the time the ship will enter dry dock (i.e., it 
is covered by an EPA-issued certificate of conformity).
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    \10\ ``In service'' means operating as a steamship, but is not 
limited to actually performing that service on that day.
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    To qualify for this steamship repower waiver, the vessel must 
remain intact in that the cargo section of the vessel must remain 
connected to the section that contains the pilothouse. This means that 
if a steamship is converted to a barge and is subsequently paired, 
either permanently or sporadically, with a tug, the tug will not 
qualify for this fuel sulfur waiver. Removal of the engine section of 
the vessel and replacing it with a tug is more consistent with 
replacing the existing vessel rather than repowering it. In addition, 
the replacement tug would likely be powered by a Category 2 engine that 
does not use residual fuel, due to the space restrictions on tugs and 
the requirements for fuel handling equipment to use residual fuel, and 
therefore a residual fuel waiver would be irrelevant.
    The waiver is valid through December 31, 2025. Beginning January 1, 
2026, the owner will be required to use ECA-compliant fuel in the 
repowered diesel engine. This limited waiver period is intended to 
encourage steamship owners to repower early to take full advantage of 
the amount of time they can use lower price residual fuel. This,

[[Page 2476]]

in turn, will maximize the human health and environmental benefits of 
the steamship repower waiver.
    A steamship owner taking advantage of the automatic steamship 
repower incentive program is required to notify EPA's designated 
certification officer of the intention to use this provision. The 
notification must include a description of the project, the expected 
timeline, and other relevant information. The owner is also required to 
notify EPA's designated certification officer at completion of the 
project. At that time, EPA will provide the owner with a statement that 
the repowered ship is covered by the steamship repower incentive 
program fuel sulfur waiver. This document should be kept with the 
ship's International Air Pollution Prevention (IAPP) and Engine 
International Air Pollution Prevention (EIAPP) certificates, for 
compliance purposes.
    The owner of the repowered steamship is required to comply with all 
other aspects of EPA's marine diesel engine program, including the 
MARPOL Annex VI requirements with respect to bunker delivery notes.
    EPA has determined that no changes are needed to our 40 CFR part 80 
fuels program to effectuate the fuel sulfur waiver for repowered 
steamships. This is because the prohibitions contained in 40 CFR 80.610 
specify that ``no person shall * * * (6) beginning January 1, 2015, 
introduce (or permit the introduction of) any fuel with a sulfur 
content greater than 1,000 ppm for use in a Category 3 marine vessel 
within an ECA, except as allowed by 40 CFR part 1043,'' and the 
steamship repower incentive program regulations will be part of 40 CFR 
1043.95. In addition, ECA fuel is defined in 40 CFR 80.2(ttt)(2)(i) as 
excluding ``fuel that is allowed by 40 CFR part 1043 to exceed the fuel 
sulfur limits for operation in an ECA (such as fuel used by excluded 
vessels * * *).''

D. Regulatory Action

    Under the authority of 33 U.S.C. 1903 to ``prescribe any necessary 
or desired regulations to carry out the provisions'' of MARPOL Annex 
VI, EPA is taking direct final action to add an automatic fuel sulfur 
waiver to our marine diesel program for repowered steamships operating 
on the Great Lakes. This automatic fuel waiver is available only to 
owners of steamships that operate exclusively on the Great Lakes and 
that were in service on October 30, 2009, where ``in service'' means 
operating as a steamship, but is not limited to actually performing 
that service on that day. This waiver will allow the converted 
steamship to use non-compliant residual fuel in the repowered diesel 
engine through December 31, 2025.
    This action will not have an adverse cost impact on steamship 
owners. Steamship owners are not required to replace the steam engines 
on their vessels with diesel engines. This direct final rule merely 
adds a provision to allow steamship owners who voluntarily repower with 
diesel engines to automatically continue to use the fuel they would 
otherwise be permitted to use had the ship not been repowered, for a 
period of time. This provision will provide important air quality and 
energy benefits immediately, due to the improved fuel efficiency of the 
diesel engines, and even larger benefits beginning in 2026, when the 
repowered ship will use fuel that complies with the 1,000 ppm sulfur 
limit on the Great Lakes.

V. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is 
therefore not subject to review under Executive Orders 12866 and 13563 
(76 FR 3821, January 21, 2011). This direct final rule merely adds an 
automatic waiver provision to encourage Great Lakes steamship owners to 
repower their vessels with cleaner marine diesel engines. There are no 
costs associated with this rule because steamship owners are not 
required to repower their ships.

B. Paperwork Reduction Act

    The information collection requirements in this rule will be 
submitted for approval to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
information collection requirements are not enforceable until OMB 
approves them.
    The program contained in this rule is a voluntary incentive program 
to encourage owners of Great Lakes steamship to repower their ships 
with diesel engines. A steamship owner taking advantage of the 
automatic fuel waiver is required to notify EPA's designated 
certification officer of the intention to use this provision. The 
notification must include a description of the project, the expected 
timeline, and other relevant information. The owner is also required to 
notify EPA's designated certification officer at completion of the 
project. The purpose of the reporting is to ensure that a repower has 
taken place, with a qualified EPA-certified engine. Because this 
program is voluntary, a steamship owner would provide this information 
only if the provision is exercised. When the project is completed, EPA 
will provide the owner with a statement that the repowered ship is 
covered by the steamship repower incentive program fuel sulfur waiver, 
which is to be kept onboard for compliance purposes.
    There are potentially six companies affected, which own the twelve 
remaining diesel steamships that operate on the Great Lakes. It is not 
known how many of these companies will actually take advantage of the 
waiver, or when they would repower. However, it is likely that the 
repowers would occur prior to 2015, to maximize the fuel savings 
afforded by the fuel sulfur waiver before it expires on December 31, 
2025.
    The total estimated burden associated with the automatic steamship 
repower incentive program is 14.0 hours annually. This is based on two 
steamship owners repowering two steamships in each of three years and 
an estimated 3.5 annual labor hours for each manufacturer to prepare 
and submit the required information for each ship. Burden is defined at 
5 CFR 1320.3(b).
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is 
approved by OMB, the Agency will publish a technical amendment to 40 
CFR part 9 in the Federal Register to display the OMB control number 
for the approved information collection requirements contained in this 
final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business primarily 
engaged in shipbuilding and repairing as defined by NAICS code

[[Page 2477]]

336611 with 1,000 or fewer employees (based on Small Business 
Administration size standards); (2) a small business that is primarily 
engaged in freight or passenger transportation on the Great Lakes as 
defined by NAICS codes 483113 and 483114 with 500 or fewer employees 
(based on Small Business Administration size standards); (3) a small 
business primarily engaged in commercial and industrial machinery and 
equipment repair and maintenance with annual receipts less than $7 
million (based on Small Business Administration size standards); (4) a 
small governmental jurisdiction that is a government of a city, county, 
town, school district or special district with a population of less 
than 50,000; and (5) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of today's final rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities.
    In determining whether a rule has a significant economic impact on 
a substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    This direct final rule merely adds an automatic waiver provision to 
encourage Great Lakes steamship owners to repower their vessels with 
cleaner marine diesel engines. There are no costs and therefore no 
regulatory burden associated with this rule because steamship owners 
are not required to repower their ships and can continue using their 
vessels indefinitely. This Great Lakes steamship repower incentive 
program will assist those steamship owners who choose to voluntarily 
repower their ships, however, by allowing them to use lower-price 
residual fuel in the repowered diesel ship for a specified period of 
time, which may help them cover the costs of the repower project. We 
have therefore concluded that today's final rule will not increase 
regulatory burden for affected small entities.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 for State, local, or tribal governments or the private 
sector. The action imposes no enforceable duty on any State, local or 
tribal governments or the private sector. Therefore, this action is not 
subject to the requirements of sections 202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203 
of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. This direct final 
rule merely adds an automatic waiver provision to encourage Great Lakes 
steamship owners to repower their vessels with cleaner marine diesel 
engines. None of the thirteen U.S. steamships operating on the Great 
Lakes as of October 30, 2009, are owned or operated by a State, local, 
or tribal government.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This direct final rule merely adds 
an automatic waiver provision to encourage Great Lakes steamship owners 
to repower their vessels with cleaner marine diesel engines. None of 
the thirteen U.S. steamships operating on the Great Lakes as of October 
30, 2009, are owned or operated by a State. Thus, Executive Order 13132 
does not apply to this action.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This direct 
final rule merely adds an automatic waiver provision to encourage Great 
Lakes steamship owners to repower their vessels with cleaner marine 
diesel engines. None of the thirteen U.S. steamships operating on the 
Great Lakes as of October 30, 2009, are owned or operated by an Indian 
tribal government. Thus, Executive Order 13175 does not apply to this 
action.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    This action is not subject to Executive Order 13045 (62 FR 19885, 
April 23, 1997) because it is not economically significant as defined 
in Executive Order 12866, and because the Agency does not believe the 
environmental health or safety risks addressed by this action present a 
disproportionate risk to children. This direct final rule merely adds 
an automatic waiver provision to encourage Great Lakes steamship owners 
to repower their vessels with cleaner marine diesel engines. To the 
extent Great Lakes steamship owners take advantage of this incentive 
program, their action will provide immediate air quality and energy 
benefits, due to the improved fuel efficiency of the diesel engines, 
and even larger benefits in the long term, when the repowered ship will 
use fuel that complies with the 1,000 ppm sulfur limit on the Great 
Lakes. These emission reductions will improve air quality for all 
people who live in the Great Lakes region, including children and other 
sensitive populations.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not subject to Executive Order 13211 (66 FR 28355, 
May 22, 2001), because it is not a significant regulatory action under 
Executive Order 12866.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

[[Page 2478]]

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it increases the 
level of environmental protection for all affected populations without 
having any disproportionately high and adverse human health or 
environmental effects on any population, including any minority or low-
income population. This direct final rule merely adds an automatic 
waiver provision to encourage Great Lakes steamship owners to repower 
their vessels with cleaner marine diesel engines. To the extent Great 
Lakes steamship owners take advantage of this incentive program, their 
action will provide immediate air quality and energy benefits, due to 
the improved fuel efficiency of the diesel engines, and even larger 
benefits in the long term, when the repowered ship will use fuel that 
complies with the 1,000 ppm sulfur limit on the Great Lakes. These 
emission reductions will improve air quality for all people who live in 
the Great Lakes region, including minority and low-income populations.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A Major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective on March 19, 2012.

L. Statutory Authority

    The statutory authority for this action comes from section 1903 of 
the Act to Prevent Pollution from Ships (33 U.S.C. 1901 et seq.). The 
Act to Prevent Pollution from Ships implements Annex VI to the 
International Convention for the Prevention of Pollution from Ships 
(MARPOL) and makes those requirements enforceable domestically. Section 
1903 gives the Administrator the authority to prescribe any necessary 
or desired regulations to carry out the provisions of Regulations 12 
through 19 of MARPOL Annex VI.

List of Subjects in 40 CFR Part 1043

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Economic 
hardship waiver, Great Lakes, North American Emission Control Area, 
Reporting and recordkeeping requirements, Steamships.

    Dated: January 11, 2012.
Lisa P. Jackson,
Administrator.

    For the reasons set out in the preamble, Title 40, Chapter I of the 
Code of Federal Regulations is amended as follows:

PART 1043--CONTROL OF NOX, SOX, AND PM EMISSIONS FROM MARINE 
ENGINES AND VESSELS SUBJECT TO THE MARPOL PROTOCOL

0
1. The authority citation for part 1043 continues to read as follows:

    Authority: 33 U.S.C. 1901-1915.

0
2. Section 1043.95 is amended by redesignating paragraphs (b) and (c) 
as paragraphs (c) and (d), respectively, and adding a new paragraph (b) 
to read as follows:

Sec.  1043.95  Interim provisions.

* * * * *
    (b) The fuel-use requirements of this part do not apply through 
December 31, 2025, for a ship qualifying under paragraph (a) of this 
section if it was in service as a steamship on October 30, 2009 and it 
is repowered with one or more marine diesel engines, subject to the 
following conditions and requirements:
    (1) Engines must meet exhaust emission standards using one of the 
following approaches:
    (i) All the installed replacement engines must be certified to 
applicable standards under 40 CFR part 1042 based on the date the 
vessel enters dry dock for service.
    (ii) We may approve the use of an engine meeting less stringent 
standards if the owner can demonstrate that it took possession of the 
engine before October 30, 2009, and that engine is a new engine that 
has not been installed in a non-marine application. Such an engine must 
at a minimum be certified to the Annex VI NOX emission 
standard in Sec.  1043.60 that applies based on its build date.
    (2) The vessel owner must notify us regarding the intent to use 
this provision. The notification must include a description of the 
vessel and a summary of the project, including the expected timeline, 
and other relevant information.
    (3) The vessel owner must notify the Designated Certification 
Officer when the project is complete. We will send the owner a 
statement that the repowered ship is exempt from fuel sulfur 
requirements through December 31, 2025; this statement must be kept 
onboard the vessel for compliance purposes.
    (4) All other requirements under this part 1043 continue to apply, 
including requirements related to bunker delivery notes.
    (5) This paragraph (b) applies only for vessels whose hull remains 
intact through the repowering process. For example, if a steamship is 
converted to a barge for use with tugboats, those vessels must use fuel 
meeting the requirements of this part 1043.
* * * * *
[FR Doc. 2012-819 Filed 1-17-12; 8:45 am]
BILLING CODE 6560-50-P