Window on Washington: Ready, Set, IMO 2020!

This article originally appeared in the Fourth Quarter 2019 Benedict’s Maritime Bulletin. Reprinted with permission. Any opinions in this article are not those of Winston & Strawn or its clients. The opinions in this article are the author’s opinions only.

Effective January 1, 2020, MARPOL Annex VI amendments adopted by International Maritime Organization (IMO), which reduce global marine fuel sulfur limits from 3.5% to 0.5%—an 86% reduction, will come into effect.1 From that date, vessels will need to operate on more expensive low sulfur fuels, or operate with exhaust gas scrubbers. And effective March 1, 2020, vessels will not be permitted to carry fuel for use on board the ship in excess of 0.5% sulfur content.2 Although Emission Control Areas (ECAs) requiring sulfur limits of 0.1% have been in effect in some areas for several years, IMO 2020 is a major change with significant issues for everyone involved with the maritime industry. Questions abound regarding compliance options, fuel availability and global fuel market impacts, allocating compliant fuel costs among shippers and carriers, implementation timelines, enforcement, and other legal issues.

The IMO announced the transition to 0.5% fuel in October 2016, and immediately carriers, refiners, and bunker suppliers began plans to meet the deadline. In the fall of 2018, the Trump Administration suggested that there would be an ‘‘Experience Building Phase’’ to gradually transition to compliance, in lieu of a hard start on January 1, 2020. However, the IMO’s Marine Environment Protection Committee (MEPC) rejected the proposal, and the Administration ultimately backed away from it as well. Faced with a potential U.S.-led defection from the planned start date, refiners, oil producers, carriers, labor, and other U.S. domestic interests mobilized through the Coalition for American Energy Security, which continued to press for on-time implementation through 2019.3 In April 2019, a group of 14 Republican Senators, many from states leading in oil production and refining, wrote to President Trump urging support for IMO 2020, stating ‘‘The U.S. is wellpositioned to benefit from these standards, because we are already the world’s leading producer of low-sulfur fuels. Additionally, many foreign refiners lack the complexity required to process heavy crude oil into IMO-compliant fuel and could turn to U.S.-produced low-sulfur crude, increasing domestic oil exports.’’

View full article