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California Shippers Want|Fewer Fuel Regulations

SAN FRANCISCO (CN) - The Pacific Merchant Shipping Association told 9th Circuit judges on Thursday that California's fuel regulations overstep federal laws that regulate maritime commerce.

The California Air Resources Board (CARB) limits the use of sulfur in fuel for ships sailing within 24 miles of the state's coast, but the shipping group says the board should only regulate ships that travel within the three-mile limit of the California coast.

"The state is reaching beyond their power," said attorney Erich Wise, who represents the shipping association. "We have a case where the state is directly regulating out of state conduct ... and that is not appropriate."

Wise also called for uniformity in the face of a "double standard," since both CARB and federal regulations impose their own commerce restrictions.

"We don't know what's going to happen when we have a double standard," said Wise. "CARB is dictating national policy here."

Nicholas Stern, attorney for CARB, said the federal government had made no attempt to exercise its prevailing authority over the state on the matter.

"The paramount authority is not the exclusive authority," Stern said. "When Congress wants to make its authority exclusive it may do so, but in the area of regulating the fuel use of oceangoing vessels, it has chosen not to."

"Except when there is a tremendous impact on foreign commerce," Judge Robert Cowen said.

The judge pointed out that the shipping group had not challenged how emissions from seagoing vessels affect Southern Californians, which Cowen called "a very extremely serious problem."

Cowen took an even harsher stance against the financial burdens the regulations place on foreign business.

"You make little of the effects of the cost and so forth, [but] their briefing reflects the monumental costs for shipping coming into California if they have to adhere to this regulation," Cowen told Stern. "And it's not insignificant."

Stern argued that the costs are not as bad as they look on paper.

"There are costs involved in purchasing the more expensive fuel, you're absolutely right your honor," Stern said. "If you break it down to the container on the ship ... by what the ship carries, it's actually very small, a matter of pennies or dollars."

Cowen replied: "You might say it's a penny here, a penny there. After a while, that adds up to a couple billion dollars."

The judge also noted that Stern had not cited any case law to support the benefits of fuel regulation over the cost for shippers.

"The burden here is unprecedented on foreign and interstate commerce," Cowen said. "I don't see any case where states have made regulations that are going to cost what foreign commerce is going to be saddled with if we uphold this."

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