A regulation in California, known as the Vessels At Berth rule, is increasing the cost of goods across the United States, according to critics. The rule, in effect since 2023, mandates that cargo ships, tankers, and container vessels docked at California ports must shut off their diesel engines and either connect to the state's electrical grid, install state-approved emissions technology, or pay hourly fees.
California's ports handle approximately 40% of the nation's containerized imports. Shipping companies reportedly pass these costs onto freight rates, which in turn influence wholesale and retail prices for a wide range of products, including produce, electronics, and clothing. The California Air Resources Board (CARB), the agency responsible for the regulation, estimated potential pass-through costs when applying for a waiver from the Biden administration in 2023. These estimates included $1.14 per Twenty-foot Equivalent Unit (TEU) of cargo, $4.65 per passenger on cruise ships, $7.66 per automobile, and less than one cent per gallon of gas on tanker ships.
Ships that do not comply with the Vessels At Berth rule face daily penalties. California's own regulatory impact assessment projected total costs to the shipping industry of approximately $2.3 billion through 2032. When CARB began enforcing the rule against tankers in January 2025, the Western States Petroleum Association warned that compliance was challenging due to a lack of widespread shore power infrastructure and ongoing testing of emissions-capture technology.
In response to these challenges, ships began paying an hourly fee into a state remediation fund. This fund, initially intended as a temporary measure, has become a recurring cost of doing business that is reportedly passed down the supply chain. Investment firms have taken notice, with Bain Capital investing $150 million into STAX Engineering, a company that provides barge-mounted exhaust-capture systems for tankers to comply with the California rule.
The Biden administration's EPA granted California a waiver for this regulation in 2023, asserting that delegating state regulatory authority does not constitute a federal "rule" requiring congressional review under the Congressional Review Act. However, critics argue that Congress can use the Congressional Review Act to disapprove such waivers with a simple majority vote. This mechanism was previously used to overturn EPA waivers related to California's electric-vehicle mandates. The article suggests that the Vessels At Berth rule is eligible for similar congressional review, but it has not yet been submitted for such consideration by the EPA.