Company Energy Saving Plans (France)

On 29th August ’22, the French Prime Minister speaking to MEDEF (Mouvement des Entreprises de France) called for all companies to put in place an energy saving plan in September. The link is here.

She said “In September, every company should put in place its own plan to save energy. If we act collectively, we can overcome the risk of shortages. But if each one of us fails to do our part, or if all negative outlooks come to fruition at once, we will have to impose a decrease in consumption.”

She said she had ordered every government ministry to put in place a plan to cut 10 percent of their energy use within the next two years and she suggested each company also put in place an “energy sobriety ambassador.”

She said corporate energy savings plans will be reviewed in October.

We will be looking out for the legislation that will underpin this, and update French systems accordingly.

Spain Energy Saving Plan (Spain)

On 1st August ’22 the Spanish Council of Ministers approved a new royal decree-law setting out at Title V a “Shock Plan” for energy saving and management in air conditioning to rapidly reduce energy consumption in administrative, commercial and public buildings, as defined in the Reglamento de Instalaciones Térmicas en los Edificios (RITE).

The instrument will have to be complied with by all administrations, both the general State administration and the regional and local ones, as well as the private sector: shops, department stores, cinemas, theaters, stations, airports, hotels and distribution centers. However, the president of the Community of Madrid has said it would not be applied in Madrid.

The third vice president, Teresa Ribera, explained that these measures may be relaxed in the event of waves of extreme temperatures and in duly justified cases.

The new instrument is here, scroll to Title V.

A description is found here.

The Spanish Government is also preparing a Contingency Plan, which will include energy saving measures and solidarity actions with the rest of the EU, which will be presented at the end of September.

The new instrument temporarily increases the obligations for management of the real estate of public buildings; commercial establishments, such as department stores or shopping malls; cultural spaces, such as cinemas or congress centers; and infrastructure intended for the transport of people, such as stations and airports. More details:

• These structures will have heating and cooling temperatures limited to 19 and 27 degrees Celsius respectively; building managers will have seven days from the publication of the rule to make the limitation effective, which will be in force until October 1, 2023.

• Building managers must display on posters or screens the mandatory saving measures, and other additional ones, that reduce consumption. They will have seven days to comply and this requirement will be effective until October 1, 2023.

• Before September 30, buildings must have automatic closing mechanisms on access doors to prevent them from being permanently open.

• The lighting of the shop windows will have to be turned off from 10:00 p.m. This provision will also apply to public buildings that are unoccupied at the time. Seven days is given for compliance and the measures will last until October 1, 2023.

• Those properties that have passed the energy efficiency inspection prior to January 1, 2021 must undergo an emergency review before December 31, 2022, so that all buildings with relevant boilers and air conditioning consumption have passed an inspection in the last two years.

We will add this document to Spanish systems, at their next update.

Hydropower Producer Reporting (Norway)

On 13th July 2022 the oil and energy minister Terje Aasland tasked the Norwegian Directorate of Water Resources and Energy (NVE) to establish a reporting scheme for the large hydropower producers in Southern Norway. The press release is here.

This press release states (translated) – NVE will soon send a letter to Statnett and the power producers to establish the temporary reporting scheme for storage power in the price areas in southern Norway. The reporting will give Statnett, NVE and the Ministry of Petroleum and Energy a basis for assessing whether further measures are necessary to ensure security of supply in the winter and spring period 2022-23. The reporting scheme will initially last until the summer of 2023.

It is important that the power companies in southern Norway now withhold water that can be stored for the winter. I would like to emphasize that, as of today, there is a low probability of rationing in the spring. It is nevertheless important that we take the situation seriously. I do not want to rule out that it may be appropriate to introduce further measures, in which case it is important that the choices we make are well thought out. This reporting scheme will contribute to that, says Aasland.

On 8 August, Terje Aasland, told the Norwegian parliament that refilling dams will be prioritised over power production when levels fall below the seasonal average.

On 15 August, Terje Aasland gave an update – here. In this he states that the NVE has been asked to assess the scope for setting water storage restrictions in reservoirs serving hydropower plants, and Statnett has been asked to provide weekly assessments. He also states that a separate management mechanism will be established to ensure that more water is saved in the reservoirs at low water levels and that the export of power is limited in such cases.

Relevant laws will be added to Norway systems.

German Gas Savings Plan (Germany)

Germany aims to cut energy use by 20% this winter. It’s government has this week adopted a set of immediate short-term and medium measures as a series of Ordinances. The measures amount to 2% to 2.5% gas savings, according to Robert Habeck, minister of economy and climate action. We will add the relevant Ordinances to systems as they are updated.

Although Germany is required to save around 15% as per EU rules, the government estimates that 20% of gas use must be cut to make it through the coming winter without a gas shortage.

The German Embassy has issued this image of some of the short-term energy-saving measures that came into force from yesterday (1 September) in Germany. The short term measures will last six months. The 2-year long medium term measures are planned for 1 October.

Pension Scheme Climate Focus (UK)

Yesterday (1st September 2022) the UK government commenced a consultation on obliging trustees of the £342bn Local Government Pension Scheme (LGPS) in England and Wales to report and address climate risks in the assets they manage. The consultation document is here.

This continues the climate focus commenced in 2021 across the UK for larger private sector occupational pension scheme trustees. The resulting Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (and similar in Northern Ireland) are in your systems (in ENV Energy), and there is an Audit Checklist question also. October will add an amendment to the Regulations in Britain. The statutory guidance for these obligations is here.

[you will note that certain larger UK private companies also have climate reporting obligations, which were enhanced this year, these instruments are in your Registers, as are the Audit Checklist questions]

After the phasing-in, in respect of the private (Occupational Pension) funds, the climate focus will extend to trustees of money purchase and non-money purchase schemes with £1bn or more in “relevant assets”. It will also include trustees of all authorised master trusts and authorised schemes (once established) providing collective money purchase benefits, in both the accumulation and decumulation phases. You are advised to re-check if the climate focus applies to the pension scheme in your organisation.

The (Occupational Pension) statutory guidance states – “To meet the requirements imposed by the Climate Change Governance and Reporting Regulations 2021, trustees should have a good understanding of the climate-related risks and opportunities that are relevant to their scheme. Trustees should understand that as a systemic risk, climate change risk could include risks outside of the obvious sectors, including those which are both directly and indirectly affected.”

And “Trustees have a legal duty to consider matters which are financially material to their investment decision-making. Trustees must not only consider the kinds of financial risks which might affect investments (and in the case of DB schemes, their liabilities and sponsoring employers’ covenant), they should consider where climate change, and action to address climate change, might contribute positively to anticipated returns or to reduced risk.”

And “Climate-related risk and opportunity is one of the major categories of financial factors of which trustees need to take account. Trustees also need to take account of other risks affecting the pension scheme, in line with their fiduciary duty. As such, trustees are expected to take a proportionate approach to managing climate-related risks and opportunities. The time spent by trustees on considering climate-related risks and opportunities, should not come at the expense of considering other major risks, including financially material social and governance factors.”

The government proposal for the LGPS scheme takes as it’s starting point the above Occupational Pension trustee obligations, but hints at extending it with more specificity on fund investment.

For example, the consultation document points to the UK Energy Security Strategy published in April 2022 (which highlighted energy investment opportunities for the private sector to improve energy security and support the transition to clean energy). The consultation document states the LGPS has an important role to play as a major investor with a commitment to stewardship and engagement.

The consultation document states “These proposals seek to support that approach to addressing high carbon emissions and discourage any pursuit of lower emissions through withdrawing investment from energy companies.”

Another difference with the private sector scheme is the proposed requirements will apply to all LGPS AAs (fund managers) from 2023/24 regardless of fund size. Currently the assets held by LGPS funds range from around £0.5 billion to £25 billion with 65 funds holding less than £5 billion and 8 funds holding less than £1 billion.

It is also proposed that data quality is a mandatory metric (for reporting). The consultation states this is in order to help the LGPS use its scale and market power to drive improvements in the quality of emissions data, which will be a critical factor in raising the quality of climate risk management.

Statutory guidance will be produced. Consultation closes on 24th November 2022.

National Carbon Trading System (Germany)

The FT reports (this morning) higher inflation in Germany, and cites (amongst other components) the carbon tax introduced Jan 1 (2021).

This Blog doesn’t often report on domestic policies in non-UK/Ireland jurisdictions. However, in this case, we comment as follows –

A new national carbon trading system was introduced in Germany, to start Jan 1 2021. In many places, this is cited as a carbon tax. The German National Emissions Trading System sits alongside the EU ETS (and is influential in terms of possible extension of the EU ETS to transport and buildings). The new German system applies to GHG emissions from fuel distribution and supply. Fuel distributors and suppliers based in Germany are obliged to participate (there are exemptions). Specifically, the obligated parties are those that place fuels on the market include fuel wholesalers, gas suppliers or companies in the mineral oil industry that are liable to pay energy tax. For each tonne of CO2 produced by the combustion of these fuels, the party placing the fuel on the market must acquire a corresponding emissions certificate and surrender it to the DEHSt – here.

Further information is set out – here (English).

As you are aware, the UK national carbon trading scheme based on electricity through half hourly meters, was abolished, and the material removed from Cardinal Environment EHS Legislation Registers & Checklists.

New Energy Performance Bill (UK)

A new private members’ bill is starting in the House of Lords on 21st July. The bill is titled ‘Minimum Energy Performance of Buildings Bill’. The Bill document is here.

In its policy statements, the Government has said –

• Homes should be Energy Performance Certificate (EPC) band C by 2035 where practicable, cost-effective and affordable

• All Private Rented Sector (PRS) homes should be EPC band C by 2028

• Mortgage lenders should ensure an EPC band C average for their portfolios by 2030

• The Secretary of State to take reasonable steps to assist owner occupiers to achieve EPC band C

• Non-domestic commercial lettings are to achieve EPC band B by 2030

The Bill aims to set these into law.

For a Private Members’ Bill to become law, the government has to support it (in effect take it over).

I will post again if this happens.

A Private Members’ Bill of similar title is also started in the House of Commons (text not available).

EU Eco-design & labelling rules (Britain)

The UK government has decided to introduce EU Ecodesign and Energy labelling rules for lighting products in Britain in 2021 (if there is parliamentary time).

The UK government decision is set out here, and here.

In the EU from 1 September 2021, the existing rules under Regulation (EU) No 874/2012 will be repealed and replaced by new energy labelling requirements for light sources under Regulation on energy labelling for light sources (EU) 2019/2015

The new EU rules will use a scale from A (most efficient) to G (least efficient), the new labels will give information on the energy consumption, expressed in kWh per 1000 hours and have a QR-code that links to more information in an online database.

In the EU, with the new regulation, most halogen lamps and the traditional fluorescent tube lighting, which are common in offices, will be phased-out from September 2023 onwards.

Note : the UK government earlier decided to rescale the energy labels for some energy-related products from 1 March 2021, following the EU. The legislation is not yet adjusted. The Office for Product Safety and Standards (OPSS) issued technical notices, and the UK government updated the information on gov.uk and responded to email queries from businesses. I blog posted at the time about this change. The updated guidance is found in the Brexit Guidance List on subscribers’ Cardinal Environment Limited EHS Legislation Registers & Checklists.

Note (2) : the EU rules will apply in Northern Ireland by virtue of the Northern Ireland Protocol.

Changes to Energy Labels and Ecodesign (UK)

UK guidance changed to confirm that (effective 1st March) EU type re-scaled energy labels would apply throughout the UK, not only in Northern Ireland (via the IRL/NI Protocol). This was in yesterday’s monthly email alert.

The law has still to catch up, but today the BBC confirms (1 March) EU repairability and spare parts obligations will be applied in Britain. They anyway applied in Northern Ireland (Protocol).

The specific product EU Law in this area is in the form of EU Regulations directly applicable in member states (and Northern Ireland via the Protocol).

The BBC link is here.

A consultation was held (closing date November 2020) – here.

Energy labels apply to a list of mainly white household goods, but also computer screens. Ecodesign stipulations apply to a wider list of electric and electronic products.

EU-UK Trade and cooperation agreement (2) (UK & EU)

I updated my post this morning with the link to the UK published legal text (1,246 pages – it’s the same text in the individual sections and chapters). Look back on the blog itself.

I also updated my post this morning (online) with the link to the EU document now loaded on a dedicated website, this also includes an EU Q&A – here.

A couple of points (identified in the Q&A) –

(1) Trading under ‘FTA’ (free trade agreement) terms from 1st Jan will differ substantively to trading in EU’s Customs Union and Single Market.

In particular:

• rules of origin will apply to goods in order to qualify for preferential trade terms under the agreement;

• all imports will be subject to customs formalities and will need to comply with the rules of the importing party;

• all imports into the EU must meet all EU standards and will be subject to regulatory checks and controls for safety, health and other public policy purposes.

(2) Traders will account not only for the origin of materials used, but also if their processing took place in the territory of one of the Parties. This is called ‘full cumulation’. Exporters will be able to self-certify the origin of the goods, and will have additional flexibility in collecting documentary evidence to prove origin during the first year.

(3) The Parties will recognise each other’s ‘Authorised Economic Operators’ programmes, enabling trusted traders with this status to use certain simplifications and/or facilitations relating to security and safety in their customs operations with the customs authorities of the other Party. But there is no waiver on security and safety declarations, as this requires alignment between the Parties on security standards.

(4) From 1st Jan, the EU and the UK will be two separate regulatory and legal spaces. This means that all products exported from the EU to the UK will need to comply with UK technical regulations and will be subject to any applicable regulatory compliance checks and controls. Similarly, all products imported from the UK to the EU will need to comply with EU technical regulations and will be subject to all applicable regulatory compliance obligations, checks and controls for safety, health and other public policy purposes.

(5) Both Parties agreed on a definition of international standards that identifies the relevant international standard-setting bodies. This is intended to ensure that both sides’ domestic product standards and technical regulations are based on the same international references and are therefore compatible to the extent possible.

(6) In the field of conformity assessment, the Parties agreed to maintain simplified access to each other’s markets through, in particular, the continued use of self-certification of conformity by the manufacturer where this is currently applied in both the EU and the UK. This covers a very large share of bilateral trade.

(7) Re Automotive Products – the Parties agreed that regulatory convergence will be based on the use of the international technical standards set at UNECE (United Nations Economic Commission for Europe) level. Both Parties will accept, in their respective markets, products that are covered by a valid UN type-approval certificate.

(8) Re Medicinal Products – the Parties agreed to recognise the results of inspections carried out by the authorities of the other Party in manufacturing facilities located in the territory of the issuing authority. This will avoid unnecessary duplication of inspections of manufacturers of medicinal products to assess their compliance with Good Manufacturing Practice requirements.

(9) Re Chemicals – the Parties agreed to cooperate, while respecting each Party’s right to regulate, both bilaterally and in relevant international fora, on the assessment of hazards and risks of chemicals and the formats for documenting the results of such assessment. The Parties already implement the UN GHS and this will continue. The Parties agreed to use transparent procedures for the classification of substances and possibly to exchange non-confidential information.

(10) Re Organic Products – the Parties agreed reciprocal recognition of equivalence of the current EU and UK organic legislation and control system, for all categories of organic products. Organic products complying with EU law and certified by control bodies recognised by the EU will be accepted on the UK market and vice-versa. In view of new EU rules for organic products applying as of 1.1.2022, equivalence will be reassessed by end-2023.

(11) Re SPS – there will be no changes to EU food safety standards. UK agri-food exporters will need to meet all EU SPS import requirements and be subject to official controls carried out by Member States’ authorities at Border Control Posts. Where required, these controls will include the verification of health certificates in line with international standards. Similarly, EU agri-food exporters will need to meet all UK SPS import requirements.

The Agreement allows for either party to unilaterally decide to reduce the frequency of certain types of border import controls, taking into account the extent to which their SPS rules converge.

It also ensures a simplified process for the approval of imports, where relevant by drawing up lists of establishments that are eligible to export to the other party, based on guarantees provided by the authorities of the exporting Party.

(12) Re Northern Ireland – the EU acquis, including the Union Customs Code, legislation on goods, sanitary rules for veterinary controls (“SPS rules”), rules on agricultural production/marketing, or VAT and excise in respect of goods, will apply to all goods entering Nortern Ireland.

As a result, from 1 January, goods entering Northern Ireland from Great Britain will constitute “imports”.  This means that such goods will need to comply with EU product rules and be subject to checks and controls for safety, health and other public policy purposes, including all necessary SPS controls applicable between the EU and the UK.

An agreement in principle (under the separate Withdrawal Agreement) has been found in the following areas, amongst others: export declarations, the supply of medicines, the supply of certain chilled meats and other food products to supermarkets, and a clarification on the application of State aid under the terms of the Protocol. There are some facilitations –

For example, certain chilled meat, for which imports in the Union market are normally prohibited, will be accepted for delivery to supermarkets in Northern Ireland during a limited period of 6 months:

• Minced meat of poultry, frozen or chilled. Chilled minced meat from animals other than poultry (e.g. minced beef.

• Chilled meat preparations (e.g. sausages, meatballs, pork pies)..

• Any fresh meat, including minced meat and meat preparations, produced from triangular trade (e.g. EU meat exported to Great Britain, cut or minced in Great Britain and re-exported to Northern Ireland).

Another example is that, during a limited period of 3 months, the goods coming from Great Britain and destined for supermarkets located in Northern Ireland will be accompanied with a simplified, collective certificate covering all the goods transported in the same truck, instead of individual certificates.

During this period of time, the UK shall maintain its current EU SPS legislation for the products concerned.

The scope is limited to a restricted number of food suppliers for supermarkets which are approved by the UK authorities after demonstrating that they meet a range of trust criteria. This list of members will be established by the United Kingdom in cooperation with the European Commission before 31 December 2020 and cannot be extended after that date.

(13) Re Business Persons Mobility – the temporary movement of natural persons for business purposes (often refered to as ‘mode 4‘), the EU and the UK have agreed on a broad range of reciprocal commitments facilitating the ability of companies located in a Party to transfer certain employees, as intra-corporate transferees, to work in an associated company located in the other Party. As intra-corporate transferees constitute temporary migration, the maximum duration of such transfers is capped at three years. With respect to UK nationals transferred to the EU, this duration includes periods of mobility between Member States. This is in line with current EU practice with other third countries.

The EU-UK Agreement also facilitates the movement of “contractual service suppliers” or “independent professionals” to supply services under certain conditions. Business visitors not providing services will also be allowed short-term entry in order to carry out certain activities.

(14) Re Legal Services – the EU and its Member States, and the UK will allow lawyers from the other Party to provide legal services relating specifically to the practice of international law and the law of the country where they are authorised under their “home” title.

However, it should be noted that EU law is not considered to be international law, but instead the law of the Member State in which EU lawyers are established or hold their “home title”.

(15) Re Energy – the UK will leave the EU’s internal energy market on 1st Jan, Northern Ireland will maintain the Single Electricity Market with Ireland (Republic of Ireland) (under the separate Withdrawal Agreement). The EU and the UK have agreed to establish a new framework for their future cooperation in the energy field. The UK Energy (Electricity) Guidance was updated on Dec 24th (see the Brexit Guidance List on Cardinal Environment Registers & Checklists).

The UK also leaves the EU ETS (see the Brexit Guidance List) and Euratom.

The UK will define its own climate change targets and policies and the UK committed to implementing a system of carbon pricing as of 1 January 2021. The Parties agreed a framework for cooperation in the fight against climate change, and their ambition to achieve economy-wide climate neutrality by 2050. The Parties will give serious consideration to linking their respective carbon pricing systems in a way that preserves the integrity of these systems and provides for the possibility to increase their effectiveness, for instance by adding further sectors, such as buildings. This would be subject to an agreement to be negotiated separately in the future.

There are also agreed provisions for cooperation in the development of offshore energy, with a focus on the North Sea.

(16) Re Euratom – the Agreement contains a separate agreement between Euratom and the UK on the safe and peaceful uses of nuclear energy.

This Agreement enables:

• the supply and transfer of nuclear material, non-nuclear material, technology and equipment;

• trade and commercial cooperation relating to the nuclear fuel cycle;

• cooperation in the safe management of spent fuel and radioactive waste;

• nuclear safety and radiation protection;

• use of radioisotopes and radiation in agriculture, industry and medicine;

• geological and geophysical exploration;

• development, production, further processing and use of uranium resources.

(17) Re Rebalancing (Level Playing Field, includes OHS and ENV Standards) – the Agreement provides the possibility to apply unilateral rebalancing measures in the case of significant divergences in the areas of labour and social, environment or climate protection, or of subsidy control, where such divergences materially impact trade or investment between the Parties.

This might be relevant, for example in a situation where one Party would significantly increase its levels of protection related to labour or social standards, the environment or climate above the levels of the other Party. This may entail an increase in the costs of production and hence a competitive disadvantage.

Another example would be a situation where one Party would have a system of subsidy control that would systemically fail to prevent the adoption of trade distorting subsidies, which would provide a competitive advantage for that Party.

In such cases, a Party would be able to adopt measures to rebalance the competitive advantage of the other Party.

Each Party could also, at regular intervals and if rebalancing measures have been taken frequently or for more than 12 months, seek a review of the trade and other economic parts of the Agreeent to ensure an appropriate balance between the commitments in the Agreement on a durable basis. In this case, the Parties could negotiate and amend relevant parts of the Agreement. Any trade or economic part of the Agreement, including aviation, that would remain in place or be renegotiated would retain appropriate level playing field commitments.

(18) Re OHS and ENV – the EU and the UK agreed to uphold levels of protection in the areas reated to labour and social standards, and environment and climate.

Labour and social levels of protection cover the following areas:

• fundamental rights at work;

• occupational health and safety standards;

• fair working conditions and employment standards;

• information and consultation rights at company level; or

• restructuring of undertakings.

Environmental levels of protection include the following areas:

• industrial emissions;

• air emissions and air quality;

• nature and biodiversity conservation;

• waste management;

• the protection and preservation of the aquatic environment;

• the protection and preservation of the marine environment;

• the prevention, reduction and elimination of risks to human health or the environment arising from the production, use, release or disposal of chemical substances; or

• the management of impacts on the environment from agricultural or food production, notably through the use of antibiotics and decontaminants.

The climate level of protection applies to:

• emissions and removals of greenhouse gases covering EU’s and the UK’s respective 2030 economy-wide targets including their systems of carbon pricing; and

• the phasing-out of ozone depleting substances.

(19) Re Further OHS and ENV Provisions – the Agreement contains several guarantees in terms of environmental protection, over and above the non-regression provisions applying to environment, climate and labour and social protection. These include:

• A recognition of the shared biosphere;

• Coverage of future targets that are now in the laws of the parties – the 2030 waste recycling targets, the 2027 water targets and the 2030 air pollution ceilings;

• Full inclusion of the key environment principles, including precautionary principle, polluter pays, and integration principle;

• Full inclusion of the principles of the Aarhus Convention with modernised text, including access to justice, access to information and public participation;

• Effective co-operation mechanism foreseen between the supervisory body or bodies in the UK in terms of protection of the environment, and the Commission;

• The recognition of the relevance of procedures for evaluating the likely impact of a proposed activity on the environment, such as an environmental impact assessment or a strategic environmental assessment.

(20) Re Health/Sanitary Quality in Agri/Foods – the broad scope of the commitment on the environment refers to agricultural and food production. In addition, it specifies two important areas for the level playing field with regards to agriculture and food production, namely the use of antibiotics and decontaminants.

(21) Re Aviation – UK carriers will be able to fly across the territory of the EU without landing; make technical stops in the territory of the EU for non-traffic purposes; and carry passengers and/or cargo on any routes between a given point in the UK and a point in the EU. Also, the Agreement will permit Member States and the UK to bilaterally exchange onward travel (termed 5th freedom) rights for extra-EU all-cargo operations only (e.g. Paris-London-New York).

The Agreement defines new arrangements for the recognition of future design and environmental certificates, as well as for production organisation oversight. Existing design certificates issued under EU rules before 1 Jan will remain valid.

(22) Re Road Transport – the Agreement provides for quota-free point-to-point access for operators transporting goods by road between the EU and the UK. This means UK lorries would be able to reach the EU and return from the EU, including when not loaded. The same rights are conferred to EU hauliers travelling from any point in the EU to the UK, and back from the UK to anywhere in the UK.

UK and EU trucks will also be able to perform up to two additional operations in the other party’s territory, once they have crossed the border.

This will allow EU hauliers that carry a load to the UK to perform two cabotage operations in the UK, thus limiting the risk of having to travel back to the EU without a load. 

For UK hauliers, these additional operations can be composed of two cross-trade operations (i.e. transport operations between two Member States) or one cross-trade and one “cabotage” operation (i.e. a transport operation within two points of a single Member State). Special provisions are made in the case of Ireland, as Northern Irish hauliers will be able to perform two cabotage operations in Ireland.

ECMT holders will be able to do 3 cabotage operations.