JUNEAU, Alaska (AP) — The federal government has reached agreement with one of Alaska's largest shipping companies, providing a conditional waiver for new fuel standards while Totem Ocean Trailer Express, or TOTE, converts its ships to a cleaner-burning fuel.

Friday's announcement comes two days after rules took effect requiring that cargo carriers and cruise ships use a low-sulfur fuel within 200 miles of a significant portion of U.S. and Canadian shores.

Alaska had sued to block enforcement of the rules off the state's coast, saying they would result in higher freight rates and pricier cruises that would hurt the state's economy. That case has yet to be heard.

But the U.S. Environmental Protection Agency, which is working with the U.S. Coast Guard on the fuel-standard issue, has said the agencies are aware of Alaska's concerns and have some flexibility in implementing the rules.

TOTE plans to convert its two vessels to use liquefied natural gas as its primary fuel source. EPA said Friday that once the conversion is complete, in 2016, the vessels "will achieve significantly higher emission reductions than required by nearly eliminating harmful emissions of sulfur dioxide and particulate matter and significantly reducing emissions of nitrogen oxides."

An EPA spokesman, David Bloomgren, said TOTE will have to meet benchmarks for emissions along the way, with full conversion expected by Sept. 30, 2016.

U.S. Sen. Mark Begich praised the development, saying that instead of "endless litigation, this is the kind of teamwork, creativity and regulatory flexibility that we truly need."

Sen. Lisa Murkowski said she remains concerned.

"While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars," she said. "My fear is that the total costs of compliance will simply be passed on to Alaskans."

TOTE, in a news release, said conversion to liquefied natural gas "assures long-term access to lower-cost sources of energy, enabling TOTE to provide economical service to the people of Alaska for many years to come. This project is consistent with TOTE's core philosophies that reflect a deep commitment to the environment and to the communities it serves."

EPA had previously said it was working with cruise lines, but Bloomgren said there was nothing new to report Friday beyond the TOTE announcement.

The rules, intended to limit pollution from large ships, were initiated by the U.S. and agreed to by dozens of other nations as part of an international treaty. They affect much of the North American coast and Hawaii.