U.S. Coast Guard INTERTANKO North American Panel Presentation

1. U.S. Coast Guard INTERTANKO North American Panel Presentation Mr. Jeff Lantz Director of Commercial Regulations and Standards April 27, 2010

2. Outline Coast Guard leadership changes Port State Control Update Piracy and Executive Order TWIC Seafarer Access Regulatory Development Air Emissions Ballast Water Management Vessel General Permit Climate Change Salvage

3. Commandant ADM Robert Papp Vice - Commandant VADM Sally Brice-Ohara Deputy Cmdt Operations RADM Brian Salerno CG-5 RADM Paul Zukunft CG-52 Mr. Jeff Lantz Technical standards, IMO, Regulations CG-53 RDML Cari Thomas Pollution response, law enforcement, SAR CG-53 RDML Kevin Cook Vessel inspection, PSC, maritime security Coast Guard Leadership Changes

4. Operational Controls by Vessel Type Top 5 Detainable Deficiencies Port State Control UpdateTank Vessel Stats

5. Port State Control Targeted Flags - 2010 * Administrations not targeted in 2009

6. Port State Control – QUALSHIP 21 Eligible Flags for 2010 * New this year

7. Port State Update Chronically Detained Vessel Policy Would deny a vessel entry if the vessel has been subject to three detentions in a 12 month period, if the Coast Guard determines that those detentions are related to their Safety Management System (SMS) and adequate measures were not put in place to prevent reoccurrences. The vessel would be temporarily denied entry; giving the vessel, company, and flag State time to perform a proper assessment of the vessel’s SMS and to ensure proactive measures are taken to improve the ineffective SMS and prevent continued non-compliance.

8. Port Security – Conditions of Entry • The Coast Guard imposes Conditions of Entry on vessels arriving from ports with inadequate security requiring those vessels to take additional security precautions. See Port Security Advisory 3-10 dated 14 April 2010 • This year, CG has imposed additional security measures for LNG vessels arriving from high risk countries. • Venezuela – frequent flyer policy

9. Piracy USCG Piracy-Related Policy & Guidance Maritime Security (MARSEC) Directive 104-6 (Rev 2) Guidance/direction for U.S. flagged vessels operating in High Risk Waters Provides enhanced security measures Supported by supplementary guidance in Port Security Advisories (PSAs) PSA (2-09) – Non-SSI version of directive; for public release. PSA (3-09) – Guidance on Self-defensive and defense of others PSA (4-09) – Guidance on International Traffic in Arms Regs (ITAR) PSA (5-09) – Guidelines for contracted security services PSA (6-09) – Establishes a screening process for security personnel PSA (8-09) – Provides info regarding the carriage and transport of self-defensive weapons into foreign ports/states PSA (9-09) – Guidance on expected course of action following a pirate attack PSA (11-09) – Supplementary guidance on defensive measures MARSEC Directive 104-6 (series) is being revised and will incorporate lessons-learned and best management practices that were successful in thwarting pirate attacks.

10. Piracy Executive Order concerning Somalia Provides authority and tools to go after the “bad guys”, i.e. those persons and entities that are destabilizing Somalia Applies to only the 11 persons and one entity listed in the Annex Prohibits all transactions, including remittances and other payments (ransoms), by U.S. persons or others doing business in the U.S. to the persons and entity identified in the EO Need a US nexus – foreign flag ship, foreign company Prosecutorial discretion based on the facts of the case No pre-decision on legality or ransom payment Questions: Dept of Treasury (OFAC) 202-540-6322

11. Transportation Worker Identification Credential Since the national compliance date of April 15, 2009, all personnel requiring unescorted access to secure areas of MTSA regulated facilities and vessels, and all mariners holding Coast Guard issued credentials, are required to have a TWIC. Individuals applying for a B-1 visa who work in the maritime domain are to obtain an annotation allowing them to be eligible for a TWIC. TSA will be putting out information on the process soon. Risk-Based Approach to TWIC Reader Regulations (ANPRM published March 2009) Maximum consequence Criticality to nation TWIC utility Three Risk Groups Highest: Biometric check at each entry Middle: Biometric check once/month Lowest: Visual identification NPRM will be informed by the Pilot Program, currently underway to test business processes, technology, & operational impacts of readers

12. Seafarer Access Reports to the Coast Guard: inconsistent interpretation of regulations exorbitant fees for escorts limited hours of escort availability facility denial of access without TWIC Coast Guard efforts include: Strong push for seafarer access using the tools currently available to the COTP Clarification on interpretation of regulation and policy and flexibility with the COTPs to approve monitoring and escort plans ALCOAST 529/08 and 575/09 Reviewing Facility Security Plans to include seafarer access provisions Port security grant money eligibility for projects associated with the facilitation of seafarer access

13. Salvage and Marine Firefighting Rulemaking TROIKA Salvage and Marine Firefighting Published December 31, 2008 Vessel and Facility Response Plans for Oil;2003 Removal Equipment Requirements &Alternative Technical Revisions Published August 31, 2009 Amended S&MFF compliance to February 22, 2011 Non-tank Vessel Response Plans NPRM published August 31, 2009 Working to resolve comments and publish final rule Goal is to publish Final Rule ASAP; recognize the importance of having it published by February 22, 2011

14. Ballast Water Management BWDS Notice of Proposed Rulemaking published August 28 2009 Received over 3000 comments, currently evaluating Proposal - Phased Approach IMO Standard initially 1000 times more stringent than IMO after 2016 Practicability Review will determine if 1000x standard can be met. If Practicability Review determines 1000x cannot be met, then intermediary standards established. Type Approval Process

15. Ballast Water Management

16. Ballast Water Management Given anticipated timeframe for U.S. approval process, initial systems likely to be foreign approved Develop a process for foreign acceptance Dependent upon transparency of administration and testing facility process and dossier May require additional testing or refinement prior to U.S. type approval. State preemption still exists Both laws authorizing Coast Guard and EPA permit states to establish their own BWDS

17. Vessel General Permit Prohibits discharge of any pollutant from any point source into navigable waters without a permit. EPA instituted VGP in December 2008 w/ effective date of February 2009. VGP identified 28 different discharge streams which must be controlled. As of 19 September 2009, vessels must submit Notice of Intent to receive coverage. CG & EPA working together to develop joint enforcement measures USCG/EPA reached agreement on MOU for VGP compliance – 12 May CG examines vessels for compliance during routine exams. Discrepancies referred to EPA for action. Initial enforcement generally limited to outreach and education, only egregious cases will warrant penalty action

18. Amended MARPOL Annex VI entered into force on 1 Jan 2010 • Tier II NOx standards for ships built after 2011 • Tier III NOx standards for ships built after 2016 when operating in an ECA • Increase SOx standards: 4.5% prior to 2012, 3.5% after 2012, 0.5% after 2020 • SOx ECA requirements: 1.5% prior to July 2012, 1.0% after July 2010, 0.1% after 2015 Air Emissions • North America Emission Control Area (ECA) adopted by IMO (MEPC 60, March 2010) – enters into force 1 August 2011 – extends 200 mi from coast of US and Canada • 1.0 % sulfur on 1 August 2012, 0.1% sulfur after 1 January 2015 • Tier III NOx for ships after 1 January 2016 • EPA regulations apply ECA standards to the internal waters of the US • Equivalency, i.e. exhaust after treatment permitted

19. US position regarding GHG emissions in the maritime sector • IMO is the appropriate regulatory body • Fully support development of and application of EEDI to both new and existing ships • Heartened by the progress on the EEDI made at MEPC 60 • US proposal on Market Based Measure (MBM) • Based on CO2 efficiency, Applies efficiency standard to both new and existing ships • Neither a cap or bunker levy • Ships have options to demonstrate compliance – technical, operational or efficiency credit trading • Incentivizes development of efficient ships Climate Change

20. Efficiency Effective date Time US GHG Proposal Efficiency Goal New ship (EEDI) Existing ship Baselines

21. A Ship Efficiency Effective date Y1 Time US GHG Proposal Efficiency Goal New ship (EEDI) B Existing ship Baselines

22. A Ship C Efficiency B Effective date Y1 Y2 Time US GHG Proposal Efficiency Goal New ship (EEDI) Existing ship Baselines

23. A Ship C Efficiency B Effective date Y1 Y2 Time US GHG Proposal Efficiency Goal New ship (EEDI) Existing ship Baselines

24. US GHG Proposal Advantages of US proposal • Efficiency improvements provide significant cost savings through reduced fuel costs • Incentivizes building and operating of efficient ships • All revenues from this scheme fund projects within the international maritime sector • Efficiency credit trading makes the most cost-effective efficiency gains available to all in the sector • Does not cap absolute emissions • Provides certainty to the industry

25. Thank you