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 March 19, 2011

2. Port State Control • 9,326 individual vessels, from 96 different Flag Administrations, made 79,031 U.S. port calls • # Vessel arrivals decrease by approximately 3.3% • # Individual vessels remained virtually the same • Goal: eliminate substandard shipping • Performance based targeting system: U.S. Port State Control Matrix targets – Flag, Recognized Org, Class Society, & Ship Mgmt/Charterers. • Challenge: • Ships larger/ more complex • Consequences of failure greater • Effects of Economic downturn? Change in trading patterns?

3. 2011 PSC Statistics Note: Decrease in arrivals and examinations affects the overall detention average.

4. 2011 Detainable Deficiencies * Includes deficiencies for blocked fuel valves – fastest growing reason for vessel detention

5. Rewarding the Best • QUALSHIP 21 • Rewards Highest Performing vessels flagged by an eligible Flag Administration • Subject to fewer CG inspections • Internationally recognized program sought out by charterers, etc • Difficult criteria must be met through vessel performance, flag performance, etc

6. Improved Performance Port State Control Targeting • Safety: 20 Flag administrations • Security: 3 Flag administrations

7. Vessel Banning Policy • USCG Banning Policy is set forth in CG-543 Policy Letter, dated September 1, 2010 • Outlines procedures for denying entry of identified (banned) foreign vessels from a Port or place in the U.S. • Intended to deter substandard vessels and companies from changing shipping routes or Flag Administrations to avoid the PSC program • Based upon compliance of vessel with the ISM Code

8. Overview of Banning Procedures • 3 detentions in a 12 month period – vessel will be reviewed closely by U.S. Coast Guard Headquarters to determine if vessel meets criteria • Clearly documented cases of ISM Code non-compliance indicating a failure of the Safety Management System is a key factor in U.S. Coast Guard Headquarters’ determination • If banned, U.S. Coast Guard Headquarters issues Letter of Denial w/conditions to the Owner/Operator, Flag Administration and Coast Guard units. Vessel is banned for a minimum of 3 months – regardless if conditions for removal of ban are satisfied earlier then the 3 month timeline. • Banning remains in effect until removed by U.S. Coast Guard Headquarters, regardless of status of vessel (change of Flag, RO or operating status) • If vessel takes corrective actions, U.S. Coast Guard issues Letter of Acceptance; Immediately upon return to U.S. waters, an offshore PSC exam is required. • If found non-compliant again, the Coast Guard will review the detention and may issue another Letter of Denial; vessel would be banned for no less than 12 months • Vessels “Banned” may still transit US waters due to Force Majeure or Innocent Passage

9. VESSELS BANNED FROM OPERATING IN THE U.S. VESSEL IMO# FLAG OWNER DATE COSETTE 6617025 Bolivia Pinafore Shipping Corp 01/28/2010 WILMINA 9151840 Norway Wilmina Shipping AS 06/30/2010 ISLAND INTREPID 7033161 ST. Vincent Mercator Ship Management SA 09/01/2010 http://homeport.uscg.mil/mycg/portal/ep/browse.do?channelId=-18371

10. CG International Port Security Program • IPS Program visits over 150 countries on two year cycle to assess port security. • COE are imposed on vessels arriving from ports that : • lack effective anti-terrorism measures, or • where CG is denied access • Vessels with COE’s must take additional security precautions while in those foreign ports. • Vessels with COE’s are subject to offshore boardings prior to U.S. entry. • Vessels may need to post guards while in U.S. ports • List of countries & specific conditions are published in Port Security Advisory https://homeport.uscg.mil

11. Currently on PSA (4-11) - Cambodia* - Iran - Cameroon* - Liberia* - Comoros -Madagascar* - Cote d’Ivore - Sao Tome and Principe - Cuba - Syria - Equatorial Guinea* - Timor-Leste - Guinea-Bissau - Venezuela - Indonesia* * contains some exempted ports

12. Environmental Compliance

13. Environmental Compliance Detection • Remote Sensing • Whistleblowers • Port State Control • MARPOL • ISM Inspections • Referrals from Foreign countries • Marine Casualty Investigations

14. Summary of Enforcement • Deliberate discharges of tons of waste oil, sludge and other pollutants. • Intentional falsification of vessel records to deceive port authorities. • Concealment: discharges made at night, hiding of bypass equipment, use of dispersants, tricking OCM, falsification of Oil Record Book and Tank Sounding Log, etc. • Obstruction of justice (witness tampering, destruction of evidence, alteration of documents).

15. Atlantic Offshore Wind Power Project Status 13 March 2012

18. Ballast Water Regulations Available 16 March 2011 http://www.archives.gov/federal-register/public-inspection/ Published 23 March 2011

19. Ballast Water Regulations Discharge Standard • IMO D-2 Standard • Technology review • Completed by 1 January 2016 • More stringent standard • Testing protocols can support a more stringent standard • If “significant improvement in ballast water treatment efficacy could be practicably implemented” – Coast Guard must initiate regulations by 1 January 2017

20. Ballast Water Regulations Applicability • Seagoing vessels (operate beyond US baseline) • Exemptions • Sovereign immune vessels • Crude oil tankers in U.S. coastwise service • Vessels operating solely w/i COTP zone • Vessels less than 1600grt/3000gt operating within EEZ • Innocent passage

21. Ballast Water Regulations Compliance dates: New vessel – Constructed on or after 1 December 2013 • Keel laid, • Construction identifiable with the specific vessel, • Assembly commenced w/50 tons or 1%, whichever is less, or • Major conversion Extension provision • Document compliance is not possible

22. Ballast Water Regulations Treatment system requirements • Coast Guard type approval • Alternate management systems (AMS) • Type approval by foreign administration IAW Ballast Water Convention • Manufacturer must also apply for USCG type approval • Valid for 5 years after date vessel required to comply • Not permitted if USCG type approved systems are available • 19 foreign “type approved” systems

23. Ballast Water Regulations Conclusion • Regulations are out • Consistent with IMO discharge standard • Requires CG type approved systems • Compliance begins in 2013 • Provides a bridging strategy until CG type approved systems are available. Now the “hard work” begins!

24. Thank you