UPDATE ON US LEGAL ISSUES NORTH AMERICAN PANEL MEETING 24 OCTOBER 2006

US LEGAL ISSUES MASSACHUSETTS LAWSUIT RHODE ISLAND LAW FOR LNG TANKERS LAWSUIT ON BALLAST WATER DISCHARGES CARB AIR EMISSION REGULATIONS

MASSACHUSETTS LAWSUIT JULY 24 COURT ISSUES DECISION THAT MASS OIL SPILL REGULATIONS ARE PRE-EMPTED BY USCG REGULATIONS SEPTEMBER 7 MASS SUBMITS NOTICE TO APPEAL DECISION TO APPELLATE COURT MASS APPEAL DUE BY NOVEMBER 16 DOJ AND INDUSTRY COALITION REBUTTAL DUE 30 DAYS LATER EXCOM – WORK WITH DOJ AND INDUSTRY COALITION TO UPHOLD DISTRICT COURT DECISION

RHODE ISLAND LAW FOR LNG TANKERS JULY 2006 RI PASSES LAW PROHIBITING LNG TANKERS FROM TRANSITING NARRAGANSETT BAY UNLESS CERTAIN NAVIGATION CONDITIONS ARE MET COAST GUARD EXPRESSED CONCERN TO RI LEGISLATURE THAT LAW IS PRE-EMPTED BY USCG REGULATIONS CURRENTLY NO LNG TANKERS TRANSIT NARRAGANSETT BAY EXCOM – MONITOR, ENCOURAGE FEDERAL GOVERNMENT TO PURSUE LEGAL ACTION

LAWSUIT ON BALLAST WATER DISCHARGES SEPTEMBER 18 FEDERAL JUDGE ISSUES ORDER FOR EPA TO REGULATE ALL SHIPS DISCHARGES, INCLUDING BALLAST WATER, UNDER NPDES PERMIT SYSTEM REGULATIONS TO BE ISSUED BY SEPTEMBER 30, 2008 JUDGE RECOGNIZES USCG AUTHORITY TO REGULATE BALLAST WATER, BUT SAYS CWA ALSO GIVES AUTHORITY TO EPA EXCOM – WORK WITH EPA AND INDUSTRY COALITION TO DETERMINE NEXT STEP

CARB AIR EMISSION REGS JUNE 2006 INDUSTRY COALITION SUBMITS COMMENTS ON CARB REGULATIONS, INCLUDING THEIR LEGAL AUTHORITY TO ISSUE REGS AUGUST 2006 CARB ISSUES ADVISORY THAT REGS WILL ENTER INTO FORCE ON JAN 1, 2007 CLEAN AIR ACT GIVES CA AUTHORITY TO ISSUES REGS THAT EXCEED FEDERAL REQUIREMENTS, WEAKENING FEDERAL PRE-EMPTION ISSUE AUTHORITY TO EXTEND REGS TO 24 MILES IS SERIOUSLY QUESTIONED EXCOM – PRE-EMPTION IS MAIN ISSUE, MONITOR DEVELOPMENTS AND REPORT TO NEXT SESSION