NORTH AMERICAN PANEL NORTH AMERICAN PANEL April 27, 2010 UPDATE ON US ISSUES UPDATE ON US ISSUES JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

US ISSUES Massachusetts lawsuit EPA Vessel General Permit California Air Resources Board (CARB) air emission Salvage and Firefighting Iranian Sanctions

MASS LAWSUIT INTERTANKO CONCERNS District Court 2006 decision upholds Coast Guard authority over vessel operations in US waters Reinforces unanimous US Supreme Court decision in 2000 when INTERTANKO took the state of Washington to court

MASS LAWSUIT DEVELOPMENTS July 2009 – the District Court Magistrate Judge issued his recommendation to the District Court to grant the U.S. Government's motion for a permanent injunction enjoining the State of Massachusetts from enforcing the tug escort and vessel manning provisions of the states oil spill prevention regulations. March 31, 2010 – the District Court adopts the Magistrate Judge’s recommendation and issues a permanent injunction against the State of Massachusetts

MASS LAWSUIT NEW DEVELOPMENT New Mass law imposes triple the fines if an oil spill occurs and tank vessel did not provide the state with advance notice, have a tug escort and have a state pilot on board (USD750K per day) State trying to indirectly regulate tank vessel operations in Buzzard's Bay, which is contrary to the Supreme Court decision in state of Washington USCG sent a letter expressing deep concern about the new law, but extremely unlikely they will take the lead in taking Massachusetts to court political reasons. If successful, will very likely be used by other states, including Washington, as a vehicle to get around the state pre-emption

MASS LAWSUIT LATEST DEVELOPMENT Industry coalition consisting of INTERTANKO, the American Waterways Operators (AWO), the Chamber of Shipping of America (CSA), the International Chamber of Shipping (ICS) and the International Group (IG) of P&I Clubs have challenged this new law in district court Letter sent to the US Coast Guard encouraging US government intervention in the lawsuit

EPA VGP INTERTANKO CONCERNS Federal Court orders EPA to develop regulations for all ship discharges under NPDES permit system of Clean Water Act Judge acknowledges that US Coast Guard has authority under certain laws, but believes that Congress also gave authority to EPA under Clean Water Act Ruling has two federal agencies responsible for same subject matter

EPA VGP DEVELOPMENTS VGP requirements have been effective since February Environmental groups have sued EPA stating that the VGP discharge requirements, in particular those relating to ballast water, are not stringent enough. Lake Carriers Association, American Waterways Operators and World Shipping Council have sued EPA requesting the court to vacate the VGP Expected outcome is that court will maintain in place the existing VGP, while remanding the VGP back to EPA for reconsideration.

CARB AIR EMISSIONS INTERTANKO CONCERNS CARB regulations require fuel with 0.5% sulphur content, reduced to 0.1% Jan 2012 when within 24 miles of California coast CARB implements unilateral requirements that are not consistent with IMO standards Fuel switching to low sulphur fuels could have safety implications

CARB AIR EMISSIONS DEVELOPMENTS June 2009 US District Court denies PMSA motion to dismiss CARB air emission regulations for ocean- going vessels Court also ruled that California has the authority to apply the regulations 24 miles from their coast because they only applied to ships entering Californian ports PMSA to take matter to US Appellate Court San Francisco Harbor Safety Committee meeting discusses engine failures in San Francisco Bay as a result of fuel switching to comply with this CARB regulation. CARB representative at the meeting made it very clear that suspending the CARB regulation is not an option.

SALVAGE AND FIREFIGHTING Final regulation for tankers issued December 31, 2008, initially required compliance by June 1, 2010 August 2009, USCG delays compliance date to February 11, 2011 March 19, 2010, USCG issues “Frequently Asked Questions” (see WN No. 12/2010) USCG indicates it will issue further guidance (NVIC)

SANCTIONS Iranian sanctions Both houses of US Congress have passed bills (HR 2194, S 908), awaiting conference committee action Regarding the transportation of oil, both bills would require the President to impose sanctions against someone who provides ships to deliver refined petroleum products to Iran They do NOT impose sanctions against someone who provides ships to export Iranian oil INTERTANKO Documentary Committee has developed charter party clause (WN No. 12/2010)

SANCTIONS Documentary Committee developed clause: “ Any trade in which the vessel is employed under this Charterparty which could expose the vessel, its Owners, Managers, crew or insurers to a risk of sanctions imposed by a supranational governmental organisation or the United States, { insert other countries } shall be deemed unlawful and Owners shall be entitled, at their absolute discretion, to refuse to carry out that trade. In the event that such risk arises in relation to a voyage the vessel is performing, the Owners shall be entitled to refuse further performance and the Charterers shall be obliged to provide alternative voyage orders.” (WN No. 12/2010)

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