Land, Sea, and Air: Major Environmental Changes Underway for the Maritime Industry and the Nation’s Waterways Susan Geiger, Partner K&L Gates Maritime Group September 24, 2009

1 Land  New Regulatory and Enforcement World  EPA  Vessel General Permits  Air emission regulations

2 Sea  Major new restrictions on vessel discharges  And more to come

3 Air  Air emission restrictions are just beginning

4 Land, Sea, and Air  Why Now?  What Now?  What Next?

5 Why Now?  Laws to protect our waterways are more than 100 years old  Refuse Act of 1899  Increased global awareness  Climate change  Clean and green  Reductions in other sources leaves vessel emissions as a large and growing percentage  Improvements in technologies  Not the best record

6 What Now? Vessel General Permit Just the skeleton of what is to come  Ballast water  Others Incorporates “best management practices” as an interim measure Further EPA “guidance” expected

7 What Now? VGP  Why is this a major change? Report and make public Inspection and entry Sample and monitor Sign and certify  New enforcement tools  New enforcement personnel  New types of enforcement

8 What Now?  VGP Enforcement  Corrective action reporting  Treasure trove for citizen suits?  24,000 vessels subject to the permit  If only 1% have a violative condition each year, that equals 240 enforcement actions

9 Judicial Appeals Relating to the VGP in Federal and State Courts ForumSummary of ArgumentStatus D.C. Circuit: Lake Carriers, et al. v. EPA, No VGP is arbitrary and capriciousStayed by order of court until 10/15/09; parties are discussing potential settlement Minnesota Court of Appeals: Nat. Wildlife Fed. V. Minn. Pollution Control Agency, No. A Minnesota had insufficient time to properly certify the VGP Fully briefed, awaiting court decision Michigan Circuit Ct. Ingham Cty.: Nat. Wildlife Fed. v. Chester, No Decision to exempt Lakers from ballast water condition was not arbitrary or capricious Industry brief filed June 29, 2009 New York Supreme Court/App. Div.: Port of Oswego Authority v. Grannis, No Did not submit our own briefs; petitioners arguments were based on federal 401 requirements and state law NY Supreme Court (trial court) upheld 401 certification 5/21/2009. Appeal pending. Illinois Circ. Ct. Sangamon County: Lake Carriers Assoc. v. Scott, No. 09-MR-140 Two conditions in Illinois certification did not comply with federal regulations because they did not cite state law basis for condition Amended complaint pending Pennsylvania Environmental Hearing Bd: Lake Carriers Assoc. v. Pennsylvania DEP, No L Ballast water provisions of certification violate federal and state law Stayed by order of court until October 15, 2009.

10 What Now? Ballast water regulations  Proposed by Coast Guard, not EPA  EPA can add its own requirements  Moving from best management practices to numerical standards  Applied to domestic as well as international trading  $1 billion cost  Small companies bear the most significant cost  Comments due November 27, 2009

11 What Now? Air emission restrictions for Category 3 engines  Adoption of Annex VI  Submission of US/Canada ECA proposal to IMO  Draft regulations would apply ECA limits to internal as well as coastal areas  Unintended consequences?

Many Environmental Changes for the Maritime Industry 2011NO x IMO Tier III for new engines 2012SO x Ballast Water 10,000 ppm sulfur fuel standard Phase I for new engines and technology review for Phase II 2014Ballast WaterPhase I for fist drydocking after January 1 st for existing vessel with 1,500-5,000 M 3 ballast water tanks 2015SO x 1,000 ppm sulfur fuel standard 2016NOx Ballast Water IMO Tier III for new engines Phase I for first drydocking after January 1 st for existing vessel with 1,500-5,000 M 3 ballast water tanks Phase II for new vessels and first drydocking after January 1 st for existing unless Phase I technology is less than 5 years old

13 What’s Next?  Climate Change  Possible new CO 2 air emission restrictions  Bunker tax to provide funding used as an incentive to less developed countries?  Maritime spatial planning  Zoning for the oceans?

14 What’s Next?  Marine debris  Upcoming focus  Sewage discharges  Petition filed for EPA to develop stricter regulation of Type II MSD

15 What’s Next?  New environmental claims?  Propeller wash disturbing PCB-contaminated sediments by an engine testing facility can support operator liability under Superfund  Criminal violations of Non-Indigenous Aquatic uses and Prevention Control Act brought against the captain and chief officer of a vessel for ballast tank violations  Consolidations and modal shifting?  Many more changes to come

16 Any Questions?