INTERTANKO LATIN AMERICAN PANEL 2005 Federal and State Legislative Update November 16, 2005 Miami Beach, Florida

P.L Energy Policy Act of Became law on August 8, –The law reinstates a per barrel tax/financing rate on imported and domestic petroleum in order to recapitalize the Oil Spill Liability Trust Fund. –Tax suspended since 1994; however, the Fund was declining rapidly. –Tax will begin to be collected starting April 1, It will not apply during any quarter if during the preceding quarter the Fund exceeds $2.7 billion. –This provision of the law is in effect until December 31, 2014.

H.R. 889/H.R Coast Guard and Maritime Transportation Act of This act passed the House on September 15, –H.R. 889 contains the text of HR re: raising OPA ’90 liability limits and which passed the House on June 27, H.R was a stand-alone oil pollution bill which had little chance of seeing further action. –If passed, the Ports and Waterways Safety Act would be amended to require immediate reporting of any release from a vessel into navigable waters any object that creates a prohibited obstruction. –It would also amend OPA ’90 by adjusting liability limits for single-hull and double-hull tank vessels.

H.R. 889 OPA ‘90 Liability Limits Current liability limit is $1200 per gross ton Single-Hull Vessel: –$1,550 per gross ton for an incident in 2005; $1,990 per gross ton for an incident in 2006; $2,250 per gross ton for an incident that occurs in 2007 and thereafter. Double-Hull Vessel: –$1,350 per gross ton for an incident in 2005; $1,500 per gross ton for an incident in 2006; $1,700 per gross ton for an incident that occurs in 2007 and thereafter. These liability limits would be adjusted every 3 years to reflect increases in the Consumer Price Index. Status of Bill – No concerted opposition to increased liability limits from owners or insurers. Passage is likely since provision is part of appropriations bill.

S Coast Guard Authorization Act of Key provisions: –The Department of Homeland Security would conduct a pilot program for a long-range vessel tracking system to aid in maritime security and response to emergencies –The Department would be required to accelerate efforts at the IMO to enhance flag state oversight and enforcement IMO agreements. –Amends the Federal Water Pollution Control Act to make the oil spill response plan requirement applicable to nontank vessels of at least 400 gross tons International Tonnage Certificate, or, for vessels not measured under ITC, of at least 400 gross tons as measured under the regulatory system. Given the passage of H.R. 889, the Senate is expected to also consider liability limits as it debates S

Implementing MARPOL Annex VI Annex VI, adopted by parties to MARPOL in 1997, regulates the emission into the atmosphere of specified pollutants from vessels. On May 15, 2003, the Bush Administration sent the treaty to the U.S. Senate for its advice and consent and recommended ratification of Annex VI. However, the implementing legislation was only recently cleared by the Administration and sent to the Senate. The Senate Foreign Relations Committee met on September 29, 2005 to consider the treaty. Given maritime industry support, the Senate will likely ratify with little debate. Once U.S. emission standards go into effect, U.S.-flagged vessels must meet the national emission limits. U.S. vessels traveling to foreign ports must comply with the provisions of Annex VI which entered into force in May 2005.

State Legislative & Regulatory Activity MASSACHUSETTS United States v. Massachusetts –On August 4, 2004, Massachusetts enacted “An Act Relative to Oil Spill Prevention and response in Buzzards Bay and Other Harbors and bays of the Commonwealth”. –The United States filed suite in January 2005, and an industry group (Intertanko/AWO/BIMCO/CSA) intervened in the action in March –The lawsuit charges that the Massachusetts Act impermissibly treads on federal jurisdiction, specifically, the jurisdiction of the U.S. Coast Guard, in making rules governing maritime operations in U.S. waters. It also asserts that comprehensive federal regulation already exists in the areas covered by the state Act, and that the Supremacy Clause of the U.S. Constitution provides that federal laws and regulations override any attempt by a state government to legislate or regulate in the same areas. –Matter is briefed and awaiting either a decision or scheduling of oral argument.

State Legislative & Regulatory Activity NEW JERSEY –SPILL COMPENSATION AND CONTROL ACT. Signed into law on 31 October Raises tanker limits of liability from $150 per gross ton to $1200 per gross ton to a maximum of $50 million. This new limit of $1200 per gross ton is consistent with current OPA 90 limits of liability for tankers. –A This bill was introduced in January 2005 and has not moved since introduction. Nevertheless, the bill would require any tanker vessel transporting petroleum products in state waters to be of double hull construction. –Resolutions. Both the Senate and the Assembly have introduced non-binding resolutions which seek Federal legislation accelerating the phase-in of double hull tankers. The Senate version urges Delaware River refiners to voluntarily agree to use only double hull tankers by July 1, 2005.

State Legislative & Regulatory Activity RHODE ISLAND –HB 5362 – Introduced in February, this bill would require that an American master mariner, LNG certified, be on board to insure that when any tanker enters a port within the state it complies with all operational standards, best practices and regulatory requirements for safety and pollution control. This bill passed the House in May 2005, but saw no action in the Senate prior to adjournment in June.

State Legislative & Regulatory Activity CALIFORNIA –SB 771 – Current law regulates the release of graywater, sewage, sewage sludge, oily bilgewater, hazardous waste, or other waste by large passenger ships into the marine waters of the state and marine sanctuaries. The bill, which has passed both chambers and been sent to the Governor, would apply such regulations to all oceangoing ships. –Air Resource Board Proposed Regulations to Reduce Air Emissions from Ocean Going Vessels Proposal would require the use of marine diesel oil with maximum 0.5% sulfur content by 2007 and 0.1% sulfur content by Public hearing to be held on 8 December.