“Changing Regulations: Implementation” Christian Mollitor, Vice President, LISCR

1. “Changing Regulations: Implementation” Christian Mollitor, Vice President, LISCR February 19, 2014

2. Finding Solutions to Implementation Challenges • MLC 2006 • Ballast Water Management • Global Emission Control Areas PROBLEM WITH THE SOLUTION “THE SOLUTION” THE PROBLEM Liberia’s Resolution

3. About Us • 3,950 Vessels • 134 Mil. Gross Tons • World’s 2nd Largest Registry (DWT Rank) • White-Listed with all PSC Authorities; USCG Qualship21 • Top Ranking in ICS Flag State Performance Table • 350 Offshore Units/ Vessels • 500,000 active seafarers • 15+ Global Regional Offices • 175+ Full-time Employees • 300+ Inspectors/Auditors

4. Enforcement of Standards RE: Seafarers’ Living & Working Conditions THE PROBLEM • Since 1920, ILO has adopted over 68 legal instruments on seafarer’s living & working conditions. • Problem  too many conventions, too much complexity and not enough impact: • difficult for governments to ratify and to enforce all of the standards; • standards were out of date and did not reflect contemporary working and living conditions on board ships. • Need for a Convention that can be enforcedand promotes compliance and awareness at every stage from the national system of protection (flag state) to the International system (port states) and the ILO’s supervisory system.

5. THE SOLUTION International Labour Organization Maritime Labour Convention 2006 • Maritime Labour Convention 2006 (MLC 2006) • Purpose: • MLC 2006 aims to provide seafarers’ rights to decent conditions of work and helps to create conditions of fair competition for shipowners; • Brings together 37 existing ILO Maritime Conventions and 31 ILO Maritime Recommendations into one single instrument that addresses new subjects in the area of occupational safety and health; • Globally applicable, easily understandable, readily updateable and uniformly enforced; • The 37 existing ILO maritime labour Conventions will gradually be phased out. • MLC 2006: The “fourth pillar” of the international regulatory regime for quality shipping, complementing the key Conventions of the International Maritime Organization (IMO) – SOLAS (1974) as amended, STCW (1978) as amended, and MARPOL (73/78) • Regulation & Code: • Minimum requirements for seafarers to work on a ship • Conditions of employment • Accommodation, recreational facilities, food and catering • Health protection, medical care, welfare and social security protection • Complaint Handling Procedures • Compliance and enforcement • Entered into force: August 20th, 2013

6. MLC 2006 Implementation of MLC, 2006 Problem with “The Solution” The Global Shipping Industry is faced with the challenge of navigating the ‘MLC Minefield’ as the Convention officially entered into force this past year on August 20th, 2013. Defining Seafarer? SRPS Providers? Flag State Responsibilities? Social Security? Who is the (MLC) “Shipowner”?

7. Liberia’s Resolution –MLC 2006 Implementation Challenges • Liberia’s Proactive Measures: • Trained a global network of more than 174 MLC certified inspectors to conduct shipboard MLC compliance inspections and issue MLC certificates on its flagged fleet of 3,173 vessels to which MLC, 2006 applies; • Provided global MLC seminars, training forums and gap analysis to shipowners and operators; • Ongoing and vigorous review and acceptance of the shipowners’ measures and procedures for ongoing compliance (DMLC Part II); • Reviewed and accepted 3,050 DMLC Part IIs and issued 1,817 Maritime Labour Certificates (ROs issued 1,228 Maritime Labour Certificates); • Certified 3,045 Liberian Flagged Vessels under MLC (to-date); • Launched an Online Maritime Labour Complaints Resolution Formto help seafarers resolve all genuine and valid complaints.

8. Ballast Water Management THE PROBLEM While ballast water is essential for safe and efficient modern shipping operations, it may pose serious ecological, economic and health problems due to the transfer of marine species carried in ships’ ballast water from their natural habitat to a non-indigenous one.

9. Ballast Water Management THE SOLUTION • International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM) • Purpose: Aims to “prevent, minimize and ultimately eliminate the transfer of harmful aquatic organisms and pathogens through the control and management of ships' ballast water and sediments”. • Objective: Establish Global Regime in order to prevent Regional & Unilateral Standards • Implementation Deadline: • After a minimum of 30 States, representing 35% of world merchant shipping tonnage, sign the document in agreement • As of January 2014, 30.38% of the requisite 35% of global tonnage requirement has been met; 38 States have ratified the Convention. • After the global tonnage requirements are satisfied, the Ballast Water Convention will come into force one year later

10. Problem with “The Solution” Ballast Water Management • Implementation Challenges: • Unique IMO Approach – set deadlines prior to Ratification • based on a false premise • Availability of BWTS required to meet “Convention” performance standards • Excessive Implementation Costs • $100 billion in implementation expenses • Retrofitting: Scheduling, Capacity, Space, Power – availability of ship repair yards, manufacturer resources, onboard space, power requirements & increases air emissions. Current state of shipping economy. • Testing/Verification: There is a new dispute on the testing/sampling protocols which has already resulted in 2 approved systems being pulled from the market • Active Substance Systems may cause unintended environmental damage

11. Liberia’s Resolution - Ballast Water Management • Liberia’s Proactive Measures: • Major advocate for pushing back implementation dates (practical implementation); • Prior to the Convention’s Entry into Force, Liberia urges Ship Owners to: • provide their ships with the BWM Plans approved for the D-1 standard (i.e., ballast water exchange); and • complete initial surveys for issuance of a Statement or Certificate of Compliance in advance; • The Administration offers guidance, review and approval of Ballast Water and Sediments Management Plans; and • Liberia is reviewing BWMSs for installation on Liberian flagged ships –to date, 6 systems have been approved and 2 systems are pending approval.

12. Global Emission Control Areas & Future ECAs THE PROBLEM North Sea (22 Nov, 2007) Baltic (19 May, 2006) North America (01 Aug, 2012) US Caribbean Sea (01 Jan, 2014) Future ECA’s?

13. Global ECAs THE SOLUTION • MARPOL ANNEX VI, Regulation 4 provides alternatives “any fitting, material, appliance, or apparatus to be fitted in a ship or other procedures, alternative fuel oils, or compliance methods used as an alternative” if they are “at least as effective in terms of emission reductions.” To include: • Mechanical Removal • Exhaust gas cleaning systems for marine applications include scrubber systems for the reduction of SOx and Selective Catalytic Reduction systems to reduce NOx. • SCRUBBERS: • Wet: Uses seawater or freshwater (open system – water taken from sea and discharged back to sea; and closed system – uses onboard water and kept onboard). • Dry: removes acid gases primarily from combustion sources via two types, Dry Sorbent Injector and Spray Dryer Absorbers. • RETROFIT VS. NEW SYSTEMS • Alternative Fuels: Low Sulfur Fuel, Distillate Fuel • Non-Conventional Propulsion • Cold Iron/Shore Power • Operational Means

14. Global ECAs “The Solution” Problem with • Fuel • Availability of Low Sulfur Fuel • Storage Capacity • Auxiliaries • Safety, Change-Over Risks • Cost • Fuel Expense – 50%? 100%? increases • Cost Effective? • Technology • Engine Specific • Technology Still Being Proven • Theoretical vs. In-Service • Testing & Enforcement • Space Constraints • Equipment Risk • Sulfur ↓ = CO2↑? • Waste Stream • Cost

15. Liberia’s Resolution – Global ECAs • Flags cannot exempt or grant dispensation as coastal states have primary responsibility to enforce ECAs. • Liberia’s Proactive Measures: • Supported CLIA’s cruise ship weighted average study in ECAs • Support Owner: • Issued Marine Notice to inform Ship Owners of new ECAs • Advised Ship Owners of steps to take if they can’t get fuel (i.e., notify EPA, USCG, Transport Canada) • We report to IMO: • Bad Fuel (falsified bunker delivery note) • Unavailability of low sulfur fuel from Ports

16. Finding Solutions to Implementation Challenges • Regulations are always changing • Implementation is difficult  technology, confusion, etc. • Flag States can help provide SOLUTIONS PROBLEM WITH THE SOLUTION “THE SOLUTION” THE PROBLEM Liberia’s Resolution

17. QUESTIONS. . . ? Thank You for Your Time

18. PROBLEM WHO IS THE “SHIPOWNER” UNDER MLC? Despite the complex commercial arrangements involved with a ship’s operation, there must be a single entity– ”the shipowner” – that is responsible for seafarers’ living and working conditions under the MLC.

19. Liberia’s Solution: Who is the Shipowner under MLC? • MLC defines ‘shipowner’ as the ‘owner of the ship’ or ‘operator of the ship’. • There is only one person-namely, ‘the shipowner’, who assumes all of the duties and responsibilities imposed by the Convention on the shipowner. • To ensure the ‘single entity’ concept intended by MLC, Liberia requires that the same entity is listed on the: • DMLC Part II • MLC Certificate; and • Seafarers’ Employment Agreement • DMLC Part II Declaration possible in case of appointment

20. PROBLEM • A shipowner is unable to comply with Liberia’s provisions regarding Seafarers’ Employment Agreements. • What now?

21. Liberia’s Solution: if a Shipowner cannot comply with its Provisions RE: Seafarer’s Employment Agreements • In the event that a shipower is unable to comply with Liberia’s provisions for implementing the Convention, • Such as different direct Employer of Crew • Owner unable to sign agreements • Logistic handling of Agreements •  the Administration will consider providing substantial equivalents to these requirements, pursuant to Article VI of the MLC, if it: • Fully achieves the general object and purpose of the provision(s) of Part A of MLC; and • Gives effect to the provision(s) of Part A of MLC • “Substantial Equivalents” are recorded in the DMLC Part I for that ship.

22. PROBLEM Is a Cadet/Trainee a SEAFARER for the purpose of MLC compliance?

23. Libiera’s Solution: Is a Cadet/trainee a SEAFARER for MLC Compliance Purposes? • The Liberian Administration will give due consideration to exempting Cadets as “SEAFARERS” from some of the Regulations under the Convention, if: • The Cadet/Trainee is enrolled in a Maritime University; and • Is on board for the sole purpose of completing sea time required as part of graduation. • Cadets, if classified as such, will be exempt from the requirements of recruitment and placement, employment agreement, wages, entitlement to leave, and social security protection.

24. PROBLEM The MLC Ratifying State is responsible for ensuring that SRPS operating in their territory establish a system of protection to guarantee Seafarer compensation for monetary loss.

25. Liberia’s Solution: for ensuring that SRPS operating in their territory establish a system of protection to guarantee Seafarer compensation for monetary loss. • As part of its audit of SRPS located in countries not party to MLC, Liberia confirms that the SRPS has verifiable procedures for ensuring that the Shipowner has some form of insurance or other financial guarantees to cover potential monetary losses. • In respect of the obligations on the SRPS, a form of insurance or other form of guarantee from the shipowner will be sufficient.

26. PROBLEM How does a Flag State give consideration to the various ways in which comparable social security protection benefits are provided to seafarers in the absence of adequate coverage?

27. Liberia’s Solution: Social Security Protection Benefits • The MLC requires that the seafarers employment agreement include the health and social security benefits provided to the seafarer by the Shipowner. • The MLC also requires that labor-supplying states to provide complimenting social security protection, which includes at least 3 of the 9 branches of medical care, sickness benefit, unemployment benefit, old-age benefit, employment injury benefit, family benefit, maternity benefit, invalidity benefit and survivor’s benefit. • Therefore where a Shipowner employs seafarers from labor-supplying states that are signatory to MLC: the Liberian Administration requires that any deductions (contributions) are being made in accordance with the seafarers employment agreement. This is confirmed during MLC inspections. • Where a Shipowner employs seafarers from non-ratifying labor-supplying states, during the review of the DMLC part II: Liberia requires the shipowner to document the health and social security benefits provided to the seafarer through contribution-based systems, per the seafarers’ national social security legislation, through private insurance schemes or in CBA’s, or in a combination of these.