U.S. Coast Guard INTERTANKO North American Panel Presentation

1. U.S. Coast Guard INTERTANKO North American Panel Presentation Jeff Lantz Director of Commercial Regulations and Standards March 21, 2011

2. Port State Control • 9,260 individual vessels, from 92 different Flag Administrations, made 81,712 U.S. port calls • U.S. ports saw vessel arrivals increase by approximately 8% • Goal: eliminate substandard shipping • Performance based targeting system: U.S. Port State Control Matrix targets – Flag, Recognized Org, Class Society, & Ship Mgmt/Charterers. • Challenge: • Ships larger/ more complex • Consequences of failure greater • Effects of Economic downturn? Change in trading patterns?

3. Detentions • Relatively low detention ratio: 1.87% • Other Options: • Denial of Entry/Suspend Cargo Ops/Expel from port • New Vessel Banning Policy- minimum of 3 months • Typical reasons: • Firefighting • Marine Pollution (including environmental crimes) • Propulsion & Machinery • ISM Code

4. 2010 Detainable Deficiencies

5. 2010 PSC Statistics Note: Decrease in arrivals and examinations affects the overall detention average. In 2009, 8557 distinct arrivals.

6. Improved Performance Port State Control Targeting

7. Rewarding the Best QUALSHIP 21 • Rewards Highest Performing vessels flagged by an eligible Flag Administration • Subject to fewer CG inspections • Internationally recognized program sought out by charterers, etc • Difficult criteria must be met through vessel performance, flag performance, etc • Only 342 vessels enrolled

8. Vessel Banning Policy • USCG Banning Policy is set forth in CG-543 Policy Letter, dated September 1, 2010 • Outlines procedures for denying entry of identified (banned) foreign vessels from a Port or place in the U.S. • Intended to deter substandard vessels and companies from changing shipping routes or Flag Administrations to avoid the PSC program • Based upon compliance of vessel with the ISM Code

9. Overview of Banning Procedures • 3 detentions in a 12 month period – vessel will be reviewed closely by U.S. Coast Guard Headquarters to determine if vessel meets criteria • Clearly documented cases of ISM Code non-compliance indicating a failure of the Safety Management System is a key factor in U.S. Coast Guard Headquarters’ determination • If banned, U.S. Coast Guard Headquarters issues Letter of Denial w/conditions to the Owner/Operator, Flag Administration and Coast Guard units. Vessel is banned for a minimum of 3 months – regardless if conditions for removal of ban are satisfied earlier then the 3 month timeline. • Banning remains in effect until removed by U.S. Coast Guard Headquarters, regardless of status of vessel (change of Flag, RO or operating status) • If vessel takes corrective actions, U.S. Coast Guard issues Letter of Acceptance; Immediately upon return to U.S. waters, an offshore PSC exam is required. • If found non-compliant again, the Coast Guard will review the detention and may issue another Letter of Denial; vessel would be banned for no less than 12 months • Vessels “Banned” may still transit US waters due to Force Majeure or Innocent Passage

10. Conditions of Entry • Cambodia* • Cameroon* • Congo, Republic of* • Cuba • Equatorial Guinea* • Guinea-Bissau • Indonesia* • Iran * contains some exempted ports • Liberia* • Madagascar • Mauritania* • Sao Tome and Principe • Syria • Timor-Leste, Democratic Republic • Venezuela

11. Vessel General Permit • VGP MOU outlines coordination and cooperation between EPA and the USCG • MOU provides division of labor • USCG – compliance examinations • EPA – enforcement

12. Vessel General Permit • The Permitting Program for Vessels - National Pollution Discharge Elimination System • Covers Normal Operational Discharges • Vessels subject to VGP must be in compliance now

13. Regulatory Update • Workload • Review process • Significant/Non-significant • OMB/DHS • High priority regulations • STCW • Ballast Water (VGP Settlement) • Non-tank Vessel Response Plans • Towing Vessels

14. Regulatory Update • EO 13563 – “Improving Regulation and Regulatory Review” • Federal Register Notice – 76FR13526 dated 14 March 2011

15. Japanese Fukushima Power Plant Incident • Maritime Transit Advisory – Coast Guard, MARAD and NOAA - HYDROPAC and NAVAREA XII message to mariners • Do not expect harmful levels to reach the US • The US has necessary screening protocols in place for inbound vessels, cargo and people should further examination be required

16. FUKUSHIMA DAIICHI POWER PLANT 282 MILES 139 MILES 375 MILES TOYOHASHI TOKYO KOBE 214 MILES SHIMIZU KASHIMA, IBARAKI 101 MILES CHIBA YOKOHAMA 132 MILES 154 MILES NAGOYA AICHI OSAKA 281 MILES 362 MILES PROXIMITY TO POWER PLANT (APPROX) CLOSEST – 100 MILES FARTHEST – 600+ MILES KANDA, FUKUOKA 617 MILES

17. IMO Update • EU Mutual recognition • Code for Implementation of Mandatory Instruments – mandatory audit scheme to tell how countries are giving complete effect to mandatory IMO instruments • Recognized Organization Code – govern the actions of recognized organizations (classification societies)

18. QuestionsThank you