1. United States Coast Guard Marine Safety, Security, and Stewardship U.S. Coast Guard INTERTANKO North American Panel Presentation Mr. Jeff Lantz Director of Commercial Regulations and Standards March 19, 2011

2. United States Coast Guard Marine Safety, Security, and Stewardship Port State Control 9,326 individual vessels, from 96 different Flag Administrations, made 79,031 U.S. port calls – # Vessel arrivals decrease by approximately 3.3% – # Individual vessels remained virtually the same 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. United States Coast Guard Marine Safety, Security, and Stewardship 2011 PSC Statistics 2008200920102011 Change 3-Year Average Detention Ratio 1.75%1.92%1.87%1.53% 18% PSC Detentions1761611569737% PSC Examinations11,5829,6579,90710,129 2% ISPS Major Control Actions 2718171512% ISPS Examinations9,4918,7258,9068,909 --- Note: Decrease in arrivals and examinations affects the overall detention average.

4. United States Coast Guard Marine Safety, Security, and Stewardship 2011 Detainable Deficiencies Fire Fighting Appliances 22% * MARPOL, Annex I 15% ISM Related Deficiencies 12% ISPS/Security Related Deficiencies 12% Crew 7% Propulsion and Auxiliary Machinery 7% Load Lines 6% Life Saving Appliances 5% Other 15% * Includes deficiencies for blocked fuel valves – fastest growing reason for vessel detention

5. United States Coast Guard Marine Safety, Security, and Stewardship 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 Flag States that are QUALSHIP 21 eligible in 2012 BahamasFranceLiberiaSweden BarbadosGermanyMalaysiaSwitzerland CanadaGreeceMarshall IslandsThailand Cayman IslandsHong KongNetherlandsUnited Kingdom ChinaIsle of ManNorwayVanuatu DenmarkJapanRussian Federation

6. United States Coast Guard Marine Safety, Security, and Stewardship Improved Performance Port State Control Targeting – Safety: 20 Flag administrations – Security: 3 Flag administrations Flag States that have improved performance and are not longer targeted in 2012 SafetySecurity Antigua and Barbuda Mexico Belgium Croatia India Republic of Korea

7. United States Coast Guard Marine Safety, Security, and Stewardship 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 7

8. United States Coast Guard Marine Safety, Security, and Stewardship Overview of Banning Procedures 1.3 detentions in a 12 month period – vessel will be reviewed closely by U.S. Coast Guard Headquarters to determine if vessel meets criteria 2.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 3.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. 4.Banning remains in effect until removed by U.S. Coast Guard Headquarters, regardless of status of vessel (change of Flag, RO or operating status) 5.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. 6.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 7.Vessels “Banned” may still transit US waters due to Force Majeure or Innocent Passage 8

9. United States Coast Guard Marine Safety, Security, and Stewardship VESSELS BANNED FROM OPERATING IN THE U.S. VESSEL IMO# FLAG OWNER DATE COSETTE 6617025 Bolivia Pinafore Shipping Corp 01/28/2010 WILMINA 9151840 Norway Wilmina Shipping AS 06/30/2010 ISLAND INTREPID 7033161 ST. Vincent Mercator Ship Management SA 09/01/2010 http://homeport.uscg.mil/mycg/portal/ep/browse.do?channelId=-18371

10. United States Coast Guard Marine Safety, Security, and Stewardship CG International Port Security Program IPS Program visits over 150 countries on two year cycle to assess port security. COE are imposed on vessels arriving from ports that : – lack effective anti-terrorism measures, or – where CG is denied access Vessels with COE’s must take additional security precautions while in those foreign ports. Vessels with COE’s are subject to offshore boardings prior to U.S. entry. Vessels may need to post guards while in U.S. ports List of countries & specific conditions are published in Port Security Advisory https://homeport.uscg.milhttps://homeport.uscg.mil

11. United States Coast Guard Marine Safety, Security, and Stewardship Currently on PSA (4-11) - Cambodia*- Iran - Cameroon*- Liberia* - Comoros-Madagascar* - Cote d’Ivore- Sao Tome and Principe - Cuba- Syria - Equatorial Guinea*- Timor-Leste - Guinea-Bissau- Venezuela - Indonesia* * contains some exempted ports

12. United States Coast Guard Marine Safety, Security, and Stewardship Environmental Compliance

13. United States Coast Guard Marine Safety, Security, and Stewardship Environmental Compliance Detection – Remote Sensing – Whistleblowers – Port State Control MARPOL ISM Inspections – Referrals from Foreign countries – Marine Casualty Investigations

14. United States Coast Guard Marine Safety, Security, and Stewardship Summary of Enforcement Deliberate discharges of tons of waste oil, sludge and other pollutants. Intentional falsification of vessel records to deceive port authorities. Concealment: discharges made at night, hiding of bypass equipment, use of dispersants, tricking OCM, falsification of Oil Record Book and Tank Sounding Log, etc. Obstruction of justice (witness tampering, destruction of evidence, alteration of documents).

15. United States Coast Guard Marine Safety, Security, and Stewardship Atlantic Offshore Wind Power Project Status 13 March 2012 Pre-Lease (not necessarily done in order left to right) Leasing Site Assess Construction X = Step complete Form Inter-government Task Force 1 Initial Federal Register (optional) Call for Info or Interest Refine Area Notice of Intent to conduct NEPA for site analysis Draft NEPA Analysis Final site analysis EA/EIS Proposed Sale Notice (optional) Final Sale Notice Lease Sale Execution of lease Assessment Plan Const & Ops Plan, NOI to conduct NEPA, other associated consultations Final EA/EIS Construction Begins New JerseyX-XXXXX 30 day waiting period after notice before sale New YorkX N CarolinaX Rhode IslandX-XXX VirginiaX-3/19XXXX MarylandXX3/19XXXX MassachusettsX-3/22X DelawareXXXXXXX MaineX Georgia S Carolina Florida 1) Inter-governmental Task Forces are formed by state. Meetings are open to the public. After each meeting public may ask questions and make comments. Task Forces remain engaged through the entire process. 2) Inter-governmental coordination/consultation occurs throughout. Yellow = Docket open until dateBlue = Opportunity for formal public comment

16. United States Coast Guard Marine Safety, Security, and Stewardship

17. United States Coast Guard Marine Safety, Security, and Stewardship

18. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Available 16 March 2011 http://www.archives.gov/federal-register/public-inspection/ Published 23 March 2011

19. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Discharge Standard – IMO D-2 Standard – Technology review Completed by 1 January 2016 – More stringent standard – Testing protocols can support a more stringent standard If “significant improvement in ballast water treatment efficacy could be practicably implemented” – Coast Guard must initiate regulations by 1 January 2017

20. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Applicability – Seagoing vessels (operate beyond US baseline) – Exemptions Sovereign immune vessels Crude oil tankers in U.S. coastwise service Vessels operating solely w/i COTP zone Vessels less than 1600grt/3000gt operating within EEZ Innocent passage

21. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Compliance dates: New vessel – Constructed on or after 1 December 2013 Keel laid, Construction identifiable with the specific vessel, Assembly commenced w/50 tons or 1%, whichever is less, or Major conversion Extension provision – Document compliance is not possible VesselBallast CapacityCompliance Date NewAllDelivery Existing < 1500 m 3 First scheduled drydocking after 1 Jan 2016 1500 – 5000 m 3 First scheduled drydocking after 1 Jan 2014 > 5000 m 3 First scheduled drydocking after 1 Jan 2016

22. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Treatment system requirements – Coast Guard type approval – Alternate management systems (AMS) Type approval by foreign administration IAW Ballast Water Convention Manufacturer must also apply for USCG type approval Valid for 5 years after date vessel required to comply Not permitted if USCG type approved systems are available 19 foreign “type approved” systems

23. United States Coast Guard Marine Safety, Security, and Stewardship Ballast Water Regulations Conclusion – Regulations are out – Consistent with IMO discharge standard – Requires CG type approved systems – Compliance begins in 2013 – Provides a bridging strategy until CG type approved systems are available. Now the “hard work” begins!

24. United States Coast Guard Marine Safety, Security, and Stewardship Thank you