1. INTERTANKO NORTH AMERICAN PANEL EPA NPDES PERMIT PROGRAM Jonathan K. Waldron October 14, 2008 The information contained herein is abridged and summarized from numerous sources, the accuracy and completeness of which cannot be assured. This should not be construed as legal advice or opinion and is not a substitute for the advice of counsel.

2. 2 Discharges Incidental to the Normal Operation of a Vessel HOW DID WE GET HERE? In 1972 Congress enacted the Clean Water Act (CWA) which established the National Pollutant Discharge Elimination System (NPDES) and issued implementing regulations in 1973 – over 35 years ago CWA Definitions and Prohibitions o“Discharge of a Pollutant” defined to mean any addition of a pollutant to the navigable waters from a point source o“Pollutant” defined to include, among other things, garbage, heat, solid waste, rock, and industrial, municipal, and agricultural waste – almost anything except sewage from vessels (specifically excluded from this statutory definition) o“Point Source” is a vessel when operating within navigable waters (i.e. three miles)

3. 3 Discharges Incidental to the Normal Operation of a Vessel (continued…) HOW DID WE GET HERE? The Incidental Discharge Regulatory Exclusion (40 C.F.R. § 122.3(a)) The following discharges do not require NPDES permits: Any discharge of sewage from vessels, effluent from properly functioning marine engines, laundry, shower, and galley sink wastes, or any other discharge incidental to the normal operation of a vessel. This exclusion does not apply to rubbish, trash, garbage, or other such materials discharged overboard; nor to other discharges when the vessel is operating in a capacity other than as a means of transportation such as when used as an energy or mining facility, a storage facility or a seafood processing facility, or when secured to a storage facility or a seafood processing facility, or when secured to the bed of the ocean, contiguous zone or waters of the United States for the purpose of mineral or oil exploration or development. No challenges to this exclusion until 2003

4. 4 Legal Challenge and EPA Rulemaking History Rulemaking Petition: Filed January 13, 1999 by various environmental groups asking EPA to repeal this exclusion Denial: EPA denied this petition in September 2003 Lawsuit: Filed in December 2003 in the U.S. District Court for the Northern District of California District Court Decision: In March 2005 the District Court ruled that the exclusion exceeded EPA’s authority under the CWA

5. 5 Legal Challenge and EPA Rulemaking History (continued…) Permanent Injunction Issued: In September 2006 the District Court issued a final order and a permanent injunction that requires revocation of the exclusion by September 30, 2008 EPA Appeal: Filed November 16, 2006 EPA Advance Notice of Proposed Rulemaking: Issued June 21, 2007 requesting information EPA Proposed General Permit: Issued in a Notice dated June 17, 2008 Appeal Denied: On July 23, 2008 the Ninth Circuit denied the appeal leaving the September 30 date in effect Temporary Reprieve: District Court extended the date until December 19, 2008

6. 6 The Proposed Vessel General Permit (VGP) Vessels Affected: Approximately 50,000 commercial vessels Recent Legislation Makes Recreational General Permit Unnecessary: oClean Boating Act of 2008 (S. 2766): Enacted July 29, 2008 and exempts recreational vessels from the VGP requirement. Directs EPA to evaluate discharges and the Coast Guard to promulgate regulations on management practices oS. 3928 and Commercial Fishing Vessels: Enacted July 31, 2008 and imposes two year moratorium on vessels less than 79 feet and commercial fishing vessels and directs a report to Congress Limitations on Coverage: Does not apply to: oVessels when not operating in a capacity other than as a means of transportation including vessel permanently moored to a pier (e.g. floating casinos), or facilities engaged in activities under the Outer Continental Shelf Lands Act oSewage, used oil, garbage or trash, photo processing or dry cleaning effluent, medical waste, or NLS residues

7. 7 The Proposed Vessel General Permit (VGP) (continued…) Categories of Discharges Authorized: 28 kinds of operational discharges –Deck Washdown and Runoff –Bilgewater –Ballast Water –Anti-Fouling Hull Coatings –Aqueous Film Forming Foam –Cathodic Protection –Chain Locker Effluent –Controllable Pitch Propeller Hydraulic Fluid –Distillation and Reverse Osmosis Brine –Elevator Pit Effluent –Firemain Systems –Freshwater Layup –Gas Turbine Wash Water –Graywater

8. 8 The Proposed Vessel General Permit (VGP) (continued…) oMotor Gasoline and Compensating Discharge oNon-Oily Machinery Wastewater oRefrigeration and Air Condensate Discharge oRudder Bearing Lubrication Discharge oSeawater Cooling Overboard Discharge oSeawater Piping Biofouling Prevention oSmall Boat Engine Wet Exhaust oSonar Dome Discharge oStern Tube Oily Discharge oUnderwater Ship Husbandry Discharges oWelldeck Discharges oGraywater Mixed with Sewage from Vessels oExhaust Gas Scrubber Washwater Discharge

9. 9 The Proposed Vessel General Permit (VGP) (continued…) Effluent Limits and Best Management Practices (“BMPs”) For each discharge type, the VGP will implement effluent limits designed to decrease the amount of constituents entering the waste stream, many in the form of a BMP Other Standard Conditions Apply: 40 C.F.R. § 122.41 is a list of additional conditions that apply to all NPDES permits Obtaining Coverage Under the VGP: Automatically covered unless vessel is greater than or equal to 300 GT or has the capacity to hold more that 2113 gallons of ballast water oSubmit a Notice of Intent (“NOI”) to be covered between six and nine months after the VGP’s issuance date oPrior to NOI submission qualifying vessels will be deemed automatically authorized to discharge under the VGP oFor vessels delivered up to nine months after the VGP’s issuance date, the vessel will receive permit coverage on the date that EPA receives the NOI. Vessels delivered after that date will receive permit coverage 30 days after EPA receives the NOI

10. 10 The Proposed Vessel General Permit (VGP) (continued…) Corrective Action to Remedy Deficiencies and Violations: Requires corrective action assessment to be conducted, return to compliance within deadlines, and findings documented in the ship’s log or other recordkeeping Inspections, Monitoring Recordkeeping, and Reporting: Routine self inspections, weekly, quarterly, more comprehensive annual inspections, drydock inspections, recordkeeping, and reporting and a one-time report 30-36 months after obtaining permit coverage Supplemental Requirements for Eight Types of Vessels: oLarge cruise ships, medium cruise ships, large ferries, research vessels, rescue boats, experimental ballast water treatment systems oOil tankers: inert gas systems, deck seals, scuppers, inspections during loading/unloading operations, training on shipboard environmental procedures and management, and reprimand procedures CWA State Certifications: Under CWA section 401 states must certify that the VGP meets state water quality standards and may insert additional more stringent requirements for operations in its state waters

11. 11 Compliance and Enforcement Permit Compliance: oPermit will inform permittee of potential consequences for failure to comply oStandard permit condition is “duty to comply” with NPDES permit oFailure to comply constitutes violation of the VGP and the CWA oFailure to remedy deficiencies within specified time is an additional violation of VGP and CWA Certification Statements: NOI and all reports require certification that information is true and accurate and person making certification is aware that there are significant penalties for submitting false information

12. 12 Compliance and Enforcement (continued…) VGP Penalties: oFalsify, tamper with, or knowingly render inaccurate any monitoring device or method required under permit, or make any false material statement or certification subject to a $10,000 fine or imprisonment up to 2 years or both oSubsequent offenses subject to a fine of $20,000 per each day of violation or by imprisonment up to 4 years or both oFalse statements, representations, alterations, or false entries in documents subject to more severe criminal penalties under other provisions of the CWA and 18 U.S.C. § 1001

13. 13 Compliance and Enforcement (continued…) CWA Penalties: oAdministrative Civil Penalties: A Class I penalty may be assessed up to $11,000 per day for each day the violation continues, not to exceed $27,500. A Class II penalty may be assessed up to $11,000 per day for each day the violation continues, not to exceed $137,500 oJudicial Civil Penalties: A judicial civil penalty of up to $27,500 per day of violation

14. 14 Compliance and Enforcement (continued…) oCriminal Penalties:  Negligent Discharge: A person may be imprisoned for up to one year for the first conviction and for up to two years for a second conviction for negligently discharging a pollutant. In addition, a person may be fined a minimum of $2,500 per day of violation up to a maximum of either $25,000 per day of violation ($50,000 per day for a second conviction) or $100,000 per count, whichever is greater. An organizational defendant convicted of negligently discharging a pollutant may be fined a minimum of $2,500 per day of violation up to a maximum of either $25,000 per day of violation ($50,000 per day for a second conviction) or $200,000 per count, whichever is greater

15. 15 Compliance and Enforcement (continued…)  Knowing Discharge: An organization convicted of a knowing discharge of a pollutant may be fined a minimum of $5,000 per day of violation up to a maximum fine of either $50,000 per day of violation ($100,000 for a second conviction) or $500,000 per count, whichever is greater. A person convicted of knowing discharges may be fined the same minimum as an organization, but the maximum is the greater of either $50,000 per day of violation ($100,000 for a second conviction) or $250,000 per count. In addition, a person may be imprisoned for up to three years for the first conviction and up to six years for a second conviction

16. 16 Compliance and Enforcement (continued…)  Imminent Danger: Any person who knowingly places another person in imminent danger of death or serious bodily injury may be fined up to $250,000 or imprisoned up to 15 years per count, or both. The maximum fine for corporations is $1,000,000 per count. For a second or subsequent conviction, the maximum punishment shall be doubled with respect to both fine and imprisonment Citizens' Suits: Citizens' suits are authorized against persons for permit violations

17. 17 Challenges and Conclusions Applicability of Permit Requirements Seaward of the Three Mile Limit? Challenges in Training and Familiarity with VGP? Documentation? State Certification? Enforcement by the Coast Guard and EPA?

18. 18 QUESTIONS? Contact Jonathan K. Waldron Blank Rome LLP 600 New Hampshire Avenue, N.W. Washington, D.C. 20037 Tel. (202) 772-5964 waldron@blankrome.com