Outline

• As a result of a recent US Court of Appeal decision, the EPA is now required to regulate discharges incidental to the normal operations of vessels.
• Vessels must comply with the Vessel General Permit (VGP) requirements from 19th December 2008.
• Vessels must file an Notice of Intent (NOI), between 19th June 2009 to 19th September 2009, to obtain authorisation to discharge under the VGP.

TO THE MEMBERS

Dear Sirs

US Environmental Protection Agency (EPA) Vessel General Permit (VGP) requirements

From 19th December 2008, all commercial vessels, except commercial fishing vessels, of 24 metres (79 feet ) in length or greater with discharges of pollutants incidental to their normal operation, including but not limited to ballast water discharges, into the US three mile territorial sea or inland waters will become subject to the Environmental Protection Agency's (EPA) final Vessel General Permit (VGP) requirements and will need permit coverage. Members whose vessels will be calling at US ports after this date are recommended to begin development of a compliance programme based upon the requirements found in the EPA proposed VGP. Members should keep in mind that changes to their compliance programme may need to be made after the final VGP is issued by the EPA.

General information on the VGP requirements, including the proposed VGP, can be accessed at the

EPA website

.

Background

Since May 1973, the EPA's regulations have excluded certain discharges "incidental to the normal operation of vessels", including ballast water, from the National Pollutant Discharge Elimination System (NPDES) programme under the Clean Water Act.

On 23rd July 2008, the US Court of Appeals for the Ninth Circuit upheld a District Court decision which ruled that the EPA exceeded its authority under the Clean Water Act in exempting certain marine discharges from the NPDES programme. The EPA is now required to regulate discharges incidental to the normal operation of vessels under that programme. A draft general permit has been issued and the final regulation is expected to enter into force on 19th December 2008.

In order to meet its obligations under the Clean Water Act, the EPA will issue a Vessel General Permit (VGP) covering all commercial vessels. It is not necessary to obtain a separate permit for each vessel. Instead, vessels will be covered by the VGP when their operators file 'Notices of Intent' to receive coverage under that permit.

Compliance with VGP requirements from 19th December 2008

Though the VGP requirements are not yet finalised, it is unlikely that the EPA will apply to the Court for an extension of the 19th December compliance date fixed by the Court. It is expected that EPA will issue its final VGP soon and the vessel operators will be required to comply with the final VGP requirements from 19th December 2008. However it is understood that all qualifying vessels will initially be deemed to be covered under the VGP when issued by the EPA and until the vessel operator files a Notice of Intent.

The discharge types eligible for coverage under the VGP are listed at the end of this circular.

The proposed permit incorporates the US Coast Guard's mandatory ballast water management and exchange standards (33 C.F.R. part 151) and supplemental ballast water requirements for those vessels that carry ballast water. Furthermore, this proposed permit will establish requirements for 27 other discharge types including deck run-off, bilge water discharge, and greywater discharge for all covered vessels.

The permit establishes practices to be adopted for each discharge type dependant upon various conditions that may exist and, in some cases, effluent limits pertaining to the constituents found in the effluent. In addition to these standard or common requirements, the permit outlines further requirements for eight specific classes of vessels including cruise ships, research vessels, oil and petroleum tankers, and large ferries. The proposed VGP also includes requirements for corrective actions, inspections, monitoring, recordkeeping and reporting.

Filing a Notice of Intent between 19th June 2009 to 19th September 2009

Assuming the final VGP requirements will take effect on 19th December 2008, all qualifying vessels must file a Notice of Intent no earlier than 19th June 2009 and no later than 19th September 2009, to obtain coverage under the VGP.

The owner or operator of a vessel of 300 or more gross registered tons or which has the capacity to hold or discharge more than 8 cubic metres (2,113 gallons) of ballast water is required to submit a Notice of Intent between six months and nine months after the VGP's issuance date in order to receive VGP coverage. Coverage gives authorization to discharge in accordance with VGP. Coverage under that VGP will begin on the date the Notice of Intent is received by the EPA from the vessel operator, with the exception of vessels delivered after 30th June, 2009 where coverage will begin 30 days after Notice of Intent is received. Coverage will be valid for five years.

The EPA is currently constructing a system to provide for electronic filing of Notices of Intent. Once this system is available, filers will need to register with the

EPA's Central Data Exchange

where they can submit the required information electronically. No fees are charged for the permit.

Potential penalties

Once the VGP is issued, the EPA will be the agency charged with determining whether a permit condition has been violated. Currently, it is unclear how the EPA and the US Coast Guard will co-ordinate inspection and enforcement activities.

The EPA's NPDES permit issuing process under the Clean Water Act authorises civil and criminal penalties for violations of the prohibition against the discharge of a pollutant without a permit, for discharges exceeding an effluent limit. It also allows citizen suits against violators.

Penalties under the Clean Water Act for violating the permit or not having a permit to discharge into the waters of the United States may be up to $27,500 per violation per day. There are also administrative classes of penalties and significant criminal penalties for any negligent or knowing violations.

Recommendation

The final VGP is not expected to differ significantly from that already proposed. As the expected compliance date is approaching, the Club recommends Members begin development of a compliance programme based upon the requirements found in the proposed VGP. Members should review the various types of discharges that are proposed to be covered under the VGP and begin the process of training employees who will have responsibility for managing these regulated discharges and maintaining the records required to document compliance.

A number of US Qualified Individual and ISM companies provide advice and assistance on the preparation of such programmes. Members may wish to seek their advice and assistance in their efforts towards compliance.

A similar circular is being sent by the other International Group P&I clubs.

Yours faithfully

THOMAS MILLER (BERMUDA) LTD.CONTACT

• Members requiring further information should contact Dr Chao Wu, chao.wu@thomasmiller.com or their usual claims contacts.

Annex: Discharge types eligible for coverage under the VGP

1. Deck washdown and runoff

2. Bilge water/oily water separator effluent

3. Ballast water

4. Anti-fouling leachate from anti-fouling hull coatings/hull coating leachate

5. Aqueous Film Forming Foam (AFFF)

6. Boiler/economizer blowdown

7. Cathodic protection

8. Chain locker effluent

9. Controllable pitch propeller hydraulic fluid

10. Distillation and reverse osmosis brine

11. Elevator pit effluent

12. Firemain systems

13. Freshwater layup

14. Gas turbine wash water

15. Grey water [Except that grey water from commercial vessels operating on the Great Lakes within the meaning of CWA section 312 is excluded from the requirement to obtain an NPDES permit (see CWA section 502(6)(A)), and thus is not within the scope of this permit.]

16. Motor gasoline and compensating discharge

17. Non-oily machinery waste water

18. Refrigeration and air condensate discharge

19. Rudder bearing lubrication discharge

20. Seawater cooling overboard discharge (including non-contact engine cooling water, hydraulic system cooling water, refrigeration cooling water)

21. Seawater piping biofouling prevention

22. Small boat engine wet exhaust

23. Sonar dome discharge

24. Stern tube oily discharge

25. Underwater ship husbandry discharges

26. Well deck discharges

27. Grey water mixed with sewage from vessels

28. Exhaust gas scrubber washwater discharge

[Complete list as at November 2008]