American Club Circular No. 20/12 1 JULY 31, 2012 CIRCULAR NO. 20/12 TO MEMBERS OF THE ASSOCIATION Dear Member: MARPOL ANNEX VI – IMPLEMENTATION IN THE NORTH AMERICAN EMISSION CONTROL AREA (ECA) - AUGUST 1, 2012 Background MARPOL Annex VI is implemented in the United States through the Act to Prevent Pollution from Ships (APPS). Under the authority of APPS, the US Environmental Protection Agency (EPA), in consultation with the United States Coast Guard (USCG), has promulgated regulations which incorporate by reference the full text of MARPOL Annex VI. See also 40 C.F.R. § 1043.100(a)(1). Compliance with the MARPOL Annex VI air emission standards, including the fuel oil sulfur standards, will significantly reduce emissions from foreign and domestic vessels that affect U.S. air quality. On August 1, 2012, the North American Emission Control Area (ECA) will be established under MARPOL Annex VI. Under this regime, vessels will be required to demonstrate compliance with the applicable sulfur oxide (SOx) and nitrogen oxide (NOx) standards. The geographical limits of the North American ECA can be found in Appendix VII of MARPOL Annex VI and MEPC.1/Circ.723 “Information on North American Emission Control Area (ECA) under MARPOL Annex VI”. Further details can be found on the EPA website under the heading “Designation of North American Emission Control Area”. The USCG and EPA have now released their guidelines for compliance and enforcement in the US. Transport Canada has also recently released its guidelines for compliance and enforcement in their Ship Safety Bulletin 03/2012. American Club Circular No. 20/12 2 Area of the North American ECA Applicability With few exceptions, all vessels which operate in the North American ECA are required to be in compliance with the Annex VI ECA fuel oil sulfur standard. Actions Required When operating in the ECA, ships must utilize low sulfur fuel oils that meet the current standards in the table below, or employ exhaust gas cleaning technology that will meet the emission requirements. Fuel Sulfur Standard (Maximum Percentage by Weight) Global Sulfur Cap ECA Sulfur Cap On and after Jan. 1, 2012 3.50% On and after Aug 1, 2012 1.00% On and after Jan. 1, 2020 0.50% On and after Jan. 1, 2015 0.10% Enforcement in Canada Transport Canada has announced in its Ship Safety Bulletin 03/2012 that it has not yet provided the required national regulations to implement the ECA. The regulations are expected to be completed near the end of 2012. In the interim, Canada will continue to enforce the “Vessel Pollution and Dangerous Chemical Regulations” and is requesting ships to voluntarily comply with the low sulfur fuel oil standards of the ECA. Enforcement in the United States The USCG and the EPA have entered into an agreement assigning roles for the enforcement of the ECA. The USCG will board ships to confirm compliance. The EPA and USCG will share responsibilities for investigating non-compliance and subsequent enforcement actions. American Club Circular No. 20/12 3 On June 26, 2012, the EPA approved its “Interim Guidance on the Non-Availability of Compliant Fuel Oil for the North American Emission Control Area”. This document addresses how the US will implement fuel oil availability provisions for ship owners and operators unable to obtain fuel oil that meets the sulfur standards of the ECA. On July 25, 2012, the USCG approved CG-CVC Policy Letter 12-04 “Guidelines for Compliance and Enforcement of the Emission Control Ar