2018 Annual Report for Norwegian Cruiseline Holdings - 16

With regard to air quality requirements, the International Maritime Organization's ("IMO") convention entitled Prevention of Pollution from
Ships ("MARPOL") has set a global limit on fuel sulfur content of 0.5% (reduced from the current 3.5% global limit) beginning
January 2020. Various compliance methods, such as the use of alternative fuels, or exhaust gas cleaning systems that reduce an equivalent
amount of sulfur emissions, may be utilized.
MARPOL also requires stricter limitations on sulfur emissions within designated Emission Control Areas ("ECAs"), which include the
Baltic Sea, the North Sea/English Channel, North American waters and the U.S. Caribbean Sea. Ships operating in these waters are required
to use fuel with a sulfur content of no more than 0.1% or use approved alternative emission reduction methods. ECAs have also been
established to limit emissions of oxides of nitrogen from newly built ships. Additional ECAs may also be established in the future, with areas
around Norway, Japan, and the Mediterranean Sea being considered.
Ballast water discharges are governed by the MARPOL Ballast Water Management Convention, which came into force in 2017 ("The
Convention"), and which governs the discharge of ballast water from ships. Ballast water, which is seawater held onboard ships and used for
stabilization, may contain a variety of marine species. The Convention is designed to regulate the treatment and discharge of ballast water to
avoid the transfer of marine species to new, different, or potentially unsuitable environments. Applicable vessels sailing in specific itineraries
have also been upgraded with ballast water treatment systems to further prevent the spread of invasive species.
MARPOL also sets forth requirements for discharges of garbage, oil and sewage from ships, including regulations regarding the ships'
equipment and systems for the control of such discharges, and the provision of port reception facilities for sewage handling. Ships are
generally prohibited from discharging sewage into the sea within a specified distance from the nearest land. Governments are required to
ensure the provision of adequate reception facilities at ports and terminals for the reception of sewage, without causing delay to ships. Ships
are generally required to be equipped with either approved sewage treatment plants, disinfecting systems or sewage holding tanks.
Recently adopted amendments to MARPOL will make the Baltic Sea a "Special Area" where sewage discharges from passenger ships will
be prohibited. Stricter discharge restrictions will be in effect for new passenger ships in 2019, and for existing passenger ships starting in
2021.
These requirements may impact our operations unless suitable port waste facilities are available, or new technologies for onboard waste
treatment are developed. Accordingly, the cost of complying with these requirements is not determinable at this time.
In the U.S., the Clean Water Act of 1972, and other laws and regulations, provide the Environmental Protection Agency ("EPA") and the
U.S. Coast Guard with the authority to regulate commercial vessels' incidental discharges of ballast water, bilge water, gray water, antifouling paints and other substances during normal operations while a vessel is in inland waters, within three nautical miles of land, and in
designated federally-protected waters. The U.S. National Pollutant Discharge Elimination System ("NPDES") program, authorized by the
Clean Water Act, was established to reduce pollution within U.S. territorial waters. For our affected ships, all of the NPDES requirements are
set forth in the EPA's Vessel General Permit ("VGP"). The VGP establishes effluent limits for 26 specific discharge streams incidental to the
normal operation of a vessel. In addition to these discharge- and vessel-specific requirements, the VGP includes requirements for inspections,
monitoring, reporting and recordkeeping.
The Act to Prevent Pollution from Ships, which implements certain elements of MARPOL in the U.S., provides for potentially severe civil
and criminal penalties related to ship-generated pollution for incidents in U.S. waters within three nautical miles of land and, in some cases,
within the 200-nautical mile Exclusive Economic Zone ("EEZ").
The Oil Pollution Act of 1990 ("OPA 90") provides for strict liability for water pollution caused by the discharge of oil in the 200-nautical
mile EEZ of the U.S., subject to defined monetary limits. OPA 90 requires that in order for us to operate in U.S. waters, we must have
Certificates of Financial Responsibility ("COFR") from the U.S. Coast Guard for each ship. Our continued OPA 90 certification signifies
our ability to meet the requirements for related OPA 90 liability in the event of an oil spill or release of a hazardous substance.
Many coastal U.S. states have also enacted environmental regulations that impose strict liability for removal costs and damages resulting
from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law and, in some cases, the
laws have no statutory limits of liability. Among the most stringent requirements are those set by the State of Alaska, which has enacted
legislation that prohibits certain discharges in designated state waters and requires that certain discharges be monitored to verify compliance
with the established standards. The legislation also provides that repeat violators of the regulations could be prohibited from operating in
Alaskan waters.

2018 Annual Report for Norwegian Cruiseline Holdings

Table of Contents for the Digital Edition of 2018 Annual Report for Norwegian Cruiseline Holdings