New US EPA Regulations: Environmentally Acceptable Lubricants for use in Vessel General Permit - VGP Small Vessel General Permit svgp

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New US EPA Regulations: Environmentally Acceptable Lubricants for use in Vessel General Permit - VGP Small Vessel General Permit svgp Presented by: James Kovanda Vice President American Chemical Technologies, Inc.

A move towards alternative lubricants-why? The National Oceanic and Atmospheric Administration (NOAA) estimates that more than 700 million gallons of petroleum enter the environment each year, more than half of which is through irresponsible and illegal disposal. Oil leakage from stern tubes, once considered a part of normal operational consumption of oil, has become an issue of concern and is now considered oil pollution. Deepwater Horizon catastrophe another wake-up!

US EPA White Paper The US EPA contracted an independent lab to review information on environmentally friendly fluid alternatives with the purpose of writing a White Paper - Draft The purpose of this document was to describe the range of environmentally preferable lubricants that may be used as a best management practice (BMP) by operators of vessels covered under the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels The document EPA 800-R11-002, November 2011 - defines what they are calling Environmentally Acceptable Lubricants EAL s Differentiating them from Environmentally Friendly Lubricants

White Paper Three Criteria Identified Biodegradation Process of chemical breakdown of oil caused by organisms or their enzymes into carbon dioxide and water Eco (Aquatic) Toxicity Concentration in ppm or milligrams per liter that kills a specified % of the species being tested Bioaccumulation The build-up of chemicals within the tissues of an organism over time

White Paper Criteria - Defined Readily Biodegradable OECD 301 A-F > 60 % biodegraded in 28 days Low (Aquatic) Toxicity OECD 201 212 Food chain - Algae / Daphnia / Fish Non-Bioaccumulative OECD 107 & 117 Partition Coefficients of Log Kow < 3.0 or > 7.0

White Paper Conclusions Because the majority of a lubricant is composed of the base oil, (3) types that satisfied the requirements were identified Vegetable Oil Synthetic Ester Polyalkylene Glycol (PAG) Conclusions from the White Paper were used in the draft of the Vessel General Permit

Draft VGP Equipment Impacted 2013 VGP - Vessels 80 and longer 2.2.9 Controllable Pitch Propeller and Thruster Hydraulic Fluid and Other Oil-to-Sea Interfaces Including Lubrication Discharges from Paddle Wheel Propulsion, Stern Tubes, Thruster Bearings, Stabilizers, Rudder Bearings, Azimuth Thrusters, Propulsion Pod Lubrication, and Wire Rope and Mechanical Equipment Subject to Immersion Page 43

Draft svgp Equipment Impacted 2013 svgp - Vessels 79 and shorter 2.3 ENGINE AND OIL CONTROL (h) Unless technically infeasible, you must use environmentally acceptable lubricants (as defined in Part 6 of this permit) in all machinery and equipment, including but not limited to stern tubes, wires, and twostroke engines, where discharges of oil to surrounding waters are likely to occur. Page 4

Time Frames VGP / svgp All Vessels constructed on or after December 19, 2013 must use an environmentally acceptable lubricant in all oil-to-sea interfaces. For all vessels built before December 19, 2013, unless technically infeasible, owner/operators must use an EAL in all oil-to-sea interfaces. Technically Infeasible Equipment must be retrofitted to accept EAL If EAL significantly degrades performance NOTE: If deemed Technically Infeasible, owner/operator must document why they cannot use EAL, and must note the use of a non-eal in the vessel s Annual Report.

Spill / Discharge Visible Sheen Lastly, any discharge of oil, including oily materials, from any of these oil-to-sea interfaces may not result in a discharge that may be harmful as defined by 40 CFR Part 110 or result in the production of a visible sheen. Proposed 2013 VGP Fact Sheet, Page 136 Canada If it floats, it is considered an oil Note: Dispersants, detergents, emulsifiers, chemicals or other substances that remove the appearance of a visible sheen may not be added to the bilge. svgp Section 2.3 ENGINE OIL CONTROL, (j) Workboat Show emulsifier added to white oil

Comparative EAL s Specific Gravities

Sheen Black Light Comparison Water Soluble Water Insoluble Fluids Mineral Oil Synthetic Ester Polyalphaolefin (PAO) Vegetable Oil Polyalkylene Glycol (PAG)

40CFR435 Static Sheen Results Water Soluble Polyalkylene Glycol (PAG) Vegetable oil based hydraulic fluid Synthetic ester based hydraulic fluid White-oil based hydraulic fluid Petroleum based hydraulic fluid Silvery or metallic sheen NO NO NO NO NO Increased reflectivity NO NO YES YES NO Visual Color NO NO NO NO NO Iridescence NO NO NO NO NO Oil Slick exceeding 10% of surface area NO YES YES YES YES Appendix 1 to Subpart A of 40CFR435 result PASS FAIL FAIL FAIL FAIL

Water Soluble PAG PRO s Proven Since 2005 Non-Sheening Heavier than water /Soluble Inert to Water Limit 7,500 ppm salt water Superior Lubricity PRO s Low Coefficient of Friction High Viscosity Index High/Low Temp Properties Excellent Oxidation Stability Extended drain intervals Factory Mutual Approved CON s Paint Compatibility Seal Compatibility 3-4 times price of conventional petroleum-based lubricants

PAG Designed not Refined

Water Insolube PAG Proven Since 1990 Inert to Water PRO s Limit 7,500 ppm salt water Superior Lubricity Low Coefficient of Friction High Viscosity Index Excellent Oxidation Stability Extended drain intervals Least expensive EAL that is reliable and performs CON s Paint Compatibility Seal Compatibility Approximately 2-3 times price of conventional petroleum-based lubricants

Sheen Black Light Comparison Water Soluble Water Insoluble Water Insoluble Fluids Polyalkylene Glycol Polyalkylene Glycol Synthetic Ester Polyalphaolefin (PAO) Vegetable Oil (PAG) (PAG)

Hydrolytic Stability ASTM D-2619 EAL PRODUCT Change in Acid Number - mg KOH/g Total Acidity of the Water Layer - mg KOH Polyalkylene Glycol -0.01 Water Solubilized Polyalphaolefin -0.08 6.90 Synthetic Ester +0.83 19.37

Comparative Wear Characteristics 0.08 MTM Coefficient of Friction 0.07 Coeficient of Friction 0.06 0.05 0.04 0.03 0.02 Water Insoluble PAG Synthetic Ester Water Soluble PAG Vegetable Ester PAO 0.01 0 0 5 10 15 20 25 30 35 40 45 50 Slide Roll Ratio %

Comparative Wear Characteristics 0.07 MTM Traction Coefficient 0.06 Traction Coeficient 0.05 0.04 0.03 0.02 Water Insoluble PAG Synthetic Ester Water Soluble PAG Vegetable Ester PAO Standard AW Petroleum 0.01 0 0 5 10 15 20 25 30 35 40 45 50 Slide Roll Ratio %

Seal Testing USACE Wheeler Dredge-CPP Industry standard is change in volume and change in hardness at 1000 hours of less than +/- 12% when exposed to fluids that are ISO viscosity grade 46 and +/- 10% when exposed to fluids that are ISO viscosity grade > 46. 1000 hrs. DUROMETER ASTM D 2240-05(10): Shore A Durometer Point 86 Confidence (+/-) 1 FLUID IMMERSION PROPERTIES, ASTM D 471-10 Durometer, points change -0 Volume Change % +3% Weight Change % +6% Elastomers immersed @ 65ºC in UCON Trident AW-68 lot 31095.

Conversions

Polyalkylene Glycol The True Solution ** PLEASE COME VISIT US AT OUR BOOTH FOR FURTHER INFORMATION OR DISCUSSION