2016 Annual Report for Norwegian Cruiseline Holdings - 14

In the U.S., the Clean Water Act of 1972, and other laws and regulations, provide the Environmental Protection Agency ("EPA") with the authority to
regulate commercial vessels' incidental discharges of ballast water, bilge water, gray water, anti-fouling paints and other substances during normal
operations while a vessel is on inland waters, within three nautical miles of land, and in designated federally protected waters. The U.S. National
Pollutant Discharge Elimination System ("NPDES"), 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 27 specific discharges 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 U.S. Act to Prevent Pollution from Ships, which implements the MARPOL, provides for severe civil and criminal penalties related to shipgenerated 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 U.S. 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 that operates in these waters. 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 have no statutory limits
of liability. The State of Alaska 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.
The European Union ("EU") has adopted a substantial and diverse range of environmental measures aimed at improving the quality of the environment.
To support the implementation and enforcement of European environmental legislation, the EU has adopted directives on environmental liability and
enforcement as well as a recommendation providing for minimum criteria for environmental inspections.
With regard to air emissions from seagoing ships, the European Commission's ("EC") strategy is to require the use of low sulfur (less than 0.1%) marine
gas oil in EU ports. Passenger ships on regular service to EU ports are required to use fuels containing a maximum sulfur content of 1.5%.
In addition to the existing legal requirements, we are committed to helping to preserve the environment, because a clean, unspoiled environment is a key
element that attracts guests to our ships. Furthermore, NCL (Bahamas) Ltd. and NCL (America) LLC are certified under the International Organization
for Standardization's 14001 Standard. This voluntary standard sets requirements for establishment and implementation of a comprehensive
environmental management system which we have adopted for our operations. Currently we operate under an Environmental Management System that
is incorporated into the Company's SMS.
If we violate or fail to comply with environmental laws, regulations or treaties, we could be fined or otherwise sanctioned by regulators. We have made,
and will continue to make, capital and other expenditures to comply with changing environmental laws, regulations and treaties. Any fines or other
sanctions for violation or failure to comply with environmental requirements or any expenditures required to comply with environmental requirements
could have a material adverse effect on our business, operations, cash flow or financial condition.
Permits for Glacier Bay, Alaska
In connection with certain Alaska cruise operations, we rely on concession permits from the U.S. National Park Service to operate our ships in Glacier
Bay National Park and Preserve. We currently hold a concession permit allowing for 22 calls per summer cruising season through September 30, 2019.
However, there can be no assurance that such permit will be renewed when necessary or that regulations relating to the renewal of such permit will
remain unchanged in the future.
Passenger Well-Being
In the U.S., we must meet the U.S. Public Health Service's requirements, which include vessel ratings by inspectors from the Vessel Sanitation Program
of the Centers for Disease Control and Prevention ("CDC") and the U.S. Food and Drug Administration ("FDA"). We rate at the top of the range of
CDC and FDA scores achieved by the major cruise lines. In addition, the cruise industry and the U.S. Public Health Service have agreed on regulations
for food, water and hygiene, aimed at proactively protecting the health of travelers and preventing illness transmission to U.S. ports.
Security and Safety
The IMO has adopted safety standards as part of the SOLAS convention, which apply to all of our ships. SOLAS establishes requirements for vessel
design, structural features, construction methods and materials, refurbishment standards, life-saving equipment, fire protection and detection, safe
management and operation and security in order to help ensure the safety and security of our guests and crew. All of our crew undergo regular safety
training exercises that meet all international and national maritime regulations.
SOLAS requires that all cruise ships are certified as having safety procedures that comply with the requirements of the International Management Code
for the Safe Operation of Ships and for Pollution Prevention ("ISM Code"). All of our ships are certified as to compliance with the ISM Code. Each such
certificate is granted for a five-year period and is subject to periodic verification.
14

Table of Contents for the Digital Edition of 2016 Annual Report for Norwegian Cruiseline Holdings