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Pollution violations are being treated extremely seriously by prosecutors in North America.

Headlines in print and broadcast media continue to trumpet larger and more severe fines as well as prison sentences being imposed on violators of US and Canadian environmental and criminal laws. These prison sentences1 and fines extend to the masters and crews of vessels as well as to shipowners and operators. The US and Canadian governments, through their respective Departments of Justice, place an ever-increasing importance on the uncovering of violators and imposition of harsh sentences.2

The Canadian Parliament is considering a law that will give extra enforcement powers to the officers of Environment Canada, a branch of the Canadian government, due to the perception that judges are not imposing sufficiently high fines on ships found to have polluted. The US Department of Justice was recently quoted as saying that waste oil deliberately discharged by vessels exceed pollution from major casualties and that the decision “to pollute” is always an economic issue. The apparent perception of the Department of Justice that shipowners and their crews believe it is cheaper to pollute than to properly dispose of waste material is offered as justification for more aggressive pursuit and punishment of violators. According to sources knowledgeable in this arena, shipowners can expect more crew arrests and longer detention of vessels along with multi-million dollar demands for posting of security.

The basis for many investigations and prosecutions is the improper “bypassing” of oily water separators and discharging oily water directly to the sea. These improper discharges are not accurately recorded in the oil record book in violation of MARPOL which (except in emergency circumstances) requires oily water to be treated and discharges to be recorded in the oil record book. MARPOL, as enacted by flag and port states, includes fines and penalties for discharging oily waste in international waters. At least in the US, the alleged crime may be for the presentation of a false document (the oil record book) to a US official (the US Coast Guard) or obstruction of justice by destroying evidence of bypassing. These crimes may carry much higher fines and penalties under domestic law than violation of MARPOL itself.

Prior to February 2002 the highest fine imposed on ship source pollution (a strict liability offence under Canadian law) was CAD 40,000 for an offence involving the discharge of 2,361 litres of an oily substance in October 2001. Four months later, the owner of a bulk carrier pleaded guilty to discharge of the substantially lower quantity of 850 litres and was fined CAD 125,000. This case was soon matched by a fine of CAD 125,000 for the discharge of an oily water mixture of 92 litres. In these cases the Crown and defence counsel jointly recommended settlement amounts, which were later accepted by the judges handling the cases.

In June 2003 a vessel in Halifax Harbor was fined CAD 100,000 and made to pay clean-up expenses of CAD 80,000 in satisfaction of offences for the discharge of 4,300 litres and subsequent failure to report the offence.

In a more recent case involving a bulk ship’s discharge of 227 litres of an oily substance in March 2004 the Crown failed to reach an agreement with the owners and submitted evidence to the court that the appropriate range of fine would be CAD 100,000 to 125,000. In noting that the defendant was an environmentally responsible company and that the pollution involved was unintentional the judge set the fine at CAD 60,000. The judge, however, characterised the offence as a “crime” rather than a regulatory violation.

Oily water separation and discharge: risk of criminal penalties.

The Canadian government has introduced and is fast tracking enactment of legislation relative to ship-source pollution which if passed into law will increase the maximum fines on conviction to CAD 300,000 on summary conviction and CAD 1 million on indictment as well as provisions for imprisonment of individuals.3 This legislation will allow Canadian officials to board and inspect without warrant any ship in Canada’s 12-mile territorial sea or the 200-mile Exclusive Economic Zone. Although not stated in the Bill, it is believed that the Oil Record Book will be one of the documents the boarding officers will be examining. Furthermore, the boarding officers, subject to the consent of the Attorney General of Canada, will have the power to direct a ship into a Canadian port and issue detention orders if they believe the ship has committed an offence against the (Canadian) Migratory Birds Convention Act, 1994 or the Canadian Environmental Protection Act, 1999.

1  Which are allowed under Canadian law but which to date have only been imposed in the US.
2  See article “Environmental crime – Myths and reality” in Gard News issue No. 167.
3  The decision concerning which offence to pursue is made by the Crown prosecutor and is based on the circumstances of the offence. The most important determinant is the severity of the alleged offence. The majority of cases to date have been prosecuted by summary conviction and the imprisonment penalty has yet to be enforced.

United States
In an incident during October 2002 involving a Korean chief engineer, a prison term of one year was imposed for making false statements to government investigating personnel.

Another Korean chief officer was sentenced to six months in prison for the violation of the US Clean Water Act and for making false statements during February 2003.

July 2003 saw a Taiwanese operator sentenced for two felony violations after the falsification of records following the illegal dumping of 20 tons of oily wastes over a period of months. The company was ordered to pay USD 750,000 for the offence and was required to develop an Environmental Compliance Program as well as being placed on four years probation.

During February 2004 a Filipino officer was sentenced to prison for felony violations involving falsifying documents and covering up evidence during a US Coast Guard investigation.

In March 2004, an operator of 38 vessels pleaded guilty to seven felony counts, which included obstruction and making false statements to federal officials. A proposed fine of USD 3.5 million, the implementation of an Environmental Compliance Program for all vessels trading in US ports as well as a four-year probation term await a federal court’s sentencing decision.

During the past two years, five companies involved in shipping as well as four vessel engineers have pleaded guilty in Washington State and have been required to pay USD 5 million in criminal fines connected with the documentation of waste oil disposal while at sea.

An operator of ocean-going vessels pleaded guilty in April 2004 to a felony violation for improperly documenting the handling of oily wastes. A criminal fine of USD 200,000 was imposed with a further requirement for a comprehensive Environmental Compliance Program for the operator’s fleet of 28 ships. An escrow deposit of USD 50,000 was also required for the purposes of funding the development, implementation and monitoring of the plan.

All owners and operators should be alert to the seriousness of North American prosecutors in dealing with pollution violations and may wish to give full consideration to the establishment of Environmental Compliance Programs with proper follow-ups built into the programs. Some legal advisors believe the voluntary establishment of an Environmental Compliance Program prior to an event similar to those mentioned in this report may serve to reduce the chances of a prison sentence (or probation) and may give a basis for an application to moderate major fines. It should be remembered that prison sentences and fines could be imposed on vessel owners, crews and shore side responsible parties. Department of Justice prosecutors frequently pursue individuals with the “highest level of knowledge” for the intentional violations and seek to impose harsh penalties at the uppermost level in the hope that this will serve as a deterrent to other parties.

In the event that a pollution event in the US or Canada may involve possible falsification of records then the retention of criminal counsel for all those who may be held culpable is highly recommended.

Any comments to this article can be e-mailed to the Gard News Editor.

Gard News is published quarterly by Gard AS, Arendal, Norway.