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Gard News 192, November 2008/January 2009

US law – Oil record book violations

US Appeals Court allows criminal prosecution for false entries in oil record books of foreign-flagged vessels relating to activities taking place outside US waters.

Criminal prosecution
On 30th June 2008 a three-judge panel of the Court of Appeals for the Fifth Circuit reversed a lower court’s dismissal of criminal charges against the shipowner and chief engineer of a Marshall Islands-flagged vessel arising from false entries in the vessel’s oil record book, notwithstanding that the underlying alleged violations – discharge of oily waste water and failure to make appropriate entries in the oil record book – had occurred aboard ship on the high seas and outside the territorial waters of the United States.1

The district court had determined that criminal prosecution under the US Act to Prevent Pollution from Ships (APPS) was prohibited “because the government has not charged defendants with an act of pollution in US waters”.2  The court noted that the APPS provides that enforcement of its provisions must be “in accordance with international law” and that the United Nations Convention on the Law of the Sea (UNCLOS) provides for the flag state to take action with respect to acts of pollution committed on the high seas.

In reversing the district court, the Fifth Circuit Court of Appeals took issue with the lower court’s conclusion that the violations which were being prosecuted had occurred outside US territorial waters:  “In contrast to the district court’s characterisation of the oil record book offences, we read the indictment to allege eight knowing failures to maintain an oil record book that each occurred entirely within the ports of the United States.”3 According to the court, the violations could be said to have occurred in the US, since the requirement to maintain an oil record book imposes “a duty upon a foreign-flagged vessel to ensure that its oil record book is accurate (or at least not knowingly inaccurate) upon entering the ports of navigable waters of the United States”.  Having established that the violations were committed “in port”, the court then concluded that prosecution would not violate international law because “[a] sovereign nation has exclusive jurisdiction to punish offences against its laws committed within its borders, unless it expressly or impliedly consents to surrender its jurisdiction”.  Nor, according to the court, had Congress intended to limit the state’s traditional authority to prosecute violations committed by foreign-flagged vessels:  “Far from signaling an abdication of this traditional authority, the APPS indicates congressional willingness to criminalise knowing violations of MARPOL, the APPS, and APPS regulations committed by foreign-flagged ships while in United States’ ports and navigable waters”.

The decision of the district court had been touted as an important victory for vessel owners and operators as it was thought that it would end criminal prosecutions resulting from the presentation of false oil record books which have long troubled shipowners trading to the US.  However, two other district courts subsequently rejected the approach taken by the district court in this case.4  With this latest decision from the Fifth Circuit Court of Appeals, the US Department of Justice’s long- standing contention that an APPS violation occurs when a ship calls on a US port and presents an oil record book with false or inaccurate entries to a US government official has been vindicated. While the decision of the Court of Appeals is binding only on courts within the jurisdiction of the Fifth Circuit (which includes Texas and Louisiana), this court is highly regarded for its maritime jurisprudence and it is anticipated that the decision will be applied nationwide in the remaining circuits.

Penalties may increase
The Court of Appeals remanded to the district court for further consideration the question of whether the defendants could permissibly be charged with eight counts  one for each port the vessel called at – for the same violation (failure to maintain an accurate oil record book).  Depending on how this issue is resolved, it is possible that alleged violators will be prosecuted for each false entry at every US port call from the time that the oil record book is falsified until it is corrected or officially retired. As the oil record book can not be retired until three years after the final entry, the Department of Justice may then seek a criminal/felony indictment on multiple counts every time the false entry in the oil record book is presented.  This raises the prospect that potential fines, as well as the length of prison sentences for those convicted of violating the law, will significantly increase.

The decision of the Court of Appeals makes clear that the US Department of Justice can continue to actively prosecute APPS and MARPOL violations, perhaps with new vigor, no matter where they occur, so long as the violations can be connected to false or inaccurate entries in the vessel’s oil record book when the vessel calls at one or more US ports.  In the past, the Department of Justice has prosecuted offending crew members as well as shore-side senior management when serious violations have been alleged. Therefore, it would be in the best interests of all shipowners and operators trading to the United States to once again review their procedures to ensure strict compliance with MARPOL and APPS, as well as comprehensive management oversight of all shipboard operations.

1 United States v. Jho , 465 F. Supp. 2d 618  (Eastern District of Texas, 2006), reversed and remanded;  United States v. Jho, No. 06-41749 (5th Cir. June 30, 2008).
2 465 F. Supp. 2d at p. 625.
3 United States v. Jho, No. 06-41749, at p.6. The eight “knowing failures” referred to the vessel having made eight port calls in the US. The same oil record book was presented each time, leading the defendants to argue, in the alternative, that the indictment was flawed because it alleged eight counts for essentially the same violation.
4 United States v. Ionia Management, 498 F. Supp. 2d 477 (D. Conn. 2007) (on appeal to the Second Circuit Court of Appeals) and United States v. Petraia Maritime, Ltd., 483 F. Supp. 2d 34 (D. Me. 2007).


Gard News 192, November 2008/January 2009

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