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Prosecutions of shipowners and crew members in the United States criminal courts for environmental crimes have recently hit the headlines in both industry and general news media. The purpose of this article is to explain the background for the spate of high profile criminal investigations and prosecutions as well as to explode the myths that may lead some in the industry to wrongly conclude that they have little or no exposure for similar treatment.

The regulatory background
To put it in simple terms, the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) provides that oily water discharge from bilges shall not exceed 15 parts per million (ppm) unless the discharge is necessary for securing the safety of the ship or saving life at sea. MARPOL 73/78 further requires ships to process oily water in an oily water separator (OWS) and to monitor the discharge with detection and an alarm system that shuts off discharge in the event it exceeds 15 ppm while triggering an alarm.

MARPOL 73/78 further requires the ship's crew to maintain an Oil Record Book (ORB) and to record discharges, both those meeting the 15 ppm requirement and those exceeding it (for example, in an emergency). The ORB may be inspected by port state control authorities. In the United States, port state inspection for compliance with MARPOL 73/78 is done by the United States Coast Guard (USCG). MARPOL 73/78 is implemented in the various signatory countries by domestic legislation. MARPOL 73/78 regulations call for administrative proceedings and fines and penalties for violation. It is the flag state that administers the penalty provisions under domestic regulations.

Shipboard practice
Oily water that collects in the engine room bilges was often pumped overboard in international waters before MARPOL 73/78 became effective in 1983. At the time of implementation, the technology for oily water separation was less effective than it is today. The bilge tank capacity tended to be small and the OWS inefficient in processing the oily water.

The oily water separator: "Fine 5000" placard in place.


Overboard line for oily water separator.

Since the MARPOL requirements have been in force and to save themselves time and trouble in dealing with the less effective older units, some creative engineering crewmen have devised ways to circumvent the OWS or the monitoring equipment in order to discharge oily water overboard. According to government allegations in the US investigations, this has been done by either piping around the OWS or flushing the oil content meter with seawater to push more water through the meter and fool it into registering oil content at less than 15 ppm. This is not to suggest that many crewmen fail to comply with environmental requirements. But for those few that do, the sanctions for the shipowner or operator can be devastating.

Myths, dangerous half truths and painful reality
We now turn to some widely held but incorrect assumptions about violation of MARPOL regulations with respect to the current criminal prosecutions in the United States for environmental crimes.

 Myth: "Violation of MARPOL in international waters is of interest only to the flag state".

It is true that the convention contemplates that enforcement actions will be taken by the flag state, that is, where the vessel is registered. This does not mean, however, that the authorities in the United States are uninterested in policing worldwide violations of international pollution laws. Read on.

 Myth: "The United States has no jurisdiction to prosecute without pollution in US waters".

Wrong. Recent criminal prosecutions have not involved pollution of US waters. MARPOL 73/78 requires that entries be made in the ORB for discharges. The ORB is routinely reviewed during port state inspections conducted by the USCG. If the crew has bypassed the OWS or flushed the sensors and discharged oily water overboard but recorded the discharges as "clean", the company may be charged with violation of US law for presenting a materially false document to a US authority. This is a crime under general criminal law in the United States and provides jurisdiction in the federal criminal court over both the individuals involved and the company.

 Myth: "The penalty for bypassing the OWS is a USD 5,000 administrative fine under MARPOL".

This is a dangerous half-truth. In the United States the crime charged is presenting a false ORB and the maximum fine against the company under the US criminal sentencing guidelines is USD 500,000. This fine may be doubled if the violation resulted in financial gain for the company. For example, Carnival Cruise Line in a plea agreement recently accepted a USD 18,000,000 fine for presenting false ORBs on six of its ships.

Additionally, crew involved may be prosecuted individually and put in jail! The maximum penalty upon conviction for individuals is five years incarceration and USD 250,000 in fines.

 Myth: "The P&I Club will reimburse the fine under its cover for pollution".

Gard's Protection and Indemnity cover, like that of all Clubs in the International Group, is a named risks cover. The risks covered are set out in Gard's Statutes and Rules. Gard's Rule 38 - "Pollution" expressly excludes fines. Gard's Rule 47 - "Fines" covers fines and penalties imposed upon a member by any court, tribunal or other authority of competent jurisdiction for or in respect of the accidental escape or discharge of oil. Intentionally bypassing the OWS or flushing the sensors and pumping oily water overboard is not considered by the Association to be accidental.

Gard's pollution and fines rules were clarified and narrowed in policy year 2000 in line with a model rule adopted by the International Group of P&I Clubs. Thus, under the current rules, no Club in the International Group covers fines as a matter of right for intentionally pumping oily water containing 15 ppm overboard or for falsification of an Oil Record Book.

A final word of warning
The USCG has intensified its focus on oily water separators and Oil Record Books, specifically looking for violators. The USCG inspections involve both large operators and single ship companies. USCG inspectors aided by other state and federal agencies look for evidence of bypass piping, including wear patterns indicating removal of fittings or even fresh painting to cover wear patterns. If there is suspicion of bypassing, the crew may be detained for questioning under Grand Jury Subpoena, the ship records and equipment will likely be seized and the vessel detained.

The only effective way to avoid investigation and prosecution is not to violate the MARPOL 73/78 requirements in the first place. That means the company must have a well-monitored environmental compliance programme including ship audits, upgrading of equipment as required and training. If caught up in an investigation, the shipowner will need to immediately obtain advice of qualified criminal counsel. One of the biggest mistakes that can be made is to destroy or conceal evidence in a criminal investigation, for to do so will bring additional criminal charges of obstruction of justice.

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