CRIMINAL  AND  CIVIL  LIABILITY  FOR  MARITIME  ENVIRONMENTAL  AND  RECORD  KEEPING  OFFENSES      Ben  A.  Hagood,  Jr,  Moore  &  Van  Allen,  PLLC,  Charleston,  SC  

Gregory  F.  Linsin,  Blank  Rome  LLP,  Washington,  DC  

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United States Coast Guard Marine Safety, Security, and Stewardship

   

Criminal Enforcement

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•  Deliberate discharges of tons of waste oil, sludge and other pollutants.

•  Intentional falsification of vessel records to deceive port authorities.

•  Concealment: discharges made at night, hiding of bypass equipment, use of dispersants, tricking OCM, falsification of Oil Record Book and Tank Sounding Log, etc.

•  Obstruction of justice (witness tampering, destruction of evidence, alteration of documents).

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2011 Prosecutions

•  ~ 8 main criminal prosecutions •  Companies = 11 •  Individuals = 4

•  > $9 million •  6 months in prison; 2 await sentencing •  OWS cases, Ports & Waterways Safety Act, Ballast Water Reporting •  Many whistleblowers •  False Claims Act suit •  Administrative banning of a ship

After a slowdown at the end of 2009, DOJ is now getting

about a case a week, which is almost a record pace.

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Whistleblower Awards •  Increased whistleblower awards under APPS—50% of DOJ prosecutions arise from whistleblower reports:

– 2011 Case •  1 whistleblower awarded $250,000

– 2011 Case •  3 whistleblowers awarded $550,000, $350,000 and $350,000 •  4 other whistleblowers share $100,000

– 2010 Case •  1 whistleblower awarded $250,000 •  3 whistleblowers share $250,000

– 2010 Case •  1 whistleblower awarded $200,000

– 2010 Case •  2 whistleblowers awarded $125,000

•  BUT several recent cases involved whistleblowers who violated company policies by failing to report known MARPOL violations, and permitted violations to continue over months while gathering evidence:

– Award in one such case was only 40% of what government sought. – In another, government did not request award

– In a third, court has not yet decided on $925,000 award objected to by owner/operator

“In the discretion of the Court,

an amount equal to not more than 1/2 of such fine

may be paid to the person

giving information leading to a conviction.”

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Hypothetical While a container vessel is docked for unloading, the USCG boards and inspects. While in the engine room, the inspecting petty officers photograph the piping around the OWS, and take a swab sample from the overboard discharge pipe. They then seize the Oil Record Book and begin questioning the Master, the Chief Engineer and the engineering crew. You are sitting at your desk when shoreside management calls, tells you what is happening and requests your advice. What do you do immediately and what advice do you give about what may result from this investigation?

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“Magic Pipe” Cases What’s The Crime?

•  In 1990s, cases involved discharges in U.S. waters in violation of MARPOL / APPS

•  Enforcement role has expanded to reach improper discharges wherever they occur

•  APPS regulations require accurate maintenance of ORB

•  Inaccurate ORB brought into U.S. port can be prosecuted as criminal violation

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Oil Record Book Entry

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How Do Investigations Start?

•  Port State Control inspections •  “Red flags” will cause

investigation to expand •  Whistleblowers •  Remote sensing •  International cooperation •  Obstructive conduct / false

statements will intensify any investigation

•  Casualties / Oil Spills

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Some Key Red Flags

• Discharges in excess of capacity • Conflicts between sounding logs and ORB • Flexible hoses / blank flanges • Turned nuts and bolts / chipped paint • Fresh paint / different colors • Lack of sludge or disposal records • Leaking oil / hull stains • Malfunctioning incinerators • OWS systems not matching drawings • Lack of familiarity with the OWS system

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Potential Targets & Penalties • Chief Engineer and/or other crewmembers • Shoreside superintendents or managers • Technical manager can be held responsible as

operator/employer of crew although “agent only” • Vessel owner can also be held responsible,

if it exercised some control

• Individuals can be incarcerated • Fine under Alternative Fines Act

and APPS

over crew or vessel

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Investigation Timeline • Coast Guard onboard

– Port State Control – Whistleblowers

• P&I counsel attend – Criminal counsel needed? • Documents taken / hard drives imaged •  Interviews • Referral to the Department of Justice • Lawyers for the crew, owner and manager – Conflicts? • Security Agreement – Ticket to leave

– Customs clearance to depart withheld – Bond, cooperation, lodging/maintenance of crew – Generally, up to 10 crewmembers removed from ship – New developments

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Investigation Timeline (continued)

•  Put new crew in place •  Subpoenas – documents/equipment •  DOJ investigation •  Experts / Evaluation of Data •  Defenses? Plea negotiations?

– Respondeat Superior •  Joint Factual Statement and ECP •  Indictment? Information? Trial? •  Plea/Sentencing/Jail

– Immigration Status •  Timing

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Civil Liability

The Oil Pollution Act of 1990 (OPA 90) was enacted after the Exxon Valdez spill to: •  Increase pollution prevention; •  Ensure better spill response capabilities; •  Increase liability for oil spills; and •  Facilitate prompt compensation for cleanup and pollution damage.

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Who is the Responsible Party?

The Responsible Party is liable under OPA 90 for all removal costs and damages resulting from a spill •  The Responsible Party includes the owner, operator, or demise charterer of a vessel •  Damages may include natural resources, real or personal property, subsistence use, revenues, profits and earning capacity, and public services •  Coast Guard monitoring costs may also be recoverable from the Responsible Party

In some states, the cargo owner is also liable for a spill under state laws, such as California, Washington, Alaska, Oregon, and Maryland, even though the cargo owner would not be liable under OPA 90.

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Limits to Liability Vessel Limits of Liability (greater of)

Tank vessel >3,000 gross tons with a single hull, double sides, or double bottom

$3,200 per gross ton or $23,496,000

Tank vessel of 3,000 gross tons or less with single hull, double sides, or double bottom

$3,200 per gross ton or $6,408,000

Tank vessel >3,000 gross tons with a double hull

$2,000 per gross ton or $17,088,000

Tank vessel of 3,000 gross tons or less with a double hull

$2,000 per gross ton or $4,272,000

Any other vessel $1,000 per gross ton or $854,000

Liability  limit  under  CERCLA:  $300/  gross  ton    Limits of liability for an offshore facility are removal costs + $75 million; and for an onshore facility are $350 million   15

Loss of Limits to Liability

In some circumstances, the Responsible Party may not utilize the limits to liability. •  The incident was caused by the Responsible Party’s gross negligence or willful misconduct •  The incident was caused by the Responsible Party’s violation of applicable federal safety, construction, or operating regulations •  The Responsible Party fails or refuses to report the incident, or fails to provide reasonable cooperation and assistance in connection with removal activities

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Defenses to Liability

The Responsible Party will not be held liable for damages or removal costs if the incident is caused solely by: •  An act of God; •  An act of war; or •  An act or omission by a third party.

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Clean Water Act Penalties

Any owner, operator, or person in charge of a vessel from which an oil or hazardous material is discharged is liable for: •  $25,000 per day of violation; or •  $1,000 per barrel or unit of oil or hazardous material discharged Any owner, operator, or person in charge of a vessel from which an oil or hazardous material is discharged that fails to remove the discharge or comply with orders under the CWA is liable for: •  $25,000 per day of violation; or •  Three times the costs incurred by the Oil Spill Liability Trust Fund as a result of the failure

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Hypothetical

A tug towing a barge laden with crude oil loses propulsion on the Sabine River inbound to Port Arthur. The barge quickly drifts across the river and is struck by an outbound vessel. The resulting spill from the barge and clean up activities shuts down the port. The vessel, while sustaining some structural damage, does not cause any discharge. Who are the responsible parties and what are they liable for?

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“The Department of Justice will continue

to prosecute shipping companies who

break the laws that protect our oceans.”

~ Assistant Attorney General

Moreno

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Avoiding Enforcement

• Comprehensive Environmental Compliance Program

à From a Plea Agreement

or à Implemented in Advance

• Good Company Culture • Close Coordination with Flag State

Environmental Compliance Program

•  Enhanced Compliance Training – Deck and Engine Officers / Unlicensed Crew – Communicate commitment to compliance – Non-compliance not an option – Repeated reminders

•  Open Reporting System – Information is valuable – Hotlines, electronic, and anonymous – Internal monetary rewards

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Future Enforcement Activities

•  Continued aggressive enforcement both civil & criminal

•  EPA’s Vessel General Permit •  Coast Guard’s ballast water management

regulations •  MARPOL Annex VI NOx air emissions limits •  New federal statutes? •  New state statutes?

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Q & A

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