1. Vessel Pollution Enforcement The U.S. Criminal Program Lana N. Pettus Trial Attorney Environmental Crimes Section U.S. Department of Justice Lana.Pettus@usdoj.gov 202-305-0403 WISTA Annual Conference October 16, 2008 New Orleans

2. Summary of U.S. Enforcement All types of commercial vessels - U.S. and foreign flag. All types of commercial vessels - U.S. and foreign flag. Most frequent violation is MARPOL Annex I. Most frequent violation is MARPOL Annex I. Corporate: Over $200 million dollars in criminal fines since 1998. Corporate: Over $200 million dollars in criminal fines since 1998. –Plus restitution, community service and probation with court supervised environmental compliance programs. Individual targets: 17 years of incarceration since 1998. Individual targets: 17 years of incarceration since 1998. –Senior shipboard officers and engineers and responsible shore- side managers.

3. Summary of Enforcement Continued Crimes committed for financial motive. Crimes committed for financial motive. Most cases involve deliberate discharges of tons of waste oil, sludge and other pollutants. Most cases involve deliberate discharges of tons of waste oil, sludge and other pollutants. Intentional falsification of vessel records to deceive port authorities. Intentional falsification of vessel records to deceive port authorities. Concealment: discharges made at night, hiding of bypass equipment, use of dispersants, tricking of OCM, falsification of Oil Record Book and Tank Sounding Log, etc. Concealment: discharges made at night, hiding of bypass equipment, use of dispersants, tricking of OCM, falsification of Oil Record Book and Tank Sounding Log, etc. Most cases involve obstruction of justice (witness tampering, destruction of evidence, alteration of documents, perjury). Most cases involve obstruction of justice (witness tampering, destruction of evidence, alteration of documents, perjury).

4. Most Commonly Used U.S. Laws POLLUTION STATUTES Act to Prevent Pollution from Ships (APPS) – knowing discharge in violation of MARPOL or domestic regulation and/or knowing failure to maintain an accurate Oil Record Book. (18 U.S.C. § 1908(a)) Clean Water Act/Oil Pollution Control Act – knowing discharge of a harmful quantity of oil or hazardous substances and/or knowing failure to report a discharge. (18 U.S.C. §§ 1319, 1321) OTHER CRIMINAL STATUTES False Statements/Omissions/Writing (18 U.S.C. § 1001) Obstruction of Justice, witness tampering, destruction of evidence (18 U.S.C. §§ 1505, 1512, 1519) Conspiracy (18 U.S.C. § 371)

5. APPS/MARPOL Annex I (oil discharges) Discharges from machinery spaces must be through oil sensing equipment and less than 15 ppm. (Emergency Exception) Discharges from machinery spaces must be through oil sensing equipment and less than 15 ppm. (Emergency Exception) Discharges must be through OWS/OCM with automatic stopping Discharges must be through OWS/OCM with automatic stopping Discharges/Transfers must be fully recorded in an Oil Record Book. Discharges/Transfers must be fully recorded in an Oil Record Book.

6. APPS/MARPOL ANNEX I (Maintaining an Oil Record Book) APPS/MARPOL ANNEX I (Maintaining an Oil Record Book) Required operations must be entered without delay Required operations must be entered without delay Entries must be accurate. Entries must be accurate. Signed by person in charge of operation. Signed by person in charge of operation. Each page signed by Master. Each page signed by Master. Maintained on Board and readily available for inspection at all reasonable times. Maintained on Board and readily available for inspection at all reasonable times.

7. Clean Water Act (as amended by the Oil Pollution Control Act) Prohibits discharge of hazardous quantities of oil or hazardous substances within 3 miles of low tide mark or inland waters. May extend up to 200 miles if U.S. natural resources may be affected. Prohibits discharge of hazardous quantities of oil or hazardous substances within 3 miles of low tide mark or inland waters. May extend up to 200 miles if U.S. natural resources may be affected. “Harmful quantity” is any discharge that causes a film or sheen or deposits a sludge or emulsion. “Harmful quantity” is any discharge that causes a film or sheen or deposits a sludge or emulsion. Use of dispersants or emulsifiers to prevent the formation of a sheen is expressly prohibited. Use of dispersants or emulsifiers to prevent the formation of a sheen is expressly prohibited.

8. THE PROBLEM

9. Sabotage of the MARPOL Regime MARPOL 73/78 based on presumption of good faith efforts to achieve compliance. MARPOL 73/78 based on presumption of good faith efforts to achieve compliance. Annexes I and V in force for nearly 30 years. Annexes I and V in force for nearly 30 years.But: Thousands of mystery sheens observed each year in costal vessel traffic lanes, ports, and inland rivers. Thousands of mystery sheens observed each year in costal vessel traffic lanes, ports, and inland rivers. Epidemic of cases involving intentional bypassing or disabling of pollution prevention equipment and falsification of vessel records to conceal illegal discharges. Epidemic of cases involving intentional bypassing or disabling of pollution prevention equipment and falsification of vessel records to conceal illegal discharges. Cases represent a fundamental failure of corporate management, ISM/SMS, Class, Flag State and Port State certification procedures. Cases represent a fundamental failure of corporate management, ISM/SMS, Class, Flag State and Port State certification procedures.

10. Defying MARPOL Requirements

11. The Cost Avoidance Feedback Cycle Poor maintenance leads to increased disposal fees Poor maintenance leads to increased disposal fees Poor maintenance also leads to equipment problems that make waste accumulation more likely and waste processing more difficult which increases the drain on man power and time. Poor maintenance also leads to equipment problems that make waste accumulation more likely and waste processing more difficult which increases the drain on man power and time. Equipment, maintenance, repair, disposal fees (est. 3 – 6.5% of operating costs Equipment, maintenance, repair, disposal fees (est. 3 – 6.5% of operating costs Manpower and time Manpower and time Anticipated Costs Resulting Costs

12. Absence of Shoreside Accountability

13. Each of these vessels was ISM certified and had passed Class, Flag and Port State inspections.

14. What’s wrong with this picture? Oil Record Book vs. Bridge Log

15. And this one?

17. United States v. Exxon March 24, 1989 - largest oil spill in U.S. history March 24, 1989 - largest oil spill in U.S. history 11 million gal. of crude oil 11 million gal. of crude oil Catastrophic environmental damage Catastrophic environmental damage Both criminal and civil enforcement Both criminal and civil enforcement Criminal = Negligent Clean Water Act violation for oil spill and other intentional offenses Criminal = Negligent Clean Water Act violation for oil spill and other intentional offenses

18. Environmental Impact Empirical Data Canadian studies estimating 300,000 oiled birds per year on the Atlantic Coast and demonstrate that chronic oil discharges at sea cause greater seabird mortality than large spills. Canadian studies estimating 300,000 oiled birds per year on the Atlantic Coast and demonstrate that chronic oil discharges at sea cause greater seabird mortality than large spills. OECD report (2002) – intentional, illegal discharges of oil from vessels equal 8 times oil spilled by Exxon Valdez – every year. OECD report (2002) – intentional, illegal discharges of oil from vessels equal 8 times oil spilled by Exxon Valdez – every year.

19. DOJ GOALS AND POLICIES

20. Ensuring accurate ship records and verbal statements to authoritiesEnsuring accurate ship records and verbal statements to authorities Deter future criminal conductDeter future criminal conduct Punishment of deliberate and intentional violationsPunishment of deliberate and intentional violations ENVIRONMENTAL PROTECTION & FAIRNESS

21. Measures for Achieving Prosecution Goals Increased coordination among inspectors, investigators and prosecutors in key US ports. Increased coordination among inspectors, investigators and prosecutors in key US ports. Focus on responsible corporate officials. Focus on responsible corporate officials. Seek enhanced sanctions, where warranted. Seek enhanced sanctions, where warranted. Expanded training of US Coast Guard inspectors and criminal investigative agents. Expanded training of US Coast Guard inspectors and criminal investigative agents. Enhanced port inspections and records analysis. Enhanced port inspections and records analysis. Expanded international cooperation. Expanded international cooperation. –Referrals to and from other Port States. –IMO and bi-lateral efforts. Support efforts to ostracize intentional MARPOL violators from responsible maritime organizations. Support efforts to ostracize intentional MARPOL violators from responsible maritime organizations.

22. Fair Treatment of Seafarers Issue arises in midst of need to conduct thorough investigation in timely manner. Issue arises in midst of need to conduct thorough investigation in timely manner. Often hampered by active efforts to obstruct investigation and intimidate witnesses. Often hampered by active efforts to obstruct investigation and intimidate witnesses. Consistent efforts by USCG and DOJ to – Consistent efforts by USCG and DOJ to – –Gain cooperation of owner/operator to maintain necessary witnesses so as to minimize disruption to vessel’s schedule. –Expedite investigations. –Utilize available procedures to memorialize testimony and permit early release of mariner witnesses. Investigative focus on senior shipboard officers and responsible shoreside officials. Investigative focus on senior shipboard officers and responsible shoreside officials. Owners and operators also have a role to play in ensuring seafarers are treated fairly. Owners and operators also have a role to play in ensuring seafarers are treated fairly.

23. Enforcement Data & Case Anecdotes

24. How Case Begins: Detection How Case Begins: Detection Remote sensing. Remote sensing. Routine inspections. Routine inspections. Enhanced physical and record inspections – Targeting. Enhanced physical and record inspections – Targeting. Marine casualty investigations. Marine casualty investigations. “Mystery Spill” investigations. “Mystery Spill” investigations. Referrals from foreign countries. Referrals from foreign countries. Whistleblower allegations. Whistleblower allegations.

25. US v. OSG 33 felony counts: APPS, CWA/OPA, conspiracy, false statements, obstruction 33 felony counts: APPS, CWA/OPA, conspiracy, false statements, obstruction 12 ships, 6 ports 12 ships, 6 ports $37 million penalty; 3 years probation $37 million penalty; 3 years probation Conduct included: night-time direct discharges of oil and sludge; “tricking” oil pollution control equipment; falsifying ORBs; threats from senior engine room officers to lower-level crew Conduct included: night-time direct discharges of oil and sludge; “tricking” oil pollution control equipment; falsifying ORBs; threats from senior engine room officers to lower-level crew Case began with a referral from Transport Canada Case began with a referral from Transport Canada

26. US v. Clipper Marine Services, et al. 11 felony counts: APPS, conspiracy, false statements, obstruction of justice 11 felony counts: APPS, conspiracy, false statements, obstruction of justice $4.75 million penalty; remote monitoring system required as part of probation $4.75 million penalty; remote monitoring system required as part of probation 1 district, 1 ship 1 district, 1 ship Conduct included: falsified ORB, false verbal statements to CG inspectors, crew members instructed to sign false affidavits, fabrication of special pipe to alter soundings taken by CG Conduct included: falsified ORB, false verbal statements to CG inspectors, crew members instructed to sign false affidavits, fabrication of special pipe to alter soundings taken by CG

27. US v. MSC 11 felony counts: APPS, conspiracy, obstruction, destruction of evidence, false statements 11 felony counts: APPS, conspiracy, obstruction, destruction of evidence, false statements 1 ship, 1 district 1 ship, 1 district $10.5 million in penalties $10.5 million in penalties Conduct involved discharging 40 tons of sludge over 5 months; falsifying the ORB; hiding records during inspection; conversations with shore that were interpreted to mean crew should continue to lie Conduct involved discharging 40 tons of sludge over 5 months; falsifying the ORB; hiding records during inspection; conversations with shore that were interpreted to mean crew should continue to lie Case began with bypass piping discovered during a Coast Guard inspection Case began with bypass piping discovered during a Coast Guard inspection

28. US v. Ionia Management 18 felony counts: APPS, falsification of records, obstruction, conspiracy 18 felony counts: APPS, falsification of records, obstruction, conspiracy 1 ship, 4 districts, repeat offender 1 ship, 4 districts, repeat offender $4.9 million fine; 4 year probation, installation of monitoring equipment, special master with bi-annual hearings $4.9 million fine; 4 year probation, installation of monitoring equipment, special master with bi-annual hearings Conduct involved falsifying ORBs; discharging bilges and sludge directly overboard; falsifying reports submitted as part of probation; destruction of bypass hose; instructing lower level crew to lie. Conduct involved falsifying ORBs; discharging bilges and sludge directly overboard; falsifying reports submitted as part of probation; destruction of bypass hose; instructing lower level crew to lie. Case began with whistleblower and SLAR evidence from the Netherlands Case began with whistleblower and SLAR evidence from the Netherlands

29. US v. Evergreen 24 felony counts, 1 misdemeanor: APPS, false statements, obstruction, CWA negligent discharge. 24 felony counts, 1 misdemeanor: APPS, false statements, obstruction, CWA negligent discharge. 7 vessels, 5 districts 7 vessels, 5 districts $25 million in penalties; probation and ECP with court- appointed monitor $25 million in penalties; probation and ECP with court- appointed monitor Conduct included bypassing oil pollution prevention equipment; destruction of bypass pipe; false verbal statements to the CG; instructing lower level crew to lie. Conduct included bypassing oil pollution prevention equipment; destruction of bypass pipe; false verbal statements to the CG; instructing lower level crew to lie. Detected by tracing 500 gallon oil spill in Columbia River and through inspection. Detected by tracing 500 gallon oil spill in Columbia River and through inspection.

30. Thoughts Moving Forward

31. Coast Guard & Department of Justice Continued international collaboration. Continued international collaboration. Clearly articulate policies guiding exercise of discretion. Clearly articulate policies guiding exercise of discretion. Fair, even-handed inspections and investigations. Fair, even-handed inspections and investigations. Minimize disruption to vessels’ schedules. Minimize disruption to vessels’ schedules. Use of expedited procedures to conclude investigations and evaluate evidence. Use of expedited procedures to conclude investigations and evaluate evidence. Recognize good faith efforts to ensure compliance and voluntarily disclose violations. Recognize good faith efforts to ensure compliance and voluntarily disclose violations. Respect rights of witnesses, subjects, targets, and defendants in conduct of investigation and management of any resulting prosecution. Respect rights of witnesses, subjects, targets, and defendants in conduct of investigation and management of any resulting prosecution. Ensure public statements are fair and accurate. Ensure public statements are fair and accurate.

32. Owners and Operators Cost of offloading waste at port and equipment parts Cost of offloading waste at port and equipment parts –Train crew to minimize waste streams. Have flexible budget for environmental compliance. Avoid directly tying compensation to cost savings. Maintenance time & inoperable/difficult equipment? Maintenance time & inoperable/difficult equipment? –Make sure crew is fully manned. Make maintenance of OWS and related equipment a part of regular duties. Keep spares onboard and available on short notice. Provide training by vendors or experts on proper maintenance and repair of equipment. Upgrade to best available technology. Environmental protection & MARPOL compliance perceived to be a low priority Environmental protection & MARPOL compliance perceived to be a low priority –Increase and improve training. Make environmental compliance a factor in personnel evaluations. Have zero tolerance for violators. Emphasize importance through audits, turnover, maintenance schedules, and proactive shore-side supervision. Fear of losing job Fear of losing job –Establish direct and anonymous means of reporting violations. Reward and protect employees that make internal reports.

33. Defense Bar Encourage owners/operators to determine what is happening in engine rooms and to take actions adequate to ensure compliance. Encourage owners/operators to determine what is happening in engine rooms and to take actions adequate to ensure compliance. Encourage actions before USCG investigation. Encourage actions before USCG investigation. Provide fair assessment of vessel enforcement program and policies which guide prosecutorial decisions. Provide fair assessment of vessel enforcement program and policies which guide prosecutorial decisions. Recognize that expedited investigations require good- faith cooperation from all parties. Recognize that expedited investigations require good- faith cooperation from all parties. Sensitivity to conflict of interest issues. Sensitivity to conflict of interest issues. Ensure public statements are fair and accurate. Ensure public statements are fair and accurate.

34. Protection & Indemnity Clubs Consider whether P & I club rules should absolutely exclude compensation, even under discretionary authority, for fines resulting from intentional criminal violations. Consider whether P & I club rules should absolutely exclude compensation, even under discretionary authority, for fines resulting from intentional criminal violations. Consider whether premium concessions may be appropriate for members who implement and sustain comprehensive environmental compliance measures. Consider whether premium concessions may be appropriate for members who implement and sustain comprehensive environmental compliance measures. Consider whether members who intentionally violate environmental laws should incur premium surcharge and/or be placed in provisional coverage status during probationary period. Consider whether members who intentionally violate environmental laws should incur premium surcharge and/or be placed in provisional coverage status during probationary period.