World Bunkering > News > Spring 2009 > Legal eagle

A recent article in the Maritime Advocate has highlighted current trends in so-called “magic pipe” cases in the US. Walter F. Becker, Jr. of the firm of Chaffe McCall, LLP warns that over the past two years, the United States Department of Justice Environmental Crimes Section (USDOJ) has aggressively pursued criminal prosecution of foreign-flagged vessels entering US ports which have been engaged in pollution. Specifically, USDOJ has been targeting vessels where a “magic pipe” has been used by the crew to bypass the oily water separator to dump bilge water or sludge directly overboard. In 2007, approximately 19 criminal prosecutions were pursued by USDOJ.

In the spring of 2008, USDOJ estimated that these cases would comprise 20% to 30% of all of its prosecutions in that year. “As defence counsel in several of these cases, it is our experience that these cases often begin with a report to the United States Coast Guard (USCG) by a whistleblower who is a low-ranking crewmember on the vessel. These whistleblowers often have a grudge against their supervisors and want to get them in trouble.

Image related to: Legal eagleLegal EagleThese whistleblowers are also often motivated by large monetary rewards which are paid by the US government. Once the vessel enters a US port, the whistleblower contacts the USCG which sends a team of armed agents to board the vessel, conducts a thorough inspection of the vessel (often led by the whistleblower), and individually interviews the officers and crew about the alleged criminal activities. These inspections and interviews often occur before the vessel’s owners and managers have had an opportunity to send defence counsel to the vessel. Quite often, incriminating evidence is seized and confessions are obtained from officers and crew during these early hours.

“Under US federal criminal law, a company can be held vicariously liable for the criminal acts of its agents or employees even if the company did not approve and was not aware of these criminal acts if the agents or employees were acting for the benefit of the company and acted within the authority or scope of their employment. The Act to Prevent Pollution from Ships (APPS) implements two marine and environmental treaties known as MARPOL which target prevention of water pollution in the sea. APPS authorises the USCG to issue regulations to carry out MARPOL. Although the US government generally lacks jurisdiction to prosecute illegal dumping of oil in the international waters, it does have jurisdiction over a number of violations which occur when the vessel enters a US port.

The following criminal violations are being actively prosecuted:

• Knowing failure to maintain an accurate Oil Record Book (33 USC § 1908(a) and 33 CFR § 151.25);
• Knowing violation of ballast water management regulations (33 CFR § 151.2000);
• False statements to federal agents (18 USC § 1001);
• Evidence tampering (18 USC § 1512);
• Ports and Waterway Safety Act – duty to report hazardous condition (33 USC § 1232(b)(1) and 33 CFR §§ 160.203 and 160.215);
• Negligent operations and interfering with safe operation (46 USC § 2302);
• Plastic discharge offence (33 CFR § 151.67);
• Discharges of oil and reporting of oil discharges (33 CFR § 151.09, et seq.).

“The parties who are usually indicted for these offences are the companies that own and manage the vessel, the master, and the chief engineer. Recent prosecutions have also included lower-ranking crew members such as the second engineer. The indictments are usually for felony violations that can expose the companies to millions of dollars in fines and expose the individuals to imprisonment for over six months and substantial fines.

“There are several important lessons to be learned from these recent prosecutions. First, the company should have an effective compliance programme and an effective training programme in place to insure that crew members do not engage in this criminal activity. Second, when pollution activity by crew members is discovered, the company should immediately confer with experienced defence counsel to discuss a possible self-report of the incident to US authorities. Third, when the company learns of a whistleblower or an investigation by the USCG, the company should immediately contact experienced defence counsel who will immediately go to the vessel, conduct an internal investigation, and interface with USCG agents who are on the scene.”

Rotterdam Rules

The United Nations General Assembly has recently let it be known that it has adopted the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (otherwise known as the Rotterdam Rules). A ceremony for the opening of the Convention for signature is to be held in Rotterdam, the Netherlands, on 21-23 September 2009.