GARD P&I GUIDELEINES TO AVOID pollution+by+oil+December+2013

8/9/2019 GARD P&I GUIDELEINES TO AVOID pollution+by+oil+December+2013

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Prevention ofpollution by oil

A selection of articles previouslypublished by Gard AS



© Gard AS, December 2013

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Contents

Disclaimer

The information contained in this publication is compiled from material previously published by Gard AS and isprovided for general information purposes only. Whilst we have taken every care to ensure the accuracy and qualityof the information provided at the time of original publication, Gard AS can accept no responsibility in respect of anyloss or damage of any kind whatsoever which may arise from reliance on information contained in this publicationregardless of whether such information originates from Gard AS, its shareholders, correspondents or othercontributors.

Introduction 5

Shipping industry guidance on the use of Oily Water Separators Ensuring compliance with MARPOL 6

Clearing of shore pipelines following cargo operations at terminals 8

US Pollution - California Certificates of Financial Responsibility (COFR) Requirements 10

Australian Pollution Law – Oil Pollution Indemnity Clause for Penalties and Fines 11

Limitation of liability for pollution clean-up costs in China 13

The silent sentinels – Increased use of remote marine pollution sensors 15

New Greek marine pollution legislation 17

New wine from old wineskins? - Current efforts to retrieve oil from sunken vessels 19

Australia toughens pollution laws 21New Pollution Regulations in China - FAQs II 22

Charterers’ pollution liability in Brazil 24

Perfecting pollution prevention? - The State of Washington enacts a new statute 26

The state of environmental crime enforcement in the US 27

US law – Criminal prosecutions of MARPOL violations 32

ICS/ISF guidance on environmental compliance 34

Oil and water don’t mix 35

Environmental Crime – Myths and Reality 36

Oily water separation and discharge: Risk of oil pollution versus vessel’s safety 37

The finer points of oil pollution 40

US Coast Guard formal policy on voluntary disclosure of MARPOL violations 43

Oily water separator bypass in the US - The tables are turned 44

US law - MARPOL violations in the US 45

Environmental crime - Oily water discharge off the East Coast of Canada 46

Pollution - The hard line taken by the French criminal courts on oil discharge from ships 47




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Introduction

This booklet contains a collection ofloss prevention material relating to theprevention of pollution by oil, whichover the years has been published byGard.

Discharges of oil from shipping,offshore extraction of oil, and transportof oil in pipelines is the result of eitheraccidents or “normal”, deliberateoperational discharges. Accidental

discharges (oil spills) may occur whenvessels collide, are in some sort ofdistress at sea (engine breakdown,fire, explosion), run aground, or whenthere is a blowout of an offshore oilwell, or when a pipeline breaks. Muchcan be done to avoid accidents,but there will always be unfortunatecircumstances and situations that giverise to accidents. Operational (i.e. non-casualty-related) discharges often ariseduring routine bunkering operationsand are usually caused by negligence/lack of care. Other operationaldischarges, e.g. discharge of bilge

water, fuel oil sludge, tank washings

etc., are deliberate in the sensethat the discharge is intended (andpermitted by the relevant legislation),however, because the amount ofpollutant contained in the dischargedliquid exceeds the permitted amount,this results in the discharge beingperformed negligently. Such dischargescan be avoided.

The most important regulations

governing the prevention of pollutionby oil from ships are contained inthe International Convention forthe Prevention of Pollution fromShips (MARPOL) Annex I and coverprevention of pollution by oil fromoperational measures as well as fromaccidental discharges. With seaborneoil trade growing steadily since 1970,apart from a fall in the early 1980sduring the worldwide economicrecession, the aim of many of the safetymeasures included in MARPOL AnnexI is to ensure that the majority of oiltankers are safely built and operated,

and are constructed to reduce the

amount of oil spilled in the event ofan accident (e.g. segregated ballasttanks, protected location of fuel tanksand double hull). Although the greatervolume of the oil spilled can be linkedto tanker incidents, commercial vesselsother than tankers also contribute tooil pollution and MARPOL Annex Icontains the required safety measuresto prevent and minimise also this typeof discharges (e.g. specific requirements

for discharge of oil residue (sludge) andbilge water form machinery spaces).

Although all aspects related to theprevention of pollution by oil are notcovered in this compilation, and localauthorities may have additional, andsometimes stricter, requirements thanthose contained in MARPOL AnnexI, this compilation will hopefully be auseful aid in providing guidance, someanswers, or at the very least a pointerin the right direction when it comes toprevention of pollution by oil.




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Shipping industry guidanceon the use of Oily WaterSeparators Ensuring compliancewith MARPOL

Ensuring compliance with MARPOLShipping companies should:• Ensure that the ISM Safety

Management System* is used togood effect

• Conduct internal and externalaudits on environmentalcompliance and act upon thefindings, in full compliance with theISM Code

• Require accountability onenvironmental compliance issueswithin the shore-side and shipboardmanagement team

• Minimise waste leakage throughgood housekeeping andmaintenance

• Make the best use of the availabletechnology

• Establish a realistic operatingbudget for environmentalcompliance

• Provide meaningful and targetedtraining in environmental awarenessand MARPOL compliance

• Provide specific and targetedtraining in oily water separator(OWS) operation

• Recognise the value of opencommunication with the crew

• Verify compliance throughappropriate physical inspection,operational tests and documentanalysis

• Reward compliance and addresspotential non-compliance.

Technical approachesGeneralShipping companies should consider:• Installing the latest equipment, or

an upgrade in capability, if existingequipment does not perform torequirements

• Upgrading related equipment tominimise the production of waste

• The advantages of the pre-processing of waste

• Increasing tank capacity for wastewhere possible

• Modifying systems to facilitate in-port testing of treatment systems

The global shipping industry iscommitted to a zero toleranceapproach to any non-compliance withthe International Convention for thePrevention of Pollution from Ships(MARPOL). In particular, the industryis committed to strict adherence toInternational Maritime Organization(IMO) requirements concerning theuse of Oily Water Separators and themonitoring and discharge of oil into thesea.

National maritime authorities withresponsibility for the environmentalprotection of their coastlines quiteproperly adopt a similarly strict approachto the enforcement of MARPOL.

Companies and seafarers need tounderstand that even the most minorviolations of MARPOL will be detectedby the authorities. In addition to largefi nes amounting to literally millions ofdollars, both company managementand seafarers can be liable to criminalprosecution and imprisonment forany deliberate violation of MARPOLrequirements or falsifi cation of records.

The following industry guidelinesare intended to highlight some ofthe issues concerning the use of oilywater separators (OWS) and to remindcompany management, and shipboardpersonnel, how they can act to preventMARPOL infringements.

Ship operators have ultimateresponsibility for establishing acompliance culture within theircompanies, and it is important that everyeffort is made to ensure that seafarersdo not engage in any illegal conduct inthe mistaken belief that it will benefit

their employer. Every seafarer shouldbe made fully aware of the severe legalconsequences, both for the company andthe seafarers themselves, of even minornon-compliance with environmental rules.

At first glance, the following advicemay appear to contain nothing new;for the vast majority of shippingcompanies, these are issues whichshould already be fully addressed bytheir Safety Management Systems, asrequired by the International SafetyManagement (ISM) Code. Nevertheless,it is strongly recommended that thefollowing guidance is carefully analysedby company management, and that a

firm message of zero tolerance of non-compliance with MARPOL is circulatedas widely as possible amongst seagoingpersonnel.

• Implementing the periodic testingof the oil discharge monitoringequipment

• The use of cleaning agentsconsistent with equipmentcapability.

Control devicesShipping companies should consider:• Fitting uniquely numbered

environmental tags on flanges to

prevent unauthorised by-passing

• Using seals on overboard valvesand cross-connections

• Installing strategically placedplacards concerning compliancewith MARPOL on board ship

• Fitting surveillance cameras

• Using tamper resistant recordingsystems, alarms and printoutsto verify equipment operation,valve position, flow, OWS ppm,incineration, ship’s position etc.

• Installing locked boxes or cagesover monitoring equipment

• Fitting interlocks to preventfalsification of monitoringequipment inputs

• Using meters to record equipmentrunning time for all engine roompumps.

Management approachesRole of shore managementShipping companies should:• Assign environmental responsibility

to senior management and ship

superintendents, Masters and ChiefEngineers on board ships

• Ensure adequacy of internal auditsand implementation of correctiveactions

• Review maintenance recordsand procedures, log entries andhandover notes

• Monitor workloads imposed by theoperation and maintenance of oilywater separators, and assess theimpact on crew priorities

• Analyse waste streams to

determine content, volume, meansand capacity for storage, andestimate realistically the cost oftreatment and disposal




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• Ensure that the operating budgetfor waste removal and spare parts isadequate

• Establish comprehensive check listsfor inspections/audits

• Verify that tests have beenperformed to ensure the continued

correct operation of oily waterseparators

• Discuss findings and concernswith all levels of the engineeringdepartment

• Explore the potential gains fromthe installation of new technology.

TrainingShipping companies should:• Ensure that training, whether

shipboard, in-house or from anoutside authority, is specific onrelevant MARPOL requirements

• Consider supplementary trainingon MARPOL issues

• Document the training and assessits relevance

• Establish formal policy documentsand procedures on MARPOLcompliance and training.

Audits and inspectionsShipping companies should:• Ensure that audits target the correct

operation and maintenance of oilywater separators

• Ensure that audits are designedto investigate environmentalcompliance

• Use a comprehensive audit checklist and try to investigate beyondthe check list

• Conduct unannounced inspections

• Verify:- routine maintenance- internal record keeping policies- the accuracy of records by cross-referencing- the progress of training- that written policies are available

• Test equipment under routineoperational conditions

• Interview crew members

• Produce written audit reports

• Conduct post-audit meetings

• Ensure senior management reviewthe audit reports

• Track audit findings until correctiveaction is complete.

The role of senior management onboard the shipGeneralThe Master, Chief Engineer and seniorofficers in the engine department should:

• Promote awareness thatany attempt to circumventMARPOL requirements is totallyunacceptable

• Determine the most appropriateprocedures to maintain equipmentand systems

• Minimise and if possibleeliminate leakage through goodhousekeeping

• Correctly maintain the oil recordbook (ORB) and the record ofdischarges of oily water separatoreffluent into the sea

• Ensure that all routine shipboardand ISM safety meetings includetime to discuss a specific agendaitem on environmental matters

• Use sign on/off check lists for dutypersonnel.

Use of Oily Water SeparatorsThe Master, Chief Engineer and seniorofficers in the engine department should:• Instruct users of OWS equipment

and verify the standard achieved

• Verify that maintenance schedulesare being followed

• Ensure that audits includeoperational tests and areconciliation of records

• Ensure that scheduled tanksounding logs are maintained andsigned for

• Keep records of verification ofcorrect operation through testing atsea

• Ensure that on board spares areadequate to meet the demand

• Create a culture wherecomplacency in operationand maintenance standards isunacceptable.

Record keepingThe Master, Chief Engineer and seniorofficers in the engine department should:• Ensure that all entries in the tank

sounding log, ORB (oil recordbook†) and incinerator logs arecompleted by the crew memberwho performed the task

• Ensure that the ORB is examinedand signed by the Chief Engineerand/or the Master

• Require signatures from thoseconducting overboard dischargesand operational tests

• Ensure that ship familiarisationprocedures verify that companyenvironmental policy and

operability of equipment areunderstood and followed

• Require the status of pollutionprevention equipment to be

recorded in the handover notes ofthe responsible engineer and theChief Engineer

• Record the independentverification of the correct operationof the oil discharge monitoringequipment

• Raise awareness of the need foran open chain of command andaccurate record keeping that canbe substantiated with Port StateControl.

Tracking waste and maintenanceThe Master, Chief Engineer and seniorofficers in the engine department should:• Conduct analyses of waste disposal

records

• Compare waste output to volumespurchased

• Compare waste disposal recordswith maintenance records

• Remove disincentives to off-loadingwaste, or purchasing additionalmaterial or parts related to safetyand the environment.

The following publications may also behelpful:*Guidelines on the Application of theIMO International Safety Management(ISM) Code (published by ICS/ISF)†Guide for Correct Entries in the OilRecord Book (published by Intertanko).

Shipping industry guidance on the use ofOily Water Separators

Published by Maritime InternationalSecretariat Services Limited12 Carthusian StreetLondon EC1M 6EZ

Tel +44 20 7417 [email protected] www.marisec.org/ows

First edition 2006These guidelines have been developedusing the best information available,but they are intended for guidance only,to be used at the users’ own risk. Noresponsibility is accepted by any firm,corporation or organisation who or whichhas been in any way concerned withthe furnishing of data, the compilation,publication or authorised translation,supply or sale of this guidance, for theaccuracy of any information or advicegiven herein, or any omission herefromor consequences whatsoever resultingdirectly or indirectly from use of theseguidelines or from compliance with oradoption of guidance contained therein.

An electronic version of this leaflet isavailable atwww.marisec.org/ows




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Clearing of shorepipelines following cargo

operations at terminalsIntroduction and backgroundOver the years, Gard has seen someextensive structural damage incidentsas a result of overpressure in theliquid cargo tanks during loadingoperations. Such damages result intime consuming and costly repairs andunfortunately, for reasons unknown,the frequency of such incidents hasincreased, despite ship proceduresaddressing the risks involved.

In Gard’s experience such incidentsoften occur during the loadingoperation phase when shore pipelinesare being cleared, either by lineblowing or by pigging1. In one suchincident, failure to maintain closecommunication with the terminal anda lack of ship personnel’s attentionto and awareness of the hazardsrelated to an unattended openmanifold valve during shore pipelineclearing operations seem to be themain causes. After the completion ofloading of one tank and initial clearing

of the line, the terminal requested there-opening of the manifold valve forfurther blowing of the cargo line. Theline was then left open and the shipreportedly did not receive any furtherinformation from the terminal. Somefive hours after the request for there-opening of the manifold valve, a“bang” was heard on deck and cargowas seen emitting from the tank vent.The results were significant damage tothe transverse bulkheads between thetanks and cargo mixing between tanks.

The purpose of this circular is therefore

to highlight the main issues involved in

order to minimize the risk of pollution

and damage to the cargo tanks duringcargo operations involving clearing ofshore pipelines.

Reducing risks related to shore pipelineclearing operations The immediatecauses of any damage are gas beingsupplied at a too high pressurecompared to the capacity of the ship’stank vent system arrangement; or thatthe amount of cargo being pushedinto the ship’s cargo tank is too largecompared to the tank ullage available,or the cargo coming at too fast arate. The root causes are, however,

often complex and may involve lackof detailed planning of the overalloperation, lack of communicationbetween the parties involved during theoperation, and personnel having a lackof training and awareness of proceduresapplicable to the actual operation.

The procedure for clearing shorepipelines between the shore tank andthe ship manifold will depend on thefacilities available at each terminal andthe type of cargo loaded. Ship andterminal procedures will address allrelevant aspects of the cargo and line

clearing operations but it has become

Hazards to be aware of Parameters to be discussed in pre-cargo operation meeting:

- pressure surges in line- tank overpressurization- dramatic increase in the filling rate- cargo tank overflow due to excess cargo- cargo tank overflow due to entry ofcompressed gas

- stages at which the line clearing will be carried out- notice period required by the ship prior to line clearing operations- propelling medium to be used- length and size of the shore line- time required for a pig to travel along the line- pressures and venting capacity of the ship’s reception tank- volume of residual cargo in the line and the amount of ullage spaceavailable in the ship’s reception tank- capacity of the vapour return line to shore

- amendments to the cargo operation plan as a result of pipeline clearingoperations, including volumes available for topping off- communication routines during the entire operation

Loss Prevention Circular No. 08-11

evident that enforcement of good

communication between the involvedparties prior to and during the entireoperation is a key factor in order toprevent incidents. The following shouldtherefore be observed:

Planning and responsibilitiesAll cargo operations must be carefullyplanned and documented well inadvance of their execution. The detailsof the plans must be discussed withall personnel, both on the ship and atthe terminal and the manner in whichresponsibility is to be shared betweenthe ship and terminal must be agreed2.

The Master or Responsible Officershould ensure that ship’s personnelassigned duties during the cargooperation are made aware of thehazards associated with pipelineclearing operations.

A pre-cargo operation meetingbetween personnel responsible forthe operation from ship and terminalshould confirm all critical interfaceparameters, including those importantin the pipeline clearing operations3.




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Specific hazards that the ship’spersonnel should be aware of andrelated interface parameters to bediscussed with the terminal during thepre-cargo operation meeting are listedbelow.

Precautions and proceduresAt the commencement of loading, andat each change of watch or shift, theResponsible Officer and the Terminal

Representative should each confirmthat the communications system forthe control of loading is understood bythem and by the personnel assignedduties during the cargo operation.

Precautions and procedures requiringspecial awareness by the ship’spersonnel are presented below.During the operations, there should becontinuous and direct communicationbetween the terminal and the ship untilthe operation has been completed andall valves have been closed.

RecommendationsProcedures for cargo operationsshould be reviewed to ensure that thecorrect procedures are followed whendealing with shore pipeline clearingoperations. A key issue in order toprevent incidents is the enforcement ofgood communication, both prior to andduring the entire operation.

Precautions and procedures requiring special awareness by the ship’s personnel:

- avoid using tanks that that are loaded close to 98% as reception tanks for line clearing- add a safety margin when estimating required ullages for reception tanks, this to take account of the potential for inaccurately declared “pigging quantities”- consider to include provisions for a standby cargo tank to be lined up and ready to be opened- keep manifold valves closed during idle periods- ensure that the vapour return line to shore is open during the operation (when available)- throttle the main manifold valve as required- monitor the manifold pressure closely- monitor the available amount of cargo tank ullage space and pressure in tank- during freezing weather conditions, inspect tank vents (P/V valves) at regular intervals

- close manifold valves immediately (in agreement with the terminal) once a pig has reached itsreceiver/trap, this to avoid compressed propelling gas entering a loaded cargo tank- report immediately any abnormalities or deviations from existing procedures

- Hazards to be aware of: Prior to thecommencement of the cargo operation,and in order to raise awareness,specific hazards associated withpipeline clearing operations should becommunicated to the ship’s personnelwho are assigned duties during theoperation.

- Parameters to be discussed in thepre-cargo operation meeting: Through

the pre-cargo operation meeting, theresponsibilities, time frames and criticalinterface parameters, including thoseimportant for line clearing operations,should be agreed between theResponsible Officer and the TerminalResponsible. Specific communicationroutines to be adhered to duringthe actual operations should beestablished.

- Precautions and proceduresrequiring special awareness by theship’s personnel: Precautions andprocedures during cargo operations

should ensure that all ship manifoldvalves are kept closed unless specificoperations that require open valvesare ongoing, that each operation iscontinuously monitored by responsiblepersonnel, and that there is directcommunication between the terminaland the ship until operations have beencompleted and all valves have beenclosed.

Gard strongly recommends that onlyproperly trained and experiencedpersonnel is assigned duties relatedto operation of ship manifold valvesduring pipeline clearing operations.

Footnotes1 Pigging is a form of line clearing inwhich an object, most often in the formof a rubber sphere or cylinder and

known as a “pig”, is pushed throughthe line by a liquid or by compressedgas. A pig may be used to clear the linecompletely, in which case it will usuallybe propelled by compressed gas, or tofollow a previous grade to ensure thatthe pipeline remains as free of productas possible, in which case it is likely tobe propelled by the next grade.2 Gard’s Guidance to MastersCh.2.12.3.4 could be useful reading inthis respect.3 See also Ch.11.1.15 of theInternational Safety Guide for Oil Tankerand Terminals (ISGOTT) 5th Edition.




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US Pollution - CaliforniaCertificates of Financial

Responsibility (COFR)Requirements

Member Circular No. 3/2013March 2013

Members are requested to note therelevant provisions in the CA Codeof Regulations (CCR) on evidenceof financial security and renewalprocedures for CA certificates offinancial responsibility (COFRs)published by the Californian (CA)Office of Spill Prevention and Response(OSPR) and currently effective.

Before operating in CA marine waters,tank and non-tank vessels are requiredto submit their certificate of entry (CoE)at least ten (10) calendar days prior tooperating or entering these waters,in order to apply for a CA COFR.This requirement supersedes therequirement to submit the CoE at leastthree (3) working days prior to enteringCA waters.

Members are also advised that thethirty (30) and ninety (90) day timeframerequired for self-certifying renewal withthe P&I Club and the timeframe forproviding the renewal documentation,i.e. the CoE – are replaced with a singletimeframe of forty-five (45) calendardays following expiration of the P&IClub coverage to submit all necessarydocumentation including the CoE.

Members should contact the Manager/Association should they have anyqueries regarding any of the above.

This circular supersedes the Circularissued in January 2012 No 16-11.

All Clubs in the International Group ofP&I Clubs have issued similar circulars.

Any questions with regard to the abovemay be addressed to Sara Burgess,Gard (UK) Limited; Knut Goderstad,Gard AS or Frank Gonynor, Gard (NorthAmerica) Inc.

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Yours faithfully,GARD AS

Claes IsacsonChief Executive Officer




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Australian PollutionLaw – Oil Pollution

Indemnity Clause forPenalties and Fines

Member Circular No. 2/2013March 2013

In October 2012, an International Grouprecommended charterparty clause wasdrafted to address the concerns raisedby owners and charterers in respectof the amendments to Australianlegislation introducing increasedpenalties for pollution from ships anddamage to the Marine environment.Since the recommended clause wascirculated to Members, there havebeen further developments in relationto the Australian legislation and furtherconsideration of the wording of therecommended clause, which hasbeen updated as attached and furtherexplained below;

Increase in the amount ofpenaltiesOn 28 December 2012, a newregulation came into force in Australiaescalating the monetary value offinancial penalties for Federal offences.The increase in penalty unit valuations is

only applicable to offences committedon or after 28 December 2012.

The changes affect fines calculated onpenalty units, such as fines imposedunder the Protection of the Sea Act1983, which imposes fines ranging from500 penalty units to 20,000 penalty unitsfor the offence of discharging oil or oilymixtures into the sea.

Under the previous penalty unitcalculation, this resulted in maximumfines of AUD 2.2 million for an individualand AUD 11 million for a corporation.

Under the new penalty unit calculation,the applicable maximum fines are nowAUD 3.4 million for an individual andAUD 17 million for a corporation.

Amendments to the InternationalGroup recommended clause andexplanatory notes

• Legal/Defence costsA new subparagraph (b) iii. has beeninserted to address the concernsthat prosecution legal costs and/orexpenses might be passed onto thedefending party. Subparagraph (b)

iii. clarifies that the indemnity in therecommended clause extends to therecovery of any reasonable legal costsand/or other expenses incurred by or

awarded against either party in respectof any proceedings instituted againstthem for the imposition of any fineor other penalty, in circumstances setout in subparagraph (b), irrespectiveof whether any fine or other penalty isactually imposed.

• Indemnity in the event of contributoryfaultThe proviso to subparagraphs (b) i. andii. has been amended to specificallyaddress the consequences of liabilityarising in circumstances where thereis contributory fault on the part ofthe party seeking indemnity. Theamendment restricts the amount of therecovery where there is contributoryfault, provided this is not prohibitedunder the law governing the charterparty.

The recommended clause andexplanatory notes are attached.

This Circular supersedes MemberCircular No. 10-12 issued on 23 October2012.

Should Members have any questionsthey should contact the Managers inthe normal way.

All Clubs in the International Group ofP&I Clubs have issued similar circulars.

Any questions with regard to the abovemay be addressed to Helenka Leary inGard (UK) Limited and Arne Sætra in

Gard AS.

Yours faithfully,GARD AS

Claes IsacsonChief Executive Officer

ANNEXOIL POLLUTION INDEMNITY CLAUSEFOR PENALTIES AND FINES(a) Subject to the terms of thisCharterparty, as between Ownersand Charterers, in the event of anoil pollution incident involving anydischarge or threat of discharge ofoil, oily mixture, or oily residue fromthe Vessel (the “Pollution Incident”),Owners shall have sole responsibility forresponding to the Pollution Incident asmay be required of the vessel interestsby applicable law or regulation.

(b) Without prejudice to the above, asbetween the parties it is hereby agreedthat:

i. Owners shall indemnify, defend andhold Charterers harmless in respectof any liability for criminal fine or civilpenalty arising out of or in connection

with a Pollution Incident, to the extentthat such Pollution Incident results froma negligent act or omission, or breachof this Charterparty by Owners, theirservants or agents,

ii. Charterers shall indemnify, defendand hold Owners harmless in respectof any liability for criminal fine or civilpenalty arising out of or in connectionwith a Pollution Incident, to the extentthat such Pollution Incident results froma negligent act or omission, or breachof this Charterparty by Charterers, theirservants or agents,

provided always that if such fine orpenalty has been imposed by reasonwholly or partly of any fault of the partyseeking the indemnity, the amountof the indemnity shall be limitedaccordingly and further provided thatthe law governing the Charterpartydoes not prohibit recovery of such fines.

iii. The rights of Owners and Charterersunder this clause shall extend toand include an indemnity in respectof any reasonable legal costs and/or other expenses incurred by or

awarded against them in respect of anyproceedings instituted against themfor the imposition of any fine or otherpenalty in circumstances set out in




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paragraph (b), irrespective of whetherany fine or other penalty is actuallyimposed.

(c) Nothing in this Clause shall prejudiceany right of recourse of either party, orany defences or right to limit liabilityunder any applicable law.

(d) Charterers shall procure that thisClause be incorporated into all sub-charters and contracts of carriageissued pursuant to this Charterparty.

EXPLANATORY NOTESIt is understood that, under the revisedAustralian law, charterers can be strictlyliable for penalties and fines imposedon them as a result of a pollutionor threat of pollution caused by theact or negligence of the owner (e.g.navigational error). Conversely, owners

can be strictly liable for penalties andfines imposed on them as a resultof a pollution or threat of pollutioncaused by the act or negligence of thecharterer (e.g. unsafe berth). As thisinvolves circumstances beyond owners’and charterers’ control, a charterpartyclause is recommended to achieve theeffect that whoever causes the PollutionIncident should bear the criminal finesor penalties through indemnification.

Under the clause, owners haveoverall responsibility for respondingto a discharge or threat of dischargeof oil, oily mixture or oily residue(subparagraph (a)). This is in line withthe Australian legislation and with theinternational compensation regime.

The indemnity in subparagraphs (b) i.and ii. is designed to protect ownersand charterers by incorporating anequal indemnity by the party whosenegligent act or omission, or breachof chartererparty, causes pollution orthreat of pollution.

The proviso to subparagraphs (b) (i)and (ii) ensures that club cover is notprejudiced on the grounds that liabilityhas been contractually assumed byvirtue of the clause in circumstanceswhere there may not be an underlyinglegal liability. The proviso restricts the

amount of recovery where there iscontributory fault. The recovery of finesunder the clause is also subject to suchrecovery not being prohibited underthe law governing the charterparty.

The indemnity in this clause extendsto the recovery of any reasonable legalcosts and/or other expenses incurredby or awarded against either party inrespect of any proceedings instituted

against them for the imposition of anyfine or other penalty in circumstancesset out in subparagraph (b,) irrespectiveof whether any fine or other penalty isactually imposed.

The indemnity in this clause will notrespond to the situation where the

pollution or threat of pollution isentirely caused by a third party’s act,without involving any act of the owneror of the charterer, but where the owneror charterer still incurs the penalty orfine under the new Australian law.

The clause only addresses the specificsituation of criminal fines and civilpenalties, not civil liability which iswithin the sphere of the Conventions.

Any right of recourse of either party,defence or right to limit is preservedunder subparagraph (c).

Subparagraph (d) is designed to ensurethat the same recovery and indemnityprovisions apply where there is acharterparty chain.




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Limitation of liability forpollution clean-up costs

in China

Gard News 211, August/

October 2013

In the recent case of JiangmenMaritime Safety Administration ofPRC v. the Owners of M/V ZEUSthe Supreme Court of the People’sRepublic of China (PRC) held that thecosts incurred in cleaning up bunkersspilled from a vessel which is sunk,wrecked, stranded or abandoned shallnot be subject to limitation of liabilityin accordance with Article 207 of theChinese Maritime Code (CMC). The

facts of the case are as follows.

FactsOn 24th September 2008, TyphoonHagupit caused the M/V ZEUS torun aground off Shangchuan Island,Guangdong, China. As a result, thebunkers on board spilled from thevessel and caused oil pollution. All thecrew members died or went missing.

After the incident, the JiangmenMaritime Safety Administration (MSAJiangmen) sent various local fishingboats and vessels from other MSAs to

conduct the clean-up operations. Thefinal clean-up costs incurred were morethan RMB 10 million (around USD 1.63million).

On 21st October 2008, the ownersof the ZEUS applied to GuangzhouMaritime Court (GMC) for constitutionof a limitation fund (in the amount ofSDR 796,256, around USD 1.22 million)for the maritime claims arising from thesaid accident, including the claim forthe clean-up costs.

MSA Jiangmen raised objection to the

constitution of the limitation fund bythe owners but the GMC dismissedthis objection. MSA Jiangmen thenregistered the clean-up claim under thelimitation fund and filed a claim with theGMC for the total clean-up costs.

About 40 local aquatic breeders alsoregistered their claims for loss ofincome under the limitation fund. Later,these local aquatic breeders filed claimsbefore the GMC.

Regarding the wreck and bunkersremaining on-board the vessel, theowners entered into a wreck and bunkerremoval contract with a local company.The wreck/bunker removal fee was paidas per the contract.

There were also claims for search andrescue fees, and costs for setting upnavigation warning equipment. Theseclaims were settled amicably outsidethe court proceedings.

The claim for clean-up costs in thecourt of first instance (GMC)The owners’ main argumentsIn the first instance trial, the ownersargued that the clean-up costs should

be subject to the limitation provided forunder Article 207 of the CMC.

Article 207 of the CMC states thatexcept as provided otherwise in Articles208 and 209 of the CMC,1 with respectto the following maritime claims, theperson liable may limit his liability inaccordance with the CMC, whatever thebasis of liability may be:

“(1)Claims in respect of loss of life orpersonal injury or loss of or damage toproperty including damage to harbourworks, basins and waterways and aids

to navigation occurring on board or indirect connection with the operationof the ship or with salvage operations,as well as consequential damagesresulting therefrom; […]

(4) Claims of a person other than theperson liable in respect of measurestaken to avert or minimise loss for whichthe person liable may limit his liabilityin accordance with the provisions ofthis Chapter, and further loss caused bysuch measures.

All the claims set out in the preceding

paragraph, whatever the way they arelodged, may be entitled to limitationof liability. However, with respect to theremuneration set out in sub-paragraph(4) for which the person liable paysas agreed upon in the contract, inrelation to the obligation for payment,the person liable may not invoke theprovisions on limitation of liability of thisArticle.”

The owners argued that Article 207 (4)should be applicable, since the ownerssigned no contracts with the partiesparticipating in the clean-up operations.In addition, Article 207 (1) could also beapplied.

The owners also cited various judicialinterpretations and judicial guidancesto demonstrate that the limitationunder the CMC should be applicable tothis case.

MSA Jiangmen’s main argumentsMSA Jiangmen argued that Chinese lawdoes not have specific provision for thisparticular claim, so it should either notbe subject to limitation or be subject to

limitation under the CLC 92.

In addition, MSA Jiangmen argued that,although they signed various contractswith clean-up vessels and vehicles, MSAJiangmen should be deemed to haveentered these contracts on behalf of theowners. Since the fee rate was agreedin these contracts, the owners shouldnot have the right to limit liability.

MSA Jiangmen also referred to Article 9of the Provisions of the Supreme Courton Several Issues Concerning the Trialof Ship Collision Cases, effective from

23rd May 2008 (the 2008 Provisions),2 and argued that the pollution inthis case was not different from thepollution caused by a ship which issunk, wrecked, stranded or abandonedresulting from a ship collision accidentin terms of its nature and consequence.

Article 9 of the 2008 Provisions providesthat for claims in respect of the re-floating, removal, destruction or therendering harmless of a ship which issunk, wrecked, stranded or abandoneddue to the collision, as well as thecargo on board, the responsible party

should not be able to limit its liability inaccordance with the CMC.

MSA Jiangmen’s reasons for applyingthe CLC 92 to the ZEUS (a non-tankvessel) are as follows:

– The 2001 Bunker Convention shouldnot have retrospective application,as the convention came into force inMarch 2009 and the incident occurredin 2008.

– Even if the 2001 Bunker Conventioncould be applicable, the conventionitself did not state which should bethe limitation amount or whether thisparticular claim should be subject tolimitation of liability or not. According




14

to Article 6 of the convention, ananswer should be found under Chineselaw.

– MSA Jiangmen did not think thatthe CMC limitation of liability could beapplied to this case based upon theabove arguments.

– Hence, the only limitation the ownerscould refer to under Chinese law wouldbe that of the CLC 92. As the limitationamount under the CLC 92 is muchhigher than that of the CMC and actualclean-up costs, this limitation is in factmeaningless for the owners.

The GMC’s decisionThe GMC upheld the argumentsof MSA Jiangmen and ruled thatthe matter should not be subject tolimitation of liability under the CMC.The GMC also thought it would be

unfair if the owners were allowed tolimit their liability in spite of the factthat owners did nothing in the clean-upoperations (there was no doubt that ifthe owners had done something, likeappointing clean-up companies or staff,they would not be able to limit liability).

Comments on the GMC’s judgmentChinese law does not state that inthis case MSA Jiangmen had theright or authorisation to sign clean-up contracts on behalf of the owners.Since the right of an administrativebureau (such as MSA Jiangmen) should

expressly be provided in law, theGMC’s decision in this respect may beincorrect. In addition, the owners hadno information about these contractsbefore the litigation.

The nature of clean-up operations andrendering harmless of a ship should ofcourse be different. In fact, in this case,in order to render the wrecked shipharmless (i.e., disposing of the bunkerremaining on board and the wreckitself), the owners had already entereda contract with a local company andappointed it to carry out the bunker

and wreck removal work.

Fairness should not be an issue inthis dispute. The GMC should havefollowed the CMC and correctlyinterpreted it.

The appeal to Guangdong HighCourtThe above comments were addedto the statement of appeal filed atthe Guangdong High Court (GHC),in addition to the main argumentsraised by the owners during the GMC’sproceeding. Unfortunately, the GHC

did not overturn the GMC’s judgmentand held almost the same opinions asthose of the GMC.

China: the practical implications of theZEUS decision remain to be seen.

The Supreme CourtShortly after the GHC issued itsdecision, a judgment was issued byQingdao Maritime Court (QMC). Inthat case, Yantai Maritime Safety

Administration (MSA Yantai) organisedclean-up operations by sending vessels(as per agreed fee rate) to take part inan oil clean-up after a collision incident(which resulted in a vessel sinkingand spilling oil). Similarly, the ownersestablished a limitation fund in theQMC and MSA Yantai claimed againstthe owners for the clean-up costs. TheQMC determined that the clean-upcosts should be subject to limitationunder the CMC. Although China doesnot adopt the doctrine of judicialprecedent, the owners of the ZEUSadded this decision to their arguments

when appealing to the Supreme Court.

The Supreme Court, while deciding thatthe clean-up costs in the ZEUS caseshould not be subject to limitation ofliability under the CMC, overturned theGMC’s and GHC’s findings that MSAJiangmen could enter into clean-upcontracts on behalf of the owners.

The Supreme Court in fact formed anew theory to apply Article 9 of the2008 Provisions to this case. TheSupreme Court’s logic analysis goes asfollows:

– As per Article 9 of the 2008 Provisions,the claims in respect of the re-floating,removal, destruction or renderingharmless of a ship which is sunk,wrecked, stranded or abandonedor claims in respect of the removal,destruction or rendering harmless ofthe cargo on board the ship should notbe subject to limitation under the CMC.

– In the ZEUS case, although thebunkers spilled from the vessel (or thewreck), it should still be considered as apart of the wreck.

– Therefore, cleaning the spilledbunkers should be deemed asrendering harmless of the wreck andthe owners should not be able to enjoylimitation of liability under the CMC.

The Supreme Court obviously took astep forward by widening the definitionof a wreck.

ConclusionThe ZEUS is an interesting decision ofthe Supreme Court on an issue that hadnot been considered by it previously.

It now remains to be seen how thelower courts will apply the principlesestablished in the judgment and what

implications there will be in practice tofuture pollution incidents in China.

Footnotes1 Article 208 mainly refers to otherkinds of limitation or claims not subjectto limitation, such as the limitation

under the CLC 92 and claim for generalaverage contribution. Article 209mentions that a party will lose theright to limit liability if he committedgross negligence or wilful misconduct.Articles 208 and 209 have no relevanceto this case.2 Article 2 of the 1976 LLMC states thatsubject to Articles 3 and 4 the followingclaims, whatever the basis of liabilitymay be, shall be subject to limitation ofliability:(a) claims in respect of loss of life orpersonal injury or loss of or damage toproperty (including damage to harbour

works, basins and waterways and aidsto navigation), occurring on board or indirect connection with the operation ofthe ship or with salvage operations, andconsequential loss resulting therefrom;(b) claims in respect of loss resultingfrom delay in the carriage by sea ofcargo, passengers or their luggage;(c) claims in respect of other lossresulting from infringement of rightsother than contractual rights, occurringin direct connection with the operationof the ship or salvage operations;(d) claims in respect of the raising,removal, destruction or the rendering

harmless of a ship which is sunk,wrecked, stranded or abandoned,including anything that is or has beenon board such ship;(e) claims in respect of the removal,destruction or the rendering harmlessof the cargo of the ship;(f) claims of a person other than theperson liable in respect of measurestaken in order to avert or minimiseloss for which the person liable maylimit his liability in accordance with thisConvention, and further loss caused bysuch measures.The CMC applies most of the 1976

LLMC. Unfortunately, (d) and (e) arenot included in Article 207 of the CMC(dealing with which kind of claims couldbe limited under the CMC), so the CMConly has four items under Article 207. Atfirst, there were a lot of disputes overwhether the claims of (d) and (e) shouldbe limitable under the CMC. Then,the Supreme Court issued the judicialinterpretation in 2008, which expresslystated that the “rendering harmless”costs could not be subject to limitationof liability under the CMC. What theSupreme Court did in the ZEUS casewas simply to widen the definition of

what constitutes a wreck.




15

The silent sentinels –Increased use of remote

marine pollution sensors

Gard News 210, May/July 2013

In this era of increased vigilance in thedetection of marine pollution, therehave been various efforts by bothgovernment and industry to ensuredetection of hydrocarbon spills, as wellas to enhance spill response. This hasincluded the use of varied technologies,including aerial detection of floatingoil, use of infrared/ultraviolet camerasto allow for spill detection at night,the increase in sophistication of oily

water separators aboard ships, andthe matching of spilled pollutantto the point of source through theemployment of precise “chemicalfingerprinting” of samples in alaboratory.

The further mechanisation andautomation of these efforts has beena driver of this theme. One recentexample in major spill events hasbeen the use of small drone aircraftand watercraft,1 and even satellites,all of which can survey large areas ofocean and shoreline continually, for

many hours or even days, controlledremotely by an operator, at a distanceon the ground at a control centre,viewing things via an audio/videotelecommunication link.

Remote sensorsA more recent development, whichfocuses on spill detection at morelocalised areas, is the now morewidespread use of remote pollutionsensors that offer continuousmonitoring for pollution at a fixedpoint. These weatherproof units useoptical sensors aimed downward ata patch of water within a small radiusof the unit. Within the sensors, a highpower Xenon lamp is used to producea high-energy light beam which willcause any oil present in the targetarea to fluoresce and emit light of itscharacteristic wavelengths.

The cameras can detect extremelyminute quantities of hydrocarbons (+/-3 microns in thickness) floating upon, oreven slightly below, the surface of thewater within the range of the unit, in aradius up to 10 metres from the device.

“Slick Guard” environmentalmonitoring platform for offshore,

coastal, ports and harbour applications.

All photos courtesy of InterOceanSystems Inc., San Diego.

Once a pollutant is detected theremay be an alarm, either visual or aklaxon, and transmission of a reportabout the detection to ship crewor dock personnel, either nearby orhundreds/thousands of miles away,via text message, e-mail, or voicemessage, using one or more modesof telecommunication – radio, data orphone line, mobile phone, Wi-Fi or

satellite.

ImplicationsThe implications of this technologyare far-reaching. Incidents of pollutionin a restricted area, e.g., the side ofa ship or dock, a marina or harbourarea, the deck of a ship or facility,can be immediately detected andthen instantaneously reported tolocal personnel, who can rush to thescene and verify the situation, or sentto supervisory personnel across theplanet. This can occur day or night,on a 24-hour basis, in any weather

or setting. These units can even befitted with flotation, and be deployedlike buoys, in both inshore waters andoffshore settings. The sensitivity of theunits can be adjusted, so that alerts areonly sent for higher concentrations ofhydrocarbons, or kept highly sensitive.

The use of non-contact optical scanningtechnology means the unit keeps cleanand requires little maintenance. The

camera settings can be set up so that,if an attempt is made to cover the lens,an alarm will be transmitted, to thwartvandalism or deliberate masking of anongoing pollution, and if fitted with avideo camera, the identity of personstrying to interfere with the device canbe detected.

These devices could greatly enhancethe detection of pollution incidents inport areas, as well as aboard ships andoffshore facilities. They can also beplaced in remote locations where it isimpractical to have persons on watch,

particularly at night. Such devices nevergrow tired, do not miss things, andalways report timely. The cost of thedevices, when amortised over time, arefar lower than having workers observingan area on a continuous basis, freeingsuch workers to perform more criticalfunctions.

It also allows a redundancy of spilldetection efforts, avoiding gaps inobservations of a particular area. Itallows shore-side managerial staff,at long distances from a dock, shipor facility, to be aware of pollution

events quickly, gain valuable time inactivating response plans, and aska verification that personnel on thescene are detecting spills and actingappropriately after they are spotted.

By getting the very early detection thatthese devices offer, pollution responsecan be instituted more quickly – and itis clear that the earlier one can respondto a pollution event, the greater theodds for a more contained, less serioussituation.




16

Typical mounting platform for harbourand terminal pier applications.

Example of a loading pier.

LimitationsOf course, no technology is perfect,and these devices can have limitations.The units themselves could break,or power interruptions could impairtheir function (although such unitsmight be fitted with batteries/solarpanels to allow for this contingency).

A telecommunications issue couldprevent the news of a pollution eventfrom being transmitted to a remoterecipient.

Also, it must be said that some workersmight resent the presence of anautomated “spy” in their workplace,and in the case of a spill caused byhuman error, might attempt to blockdetection by the unit with some form oftampering or interference.

The units can only detect hydrocarbonpollutants in highly localised zones.

This could mean that in the case ofa non-hydrocarbon pollutant beingemitted, the device would fail to reportit. Or, if a large amount of pollutionoccurred, but for some reason did notflow or float within the range of thedevice’s camera, that, too, would gounreported.

ConclusionAll in all, the increase in use of thesesophisticated “silent sentinels” meansthat the gaps in detection of pollutionin specific docks, terminals, ships,marinas, offshore facilities or other

particular areas could be narrowed toalmost nil, making for higher detectionrates and increased number of reportedincidents, eventually leading to acleaner environment.

Footnotes1 See article “No place to hide – Theexpansion of remote surveillance ofshipping activity” in Gard News issueNo. 206, May/July 2012.




17

New Greek marinepollution legislation

Gard News 207, August/October 2012

Law 4037/2012 has recently beenpassed in Greece, implementingDirective 2005/35 EC (on ship-sourcepollution and on the introduction ofpenalties for infringements) and CouncilFramework Decision 2005/667JHA.

Scope of applicationLaw 4037/2012 deals with thedischarge by ocean-going vessels ofthe substances referred to in Annex

I and II of MARPOL (oil and noxiousliquid substances) in the followinggeographical areas:- internal waters and the territorial seaof any EU member state;- straits used for navigation subjectto the regime of transit passage overwhich any EU member state exercises

jurisdiction;- the exclusive economic zone of anyEU member state;- the high seas.

ViolationsAny discharge, wilful or not, operational

or accidental, is considered aninfringement of the law and results inthe imposition of penalties, except ifit is permissible under the followingMARPOL Regulations:- 15 of Annex I, regulating operationaldischarges of oil or oily mixtures fromany ship;- 34 of Annex I, regulating discharge ofoil or oily mixtures from the cargo tanksof a tanker; and- 13 of Annex II, regulating thedischarge of noxious liquid substances.

ExceptionsArticle 4 of the new law incorporatespart of the exceptions of MARPOL.Specifically, the discharge of oil or liquidnoxious substances is not consideredan infringement if it was necessary forthe purpose of securing the safety ofthe ship or saving life at sea, or whena discharge is being done with theapproval of the administration (both flagand territory, if any) for the purpose ofcombating pollution (Regulations 4.1, 4.3of Annex I and 3.1.1, 3.1.3 of Annex II).

For all of the above areas, exceptinternal and territorial seas of an EUmember state, a discharge is notconsidered an infringement if it wascaused due to damage to the ship orher equipment, provided all reasonable

precautions have been taken after theoccurrence of the damage, or discoveryof the discharge, for the purpose ofpreventing or minimising the discharge,and under the condition that the owneror Master did not act with intent tocause the damage, or recklessly andwith the knowledge that the damagewould probably result (Regulations 4.2of Annex I and 3.1.2 of Annex II).

From the above it would appear thataccidental pollution in internal watersor territorial sea of an EU member stateis not exempted, contrary to MARPOLRegulations.

Criminal penaltiesLaw 4037/2012 provides severepenalties of imprisonment and finesnot only to crew members but also toany other person that has contributedto a punishable discharge, eitherwilfully or by gross negligence, withoutexempting accidental pollution (asprovided in MARPOL).

The court may impose the criminalpenalties (reduced as per the provisionsof the Greek Penal Code) against anyperson whatsoever, in addition to theactual perpetrator or accomplice, whomay have contributed in any way inthe wilful or negligent discharges thatare punishable. This may result in thepossibility of indictment of any personfrom the ship management office (suchas directors or DPA), the charterers,cargo owners, etc.

The new law established criminalpenalties in the case of wilful dischargesas follows: a) Imprisonment from fiveto 10 years and pecuniary penalty fromEUR 3,000 to EUR 300,000, in cases ofsignificant pollution that caused riskto human life, or risk of severe bodilydamage, or of wide environmentaldisturbance or disaster;b) Imprisonment from one to fiveyears and pecuniary penalty from EUR1,500 to EUR 50,000 in all other singlepollution incidents; andc) Imprisonment from six months to fiveyears and pecuniary penalty betweenEUR 1,000 to EUR 15,000 in case ofrepeated minor discharges which inconjunction result in the deterioration inthe quality of sea water.

The new law established criminalpenalties in the case of discharges dueto gross negligence or recklessness asfollows:a) Imprisonment from six months tofive years and pecuniary penalty fromEUR 1,000 to EUR 15,000, in cases ofsignificant pollution that causes riskto human life, or risk of severe bodilydamage, or of wide environmentaldisturbance or disaster;

b) Imprisonment from three months tofive years and pecuniary penalty fromEUR 200 to EUR 3,000 in all other singlepollution incidents and also in case ofrepeated minor discharges which inconjunction result in the deterioration inthe quality of sea water.

However, if the party responsible fora negligent discharge significantlyminimises the pollution or contributesto that effect by promptly notifying theauthorities, the above penalties may bereduced or even dismissed altogether.

Discharges caused by simplenegligence (i.e., not gross negligenceor recklessness) are not punishableunder Law 4037/2012.

It should be noted that the abovepenalties of imprisonment are providedby Law 4037/2012 irrespective of thegeographical place of the dischargeand of the flag of the offendingvessel, which seems to contradict theprovisions of Article 230 of UNCLOS(United Nations Convention on theLaw of the Sea of 1982) providingthat monetary penalties may only beimposed with respect to violationsof national laws and regulations, orapplicable international rules andstandards for the prevention, reductionand control of pollution of the marineenvironment, committed by foreign-flagged vessels, except in case ofa wilful and serious act of pollutioncommitted within the territorial sea of amember state.

Administrative fineIn addition to the above criminalpenalties, an administrative fine of upto EUR 60,000 may be imposed. In caseof a serious incident the fine may varyfrom EUR 60,000 to EUR 1,200,000. Theauthorities may prohibit the sailing ofthe liable vessel until the fine is paid




18

or until the submission of a letter ofguarantee from a bank operating inGreece.

Liability of legal entitiesLegal entities may face a fine of up toEUR 500,000 for any of the offences,which are punishable under the law,

committed for their benefit:- by any person acting, eitherindividually or as part of a body ofthe legal entity, who has power ofrepresentation or the authority to takedecisions for the legal entity, or anauthority to exercise control within suchlegal entity; or- by any person under the control ofthe legal entity when the offence wascommitted due to lack of supervisionby any of the persons of the legal entitywho have power of representation,authority of decision making andexercise of control.

Entry into forceThe law came into force on 30thJanuary 2012.

ConclusionLaw 4037/2012 provides severepenalties of imprisonment not onlyto crew members but also to any

other person that has contributedto a punishable discharge, therebyincreasing criminalisation of theshipping industry and conflicting withArticle 230 of UNCLOS 1982 as regardsto foreign-flagged vessels.

According to Greek precedents,European Union legislation (andimplementing laws) prevails overany sub-constitutional legislation.Therefore, if a case were broughtbefore a Greek court chances are thatthe provisions of Law 4037/2012 wouldbe found to prevail over the provisions

of MARPOL and UNCLOS mentionedabove.

We are grateful to KGDI Law Firm,Kyriakides Georgopoulos & DaniolosIssaias, Greece, for the aboveinformation.




19

New wine from oldwineskins? - Current

efforts to retrieve oilfrom sunken vessels


When a ship sinks one of the mainconcerns is whether it contains oil andwhether that oil should be removed.

For thousands of years vessels havesunk to the bottom of the sea, theresult of man-made events - collision,grounding, explosion, acts of war orpiracy - or the forces of nature, in theform of storms and other consequencesof inclement weather. In that time,sunken ships might have attractedsome attention -from salvors or treasurehunters, or authorities if they posed ahazard to navigation. But for the mostpart, they took on a status of anonymityin perpetuity.

However, with the advent of ships thatcarry oil and other liquid substances,either as cargo or fuel, this permanentdwelling in obscurity has changed toone of sometimes notoriety. This isbecause such cargoes can and will leak

out from the wrecked ships, floatingupwards and causing pollution, bothto the seas above and eventually tonearby coastal areas.

This phenomenon has beenaccelerated due to a single man-madeactivity: naval warfare. During boththe First and Second World Wars,thousands of vessels were sunk duringhostilities. After peacetime returned,the pace of sinkings abated, but neverceased completely.

With the increase in shipping activity

world-wide, even with lower ratesof sinking incidents, the number ofsunken wrecks that emitted, or werecapable of emitting, petroleum or otherliquids grew, along with that of shipsthat contained solid cargoes of a toxicnature that, if exposed to seawater,could create poisonous solutionsequally or potentially more damaging.

What are the figures involved?- A study in 2005, performed byEnvironmental Research Consulting(www.environmental-research.com),indicated that on a world-wide basis,

there were a total of 8,569 sunken shipsof various types that were leaking, orcapable of leaking, oil or other liquidsubstances, in a range of at least 747

million gallons, and perhaps as much assix billion gallons.- The US National Oceanic andAtmospheric Administration (NOAA,www.noaa.gov) estimates that near theUnited States coastal areas there are400 sunken tank ships and barges and1,300 other vessels >400 grt in size thatcontain 180 million gallons of oil andare in a position to threaten pollution tocoastal areas.- In 2007, Swedish researchersconducted a study of wrecks inthe Skagerrak area, and found 261wrecks that were in such a state asto be potential leakers of oil or otherhazardous substances.1- In 2008, ITOPF stated that one out offive cases of ship casualties it was askedto attend involved a sunken wreck andthe potential need for removal of theoil from it.

Legal regimes

These factual circumstances point outthat the risk of pollution from sunkenships bears significant potentialenvironmental damage. However,the applicable legal regimes have,thus far, given only an incompleteresponse to this issue. Sinkings invarious jurisdictions have resultedin the triggering of a wide variety ofdomestic laws ordering removal ofthe oil from such sunken ships, themost well-known recent examplesbeing the PRESTIGE and the ERIKAoff Spain and France, and the COSTACONCORDIA, on the Italian coast. On

the international level, some incidentshave seen the International OilPollution Compensation (IOPC) Fundsfunding the removal of oil under CLC(Convention on Civil Liability for OilPollution Damage) regimes, such as theSOLAR 1 case in the Philippines in 2006.

Currently, it is safe to say that whenevera ship sinks in the sea or wrecks upona shoreline, one of the prime concernsis the question of whether the vesselcontains significant quantities of oil,and if so, whether that oil shouldbe removed. However, the Nairobi

International Convention on theRemoval of Wrecks, adopted by theIMO in 2007 to address the issue of oilin sunken ships, thus far has only been

ratified by four nations, so its ability toaddress this issue in the future is farfrom a certainty.

TechnologyWhile there may be some lag in legalregimes keeping up with this issue,the technology for removal of oil fromsunken ships has developed fully inresponse. Various salvage companiesand sub-sea technology firms havedeveloped various methods andspecialised equipment that can removeoil from sunken ships, even if theylay on the seabed at depths of 1,000metres or more. Most methods relyin one way or another on a techniquecalled “hot tapping”. This involves theplacement of equipment that is affixedto the outer hull of the ship and candrill through the hull plating withoutleaking the contents, pumping intoship tanks water with solvent chemicalsthat pushes the oil contents into outlet

piping, which carries the oil to thesurface to be collected. This operationis enabled through the employmentof remotely-operated submarinevehicles (ROVs), subsurface tool sleds,ship tank volume sensors and othermarine technologies, many of whichwere developed in connection with theoffshore energy industry.

ChallengesThe various sunken ships offer manychallenges to recovery, not only fromdeep depths, but also from inaccessiblepositioning, coverage with silt and

sediment, and dispersal of the oil innumerous locations in the ship itself.In addition, there can be other sorts ofimpediments posed, due to the historyof a particular wreck. With many ofthese ships having met their fate inwartime, it is a tragic fact that manywrecks contain human remains of thosecrew and passengers who perishedwith the ship when it sank. That factalone poses a sensitive social issue asto the ability to carry out oil recoveryoperations in an efficient manner, withmany local governments and authoritiesdeciding against such activities, which

might be viewed as acts of desecrationof a de facto burial site. Such is notalways the case, however, when awreck poses significant environmental




20

problems for nearby activities, suchas fishing and aquaculture. That wasthe case with the wreck of the ROYALOAK, a British warship sunk by aGerman U-boat in the Scapa Flow areaof Scotland in 1939. For many years,it remained deliberately undisturbed,as a memorial. But when it began to

leak large quantities of oil that affectednearby salmon farms, the decision wasto engage a company to carry out a“hot tapping operation”, and almost allof the oil from the ship was successfullyremoved.

The major limiting factor in theremoval of oil from sunken ships canbe summarised in one word - money.Such operations are not only difficult,but they are extremely expensive, manytimes running in the tens of millions ofdollars. With the number of eligiblesunken ships around, there are simply

not enough funds from governmentaland private sources to enable oil to beremoved from even a large fraction ofthese wrecks.

Thus, a complex set of factors mustbe considered in order to determinewhether a particular sunken ship clearlyneeds immediate remedy, using thelimited funds available for such projects.

Various nations, as well as the IOPC,have developed sets of criteria and aprocess for evaluation. One of the mostcomplete is shown in Graph 1 below,developed by Environmental Research

Consulting for NOAA, for its Wreck OilRemoval Project, known as WORP.

By taking into consideration numerouspotential risks, a decision can be

Graph 1. Courtesy of Environmental Research Consulting.

logically reached as to the eligibility ofa particular site of a sunken ship, andaction then taken.

ConclusionThe days of straightforward wreckremoval are long over. Even if thewreckage of the ship itself cannot be

retrieved or disposed of by a salvor,the issue of what the ship contains andits possible removal is a separate andsignificant question that arises in almostevery case of a vessel sinking.

The fact that a ship disappears beneaththe sea’s surface does not mean that itcan be forgotten.

Footnotes1 Hassellöv, I-M., 2007. Pre-Studyof Ship Wreck Assessment andRemediation. Alliance for Global

Sustainability, Gothenburg, Sweden




21

Australia toughenspollution laws


As reported previously in GardNews,1 there has been a numberof significant and highly publicisedpollution incidents in Australianwaters in recent years, such as theone in March 2009 involving the HongKong registered general cargo shipPACIFIC ADVENTURER and the one inApril 2010 involving the Chinese bulkcarrier SHEN NENG. As a result theAustralian Maritime Safety Authority

(AMSA) undertook a review of thelegislation and the Maritime LegislationAmendment Act 2011 came into forceon 4th-6th December 2011.

The Act represents the first stepstaken by the Federal Governmentto implement the shipping industryreform package announced by MinisterAlbanese in September 2011. TheAct amends the Navigation Act andProtection of the Sea Act and createsnew offences for oil pollution from shipsand widens the scope of liability toinclude a wider range of liable parties. It

also significantly increases the penaltiesfrom pollution offences.

Amendments to the Protection ofthe Sea ActThe purpose of the amendments to theProtection of the Sea Act is to make theregulation more consistent with otherCommonwealth and state legislationsuch as the regulatory regime thatapplies in the Great Barrier Reef MarinePark. The main changes to the Act are:

- The liability is extended to includecharterers, probably time, voyage and

demise charterers, as well as master andowners of ships for offences involvingdischarge of oil, an oily mixture or anoily residue from a ship into Australia’sExclusive Economic Zone (EEZ). Themaster is personally liable and may facecriminal proceedings. The defencesavailable under the Act, such asdischarge for the purpose of securingthe safety of the ship or saving lifeat sea, have been extended to covercharterers.

- Penalties have been significantlyincreased. A maximum fine for acorporation has increased from AUD1.1 million to AUD 11 million andfrom AUD 220,000 to AUD 2.2 millionfor an individual.2 Furthermore, the

amendments will bring the offenceprovisions in line with the Great BarrierReef Marine Park Act, which providesfor penalties of up to 20,000 penaltyunits per year in comparison with theearlier 2,000 penalty units per year.

Amendments to the Navigation ActThe Navigation Act is an importantpiece of legislation regulating awide range of marine matters which

primarily include ship safety and marineenvironment protection. However, theAct is old and has now been recast inplain language and simplified to reflectcurrent drafting standards. The mainchanges of the Act are:

- The master of a ship must ensure thatthe ship is not operated in a negligentor reckless manner that causes pollutionor damage to the marine environmentin Australian waters or in waters ofthe high seas outside Australia. Thepenalties are significant particularlywhere the contraventions have caused

or had the potential to cause seriousharm to the marine environment. If acorporation is found guilty of an offenceit may be liable for fines up to AUD 3.3million. The maximum penalty for amaster who is found in breach of suchprovisions is AUD 666,000.

- Amendments also require mandatoryreporting by the master of a ship inrelation to the movement of the shipin prescribed areas, such as the GreatBarrier Reef. If the master fails to reportin a mandatory way he will be strictlyand personally liable for the damage,

meaning that the master’s state ofmind or degree of fault is not neededto be proved and criminal liabilitycan be imposed on the master. Theprosecution is not required to proveintention, knowledge, recklessnessor negligence. In addition to criminalprosecution, the court may now makea “civil penalty order”, which imposeslarge fines.

ConclusionThe amendments under the MaritimeLegislation Amendment Act 2011are of high importance and increasethe risk exposure for individuals andcompanies, especially charterers,who operate within Australian waters.Penalties have significantly increased

(both civil and criminal) and the liabilityis extended to also include charterers.Furthermore, strict liability is imposedon masters to report movement of shipsin prescribed areas and, accordingto the amendments, the master of aship has an obligation to ensure thata ship is not operating in a reckless ornegligent manner.

At last, there are further bills that have

been released/will be released shortly.The Federal government is aiming tohave all shipping reform legislation inforce by 1st July 2012.

Footnotes1 See article “Australia - Tougherpenalties for Queensland environmentaloffences” in Gard News issue No. 202.2 AUD 1 = USD 1.06 in February 2012.




22

New Pollution Regulationsin China - FAQs II

Gard News 204, November

2011/January 2012

The article “New Pollution Regulationsin China - FAQs”, published in GardNews issue No. 197, contained answersto frequently asked questions (FAQs)about the Regulations of the People’sRepublic of China on the Preventionand Control of Marine Pollution fromShips (the main Regulations) whichwere effective on 1st March 2010. Sincethe first FAQs, further implementinglegislation, rules and interpretation

have been issued to give effect to themain Regulations and in relation tothe handling of disputes in a pollutionincident. This article contains a new setof FAQs to update Gard News readerson the developments.

UpdatesAre there any further legislation andupdates following Gard News’ firstFAQs?Yes. Various implementinglegislation, rules and interpretationhave been issued since then, providingfurther explanation and detailed rulesto implement and supplement the

main Regulations. The table belowprovides an at-a-glance chart settingout the major legislation, rules andinterpretation.

The above table provides an at-a-glance chart setting out the majorlegislation, rules and interpretation.

Pollution liabilityWho is liable for pollution damage?The previous FAQs discussed who isliable for pollution damage, defencesand limit of liability as providedunder the main Regulations. On

pollution liability, the Supreme Court’sInterpretation (Article 3) gives furtherguidance that if the oil pollution iscaused by oil leakage from two ormore ships and if the claimants requestthe leaking ships to compensate,each shipowner shall be individuallyresponsible for the damages whichcan be reasonably apportioned to hisparticular ship. If the damages cannot be reasonably apportioned, theshipowners shall bear joint liabilitysubject to any applicable defences andexemptions.

Will Club LOU be accepted as securityin a pollution incident?The new legislation has not changedthe existing position. It is still the case

that only guarantees/undertakings fromlocal recognised financial institutions/insurance companies will be accepted

by the MSA (Maritime Safety Agency)and the maritime courts as securityfor pollution liability, with very fewexceptions. It is possible, however, tonegotiate with claimants to provide aClub LOU or other alternative forms ofsecurity if they agree to that.

Pollution clean-up contractWhen do I need to sign the clean-upcontract?Readers may recall from the previousFAQs that the operators of (a) any shipcarrying polluting and hazardous liquidcargoes in bulk or (b) any other vessel

above 10,000 GT is required under themain Regulations to sign a pollutionclean-up contract with an approvedpollution response company prior tothe vessel’s operations or entry into/departure from Chinese ports. Theenforcement date of this requirementhas now been postponed to 1st January2012.

Those who trade regularly into the PRCare recommended to sign the pollutionclean-up contract before 1st January2012, otherwise they will be subjectto administrative penalties and other

measures.

Who should sign the clean-up contract?Under the main Regulations, the

“operator” of the ship should sign thepollution clean-up contract. “Operator”has now been defined in the MSA

Detailed Rules as “the owner, manageror actual operator” of a ship . In respectof those operators not domiciled inChina, it is understood that the ship’sagent in port, Club correspondent, locallaw firm or another legal entity locatedin mainland China (not Hong Kong orMacau) may sign the contract on behalfof the operator if authorised by theoperator to do so. It is understood thatthe Master may also sign the contract,which may be necessary in certaincircumstances, for example where thereis urgency, although an authorisationwould still be necessary for the Master

to sign on behalf of the operator. TheInternational Group of P&I Clubs (IG)is considering the development of astandard form authorisation letter foroverseas operators for this purpose.

Who are the approved clean-upcontractors?Approved clean-up contractors will becategorised by the MSA in accordancewith their qualifications and responsecapabilities and will be assigned 1, 2, 3or 4 status.

Operators will need to contract with

an approved clean-up contractor inaccordance with the size, type andintended operation of the ship as setout in the MOT ( Ministry of Transport)




23

Emergency Response Regulations andMSA Detailed Rules.1 It is understoodthat the list of all approved contractorswill be issued in October 2011 on thededicated MSA website at www.osp.cn.As mentioned above, the requirementto contract with an approved clean-up contractor will be enforced in all

Chinese ports from 1st January 2012.There will therefore be a relatively shortperiod of time for operators to contractwith approved clean-up contractors.

What will be the content of theclean-up contract?On 20th May 2011 the MSA publisheda Sample Agreement, which is in bothEnglish and Chinese, together with anintroduction to the agreement. Theintroduction states that the articlesof the agreement on rights andobligations are mandatory and theparties can not amend them, whilst for

matters not covered in the agreementthe parties may enter a supplementaryagreement Members are recommendednot to sign any clean-up contractuntil the list of approved clean-upcontractors is issued and their contractsreviewed to see whether they conformwith IG guidelines on vessel responsecontracts. The IG is currently reviewingthe Sample Agreement and will providefurther guidance after the review. TheIG will also consider the developmentof supplemental clauses for inclusion inthe Sample Agreement.

Sludge disposal contractIs the oil clean-up contract requirementthe same as the sludge disposalcontract requirement?No, they are different. The requirementin relation to disposal and discharge of

ship’s garbage, residue water waste, oilwaste and sludge is set out in the MOTOperational/Sludge Regulations whichcame into effect on 1st February 2011.Owners/operators of all vessels arerequired to discharge all waste residues(primarily sludge) at least once at aPRC port, and are required to contract

with a registered service provider ofsuch services.Shipowners/operatorsshould check with their local agentsand the local MSA websites to ascertainthe updated lists of such registeredservice providers for each Chinese port.The websites of the MSA head officeand their major branch offices are thefollowing:

MSA head office:http://www.msa.gov.cn/ Shanghai MSA:http://www.shmsa.gov.cn/

Liaoning MSA:http://www.lnmsa.gov.cn/

Hebei MSA:http://www.hebeimsa.gov.cn/

Shandong MSA:http://www.sdmsa.gov.cn/

Jiangsu MSA:http://www.jsmsa.gov.cn/

Zhejiang MSA:

http://www.zjmsa.gov.cn/

Fujian MSA:http://www.fjmsa.gov.cn/

Guangdong MSA:http://www.gdmsa.gov.cn/

Guangxi MSA:http://www.gxmsa.gov.cn/

Hainan MSA:http://www.hnmsa.gov.cn/

Shenzhen MSA:http://www.szmsa.gov.cn/

Changjiang MSA:http://www.cjmsa.gov.cn/

Heilongjiang MSA:http://www.hljmsa.gov.cn/

Ship Oil Pollution CompensationFundAre the details of the Ship Oil PollutionCompensation Fund available now?The detailed rules as to the collection

and administration of the funds havenot been released but there is currentlya draft on this.

Further questionsWhom should I contact if I have furtherqueries?Any further enquiries canbe sent [email protected] or [email protected].

Footnotes1 Readers should refer to Gard CircularNo. 4/2011 for details.




24

Charterers’ pollutionliability in Brazil

Gard News 204, November 2011/ January 2012

Pollution liability fines and pollutiondamage compensation claims broughtby governmental agencies are anincreasingly costly potential liability forvessel owners, and are often difficultto defend, as in most cases they areimposed as ‘strict’ liability (i.e., thereis no requirement to show fault on thepart of the defendant). It is sometimesthe case that where owners have beenheld liable for such incidents, they are

subsequently able to recover theselosses from the vessel’s time or voyagecharterers in the form of contractualclaims under the charterparty. It isalmost unheard of, however, that suchcharterers may be held directly liablefor pollution fines or penalties bygovernment agencies, as most legalsystems focus on the vessel owneras the party primarily liable for suchincidents. Brazil seems to be a notableexception to this rule.

Charterers’ exposure - theinternational norm

In most jurisdictions, a vessel’s charterer(whether bareboat, time or voyagecharterer) is not exposed to directliability for government bodies’ fines orcompensation claims in the event of apollution incident originating from thechartered vessel, as the internationalcompensation regimes to which mostcountries subscribe (Civil Liability andFund Conventions, Hazardous andNoxious Substances Convention)1 impose primary liability solely on theowner of a vessel and the owner’sinsurer. This is in line with the generally-accepted “polluter pays” principle

which underlies liability for marinepollution incidents.

The notable exception is the UnitedStates, where federal law and certainstates’ laws can be interpreted topermit bareboat charterers to beheld directly and strictly liable forstatutory pollution-related fines orcompensation. This is because theoperative statutes define either vessel‘operators’ or demise charterers, bothof which are interpreted to includebareboat charterers. However, even inthe US it is generally accepted that timeand voyage charterers are not capableof being held directly liable as thedefinitions clearly do not include them

as being persons who exercise controlover or bear responsibility for a vessel’sday-to-day operations.

However, Brazil is one jurisdiction withlaws which operate as an exception tothe generally accepted internationalposition, in that both time and voyagecharterers can be held directly andstrictly liable for pollution incidents,alongside shipowners and bareboat

charterers.

Brazilian legal framework forpollution liabilityBrazilian law is a codified legal systemand identifies three distinct spheresof law within which liability may beestablished. These spheres are eachseparate and independent from oneanother and empower different stateagencies. They are the administrative,civil and criminal law spheres. Thisarticle will not consider the criminal lawsphere, as in practice criminal liabilityfor pollution incidents is not commonly

imposed on shipping interests in Brazil.

Administrative lawLiability under administrative law isregulated by Federal Laws 9.605 of1998 and 9.966 of 2000. These laws,which are enforced by the BrazilianNavy, apply to vessels, platformsand offshore support installationsand provide for fines of up to BRL50,000,000 per incident, as well as moresevere penalties such as the suspensionor prohibition of activities of the vesselresponsible for the pollution. Althoughthis is a form of strict liability, in order

for liability to attach it must be shownthat there was a causal connectionbetween the pollution and an act oromission of the party concerned. Thisrequirement for a causal connectionis the main reason why administrativepenalties are unlikely to be successfullyimposed on time or voyage charterers,notwithstanding occasional attemptsto do so. Accordingly, this sphere isnot the most problematic for time orvoyage charterers.

Civil lawCivil liability is governed by Federal Law6.938 of 1981. Legal measures in thissphere are pursued by the Federal andState Public Attorneys. This is a much

more rigorous regime, in which timeand voyage charterers are exposed todirect liability.

Penalties are not based on punitiveprinciples, but are intended torecognise and enforce a duty tocompensate the State for damagecaused to the environment, and tocompensate third parties for damageto their assets, adverse effects on their

activities, and for economic lossesflowing from the pollution incident.

As under administrative law, liabilityunder this statute is not dependenton fault. Unlike administrative law,however, there is no requirement fora causal connection between a party’sconduct and the pollution damage.The test which determines whetherany particular party has a duty tocompensate for environmental damageis to ask whether the party was involvedin and benefited from the economicactivity which caused the pollution.2

This is a very wide test.

By applying the test it is immediatelyobvious that time and voyagecharterers, and potentially cargointerest, can be held to have a duty tocompensate for environmental damagecaused by pollution from a charteredship operating in Brazilian waters.Charterers are also jointly and severallyliable with owners, as well as a numberof other potential parties.

Gard has recently been notified of acompensation claim against a charterer

member for a bunker spill from thechartered vessel during operations in aBrazilian port. Other than to resist theapplication of the test mentioned aboveand to dispute that the chartered vesselwas the source of the pollution, thereis very little which can be argued bycharterers in defence of this type of claim.

Recourse and risks for foreigncharterersThe situation is not entirely gloomyfor charterers who have no controlover a ship’s day-to-day operationsbut find themselves subject to a dutyto compensate the Brazilian State forpollution damage.




25

Firstly, charterers’ liability is joint andseveral with owners. In most casesowners will respond proactively tosuch claims, as their vessel is directlyat risk of enforcement procedures andtherefore they have the most to lose.

Secondly, the law does not prohibit a

recourse action against other parties.Such recourse may be a contractualclaim between charterers and owners,or an action against third parties whoseconduct may have been the cause ofthe pollution (for example, in the casesof negligent tug operations, unchartedor unmarked obstacles within portapproaches for which port authoritiesare responsible). Such recourse ispossible once the penalty imposedhas been satisfied by the charterer.Charterers are encouraged to reviewthe terms of their charter agreementsrelating to risk allocation for pollution

liabilities when giving instructions forvessels to call at Brazilian ports.

Thirdly, as a matter of practicecharterers who are Brazilian entitiesor who have a registered presence inBrazil are more likely to find themselvessubject to civil liability claims thanthose who do not. This is simply dueto the ease of enforcement againstlocal companies in Brazil, as comparedto doing so against foreign-basedentities. It is also worth noting that, in

the event that the defendant-chartereris not Brazilian and has no assets in thecountry, the law does not permit anyaction to be taken against other vesselschartered by the same chartererswhich subsequently enter Brazilian

jurisdiction. This may of course notbe the case where an owned vessel

subsequently enters the jurisdiction,and the risks should be assessedseparately in each case.

SummaryUnder Brazilian law both time andvoyage charterers may be exposed toclaims for fines and compensation byauthorities where a pollution incidenthas occurred from the chartered vesselin Brazilian jurisdiction.

Under administrative law charterersare likely to escape liability simply bydemonstrating to the court that they

were not in control of the vessel’sday to day operations and thereforewere not the cause of the pollutionincident. However, under civil law thetest to establish a duty to compensateenvironmental damage is sufficientlywide to accommodate charterers,who are then held jointly and severallyliable with the owners and other partiesinvolved in and benefiting from thevessel’s activities in Brazil. This is strictliability and there is little defenceavailable.

However, as a matter of practice,Brazilian charterers are more exposedto civil law claims for compensationthan foreign charterers, and there is nopower for other chartered vessels tobe the subject of enforcement actionsfor these claims. Furthermore, whilecharterers will often be summoned

alongside owners, it is expected thatmost owners will take positive stepsto avoid detention of the vessel,thereby relieving charterers from directliability. Furthermore, there is no barto charterers seeking recourse againstthe party responsible for the pollutionor bearing the contractual allocation ofrisk for such liability.

We are grateful to Carbone Law Office,Rio de Janeiro, for their invaluableassistance in the preparation of thisarticle.

Footnotes1 Civil Liability Conventions 1969and 1992; Fund Convention 1992;Hazardous and Noxious SubstancesConvention 1996.2 Article 14, §10.




26

Perfecting pollutionprevention? - The State

of Washington enacts anew statute


Since the passage of the federal OilPollution Act of 1990 (OPA 90), whichspecifically allows the individual statesin the US to make their own marinepollution laws and standards (stayingwithin legal limitations), the State ofWashington first tried to augmentOPA 90 with its own comprehensiveregulatory scheme, incorporating whatit called “Best Achievable Protection”practices (BAP), controlling vesselmanning, tank vessel design andconstruction, repairs, operations,etc. This far-reaching regulatoryprogramme was opposed by industry,as an impermissible over-reachinginto the province of the US federalregulatory field and insisting that itwould set up severe inconsistencieswith the rest of the US, renderingcompliance expensive and practicallyimpossible. In March 2000, the industrygroup Intertanko successfully obtaineda ruling from the US Supreme Court

to that effect, striking down 11 of theregulations as illegal, and they wererepealed by the State of Washington inJune of that year.

But since that time, Washington Stateofficials have periodically issuedpollution protection regulations thatdo not run afoul of legal limitations,and in April 2011 the WashingtonState legislature passed, and thegovernor signed into law, the latest setof regulations for tank vessels, due tocome into effect on 22nd July 2011.

These new statutory mandates include:

- Enhancement of vessel contingencyplan provisions, including a largescale equipment deployment everythree years, that would be focusedon operational readiness of responseefforts in the first few hours of aspill. New planning standards by theDepartment of Ecology will be issuedevery five years, starting with tankvessels, with new rules set forth by 31stDecember 2012.

- The Washington State Department

of Ecology is required to establish avolunteer co-ordination system, tohandle the numerous citizens who

volunteer to participate in spill clean-ups, and grants civil immunity to thestate for what said volunteers mightdo. This is similar in aim to what theState of California has done with itscreation of regulations for the handlingof volunteers post spill, the need forwhich was seen in the 2007 ‘CoscoBusan’ spill in San Francisco. Not onlyare the needs for human volunteers tobe addressed, but the new statute alsorequires that more provisions be madeto incorporate into spill responses‘vessels of opportunity’, like fishingboats, so that they can be used foroil spill recovery efforts. This seemsto acknowledge the large role suchsmall vessels have in spill response,most recently seen in the ‘DeepwaterHorizon’ incident off Louisiana.

- The reporting of an emergency at seaor a discharge or substantial threat ofdischarge must be made within one

hour to the Washington Departmentof Ecology, in addition to the US CoastGuard. This is similar to requirements ineffect in several other states.

- Approval of contingency plans by theState of Washington must be made andnotified within 65 days of submission.

- The use of ‘umbrella plans’ for bothtank and non-tank vessels as perWashington State law is still permitted,but the omnibus plan must take intoaccount the maximum worst casedischarge amount of both vessel types,

and provide for additional equipmentto meet the challenge.

- The level of state fine to be assessedfor such an incident had been tripled,to USD 3-300 per gallon for more than1,000 gallons discharged, although anyoil recovered within the first 48 hoursafter the spill will be credited againstthe amount spilled.

These laws appear to dwell well withinthe legal boundaries as set by the USSupreme Court for such state statutes.So, compliance planning for these

regulations will be necessary for tankvessel operators (and those with mixedfleets of tank and non-tank vessels),

who have vessels that will operatein Washington State waters, and willrequire work in the modification ofplans to conform to these enhancedexpectations.

Other coastal states in the US willcertainly take note of what the State ofWashington has done, and may mimicthose aspects of the new statute thatare not currently found in equivalentterms within their own laws. In thisway, the states in the US that set thetrend are likely to be followed in kindby other states in due course, andso developments tend to eventuallyspread throughout the US and becomethe ‘new standard’. This is also fedby developments in federal pollutionregulations, which states also watchwith interest, then tend to tailor, adopt,and append to their own state laws,further driving forward developments inthe area.

The matrix of state laws, and theirinterplay with federal laws, is a hallmarkof marine pollution response in the US,and is a peculiar feature that requiresvigilance in planning and flexibilityin compliance. Gard will continue tomonitor such developments and reporton them as warranted, in what hasproven to be a dynamic venue for theevolution of marine pollution responseplanning and regulation.




27

The state ofenvironmental crime

enforcement in the USBy Steven P. Solow and Anne M. Carpenter,Katten Muchin Rosenman LLP, Washington, D.C.

Gard News 203,August/October 2011

Introduction1

It has been over a year since the20th April 2010 explosion on theDEEPWATER HORIZON drilling rig inthe Gulf of Mexico. The resulting oilspill (the Gulf spill) has been the subjectof multiple investigations and analyses.According to the National Commissionon the BP Deepwater Horizon Oil Spilland Offshore Drilling, created on 20thMay 2010, the ‘‘immediate cause’’ ofthe spill was a ‘‘series of identifiablemistakes’’ by the companies in chargeof the rig.2

A hundred spills could be similarlydescribed. The significance of the Gulfspill, given its size and the tragic humanlosses that occurred, will be analysed inmany different ways. For the purposesof this article, we first look at the spillin terms of what it may mean for thecriminal prosecution of environmentalviolations.

This article then moves to an analysisof current international projects thathighlight cross-national co-operationin vessel pollution enforcement. Finally,we provide a review of significant vesselpollution enforcement cases from 2010,and the start of 2011.

The Clean Water Act: proposals toexpand restitution and increasesanctionsLegislation introduced in the wake ofthe Gulf spill seeks to expand the scopeof restitution that may be imposed

following a criminal conviction of anenvironmental crime. At present, afederal judge has the discretion toimpose restitution to an identifiablevictim, but not, for example, for harmcaused to natural resources.3 In 1996,the U.S. Senate attempted to revisethe federal sentencing statutes toexpand the scope of restitution incriminal cases by allowing judgesto order restitution to communitiesharmed by environmental crimes.4 Thatattempt failed. The proposed post-spilllegislation would expand the scope ofrestitution by mandating that judges

order restitution to victims of criminalviolations of the Clean Water Act.5 Thebill does not propose to authorise theorder of restitution to communities asa whole.6

The bill also would direct the UnitedStates Sentencing Commission toreview the sentencing guidelines forClean Water Act offences ‘‘in orderto reflect the intent of Congressthat penalties for the offences beincreased [to] appropriately accountfor the actual harm to the public andthe environment from the offences.’’7 If this effort goes forward, we maysee similar efforts with regard to theother major environmental statutes,or a comprehensive effort, such asthat proposed in 1996, to expand thescope of restitution to all environmentalcriminal convictions.

Environmental crime investigationand prosecution as a zero sumgameAbsent from the many analyses inthe media has been any meaningfulreporting on the impact of the criminalinvestigation of the Gulf spill on the

rest of the government’s environmentalcrime enforcement efforts. This isespecially of note with the news thatthe Department of Justice (DOJ) hastransferred the criminal investigation ofthe Gulf spill from the EnvironmentalCrimes Section in the Environmentand Natural Resources Division to theCriminal Division.8

Given the relatively small amount offederal resources typically devotedto environmental criminal matters,the impact of investigating and (ifappropriate) prosecuting cases arising

out of the Gulf spill is significant.EPA recently touted the growth ofits Criminal Investigation Division toa ‘‘full’’ complement of 200 specialagents.9 To put this into perspective,the FBI has somewhere north of 13,000special agents.10 While other agenciesare involved in environmental crimeinvestigations, EPA is unquestionablythe lead agency in this area, and thecommitment of numerous agents to theGulf spill investigation inevitably raisesquestions about EPA’s ability to coverother matters.

The same resource questions existedfor the Environmental Crimes Sectionat DOJ. During the government’sinvestigation and prosecution effortsafter the March 1989 EXXON VALDEZ

spill, it has been said that, at one pointor another, nearly all of the JusticeDepartment’s environmental crimeprosecutors were working on the case.While it has grown in the past 20 years,the Justice Department’s EnvironmentalCrimes Section has approximately35 trial attorneys. Even if only four orfive of those attorneys are spendinga significant amount of time on theGulf spill investigation, that would bemore than 10 per cent of the section’stotal. It is as yet unknown whether thedepartment’s decision to move the Gulfspill case into the Criminal Division willinject new resources into the case andfree resources from the EnvironmentalCrimes Section.

With regard to EPA, particularly in anatmosphere of budget cutting,11 it issimilarly unknown whether anotherimpact of the Gulf spill will be areduction in the federal government’s

ability to more broadly investigateenvironmental crimes. If EPA wereso constrained it could impact morethan federal cases. In recent yearsEPA has expanded and strengthenedits role in training and supporting thework of state and local environmentalinvestigators and police. Hundreds ofstate law enforcement officers havebeen trained by EPA at the FederalLaw Enforcement Training Center inGeorgia. Cuts to training budgets andother forms of state assistance couldimpact these resources as well.

As a means of comparison that mayor may not be an artifact of resourceallocation related to the spill, we cancompare the reports of cases comingout of EPA Region 6 from 2009 to 2010.In 2009, a total of eight matters involvedcases in Region 6.12 A review of 2010indicates one.

As in any major case, the governmentwill have to decide just how muchinvestigation of the Gulf spill itcan afford. As one former JusticeDepartment lawyer has observed,“A prosecutor is not obligated

to take every possible step in theinvestigation of a suspected criminaloffence. Rather, the prosecutor shouldconsciously engage in an analysisof proportionality in choosing which




28

investigative steps to pursue, and howaggressively to pursue them”.13 Theavailability of resources is a legitimateconsideration in determining the scopeand extent of a government criminalinvestigation.14 The underlying reasonfor the shift of the Gulf spill case tothe Criminal Division is not publicly

known. Whatever the reason, movingsole responsibility for prosecuting thespill case to that division may allow theDepartment’s Environmental CrimesSection to continue to play a leadingrole in investigating and prosecutingother environmental crime mattersaround the country.

Who’s in charge after a majorincident?Another issue receiving scant coverageis the remarkable, and remarkablyconfusing, number of agreementsthat address the federal government’sinter-agency co-ordination followinga significant event such as the Gulf

spill. There is insufficient space hereto address each memorandum ofunderstanding that exists between andamong the various agencies respondingto the spill. Indeed, several MOUs werecreated specifically to co-ordinate workinvolving the Gulf spill.

Part of what is remarkable about theseagreements is that they are generallythe result of bilateral discussionsbetween two government agenciesand do not reflect other MOUs thatexist between these same agencies andother agencies. To provide a shorthandway of visualising the MOUs between

and among the federal agencies withauthority to investigate environmentand safety matters, we have providedthe illustration below.

Federal Agencies with Memorandums of Understanding in Environmental and Safety Investigations

Agencies identified above (clockwise starting from top): Department of Labor, Occupational Safety and HealthAdministration; Department of Homeland Security, U.S. Coast Guard; National Transportation Safety Board; ChemicalSafety Board; Department of Interior; Bureau of Ocean Energy Management, Regulation, and Enforcement; Department ofTransportation; Environmental Protection Agency.

From the perspective of those whomust represent entities and individualswho are the subject of such inquiries,these MOUs create more questionsthan answers. If an individual or entityis approached by one agency toprovide information or to be asked foran interview, it is often impossible toknow whether the agency is the ‘‘lead’’agency, or whether it is operating inco-ordination with, or independentlyfrom, other agencies. This situation notonly creates issues for those outside thegovernment, but also raises questions

within the government because it canresult in a lack of clear lines of authorityand communication with regard toissues such as evidence preservationand forensic analyses. Withoutdoubt, as the government’s criminalinvestigation of the Gulf spill movesforward, increasing attention should bepaid to whether and how its handling ofthis case impacts other cases involvingmultiple agencies and parallel safety,civil, and criminal investigations.

International co-operation in vessel

pollution enforcement and prosecutionOver the last few years, governmentshave increased their co-ordinatedefforts to investigate and prosecutevessel cases. Although many are familiarwith these developments as theyhave occurred, we have summarisedthem below in an effort to provide anoverview of what we see as a growingculture of international co-operationto investigate and bring enforcementactions involving maritime vesselpollution.




29

The Interpol Pollution CrimeWorking GroupAs is widely known, Interpol’s PollutionCrime Working Group is a consortiumof criminal investigators from Interpol’s188 member countries, which sharesinformation to develop new strategiesto control global environmental crime.15

The Group includes various project-teams including the Clean Seas Project,led by an officer of the AustralianMaritime Safety Administration.The Group developed a manualon investigating vessel pollutionand plans to develop and deliver atraining course to international lawenforcement officers using the manualas a guide.16 In an effort to provideenforcement guidance, and publiciseshipping companies and ships thatviolate pollution law, the Clean SeasProject also maintains a Ship PollutionProsecution Database that contains

information on completed prosecutionsby various countries for the period 2001to 2006.17

AquapolAquapol is a self-governing associationof maritime and inland navigation-related law enforcement authoritiesfrom the member states of theEuropean Union and Switzerland.18 The organisation, founded in 2002 bythe Dutch, German and Belgian WaterPolice Forces, is an effort to improveco-ordination of inland and maritimeshipping-related law enforcement

in Europe through the exchange ofgood practice, joint training, jointinternational control operations, and

joint legislation and lobbying efforts.19

The North Sea NetworkThe North Sea Network of Investigatorsand Prosecutors (NSN), a group ofcoastal countries bordering the NorthSea, works to enforce internationalrules and standards under the UnitedNations Convention on the Law ofthe Sea (UNCLOS), the InternationalConvention for the Prevention ofPollution from Ships (MARPOL 73/78),

and the numerous regulations of theInternational Maritime Organization(IMO).20 Because of the density of shiptraffic and close proximity of the coastalstates, the NSN has facilitated jointefforts to investigate and prosecutecases crossing national borders.21 Theparticipating coastal states includeBelgium, Denmark, France, Germany,Ireland, the Netherlands, Norway,Sweden and the United Kingdom. TheNSN was begun by Norway in 2002, andfacilitates the exchange of informationbetween the member states regardinglegal and evidentiary requirements, aswell as surveillance data.22 The NSNhas created an international manualthat offers guidance on the detectionof maritime oil pollution offences,

collection of evidence, and impositionof penalties for offenders.23

Maritime MOUsUnder the leadership of the IMO,various MOUs have been establishedbetween consortiums of port states toco-ordinate compliance inspections

under Marpol 73/78. To date, MOUshave been signed covering all ofthe world’s oceans: the Paris MOUcovers Europe and the North Atlantic;the Tokyo MOU covers Asia and thePacific; the Acuerdo de Viña del Marcovers Latin America; the CaribbeanMOU covers the Caribbean; theAbuja MOU covers West and CentralAfrica; the Black Sea MOU covers theBlack Sea region; the MediterraneanMOU covers the Mediterranean; theIndian Ocean MOU covers the IndianOcean; and the Riyadh MOU covers sixPersian Gulf states.24 As time passes,

and enforcement efforts rise, thesedocuments are becoming increasinglymeaningful. For example, it appearsthat vessel pollution enforcementtraining in the Arab countries thatoperate under the Riyadh MOU(Bahrain, Kuwait, Oman, Qatar, SaudiArabia and UAE) has increased inrecent years. While the Riyadh MOUwas enacted in 2004,25 the increasesin enforcement training suggest thatit may only be a matter of time beforethese countries begin to step upenforcement on vessels transiting theirwaters.

An example of international co-operation to effectively and efficientlyprosecute vessel pollution can beseen in United States v. Ionia MgmtS.A.26 In Ionia, the US Court of Appealsfor the Second Circuit upheld theconviction of the shipping companyIonia Management S.A. for violationsof the Act to Prevent Pollution fromShips for failure to maintain an accurateOil Record Book for the M/T KRITONwhile in US waters. The crew of the M/TKRITON, a 600-foot oil tanker managedby Ionia, routinely discharged oily

waste into the ocean through a “magichose” at the direction of the ship’sChief Engineers.27 The crew also madefalse entries into the Oil Record Bookto conceal the discharges and hid the“magic hose” from US Coast Guardinspectors. The Netherlands RoyalMilitary Police provided the US CoastGuard with evidence of illegal dumpingwhich helped secure the convictionagainst the company for violationsof the Act to Prevent Pollution fromShips.28

Vessel enforcement cases of

note29

United States v. Koo’s ShippingCompany30 - Koo’s Shipping Company,a Taiwanese Corporation, pleaded

guilty in federal court to charges ofmaking false statements, knowinglyfailing to fully and accurately maintainan oil record book, and knowinglydischarging oily bilge waste intoPago Pago Harbor, American Samoa,without using proper pollutionprevention equipment. A Coast Guard

inspection of the company’s ship M/VSYOTA MARU on 17th August 2010revealed evidence of the violations.The company was sentenced to paya USD 750,000 criminal fine and USD250,000 in community service paymentsfor projects in American Samoa. Thecompany was also placed on threeyears’ probation.

United States v. Cardiff Marine, Inc.31 - Cardiff Marine, Inc., a Liberian-registered shipping company, wassentenced in a Baltimore federal courtfor a felony violation of the Act to

Prevent Pollution from Ships after thecompany pleaded guilty to makingfalse statements to the Coast Guard,falsification of discharge recordsfrom the M/V CAPITOLA, and otheracts of concealment.A Coast Guardinvestigation of the company waslaunched on 3rd May 2010 after a crewmember informed a clergyman, whowas on board on a pastoral visit, about“monkey business in the engine room”involving a “magic pipe.” The crewmember gave the clergyman a flashdrive containing a video taken of theship’s engine room and asked him to

alert the Coast Guard. The investigationrevealed that the “magic pipe” was abypass hose that enabled the dumpingof waste oil overboard. The companywas sentenced to pay a USD 2.4million fine and three years’ probation,during which time third-party auditorswill administer an environmentalcompliance plan for the company.

United States v. Stanships, Inc., etal.32 - Standships, Inc., Stanships, Inc.,Standard Shipping, Inc., and CalmoreMaritime, Ltd. pleaded guilty on 12thApril 2011 to violations of the Act to

Prevent Pollution from Ships, Portsand Waterways. Investigation into thedefendants began on 29th November2010 after a crew member reportedto the Coast Guard that the ship M/VAMERICANA had a “magic pipe”that bypassed pollution controls todump oily waste overboard. The crewdeliberately pumped engine wasteoverboard and created false OilRecord Books to conceal the illegaldumping. Efforts were made to hidethe pipe when the ship was in port.The defendants were also charged withfailing to report a situation hazardous

to US waterways because the shipentered the Mississippi River without afully-functioning generator and the crewwas unable to power the ship. Under




30

the terms of the plea agreement alldefendants are banned from operatingin the United States for a period of fiveyears. Defendants must also pay USD1 million in restitution, of which USD250,000 will be devoted to conservationand protection of wildlife in the area.

United States v. Dimitrios Grifakis33

-Dimitrios Grifakis pleaded guilty toobstructing a federal Coast Guardinvestigation that was examiningthe use of a “magic pipe” to bypassrequired pollution controls on theM/V CAPITOLA. Grifakis admittedhe instructed subordinates to dumpoily waste overboard via the pipebetween March 2009 and 3rd May 2010.Grifakis obstructed the investigationinto the dumping by falsifying theM/V CAPITOLA’s Oil Record Booksand failing to produce Daily SoundingRecords for the ship, which could have

helped pinpoint days when dumpingoccurred. Cardiff Marine, Inc., theshipping company responsible for theM/V CAPITOL, pleaded guilty on 3rdFebruary 2011 to violation of the Actto Prevent Pollution from Ships. Thecompany was fined USD 2.4 million andwill serve three years’ probation.

United States v. Fleet ManagementLtd.34 - Fleet Management Ltd., a HongKong-based ship management firm,pleaded guilty to a criminal violationof the Oil Pollution Act of 1990, as wellas felony obstruction of justice and

false statement charges. The firm wasordered to pay USD 10 million andsentenced to three years’ probationfor its role in the COSCO BUSAN oilspill and related cover-up after the shipstruck the San Francisco Bay Bridge inNovember 2007. Fleet Managementconcealed ship records and falsifiedand forged documents to influencethe Coast Guard’s investigation. Thecollision killed at least 2,000 migratorybirds including Brown Pelicans, MarbledMurrelets and Western Grebes.Pursuant to the plea agreement, FleetManagement was ordered to direct

USD 2 million of the USD 10 millionpenalty to fund marine environmentalprojects in the San Francisco Bay. Thefirm was also ordered to implementa comprehensive compliance plan toheighten training and voyage planningfor ships engaged in trade with theUnited States.

United States v. Irika Shipping S.A.35 -Irika Shipping S.A., a ship managementcorporation, pleaded guilty to felonyobstruction of justice charges andviolation of the Act to Prevent Pollutionfrom Ships. Irika was ordered to pay

more than USD 4 million in finesand community service restitutionfor deliberately concealing vesselpollution from the M/V IRANA, one of

the company’s cargo ships that madeport calls in US cities. The ship’s chiefengineer directed the dumping ofapproximately 6,000 gallons of wasteoil overboard through a bypass hosethat circumvented pollution preventionequipment. Irika also received fiveyears’ probation, during which the

company is required to develop anenhanced environmental complianceplan covering all its ships, including anynew vessels.

United States v. Avaz,36 United Statesv. Mogultay,37 United States v. AtlasShip Management Ltd.38 - GunduzAvaz, a Turkish citizen and the chiefengineer on the cargo ship M/VAVENUE STAR, operated by Atlas ShipManagement Ltd., was sentencedto five years’ probation for failing tofully and accurately maintain an oilrecord book in violation of the Act

to Prevent Pollution from Ships. Avazfailed to record illegal dischargesof oil-contaminated waste from theengine room of the ship that wastransferred to a ballast storage tank,and then disposed of at sea as thevessel travelled from Honduras toTampa, Florida. Yavuz Mogultay, thesecond assistant engineer, was chargedseparately for the use of a bypass hoseto discharge waste and the failure torecord the discharges in the ship’s oilrecord book. Mogultay was sentencedto five years’ probation. Atlas ShipManagement Ltd. separately pleaded

guilty to making false statements andknowingly failing to accurately maintainan oil record book. The company wassentenced to three years’ probation anda USD 800,000 fine. The company wasalso ordered to pay USD 100,000 to theNational Fish and Wildlife Foundation,and implement an environmentalcompliance programme coveringinspection and audit of its ships that sailinto the United States.

United States v. Aksay Denizcilik VeTicaret A.S.39 - Aksay Denizcilik VeTicaret A.S., a Turkish corporation that

operated the ship M/T KERIM, pleadedguilty to making a false statement andfailure to fully and accurately maintainan oil record book. Between 2006and 2009 officers and crew of the M/TKERIM, under the direction of Aksay,used a pipe to bypass the ship’s oilpollution prevention equipment anddischarge oil-contaminated wastedirectly into the ocean. Aksay wassentenced to three years’ probationand a USD 725,000 fine, and orderedto implement an environmentalcompliance programme.

United States v. DRD Towing Co. LLC,40 United States v. Dantin41 - DRD TowingCo. LLC pleaded guilty to a felonyviolation of the Ports and Waterways

Safety Act, and a misdemeanor violationof the Clean Water Act. Randall Dantin,a co-owner of the company, alsopleaded guilty to a separate chargeof obstruction of justice. DRD Towingassigned employees to operate vesselswithout proper Coast Guard licensing,paid captains to operate without a relief

captain, and created environmentallyhazardous conditions by negligentlydischarging oil. The company admittedthat the M/V MEL OLIVER was pushinga tanker barge of fuel oil when it crossedthe path of the M/T TINTOMARAand caused a collision resulting in thedischarge of 282,686 gallons of fuel intothe Mississippi River. DRD Towing wassentenced to two years’ probation anda USD 200,000 fine, while Dantin wassentenced to 21 months in prison, twoyears of supervised release, and a USD50,000 fine.

United States v. The China NavigationCo. Pte. Ltd.42 - The China NavigationCo. Pte. Ltd., a marine cargo vesselsoperation, pleaded guilty to a felonyviolation of the Act to Prevent Pollutionfrom Ships based on its failure tomaintain an oil record book. The oilrecord book failed to note that thecrew had discharged approximately275 gallons of oil-contaminated wastecollected by crew members afteran on-board oil spill in violation ofthe International Convention for thePrevention of Pollution from Ships.Pursuant to the plea agreement, the

company agreed to pay a USD 75,000fine, serve two years’ probation,implement an environmental complianceplan, and pay USD 25,000 to theColumbia River Estuarine Coastal Fund.

United States v. Cooperative SuccessMaritime S.A.43 - Cooperative SuccessMaritime S.A., the operator of theM/T CHEM FAROS, a cargo ship thatregularly transported cargo betweenforeign ports and the United States,pleaded guilty to violation of the Actto Prevent Pollution from Ships andmaking false statements. The crew of

the M/T CHEM FAROS dischargedapproximately 13,200 gallons of oil-contaminated waste into the ocean,and falsified entries in the oil recordbook to conceal the amount of oil-contaminated bilge waste that wasactually stored aboard the ship. Thecompany was sentenced to a USD850,000 fine, of which USD 150,000was directed to the National Fishand Wildlife Foundation, five years’probation, and the implementationof an environmental complianceprogramme.

United States v. Sikharulidze44 - VajaSikharulidze, former chief engineer ofthe M/T CHEM FAROS, operated byCooperative Success Maritime S.A.,




31

pleaded guilty to violating the Act toPrevent Pollution from Ships for failureto properly maintain an oil record bookrecording disposal of contaminatedwaste. On at least one occasion,Sikharulidze directed subordinatecrew members to bypass the ship’soil-water separator, and pump oil-

contaminated waste directly overboard.Approximately 13,200 gallons of oil-contaminated waste was dischargedinto the ocean. Sikharulidze receivedone year’s probation and seven days ofhome confinement for his conduct.

United States v. Dimitrios Dimitrakis45 - Dimitrios Dimitrakis, chief engineerof the M/V NEW FORTUNE cargoship, was sentenced to three years’probation, and a USD 5,000 fine foraiding and abetting the failure tomaintain an oil record book. Dimitrakisroutinely ordered his crew to bypass

the oil pollution prevention equipmentand discharge oil-contaminatedmaterials directly into the oceanwhen entering US waters. Dimitrakisconcealed these discharges via falseentries into the ship’s oil record book.

Volodymyr Dombrovskyy, anothercrew member, was sentenced to twoyears’ probation, and a USD 500 finefor aiding and abetting the failure tomaintain an oil record book. TransmarShipping Co. S.A., the ship’s operator,was separately sentenced for failureto maintain an oil record book andfalse statements made to a federal

official, three years’ probation, a USD750,000 fine, a USD 100,000 communityservice payment to the National Fishand Wildlife Foundation, and wasordered to implement an environmentalcompliance programme.

Footnotes1 Portions of this article previouslyappeared in: Steven P. Solow & Anne M.Carpenter, The State of EnvironmentalCrime Enforcement: A Survey ofDevelopments in 2010, Daily Env’tReport (BNA) No. 50 DEN B-1 (Mar. 15,

2011).2 National Commission on the BPDeepwater Horizon Oil Spill andOffshore Drilling, Report to thePresident, Deep Water: The Gulf OilDisaster and the Future of OffshoreDrilling, p. vii (January 2011), availableat http://www.oilspillcommission.gov/final-report.3 See 18 U.S.C. §§ 3553, 3663.4 Environmental Crimes andEnforcement Act of 1996, S. 2096, 104thCong. (1996).5 Environmental Crimes EnforcementAct of 2011, S. 350, 112th Cong. (2011)

(proposing to amend 18 U.S.C. §3663A(c)(1)(A)). See http://www.gpo.gov/fdsys/pkg/BILLS-112s350is/pdf/BILLS-112s350is.pdf BILLS-112s350is.

pdf.6 See id.7 Id.8 ‘‘Justice Department Sets Up TaskForce for Gulf of Mexico Oil SpillInvestigation’’(46 DEN A-11, 3/9/11).9 ‘‘Giles Says EPA Pursuing High-ImpactCases, Adding Criminal Investigators to

Staff’’ (184 DEN A-7, 9/24/10).10 See http://www2.fbi.gov/quickfacts.htm.11 The President’s proposed budget forFY2012 cuts, among other things, theEPA budget for ‘‘Forensic Support’’ bythousands of dollars - a pittance in thedeficit abyss, but potentially significantto EPA’s ability to provide functionalsupport for investigations. See http://www.epa.gov/planandbudget/annualplan/fy2012.html12 EPA Region 6 covers Arkansas,Louisiana, New Mexico, Oklahoma,Texas and the areas covered by 66

Native American Tribes.13 See Rory K. Little, Proportionality asan Ethical Precept for Prosecutors inTheir Investigative Role, 68 Fordham l.Rev. 723, 770 (1999).14 See ABA Criminal Justice Standardson Prosecutorial Investigations,2.1(c)(vi), available at http://www.americanbar.org/groups/criminal_

justice/policy/standards.html.15 See Interpol, The Pollution CrimeWorking Group, available at http://www.interpol.int/Public/EnvironmentalCrime/Pollution/WorkingGroup.asp.16 Id.

17 Id.18 See Aquapol, International PoliceCooperation on the Water, available athttp://www.aquapol-police.com/.19 Id.20 See The North Sea Networkof Investigators and Prosecutors,available at http://www.ospar.org/content/content.asp?menu=00580623000000_000000_000000.21 Id.22 Id.23 Id.24 See International MaritimeOrganization, Port State Control,

available at http://www.imo.org/OurWork/Safety/Implementation/Pages/PortStateControl.aspx.25 See Riyadh Memorandum ofUnderstanding on Port State Control,available at http://www.riyadhmou.org/.26 555 F.3d 303 (2d Cir. 2009).27 555 F.3d at 306.28 See Press Release, U.S. Dep’t ofJustice, Tanker Company Fined $4.9Million for Falsifying Records andObstruction of Justice (Dec. 14, 2007).29 Like other sources, our data onenvironmental criminal cases isprobably incomplete. Our sources,

among others, include the websites ofEPA and DOJ, as well as BNA’s DailyEnvironment Report, and the alwaysuseful Environmental Crimes Blog of

Walter James, accessible at http://www.environmentalblog.typepad.com.30 No. 1:11-cr-00034-GK-1 (D.D.C.guilty plea entered Mar. 31, 2011).31 No. 1:11-cr-00058-MJG (D. Md. guiltyplea entered Mar. 17, 2011).32 No. 2:11-cr-00057-CJB (E.D. La.guilty plea entered April 12, 2011).

33 No. 1:11-cr-00011-MJG (D.Md. guiltyplea entered May 5, 2011).34 No. 3:08-cr-00160-SI (N.D. Cal.sentencing Feb. 19, 2010).35 Nos. 1:10-cr-00403-JSM and 1:10-cr-00372-JSM (D. Md. sentencing Sept. 21,2010).36 No. 8:10-cr-00286-JSM (M.D. Fla.sentencing Sept. 7, 2010).37 No. 8:10-cr-00264-JDW (M.D. Fla.sentencing Aug. 26, 2010).38 No. 8:10-cr-00363-SDM (M.D. Fla.sentencing Dec. 2, 2010).32 No. 2:11-cr-00057-CJB (E.D. La. guilty plea enteredApril 12, 2011).

39 No. 8:10-cr-00116-RAL (M.D. Fla.sentencing May 21, 2010).40 No. 2:10-cr-00191-ILRL (E.D. La.sentencing Jan. 19, 2011).41 No. 2:10-cr-00190-ILRL (E.D. La.sentencing Jan 19, 2011).42 No. 3:10-cr-05181-BHS (W.D. Wash.sentencing Mar. 22, 2010).43 No. 4:10-cr-00035-D (E.D.N.C.sentencing June 7, 2010).44 No. 4:10-cr-00032-D (E.D.N.C.sentencing Aug. 17, 2010).45 No. 4:10-cr-00552-DLJ (N.D. Cal.sentencing Sept. 30, 2010).




32

US law – Criminalprosecutions of MARPOL

violationsThe Second Circuit Court of Appealsconfims US jurisdiction to criminallyprosecute ship operators for crewviolations of MARPOL.

The Second Circuit Court of Appealshas joined the Fifth Circuit Court ofAppeals in confirming that shipownersand operators may be criminallyprosecuted and held vicariously liablefor entering US waters with false

entries in the Oil Record Book (ORB)designed to hide discharges of wasteoil in violation of MARPOL. On 20thJanuary 2009 a three-judge panelruled in the case United States v. IoniaManagement1 that the Act to PreventPollution from Ships (APPS), the USversion of the MARPOL Convention,“imposes a positive duty on the subjectships to ensure that their oil recordbooks are accurate (or at least notknowingly inaccurate) upon enteringthe ports or navigable waters of theUnited States”.

Ionia was the ship manager of thetanker KRITON, which delivered oilproducts to various US east coast ports.At the trial the jury found that theengine room crew under the directionof the chief engineers routinelydischarged waste oil into internationalwaters by bypassing the oily waterseparator and made entries in the ORBto make it appear that the vessel was incompliance. The jury also determinedthat senior engine room personnelobstructed justice by directing juniorcrew members to lie to the CoastGuard and by destroying evidence. The

company was convicted under the ruleof vicarious criminal liability, meaningthat there was no proof required thatthe company management was awareof any of the criminal activity on boardthe vessel.

The Second Circuit followed the FifthCircuit’s decision in United States v.Jho2 in holding that the crime underAPPS is the failure to “maintain”the ORB.3 Both courts found thatmaintenance of the ORB implies a dutyupon a foreign flag vessel to ensurethat the entries are accurate and thatthis is a continuing duty that applieswhen the vessel calls at US ports. TheMARPOL treaty provides for flag state

jurisdiction for compliance within

international waters. The court ruledthat because the failure to maintain theORB occurs within US waters, the US asport state has jurisdiction to prosecutethe company and the individuals andthat there is no positive duty underinternational law for the port state torefer the matter to the flag state.

Vicarious corporate liability is hereto stay

The Second Circuit also consideredarguments made by amici curiae4 thaturged the court to review the standardsfor corporate vicarious criminal liability.

Vicarious liability of a corporation foracts of its agents or employees is wellknown within the civil law under therubric “respondeat superior”: let themaster answer. It is well establishedwithin tort principles that the employeris responsible to pay compensationwhen an employee’s negligence harmsanother. This is so even when theemployee has acted against corporatepolicy and instructions, as long as the

act leading to the injury can be saidto be within the employee’s scopeof employment. Amici attackedthe wholesale incorporation of therespondeat superior principle into thecriminal law on the ground that APPSdid not provide for corporate vicariousliability and, absent specificity in thestatute, criminal conviction requiressome form of intent at least on the partof the corporate management.

The Ionia jury was instructed that “acorporation may be held criminallyliable for the acts of its agent done

on behalf of and for the benefit ofthe corporation, and directly relatedto the performance of the dutiesthe employee has authority toperform”. As is the norm in this typeof case, the illegal discharges were incontravention of company policy andthe management company was notaware of the illegal discharges or thefalse entries in the ORB. Indeed, as theresult of a prior conviction, Ionia had acourt-approved compliance plan at thetime of the alleged violations.

The Second Circuit affirmed the jury’sguilty verdict against the companybecause the operation of the engineroom and record keeping were clearlywithin the scope of employment for

the engine room crew. Further, basedupon expert testimony put forward bythe government, the Second Circuitheld that the jury was entitled to findthat the bypassing and false entrieswere performed for the benefit of thecompany based on the extra time andexpense involved in properly disposingof the oily waste water.

Finally, the court rejected the argument

made by amici that the governmentwas required to prove within its casethat Ionia lacked effective policies andprocedures to deter and detect thecriminal acts of its employees. Thecourt held that the lack of an effectiveenvironmental compliance plan is notan element of proof for the governmentbut instead an effective plan is adefence available to the defendantin showing that the crew member atissue was not acting for the benefit ofthe company and within the scope ofemployment.

The Federal Appellate system in theUnited States is divided into twelveCircuits with each of the Circuit Courtsof Appeal responsible for interpretingthe federal law within the cases broughtbefore it, subject only to review by theSupreme Court.5 The Second andFifth Circuits are considered to beleaders in matters of maritime law andtheir decisions are frequently followedin the other Circuits deciding similarquestions. Thus, it is now withoutdoubt that the owner and operatorof any vessel entering US waters withan inaccurate ORB are vulnerable

to criminal investigation and, if it isshown that the entries were made forthe purpose of hiding discharges inviolation of MARPOL, the owner andoperator will be subject to criminalprosecution and vicarious liability forcriminal acts of crew members resultingin severe fines, onerous probationterms and prolonged disruption oftheir operations. Lack of knowledgeof crew non-compliance is no defence.A jury may consider a company’scompliance efforts but, in itself, thoseefforts are not an absolute defence.Rather, the compliance efforts arefacts that may be considered by the

jury in determining whether the crewwas acting “to benefit” the company.Compliance efforts are also relevant





33

and mitigating factors considered bya court in determining the proper fineafter conviction.

Corporate responsibility forenvironmental compliance requiresa vigorous and proactive approachFor many years, Gard has been warning

members about the severe penaltiesfor violations of MARPOL throughcirculars, Gard News articles andseminar presentations. This risk is not

just in the US but includes Europeanport and flag states as well. Despitesuch warnings by Gard, other Clubsand shipping associations, shipownersand operators continue to be chargedfor vicarious liability for record keepingviolations masking illegal discharges.The US prosecutors offer a reward inthe form of a portion of the fine to crewmembers who report violations. So-called “whistleblower rewards” are now

well-known in the crewing communityand an undeniable incentive to reportwrongdoing not to the company but tothe authorities. Gard has repeatedlyadvised members that in order tominimise risk they must implement avigorous environmental complianceprogramme and actively auditcompliance aboard their vessels. Gardrecommends that members benchmarktheir programme against the guidancedocument prepared by the InternationalChamber of Shipping (ICS) and theInternational Shipping Federation (ISF)“Industry Guidance on Environmental

Compliance – A Framework forensuring compliance with MARPOL”.6 The guidance document includes suchtopics as management responsibility,corporate and individual responsibility,training, awareness and competence,waste stream analysis and budget,technical equipment, control devices,documentation, internal reporting,external reporting and audit systems.While each company must composeand execute its own environmentalcompliance programme in conformitywith its culture and needs, allprogrammes should address the

components set out in the ICS/ISFframework.

In introducing the framework, ICS andISF acknowledge the prosecution ofcompanies, particularly in the US, forMARPOL violations and commentthat “prosecuting authorities haveidentified the absence of a systematicapproach to identifying and managingcompliance with environmental

requirements as a common failure”.An effective compliance plan withdemonstrable crew training in properuse of the pollution preventionequipment and company environmentalpolicy will, as the Second Circuit hasindicated in the Ionia decision, providea defence to vicarious corporatecriminal liability in rebutting thecontention that an illegal dischargeand false record keeping were for the“benefit” of the company and withinthe “scope of employment”.

The guidance is relevant to preventing

all forms of pollution but can be read inconjunction with the “Shipping IndustryGuidance on the Use of Oily WaterSeparators”, also published by ICS/ISF.Gard recommends both documents tomembers. Both can be found at www.marisec.org/environmental-compliance.

The MARPOL requirement that oilywaste water be processed by anoily water separator and dischargesproperly recorded in an ORB were firstimplemented in 1983, more than 25years ago. MARPOL is one of the mostwidely subscribed international treaties

with virtually all of the maritime nationsas signatories. The risks of violation ofthe treaty requirements have been verywell publicised by the P&I Clubs as wellas other shipping organisations. Noprudent ship operator can send shipsto sea today without an environmentalcompliance plan that includes propercrew training and regular audits.

It is important to remember that themere institution of a compliance planalone will not exonerate an owner/operator from culpability for MARPOL/APPS violations. The shipowner and

operator must be proactive in ensuringthat their environmental polices are

Footnotes1 United States v. Ionia Management S.A., No. 07-5801-cr, 08-1387-cr (2d Cir. 2009), 2009 U.S. App. LEXIS 902 (decided Jan. 20, 2009); 2009 AMC 153.2 United States v. Jho, 534 F.3d 398 (5th Cir. 2008). The Jho decision is discussed in the article “US law – Oil record book violations” in Gard News issueNo. 192.3 The Act to Prevent Pollution from Ships is intended to implement the MARPOL Convention but the requirement to “maintain” the ORB is not explicitin MARPOL. Rather, the MARPOL regulations refer to making full and complete entries and keeping the ORB for examination for at least three yearsfollowing the last entry. See “Implications of the Jho Doctrine”, by Dennis Bryant, Senior Maritime Counsel, Holland and Knight, August 2008 at www.marinelink.com.4 Amicus curiae (plural amici curiae) is a legal Latin term, literally translated as “friends of the court” and refers to someone who volunteers to advocate

a position before a court even though they were not a party to the case itself. In the Ionia case a number of business and legal defence associationswere amici, namely: Chamber of Commerce of the United States, Washington Legal Foundation, Association of Corporate Counsel, National Associationof Criminal Defense Lawyers, National Association of Manufacturers and New York State Association of Criminal Defense Lawyers.5 Review by the US Supreme Court is discretionary and relatively rare.6 See article ”ICS/ISF guidance on environmental compliance” in Gard News issue No. 189.

understood and followed by personnelserving aboard their ships. While manyship operations can be sub-contracted,liability for proper performance remainswith the owner and operator. Regular,documented on-board audits ofshipboard environmental compliancewith oversight by senior shore side

management are an absolute necessityfor effective compliance efforts. Vigorous and proactive management ofshipboard environmental compliancewill in most instances prevent practicesleading to prosecution in the US and, inthe event a crew member does violatecompany policy, will provide the ownerand operator with the best defenceavailable under APPS to corporatevicarious liability for the wrongfulactions.

Further informationFor more information about MARPOL

violations in the US readers should referto:

Gard News articles:– US law – Oil record book violations(issue No. 192);– The greening of the deep blue sea –Corporate environmental compliancetoday (issue No. 191);– US Coast Guard formal policy onvoluntary disclosure of MARPOLviolations (issue No. 189);– Oily water separator bypass in the US– The tables are turned (issue No. 189);– ICS/ISF guidance on environmental

compliance (issue No. 189);– US Coast Guard new Oil RecordBooks (issue No. 188);– MARPOL Annex VI – New risks andchallenges for owners and charterers(issue No. 187);– Waste management – From oily waterto plastics (issue No. 186);– US law – MARPOL violations in the US(issue No. 184);– MARPOL Annex VI – Solving the lowsulphur issue (issue No. 184);– Recent changes in US regulations(issue No. 182);– Oil and water don’t mix (issue No.

180);




34

– Pollution – Ships, crews and shoreside management face ever-increasingfines and prison sentences (issue No.175);– Environmental crime – Myths andreality (issue No. 167);– The United States Ocean DumpingAct (issue No. 159);

– Discharge of oil prohibited (issue No.152).

Loss Prevention Circulars:– New Permit Requirements for Vessels

ICS/ISF guidanceon environmentalcompliance

ICS and ISF publish guidance forensuring compliance with MARPOL.

The International Chamber of Shipping(ICS) and the International ShippingFederation (ISF) have published a newleaflet: “Shipping Industry Guidanceon Environmental Compliance – Aframework for ensuring compliancewith MARPOL”. The framework isintended to be used by shipowners andoperators as a template for review ofcompany environmental complianceprogrammes. The framework issupported by BIMCO, Intertanko,Intercargo, OCIMF and SIGTTO.

The guidance document includes such

topics as management responsibility,corporate and individual responsibility,training, awareness and competence,waste stream analysis and budget,

technical equipment, control devices,documentation, internal reporting,external reporting and audit systems.

While each company must composeand execute its own environmentalcompliance programme in conformitywith its culture and needs, allprogrammes should address thecomponents set out in the ICS/ISFframework.

In introducing the framework, ICS andISF acknowledge the prosecution ofcompanies, particularly in the UnitedStates, for MARPOL violations andcomment that “prosecuting authoritieshave identified the absence of asystematic approach to identifying

and managing compliance withenvironmental requirements as acommon failure”. The framework is atool for companies to use in reviewing

– US Environmental Protection Agency(No. 16-08);– US Coast Guard – Formal policyon voluntary disclosure of MARPOLviolations (No. 13-07);– Environmental crime – Oil waterdischarges off the East Coast of Canada(No. 14-02);

– Environmental Crime – Myths andReality (No. 05-02);– Oily water separation and discharge:Discharge of oil prohibited (No. 07-01);– Oily water separation and discharge:

Risk of oil pollution versus vessel’ssafety (No. 06-01).

P&I Member Circulars:– International Convention for thePrevention of Pollution from Ships 73/78MARPOL – Oily Water Separators (No.03/05).

their own practices and determineany additional steps that may beneeded to ensure compliance with

environmental protection obligations.The guidance is relevant to preventingall forms of pollution but can be read inconjunction with the “Shipping IndustryGuidance on the Use of Oily WaterSeparators”, also published by ICS/ISF. Gard commends both documentsto members. Both can be downloadedat www.marisec.org/environmental-compliance.

Gard News 189,February 2008/April 2008




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Oil and water don’t mixBy Captain Helge Oliversen, Project Manager,Norwegian Training Center, Manila

IntroductionEverybody knows that oil and waterdon’t mix. But in the maritime industryseparating oil from water is not a simplematter, although it is a very importantone. Any breach of MARPOL 73/78can have severe consequences for theshipowner and the officers and crewinvolved. Failing to separate one fromthe other could pollute the world’sbodies of water and cost shipowners

and responsible officers a lot of moneyin fines, or even land them in jail.1 Intonnage terms, the most importantpollutant resulting from shippingoperations is oil.

The Norwegian Training Center –Manila(NTC-M), which was established in 1990to provide relevant training to Filipinoseafarers serving on its members’ ships,has joined with Hoegh Fleet Servicesto create a five-day course entitled“Bilge Water/Waste Oil OperationalManagement”. The course is supported

with training material from Gard.

Contents of the courseThe course is designed for marine deckofficers and marine engine officers andprovides participants with an effectiverefresher on waste oil management.Aside from reminding them of thedetails of bilge water and waste oilmanagement, the course aims toheighten their awareness of the needto be responsible officers, especiallyin dealing with waste matters that canpollute the sea. This is in line with NTC-M’s key objective to improve the human

factor in ship operations.

The contents of the course are asfollows:

Theoretical upgrading andawarenessThe course covers applicable marinepollution laws and regulationsextensively. Among the regulations isMARPOL 73/78. This is one of the mostimportant global conventions for theprevention of pollution from ships. Itgoverns the design and equipmentof ships, establishes a system ofcertificates and inspection and requiresstates to provide reception facilitiesfor the disposal of oily waste and

chemicals. In addition, MARPOL 73/78requires water from engineering spacesto pass through the oily water separator(OWS) before discharge to meet therequirement of the 15 ppm limit tothe oil content of water that can bedischarged to the sea. A corollary to therequirement to separate oil from waterbefore discharge is the requirement forall vessels to maintain a sludge tank tostore oil wastes. Sludge generated by

the OWS must either be incinerated orpumped ashore.

MARPOL 73/78 has six annexes. AnnexI details regulations for the preventionof pollution by oil. A very importantregulation under this Annex is therequirement that every ship should havean Oil Record Book, which should haveaccurate and complete daily records ofrelevant machinery space operations.Proper use of the Oil Record Book isemphasised in the course. Anotherimportant regulation covered in thecourse is the outcome of the 49th

session of the IMO Marine EnvironmentProtection Committee (MEPC49).

Practical training and exercisesThe course has six practical exercisesthat take the participants throughthe stages of bilge water and wasteoil management. For this purpose,a laboratory has been set up insidethe premises of NTC-M simulating allthe components that make up a bilgewater/waste oil management system.The laboratory simulates a bilgewell where bilge water and waste oilaccumulate, an oily bilge holding tank

with a separated oil tank containingmostly oil and a bilge holding tankcontaining mostly water and an OWSthat filters oil from water down to lessthan 15 ppm (the permitted amountof oil in water that can be thrownoverboard), a separate oil tank, anincinerator waste tank and a holdingtank to port facilities. The exercisesfocus on the OWS systems andoperation. The heart of the system – or,should we say, kidney or liver – is theOWS, which takes care of filtering oilfrom water. As such, the course stressesthat the OWS should not be overlytaxed. As a person should not takeexcessive levels of alcohol so as not todestroy the liver, marine deck officers

or marine engine officers in charge ofwaste oil management should not feedexcessively oily water to the OWS.

The system of waste oil management isdesigned to separate oil from water inthe oily bilge holding tank so that thewater fed to the OWS will no longercontain so much oil. However, knowingfrom experience that this system isprone to malfunction due to human

negligence, NTC-M has designed asupport sub-system called physicalseparation, composed of cascadingtanks of differing elevations. Using thewell-known fact that oil floats abovewater, the cascading tanks capturewater that settles below each tankand forward the oilier portion to thesucceeding tanks. Only the watercaptured in this process is finally fedto the OWS for further filtration. Inthis way, the effect of possible humannegligence is reduced in the processand the OWS is not taxed excessively.This will of course prolong the life of the

OWS.

ConclusionThe Bilge Water/Waste Oil OperationalManagement Course has been warmlyreceived by the industry since it wasintroduced as a pilot course by NTC-Min 2004. Attendance has always beenvery good. Now that Bilge Water/WasteOil Operational Management is offeredas a regular course, NTC-M hopes it willbe able to contribute to protecting theenvironment from oil pollution, having apositive impact on the human factor inship operations.

Gard News 180,November 2005/January 2006




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Environmental Crime –Myths and Reality

Prosecutions of shipowners andcrewmembers in the United Statescriminal courts for environmental crimeshave recently hit the headlines in bothindustry and general news media. Thepurpose of this article is to explain thebackground for the spate of high profilecriminal investigations and prosecutionsas well as to explode the myths thatmay lead some in the industry towrongly conclude that they have little or

no exposure for similar treatment.

The regulatory backgroundTo put it in simple terms, theInternational Convention for thePrevention of Pollution from Ships(MARPOL 73/78) provides that oilywater discharge from bilges shall notexceed 15 parts per million (ppm)unless the discharge is necessary forsecuring the safety of the ship or savinglife at sea. MARPOL 73/78 furtherrequires ships to process oily water inan oily water separator and to monitorthe discharge with detection and an

alarm system that shuts off dischargein the event it exceeds 15 ppm whiletriggering an alarm.

MARPOL 73/78 further requires theship’s crew to maintain an Oil RecordBook (ORB) and to record discharges,both those meeting the 15 ppmrequirement and those exceeding it (forexample, in an emergency). Port Statecontrol authorities may inspect theORB. In the United States, the UnitedStates Coast Guard (USCG) does portState inspections for compliance withMARPOL 73/78. MARPOL 73/78 is

implemented in the various signatorycountries by domestic legislation.MARPOL 73/78 regulations call foradministrative proceedings and finesand penalties for violation. It is theflag state that administers the penaltyprovisions under domestic regulations.

Shipboard practiceOily water that collects in the engineroom bilges was often pumpedoverboard in international waters beforeMARPOL 73/78 became effective in1983. At the time of implementation,the technology for oily water separationwas less effective than it is today. Thebilge tank capacity tended to besmall and the OWS were inefficient inprocessing the oily water.

Since the MARPOL requirements havebeen in force and to save themselvestime and trouble in dealing withthe less effective older units, somecreative engineering crewmen havedevised ways to circumvent the OWSor the monitoring equipment in orderto discharge oily water overboard.According to government allegationsin the US investigations, this has beendone by either piping around the OWS

or flushing the oil content meter withseawater to push more water throughthe meter and fool it into registeringoil content at less than 15 ppm. Thisis not to suggest that many crewmenfail to comply with environmentalrequirements. But for those few thatdo, the sanctions for the shipowner oroperator can be devastating.

Myths, Dangerous Half Truths andPainful RealityWe now turn to some widely held butincorrect assumptions about violationof MARPOL regulations with respect to

the current criminal prosecutions in theUnited States for environmental crimes.

Myth: “Violation of MARPOL inInternational Waters is of interestonly to the Flag State.”It is true that the conventioncontemplates that enforcement actionswill be taken by the Flag state, that is,where the vessel is registered. Thisdoes not mean, however, that theauthorities in the United States areuninterested in policing worldwideviolations of international pollutionlaws. Read on.

Myth: “The United States has no jurisdiction to prosecute withoutpollution in U.S. waters.”Wrong. Recent criminal prosecutionshave not involved pollution of USwaters. MARPOL 73/78 requiresthat entries be made in the ORB fordischarges. The ORB is routinelyreviewed during port State inspectionsconducted by the USCG. If the crewhas bypassed the OWS or flushedthe sensors and discharged oily wateroverboard but recorded the dischargesas “clean” the company may becharged with violation of US law forpresenting a materially false documentto a US authority. This is a crime undergeneral criminal law in the United States

and provides jurisdiction in the federalcriminal court over both the individualsinvolved and the company.

Myth: “The penalty for bypassing theOWS is a $5,000 administrative fineunder MARPOL”This is a dangerous half-truth. Inthe United States the crime chargedis presenting a false ORB and themaximum fine against the company

under the US criminal sentencingguidelines is $500,000. This fine maybe doubled if the violation resultedin financial gain for the company. Forexample, Carnival Cruise Line in aplea agreement recently accepted an$18,000,000 fine for presenting falseORBs on six of its ships.

Additionally, crew involved may beprosecuted individually and put in jail!The maximum penalty upon convictionfor individuals is five years incarcerationand $250,000 in fines.

Myth: “The P & I Club will reimbursethe fine under its cover for pollution”Gard’s Protection and Indemnity cover,like that of all Clubs in the InternationalGroup, is a named risk cover. The riskscovered are set out in Gard’s Statutesand Rules. Gard’s Rule 38 – “Pollution”expressly excludes fines. Gard’s Rule47 – “Fines” covers fines and penaltiesimposed upon a Member by anycourt tribunal or other authority ofcompetent jurisdiction for or in respectof the accidental escape or dischargeof oil. Intentionally bypassing theOWS or flushing the sensors and

pumping oily water overboard is notconsidered by the Association to beaccidental.

Gard’s pollution and fines rules wereclarified and narrowed in policy year2000 in line with a model rule adoptedby the International Group of P & IClubs. Thus, under the current rules,no Club in the International Groupcovers fines as a matter of right forintentionally pumping oily watercontaining 15 ppm overboard or forfalsification of an Oil Record Book.

A final word of WarningThe USCG has intensified its focus onOily Water Separators and Oil RecordBooks, specifically looking for violators.

Loss Prevention CircularNo. 05-02




37

The USCG inspections involve bothlarge operators and single shipcompanies. USCG Inspectors aided byother state and federal agencies lookfor evidence of bypass piping, includingwear patterns indicating removal offittings or even fresh painting to coverwear patterns. If there is suspicion of

bypassing, the crew may be detainedfor questioning under Grand JurySubpoena, the ship records andequipment will likely be seized andvessel detained.

The only effective way to avoidinvestigation and prosecution isnot to violate the MARPOL 73/78

requirements in the first place. Thatmeans the company must havea well-monitored environmentalcompliance program including shipaudits, upgrading of equipment asrequired and training. If caught up inan investigation, the shipowner willneed to immediately obtain advice of

qualified criminal counsel. One of thebiggest mistakes that can be madeis to destroy or conceal evidence in acriminal investigation for to do so willbring additional criminal charges ofobstruction of justice.

The single most frequent port Statedetention deficiency item for vessels

Oily water separationand discharge: Risk of oilpollution versus vessel’ssafety

IntroductionAs part of our overall loss preventionactivities, Gard Services regularlymonitors port State detentions from theParis Memorandum of Understanding(MoU), Tokyo MoU and United StatesCoast Guard (USCG). In 2000, therewas a total of 131 detentions of shipsentered in the Gard P&I portfolio. Oilywater separation and discharge relateditems were the single most frequentdeficiency cited. Similar results werealso observed in the detention of

vessels entered in the Gard Marineportfolio for 2000 (147 detentions andthe second most cited deficiency). Weare not satisfied with these figures.As a result, we believe it is necessaryto revisit this issue for Gard ServicesMembers and Clients. The article “Discharge of oilprohibited”, which appeared in GardNews issue No. 152 (December 1998/February 1999) (also reproduced asGard Loss Prevention Circular 07-01) warned against the implicationsof pumping oil and oily bilge water

overboard, and was followed byanother article on the same topic inGard News issue No. 155 (September1999/November 1999), titled “Risk of oilpollution versus vessel’s safety”. The

present circular contains a summaryof that second article, which we hopewill assist Members and Clients instaying vigilant in light of the potentialcosts associated with an incident,fines, port State detentions and thesafety implications related to oily waterseparation and discharge. Environmental and safety mattersDuring condition surveys of vessels,the Association normally notes thatMasters and Chief Engineers enforce

a strict policy regarding pumpingof bilge water, in order to avoid anyoil spill. Port State control officersinspect engine room pipelines andoily water separating equipment toensure compliance with the MARPOLregulations. Fines and detentionsare not popular. To guard againstaccidentally pumping overboard engineroom bilge water which has not beencleaned, shipside valves are sometimeschained and padlocked or lines areeven blind flanged, all in an effort toreduce the risk of an oil spill. At times,such remedies are requested by port

State control officers, and are willinglyinstalled by the ship’s crew.

All efforts to avoid polluting the seasand coastal areas are appreciated,

covered by Gard is the result of oilywater separation, overboard dischargeand oil record book anomalies. Asa result, Gard released two lossprevention circulars on environmentaland safety concerns regarding oilywater separation (Loss PreventionCircular 05-01 and 06-01). Please see

the Gard website atwww.gard.no for copies of thesecirculars.


of course, but it should be notedthat there is also an overriding issueinvolved: the safety of the vessel in anemergency situation. In case of wateringress and flooding of the engineroom or the cargo holds, the vesselneeds a fully working and readilyoperational bilge pumping system.Therefore, the overboard connectionsfrom the bilge pump should not beblocked by locked hand wheels, blankflanges or by removed spool pipes. Itshould be noted that SOLAS, Chapter

II-1, Regulation 21, as well as relevantClass rules, require a vessel to beequipped with a bilge pumping systemthat should be operational under allpractical conditions. In case of a suddenflooding of the engine room, the bilgepumping system must be able to bestarted without undue delay. So is there a problem in complying withboth MARPOL and SOLAS? Not really,if one keeps in mind that the MARPOL73/78 regulations are meant for non-emergency operational situations. InAnnex I of MARPOL 73/78, Regulation

9 deals with the control of oil dischargeand Regulation 10 covers methods forprevention of oil pollution from shipswithin a special area, but Regulation 11provides exceptions from both, in the




38

case of an emergency. The exceptionsunder Regulation 11 are the following:“Regulation 9 and 10 shall not apply to:

Oily water separator(a) the discharge into the sea of oil oroily mixture necessary for the purposeof securing the safety of a ship or saving

life at sea; or(b) the discharge into the sea of oil oroily mixture resulting from damage to aship or its equipment:(i) provided that all reasonableprecautions have been taken after theoccurrence of the damage or discoveryof the discharge for the purpose ofpreventing or minimising the discharge;and(ii) except if the owner or the masteracted either with intent to causedamage, or recklessly and withknowledge that damage wouldprobably result; or

(c) the discharge into the sea ofsubstances containing oil, approvedby the Administration, when beingused for the purpose of combatingspecific pollution incidents in order tominimise the damage from pollution.Any such discharge shall be subjectto the approval of any Government inwhose jurisdiction it is contemplatedthe discharge will occur.” In view of Regulation 11, MARPOLand SOLAS are not in conflict witheach other and it is important thatall authorities inspecting a vessel for

compliance with MARPOL understandthis.

Blocking the overboard pipe from themain bilge pumps should never bedone, as this would seriously affectthe safety of the vessel and wouldbe in conflict with SOLAS and Classrequirements. In the interest of thecoastal States, at times port Statecontrol officers seem to pay moreattention to the MARPOL regulationsthan to the corresponding SOLASregulations. A conflict of interest mayoccur when the bilge pump of a vessel

is also used for ballast water and insome cases even for emptying a sumptank. Oil remains in the pipeline maynot be large in quantity, but will putharbour authorities on full alert ifinadvertently pumped overboard withballast water. In some such cases portState authorities have required blanksinserted in the pipeline or the locking ofvalve handles. This may secure againstoil pollution, but as pointed out, may

Oily water separator.

Overboard line for cleaned bilgewater from the oily water separator.

The hand wheel has been chainlocked by the vessel’s Chief Engineerat the request of port State controlauthorities. A seal has also been fittedto the chain.




39

Overboard valve for main bilge/ballast line. The hand wheel has been fittedwith a chain and padlock at the request of the port authorities. This is not

a good practice as the vessel's bilge pumping system is no longer readilyoperational.

reduce the safety of the ship in anemergency situation.

On the other hand, there should beno excuse for pumping oil overboardthrough pumps serving a dual purpose.It should always be ensured that allpipelines, whether used for clean

bilge or ballast water, are free from oilcontamination prior to using the bilge/ballast pumps for direct overboarddischarge. Such verification should beincluded in the operational procedures. It should also always be clear to avessel’s crew that sludge tanks, wasteoil tanks and oil drain tanks are notallowed to have any direct connectionoverboard (MARPOL 37/78 Annex I,Regulation 17(3)). and that the contentof such tanks must be discharged toreception facilities ashore throughthe standard discharge connection

required (MARPOL 37/78 Annex I,Regulation 19), if not disposed of inan incinerator on board. If requiredby harbour authorities, pipelines fromsuch tanks may be closed off to preventoil pollution, but not the overboardpipeline from the main bilge pump. In case Members face conflictingrequirements from various authoritiesconcerning the issues addressedabove, they should always consultthe vessel’s Class Society, which hasapproved the vessel’s bilge pumpingsystem and normally has also issued the

International Oil Pollution PreventionCertificate. In any case, all changes toa vessel’s bilge system should alwaysbe informed in advance to the vessel’sClass Society, for proper approval.




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The finer points of oilpollution

Fines are monetary impositions madeby a competent court, tribunal orauthority in respect of breach of,or non-compliance with, any law orregulation. Whether the fine is referredto as administrative, civil or criminal,all are penal in nature, irrespective ofthe exact words used.1 A penalty isgenerally defined as punishment foran offence, but given the level of finesand attitude to their defence in some

countries, there is sometimes a feelingthat other motivations may exist.

Whilst a fine can also act as a necessaryand important deterrent, fairness issometimes brought into questionwhen it is apparent that certain casesare being made examples of, perhapsfor political reasons and/or becausethis is expected in an ever moreenvironmentally friendly world. Ofcourse, in some cases the authoritiestake a fair and reasonable approach.This approach, however, variesenormously, irrespective of the facts of

a case. In a recent case, where therewas quite extensive oil pollution, aharbour master imposed an on-the-spot

fine of a few thousand US dollars onthe Master.2 In the US prosecutions areoften complicated and protracted,3 withlarge amounts involved. In Italy a legalpeculiarity permits payment of whatcan best be described as a donation toavoid prosecution.

P&I COVERIt is important to understand thatthe Association’s cover for fines is

strictly controlled, and in addition tothe limitations set out in the Statutesand Rules,4 a Member’s conduct is,in each case, closely considered.Clearly, there is an important duty onany organisation not to condone orencourage the breaking of laws, buton the other hand, most pollutionincidents are not caused intentionally,the majority result from human error.5

STRICTER ATTITUDEOil pollution fines are no longer limitedto the offence of the spill itself, andas will be discussed below, in some

jurisdictions fines now exist for failedand/or late notification, and nonco-operation with the authorities. In

Factual and accurate reporting is very important.

Gard News 157,March/May 2000

addition to this wider scope, pollutionfines have recently been the subject ofa stricter attitude in many countries.

In 1997 Greece increased itsmaximum fine for polluting the marineenvironment and breaching relatedlegislation to GRD 250 million (aroundUSD 738,400) in serious cases.

In September 1997 the UK increased

its maximum fine for the offence ofdischarging an oily mixture into the sea(which is unlimited if the case is referredto a higher court) five fold from GBP50,000. A recent case resulted in themaximum level of GBP 250,000 beingimposed.6

In 1997 the US imposed punitivedamages of USD 5 billion in respectof the EXXON VALDEZ spill (currentlyunder appeal) and more recentlypenalties of USD 9.5 million for a spilloff Rhode Island in January 1996.

More often than not, the fine itself isonly part of the actual cost involved.Security demands to cover possible




41

prosecutions are now commonplace,even for the smallest of spills, andoften owners are faced with non-negotiable demands for cash securityor bank guarantees. Such demandsare particularly costly when they causethe ship to be delayed. Delays can alsoresult from on board investigations by

the authorities, who have detentionpowers available under national lawsand relevant international conventions.There is also the cost of attending anylegal proceedings, which may involvecrew witnesses and invariably lawyers.If the court imposes a fine, the guiltyparty may also be faced with having topay the costs of the authority bringingthe prosecution. One should also notforget the hidden cost of possibleadverse publicity.

Whilst the Association is always on handto give advice, and where appropriate,

assistance, a general guide is outlinedbelow as to what should be borne inmind in terms of potential pollutionfines and when a spill occurs or isalleged to have originated from anowner’s vessel.

NOTIFICATIONNo matter how small the spill, theapplicable and designated coast stateauthorities must be notified at theearliest opportunity.7 Failed or latereporting will often result in a largerfine8 and polluters can no longerexpect not to be caught. Increased

co-operation between states withregard to surveillance9 and improved“fingerprinting” techniques are justtwo of the factors involved in theincreased number of prosecutionsbeing witnessed world-wide. Therecent US case concerning the vesselCOMMAND illustrates the lengths theUS authorities are now prepared to goto seek justice. After fingerprinting thevessel’s oil to an illegal discharge inSan Francisco Bay in September 1998,the vessel was pursued by a US aircraftand Coast Guard cutter and boardedin Panama. Penalties of USD 9.3 million

were subsequently imposed.

There is also the obligation onships and offshore units to report,without delay, any observed eventat sea involving a discharge of oil orthe presence of oil.10 It should benoted that some legislation permitsprosecution of both the Master andowner for failure to notify. This shouldbe borne in mind particularly byMasters who might assume that theirowners would be carrying out thenotification (and vice-versa).

Factual and accurate reporting isalso very important, primarily so as toavoid misleading the authorities and/or potentially hampering any spill

response efforts. For example, it is oftenfound that the amount of oil spilt isunderestimated. There is also a dangerthe authorities could infer that there isan attempt to cover up the true amountspilt. Care should also be taken to avoidmaking admissions of responsibility/liability, particularly in circumstances

such as collisions or bunkering, wherethe source of the spill may be uncertain.

CO-OPERATIONWhilst genuine disagreement with theauthorities may arise, for example, asto the source of the spill and responsemethods employed, co-operationshould be extended as much aspossible. The authorities may also wantto investigate the cause of the spill andagain co-operation should be afforded.Depending on the circumstances itmay be advisable to arrange legalrepresentation for the owner and/

or Master/crew. Guidance should besought from the Association via thelocal correspondent.

The US Oil Pollution Act of 1990 (OPA90)11 expressly provides for fines inrespect of the failure to co-operate, andin most other states one could expecta larger fine in case of such failure. Theappointment of a marine surveyor orspill expert (as the case warrants), withlocal knowledge and contacts, willlikely be of assistance in resolving anydisagreement, but if this assistanceis not available it may be advisable

(depending on the circumstances) tolimit action to issuing a protest, so as toavoid hampering the response efforts.

OWN INVESTIGATION ANDEVIDENCEThe appointment of a surveyor/expertshould be considered to assist ininvestigating and gathering informationat the scene (such an appointmentmay be inevitable, for example, toexplain technical aspects in court).Even if the spill is small, the costinvolved is far outweighed by the riskof not obtaining contemporaneous

evidence. Such evidence can be vitalif it becomes necessary to challengethe evidence of the authorities and tosupport any defences or mitigatingarguments available (see below). Onewill also appreciate that, following aspill, the Master and crew will likelyhave many other and often moreimportant things to do than collectingevidence. Inevitably, however, therewill be occasions when a surveyorcan not attend before evidence maybe lost, particularly, for instance,when the vessel spills at sea. In suchcircumstances the Master and his crew

have to act themselves (nothing shouldpre-empt safety and environmentalconcerns) and in view of this, the sort ofinformation required is outlined below.

Some of this information should formpart of the vessel’s standard reportingrequirements.

(1) An estimation of the amount of oilspilled.(2) The type of oil spilled.(3) The date and time the spill occurredor was first reported on board (and bywhom).(4) The position of the spill (e.g.,latitude and longitude, berth, etc.).(5) Details of whom the spill was notifiedto, by whom, when and with whatinformation.(6) A description of any slicks (e.g.,direction of movement, length, breadthand appearance) against time.(7) Details of any alleged/reported/

observed pollution damage.(8) Details of any risks of pollutiondamage (e.g., to beaches, marinas,etc.).(9) Details of response and clean-upmeasures.(10) Details of weather and tide/current.(11) Details of initial investigations intosource and cause.

If the source of the spill is not certain,properly labelled and sealed samplesof all oils on board and of the spilledoil should be retained for futurecomparative analysis. Depending on

the circumstances, it may be advisableto have an independent surveyor obtainthese samples in the presence of thestate authority representative, so as toavoid disputes regarding credibility.Details of other possible spill sourcesin the vicinity may also be valuable anda record should be made of the type,position, movements, and work of theobject observed against time.

To support the information mentionedabove, it is important to retain relevantdocumentary evidence, e.g., ullage/sounding and maintenance records.

Photographic and/or video records willalso be of significant value.




42

OIL RECORD BOOKSIt is perhaps worth mentioning herethat on numerous occasions during theinvestigation into a spill, the vessel’slog and record books have been foundto be incomplete and/or wrong. Beingone of the first items to be inspectedby the authorities, the Oil Record

Book (ORB),12

is a particular sourceof errors and omissions. This bookis a requirement of the InternationalConvention for the Prevention ofPollution from Ships (Marpol) 1973 (asamended), which most maritime statesare parties to.13 Most of these states areaware that, under the convention, theyhave the power to take penal action forany failure to keep the Oil Record Bookup to date and accurate. More oftenthan not fines are imposed, sometimesagainst both the Master and owner, andin many states these are by no meanssmall.14

LETTERS OF RESPONSIBILITYLetters of responsibility should not beconfused with letters of undertaking,which are offered for the purposeof security. A letter of responsibilityis usually sought to obtain at leastan admission of liability. Letters ofresponsibility are becoming a usualrequirement of many authoritiesbefore releasing the ship/crew, and itis advisable to consult the Associationor its correspondents before anysignature is added. If the Associationis not consulted, potentially damaging

admissions may be made. In somecircumstances even the most innocentremark can be misconstrued and it

may be very difficult to overcome thisat a later date. The same applies toreports made pursuant to internalinvestigations into a pollution incident.Copies of such reports are oftenrequested by authorities to assist intheir investigations, and if these arenot disclosed because they contain

potentially damaging information,adverse inferences may be drawn.

THE PROSECUTION PROCESSIf an owner is invited to an interviewor to assist an authority with itsinvestigations, or if a notification of aprosecution is received, it is advisableto contact the Association and seekimmediate legal advice. It may bethat the legislation under which theprosecution is being brought is notapplicable or that other more lenientlegislation is applicable. As previouslymentioned, defences are available, and

in some cases action may be limitedto issuing a formal warning - this wasachieved in a recent case handledby the Association in the UK andthe Member’s proper investigation,co-operation and honesty were keyfactors. Fines can often be reduced ifthere are good arguments in mitigation,and if claimed costs can be shownto be unreasonable - it has beenknown for some authorities to try andrecover some costs which are arguablynot directly attributable to the spill,like for example the whole cost of asurveillance aircraft’s routine flight.

The amount of the fine usually dependson a number of factors, such as the

1 See pages 442 and 443 of the Gard Handbook on P&I Insurance.

2 The case was featured in Gard News issue No. 154 in the article “P&I incidents - Bunkering - How not to do it”.

3 See for instance “P&I incidents - The criminal aspect of oil spills in the US” in Gard News issue No. 155.

4 Rule 47 has recently been amended and is effective as of 20th February 2000. Under paragraph 1c, the Association shall cover “...fines imposed upon

the Member in respect of the accidental escape or discharge of oil or any other substance, provided that the Member is insured for pollution liability by

the Association under Rule 38, and subject to the applicable limit of liability under the P&I entry in respect of oil pollution risk.” Under paragraph 2c the

Association may, in its sole discretion, cover whole or in part “...any fine imposed not upon the Member but the master or Crew member of the Ship or

on any other servant or agent of the Member or on any other party, provided that the Member has been compelled by law to pay or reimburse such a

fine or that the Association determines that it was reasonable for the Member to have paid or reimbursed the same.”

5 The International Maritime Organization estimates that 90 per cent of pollution incidents are due to human error, the remaining 10 per cent generally

considered to be due to some type of technical or mechanical fault. For further information see Gard’s Handbook on Marine Pollution, Second Edition,pages 255 onwards.

6 The fine was reduced on appeal to GBP 25,000.

7 This information should be contained in the vessel’s Shipboard Oil Pollution Emergency Plan (SOPEP) or equivalent emergency response

documentation and checks should be made to ensure that the information is correct and up to date.

8 Section 4301 of the US Oil Pollution Act of 1990 expressly states that an organisation can be fined up to USD 500,000 and an individual up to USD

250,000 for such a failure.

9 Surveillance aircraft now use specialist radar equipment, which enables them to detect oily mixtures on the sea surface at night.

10 Article 4 of the Oil Pollution Preparedness, Response and Co-Operation Convention 1990.

11 Section 4301.

12 The ORB must be provided for ships over 400 GT and above and for oil tankers of 150 GT and above. The book has two parts: part I deals with

machinery space operations and part II deals with cargo and ballast operations and need only be carried on oil tankers. The book lists various

operations (e.g., the discharge of bilges), the details of which must be recorded against the signature of an officer. The Master also signs each

completed page of the book.

13 The main part of Marpol 73/78, which includes the ORB requirements under Annex 1, has been accepted by 100 states, accounting for approximately

93 per cent of the world’s gross tonnage. For further information see Gard’s Handbook on Marine Pollution, Second Edition, pages 98 onwards.14 It should be noted that Rule 47.2.b.vi of the Association’s Statutes and Rules excludes cover for fines resulting from the non-compliance with the

provisions of Marpol.

15 The attitude of the UK authorities appears to be that a ship’s Master would usually only be prosecuted if the offence arose from the Master’s personal

fault or negligence and if the Master was acting against the owner’s instructions.

size of the spill, the type of oil spilled,the environmental sensitivity of thearea, the effects of the spill (e.g.,environmental/property damageand economic impact), co-operationwith authorities, previous offences/spills, investigative efforts, steps takento prevent re-occurrence, financial

hardship, response and clean-upmeasures, and whether a guilty or notguilty plea is made. Hopefully, there willbe a number of these factors, which canbe relied upon as mitigation. Exposuremay also be reduced, in cases wherethe owner and Master are prosecuted,if the authorities can be persuadedto drop their prosecution against theMaster.15

To conclude, it is now the case that,with more fines being pursued, morevigorously, and for increasing amounts,an alleged polluter can no longer run

the risk of not being caught and/ornot being prepared for prosecution.No matter how small the spill or howconfident owners may be that theyare not to blame, the above stepsshould be considered. Whilst in someinstances the authorities may appearunconcerned, this does not mean theywill not pursue a fine when the ship, orher sister, next visits the port.




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US Coast Guard formal policyon voluntary disclosure of

MARPOL violationsA formal policy on voluntary disclosureof MARPOL violations has been issuedby the United States Coast Guard.

The United States Coast Guard (USCG)has issued a formal policy on voluntarydisclosure which applies to MARPOLviolations that may result in prosecutionof owners and operators of foreignflag vessels in the United States. Thepolicy is similar to existing policies

of other US government agencies,including the US Justice Department,in describing the factors that will beconsidered in evaluating a violationfor possible criminal investigation orprosecution. These policies requirethat companies have in place acompliance management system toprevent, detect and correct violationsof environmental regulations. The“Shipping Industry Guidance onEnvironmental Compliance”, publishedby ICS/ISF,1 would appear to addressall of the requirements for a compliancemanagement system as contemplated

by the USCG policy.

If a company promptly and voluntarilydiscloses a violation to the USCGdiscovered within the company’senvironmental compliance plan,including ship audits, and the disclosure

otherwise meets the requirement of theUSCG policy, the USCG may exercisediscretion not to recommend to the USJustice Department prosecution of thecompany. The policy does not apply ifthere is a pattern of prior violations, orif the violation would likely have beendiscovered by the USCG. The full policydocument can be found at www.uscg.mil/foia/docs/CH-4%20Appendix%20V.pdf .

Recall that under US law foreign flagshipowners and operators can be andoften are prosecuted for entry into USwaters with a false oil record book thatconceals discharges of oily wastes thathave taken place outside US waters.Discharges in violation of MARPOLin international waters are violationsthat are subject to the law of the flagstate but the United States does nothave jurisdiction to prosecute foreignflag operators for the discharge itselfbecause the vessels were outside USwaters at the time of the discharge.

According to the “Industry Guidanceon Environmental Compliance”,“non-compliance with MARPOLregulations should be reported tothe vessel’s flag administration. In theevent of the discovery of evidence ofintentional discharges of waste, the

flag administration must be notifiedimmediately and a request for aninvestigation should be initiated”.

If the vessel trades to the UnitedStates, the vessel owner or operatormay, in addition to the flag state, alsoconsider reporting the discovery andthe correction of any false entries in theoil record book to the USCG in orderto comply with the voluntary disclosure

policy. In deciding whether to report tothe USCG, prudence suggests foreignflag owners and operators shouldseek immediate legal advice from alawyer familiar with the USCG andJustice Department policy guidelinesand MARPOL criminal prosecutions ingeneral.

Gard’s Loss Prevention Circular No. 13-07, which can be found at www.gard.no,contains details of the policy.

1 See article ” ICS/ISF guidance on

environmental compliance“ above.





44

Oily water separatorbypass in the US - The

tables are turnedUS Coast Guard prosecutes one ofits own staff for alleged oily waterseparator bypass.

For some time now the shippingpress has contained cautionarystories of the ferocity with which theauthorities in the US pursue shippingcompanies, usually foreign companiesand their employees, for alleged oilywater separator bypasses. Usually,

the accused is faced with a range ofallegations, the main one often beingthe entry of false information in thevessel’s oil record book. If the allegeddischarge overboard has taken placeoutside US waters, the vessel can notbe prosecuted for that act under USlaw, but it can be prosecuted underMARPOL. Flag states are responsiblefor prosecuting MARPOL violations.

However, the situation is differentwhen the alleged discharge overboardis said to have happened inside USwaters. In such circumstances, the

full weight of the US legal system canbe brought to bear on the accused.Somewhat embarrassingly for the CoastGuard, one of their own seafarers isfacing allegations that he knew of and

authorised the direct discharge (i.e.,not through the oily water separator) ofbilge waste overboard into Honoluluharbour.

The individual in question was aMain Propulsion Assistant (MPA) –presumably an engineer – aboard aUSCG cutter. It seems that some of hisshipmates complained (anonymously)that they had been ordered by the

MPA to pump into the harbourapproximately 2,000 gallons of bilgewaste without using the oily waterseparator (OWS). In May 2006, thecomplaint was investigated by the USauthorities. They interviewed engineercolleagues of the MPA, who stated thatthey had taken part in the operationdescribed above. Evidence was alsoobtained that untreated bilge waterhad been discharged overboard on tenprevious occasions, when the vessel wasoff Central and South America.

It is understood that the MPA initially

denied the allegations, but laterconfessed that he had been aware ofwhat was going on, but had turneda blind eye to it. The MPA has beenindicted on charges of obstruction of


justice and making a false statementin connection with the release of oilybilge water into Honolulu Harbour. Ifconvicted, he faces a sentence of upto five years in prison on each count. Itis understood that the investigation iscontinuing and that, depending on itsoutcome, the MPA could face furthercharges from federal and the State ofHawaii authorities, fines and/or lawsuits.It seems that, as his employer, the Coast

Guard itself may also face charges, finesand/or lawsuits.

There are many who feel that theUS authorities are over-zealous andpunitive in their pursuit and treatmentof seafarers accused of bypassingthe OWS and it is not known whetherthe MPA was taken from the vesselin handcuffs and escorted by armedofficers, but it would, at least, appearthat they do not have one rule for theirown people and one rule for everyoneelse.




45

US law - MARPOLviolations in the US

The Third Circuit Court of Appeals rulesin favour of a seaman in a prosecutionfor MARPOL violations.

On 18th August 2006 the United StatesCourt of Appeals for the Third Circuitissued its decision in the case of UnitedStates of America v. Noel Abrogar.1This was the first time an appellatecourt has considered the sentence of aforeign seaman convicted of violations

of the Act to Prevent Pollution fromShips (APPS), the United States’ versionof the MARPOL Convention.

Mr Abrogar, a citizen of the Philippines,served as chief engineer aboard theMAGELLAN PHOENIX, a Panamanian-flag vessel. Mr Abrogar admitted byplea agreement that he knew that thoseunder his command had on occasiondischarged oily water direct to thesea and he admitted he made falseentries in the vessel oil record bookto conceal the violations. Followingthe plea agreement a district court

judge sentenced Mr Abrogar to serveone year and a day in federal prisonfor failure to maintain an accurate oilrecord book, a crime under APPS.

Those convicted in the federal courts ofthe United States are sentenced to finesand imprisonment according to FederalSentencing Guidelines that assignpoints to certain types of conduct forthe purpose of guiding the sentencing

judges. Here the conduct that providedenhancement was “the ongoing,continuous or repetitive discharge,release or emission of a pollutant into

the environment”.

Mr Abrogar’s counsel appealed thesentence on the ground that the districtcourt had improperly enhanced thecriminal penalty based on government’sassertion that a six-point enhancementshould be applied for the acts ofdischarge that had occurred ininternational waters. Mr Abrogar arguedon appeal that the enhancement shouldnot be applied since the discharges,while clearly MARPOL violations, were

not violations of US law.

In analysing the scope of MARPOLand APPS, the court found thatCongress did not make every violationof MARPOL by every person a crimeunder US law. To the contrary, underAPPS “Congress and the Coast Guardcreated criminal liability for foreignvessels and personnel only for thosesubstantive violations of MARPOL thatoccur in US ports or waters. Stateddifferently, a MARPOL violation is onlyan offence under US law if that violationoccurs within the boundaries of US

waters or within a US port.”

The Third Circuit held that the districtcourt could not consider the MARPOLviolations that occurred outside USwaters in its sentence calculationbecause these were not offences underUS law and the acts were not conductrelevant to Mr Abrogar’s failure tomaintain the oil record book while inUS waters. Hence the court determinedthat the sentence as imposed wastoo harsh and sent the case back tothe district court for re-sentencing. Itshould, however, be noted that implied

in the court’s ruling is the recognition

that, as soon as a foreign-flagged vesselwith a faulty Oil Record Book crossesinto US waters, an APPS violation hasoccurred, even though the entries weremade outside US waters.

The decision is important to seamencharged with or facing charges in theUS for MARPOL violations. The decisionmust be followed by the district courtsin the Third Circuit and is persuasive

authority for the other federal courts.2The Third Circuit decision should not beread as implying that seamen and non-US flag shipowners can avoid penaltiessimply by correctly recording illegaldischarges in the oil record book.3 Flagstates do have jurisdiction to punishMARPOL violations in internationalwaters and are increasingly likelyto impose hefty fines for deliberatedischarges.

1 Case No: 06-125 (3d Cir.) decided 18thAugust 2006, not yet reported. The fulltext of the decision is available at www.

ca3.uscourts.gov/opinarch/061215p.pdf.2 There are 11 numbered federalappellate courts plus the District ofColumbia (Washington D.C.). The ThirdCircuit takes appeals from the districtcourts in Pennsylvania, New Jersey,Delaware and the US Virgin Islands.3 Those vessels flying the US flag aresubject to jurisdiction under APPS forviolations within international waters aswell as US ports and coastal waters.





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Environmental crime -Oily water discharge off

the East Coast of CanadaIntroductionThe Government of Canada recentlyincreased its commitment to theprotection of wildlife and theenvironment on the Canadian eastcoast through increased surveillanceof vessels entering Canadian watersand illegally discharging oily water.The discharge of oily water is ofparticular concern during the months ofNovember to January when migratory

birds, who are especially susceptibleto these oily water discharges, are inCanadian east coast waters.

Recent incidents have shown thatshipowners and ship managersshould continue to take considerableprecautions to prevent non-accidentaldischarges of oily water. Pollution finesfor hundreds of thousands of Canadiandollars have been handed down.

The problemThe illegal discharge of oily water innon-compliance with MARPOL 73/78

is a problem that continues to concernthe maritime industry. The problemtends to be particularly acute off ofthe coast of eastern Canada duringthe months of November to January.Many vessels transit closer to shore totake advantage of the ice covers thatform during the winter. The dischargeof oil has had a significant impact onmigratory birds that transit throughthe area during the winter months. Itis estimated that as many as 300,000seabirds are killed on the CanadianAtlantic east coast annually. Suchdevastation has led the Canadian

authorities to focus their attentionand resources on prevention of suchincidents and the prosecution ofviolators.

Canadian response to this problemThe Canadian authorities haveenhanced their monitoring of vesselsthrough the use of surveillance andship-traffic monitoring to catchviolators. This includes both airand sea surveillance, and satellitetechnology. For example, recentsatellite technology such as RADARSAThas improved marine surveillance bythe use of Synthetic Aperture Radar.This radar can pierce cloud cover bothday and night. In addition, significantfines are being handed down to

violators caught discharging oily waterin Canadian territorial waters.

RecommendationsOily water separation relatedproblems and associated fines cancreate significant problems for bothseafarers and companies. Therefore,please consider the followingrecommendations:

• Gard Service’ Protection andIndemnity cover, like that of allClubs in the International Group,is a named risk cover. The riskscovered are set out in GardP&I’s Statutes and Rules. Gard’sRule 38 – “Pollution” expresslyexcludes pollution fines. Gard’sRule 47 – “Fines” covers finesand penalties imposed upon aMember by any court, tribunalor other authority of competent

jurisdiction, for or in respectof the accidental escape ordischarge of oil.

• The oily water separator installed

on board must be of an approvedtype and function properly.

• The oil content meter, themonitoring device and the alarm/automatic-stopping device mustfunction correctly.

• Reduce the oil leakages to thebilges by collecting oil in driptrays and gutters draining intoa waste oil tank. Ensure that thedrain pipes from the gutters are

not clogged by deposits or rags.It is, therefore, important thatcrew does not leave rags or othermaterial in drip trays and gutters.

• Oil sludge from engine roomsmust not to be pumpedoverboard. If not disposed of inan incinerator, the oil must remainon board until discharged toshore-based reception facilities.

• Accurately record all informationrequired to be entered in theOil Record Book. All handlingof waste oil must be recorded,including quantities sent forincineration to shoresidereception facilities, and to sludge

tank through separation. If anyequipment is not operatingcorrectly, such informationmust be recorded and properprecautions taken to preventdischarge. Oil Record Books areroutinely inspected by port Statecontrol authorities. Detentionof the vessel and/or fines mayresult if the Oil Record Book isincomplete or has been tampered

with.

For more information, guidanceand recommendations on oily waterseparation related issues, please referto Gard Services Loss PreventionCircular 05-02, Environmental Crimes—Myth or reality?, Loss PreventionCircular 06-01, Oily water separationand discharge: Risk of oil pollutionversus vessel’s safety, and LossPrevention Circular 07-01, Oily waterseparation and discharge: Discharge ofoil prohibited. For more information onthe impact of oil discharge in Canadian

waters, please see the World WildlifeFund report “Seabirds and AtlanticCanada’s Ship-Source Oil Pollution” atthe following website address:www.wwf.ca/en/news_room/pdf/02_09_24_seabirdsreport.pdf .





47

Pollution - The hard line taken

by the French criminal courts

on oil discharge from shipsBy Oliver Purcell and Guillaume Brajeux, Holman Fenwick & Willan (Paris)

There has recently been considerablepress coverage of the attitude adoptedby French prosecutors in relation tooil discharge from ships, and reportsof increasing fines ordered by Frenchcriminal courts.

IntroductionWhilst the law has recently changed,and in particular has significantlyincreased the level of fines which canbe awarded by the courts, the principalchange is probably in the attitudeadopted by French prosecutors, whoare now applying powers which theyhave arguably always had.

The change in attitude resultsfrom growing public interest inenvironmental issues, and fromincreasing public discontent with

marine pollution. Recent casualties,such as the ERIKA and the PRESTIGE,have not only generated public

outrage, but finally caused politicians totake certain measures.

New approachThe recent changes in the law whichhave generated the most interest from

the press do not concern oil pollutionresulting from casualties (such as thosementioned above), but rather pollutionresulting from the discharge of oilor oily residues from ships, whethervoluntary or accidental (but unrelatedto a marine casualty). The Frenchauthorities have been relatively slow intaking effective measures to deal withsuch pollution; they are in effect nowtrying to catch up for time previouslylost.

The manner of achieving this has beentwofold:

1. By tinkering with jurisdictional rules,greater responsibility has been givento local prosecutors in Le Havre (for the

There is growing public interest in environmental issues in France.

English Channel), Brest (for the Atlantic),and Marseille (for the Mediterranean),who are now using all their powers, inparticular that of detaining ships. Thishas proved to be a much more effectiveway of securing the payment of fines,

and provides publicity intended bothto demonstrate to the public thatgovernment policy is being applied,and to deter the shipping communityfrom causing pollution in French waters.2. Maximum fines have beenconsiderably increased. The categoriesof persons who may be found liable topay the fine have also been broadenedto include ship operators and the“real” or effective owner or managerof a vessel; however, the courts have todate not had to apply these changes,intended to facilitate payment of thefine, wherever a ship has been detained

and an owner has paid cash into courtin order to secure payment of the fine.





48

Power over EEZFrance’s power to exercise control overnot only its territorial waters but alsoover its Exclusive Economic Zone (EEZ)1results both from the 1982 Conventionon the Law of the Sea and fromMARPOL Conventions.

Pursuant to the Convention on the Lawof the Sea, a state has jurisdiction overboth its territorial waters and its EEZ, forcertain purposes. Pursuant to article 4(2)of MARPOL:“Any violation of the requirementsof the present convention withinthe jurisdiction of any Party to theConvention shall be prohibited andsanctions shall be established thereforunder the law of that party.

Whenever such violation occurs, theparty shall either:(a) cause proceedings to be taken in

accordance with its law; or(b) furnish to the Administration of theship such information and evidence asmay be in its possession that a violationhas occurred.” (our emphasis)

Thus pursuant to internationalconventions, the French courts andcriminal prosecution authorities areentitled (and even obliged) to ensurecompliance with international rules onthe prevention of oil pollution withintheir jurisdiction, which includes forthese purposes France’s EEZ.

ProhibitionThe basic rule under Rule 9 of MARPOLis as follows:“... any discharge into the sea of oilor oily mixtures from ships to whichthis Annex applies shall be prohibitedexcept where all the followingconditions are satisfied: ...(b) from a ship of 400 gross tonnageand above ...(i) the ship is not within a special area;(ii) the ship is proceeding en route;(iii) the oil content of the effluent doesnot exceed 15 parts per million (ppm);and

(iv) the ship has in operation equipmentas required by Regulation 16 ...”

Regulation 10 of MARPOL specifiesthat, within special areas, any dischargeis prohibited; as far as France isconcerned, these special areas are theMediterranean and the English Channeland its approaches.

Outside special areas, only dischargenot exceeding 15ppm is authorised,provided the ship is operatingequipment which complies withRegulation 16; the latter is oil filteringequipment (oily water separator)which will ensure that any oily mixturedischarged into the sea after passing

through the system has an oil contentnot exceeding 15ppm.

Increased surveillanceWhilst some pollution cases haveoccurred in the Mediterranean, the vastmajority have arisen in the Atlantic,usually midway along a line drawn

between Finisterre (in Spain) andOuessant (in Brittany); this is one ofthe principal routes for all sea traffic toor from Northern Europe, and is wellwithin France’s EEZ. This is the mainarea patrolled on a regular basis byFrench Customs aircraft, although Navyaircraft or other authorities also patrolthe area, and have similar powers.

The Customs officer or other authoritieson board these aircraft will follow whatthey consider to be slicks or traces ofoil. If they locate a vessel which theyconsider to be the cause or origin of

pollution, they will contact such vessel,inform the master of the fact that hisvessel appears to be discharging oil oroily residues, and seek information onthe vessel and her future destination.

ResponseIf a vessel is contacted or spots aCustoms or Navy aircraft in the vicinity,a number of practical steps may betaken:– The master and chief engineer shouldcheck that the oily water separatorequipment is functioning correctly;– If the vessel is operating its oily

water separator, and this is functioningproperly (and thus discharge is lessthan 15ppm), the vessel should notstop discharging when the aircraft fliesoverhead;– The master should respondimmediately to any VHF call;– The master should ask for athermographic image and/or forsamples of any alleged slick to betaken;– The master should encourage theauthorities to come on board at thenext port of call;– Nothing should be modified in the

engine room;– The owners or managers shouldcompile evidence that the vesselregularly uses discharging facilities inports;– The owners or managers shouldarrange for a joint survey of the vesselwith the authorities at the next port.

EvidenceThe authorities will invariably also takephotographs. These photographs,together with the official report drawnup by the officer on duty, will constitutethe principal (and often exclusive)

evidence upon which the prosecutionwill rely to pursue a criminal actionagainst a master.

Under article L218-28 of the FrenchEnvironment Code, reports preparedby certain sworn officers of the state,including Customs agents, constituteproof of the events related thereinuntil such time as their contents aredisproved. This provision in effectreverses the burden of proof which

normally applies in criminal matters; asa result of this provision, the accusedhas the burden of proving that thevessel was not polluting, rather than thereverse.

The prosecution may also rely on otherevidence, for example that there wereno other vessels in the vicinity, thatdischarge seemed to stop as soon asthe Customs aircraft flew overhead,or that the Oil Record Book is notproperly kept (this list is obviouslynot exhaustive). Nevertheless, it isessentially the official report prepared

by Customs, together with thephotographs taken, which form themain evidence on which French criminalcourts have found vessels to be guiltyof breaches of the relevant MARPOLregulations.

The photographs taken are quite oftenof poor or questionable quality; thishas not, however, prevented the Frenchcourts from considering such evidenceto be sufficient for a finding of guilt. Thereason for this is that the majority viewof experts who attended discussionswhich led to the signing of the Bonn

Agreement2 considered that residueswith less than 15ppm oil content wouldnot be visible from the sky, whereasresidues with an oil content in excessof 15ppm would be visible. This simplebut relatively arbitrary approach hasconvinced a number of courts thatthe evidence before them showed oilpollution, rather than simply showingthe trace left by the wake of a vessel orother natural phenomena such as theeffect of wind on the water’s surface.

DetentionProsecutors have also now taken the

initiative of ordering vessels suspectedby Customs officers to be pollutingto deviate to the nearest French port.Pursuant to article L218-30 of theEnvironment Code, prosecutors havethis power, and may require paymentinto court (to secure payment of thefuture fine, the presence of the masterat the criminal action and payment ofany damages awarded to civil claimants)before allowing the vessel to sail. Thelevel of security required by prosecutorsis often indicative of the level of finewhich they may seek from the courts.

Increased finesThe “Perben 2” law,3 which came intoforce in March 2004, increased the




49

potential fine to EUR 1 million, or thevalue of the vessel, or four times thevalue of cargo on board and freight.To date, the maximum reported fineever ordered has amounted to EUR500,000; however, further increases canbe expected.

The new provisions have also extendedthe categories of persons who maybe ordered to pay the fine, to includean owner, operator, or the effectiveowner or manager of a vessel. Whilstthe trend had been for owners to be

joined as co-accused, this practice maydisappear if prosecutors systematicallydetain vessels to obtain security forpayment of the fine. In this respect, itshould be remembered that a vesselmay be detained as the instrumentof the alleged offence, irrespectiveof the person or entity which maysubsequently be pursued.

Whilst other methods of enforcementare available once a judgment has beenrendered, it appears that the future

practice will be for prosecutors to takethe preventive measure of orderinga vessel into the nearest French port.Failure to comply with such orders fromthe French authorities exposes a master(and in certain circumstances owners) toan additional fine.

Two additional points should bementioned:– We have considered above the mostcommon cases, namely oil dischargewithin France’s EEZ, and the fineswhich are payable. If discharge occurswithin France’s territorial waters, aforeign master will also face the risk ofimprisonment (French masters face thisrisk even in France’s EEZ).– Other interested parties, such asenvironmental associations, may joinin the criminal action as civil claimants.The damages which they are usuallyawarded remain for the time being

relatively modest, but are likely toincrease in the future. The court inMarseille has very recently awardedEUR 18,000 to each such claimant.

1 200 nautical miles from base lines as defined by the 1982 United Nations Convention on the Law of the Sea, signed at Montego Bay.2 Agreement for Cooperation in Dealing with Pollution of the North Sea by Oil and Other Harmful Substances, 1983.3 A French law on organised crime and delinquency, named after the French justice minister, Dominique Perben.

ConclusionIt should be borne in mind thatPresident Chirac has made the fightagainst oil pollution one of the threepriorities of his presidency. The abovechanges in approach reflect this shiftin policy, and ship owners or operatorscan expect that ever-increasing levels

of fines will be sought by prosecutors.Courts should, however, be encouragedto take a more balanced or betterinformed view of all the evidenceavailable; for the time being, however,acquittals remain rare. Caution musttherefore be exercised.



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Documents

GARD P&I GUIDELEINES TO AVOID pollution+by+oil+December+2013