United States: Current Trends In MARPOL Enforcement— Higher Fines, More Jail Time, The Banning Of Ships, And Whistleblowers Galore

Last Updated: October 7 2011
Article by Jeanne M. Grasso and Gregory F. Linsin

The United States has been aggressively enforcing violations of the International Convention for the Prevention of Pollution from Ships ("MARPOL") for many years. Since the early 1990s, these prosecutions under the Act to Prevent Pollution From Ships ("APPS") have commonly involved bypasses of the oily water separator or discharges of sludge overboard, but very few of the cases in recent years have involved illegal discharges in U.S. waters. Rather, the cases now are based primarily on false entries in the Oil Record Book ("ORB"), coupled with post-incident conduct such as obstruction of justice and false statements made to the Coast Guard.

The United States does not appear to make any enforcement distinction between cases that involve serious pollution problems and those that represent isolated, comparatively minor deficiencies. Similarly, the United States seems unable or unwilling to differentiate between vessel owners and operators who have made good faith efforts to achieve MARPOL compliance within their fleets, and those companies that ignore their compliance responsibilities. Nearly every allegation of a MARPOL infraction results in a vigorous criminal investigation that extends for many months, during which time the crew members are required to remain in the United States, sometimes for more than a year, at the expense of the owner/operator. And almost every such investigation results in a substantial criminal prosecution. The international maritime community views this enforcement regime as heavy handed and detrimental to the goal of enhanced environmental compliance. The United States disagrees and has stated unequivocally that it will continue these enforcement actions until the illegal discharges stop.

Recent enforcement actions demonstrate an even more aggressive prosecutorial posture.

  • In May 2010, rather than prosecuting criminally, the Coast Guard administratively banned a Norwegian-flag ship from U.S. ports for three years under the Ports and Waterways Safety Act ("PWSA"), and revoked its certificate of compliance. If, after one year, the vessel develops and successfully implements an environmental compliance program to the satisfaction of the Coast Guard, it may call on a U.S. port. The ship owner appealed this decision to Coast Guard Headquarters and, depending on the results of the administrative appeal, litigation is possible. This is the first time a ship has been administratively banned for an alleged MARPOL violation.
  • Stanships Inc. and three related companies pled guilty (again) in April 2011 (it had pled guilty in a prior case in June 2010) to 32 felony counts for violations of APPS, the PWSA, and obstruction of justice. The companies were fined $1 million and prohibited from trading to the United States for five years. The person owning the companies is also banned from owning ships trading to the United States for five years. In the past, it has been rare to ban ships from trading to the United States and this is the first time an owner has been banned.

Both of these ship-banning cases were initiated by a whistleblower's report to the Coast Guard. In recent years, more than 50% of the new MARPOL cases stem from whistleblowers, likely because of the lucrative rewards the Department of Justice is requesting and courts are awarding under the APPS "bounty" provision, which can amount to as much as 50% of any penalty paid for APPS violations. These awards to whistleblowing crewmembers are commonly in the tens to hundreds of thousands of dollars range.

Unfortunately, because of the reward prospects, in many recent cases whistleblowers who have observed environmental compliance issues have simply ignored company policies that require such problems to be reported shoreside and, instead, secretly gather photographic and/or documentary information regarding the ongoing environmental violations and wait—often for months while the violations continue—to cash in on the information by disclosing it to the Coast Guard after the vessel arrives in a U.S. port. This serves to undermine the international conventions that were designed to deal with potential violations and thwarts a company's internal compliance efforts by depriving it of the ability to react in a timely and responsible manner to correct environmental deficiencies when they are first detected.

This "gaming of the system" undermines the effectiveness of the owner/operator's Safety Management System and represents a perversion of the public policy rationale for the APPS reward system. Crewmembers who engage in this type of intentional deception should not be eligible for monetary rewards under APPS.

It is a daunting management challenge to create and sustain a durable environmental compliance culture aboard commercial ships with rotating crews of many nationalities trading in ports throughout the world. For these reasons, many companies have dedicated increased resources to improving management practices designed to foster and enhance environmental compliance aboard their ships. These include: (1) enhanced compliance training, which is necessary in light of frequent crew rotations and the unpredictability of future vessel assignments; (2) establishment of an open reporting system, such as a hotline or anonymous electronic reporting option, so crewmembers can alert shoreside management of environmental deficiencies or violations aboard ship; (3) creation of an audit program, which may include an internal audit team and/or third-party auditors that conduct audits, sometimes on an unannounced basis, and ensure corrective actions; (4) better defining the duties of the superintendent during periodic shipboard visits as the superintendent has a greater ability than port state control inspectors to identify conditions in the engine room that raise environmental compliance issues; and (5) conducting internal investigations, either in-house or with outside counsel, if information is developed from any source that suggests an intentional MARPOL violation has occurred. Seizing the initiative in the development and management of such information can help to control the potential negative consequences of any identified MARPOL deficiency, while strengthening the company's overall environmental compliance program.

The MARPOL enforcement program in the United States over the past several years has significantly distorted the MARPOL compliance and enforcement regime that is embodied in the United Nations Convention on the Law of the Sea ("UNCLOS") and in the MARPOL Convention. Both UNCLOS and MARPOL vest primary responsibility for oversight of environmental compliance in the flag state. This is consistent with the range of other oversight responsibilities under international conventions that are vested with the flag state, all of which fl w logically from an Administration's comprehensive knowledge of and relationship with a vessel's owner/operator. While port and coastal states are authorized under both UNCLOS and MARPOL to perform port state control inspections or to investigate and consider enforcement actions for pollution events occurring in their territorial waters, under both conventions these functions are secondary to the primary environmental compliance assurance role reserved to the flag state.

Early on, MARPOL enforcement cases brought by the United States were generally consistent with the international regulatory regime in that the cases brought against foreign-flag ships were based on discharges that occurred in U.S. territorial waters. Over the years, the scope of the United States' MARPOL enforcement program expanded to the point where it is now irrelevant where the illegal discharges occurred. The United States will simply proceed to prosecute the case criminally based on inaccurate ORB entries, and no consideration is given to referring the information concerning non-compliance to the vessel's flag state to permit the Administration to make an independent judgment regarding the appropriate enforcement response.

This distorted MARPOL enforcement pattern can and should be corrected. Vessel operators, working to identify MARPOL compliance issues themselves by utilizing the management techniques outlined above, will be in a better position to determine how and under what terms the compliance issue will be resolved. If information regarding a MARPOL violation is first obtained by the vessel's shoreside management, the owner/operator will be in a position to approach the Administration and develop a resolution based on the flag state's judgment concerning any required corrective action or, if warranted, appropriate enforcement response. This approach has the benefit of being consistent with the intended compliance assurance regime under MARPOL and UNCLOS and, for a number of reasons, would be far more likely to result in a balanced and measured resolution that would be advantageous to the vessel's owner/operator. Additionally, if corrective entries are thereafter made in the vessel's ORB, it would preclude subsequent enforcement action by the United States unless the discharges in question occurred in United States territorial waters.

The challenge of managing environmental compliance issues aboard vessels will only grow more difficult in the coming years. There are concrete steps that operators can take, though, as discussed above, to address these challenges intelligently and place themselves in a stronger position to manage the expanding enforcement risks.

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Jeanne M. Grasso
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