Dirty secrets that end in jail

Seafarers good and bad are being sent to prison as the US pursues creative legal investigations into the dumping of oily wastes at sea, writes Rajesh Joshi.

This article is reprinted from the December, 2006, issue of Lloyd's Ship Manager (LSM).

Complaints about wanton witch-hunts are not going to cut it when it comes to seafarers going to jail in the US for environmental offenses, commonly caricatured in the public perception by the "magic pipe".

Ship managers and crew bedevilled with this issue must stop talking about it. Tied as their hands almost invariably are, they need to do something about it.

Washington's stance has been clear; get caught in US harbours with jerry-rigged oily water separators or falsified oil logs, and be prepared to (a) cough up punitive fines if you own the ship, and (b) spend time in prison if you are unlucky enough to be part of the crew.

According to US Department of Justice (DOJ) statistics announced in September, $145m in corporate criminal fines have been collected since 1998 in prosecutions involving oily water separator (OWS) and environmental infractions. Individuals, senior shipboard staff among them, but not excluding some shoreside executives, have been sentenced to a total of 18 years' incarceration. Dozens of companies have been successfully prosecuted, and hundreds of ships are obliged to sail with US-mandated compliance regimes in place.

Photo of hands cuffed The striking aspect of all these prosecutions is that big-name shipowners have been caught in the net. Evergreen, OMI and MSC are all names that, at some time or another have figured as defendants that pleaded guilty.

In fact, corporate fines levied by Washington appear to be governed by a sliding scale, where "ability to pay" determines the actual penalty.

In October came the chilling news that Overseas Shipholding Group, by some accounts the world's second largest tanker company, had budgeted $37m to pay Uncle Sam off, as the company neared a DOJ settlement on oily-water offences on a dozen ships,

The root of the trouble is so illogical it is almost laughable. Washington has no jurisdiction to prosecute dumping of oily bilge water on the high seas, which is where an overwhelming majority of the crimes take place. US prosecutors get their men on counts of falsification and obstruction of justice.

Assume, for the sake of argument, that the chief engineer on a ship that conducts such a discharge writes in the log: "Got up this morning feeling despondent and lonely. Polluted the sea just because it seemed like a darn good idea at the time. Felt euphoric afterwards."

In theory, this individual cannot be sent to jail when the ship calls in the US, because he is telling the truth. Real life, of course, is never so simple. And this is where - apologies for the bad pun - the waters get muddied, and chest-beating and the blame game begin.

What gives?

The matter need not be so threatening, a senior DOJ official told an industry audience in Washington in September. Gregory Linsin, special litigation counsel at the DOJ's environmental crimes section, said the "co-operate or litigate" dichotomy perceived by foreign communities is far from the truth.

Washington gives ample leeway to companies and their seagoing staff that acknowledge, investigate, analyse and remedy OWS issues, and volunteer details of their work towards future compliance, including internal punitive action taken against staff, to government officials.

Public prosecutors cannot bring just any case to trial, because they have to first build evidentiary legal and political legs to sustain their allegations. Far better for companies themselves to help officials out by complying, Mr. Linsin suggested.

In fact, several examples of 'best practice' corroborate Mr Linsin's exhortations.

The OWS plague first infected the shipping industry in the 1990s, and cruise lines were the first entities to walk the plank. One after the other leading cruise brands pleaded guilty to dumping oily bilge at sea and then lying about it, each paying multi-million dollar fines to rid themselves of the stigma.

Today, thanks to a robust awareness of the policeman around the corner and his cudgel, these same cruise lines are at the forefront of "waste stream management systems" and similar practices, which have not only endeared them to the green set but also made them role models for the rest of the industry.

Smart shipping companies are already following their lead. General Maritime, OSG's New York-listed tanker contemporary, is believed to have averted prosecution (so far, at any rate) by voluntarily reporting infractions to authorities., and furnishing proof of compliance regimes instituted in-house to prevent repeat offences.

Why is the issue becoming more inflamed?

When the case for compliance is so cut and dried, why is the issue becoming more and more inflamed instead of being quietly resolved? Three factors are involved: technology, the industry's notorious 'culture', and the total absence of seafarer involvement in a process that could send them to jail.

On a technological level, there is no dearth of companies promising wonderfully capable new oily water separators, or assorted equipment that makes it easier to treat and safely dispose of bilge water. However, astute observers have divined the futility of expecting technology alone to be the magic wand.

Hendrik van Hemmen, former chairman of the Society of Naval Architects and Marine Engineers' OWS panel; explained this situation succinctly at an industry function in New York in February 2006.

Mr van Hemmen concluded that "giving crews a more complex piece of equipment when they have trouble operating a basic one" was not the solution. A better approach would involve money, training and centralized new product development, he said. He suggested the International Safely Management Code might be a powerful tool to solve OWS issues. Forcing crews to report OWS troubles through the ISM channel would force shipping executives to act on real-time and empirical data; he suggested.

Such comments, of course, go to the heart of the second factor - our culture. Government officials speaking at the same event were blunt on this topic. The US Coast Guard's then assistant commandant for prevention, Rear Adm Thomas Gilmour, since retired, observed that OWS offences are always "intentional" and based on a belief that "dumping oil is OK".

"There are never any grey areas in these cases, and they are never difficult to prosecute," said Adm Gilmour. The problem transcends OWS in that it requires solutions designed to manage waste streams, he said. He expressed disappointment that, unlike the decline in port state control detentions over the last 10 years, OWS prosecutions are actually on the rise. Only a fundamental change in culture will reverse this trend, he said.

US Department of Justice senior trial attorney Richard Udell also took up cudgels against the industry, saying the department's actions are based on "facts, not fiction". These include rampant concealment of evidence and other egregious acts of untruth on the part of ship operators, Mr Udell said. The DOJ never relies solely on whistle-blowers due to their inherent bias, but builds a solid case that proves guilt "beyond doubt", he said.

Examples of evidence include discrepancies between the ship's location, as recorded in the Oil Record Book, against its actual location on that day; oil and water separation statistics that don't add up; and "magic pipes" discovered physically, he said.

Seafarers Unfairly Caught

Nevertheless, none of these arguments disprove or mitigate the fact that in several cases, seafarers are unfairly caught holding the can and then convicted, often at a career-threatening cost.

At a function organised by the North American Maritime Ministry Association in New York in November, the association's vice-present, the Rev James Von Dreele of Philadelphia, painted a sobering picture where "seafarers are literally caught in the middle".

The belief that crew members blow the whistle in anticipation of cashing in on the US system where such personnel get a bounty of up to half the fine levied from the shipowners is far off the mark, the Rev Von Dreele said.

He remarked: "In Philadelphia over the last two years, we have had three crews detained as material witnesses because of their ships' serious pollution violations. We found out about these violations through crew reports complaining of mistreatment or neglect.

"Subsequent investigations revealed major pollution violations. These seafarers made these complaints most reluctantly to protect themselves from greater harm or neglect."

He then voice a dirty little, yet very badly kept, secret. Because many ships, new and old, "do not have the capability to deal with oily bilge water", he said the only course of action possible is to dump this toxic mix into the ocean by necessity and by direct command from a ranking officer.

"Seafarers would rather not do this but they have no choice. This problem is not isolated to the so-called 'substandard' ships as a number of well-respected ship operators have also been caught dumping oily water overboard," he concluded.

So, difficult or utopian as this must sound, it appears the only way seafarers can save themselves is by speaking up, or at the very least, devising a mechanism where they have more of a say in their own destinies at an earlier stage of the proceedings, before someone sitting in Washington or someone else at head office has already sacrificed them to a prison term.

How can this be done?

Clay Maitland, of the Marshall Island registry, suggested to LSM in New York that port chaplains could take the lead in opening and operating a sort of "clearing house", or a web log, where seafarers from around the world could anonymously meet, and perhaps report on the hanky-panky they are obliged to commit because they are "obeying orders".

Port chaplains are the only people seafarers trust and so are ideally placed to play such a role, Mr Maitland suggested.

The Rev Von Dreele told LSM that NAMMA, in principle, is very receptive to Mr Maitland's suggestion, and would be happy to consider practical ways to make it work.

Oily Water Separators,
Magic Pipes and the Law:
A PRIMER

Ships generate waste oil and sludge from machinery as well as fuel oil, which accumulates at the bottom or bilge of the vessel.
These waste products are supposed to be run through processes designed to separate the oil and other wastes from the water, a process that is served by an Oily Water Separator (OWS).
Once the oily water has been run through the OWS, the water can be safely discharged into the ocean. The remaining waste is to be disposed of onshore.
US and international laws authorise the US Coast Guard to board and inspect all vessels in US ports to determine compliance with federal and international environmental regulations.
The OWS was first mandated for installation on ships by the International Maritime Organisation in 1974. A requirement was also established for maintenance of an Oil Record Book (ORB) to track use of the OWS and disposal of oily waste.
The OWS was originally required to reduce the oil in discharge water to 100 parts per million. In 1992, the standard was tightened to 15 parts per million.
It is said OWS equipment on many ships does not meet this tightened standard. This may either be because of the ship's age, the shipowner's spending philosophy or "culture". It is a common complaint that the OWS is the "stepchild" when the ship is being built, and only the legally-allowed minimum is installed.
For one or all of these reasons, seafarers resort to dumping toxic waste into the ocean, often by necessity and by direct command from a ranking officer.
Although cleverer methods of completing the process are emerging, the most common method is an elbow pipe that bypasses the OWS and discharges oily waste directly into the ocean, and another pipe to discharge the sludge that had accumulated in the sludge tanks directly into the ocean - euphemistically labelled the "magic pipe".
These pipes are usually removed and hidden before a US port call. Boarding officials, however, smell them out through simple forensics, such as paint not being found on nuts, or because whistle-blowers alert them.
US law allows for such whistle-blowers to collect up to half the fines served against offenders. However, several chaplains have rubbished the theory that money is the seafarer's main motivation. Firstly, the bounty is never guaranteed and is contingent upon successful prosecution. Secondly, by becoming whistle-blowers, the seafarers usually become material witnesses and are equired to stay in the US for months on end while the investigation proceeds. This, in turn, often places them in "blackballed" status, and several of them fear they will never sail again.
The flag state is authorized and obliged to take steps when OWS infractions are uncovered.
The history of US prosecution dates back to February 1993. A routine US Coast Guard air patrol observed a long sheen of oil streaming astern of a cruiseship on the high seas off Florida. Review of the ship's ORB when the ship arrived in port revealed that no entry had been made relative to this discharge.
When the flag state declined to take action, the US government charged the cruiseship operator with making a false statement to a federal official. The operator litigated this and a related case, arguing, among other things, that there was no violation of federal law since both the discharge and the ORB entry were made while the ship was on the high seas.
The court held, though, that the false statement occurred when the ORB was presented to the Coast Guard examination while the ship was in a US port. After losing the procedural otions, the cruiseship operator settled this crimnal charge by paying $9m and the related case by paying $18m. No other shipowner or operator has litigated an ORB case since then, and prosecutions and fines are increasing exponentially.
On this background, Holland & Knight senior counsel Dennis Bryant has famously observed, "Many in the maritime industry are beginning to view the ORB as a signed confession."

North American Maritime Ministries Association
Rev. Lloyd Burghart
Executive Secretary - NAMMA
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CAN: 13-159 Canboro Rd., Fonthill, ON L0S 1E5
NAMMA Phone: 905-892-8818
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