The Oily Water Separator (OWS) was first mandated for installation on ships by the International Maritime Organization (IMO) in
1974. At the same time, a requirement was established for maintenance
of an Oil Record Book (ORB) to keep track of use of the OWS and
disposal of the ship’s oily waste. The OWS was originally designed to
reduce the oil in discharge water to 100 parts per million. Ships could
discharge waste water that contained up to that level of oil so long as
the ship was underway, at least a certain distance offshore, and not in a
particularly sensitive area. The equipment operated reasonably well and
the program was largely self-enforced. Life was good.
In 1992, though, the discharge standard was strengthened to 15 parts
per million. Problems surfaced immediately. The OWS equipment was
not operating properly. Filters regularly clogged and discharges ceased
frequently. Meanwhile, waste water levels in the bilges were rising. It
turned out that many OWS manufacturers had merely fine-tuned their
old 100 ppm devices to achieve the new 15 ppm requirement. This was
achievable on a test platform in the factory, but frequently failed on a
ship at sea. Life was no longer good, at least for chief engineers, who had
to manage this problem while keeping the ship operating.
Things changed drastically on February 1
st
1993, when a routine
U.S. Coast Guard air patrol observed a long sheen of oil streaming
astern of a cruise ship 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 U.S. government charged with cruise ship 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 for Coast
Guard examination while the ship was in a U.S. port. After losing the
procedural motions, the cruise ship operator settled this criminal charge
by payment of USD 9 million and, in the related case, by payment of
USD 18 million. No other shipowner or operator has litigated an ORB
charge since those highly expensive events. Life was no longer good for
chief engineers, masters, or shipowners.
Many in the maritime industry are beginning to view the ORB as
a signed confession. The number of prosecutions in the United States
for fraudulent entries in ORBs is rising exponentially and fines have
recently skyrocketed. In the years 1998 through 2001, research has
revealed one prosecution in each year for oil record book violations. In
2002, there were seven prosecutions – and four of those were against
individual chief engineers. In 2003, nine prosecutions, four of which
were again against individual chief engineers. In 2004, there were seven
prosecutions, and only two were directed at individual chief engineers.
Through September, nine companies and nine individuals have been
prosecuted during 2005. Criminal fines to date have totaled USD
82,716,000. Shipping companies are also being required to implement
court-supervised compliance programs.
Under federal law, a false statement consists of
1) making a statement orally or in writing;
2) when the statement is false or misleading;
3) the false or misleading information is material;
4) the statement or concealment was made knowingly; and
5) the statement was made to a federal official engaged in
performance of his or her duty.
Here, the statement was made in the ORB, which the ship is required
to maintain and is required to present to the Coast Guard upon request
when the ship is in U.S. waters. If the federal government can prove that
the chief engineer or another senior person in the ship knew that one or
more entries in the ORB (which the person in charge of the operation is
required to initial) is false and that the false entry was made knowingly,
then the company can be held criminally responsible. The individuals
making the false entry (generally the chief engineer and the master) can
also be held criminally responsible.
Because the ORB bears the initials of the person making each entry
and the signature of the master, the document serves the purpose of a
signed confession, for which there is almost no defense.
To minimize the likelihood that the chief engineer or another engineering officer on the ship improperly disposes of the waste oil, the
company should take positive steps to ensure that the OWS is operating
properly and is well maintained. This will often require replacement of
the OWS, particularly if the unit is more than about seven years old. The
chief engineer should be clearly informed (preferably in writing) that his
or her primary goal in this regard is to properly handle and dispose of
waste oil and that the general admonition to minimize expenses does
Record Book entries regarding discharge of
oily water.
As can be seen from the descriptions of
the foregoing cases, (1) both owners in their
corporate forms and individuals are being
charged and convicted, and (2) none of the
cases are going to trial, but are being resolved
by means of guilty pleas, that is, admissions
in court and on the public record that the
defendants have engaged in the criminal conduct
with which they have been charged, and are prepared to
endure the consequences. In the face of the possibility of even more severe
sanctions than those following a guilty plea,
defendants have not been willing to take these
matters to trial.not apply to this goal. Also,
personnel should be clearly advised of the requirement that log and record
entries are to be made contemporaneously
with the event and are to be accurate.
A preferred method of accomplishing
both tasks is for the company to institute a
maritime compliance program. Federal law
provides that, if a company has a qualifying
compliance program in place and a violation
occurs regardless, the company will be entitled to a major reduction in sentence. One
major cruise ship company benefi ted from
this provision when it was proven that some
of its personnel had engaged in improper
discharge of waste oil and falsifi cation of
the ORB. Both the Department of Justice
and the Environmental Protection Agency
(EPA) have written policies providing that,
in appropriate cases, they will forego criminal prosecution for companies with compliance programs. The EPA has exercised such
forbearance in the past, although not yet in
a maritime context.
The bottom line is that, for a shipowner
or operator to avoid handing the federal
government a signed confession in the form
of an oil record book with false entries, the
owner or operator must impress upon its
engineering offi cers that they are to properly maintain and operate the OWS and
to make accurate and contemporaneous
entries in the ORB. The engineering offi cers, particularly the chief engineer, must be
given every incentive to do the right thing
and no incentive to do the wrong thing.
The Consequences
Criminal convictions, including plea agreements, can bring with them not only substantial fi nes, but possible prison terms, the banning of personnel from entering the United
States or serving on vessels calling at United
States ports, and stringent environmental
compliance programs which the United States
government will supervise. Investigators will
also detain the vessels for indefi nite periods
and crew members may be held as material
witnesses long after the ship is allowed to sail.
The fi nancial implications of such detentions
of ships and personnel are obvious and substantial.
Recent incident:
Transmar Shipping Co, S.A., the operator of the cargo ship M/V New Fortune, pleaded
guilty in federal court in Oakland today to failing to maintain an Oil Record Book and making a false
statement to the U.S. Coast Guard, United States Attorney Joseph P. Russoniello announced. The vessel’s
Chief Engineer Dimitrios Dimitrakis pleaded guilty to failing to maintain an Oil Record Book, and the
Second Engineer Volodymyr Dombrovskyy pleaded guilty to aiding and abetting the failure to maintain an
accurate Oil Record Book. These guilty pleas stem from the defendants’ overboard disposal of oil residue,
sludge, oil and oily mixtures into the ocean and their subsequent efforts to conceal these discharges by
falsifying their onboard records.
“This prosecution evidences our determination to protect the environment from the unlawful discharge of
waste oil from ships, a major source of pollution to ocean and inland waters,” said U.S. Attorney Joseph P.
Russoniello. “Companies need to understand that there are criminal consequences for attempting to deceive
government regulators by providing false documents to authorities to avoid compliance with environmental
laws.”
According to Court documents, the M/V New Fortune is a 26,136 gross ton ocean-going bulk cargo ship that
is registered in the Marshall Islands. It was engaged in the carriage of bulk products in world-wide
commerce. Following the ship’s trans-Pacific journey from South Korea to the Port of Oakland, U.S. Coast
Guard inspectors boarded the vessel for a routine inspection. At that time, crew members advised the
inspectors that illegal activities were taking place onboard, and came forward to reveal that the crew was
using a “magic hose” to dispose of the vessels’ oil-containing waste overboard, bypassing the vessel’s
pollution prevention equipment. Further investigation by the Coast Guard and the U.S. Environmental
Protection Agency’s Criminal Investigation Division revealed waste oil in the overboard piping of the M/V
New Fortune and also uncovered evidence of false entries made in the vessel’s Oil Record Book, a documen
required by MARPOL, a treaty ratified and implemented by the United States and other countries.
MARPOL, which stands for marine pollution, and U.S. law limit the oil content of overboard discharges
from ships to not more than 15 parts per million. To ensure compliance, MARPOL requires that all transfers
of sludge, oil contaminated bilge water, and overboard discharges of bilge water, be fully and accurately
recorded in the Oil Record Book.
“We consider failure to comply with MARPOL to be an insult to the seas and the citizens of the world. We
work hard to make clear we have no tolerance for such behavior and we will hold accountable those that
violate MARPOL,” said Capt. Paul Gugg, commander of the Coast Guard's San Francisco Sector.
Court documents further state that Chief Engineer Dimitrakis and Second Engineer Dombrovskyy were
onboard the M/V New Fortune from March 1, 2009 through Feb. 16, 2010, when the ship came into port in Oakland. Dimitrakis held overall responsibility for the engine room where the bypass hose was used and the
pollution prevention equipment was located and Dombrovskyy worked in the engine room under Dimitrakis.
Dimitrakis and Dombrovskyy admitted that they regularly ordered M/V New Fortune crew members to
bypass the vessel’s oil pollution prevention equipment through the illegal use of a bypass hose and
discharged oil-contaminated bilge water and sludge directly into the ocean. Dimitrakis also admitted that he
concealed this disposal by regularly making false entries and omissions in the vessel’s Oil Record Book.
Dombrovskyy admitted that he disposed of the “magic hose” before entering the waters of the United States
in order to conceal that they had used it to discharge of sludge and bilge water directly overboard.
According to court documents, on a number of occasions, Dimitrakis and Dombrovskyy ordered crew
members to operate the bypass hose and pumps at night while on the high seas. Dimitrakis and
Dombrovskyy ordered crew members to disconnect and hide the bypass hose prior to entering United States
waters and ports, as well as ports in other locations.
According to court documents, Dimitrakis made false entries into the Oil Record Book indicating that the
ship’s Oil Water Separator was being used, creating the overall false impression that the vessel was being
properly operated and that they were properly maintaining the vessel’s Oil Record Book. No entries were
made in the ship’s Oil Record Book indicating the direct discharge of bilge water and sludge from the ship
into the ocean.
Court documents further state that on Feb. 16, 2010, during the Coast Guard’s inspection, the M/V New
Fortune crew presented the false Oil Record Book to the U.S. Coast Guard during the vessels’ United States
port call in Oakland.
After accepting the guilty plea, U.S. District Judge D. Lowell Jensen sentenced Transmar to pay a fine of
$750,000, an additional community service payment of $100,000, and ordered it to follow an environmental
compliance plan agreed to by the parties. TRANSMAR is required to develop, fund, and implement a
comprehensive, fleet-wide environmental compliance plan to ensure future compliance aboard all of its
vessels. As part of the plan, Transmar will, among other things, designate a corporate compliance manager to
oversee implementation of the plan, develop an environmental manual for all ships, fully train employees,
and hire an outside environmental consultant who will conduct compliance audits of Transmar ships.
Dombrovskyy was sentenced to two years probation, a $500 fine, and a $100 special assessment.
Dimitrakis is scheduled to be sentenced on Sept. 3, 2010, before the Honorable D. Lowell Jensen in
Oakland. The maximum statutory penalty for a violation of 33 U.S.C. § 1908(a) is six years imprisonment
and a $250,000 fine. However, any sentence following conviction would be imposed by the court after
consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a
sentence, 18 U.S.C. § 3553.
This case is being prosecuted by Chinhayi Cadet, Assistant U.S. Attorney for the Northern District of
California, and Trial Attorney Lana Pettus for the Environmental Crimes Section in the Justice Department’s
Environment and Natural Resources Division with the assistance of Jeanne Carstensen. The prosecution is
the result of an investigation by the U.S. Coast Guard Investigative Service, the U.S. Coast Guard Sector San
Francisco Port State Control Inspections Office, and the U.S. Environmental Protection Agency Criminal
Investigation Division, with assistance from the U.S. Coast Guard District Eleven Legal Office.
Nandkishore Gitte
