U.S. - $3.5 Million Fine For Illegal Waste Oil Dumping

July 2004

In a case which should serve as a cautionary tale an operating company was recently sentenced to pay a fine of $3.5 million for seven felony charges relating to the falsification of records concealing the intentional dumping of waste oil into the ocean by one of its vessels. The vessel's engineering officer pleaded guilty to falsifying documents and covering up evidence in order to obstruct or influence a United States Coast Guard investigation and was ordered to serve a custodial sentence.

In addition to the fine the U.S. District Court ordered the operator to develop and implement a comprehensive environmental compliance plan for its fleet of vessels that call on United States ports, and to serve 4 years on probation. A significant part of the criminal fine, $1.6 million, will be used to fund environmental projects that benefit, preserve and restore ecosystems adjoining the coastlines of Washington and California.

A crew member who blew the whistle on the ship's illegal pollution activities, leading to the discovery of the bypass pipe by state and federal inspectors, was also granted a $300,000 whistleblower award by the Court.

Ships generate waste oil from a variety of sources, including from the purifying of heavy fuel oil used to power the ship. Like other ships of its size, the vessel in question possessed equipment to properly handle its waste oil, including an "oil water separator" to process oily water that collects in the lowermost compartments of the ship. Federal and international laws require that oily water be processed through the oily water separator so that any water discharged into the sea contains less than fifteen (15) parts per million of oil. Under U.S. law, ships that enter U.S. waters must maintain an "Oil Record Book" to document all transfers of oil on the ship, including discharges to the sea.

According to the plea agreement and other court records:

The Second Engineer directed another crew member to fabricate a bypass pipe that was fitted into the existing vessel piping system for the oil water separator to allow crew members to pump inadequately treated oil contaminated waste water directly overboard into the ocean. Crew members referred to the pipe as the "magic pipe." The magic pipe remained installed for several days at a time, allowing crew members to bypass the ship's pollution prevention equipment. None of the discharges were recorded in the Oil Record Book as required by international and U.S. law. Instead, crew members knowingly made false and fraudulent entries and omissions in the Oil Record Book in an effort to conceal the illegal discharges from United States Coast Guard inspectors.

The magic pipe was removed several days before the vessel arrived at the Port of Los Angeles, California on September 2, 2003. Following its removal, crew members painted the fittings where the magic pipe had been installed in an effort to conceal the prior use of the fittings. U.S. Coast Guard officials boarded the vessel at the Port of Los Angeles and, several days later, in Richmond, California. At both ports, ships officers failed to inform Coast Guard officials of the illegal dumping. Moreover, in Richmond, crew members presented Coast Guard inspectors with the falsified Oil Record Book. On September 11, 2003, the falsified Oil Record Book was again presented to U.S. Coast Guard inspectors at the Port of Vancouver, Washington. The illegal dumping came to light after a whistle-blower on board the ship secretly passed a note to Coast Guard inspectors describing the illegal activity. An investigation in Vancouver prompted by the whistle-blower note led to the discovery of the magic pipe.

The Second Engineer agreed to cooperate with the government in its investigation. As a result of his cooperation he was sentenced by the Court to a 30 day term in custody, followed by 2 years of supervised release.

This prosecution is the latest in a series of recent federal criminal prosecutions along the West Coast in which shipping corporations and ship engineers have been convicted and sentenced for similar criminal behavior. It was emphasised that this multi-district prosecution is a clear indication of the Department of Justice's resolve to work cooperatively with state and federal agencies to stop these practices and require vessel operators to develop comprehensive compliance programs to prevent future discharges.

This matter was investigated by the Criminal Investigation Division of the United States Environmental Protection Agency and Coast Guard Marine Safety Office, with assistance from the Coast Guard Investigative Service and State of Washington Department of Ecology. 

This article is based on a Press Release of 29 June 2004 issued by the U.S. Attorney's Office, Western District of Washington.

Club Circular B.432

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