Last week, a federal jury in Mobile, Alabama, convicted a Norwegian-based shipping company of one count of conspiracy, three counts of violating the Act to Prevent Pollution from Ships (“APPS”), three counts of obstruction of justice and one count of witness tampering.  Three vessel crewmembers were convicted for obstructing justice, violating APPS, witness tampering and conspiracy.  Notably, a fourth crewmember pleaded guilty in October.

According to the Department of Justice, the evidence presented during the two-week trial demonstrated that in January 2010, the shipping company knew that the oily-water separator aboard its vessel was inoperable.  That argument was based in part on an internal corporate memorandum noting that the device could not properly filter oil-contaminated waste water and stating that individuals “could get caught for polluting” if the problem was not addressed.  The government thus argued to the jury that, rather than repair or replace the oily-water separator, the shipping company and crew bypassed the device and discharged 20,000 gallons of oil-contaminated waste water to the sea prior to the vessel’s arrival in the Port of Mobile.

The obstruction of justice convictions were based on the government’s accusation the shipping company and its crew attempted to hide these discharges from the U.S. Coast Guard by making false and fictitious entries in the vessel’s oil record book and garbage record book.  The government also claimed two crewmembers lied to the U.S. Coast Guard about the discharge of sludge and ordered lower ranking crewmembers to do the same.

Based on these convictions, the company could be fined up to $500,000 per count, in addition to other possible penalties.  The crewmembers face a maximum penalty of 20 years in prison for the obstruction of justice charges.  Sentencing is scheduled in Mobile, Alabama, for February 11, 2016. Click here for the Department of Justice press release.

One important take-away from this case is that the investigation, commitment of resources and prosecution of MARPOL criminal cases remains a high priority with the United States Coast Guard and the United States Department of Justice.  As a federal environmental crime prosecutor for twenty-one years in New Orleans, my docket was comprised of many such cases.  Now, in private practice with Liskow & Lewis, I see the trend continuing. If anything, regulations and enforcement actions are increasing. Take for instance, the recent addition of MARPOL Annex VI involving air emissions.

I have learned as a criminal defense attorney that ship owners and operators charged with MARPOL violations are not “bad corporate citizens.”  Indeed, it is clear from my industry talks and discussions with shipping professionals, that companies go to great effort and expense to train their personnel to comply with the regulations.  They do this because it is the right thing to do.  They also know that the cost of non-compliance is worse than any arguable benefit of by-passing the regulations. This is especially true for ship owners who are “vetted” by charterers and cargo interests and a criminal conviction could prohibit a ship owner from doing business with a vital trading partner.

Unfortunately, there is no easy answer for a company to avoid government enforcement actions, even when the company is practicing good corporate responsibility.  Therefore, companies need to prepare for government inspections and prosecutions as they would for a man overboard or any other marine casualty. While preparation alone cannot prevent a criminal prosecution, having a plan in place will help a company minimize its exposure, and the costs of responding to government scrutiny.