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CARBON TAX ON BUNKER FUEL
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Marine Log

July 2, 2008

OSG loses a round in pollution case

The U.S. Court of Appeals for the Fifth Circuit has overturned a U.S. District Court's dismissal of criminal charges against chief engineer Kun Yun Jho and Overseas Shipholding Group, Inc.

The counts dismissed by the district court charged that Jho and OSG knowingly failed to maintain an oil record book aboard OSG's ship the M/T PACIFIC RUBY in violation of 33 U.S.C. 1908(a) and 33 C.F.R 151.25.

In its ever-useful "Haight's Maritime Items," law firm Holland and Knight summarizes the case as follows:

The U.S. Court of Appeals for the Fifth Circuit ruled that the federal government may prosecute a shipowner and chief engineer, under the Act to Prevent Pollution from Ships (APPS), for failure to properly maintain an oil record book (ORB) when the ship entered a US port with an ORB onboard that the chief engineer knew to contain false material entries.

In the instant case, defendant chief engineer on a ship owned by defendant shipowner, allegedly directed the discharge of oily waste water from the ship on the high seas without making entries in the ORB required by MARPOL.

The ship entered ports of the United States on eight separate occasions before the Coast Guard discovered the fraudulent entries.

The chief engineer and the shipowner were then charged with conspiracy, making a false statement to the Coast Guard, and eight counts of knowing failure to maintain an ORB in violation of APPS. Only the eight counts under APPS were in dispute here.

The defendants contended that the failure to maintain the ORB occurred when the ORB entries were made and that happened on the high seas, outside the jurisdiction of the U.S.

The government contended that "maintenance" of an ORB is a continuing duty to keep it accurately. Otherwise, the ability of the port state to fulfill its obligation under international law to enforce MARPOL against ships calling at its ports would be frustrated.

The appellate court reversed the ruling of the federal district court and adopted the government's argument that there is a continuing duty to maintain the ORB such that it does not contain known false material entries.

Holland & Knight says the decision has potentially broad implications for the marine industry. Previously, a shipowner and chief engineer were only likely to be prosecuted for actually "presenting" a falsified ORB to the Coast Guard during a port state control boarding. Now, they are subject to prosecution for each U.S. port call from the time an ORB is falsified until either the ORB is corrected or the ORB is officially retired (three years after the last entry in that particular ORB). With chief engineers changing every six months or so and ships changing owners/operators on a regular basis, it is unclear at this time how this new doctrine of expanded obligation will develop. If nothing else, it enhances the importance of due diligence and having a formal compliance program. United States v. Jho, No. 06-41749 (5th Cir., June 30, 2008).

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