Environmental Compliance Aboard Commercial Ships: Electronic Recordkeeping Is Overdue

White Collar Watch (April 2018 • No. 1)

U.S. environmental laws impose substantial recordkeeping and reporting obligations on regulated industries. The Environmental Protection Agency (“EPA”) and state agencies use these records to monitor compliance and evaluate the need for enforcement actions. Historically, the EPA resisted transitioning to electronic recordkeeping for environmental compliance data due to concerns about the reliability and security of electronic reporting. Recently, however, the EPA moved fully to electronic recordkeeping, compliance reporting, and data sharing, which allows regulated entities to identify and address potential violations through more streamlined reporting and monitoring.

Despite these advances for land-based industries, little has been done to modernize environmental recordkeeping and reporting requirements for the maritime industry. The principal maritime environmental treaty, MARPOL,1  requires commercial ships to maintain logbooks to verify compliance with numerous operational and environmental requirements. MARPOL and its implementing U.S. statute and regulations require ships to document all transfers and discharges of oily waste in a hard-copy Oil Record Book (“ORB”), which must be available on demand for inspection by the U.S. Coast Guard.

Any intentional errors or omissions in an ORB can lead to federal criminal prosecution on false records charges under MARPOL or 18 U.S.C. § 1001. The Department of Justice (“DOJ”) prosecutes 10–15 criminal MARPOL enforcement cases each year, nearly all of which charge at least one false ORB count. These prosecutions can result in criminal fines and/or imprisonment of top-ranking ship officers.

Most maritime companies comply with MARPOL requirements because they are committed to responsible stewardship of the marine environment; the financial and reputational consequences of a MARPOL violation can be crippling. Yet, companies struggle with compliance because of the challenge of maintaining real-time oversight of ships that trade all over the globe.

Trend toward E-ORBs

The maritime industry is trending towards the use of electronic ORBs, which will improve companies’ ability to monitor shipboard environmental compliance. Led primarily by Liberia, several flag administrations now authorize ships sailing under their flags to use “e-ORBs.” Collectively, these authorizations require data preservation and verification, ­retention of printed copies of e-ORB entries for a certain time period, and use of pre-approved e-ORB software. E-ORBs will provide a number of operational benefits, including the ability of shoreside personnel to detect discrepancies in log entries in near real-time, thus enabling companies to correct or mitigate potential noncompliant operations and potentially avoid an enforcement action.

The International Maritime Organization (“IMO”) expects to issue formal guidance and amendments to MARPOL on the use of e-ORBs and other MARPOL logbooks by 2019. The IMO’s Marine Environment Protection Committee (“MEPC”) has developed draft “Guidance for the Use of Electronic Record Books under MARPOL,” which addresses compliance considerations for e-ORBs, such as 1) security and verification of entries; 2) data storage and preservation; and 3) the need for e-ORB software to meet company audit requirements. Moreover, the MEPC’s Sub-Committee on Pollution Prevention and Response (“PPR”) has considered the feasibility of transitioning to electronic MARPOL record books, and is finalizing the non-mandatory guidelines and developing draft amendments to MARPOL that will permit the use of electronic record books.

There is near-uniform support for the move to electronic record books, but the United States is a holdout, expressing concern about the “safety, security, protection, and availability” of electronic logbooks, and about allowing countries to accept electronic logbooks prior to formal amendments to MARPOL. It is regrettable that, instead of taking the lead at the IMO to modernize recordkeeping aboard commercial ships in a way that will enhance environmental compliance, the United States is dragging its anchor.

E-ORBs as a Compliance Mechanism

Despite the United States’ position, maritime companies can increase MARPOL compliance simply by utilizing e-ORB software and transitioning other ship records to an electronic format. By doing so, companies can monitor and analyze ORB entries in real-time, rather than waiting for periodic shipboard audits. The real-time verification of ORB entries by shoreside technical staff, especially when coupled with the review of
other key data, such as tank sounding records, will improve shipboard compliance and help companies more readily detect and address noncompliance. It also will assist companies in determining whether a voluntary disclosure is needed, which, in turn, will facilitate cooperation between companies and regulators, and reduce enforcement risks for responsible companies. – ©2018 BLANK ROME LLP 

This article was first published in Mainbrace (March 2018), Blank Rome’s quarterly maritime newsletter.

  1. MARPOL refers to the International Convention for the Prevention of Pollution from Ships, as modified by the Protocol of 1978. It was developed by the International Maritime Organization (“IMO”) to address various forms of pollution, including discharges of oil, air emissions, and garbage dumping.