The Years of Magic(al) Pipe Thinking

Texas Lawyer

Following the Exxon Valdez pollution disaster in Alaska in 1989, Congress enacted the Oil Pollution Act of 1990 (OPA) to deter future discharges by requiring the gradual phasing in of double-hulled vessels to carry oil and implementing a strict-liability regime that imposed liability on the “responsible party,” that is, either the vessel or facility from which the spill originated. Congress also ratcheted up the potential sanctions to include potential unlimited liability for removal costs and damages, and criminal liability exposure for the negligent discharge of oil into navigable waters eliminating the need to prove up any mens rea (criminal intent). OPA has had an incredibly beneficent effect on the number and volume of oil discharges from vessels in U.S. waters, drastically reducing both (the number of annual incidents has fallen from 6,000 in 2002 to less than 3,000 in 2016, and the volume has plummeted to well less than 500,000 gallons annually, save for the catastrophic 2010 Deepwater Horizon disaster; before 1990, annual average oil spilled ranged between 10 million and 20 million gallons).

Yet, smaller but pernicious intentional discharges continue to occur worldwide when engineers aboard ships bypass the installed oil-water separator (OWS) and discharge oily water directly over the side. To combat such discharges, Congress included in the Act to Prevent Pollution from Ships (APPS) a whistleblower provision that permits the court to award up to half of any fine paid for APPS violations to any person providing information to the U.S. Coast Guard that leads to a conviction. With the advent of smartphones to visually record and transmit evidence of installed so-called magic pipes used to bypass the OWS, the Coast Guard continues to investigate numerous incidents, referring cases to the U.S. Department of Justice’s Environmental Crimes Section when facts warrant, and the DOJ then pursues criminal-enforcement action.

Vessels accumulate oily water in their bilges throughout the course of a voyage from a variety of sources—engines, piping systems, mechanical equipment, leakages and operational sources throughout the machinery spaces. The International Convention for the Prevention of Pollution from Ships (MARPOL), Annex I, regulates the discharge of such water over the side and requires that it contain no more than 15 parts per million (PPM) of oil.  OWS systems are used to filter the oil from the water, but older systems are premised primarily on gravity (oil is lighter than water, and as in a bottle of oil and vinegar, the two substances gradually separate over time) or centrifuge equipment and filters to accomplish the task. Yet replacing filters and keeping the older systems calibrated is time-consuming. Each vessel is required to have an oil content monitor (OCM) installed to sound an alarm if the PPM levels exceed MARPOL limits. The Environmental Protection Agency (EPA) has also promulgated a Vessel General Permit for Discharges Incidental to Normal Operation of Vessels (VGP), which incorporates the requirements in APPS and similarly imposes a 15 PPM limit, along with other effluent limits and requirements.

Meanwhile, the Coast Guard accepts various manufacturers’ OWS, OCM and bilge alarm equipment that comport with federal regulations promulgated at 46 C.F.R. 162. Newer though more expensive OWS systems may include chemical treatment of the oily water mix to more thoroughly segregate the substances to help ensure PPM compliance, and eliminate or reduce the need for regular filter replacement and constant monitoring or adjustments to the system, as well as include more secure data-collection systems to guard against tampering.

Likely because some older OWS systems are challenging to operate, especially under the various sea conditions encountered on the oceans, some vessel engineers continue to bypass the installed OWS equipment and pump the oily water directly over the side unmonitored. Many of these discharges occur at night in international waters where they cannot be detected, but for the involvement of whistleblowers, who often report such misconduct to the Coast Guard when the vessel calls a U.S. port. The Coast Guard would then look for inaccuracies in the vessel’s Oil Record Book (ORB) (i.e., entries indicting a discharge was done legally when it was not), which the Coast Guard regularly inspects during its port-state-control inspections. MARPOL regulations require the ORB to include entries regarding the transfer or discharge of oily water, sludge or oil from one place to another within the vessel or off the vessel. False statements in ORBs (or other documents) submitted to the Coast Guard constitute a federal-criminal offense. A variety of these prosecutions have occurred in the federal courts of Texas over the last 20 years.

Once the Coast Guard commences a MARPOL investigation, vessel interests and the crew involved face both civil and criminal liability exposure, which could include millions of dollars in penalties, jail time for individuals, and probation for the company requiring years of compliance inspections pursuant to a comprehensive environmental compliance plan, along with a third-party auditor conducting periodic audits pursuant to a judicial consent decree, the violation of which may expose the company to a contempt of court sanction—all of which is monitored by a court-appointed monitor—both entities paid for by the company. Other vessels owned or operated by the company may also be subjected to the probation requirements. In at least one case, the vessels were also barred from entering U.S. ports for five years because they refused to implement an environmental compliance plan, though this ban was subject to further litigation. Vessel interests confronted with this situation also need to consider the retention of separate criminal defense counsel for each of the suspected perpetrators as conflicts of interest exist between each individual and the company.

Years of magic(al) pipe thinking have deluded perpetrators into believing they can continue to intentionally pump oil into the world’s oceans with impunity. The rise of smartphones coupled with an incentivized whistleblower program and an active environmental crimes enforcement regime make detection and punishment not only possible but likely. Upgrading existing OWSs using old technology and employing the latest technology for new-build vessels would also go a long way to help eliminate this source of ongoing oceanic damage.

“The Years of Magic(al) Pipe Thinking,” by Keith B. Letourneau was published in the Texas Lawyer on June 21, 2022.

Reprinted with permission from the June 21, 2022, edition of Texas Lawyer © 2022 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.