The Maritime Litigation Roundup is published by Seward & Kissel LLP and covers decisions of interest in judicial, administrative or arbitral bodies as well as notable regulatory or other newsworthy developments in the space. For any suggestions on future coverage or should you like more information about the matters addressed, please contact Brian P. Maloney at maloney@sewkis.com. Special thanks to Cody Hubbs for his contributions to this month’s roundup.
This month’s roundup focuses on a vessel’s requirement to maintain an Oil Record Book under the MARPOL1 treaties, enforced in the United States by the Act to Prevent Pollution from Ships (“APPS”), and the criminal penalties that can result if the vessel’s obligation is knowingly disregarded. In an opinion issued December 7, 2021, the Third Circuit Court of Appeals in United States v. Vastardis joined the Second and Fifth Circuits in holding that Coast Guard regulations requiring vessels to “maintain an Oil Record Book” requires that the records be substantively accurate.
• United States v. Vastardis and the Requirement to Maintain an Accurate Oil Record Book
Background
- In Vastardis, Nikolaos Vastardis, a citizen and resident of the Republic of Greece, was convicted and sentenced for crimes that allegedly took place while he was the Chief Engineer onboard a Liberian-registered petroleum tanker, the M/V Evridiki.
- As Chief Engineer, Vastardis was responsible for maintenance of the Oil Record Book. Coast Guard regulations provide that entries are to be made in the Oil Record Book recording each occasion when, among other things, a vessel discharges any oily waste water that has accumulated in the bilge or ballast tanks aboard the vessel.
- When the vessel entered the Delaware Bay port, the Coast Guard performed an inspection, and found that the Oily Water Separator had a hidden valve that, when closed, caused the Oily Water Separator to give a reading of 0 parts per million (“ppm”). When the hidden valve was opened, the Oily Water Separator gave a reading of 40 ppm or higher, well over the 15 ppm limit on discharge of oily waste water into the sea.
- After investigating further, the government alleged that the vessel had dumped tens of thousands of gallons of oily waste water into the ocean, and that Vastardis had falsified the Oil Record Book entries in connection with those operations to reflect that the water had been filtered and monitored, when the waste had actually bypassed the equipment on its way overboard.
- The Coast Guard brought an in rem proceeding against the vessel for its liability for operating in violation of the APPS, seeking criminal fines and detaining the vessel and her entire crew while the Coast Guard negotiated an Agreement on Security.
- Approximately a month later, the Government filed a criminal complaint against Vastardis and secured ex parte material witness arrest warrants for ten other crewmembers. Several of these witnesses were eventually repatriated to their homes overseas after they gave depositions, subject to their agreement to return for trial unless at sea.
- Vastardis was later charged in a four-count indictment with violations of the APPS and its regulations, and for obstruction in connection with the Coast Guard’s inspection, including (1) knowingly causing the failure to maintain an accurate Oil Record Book (33 U.S.C. § 1908), (2) falsification of records under the Sarbanes-Oxley Act (18 U.S.C. § 1519); (3) obstruction of justice, in presenting false Oil Record Book entries and deceiving inspectors (18 U.S.C. § 1505); and (4) false statements in connection with a federal investigation (18 U.S.C. § 1001).
- Following a seven-day trial, a jury found Vastardis guilty on all counts. At sentencing, the District Court imposed a $7,500 fine, a $400 special assessment, and three years’ probation, a condition of which barred Vastardis from entering the United States or applying for any visas to enter the United States.
The Requirement to Maintain an Accurate Oil Record Book
- As noted, under applicable Coast Guard regulations, entries are required to be made in the Oil Record Book whenever certain machinery space operations, such as using an Oily Water Separator, take place and the master or other person having charge of a ship is responsible for the “maintenance” of such record. See 33 C.F.R. § 151.25. A person who knowingly violates this regulation commits a felony subject to criminal penalties under the APPS.
- Vastardis argued that the requirement to “maintain” an Oil Record Book only required a ship to physically possess an Oil Record Book, not that it be accurate.
- But the Third Circuit disagreed, joining the standard set forth in the Second and Fifth Circuit Courts of Appeal, finding that “[t]he recordkeeping provision would make little sense if, as Vastardis proposes, it required that ships only physically possess an Oil Record Book in any state of completeness or accuracy.”
- In the Second Circuit, this standard was explained in its 2009 opinion in United States v. Ionia Mgmt. S.A.
- There, Ionia, a company incorporated in Liberia and headquartered in Greece, managed a vessel that flies under the flag of the Bahamas. During deliveries, the vessel would discharge oily waste water through a “magic hose” that bypassed the vessel’s Oily Water Separator. The crew made false entries in the Oil Record Book to conceal such discharges.
- In finding Ionia guilty of violating the provisions of MARPOL, the Second Circuit adopted a “plain-meaning” view of the requirement to maintain an Oil Record Book, holding that a vessel must not only physically possess an Oil Record Book, but that it must also be accurate (or at least not knowingly inaccurate) upon entering the ports or navigable waters of the United States.
- The Third Circuit joined the reading set out in Ionia in affirming Vastardis’ conviction, finding that he knowingly failed to maintain the Oil Record Book. The Court affirmed the other charges as well, but vacated the condition of probation that prohibited Vastardis from entering the United States, finding that Vastardis was a seafarer whose career depends on travel in international waters and such a condition of banishment impinges upon freedom of movement and could potentially interfere with the livelihood of a foreign national.
• The Third Circuit’s opinion in Vastardis demonstrates that vessel owners and ship managers must continue to remain focused on implementing and enforcing their compliance programs in order to recognize and address any improper discharge practices, to ensure that the vessel’s required records are maintained with accuracy and that they can be verified after-the-fact.
1 The 1973 International Convention for the Prevention of Pollution from Ships and the Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ships are commonly referred to together as “MARPOL.”.