Justice Department Sends Clear Message to Marpol Violators: Carnival’s Princess Cruise Lines to Pay $40 million in Pollution Penalties

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*By James L. Pound. James is a member of the Tulane University Law School Class of 2017 and Graduate of the University of Georgia Class of 2014. James is a Notes and Comments Editor for the Tulane Maritime Law Journal and a member of the Maritime Law Association of the United States. He has a passion for maritime law, commercial litigation, and entrepreneurship.

The U.S. government’s crusade against vessel oil pollution reached new heights on Thursday. Princess Cruise Lines Ltd. (Princess) pled guilty to seven felony charges stemming from allegations that its employees illegally discharged oil into the ocean and deliberately covered it up.[1] Princess agreed to pay a $40 million penalty for its actions, the largest-ever criminal penalty involving vessel oil pollution.[2] In addition to the financial penalties, the plea agreement requires that cruise ships from eight Carnival Corporation (Carnival) cruise line companies submit to a five-year, court-supervised Environmental Compliance Program, which will require independent audits by a third party as well as a court-appointed monitor.[3] Princess is one of many subsidiaries of Carnival, which comprises the world’s largest cruise company.[4]

The U.S. Attorney General for the Southern District of Florida, along with the Department of Justice (DOJ), announced the plea agreement with Princess after a more than three-year-long joint investigation by the U.S. Coast Guard and the British Maritime and Coastguard Agency (MCA).[5]According to the DOJ, the MCA received a whistleblower complaint from a newly hired engineer on the Caribbean Princess in August of 2013.[6] The crewmember alleged that Princess employees used a “magic pipe” to circumvent the ship’s MARPOL-required oily water separator and discharged thousands of gallons of oil waste off the coast of England without recording the discharges in the ship’s oil record book.[7] Along with magic pipes, DOJ officials also claim that they identified two other methods of illegal discharge used by Princess cruise ships.[8]

Following the whistleblower’s complaint and resignation, the chief engineer allegedly directed a cover-up of the illegal discharges, including removal of the magic pipe and directing subordinates to lie.[9] According to court filings, several Princess cruise ships, including the Carribean Princess, engaged in illegal discharges dating back to 2005. The Caribbean Princess traveled extensively in U.S. waters throughout that time, visiting several U.S. ports.[10] Thus, according to prosecutors, the ship violated the Act to Prevent Pollution from Ships (APPS), the U.S. version of the International Convention for the Prevention of Pollution from Ships (MARPOL).

Though historic due to its severity, the penalty imposed on Princess Cruise Lines is not the first indication of the resolve with which the federal government is investigating and prosecuting vessel oil pollution. The discretion and extent of the measures available to the federal government in its prosecution of oil polluters and the vigor in which the DOJ and Coast Guard have investigated and prosecuted potential vessel pollution practices as of late should create concern for many commercial vessel owners.

First, APPS contains a “savings clause” that preserves the government’s seeking of additional remedies against MARPOL violators.[11] Thus, federal prosecutors can often obtain convictions for the falsification of oil record books without ever proving that an illegal discharge of oil actually occurred.[12] Additionally, the prosecution of MARPOL violations under other domestic criminal laws avoids the international jurisdictional concerns raised by prosecutions under APPS.[13] Thus, the Coast Guard and the DOJ rely on the “savings clause” to trigger prosecutions for APPS or MARPOL violations under domestic criminal statutes and thereby extend their jurisdictional reach and increase potential penalties for violations that occurred beyond U.S. territorial waters.[14]

APPS also includes a whistleblower provision, which provides that up to half of a criminal fine assessed against a violator may be awarded to a crew member who provides information leading to a conviction.[15] Such rewards have become well known in the industry and offer ample incentive for low-ranking crew members to tip off Coast Guard personnel of MARPOL violations.[16] APPS also allows the Coast Guard to demand a bond or surety in exchange for departure clearance of vessels detained for suspected oil pollution. In addition to sizeable monetary bonds, the Coast Guard has often demanded the execution of security agreements—non-financial conditions—in exchange for departure clearance. These agreements typically obligate the vessel owner to pay for wages, lodging, and transportation of crewmembers, among other costs, during an investigation.

In the past decade, federal courts have consistently aided the federal prosecution of vessel oil pollution under APPS. In United States v. Jho, the Fifth Circuit affirmed the government’s authority to prosecute foreign-flagged vessel owners, operators, or crewmembers for falsification of an oil record book regardless of where the illegal activity occurred.[17] Recently, in Watervale Marine Co. Ltd. vs. United States Department of Homeland Security, the D.C. Circuit Court of Appeal reaffirmed the U.S. Coast Guard’s authority to demand non-financial security agreements in exchange for the release of ships suspected of vessel oil pollution.[18] Notably, the court refused to expressly address whether the reasonableness of the security agreements is justiciable. Thus, while the Watervale Marine decision merely reaffirmed the status quo, it provides the Coast Guard and DOJ with a stronger negotiating position against vessel owners when investigating potential illegal discharges. Several prior court decisions concerning federal authority in the context of APPS investigations also favored the government.[19]

It is worth mentioning that the Fifth Circuit recently halted the trend of judicial deference to federal agency action in vessel oil pollution cases. In United States v. Fafalios, the court held that chief engineers on foreign-flagged vessels cannot be prosecuted under the Act to Prevent Pollution from Ships (“APPS”) for having failed to maintain an oil record book because an engineer is not the “master” of the ship as provided in APPS.[20]  While the Fafalios decision may serve as a relief for many crew members, it also highlights a crucial fact for vessel owners, commercial carriers, and their parent entities to take note of the ultimate targets of APPS investigations are high-ranking company officials.

Although there certainly are instances of top-level company officials expressly directing vessel crewmembers to illegally discharge waste in an effort to reduce costs, this is not always the case. Princess Cruise Lines, in its official press release, noted that, in many instances, it did have established company policies and procedures in compliance with international environmental law, but many employees were nonetheless operating in violation of these protocols.[21] Thus, at the very least, the Princess Cruise Lines penalty should encourage all commercial vessel owners and their legal counsel to reevaluate the effectiveness of company protocols and procedures, as well as onboard MARPOL equipment, in order to ensure legal compliance. For vessel owners that have, thus far, completely missed the boat, it should serve as the warning bell to take notice of the current legal landscape. In matters of prosecuting vessel oil polluters, the jurisprudential record of the past decade overwhelmingly supports deference to government action. Coupled with the Coast Guard’s and the DOJ’s aggressive pursuit of MARPOL violators, the risk of crippling penalties, or the costs for even suspected MARPOL violations, likely outweighs any short-term savings.

The Princess Cruise Lines penalty merely reaffirms what has become evident over the preceding decade, namely the seriousness of the federal government’s campaign against vessel oil pollution. Nonetheless, it should serve as a clear message that vessel owners, crewmembers, and legal counsel would be wise to receive.


For more discussion on penalties under APPS, see:

James Pound, “Surety” Not: Quid Pro Quo Conditions and the D.C. Circuit’s Free-Floating Expansion of Coast Guard Authority in “Magic Pipe” Investigations in Marine Waterfall v. Department of Homeland Security (publication forthcoming in the Tulane Maritime Law Journal Volume 40:1 (January)).

Brian K. McNamara, Organizing Marine Casualty Investigations: A “Wicked Problem” for Maritime Regulators, 40 Tul. Mar. L.J. 307 (2016).

Roy H. Sparks, The Fifth Circuit Finds That Criminal Sanctions for a Falsified Oil Record Book are Consistent with International Law in United States v. Jho, 33 Tul. Mar. L.J. 563 (2009).

Nicholas H. Berg, Bringing it All Back Home: The Fifth and Second Circuits Allow Domestic Prosecutions for Oil Record Book Violations on Foreign-Flagged Vessels, 34 Tul. Mar. L.J. 253 (2009).

Andrew W. Homer, Red Sky at Morning: The Horizon for Corporations, Crew Members, and Corporate Officers as the United States Continues Aggressive Criminal Prosecution of Intentional Pollution from Ships, 32 Tul. Mar. L.J. 149 (2007).


Bibliography:

[1] Press Release, United States Attorney’s Office Southern District of Florida, Princess Cruise Lines To Pay Largest-Ever Criminal Penalty For Deliberate Vessel Pollution (Dec. 1, 2016), available at https://www.justice.gov/usao-sdfl/pr/princess-cruise-lines-pay-largest-ever-criminal-penalty-deliberate-vessel-pollution.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] “Nothing in this chapter shall limit, deny, amend, modify, or repeal any other remedy available to the United States or any other person, except as expressly provided in this chapter.” Andrew W. Homer, Red Sky at Morning: The Horizon for Corporations, Crew Members, and Corporate Officers as the United States Continues Aggressive Criminal Prosecution of Intentional Pollution from Ships, 32 Tul. Mar. L.J. 149, 155 (2007) (citing 33 U.S.C. § 1907(f)); Roy H. Sparks, The Fifth Circuit Finds that Criminal Sanctions for a Falsified Oil Record Book are Consistent With International Law in United States v. Jho, 33 Tul. Mar. L.J. 563, 566 (2009)).

[12] Knowingly presenting an inaccurate ORB to a federal agency can warrant prosecution for violation of the False Statements Act, obstruction, conspiracy, and witness tampering. Homer, supra note 11, at 155; see also Lieutenant Benedict S. Gullo, The Illegal Discharge of Oil on the High Seas: The U.S. Coast Guard’s Ongoing Battle Against Vessel Polluters and a New Approach Toward Establishing Environmental Compliance, 209 Mil. L. Rev. 122, 145 (2011).

[13] Id.

[14] Homer, supra note 11, at 155–56; see Gullo, supra note 12, at 144–45.

[15] 33 U.S.C. § 1908(a) (2006).

[16] Gullo, supra note 12, at 155.

[17] 534 F.3d 398, 2008 AMC 1746, 1748 (5th Cir. 2008).

[18] 807 F.3d 325 (D.C. Cir. 2015).

[19] See Angelex LTD v. United States, 723 F.3d 500, 2013 AMC 1902 (4th Cir. 2013); Giuseppe Bottiglieri Shipping Co. S.P.A. v. United States, 843 F. Supp.2d 1241, 2012 AMC 2650 (S.D. Ala. 2012).

[20] United States v. Fafalios, 817 F.3d 155, 157 (5th Cir. 2016).

[21] Press Release, Princess Cruise Lines, Ltd., Statement from Princess Cruises (Dec. 1, 2016), available at http://www.princess.com/news/news_releases/2016/12/Statement-from-Princess-Cruises1.html.