Shipping Conglomerate Concealed Pollution in Magic Pipe Case

Four corporations will pay a $1 million penalty and will be barred from doing business in the United States during a maximum of five years

Four corporations involved in owning and operating a fleet of vessels regularly visiting New Orleans pleaded guilty on April 12 and agreed to pay a $1 million penalty and be banned from doing business in the United States for the next five years under the terms of a proposed plea agreement.

Stanships Inc. (Marshall Islands), Stanships Inc. (New York), Standard Shipping Inc. and Calmore Maritime Ltd., collectively the owners and operator of the M/V Americana, a Panamanian registered cargo vessel, each pleaded guilty in New Orleans before U.S. District Judge Carl J. Barbier to a total of 32 felony counts for violations of the Act to Prevent Pollution from Ships, Ports and Waterways Safety Act and obstruction of justice.

According to the plea agreement, subject to approval by the court, the four corporations will be prohibited from further business in the United States during the maximum five year period of probation. The plea terms also require personal banning of the owner of the companies who is also a corporate officer in some of the companies owning or technically managing vessels during the probationary period. Of the $1 million penalty, $250,000 will be devoted to community service payments to help conservation, protection, restoration, and management projects to benefit fish and wildlife habitats and resources in the Eastern District of Louisiana.

The government’s investigation of the M/V Americana started when a crew member told the U.S. Coast Guard during an inspection of the ship on Nov. 29, 2010, that the ship was illegally dumping sludge and oily waste overboard using a so-called “magic pipe” to bypass required pollution prevention equipment. The crew member provided the Coast Guard with cell phone photos taken at sea showing the use of the bypass. According to an agreed-upon factual statement filed in court, the defendants have admitted the following:

  • Sludge and oily waste from the vessel’s engines was transferred to a fuel tank and then deliberately pumped overboard.
  • The ship had an unreported leak between a ballast and fuel tank that led to overboard discharges of oil contaminated waste from both tanks.
  • A black “comet streak” stain of apparent oil was visible on the outside of the ship in the immediate vicinity of the overboard valve when the ship was in New Orleans in December 2010.
  • The metal bypass pipe used to dump oily waste overboard was hidden from view when the ship was in port.
  • A false Oil Record Book was created to conceal the illegal discharges. Ships are required to keep an Oil Record Book in which internal transfers and overboard discharges are fully recorded. The log is regularly inspected by the Coast Guard to ensure compliance with U.S. and international law and to make sure ships are not a threat to U.S. ports and waters.

The defendants also were charged with violating the Ports and Waterways Safety Act because they failed to report a hazardous situation that threatened U.S. ports and waters, involving the failure of the ship’s generators. After a voyage in which the ship had lost power for several days at sea, the ship arrived at the Southwest Pass, La. The master, who opposed proceeding to port until the problem was corrected, was directed by a shore-side manager to write an e-mail indicating that the ship had two generators. This was communicated to the Coast Guard, which then allowed the ship to enter the Mississippi River. However, the agency was not told that neither of the two generators was fully operational or able to power the ship, and that there was no backup since a third generator was completely inoperable. Because of the hazardous situation, the master ordered tug boats to guide the ship into port.

Stanships Inc. (Marshall Islands) is a repeat offender. It committed new crimes after it was sentenced on Sep. 29, 2010, for deliberate discharges in U.S. waters and concealing illegal pollution in falsified ship records from the M/V Doric Glory.

“No matter how vast they seem, aquatic resources are still finite and the Coast Guard Investigative Service remains committed to their preservation,” said Damon Rodriguez, Coast Guard Investigative Service Gulf Region special agent in charge.

This case was investigated criminally by the U.S. Coast Guard Criminal Investigative Services and the EPA Criminal Investigation Division, with assistance from Sector New Orleans, Eight Coast Guard District Office of the Judge Advocate. The case was prosecuted by Assistant U.S. Attorneys Emily K. Greenfield and Dorothy Manning Taylor, and Senior Trial Attorney Richard A. Udell of the Environmental Crimes Section of Department of Justice Environment and Natural Resources Division.

Source: Department of Justice

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