Those who read the shipping press will have noted that shipping markets are at historic lows in many sectors. The new year looks like being a tough one for ship owners. They are looking to cut costs wherever possible in the face of reduced earnings. However, shipping continues to face increasing regulations and increased enforcement of regulations. Nowhere is that more apparent than in the United States where four ships have recently been detained by the US Coast Guard for alleged oily water separator (OWS) and oil record book (ORB) deficiencies (see Tradewinds lead article 1 January 2016)
One can’t help but wonder whether this recent spate of detentions is a result of increased enforcement or the indirect result of cost cutting. In many cases MARPOL contraventions result from poor ballast maintenance or maintenance issues resulting in unexpected engine room flooding. It is often perceived by those working in the engine room to be quicker and easier to rig up a “magic pipe” rather than run contaminated water through the oily water separator. In other cases the oily water separator itself may not be defective due to poor maintenance such that oily water may have to be stored onboard thus causing ballast complications which in turn could compromise the cargo carrying capacity. One can see therefore how and why contraventions might arise.
One can also see how a ship owner who learns of a possible OWS or ORB deficiency might want to “overlook” the problem rather than incur the expense of a full scale investigation. Such investigations are often expensive and time consuming because, by their very nature, they involve deception by one or more crew members as well as falsification of records. It can take a great deal of time and effort to reconstruct the events according to the available evidence. It may also be impossible to reconcile a deficient ORB months after the alleged events took place.
The first question often asked by ship owners and managers is – how do I deal with potential OWB and ORB deficiencies?
Our advice to ship owners is to treat alleged OWS and OWB deficiencies as they would any other serious casualty. The ramifications of failing to investigate the incident can be extremely serious. One needs to look no further than the recent decision of the United States Mobile Federal Court in the case of the M/T Stavanger Blossom to see the potential fines that Owners could be exposed to not to mention the potential criminal sentences that can be levied against crew members (see www.justice.gov/opa/pr/norwegian-shipping-company-and-engineering-officers-convicted-environmental-crimes-and). As well as the financial consequences for an owner who knows of a contravention and decides to overlook it, there is also the potential damage to that owners’ reputation that could follow from any such action. Many charterers could black list the ship as part of their vetting process thus severely limiting the ship owners ability to trade the vessel and earn revenue.
If the investigation reveals a potential MARPOL infringement then the next question asked by a ship owner or manager is – how do I deal with such a situation?
If proper measures are taken promptly to investigate alleged OWS and OWB deficiencies then it is often possible to report the incident to the nearest coastal state in such a manner as to comply with the required MARPOL reporting procedure without raising any potential damaging issues for ship owners. Likewise, it may also be possible to manage the ORB issue in such a way as to dramatically reduce the risks that a ship owner may face on a later investigation in the United States.
The United States is a particular problem for ship owners not least because of a whistle blowing policy that rewards crew members for reporting incidents that they might perceive to be breaches. One can see that circumstances may arise where one or more disgruntled crew members might decide to blow the whistle on perceived historic practices that may or may not be MARPOL breaches. That in turn could lead to a detailed USCG investigation and examination of the ORB. If there is evidence of deliberate falsification of the ORB then the ship owners may face severe financial consequences.
A recent decision of the US Appeal Court has held that, as well as requiring financial security, the USCG can impose other non financial conditions before permitting ships suspected of MARPOL violations from departing from US ports. Those conditions can include requirements that the ship owners leave behind crew members who might have witnesses the alleged offences and pay their wages and costs while they remain in the US as well as agreements to serve subpoenas on ex crew members and facilitate their attendance in the US Court. These conditions are of course extremely onerous on ship owners who may be unwilling to abandon their crew in the US. The alternative however would appear to be indefinite detention of vessels, possibly resulting in breach of contractual provisions, loss of charter hire, delay of cargo deliveries and substantial claims. The case reference is USCA Case #14-5203 decided on December 15, 2014.
BDM’s lawyers have investigated numerous alleged OWS and OWB deficiencies. We help ship owners and managers to investigate alleged incidents and, if there is an infringement, we advise on the best way to report it in such a manner as to cause the least possible disruption and loss. Please feel free to call our emergency response number if you become aware of a deficiency on your ship and need help to deal with that situation.