Scholasticus law has solutions in place to assist clients in their goals of environmental management and stewardship of the seas. The United States continues to target and criminalize environmental errors made by shipping companies. The consequences of such errors can be outsized to the nature of the alleged violation, as regulators often view shipping companies as targets to enforce and advance policy objectives. It is notable that fines and penalties in this area are generally more commensurate to the size and capitalization of the shipping company rather than the gravity of the offense. The United States is also one of the only jurisdictions in the world which prosecutes shipping companies and seafarers for environmental crimes.
The most active areas of enforcement for the U.S. have recently been MARPOL (primarily discharge of oily water into the sea, the so-called “magic pipe” cases) as well as violations of the Environmental Protection Agency’s “Vessel General Permit.” Scholasticus provides its clients solutions to prevent such violations, insulate its liability in case of an error, and to defend itself if an enforcement action or investigation begins.
MARPOL and VGP Audits
Scholasticus has developed audits as a solution to the increase of enforcement undertaken by the relevant U.S. authorities. U.S. has increased enforcement of violations of both MARPOL and the VGP. Clients that have faced MARPOL or VGP investigations report that it has devastating effects, placing a tremendous psychological and labor-intensive workload on staff, crew, and shoreside personnel. The goal of the MARPOL audit is to both avoid ever being in an investigation and to ensure that clients are ready to respond to an investigation as soon as possible should the need arise.
Ironically, although shipping companies face the burden of fines and penalties from violations, they almost never commit the acts in question themselves. Rather, violations occur when crewmembers violate company policies related to environmental management. In the case of MARPOL violations, they relate to falsified oil record book entries which mask discharges of bilge water. The U.S. is famed for providing “incorrect” incentives for such actions, rewarding crewmembers for whistleblowing with substantial sums taken from the penalty amount. Companies with robust environmental management programs simply cannot compete with the disincentives to internal reporting provided by such programs.
Scholasticus Law can work with clients to customize an audit program to provide an audit of the relevant procedures in-office and shipboard related to environmental compliance. Scholasticus works with clients to develop the tailored service and customized fixed-fee pricing needed to address needs specific to clients while using more than a decade of experience working on MARPOL and VGP enforcement cases. Indeed, Scholasticus is incredibly familiar with the strategies employed by regulators and enforcement authorities and can use this experience to bolster a company’s approach to environmental compliance.
The end result of the audit is peace of mind—a reduced risk of an incident as well as reduction in the chance that a mistake would lead to an enforcement action.
Environmental Defense and Enforcement
Scholasticus has extensive experience defending shipowners, managers, and operators in environmental cases. Despite a company’s best efforts, violations of environmental laws occur. Such violations are often prosecuted or enforced in the U.S. because of the expansive view taken by the authorities on their jurisdiction to prosecute such violations. For example, even if a spill occurred outside U.S. waters, an incorrect entry in an oil record book can lead to enforcement or court proceedings in the U.S.
Quick action and responses to such investigations are critical to obtaining the best result possible. If liability were ever to result from such violations, owners or operators could be liable for millions in fines and years of probation, a procedure where a court-appointed monitor oversees operations and environmental compliance. Even some of the world’s top shipping companies have been convicted for such violations.
This has happened even to some of the most well managed and compliant companies. These convictions generally stem from actions of rogue crew members, commonly in connection with false entries in a vessel’s Oil Record Book, intended to cover up illegal discharges of bilge water. Many of these investigations begin with crewmembers reporting MARPOL violations to the U.S. Coast Guard (“USCG”), instead of through the company’s chain of command. Crewmembers can receive substantial rewards for reporting to the USCG. This combination of factors creates challenges even for companies committed to environmental compliance as they face liability for the actions of a rogue crewmember without having the opportunity to first address the wrongdoing.
The best approach to winning such cases is early action. Scholasticus stands available 24/7 to assist clients in managing risk from such violations.
Environmental Trainings
Scholasticus’ tailor-made training solutions educate crew and shoreside staff about the most effective ways to implement and manage a company’s environmental plan. Drawing on over a decade of experience, we can provide crew and staff insights on what happens when environmental violations occur. Trainings can also reinforce what the right approach is when a mistake occurs and how errors can be reported through the chain of command to mitigate risk. Indeed, even one such timely report can save millions of dollars in penalties, years of litigation, and additional years of court-supervised monitoring.
Although the trainings draw on court cases, relevant law, and policy, they are geared to create actionable advice and education for non-lawyers. Trainings can be offered on board, in-office, or in crew centers worldwide. The training can be customized depending on the audience, the length of time needed, and cost. The trainings are user-friendly and engaging, with the designed outcome to be an increase in knowledge and awareness of relevant personnel on the proper approaches to environmental management.
Oil Spill Prevention and Response
Scholasticus has advised clients on oil spill prevention, response, and cleanup over the past decade. The primary work in this area has been working with charterers and energy companies to evaluate and minimize risks of spills. While there are international conventions governing this space, the U.S. and many countries worldwide take an approach contrary to established international law. Scholasticus can help guide clients to ensure risks to the environment and their operations are minimized.
International
International law provides two principal conventions governing liability for spills from tankers. These conventions are the International Convention on Civil Liability for Oil Pollution Damage (“CLC”) and the International Conventions on the Establishment of an International Fund for Compensation for Oil Pollution Damage (commonly referred to as the “IOPC Fund”). These conventions provide security for the environment while ensuring that participants in the oil trade can reasonably assess their risks and have proper incentives to prevent any harm to the seas. Scholasticus regularly advises clients on the scopes of these conventions and how to manage risks.
Notably, the CLC regulates only crude oil. Petroleum products are outside the scope of the CLC and are currently governed only by national law.
U.S. Approach
Like many international conventions, the U.S. has declined to accede to the CLC or Fund conventions. Rather, the U.S. has promulgated the Oil Pollution Act of 1990 (“OPA 90”). OPA 90 regulates spills (or threatened spills) of all “oil”—both petroleum products and crude oil. OPA 90 governs spills in federal waters, but allows U.S. states to regulate spills in their own waters. It is an open question whether spills which migrate from federal waters to state waters would be governed by state law or OPA 90. As such, it is beneficial for owners and charterers to adequately evaluate their risks based on geography and plan their operations to minimize risks of spills.
Exceptions
Jurisdictions around the world regulate spills generally in line with CLC. However, there are significant and notable exceptions. Additionally, even countries which have acceded to the CLC deviate from the norms established there. Scholasticus works with a vast network of lawyers worldwide to get key advice in these areas and adds value to client operations using these relationships for efficient and effective advice.
