Clipper Marine pleads guilty in oil case, agrees to retrofit ships

The following is the text of a press release issued by the U.S. Department of Justice:
(NEWARK, N.J.) — In a case involving illegal discharges of oily waste from
an ocean-going vessel that entered Port Newark in June 2006, a federal
judge in Newark accepted a plea agreement today between the government
and Clipper Marine Services A/S, a Danish company, announced U.S.
Attorney for the District of New Jersey Christopher J. Christie.
In a plea entered today in U.S. District Court before U.S. District Judge
Peter G. Sheridan, Clipper Marine Services pleaded guilty and admitted
that it conspired to defraud the U.S. Coast Guard by maintaining a false
Oil Record Book on board the M/T Clipper Trojan that concealed overboard
discharges of oil sludge and oil-contaminated bilge water between February
and June of 2006.  Clipper Marine Services also acknowledged that it was
responsible for the actions of the ship’s Chief Engineer, who maintained
the false Oil Record Book and presented it to the U.S. Coast Guard during
a port state control inspection at Port Newark on June 15, 2006.   The
company also acknowledged that the discharges aboard the M/T Clipper
Trojan were attributable, at least in part, to its failure to manage the
vessel so as to ensure compliance with the MARPOL Protocol and U.S. law
and regulations, and its failure to diligently enforce company policies
prohibiting such conduct.
The dumping of oily waste violates the MARPOL Protocol, an international
treaty regulating the handling and disposal of oil waste at sea.
Ocean-going vessels like the M/T Clipper Trojan are required by
international and U.S. law to maintain an accurate Oil Record Book that
records any transfer or disposal of oily waste.
In a precedent-setting plea agreement, the company agreed to retrofit four
of its oldest vessels with new, higher capacity Oily Water Separators to
bring any discharges within the amounts allowable under the MARPOL
Protocol and U.S. law.  The company also agreed to implement a remote
monitoring system aboard five of its vessels.  The system will allow the
U.S. Coast Guard and on-shore employees of the company to monitor waste
levels and the use of oil waste processing equipment in real-time, using
data transmitted via satellite.  Such monitoring should help detect and
deter improper discharges of oil waste.
In addition to making a total monetary payment of $4.75 million, the
company agreed to retrofit certain ships with state-of-the-art oily water
separators and implement a pilot program involving a cutting-edge,
real-time remote monitoring system to track oil waste levels and the usage
of oil waste processing equipment on board five of its ships.
The total monetary payment of $4.75 million is apportioned between a fine
of $3.25 million and a community service payment of $1.5 million.  The
community service payment will be made to the National Fish and Wildlife
Foundation, to which the U.S. Attorney’s Office has directed other such
community service payments in environmental cases prosecuted in the
District of New Jersey.  This community service payment is to be
designated for the “protection, scientific study, and restoration of
marine and aquatic resources in the District of New Jersey. . .”
Clipper Marine Services was indicted along with two related companies on
March 20, 2007, in connection with an attempt by crew members of the M/T
Clipper Trojan to cover up illegal discharges of oily waste in
international waters.
“Clipper Marine Services has agreed to install real-time monitoring
equipment and upgrade environmental controls on various ships as a result
of today’s plea agreement,” said Ronald J. Tenpas, Assistant Attorney
General for the Justice Department’s Environment and Natural Resources
Division. “This is an important step towards compliance with U.S. and
international law that will become the standard for the industry.”
“The Coast Guard is satisfied that Clipper Marine Services is taking
responsibility for the crimes it has committed,” said Rear Admiral Timothy
S. Sullivan, Commander, First Coast Guard District, U.S. Coast Guard.
“The terms of this agreement demonstrate that Clipper Marine Services is
directly targeting and improving problem areas, and I am encouraged by
their willingness to retrofit the latest OWS and monitoring technologies.
The commercial shipping industry would be well served to follow Clipper
Marine Services’s example.”
The plea agreement also provides for a deferred fine of $1.25 million in
the event the company fails to implement the remote monitoring system.
But the amount of the deferred fine is to be reduced by the direct costs
of implementing the pilot system.
The company also agreed to implement an Environmental Compliance Plan
(ECP) for the entire three-year period of probation.  The ECP will require
annual environmental audits aboard any vessels that the company manages
and which employ an Oily Water Separator.  It also requires that the
company implement a variety of policies and management practices designed
to ensure compliance with the MARPOL Protocol.  These include crew member
and employee compliance training; a system of open reporting by which crew
members can anonymously report illegal discharges; the creation of a
Corporate Compliance Manager to oversee the implementation of the ECP; and
the use of an environmental tagging system in which overboard discharge
valves are fitted with numbered tags which are logged in order to track
their usage.
Since the incident in June, Clipper Marine Services has already
implemented a number of new compliance measures, many of which were
incorporated into the ECP.  The company’s willingness to implement new
compliance measures helped make possible the use of innovative terms in
the plea agreement.
Charges against the other two defendants, Clipper Wonsild Tankers Holding
A/S and Trojan Shipping Co. Ltd., were dismissed.  The case had been set
for trial on Feb. 19, 2008, when the parties reached a preliminary
agreement to resolve the matter on Feb. 8, 2008.
Clipper Wonsild Tankers Holding A/S and Clipper Marine Services A/S are
Danish companies that commercially operated and technically managed the
M/T Clipper Trojan.  The Trojan Shipping Co. Ltd., a Bahamas company, is
the registered owner of the M/T Clipper Trojan.  All three companies are
part of The Clipper Group A/S, a global shipping consortium based in
Chief Engineer Fernando Magnaye pleaded guilty on Feb. 2, 2007, to charges
of presenting a false document to the Coast Guard and attempting to
obstruct a Coast Guard inspection.   During a plea hearing before Judge
Mary L. Cooper in Trenton, N.J., Magnaye admitted that he knew about
illegal discharges of oil sludge and contaminated bilge waste but
nonetheless failed to record those discharges in the M/T Clipper Trojan’s
Oil Record Book.  Magnaye also admitted that he presented the false Oil
Record Book to the Coast Guard and falsely claimed to Coast Guard
inspectors that the book was accurate.
U.S. Attorney Christie credited Special Agents of the U.S. Coast Guard
Investigative Service, under the direction of Special Agent-in-Charge Jon
C. Finnegan, and Marine Inspectors and Investigators from U.S. Coast Guard
Sector New York, under the command of Captain Robert O’Brien, with the
investigation.  The U.S. Coast Guard’s investigation was guided by the
First Coast Guard District Inspections and Investigations Branch and Legal
Office, and U.S. Coast Guard Headquarters’s Office of Maritime and
International Law and Office of Investigations and Analysis.
The government is represented by Assistant U.S. Attorney Bradley A. Harsch
of the Criminal Division in Newark, Senior Trial Attorney David P. Kehoe
of the Justice Department’s Environmental Crimes Section and Lieutenant
Christopher L. Jones, Special Assistant U.S. Attorney, of the First Coast
Guard District Legal Office.
By Professional Mariner Staff