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Article Summary

Under a little-known federal law, people who report ships that pollute open waters can collect up to half of the resulting fines — which can rise well into the millions of dollars. In one case, the government asked a court to split $5.25 million among 12 whistleblowers.

This article by TELG managing principal R. Scott Oswald and TELG principal David L. Scher was published by PassageMaker on January 27, 2015.

Reprinted from:

Blow the Whistle

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You’re making a passage with your trust crew 150 miles offshore and you notice a ship leaving an oily sheen in its wake, it’s officers secure in the knowledge that no one will find out. Well, under a little known federal law called the Act for the Prevention of Pollution from Ships, commonly called APPS, you have a significant financial incentive to ensure that someone does.

APPS and the MARPOL Protocol

APPS implements provisions of the International Convention for the Prevention of Pollution from Ships, known as the MARPOL Protocol. Under APPS, whistleblowers that provide information about violations of the MARPOL Protocol or related regulations resulting in a conviction are eligible to receive a reward of up to one half of any federal fines.

Fines for a single violation can be as high as $25,000, and each day of a continuing violation constitutes a separate violation. In the past several years, the United State government has prosecuted cases leading to fines as high as $37 million and paid millions in rewards to whistleblowers.

The MARPOL Protocol and ancillary regulations provide significant restrictions on the ability of ships to discharge waste into open waters. The MARPOL Convention adopted On November 2, 1973, modified and placed into effect in 1978, was created in response to a series of tanker accidents. The current MARPOL Protocol contains six annexes, which regulate pollution by oil, noxious liquid substances, harmful substances in packaged from, sewage, garbage and air pullation.

APPS, which implements the U.S. obligations under the MARPOL Protocol, states: “A person who Knowingly violates the MARPOL protocol…commits a class D felony. In the discretion of the Court, an amount equal to not more than half of such fine may be paid to the person giving information leading to conviction.”

Whistleblower Rewards for MARPOL Violations

APPS does not place any restrictions on who can be a whistleblower, and even cruise passengers and fishermen on other vessels have received rewards for reporting illegal offshore dumping. For example, while on a Valentine’s week cruise in 1993, a passenger videotaped crew members dumping plastic bags into the sea roughly 29 miles off the coast of Florida. The passenger reported the illegal dumping to authorities, and the government used the passenger’s videotape to obtain a guilty plea and payment of a $500,000 fine. Under APPS, the government paid the passenger a $250,000 rewards.

In a similar incident, fishermen in Florida witnessed a school of porpoises swimming through a field of plastic bags approximately 25 to 30 miles offshore. The fishermen contacted the Coast Guard, which asked the men to retrieve some of the bags. The bags contained information identifying the source as the Regent Rainbow operated by Regency Cruises. The government used the information to prosecute the ship owners and again paid a reward.

While anyone can qualify as whistleblower under APPS, most whistleblower are crew members on the violating ship. The crew is in a unique position to learn the inner workings of the ship and can observe mechanical problems or telltale signs of pollution, such as oil trails on the surface of the water or altered logs.

One of the largest cases to date involves Overseas Shipholding Group, Inc. (OSG). OSG transports crude oil and other petroleum products and operates a fleet of more than 100 vessels.

Twelve employees came forward and reported unlawful dumping on twelve ships to the government and senior company officials who self-disclosed the violations to the government.

The government filed a motion asking the court to divide one half of the $5.25 million, evenly among the 12 whistleblowers. In support of its motion, the government noted that its difficult to find outside witnesses to misdeeds committed in mid-ocean.

“The only people likely to know about the conduct and the falsification of ship record used in the port are the employees in the engine room,” prosecutors wrote. “Employees in this case, like those in other similar prosecutions, have indicated that that they fear retaliation, not just by their employees, but by manning agencies and other companies. They have a palpable fear of being blacklisted from future employment in the maritime industry.”

And there are other incentives to report violators. Anyone that discloses violations on ship carrying federal government cargo or owned by publicly traded corporations can receive additional rewards for their disclosures under the Federal False Claims Act and possibly the Security and Exchange Commission’s whistleblowers rewards program.

For cruisers, such reports are not really whistleblowers. They are more akin to a neighborhood watch program, but with benefits.

Scott Oswald and David Scher are lawyers working for the Employment Law Group of Washington, D.C.

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