United States Fifth Circuit Decision Addresses Liability of Chief Engineers for Failing to Maintain an Accurate Oil Record Book
In United States of America v. Fafalios, the United States Court of Appeals for the Fifth Circuit recently vacated the conviction of a chief engineer for failing to maintain an oil record book, in violation of APPS, 33 United States Code (“U.S.C.”) § 1908(a). The Court held that a chief engineer on a foreign flagged vessel could not be prosecuted for failing to maintain an oil record book once a ship enters U.S. waters, because the duty to accurately maintain an oil record book rests exclusively with the “master or other person having charge of the ship.” This decision may provide some limited benefit to engineers in the short term, but will not likely assist vessel owners or managers subject to MARPOL prosecutions for the reasons discussed below.
FACTS IN UNITED STATES v. FAFALIOS
Matthaios Fafalios (“Fafalios”) was the chief engineer on the M/V Trident Navigator, a Marshall Islands flagged bulk carrier. In December 2013, Fafalios ordered the discharge of untreated bilge water from the vessel into the ocean while in international waters. A fitter aboard the vessel observed the illegal discharge and took a picture of it on his cell phone. Fafalios confiscated the fitter’s cell phone and deleted the photo. The fitter reported the illegal discharge to the master. To conceal his actions, Fafalios did not record this illegal discharge in the Trident Navigator’s oil record book. When the Trident Navigator arrived in the Port of New Orleans several weeks later, the fitter contacted the U.S. Coast Guard and reported the incident. Fafalios instructed the crew to lie about the illegal discharges when interviewed by the U.S. Coast Guard. Following an investigation, the vessel’s operator pleaded guilty to knowingly falsifying the oil record book and obstruction of justice, paid a criminal penalty of $900,000.00, and was sentenced to a three-year term of probation. Fafalios did not plead guilty, and the U.S. Attorney for the District of Eastern District of Louisiana subsequently indicted him for: (1) obstruction of justice under 18 U.S.C. § 1505; (2) witness tampering under 18 U.S.C. §1512(b)(3); and (3) failing to maintain an oil record book in violation of 33 U.S.C. § 1908(a) and 33 Code of Federal Regulations (“C.F.R.”) §151.25 . The case went to trial and Fafalios was convicted of all three charges.
Fafalios appealed his conviction on the one count of failing to maintain an oil record book and the Fifth Circuit vacated the conviction. Fafalios did not appeal his conviction of the other charges, and the Fifth Circuit’s opinion did not address them. He thus remains convicted of obstruction of justice under 18 U.S.C. § 1505 and witness tampering under 18 U.S.C. §1512(b)(3).
THE FIFTH CIRCUIT ANALYSIS
APPS is the domestic implementing legislation of MARPOL in the United States. The regulations under APPS set forth the requirements for maintenance of an Oil Record Book. A knowing violation of APPS, its implementing regulations or MARPOL occurring within the jurisdiction of the U.S., can be prosecuted as a felony criminal offense. The Fafalios opinion focused on two provisions of 33 CFR §151.25 which state in relevant part as follows:
(h) Each operation described in . . . this section shall be fully recorded without delay in the Oil Record Book so that all the entries in the book appropriate to that operation are completed. Each completed operation shall be signed by the person or persons in charge of the operations concerned and each completed page shall be signed by the master or other person having charge of the ship.
(j) The master or other person having charge of a ship required to keep an Oil Record Book shall be responsible for the maintenance of such record.
33 C.F.R. §151.25 (emphasis added).
The Fifth Circuit held that only the vessel master holds responsibility for maintaining an accurate oil record book. The court held that an engineer cannot be held liable under 33 U.S.C. § 1908(a) for failing to maintain an accurate oil record book because the plain language of 33 C.F.R. § 151.25 provides that only the “master or other person having charge of the ship” has a duty to maintain the record book.
An engineer also cannot be held liable for failure to maintain an oil record book under 33 U.S.C. § 1908(a) as a result of the duty to fully record and sign “without delay” each operation in international waters in the oil record book. The court held that a failure to make an entry “without delay” is a violation of APPS/MARPOL that occurs at the time an entry should be and is not made. It does not constitute a continuing offense under 33 C.F.R. § 151.25. The Fifth Circuit reasoned that when an engineer fails to record and sign an oil record book entry relating to an improper discharge in international waters he is not in violation of either 33 U.S.C. § 1908(a) or its attendant regulations because the offense was completed before the engineer entered U.S. waters. Therefore, the government did not have jurisdiction over an omitted entry made by an engineer in international waters.
In arriving at its decision, the Fifth Circuit relied heavily on its prior decision in United States v. Jho, 534 F. 3d 398(5th Cir. 2008). In Jho, a chief engineer of a foreign flagged vessel knowingly made inaccurate entries in the oil record book after illegal discharges in international waters, lied to the U.S. Coast Guard about the accuracy of the entries during an investigation and as a result was charged with aiding and abetting the failure to maintain the oil record book under 33 U.S.C. § 1908(a) and 33 C.F.R. § 151.25 and making false statements to U.S. Coast Guard officials. The government charged Jho and the vessel operator with conspiracy, failure to maintain an accurate oil record book and making materially false statements to a government investigator. Jho was prosecuted under an “aiding and abetting” theory with respect to the non-conspiracy charges. The district court dismissed the charges against Jho on the ground that the unrecorded discharge occurred outside U.S. waters and outside of U.S. jurisdiction. The Fifth Circuit in that case reversed the district court’s dismissal, emphasizing that 33 C.F.R. § 151.25 criminalizes a failure to maintain oil record books and that, upon entering U.S. waters, the operator and the master of a foreign-flagged vessel may be criminally liable for knowingly possessing an inaccurate oil record book. The Fifth Circuit also made clear that when an engineer, like Jho, knowingly makes inaccurate entries, or fails to make an entry in an oil record book he can be prosecuted for aiding and abetting the failure to maintain an oil record book. Moreover, Jho provides that if an engineer works with any other crewmembers to perform an unlawful discharge and fails to record the discharge in the oil record book, the engineer, assisting crew member(s) and company can be prosecuted for a conspiracy knowingly maintain an inaccurate oil record book.
In contrast to the Jho case, the U.S. Attorney prosecuting Fafalios did not pursue an aiding and abetting theory of liability or conspiracy charges against Fafalios and the vessel operator.
IMPACT OF THE FAFALIOS DECISION
The Fafalios decision will likely have little impact on prosecutions of vessel owners or operators under APPS. The government can still prosecute companies for conspiracy to violate APPS and for failing to maintain an accurate oil record book based upon the actions of management level engineers as occurred in the Jho case.
However, the Fafalios decision may signal some increased risk of prosecution for vessel masters. This is particularly true in view of the recent Department of Justice policy changes which mandate prosecution of responsible employees in connection with investigations and prosecutions of business entities. However, we expect that the government will continue to have difficulty prosecuting vessel masters as they have in the past because in many cases there is no evidence showing that the master “knowingly” maintained a false oil record book. In many cases, vessel masters have no knowledge of illegal activity occurring in the engine room. It is possible that the Falafios decision will result in the U.S. Coast Guard focusing its APPS investigations on communications between the master and the vessel engineers pertaining to illegal discharges and oil record book entries.
The decision may also affect the way the Government indicts engineers in the future. Future indictments against engineers under APPS will likely include allegations that the engineers aided and abetted the maintenance of a false oil record book or conspired with the master or vessel operator to maintain a false oil record book. They will likely continue to include charges arising during a government investigation of APPS violations including making false statements to investigators, obstruction of justice and witness tampering where warranted.
Finally, the Fafalios court noted that if the government believes its decision has limited the government’s ability to enforce MARPOL, the government has the power to simply amend its APPS regulations to require engineers to maintain accurate oil record books in U.S. waters.
In summary, Fafalios, affirms the Fifth Circuit’s earlier decision in Jho and specifically clarifies that while an engineer cannot be held liable for failure to maintain an accurate oil record book, an engineer can still be prosecuted for aiding and abetting the failure to maintain an accurate record book. In addition, engineers can still be charged and convicted for, making false statements to a Coast Guard investigator, witness tampering or other illegal conduct that sometimes occurs during government investigations of MARPOL violations.
This information has been prepared by Keesal, Young & Logan for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between you and Keesal, Young & Logan. You should not act upon this information without seeking professional counsel.