United States v. Oceanic Illsabe Ltd.

• Decision Date: 07 May 2018
• Docket Number: No. 17-4062,No. 17-4061,17-4061
• Citation: 889 F.3d 178
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. OCEANIC ILLSABE LIMITED, Defendant–Appellant. United States of America, Plaintiff–Appellee, v. Oceanfleet Shipping Limited, Defendant–Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

889 F.3d 178

UNITED STATES of America, Plaintiff–Appellee,

v.OCEANIC ILLSABE LIMITED, Defendant–Appellant.

United States of America, Plaintiff–Appellee,

v.Oceanfleet Shipping Limited, Defendant–Appellant.

No. 17-4061

No. 17-4062

United States Court of Appeals, Fourth Circuit.

Argued: December 7, 2017

Decided: May 7, 2018

ARGUED: George Michael Chalos, CHALOS & CO, P.C., Oyster Bay, New York, for Appellant. Emily Anne Polachek, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Briton P. Sparkman, CHALOS & CO, P.C., Oyster Bay, New York, for Appellant. Jeffrey H. Wood, Acting Assistant Attorney General, Eric Grant, Deputy Assistant Attorney General, Allen M. Brabender, Kenneth E. Nelson, Brendan C. Selby, Environment & Natural Resources Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; John Stuart Bruce, United States Attorney, Jennifer May–Parker, First Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina; Brendan T. Gavin, LCDR, Deputy Staff Judge Advocate, UNITED STATES COAST GUARD, Norfolk, Virginia, for Appellee.

Before TRAXLER, KING, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge King wrote the opinion, in which Judge Traxler and Judge Harris joined.

KING, Circuit Judge:

In 2016, Oceanic Illsabe Limited ("Oceanic") and Oceanfleet Shipping Limited ("Oceanfleet") (together, the "Appellants")—two closely related corporate entities headquartered in Greece—were each convicted of nine criminal offenses by a jury in eastern North Carolina. Those crimes were directly committed by the supervisory personnel in the Engine Department of the M/V OCEAN HOPE (the "Ocean Hope," or the "Vessel")—an oceangoing cargo ship owned and operated by the Appellants. The offenses of conviction arose from and are related to illegal discharges of large quantities of oily pollutants from the Vessel into the ocean. Oceanic and Oceanfleet maintain on appeal that the prosecution failed to sufficiently prove that they are criminally responsible for the offenses lodged against them. The Appellants also contend that the district court erred in imposing fines and other penalties at sentencing. As explained below, we affirm the convictions and sentences.

I.

A.

We begin with a brief review of some pertinent legal and factual background for this prosecution. The United States is a signatory to the 1973 International Convention for the Prevention of Pollution from Ships, as amended in 1978 ("MARPOL"). MARPOL's primary purpose is to eliminate pollution of the oceans by discharges of oily wastes. To that end, MARPOL—an abbreviation for "marine pollution"—requires its member states to punish under domestic law any violations of MARPOL that occur on oceangoing ships, and to provide for penalties that will discourage additional violations.

In compliance with MARPOL, our Congress enacted in 1980 the Act to Prevent Pollution from Ships ("APPS"). APPS provides that foreign ships in the navigable waters of the United States are subject to the discharge requirements of federal law pertaining to oily pollutants. See 33 U.S.C. § 1902(a)(2).¹ With respect to discharges of such pollutants that occur outside our navigable waters, the Coast Guard can assert jurisdiction when a foreign ship fails to make complete and accurate entries in the ship's Oil Record Book. Id. § 1908(a).²

MARPOL and federal law both require all oceangoing ships exceeding 400 gross tons to maintain an Oil Record Book. See 33 C.F.R. § 151.25(a). The Oil Record Book must be fully updated any time a ship's crewmembers engage in certain "machinery space operations," including the disposal of oily pollutants and wastes. Id. § 151.25(d).³ Because oceangoing ships generate large quantities of oily pollutants and wastes, their Oil Record Books are required to be updated "without delay." Id. § 151.25(h).

The applicable regulations prescribe how to properly dispose of specific waste products, including bilge water and sludge. See 33 C.F.R. § 151.10(a). Bilge water is created when water accumulates at the bottom of a ship and combines with oily mixtures that have leaked and dripped from the engine fuel systems. Id. § 151.05. Bilge water must be collected and stored in tanks onboard the ship and then processed through two pollution control devices, the Oil Water Separator (the "Separator") and the Oil Content Monitor (the "Content Monitor"). Id. § 151.10(a)(5)-(6). If, after passing through the Separator, the Content Monitor measures only negligible quantities of oil, bilge water can be legally discharged into the ocean. Id. Sludge—that is, the oil residue left over after bilge water has been processed through the Separator—must either be incinerated onboard the vessel or offloaded in port to a licensed hauler and disposal facility. See MARPOL, Annex VI, Reg. 16.1. The foregoing disposal activities must always be assiduously recorded in the ship's Oil Record Book.

B.

On April 14, 2016, the grand jury in the Eastern District of North Carolina returned the operative nine-count indictment in this case and charged Oceanic, Oceanfleet, and two of the Ocean Hope's supervisory personnel (the "Indictment"). The indicted supervisory personnel were Chief Engineer Rustico Ignacio and Second Engineer Cassius Samson of the Engine Department. The charges against the defendants included conspiracy to commit offenses against the United States, failure to fully and accurately maintain (and aiding and abetting the failure to fully and accurately maintain) the Ocean Hope's Oil Record Book, a charge of obstruction of justice by falsification of (and aiding and abetting the falsification of) the Oil Record Book, making false statements to Coast Guard investigators, a second obstruction of justice charge for making false statements to Coast Guard investigators, and four charges of witness tampering. Samson was subjected to eight charges—all the counts alleged except Count Six—while Chief Ignacio was subjected to five charges—Counts One, Two, Three, Six and Nine. More specifically, the nine offenses alleged in the Indictment were as follows:

• Count One—Conspiracy to violate APPS and obstruct justice, in violation of 18 U.S.C. § 371 ;

• Count Two—Violating APPS by failing to fully and accurately maintain—and by aiding and abetting the failure to fully and accurately maintain—the Oil Record Book, in violation of 33 U.S.C. § 1908(a), 18 U.S.C. § 2, and 33 C.F.R. § 151.25 (the "Failure to Maintain charge");⁴ • Count Three—Obstructing justice by falsification of—and by aiding and abetting the falsification of—the Ocean Hope's Oil Record Book, in violation of 18 U.S.C. §§ 1519 and 2 (the "Obstruction by Falsification charge");⁵

• Count Four—False statements to Coast Guard investigators, in violation of 18 U.S.C. § 1001(a)(2) ;

• Count Five—Obstructing justice by making false statements to Coast Guard investigators, in violation of 18 U.S.C. § 1505 ; and

• Counts Six through Nine—Four offenses of witness tampering, in violation of 18 U.S.C. § 1512(b)(3).

Oceanic and Oceanfleet were charged in each of the nine counts with being vicariously liable for the illegal activities of Chief Engineer Ignacio and Second Engineer Samson, who were acting within the scope of their agency and employment. At the conclusion of the pretrial proceedings, the four defendants—Oceanic, Oceanfleet, Chief Ignacio, and Samson—were jointly tried before a jury in Wilmington.

C.

The trial lasted several days and concluded on September 1, 2016. The jury heard approximately twenty witnesses and was presented with numerous exhibits and records.⁶ The witnesses confirmed that, sometime in April 2015, the Ocean Hope embarked on a voyage from Bangladesh in southern Asia to Wilmington in eastern North Carolina. During that trip, the Engine Department's subordinate crewmembers—at the direction of Chief Engineer Ignacio and Second Engineer Samson—ignored the waste disposal procedures required by MARPOL and APPS and illegally discharged large quantities of oily pollutants into the ocean. Several crewmembers confirmed that, after the Vessel's arrival in Wilmington, they were instructed by Chief Ignacio and Samson to make false statements to the Coast Guard investigators about the illegal discharges. The Oil Record Book of the Ocean Hope was not accurately maintained and was systematically falsified. The trial evidence proving those unlawful activities is summarized below.

1.

The jury learned that the Ocean Hope was owned by Oceanic, a Liberian corporation with its principal place of business in Greece. In October 2009, Oceanic contracted with its parent entity, Oceanfleet—a Marshall Islands corporation headquartered in Greece—to provide commercial ship management services to the Ocean Hope. Oceanic and Oceanfleet retained a staffing agency in the Philippines to provide seafarers (i.e., employees) to operate and maintain the Ocean Hope. Several of those employees were the subordinate crewmembers in the Vessel's Engine Department, and worked under the supervision of Chief Engineer Ignacio and Second Engineer Samson.

The Engine Department was staffed by eight crewmembers. The crewmembers generally wore uniforms with the name "Oceanfleet" affixed thereon. The prosecution emphasized that the Department's crewmembers confirmed to the jury that they were employed by either Oceanic or Oceanfleet, or by both Appellants. For example, Second Engineer Samson confirmed that his salary came from both Oceanic and Oceanfleet. Samson said that the name "Oceanic Illsabe" was written on his employment contract, and that Oceanfleet operated the Ocean Hope for the duration of his employment. The subordinate crewmembers understood that they were employed by Oceanfleet.

All of the Engine Department crewmembers were required to comply with the Oceanfleet Safety Management System Manual (the "Oceanfleet Manual"), which had the name "Oceanfleet" emblazoned on nearly every page. The Oceanfleet Manual explained the...