Oil tanker and bulk shipping company Overseas Shipholding Group Inc. will pay a record fine of $37 million after agreeing to plead guilty to illegally dumping waste oil and falsifying records used to log pollutants in six U.S. ports, federal officials said Tuesday. The company agreed to plead guilty to 33 felony counts stemming from dumping violations from nine ships and for log violations for three other ships in Boston; Portland, Maine; Los Angeles; San Francisco; Wilmington, N.C.; and Beaumont, Texas, federal officials said.
The penalty includes a $27.8 million criminal fine which will be divided among the districts and a $9.2 million payment for community service to fund various marine environmental projects. The Department of Justice and the U.S. Coast Guard began investigating after a tip from Canadian officials, who reported one of the company's ships showed oil waste was being disposed of but official records failed to account for it. An investigation showed 150,000 gallons of oil-contaminated waste was dumped in the waters between Maine and Massachusetts between 2001 and 2005, officials said. The Overseas Shipholding Group Inc., one of the largest publicly traded tanker firms in the world, "has engaged in repeated and deliberate pollution of our oceans," said acting Associate U.S. Attorney General William Mercer said in a release. The company's management failed to uncover or stop the illegal activity after allegations were brought to the attention of management several times and again after the government started its investigation, Mercer said. "This penalty ... will serve as a deterrent for all other companies who attempt to circumvent the law for their own financial gain at the expense of the environment," he said. Morten Arntzen, president and CEO of the shipping company, said in a news release: "We are pleased to bring closure to this investigation and believe our cooperation with the government was vital to today's announcement." Under the terms of the guilty plea, the company agreed to a three-year probation during which it must implement and follow a stringent environmental control program that includes a court-appointed monitor and outside independent auditing of its ships trading worldwide. Robert Johnston, head of shipping operations, said the company is "confident we have put the right people, systems, processes and training programs in place to ensure these issues will not happen again, and that we deliver on our commitment to being a responsible marine transportation company." The $37 million fine is the largest-ever criminal penalty involving deliberate vessel pollution, according to the U.S. Coast Guard.
The company also admitted in a court record that it dumped thousands of gallons in the ocean and its "motive for the crimes was financial." "OSG was saving the cost of offloading waste oil in port and the time it would take to comply with the law," Mercer told reporters outside U.S. District Court in Boston. "This oily waste was dumped regularly, intentionally and without regard for the laws that protect our water from harm and pollution," Mercer said. Most of the dumping occurred at night and ships' crew sometimes painted pipes to hide traces of the crimes, he said. Still, the full extent of the pollution and its impact on the environment remains unclear, Mercer said. One senior engineer has entered a guilty plea in California and another has been indicted have in connection with the dumping, he said. More birds are killed from illegal oil discharges than it happens in most oil spills, said U.S. Coast Guard Rear Adm. Tim Sullivan. "It's dangerous, obviously, not only to the environment, but to all of us" since oceans are a source of food, transportation and recreational activities for humans, Sullivan told reporters.