Tanker company to pay $10 million fine to East Texas

By Marilyn Tennissen | Jun 20, 2007

U.S. Attorney John Ratcliffe announced June 20 the $10 million criminal fine from OSG shipping for environmental violations.

After admitting it deliberately polluted the waters in which its ships sailed, an oil tanker firm will be paying millions to East Texas for environmental protection projects.

Overseas Shipholding Group Inc. was sentenced June 20 in the Eastern District of Texas to pay $10 million as part of a criminal settlement.

John Ratcliffe, U.S. Attorney for the Eastern District, made the announcement Wednesday along the Neches River in downtown Beaumont.

Ratcliffe said OSG admitted to illegally dumping contaminated bilge waste into U.S. waters, including the Gulf of Mexico.

The penalty to the local community is part of a $37 million settlement with the United States announced Dec. 19, 2006, in Boston, Mass.

The total penalty is the largest ever to involve deliberate vessel pollution. OSG was indicted on 33 felony counts and the case involved 12 oil tankers and ports including Beaumont, Boston, Portland, Maine, San Francisco, Calif., and Wilmington, N.C.

The charges involving OSG tankers took place from June 2001 to March 2006 and include conspiracy, false statements, obstruction of justice and violations of the Clean Water Act, as amended by the Oil Pollution Act of 1990 and violations of the Act to Prevent Pollution from Ships.

OSG is a U.S. corporation headquartered in New York and is one of the largest publicly traded tanker companies in the world.

OSG pleaded guilty to the charges, admitting that it deliberately falsified ship Oil Record Books, which document all overboard discharges. The company also made discharges at night and deliberately circumvented pollution-control equipment. OSG ships concealed the bypass methods during U.S. port calls so that the Coast Guard would not discover the criminal activity.

OSG was sentenced to serve a three-year term of probation during which it must implement and follow a stringent environmental compliance program that includes a court-appointed monitor and outside independent auditing of OSG ships trading worldwide.

Prosecutors credited OSG's self-disclosures, cooperation and compliance measures taken by proposing fewer charges and reduced fines.

The final $37 million penalty includes a $27.8 million criminal fine and a $9.2 million organizational community service payment that will fund various environmental projects coast-to-coast.

U.S. District Judge Thad Heartfield approved the proposed plea agreement in Beaumont for its illegal activities involving East Texas, and sentenced OSG to pay $10 million.

At the sentencing hearing, Judge Heartfield termed the regular circumvention of pollution prevention equipment and falsification of ship logs to be "a serious string of events that allowed the company to avoid large scale costs and continue to enjoy substantial pecuniary gain." The sentence of criminal fines, community service, and probation "will promote just punishment and respect for the law," Heartfield said.

Of the total settlement, $5.3 million is a criminal fine for making false statements to the Coast Guard. Another $3 million will go in escrow for additional charges.

In addition, $1.7 million is earmarked for community service. Payments will be made to the National Park Foundation and National Fish and Wildlife Foundation for projects that preserve and restore the environment and ecosystems in the Eastern District of Texas. The area includes coastal waters, rivers and lakes in Jefferson, Orange, Hardin, Liberty, Jasper and Newton counties.

One of the organizations to benefit is the Environmental Learning and Research Center at Lamar University, which conducts environmental education projects with many local partners.

Through the Conservation Fund, the Big Thicket National Preserve will continue land acquisitions.

The U.S. Coast Guard is also receiving restitution in the form of $2 million, including $540,000 designated for East Texas, to fund a satellite surveillance program to monitor ships off the U.S. coast.

The investigation and prosecution was conducted through the combined efforts of the U.S. Coast Guard units in each port, including Houston and Port Arthur, Texas; the Coast Guard Investigative Service; the Coast Guard Office of Maritime and International Law; and the Coast Guard Office of Investigations and Analysis.

The case was prosecuted by the Environmental Crimes Section of the U.S. Department of Justice and the U.S. Attorney's Offices in the affected districts.

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