Charles B. Anderson

Since the Exxon Valdez incident, criminal liability arising from the discharge of oil or hazardous substances into the navigable waters of the United States has become an increasing concern to shipowners and operators. The U.S. Department of Justice (DOJ) now vigorously prosecutes criminal violations of environmental statutes, including marine pollution incidents.

This trend has also changed the traditional role of the Coast Guard as the agency responsible for the investigation of marine casualties and the promulgation of regulations intended to promote the safety of life and property at sea. Whereas in the past shipowners generally cooperated openly with Coast Guard investigators, allowing them full access to vessel witnesses and documentary evidence, now the fear of criminal prosecution too often generates an atmosphere of mutual mistrust and necessitates the retention of criminal defense lawyers to protect the shipowner, officers, and crew.

Unfortunately, the statistics show that this fear is well-founded. In 1998, the Environmental Protection agency (EPA) referred 266 criminal cases to the DOJ and assessed $92.8 million in criminal fines. Criminal penalties assessed for violations of the U.S. Clean Water Act alone amounted to over $36 million in 1998. The number of prosecutions for marine environmental crimes is still relatively small, but growing. For example, the DOJ recently obtained felony convictions against three corporations for their role in the January 1994, 750,000-gallon oil spill from the tank barge Morris J. Berman in Puerto Rico. In September 1997, the owners of the tug Scandia and the barge North Cape, together with the parent company’s president and the tug master, pled guilty in Rhode Island federal court to criminal charges of negligently discharging oil and unlawfully killing migratory birds after the North Cape ran aground off Matunuck, Rhode Island in January 1996, spilling 826,000 gallons of home heating oil. The defendants agreed to pay $8.5 million in fines and to undertake a $1 million remedial safety program on any vessels navigating Rhode Island waters. Like the North Cape incident, most cases are settled by "plea bargains," but some have proceeded to trial and resulted in jail sentences for the defendants. In addition, the DOJ, in cooperation with the U.S. Coast Guard, has increased its efforts to catch marine polluters "in the act." In the first criminal prosecution under OPA-90, for example, the owner of the Panamanian flag cruise ship Viking Princess agreed to plead guilty to felony charges and pay a $500,000 fine after a Coast Guard patrol plane equipped with special sensors videotaped the vessel dumping bilge waste 3½ miles off the Florida coast in February 1993. The Coast Guard has increasingly focussed on the cruise industry in its enforcement efforts. As a result of these efforts, Royal Caribbean Cruise Lines recently entered guilty pleas to twenty-one federal felony counts involving the dumping of waste into U.S. waters and falsification of evidence, and agreed to pay a criminal fine of $18 million.

OPA-90 enhanced the criminal penalty provisions of various laws related to maritime transportation safety including the Deepwater Port Act of 1974, the Intervention on the High Seas Act, the Ports and Waterways Safety Act, the Clean Water Act and the Act to Prevent Pollution from Ships, as well as a number of other statutes. OPA-90 also expressly permits prosecutors to seek criminal penalties under other statutes in the event of an oil pollution incident.

Congress has also enacted legislation extending the territorial sea from 3 to 12 miles for purposes of criminal jurisdiction. The legislation was intended to eliminate an ambiguity regarding the expansion of existing federal laws created by President Reagan’s 1988 proclamation extending the territorial sea of the United States to 12 miles in accordance with the provisions of the United Nations Convention on the Law of the Sea. Although the legislation clearly extends the territorial sea for federal criminal statutes contained in Title 18, there is still uncertainty whether the extension of jurisdiction is restricted to crimes for which jurisdiction is based on the "special maritime and territorial jurisdiction" established in Title 18, or whether it has been expanded to cover all federal

criminal statutes. If the more expansive interpretation is correct, then the criminal provisions of the environmental laws discussed below which apply within U.S. "navigable waters," "waters of the United States," or the "territorial sea" will now apply to violations occurring up to 12 miles from the baseline.

Congress simultaneously amended the "Assimilated Crimes Act" provisions in Title 18 to authorize federal prosecution of state criminal laws within the expanded 12-mile territorial sea in the absence of any applicable federal criminal statute.

In deciding whether to pursue civil or criminal enforcement of environmental laws, the federal government considers a number of factors, including: (1) prior enforcement history; (2) adequacy of civil remedies; (3) the need for criminal sanctions for the relevant acts or omissions; (4) the need for deterrents; (5) anticipated response of a jury and the public to the criminal enforcement; (6) potential sentence; (7) whether the violation was voluntarily disclosed, and if so, the nature and extent of the information provided; (8) the extent to which the defendant cooperated with a governmental investigation; (9) whether preventive measures were instituted to avoid a recurrence of the violation; (10) extent of the defendant’s non-compliance with environmental laws; and (11) whether the offending employees were disciplined by the employer.

One of the most controversial issues arising from criminal prosecutions is the extent to which strict liability may be imposed on defendants convicted of environmental crimes. Under criminal laws there is normally a requirement of mens rea or intent to commit a crime. Increasingly, however, legislation and courts have imposed criminal penalties regardless of the intent or knowledge of the defendant in cases where public health, safety and welfare or the environment is endangered. As was dramatically demonstrated in Exxon Valdez, this form of criminal liability may arise from accidental oil spills. It may also be imposed on corporate directors and managers whose responsibilities include oversight of the corporation’s operations and environmental compliance programs.

Although the risk of criminal liability being imposed on the owners and crews of well-managed vessels may be small, it is nevertheless prudent for masters and corporate managers to have a basic understanding of U.S. criminal laws as they relate to marine operations, the authority of the Coast Guard and other governmental agencies to gather evidence which may be used in criminal proceedings, and the rights of defendants who are charged with marine pollution crimes.

The Refuse Act provides that:

Courts have interpreted the Refuse Act as a strict liability statute. Thus, lack of criminal intent is no defense. It is commonly used in pollution cases where the federal government wishes to expedite settlement of damage claims through plea bargains rather than pursue more serious criminal charges.

The Act does not define "refuse," but courts have construed the term broadly to include oil and other commercially valuable products.

In United States v. Pennsylvania Indus. Chem. Corp. the Supreme Court noted that the Act "creates two separate offenses; the discharge or deposit of ‘any refuse matter’ into navigable waters. . . and the deposit of ‘material of any kind’ on the bank of any navigable waterway or tributary where it might be washed into the water and thereby impede or obstruct navigation." While earlier decisions held that the obstruction of navigation was an essential element of an offense, most courts now view

any unauthorized discharge into navigable waters as a violation. It is not necessary to prove that the refuse actually reached navigable waters. In order for the Act to apply, however, the body of water must be navigable in interstate commerce.

Section 411 of the Act provides that:

Violation of the Act is a Class A misdemeanor, carrying a mandatory minimum sentence of 30-days imprisonment or a fine of $500, and a maximum sentence of one-year imprisonment or a fine of $2,500. The fine may be increased to twice the gross pecuniary loss suffered by any person resulting from the offense under a provision of the general criminal sentencing laws in Title 18 of the United States Code.

As noted above, courts have held that violations of the Act are strict liability offenses requiring no showing of criminal intent, and the Act does not explicitly recognize defenses such as acts of God or acts of third parties. There are nevertheless certain limited exceptions to liability. For example, in United States v. Georgetown University, the court held that where a university employee failed to turn off oil pumps resulting in an oil spill, the university was not liable because the employee had turned on the pumps at the direction of an independent contractor, thus recognizing the requirement of some element of control by the defendant. In United States v. White Fuel Corp., the court acknowledged that "one is not expected to take all conceivable measures to erect a fail-safe system which would be impregnable to sabotage, thievery, accidental intrusions, the negligence of third parties, and extreme natural disasters."

The Clean Water Act (CWA) is the most significant federal environmental statute imposing criminal liability for vessel oil spills in U.S. navigable waters, but it also covers a number of other criminal violations, such as pollutant discharges directly into bodies of water without or in violation of a National Pollution Discharge Elimination System (NPDES) permit, discharges into sewer systems and wetlands, and falsification of information or tampering with pollution control devices.

Section 311 of the CWA contains a broad prohibition against discharges of oil or hazardous substances into the navigable waters of the United States or the contiguous zone or discharges "which may affect natural resources" of the United States. The CWA also makes it unlawful for any person to discharge a pollutant, subject to certain narrow limitations. Violations of these provisions are subject to criminal penalties under section 309. OPA-90 amended section 309 to increase the severity of these penalties.

The CWA defines "pollutant" as:

Petroleum products are pollutants under the CWA.

"Discharge of pollutant" is defined to mean:

"Point source" means "any discernable, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft. . ."

"Navigable waters" are defined as the waters of the United States, including the territorial seas (the belt of seas measured from the line of ordinary low water along that portion of the coast which is in direct contact with the open sea, and the line marking the seaward limit of inland waters, and extending seaward a distance of three miles). The "contiguous zone" is "the entire zone established or to be established by the United States under Article 24 of the Convention of the Territorial Sea and the Contiguous Zone." "Ocean" means "any portion of the high seas beyond the 'contiguous zone.'"

A "person" is defined as an "individual, corporation, partnership, association, State, municipality, commission, or political subdivision of a State, or any interstate body." This definition includes responsible corporate officers, as discussed more fully below.

The CWA distinguishes between "knowing" discharges and "negligent" discharges. In 1987, Congress amended section 309(c)(1) to place prohibitions against intentional and negligent violations in separate sections, addressing negligent violations in section 309(c)(1)(A) and intentional violations in section 309(c)(2)(A). It also changed the term "willfully" in section 309(c)(2)(A) to "knowingly" to strengthen criminal sanctions by reducing the mens rea element of the prohibited acts. Ascertaining the degree of culpability required to prove criminal negligence has proven problematic.

While the government generally argues for a simple negligence standard, i.e., failure to use due care under the circumstances, at least one court has required a finding of wanton or reckless conduct. Some commentators have suggested that the proper standard would require a determination that the defendant’s conduct constituted a gross deviation from the standard of care expected from a reasonable person in the defendant’s situation.

Conviction for the "knowing" discharge of oil does not require actual knowledge of illegal conduct. The standard for knowing violations, however, has proven even more elusive than for negligent violations. Several cases have held that a knowing violation is established if the government can prove that the defendant knew it was discharging the pollutants in question. The rationale for these decisions appears to be that in so-called "public welfare" statutes, i.e., statutes that regulate the use of dangerous or injurious goods or materials, Congress did not intend to require proof that the defendant knew his actions were unlawful; in such cases, the probability of regulation of such materials is so great that any person who is aware that he is in possession of them or dealing with them is presumed to be aware of the regulation. At least one appellate court, however, has expressly ruled that the CWA is not a public welfare statute and that convictions under the Act require a showing of appropriate knowledge or mens rea.

The Ahmad decision represents a significant departure from earlier cases which hold that environmental statutes such as the CWA are public welfare statutes and that the government need prove only that defendants knew they were discharging the pollutants in question, not that they were violating the terms of a statute or permit.

A person who knowingly violates the Act may be punished by a fine of up to $50,000 per day per violation, or by imprisonment of up to three years, or both. Subsequent convictions are punishable by fines of up to $100,000, or up to six years in prison, or both. Negligent violations are misdemeanors, punishable by fines of up to $25,000 per day of violation or imprisonment of up to 1 year, or both. Subsequent violations are punishable by fines of up to $50,000, or up to 2 years in prison, or both.

The 1987 Water Quality Act amendments to the CWA added an additional penalty provision for "knowing endangerment." This provision is intended to apply only in the most serious instances of environmental misconduct. "Knowing endangerment" results when a person knows at the time that his violation places another person in imminent danger of death or serious bodily injury. Individuals are subject to fines of up to $250,000 or imprisonment of up to 15 years, or both, for violations of this provision. Organizations are subject to fines up to $1 million. The sentences and fines may be doubled upon subsequent convictions. The statute provides that the knowledge requirement is satisfied if the defendant is actually aware or actually believes that his conduct placed another in danger. Knowledge possessed by a person other than the defendant may not be attributed to the defendant. Circumstantial evidence may be used to prove actual knowledge, including evidence that the defendant took affirmative steps to shield himself from relevant information. Consent by the endangered person is an affirmative defense, if the defendant shows by a preponderance of the evidence that the danger and conduct charged were reasonably foreseeable hazards of an occupation, business or profession, medical treatment, or a scientific or medical experiment.

The CWA also imposes criminal liability for the failure to report a discharge of oil or a hazardous substance. Section 311 requires the "person in charge" of a vessel to immediately notify the appropriate U.S. government agency "as soon as he has knowledge of any discharge of oil or a hazardous substance."

The term "person in charge" is not defined by the statute. It is clear that the primary target will be the master of the offending vessel; however, liability may also be imposed on persons who occupy positions of responsibility and power who have knowledge of the spill. The term "person in charge" is not limited to individuals, but includes corporations as well. Some cases have held that even if no officer or director of a corporation is aware of a spill, the corporation may still be found guilty of a failure to notify the Coast Guard.

The person in charge of a vessel must report an oil spill immediately "as soon as he has knowledge of the spill." The word "immediately" is not defined by the statute, and must be interpreted in light of the circumstances of each case. The case law suggests that absent knowledge on the part of a corporate employee, there can be no prosecution for a failure to report a spill. Any spill which creates a "sheen" (an iridescent appearance on the water surface) is presumed to be a harmful quantity and should be reported. In United States v. Boyd, a shipmaster was charged for failure to report an oil spill. The master challenged the accusation, asserting that he was only required to report spills that were "harmful." The court of appeals rejected the master’s argument and upheld the so-called "sheen test" which requires notification of any oil discharges that can be seen on the surface of the water.

Section 311(b)(5) of the CWA, as amended by OPA-90, provides that a person in charge who fails to report a spill may be fined "in accordance with Title 18 or imprisoned for not more than five years or both." Title 18, discussed in further detail below, is an important statute because it lists a variety of factors which a court must consider when imposing a sentence. These factors include the defendant’s income, earning capacity, and financial resources; any pecuniary loss inflicted upon others as a result of the offense; whether restitution was ordered or made and the amount of such restitution; whether the defendant can pass on to consumers or other persons the expense of the fine; and, if the defendant is an organization, the size of the organization and any measures taken to discipline any officer, director, employee or agent of the organization responsible for the offense and to prevent a recurrence of such offense. Section 3571 of Title 18 contains a "loss doubling" provision that has been utilized by federal prosecutors in environmental cases with increasing frequency. Title 18 authorizes a maximum fine for an individual of $250,000; if the defendant derives a pecuniary gain or another person sustains a pecuniary loss as a result of the offense, however, the defendant may be fined up to twice the gross gain or loss. For an organization, the

maximum fine for a felony is the greater of either $500,000 or twice the gross gain or loss. Lower fines are imposed for misdemeanors. Prior to the OPA-90 amendments, the maximum punishment for a failure to report a discharge was a fine of $10,000 or imprisonment of no more than one year or both. One of Congress’ primary reasons for enacting the OPA-90 amendments was to increase maximum fine levels to the point where they would no longer be considered a cost of doing business. Congress set the higher fine levels for corporations because it believed that an amount sufficient to deter an individual might not be sufficient to deter an organization.

Section 309(c)(4) of the CWA also imposes criminal penalties on "[a]ny person who knowingly makes any false material statement, representation, or certification in any application, record, report, plan, or other document filed or required to be maintained under this chapter." As is the case with other "knowing" violations of the CWA, it is probably sufficient for conviction that the defendant knew it was filing a false report; actual knowledge of the statutory prohibition is not required. The penalties cover not only the filing of false reports of a spill, but also extend to submission of false information in plans or other documents required under the statute. The filing of false information in a vessel response plan is therefore also punishable under the provisions of this section. Any person who submits a false report is subject to a fine of not more than $10,000, or imprisonment for not more than 2 years, or both.

The OPA-90 amendments to the CWA enhanced the investigative authority of the Coast Guard and other government agencies, including the authority to board and inspect vessels in U.S. navigable waters and the contiguous zone; the right to arrest with or without a warrant any person who violates any provision of the CWA or its implementing regulations; and the authority to execute any warrant or process issued by an officer or court of competent jurisdiction.

OPA-90 also enhanced the criminal penalty provisions of the Deepwater Port Act, the Intervention on the High Seas Act, the Ports and Waterway Safety Act, the Act to Prevent Pollution from Ships, and several provisions contained in Title 46 relating to the operation and inspection of vessels, carriage of liquid bulk dangerous cargoes, loadlines, pilotage, and crew requirements.

CERCLA, the principal U.S. law dealing with liability for releases of hazardous substances into the environment, contains a number of criminal provisions applicable to owners or operators of vessels and facilities. These provisions focus on non-compliance with notification and recordkeeping requirements. CERCLA imposes penalties for failing to notify the appropriate federal agency of the release of a hazardous substance, knowingly destroying or falsifying records, and knowingly giving false information as part of any claim asserted against the Superfund. Under the Superfund Amendments and Reauthorization Act of 1986 (SARA), the maximum penalties against an individual for felony offenses were increased from up to 1 year imprisonment and a fine up to $20,000 to a maximum of 3 years imprisonment (5 years for a subsequent conviction) and a fine of $250,000, as authorized under Title 18. For corporations, the maximum fine was raised to $500,000. The "loss doubling" provisions of Title 18 also apply to CERCLA criminal penalties.

The Clean Air Act

The Clean Air Act imposes criminal penalties on any person who (1) knowingly violates any requirement of an applicable implementation plan or (2) violates or refuses to comply with an order requiring compliance with an implementation plan or permit. Violations of these provisions are punishable by a fine pursuant to Title 18 or imprisonment up to 5 years, or both. The Clean Air Act also imposes penalties for knowingly making any false statement, representation or certification in any application, record, report, plan or other document filed or required to be maintained under the Act or falsifying, tampering with or knowingly rendering inaccurate any monitoring device or method required to be maintained under the Act. Violations are punishable by a fine pursuant to Title 18 or imprisonment for not more than 2 years, or both.

The Migratory Bird Treaty Act (MBTA) was enacted in 1918 to implement an international treaty to protect migratory birds. The Act protects migratory birds from unregulated hunting, taking, capturing, possession, sale, purchase, shipment, transportation, carriage, import, or export, and applies to birds killed as a result of an oil spill. Violation of the Act can be a misdemeanor or a felony. In the marine pollution context, prosecutions have been limited to misdemeanor charges. Criminal intent is not required for a finding of misdemeanor violations. The Act provides that violators may be fined up to $500, or imprisoned for up to six months, or both. Under Title 18, fines may be increased to $5,000 for an individual and $10,000 for an organization.

At least one court has held the MBTA to be unconstitutionally vague. In United States v. Rollins, a farmer was charged with violation of the Act after applying pesticides in accordance with instructions on a label. The court noted that the MBTA is a strict liability statute without a scienter requirement. Although the court recognized that lack of scienter does not make a statute prone to vagueness, it held that a criminal statute must define the offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement. The court found that under the statute, "a homeowner could be pursued. . . if a flock of geese crashed into his plate-glass window and were killed. An airplane pilot could be prosecuted if geese were sucked into his jet engines. A farmer like Rollins is exposed to sanctions because he tended his crops in the same manner as other area farmers. These examples make one queasy about the reach of strict liability." The Justice Department has nevertheless shown an increasing willingness to use the MBTA to force plea agreements in settlement of marine pollution cases.

There are other statutes providing for criminal liability that may be invoked in an oil pollution case, depending on the facts of the discharge. Criminal violations of the Ports and Waterways Safety Act (PWSA) were alleged for the first time in the Exxon Valdez spill, although the charge was later dropped against Exxon. Violations of the Act were also alleged following the Morris J. Berman spill off of Puerto Rico. The standard of intent required for criminal penalties under the PWSA is a knowing and willful violation of the statute. The crime is classified as a Class D felony, subjecting violators to a fine of not more than $50,000 per violation or imprisonment for not more than five years, or both.

The Act to Prevent Pollution from Ships provides that any person who violates MARPOL 73/78 or regulations issued thereunder is guilty of a Class D felony. In the discretion of the court, an amount up to one half of any fine may be paid to the person giving information leading to a conviction.

Two conservation statutes, similar to the MBTA in that they are designed to protect certain types of plant and animal species may be invoked where a spill kills or injures the protected species. First, with certain exceptions, the Marine Mammal Protection Act subjects any person or vessel subject to the jurisdiction of the United States which knowingly takes any marine mammal (such as seals, whales, walruses, or otters) on the high seas or waters within the jurisdiction of the United States to a criminal fine of not more than $20,000 for each violation, or imprisonment for not more than one year, or both. The term "take" is defined to include "harass" or "kill." The Endangered Species Act is designed to protect fish, wildlife, and plants which are in danger of extinction. The statute imposes a criminal penalty of not more than $50,000 or imprisonment for not more than one year, or both, upon any person subject to the jurisdiction of the United States who is found guilty of knowingly "taking" (which includes harming, wounding or killing) an endangered species within the United States or its territorial sea or on the high seas, subject to limited exceptions. Because both statutes require "knowing" violations, the oil spill must have been the result of more than simple negligence for a criminal violation of either statute to have occurred.

Prosecutors may also utilize general criminal statutes to prosecute environmental offenses. The general criminal statutes most commonly used include false statements; conspiracy; mail fraud; and aiding and abetting.

As can be seen from the above array of potentially applicable statutes imposing criminal liability, in environmental cases a defendant’s liability for criminal fines can vary greatly. Further complicating the issue is the number of statutes and guidelines which determine the amount of a criminal fine following conviction of an environmental offense. The criminal fines which can be imposed upon a defendant are determined by the following: (1) the Sentencing Reform Act of 1984 (as amended); (2) the Federal Sentencing Guidelines; and (3) the applicable statutes of conviction discussed above.

In 1987 the Criminal Fine Improvements Act amended federal sentencing law to give courts two options for determining a criminal fine. First, a court may impose a fine on an individual or an organization in accordance with section 3571(b) (individuals) or section 3571(c) (organizations). These two provisions list maximum penalties that are graduated according to the classification of the crime (infraction, Class C, B, or A misdemeanor, or felony in ascending order of seriousness). Under the graduated maximum penalty provisions, the highest criminal fine for an individual is $250,000, while the highest fine for an organization is $500,000. The maximum fines are imposed for crimes that are classified as felonies or misdemeanors, where the latter result in death. Lesser crimes are penalized in correspondingly lesser amounts.

The second option is an alternative fine, characterized as the "loss doubling" provision. This provision states as follows:

It is unclear whether the loss doubling provision is applicable where the underlying criminal statute imposes strict liability without a showing of criminal intent.

The Sentencing Reform Act provides that a defendant who has been found guilty of an offense described in any federal statute shall be sentenced in accordance with the Federal Sentencing Guidelines (FSG) "to the extent that they are applicable in light of all the circumstances of the case." The FSG provide guidance to federal judges in determining sentences, including probations and criminal fines, for natural persons and corporate entities convicted of violating federal law. The guidelines require courts to impose mandatory minimum sentences for environmental crimes in accordance with certain base level penalties which must be adjusted upwards depending on such factors as the nature and frequency of the pollutant discharges and the cost of cleanup. Courts may depart from the guidelines only under limited circumstances, such as in cases of economic hardship (business failure, loss of jobs, etc.). Thus, judges must adhere closely to the detailed instructions set forth in the FSG to determine sentences.

There are two important limitations to the application of the FSG. First, the FSG do not apply to crimes classified as infractions, Class B misdemeanors, or Class C misdemeanors. If an individual is convicted of a Class B misdemeanor under the Migratory Bird Treaty Act, for example, the FSG will not apply. The court will look to either the alternative fines provision, 18 U.S.C. §3571, or the applicable statute of conviction to determine the appropriate criminal sentence.

Second, the Federal Sentencing Commission has not yet developed Guidelines for determining the amount of a criminal fine that should be imposed upon a corporation or organization convicted of an environmental offense. Therefore, while a court will look to the FSG for sentencing an individual convicted of an environmental Class A misdemeanor or felony offense, or for the terms of probation applicable to both individuals and corporations, it must look to either the alternative fines provision or the applicable statute to determine the criminal fine which may be assessed against a corporation.

Draft Sentencing Guidelines for organizations convicted of environmental violations were issued in 1993, but have not yet been adopted. Explanations for the delay in finalizing these Guidelines include the difficulty of defining the pecuniary loss attributable to environmental crimes (so as to determine the seriousness of the offense), the minimal level of intent or knowledge necessary for conviction, and overlapping enforcement schemes.

It is well-established law that a corporation may be subject to criminal liability. In New York Central & Hudson River R.R. Co. v. United States, the Supreme Court held:

In determining whether criminal liability may be imputed to a corporation, courts generally consider three factors. First, a corporation is deemed to have the collective knowledge of its employees, even though no individual employee has the requisite knowledge of the commission of a crime. Second, the corporation may be held criminally liable for the acts of an officer, employee or agent acting within the scope of his employment or within the scope of his actual or apparent authority. It is not necessary to show that the corporation expressly approved or authorized the criminal act; liability may be imposed even though the employee or agent contravened corporate policy, as long as they were acting for the benefit of the corporation. The corporation need not actually receive a benefit. In general no distinction is made between officers and agents, or between persons holding varying degrees of responsibility within an organization, in determining the criminal liability of a corporation.

A corporate officer or director can be held criminally liable if he knowingly participates in illegal activities either directly or as a co-conspirator or an aider or abetter, even though he may have been acting in an official or a representative capacity. Corporate officers are individually liable for their own independent wrongdoing and cannot shield themselves behind the corporation when they are actual participants in a crime.

It is often difficult, however, to determine which individuals in the corporate hierarchy are ultimately responsible for decisions which result in criminal violations. Where health and welfare laws are involved, courts have been more willing to find culpability on the part of corporate officers who did not have personal knowledge of the commission of unlawful acts. A seminal case is United States v. Dotterweich, in which the Supreme Court upheld the conviction of a company president and general manager for shipping adulterated and misbranded drugs in violation of the Food and Drug Act even though the defendant did not know of the violation or actively participate in the distribution of the drugs. The prosecution was based on the defendant’s "responsible share in the furtherance of the transaction which the statute outlaws." The Court formulated the standard of liability, which has since come to be known as the responsible corporate officer doctrine, as follows:

In United States v. Park, the Supreme Court upheld the Dotterweich precedent, and imposed liability on the chief executive officer of a large food company who was responsible for the general affairs of the corporation, including monitoring sanitary standards, even though such tasks were delegated to subordinates. The court held:

Following the reasoning of these decisions, many environmental statutes expressly include a "responsible corporate officer" in the definition of a "person." The Clean Water Act, for example, includes in the definition of "person" "any responsible corporate officer" for purposes of civil and criminal enforcement. In United States v. Frezzo Bros. Inc., the principal corporate officers were found guilty for counts of both willful and negligent violations of the Clean Water Act. The defendants contended that the trial judge improperly instructed the jury that they could be found guilty as individuals when the indictment charged them with acting as corporate officers. The Third Circuit, upholding the convictions, expressly approved the trial court’s jury instruction relating to the "responsible corporate officer" doctrine.

The standard articulated in Dotterweich and Park permits liability to be imposed on corporate officers when they are in positions of authority and acts constituting the criminal offense are committed under their direct supervision. Concerns have been expressed about the effect which the implementation of the International Safety Management (ISM) Code will have on the criminal liability of corporate officers and directors. Under the Code, ship safety management systems must include, among other things, a statement of safety and environmental protection policy; procedures for reporting instances of nonconformance to company management; the designation of persons ashore "having access to the highest levels of management" whose responsibilities include monitoring the safety and pollution prevention aspects of ship operation; and management review of safety and pollution prevention audits to ensure corrective action on deficiencies is taken. The safety management system will clearly facilitate the criminal prosecution under the "responsible corporate officer" doctrine of corporate officers whose responsibilities include ensuring compliance with the ISM Code and applicable environmental laws and regulations, particularly since ISM Code documentation is subject to disclosure in both civil and criminal enforcement actions and is not protected by privilege. On the other hand, companies that can demonstrate effective implementation of the safety management system may be able to use the ISM Code to their advantage by showing their commitment to preventing and detecting violations of law. The Federal Sentencing Guidelines provide for mitigation of criminal penalties for organizations that can demonstrate an effective program for reducing instances of criminal conduct. Such programs would clearly include adherence to environmental protection policies and systematic reporting and auditing procedures similar to those mandated by the ISM Code.

Since the investigation of pollution cases normally begins when a discharge is reported to the Coast Guard, it is important to understand the criminal law aspects of Coast Guard investigations. The regulations require that the owners or operators of vessels involved in a marine casualty notify the nearest Coast Guard Marine Safety Office or Marine Inspection Office whenever there is an accident involving (1) an accidental grounding; (2) an intentional grounding that meets any of the other reporting criteria or that creates a hazard to the environment; (3) a loss of main propulsion or primary steering; (4) any occurrence which materially affects the vessel’s seaworthiness, such as fire or flooding; (5) loss of life; (6) an injury that requires professional medical treatment beyond first aid; and (7) an accident that results in property damage in excess of $25,000. OPA-90 amended the definition of "marine casualty" to include "significant harm to the marine environment." Foreign flag tankers are now required to report any marine casualty in waters subject to U.S. jurisdiction, including the exclusive economic zone, that caused significant harm to the environment or material damage affecting the seaworthiness or efficiency of the vessel. These notification requirements are separate and distinct from the notification requirements for the discharge of oil or hazardous substances, discussed above. The notice must include the nature and circumstances of the casualty. Within five days after notification, the owner of the vessel is required to provide a written report to the Coast Guard.

It is the Coast Guard’s responsibility to investigate the casualty once it is reported. The investigation is required to determine (1) the cause of the casualty; (2) whether an act of misconduct, incompetence, negligence, unskillfulness, or willful violation of law was committed by licensed personnel that contributed to the cause of the casualty; (3) whether an act of misconduct, incompetence, negligence, unskillfulness, or willful violation of law was committed by any person that contributed to the cause of the casualty; (4) whether there is evidence that an act subjecting the offender to a civil penalty has been committed; (5) whether there is evidence that a criminal act has been committed so that the matter may be referred for prosecution; and (6) whether there is need for new laws or regulations or the repeal or amendment of existing laws or regulations, to prevent the recurrence of the casualty. The investigation is not meant to fix civil or criminal responsibility; however, if as a result of the investigation, evidence of criminal liability on the part of any person is found, the evidence must be referred to the United States Attorney General.

Coast Guard investigating officers may obtain evidence in the form of statements from witnesses, experts, or other individuals whose testimony may be of assistance in determining the cause of the casualty. Coast Guard investigating officers have the power to administer oaths, subpoena witnesses, and to require persons having knowledge of the subject matter of the investigation to answer questions and produce relevant documentary evidence, such as vessel logs, charts, navigation records, and oil record books. The owner, agent, master, or person in charge of any vessel involved in a marine casualty is required to retain vessel voyage records and make them available to the Coast Guard upon request. These records include rough and smooth deck and engine room logs, bell books, navigation charts, radio logs, and any other material which might be of assistance in determining the cause of the casualty. The Coast Guard’s authority to investigate is not terminated by referral to the DOJ for criminal prosecution and Coast Guard subpoenas remain valid even if there is a parallel criminal investigation, absent bad faith on the part of the agency.

The Coast Guard also has broad authority to conduct administrative searches of vessels in order to determine ownership and observance of safety standards. No particular suspicion of wrongdoing is needed for such inspections, but the Coast Guard’s authority is subject to the Fourth Amendment guarantee of freedom from unreasonable searches. In the context of a marine oil spill, the Coast Guard was found to have violated the defendant’s Fourth Amendment rights when it attempted to obtain photographic and physical evidence from a vessel without a search warrant after it had completed its initial administrative inspection.

The Coast Guard recently issued a manual dealing with the criminal enforcement of environmental laws which highlights the growing importance of the criminal aspects of its investigatory and law enforcement mission. The manual provides internal guidance for Coast Guard units and personnel "conducting operations that may result in referrals to the Department of Justice for the criminal prosecution of parties who violate federal environmental laws that the Coast Guard has jurisdiction to enforce." The manual contains, among other things, a discussion of the criteria for referral of cases for criminal prosecution; procedures for managing pollution cases in coordination with the various Coast Guard offices involved in environmental enforcement, the DOJ, and state law enforcement officials; general investigative techniques and evidence collection; and a description of the elements of environmental crimes, including oil and hazardous substance pollution, garbage or refuse discharges from ships and ocean dumping, Refuse Act violations, and general federal criminal statues.

These requirements are among the most significant for purposes of criminal liability. As noted earlier, the owner of the vessel must provide written notification of the casualty to the Coast Guard within five days of the casualty. As part of this written report, the "marine employer" must determine whether there is evidence of alcohol or drug abuse by individuals directly involved in the casualty. In the case of a "serious marine incident," the marine employer is required to take all practicable steps to have each individual employed on the vessel who was directly involved in the marine incident chemically tested for evidence of drug or alcohol abuse. A "serious marine incident" includes a discharge of 10,000 gallons of oil or more, or the discharge of a reportable quantity of a hazardous substance, into the navigable waters of the United States (such discharges or releases must be reported whether or not they are the result of a marine casualty). The Coast Guard investigating officer, or any other law enforcement officer, may determine that individuals other than those identified by the owner were directly involved in a serious marine incident. "A law enforcement officer" means a Coast Guard commissioned, warrant or petty officer; or any other law enforcement officer authorized to obtain a chemical test under federal, state or local law. In such cases, the vessel owner is required to have those individuals tested for drug or alcohol use. Individuals employed on board the vessel who are determined to be directly involved in a serious marine accident are required to provide blood, breath or urine specimens when directed to do so by the marine employer or a law enforcement officer. An individual may not be forcibly compelled to provide specimens for such chemical tests; however, a refusal is considered a violation of regulations and can subject the individual to license suspension and revocation proceedings. All inspected vessels are required to have on board a breath testing device capable of determining the presence of alcohol in a person’s system. In addition, the vessel must carry a urine specimen collection kit or be able to obtain one within 24 hours from the time of the occurrence of the serious marine incident. The owner is also required to follow specified procedures for the handling and shipment of blood and urine specimens.

If it appears that it would tend to promote safety of life and property at sea or would be in the public interest, the U.S. Coast Guard Commandant may designate a Marine Board of Investigation (MBI) to conduct an investigation. The MBI has the same powers as investigating officers to administer oaths, summon witnesses, require persons having knowledge of the incident to answer questions, and to require production of records. The MBI, however, is a formal administrative proceeding in which the testimony of witnesses is transcribed. All sessions of the MBI are normally open to the public; in addition, the MBI must notify the United States Attorney for the district in which the investigation is being conducted of the nature of the casualty under investigation and the time and place of the hearing. At the conclusion of the investigation, a written report is made containing findings of fact, opinions, and recommendations to the Commandant for his consideration.

The MBI or investigating officer will designate parties in interest in the investigation. A party in interest is "any person whom the Marine Board of Investigation or the investigating officer shall find to have a direct interest in the investigation conducted by it and shall include an owner, a charterer, or the agent of such owner or charterer of the vessel or vessels involved in the marine casualty or accident, and all licensed or certificated personnel whose conduct, whether or not involved in a marine casualty or accident, is under investigation by the Board or investigating officer." All parties in interest have the right to be represented by counsel, to examine and cross-examine witnesses and to call witnesses in their own behalf. Witnesses who are not parties in interest may be assisted by counsel for the purpose of advising them of their rights; however, such counsel are not permitted to examine or cross-examine other witnesses or otherwise participate in the investigation.

Given the trend towards increased enforcement of criminal provisions in marine environmental laws, shipowners and operators, as well as masters and crewmembers, must have a clear understanding of their privilege against self-incrimination under the Fifth Amendment to the U.S. Constitution. The Fifth Amendment provides in pertinent part:

A witness who desires the privilege against self-incrimination must actually claim the privilege and the privilege will be deemed waived unless invoked. A witness may lose the benefit of the privilege without making a knowing and intelligent waiver; thus absence of counsel may result in a waiver of the privilege. It is also well settled that disclosure of a fact by a witness waives the privilege as to details about that fact. Thus, crewmembers or other persons who are required by statute or regulation to report marine casualties to the authorities must exercise caution in complying with such regulations. In McDonald v. Dep't of Professional Regulation, Board of Pilot Comm'rs, for example, the court held that a pilot forfeited his Fifth Amendment privilege because he failed to timely assert it in his original report to the Board of Commissioners.

The issue of privilege also arises during informal Coast Guard investigations and formal hearings before the U.S. Coast Guard or National Transportation Safety Board (NTSB). Where there is a possibility of criminal liability, the Fifth Amendment privilege must be promptly invoked to preclude waiver. In practice, this may require limiting answers to questions to name, address, and place and date of birth. In marine casualty situations it is especially important to consider preservation of the Fifth Amendment privilege because Coast Guard investigators are not required to administer Miranda warnings. Foreign seamen are entitled to the protection of the Fifth Amendment when called to testify in proceedings before the Coast Guard, NTSB or other administrative agencies, as well as federal and state grand juries. The privilege applies only to individuals, not to corporations; it is applicable only to testimony and not to legal records such as ship logs, or to physical evidence, such as vessel equipment.

Representation of vessel owners, masters and individual crewmembers before investigative agencies also raises the possibility of conflicts of interest. Such defendants have a right to representation by individual counsel, unless this right is waived.

There are two different types of immunity, testimonial (or use) immunity and transactional immunity. Use immunity protects a witness from prosecution based upon testimony or evidence presented to the Coast Guard, grand jury or other investigating body or upon facts derived from the testimony during the investigation. Transactional immunity is much broader and protects the witness from all prosecution based on or arising from the facts of the incident. Use immunity may be granted by the Attorney General, Deputy Attorney General, or U.S. attorneys with the approval of the Attorney General or authorized deputy.

Immunity may also be provided by statute. As discussed above, the CWA requires that any person in charge of a vessel must immediately notify the Coast Guard of "any discharge of oil or a hazardous substance from such vessel." Prior to OPA-90, the law provided that "[n]otification received pursuant to this paragraph or information obtained by the exploitation of such notification shall not be used against any such person in any criminal case, except a prosecution for perjury or for giving a false statement." In Hazelwood v. Alaska, for example, the report by the master of the Exxon Valdez, Joseph Hazelwood, resulted in an immediate investigation by federal and state officials; the investigation yielded evidence that eventually led to the conviction of Hazelwood for reckless endangerment, operating a watercraft while intoxicated, and negligent discharge of oil. Hazelwood moved to dismiss the charges, contending that he was immune from prosecution because he had immediately reported the grounding and discharge of oil to the Coast Guard in compliance with the statute. Hazelwood’s state conviction for negligent discharge was initially overturned since the evidence used to convict him was based on information contained in the report. The Alaska Supreme Court, however, later affirmed the conviction in part based on Capt. Hazelwood’s duty to report under a different federal statute which had no immunity provision.

OPA-90 significantly reduced the scope of use immunity by deleting the phrase "information obtained by the exploitation of such information." Under current law, only the notification by the person in charge is protected by use immunity. The effect of this amendment has been to provide prosecutors with the opportunity to exchange information freely with the Coast Guard and other government agencies without having to prove that they benefitted from information derived from the initial spill notification.

It is vitally important to understand the danger of concurrent civil and criminal proceedings. In most cases, civil actions will be commenced against the vessel interests immediately following a marine casualty. The master, pilot, officers, and crewmembers may also be named as defendants in such actions. These witnesses may be the target of state or federal grand jury investigations. The witnesses’ statements in the civil proceeding may be allowed as evidence in the criminal proceeding and may incriminate the witnesses. In such cases, it may be possible to obtain a protective order postponing civil discovery until completion of the criminal proceedings.

A criminal case will invariably be tried before the corresponding civil case. Issues relating to negligence and the cause of the casualty may therefore have already been determined by the jury in the criminal proceeding. In criminal cases, a finding of guilt based on negligence or recklessness must be beyond a reasonable doubt. This finding could be introduced as a final determination of that issue in a subsequent civil trial. A criminal conviction could thus also determine a party’s civil liability, including liability for punitive damages. This makes it vitally important to vigorously defend any criminal prosecution of the crew, corporation, or corporate officers arising from a marine incident.