Shipping Company Fined $250K, Placed on Probation for Fuel Violations

Ocean Princess Motor Tanker
The M/T Ocean Princess. (Source file photo)

A shipping company has been fined $250,000 and placed on probation for one year for pollution violations in a court case that one Coast Guard official said is a warning to others that the government will “hold accountable any who put profit above the protection of our waters.”

Ionian Management Inc., a New York-based company that commercially manages three vessels, including the Motor Tanker Ocean Princess, was sentenced Wednesday in V.I. District Court for the violations that occurred between 2017 and 2018, U.S. Attorney Delia Smith announced.

According to Smith, between Jan. 3, 2017, and July 10, 2018, the M/T Ocean Princess used fuel that contained excessive sulfur on 26 separate occasions while operating within the U.S. Caribbean Emissions Control Area, or ECA.

The oil tanker was engaged in transporting petroleum products throughout the Caribbean, including from the former Limetree Terminals on St. Croix, according to court documents.

While vessels are operating within the ECA they must not use fuel that exceeds 0.10 percent sulfur by weight to help protect air quality, Smith said in a press release announcing the sentence.

The fuel used by the M/T Ocean Princess was petroleum cargo that had been transferred to the fuel tanks, known as bunker tanks, as authorized by Ionian, the release stated.

“Once authorized, the crew of the M/T Ocean Princess transferred the higher sulfur fuel from the cargo tanks into the bunker tanks and used it to fuel the vessel, even though it exceeded the 0.10 percent sulfur by weight maximum,” it said.

U.S. Coast Guard inspectors boarded the M/T Ocean Princess on July 10, 2018 to conduct an inspection and discovered the vessel’s use of fuel with an excessive sulfur content, according to the release.

The sentencing of Ionian Management is the final chapter in a multi-year investigation and prosecution of the companies and individuals involved in the use of non-compliant, high-sulfur fuel in the operation and management of the M/T Ocean Princess, the release stated.

Vessel owner Lily Shipping Ltd. and operator Ionian Shipping and Trading, both Greece-domiciled companies, previously pleaded guilty to felony violations related to the use of non-compliant fuel and falsification of records and were sentenced to pay a combined criminal fine of $3 million, serve a three-year period of probation, and implement an Environmental Compliance Plan.

According to court documents in that case, the ship’s Oil Record Book was falsified in two places to hide transferring the fuel to bunker tanks, and a crew member also created fictitious bunker delivery notes that claimed the fuel in the bunkers came from a company on St. Martin in the French West Indies.

“The sentence imposed on this commercial vessel manager for intentionally violating environmental laws designed to protect the air quality of the United States sends a strong message that the United States will not tolerate such violations and will hold violators accountable,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division.

“The pristine beauty of our Virgin Islands waters is one of our most precious resources, essential to our tourism and our fragile marine ecosystem,” said First Assistant U.S. Attorney John Kuhn for the District of the Virgin Islands.

“Today’s sentencing of Ionian Management Inc. for its role in causing high sulfur fuel to be burned within the Caribbean Emissions Control Area, and here in the waters near St. Croix, sends a strong message to commercial managers of ships that such conduct will not be tolerated. To protect the territory of the Virgin Islands, we will continue to pursue criminal enforcement of environmental laws,” Kuhn said.

“Oceangoing vessels emit hazardous air pollutants or air toxics that are associated with adverse health effects impacting populations living near ports and coastlines,” said Special Agent in Charge Tyler Amon of EPA’s Criminal Enforcement Program in the Virgin Islands. “EPA, along with its law enforcement partners are committed to ensuring the shipping industry continues to comply with laws designed to protect air quality.”

“The results announced today send a strong message to anyone who seeks to take shortcuts and intentionally pollute our environment, and I couldn’t be prouder of the Coast Guard’s Resident Inspection Office in St. Croix and Sector San Juan marine inspectors who first identified the issue, as well as our Coast Guard Investigative Service agents who worked closely with the Environmental Protection Agency in San Juan to investigate this case,” said Rear Adm. Peter Brown, commander of the Coast Guard, Seventh District.

“We will continue to work with our Department of Justice and environmental protection partners to hold accountable any who put profit above the protection of our waters, beaches and the air above them for future generations,” said Brown.

The Coast Guard Investigative Service and the Environmental Protection Agency-Criminal Investigation Division conducted the investigation. Senior Trial Attorney Kenneth Nelson of the Environment and Natural Resource Division, Environmental Crimes Section, and Former  Assistant U.S. Attorney Kim Chisholm and Assistant U.S. Attorney Daniel H. Huston for the  District of the Virgin Islands prosecuted the case.