Fourth Circuit Wades Into the Dirty Business of Oil Spills

RICHMOND (CN) – A pair of cases heard by the Fourth Circuit Thursday pit oil and natural gas producers and the companies that move their goods against environmentalists who want to hold them accountable for spills that dumped hundreds of gallons of petroleum into regional waters.

The first case on the docket was filed by Savannah Riverkeeper and Upstate Forever against  Kinder Morgan Energy Partners and the Plantation Pipeline alleging that violations of the Clean Water Act led to a 2014 spill in Belton, South Carolina caused 369,000 gallons of oil and gasoline to be released in streams and creeks that feed into the Savannah River and nearby lakes.

In April, U.S. District Judge Henry Herlong dismissed the lawsuit on the grounds the companies fixed the failing section of pipe and therefore no ongoing violation of the Clean Water Act had occurred.

Appearing before a Fourth Circuit panel on Thursday, attorney Frank Holleman, of the Southern Environmental Law Center, described the spill as “historic” and the worst such mishap to occur in the state. He also claimed the defendant companies were slow to respond to the unfolding crisis and that as a result they were guilty of illegally dumping known pollutants in violation of the Clean Water Act.

Holleman then sought to convince the three-judge panel that Herlong was wrong to dismiss the case solely on the basis of its being filed after the pipeline had been repaired.

Kinder Morgan’s attorney, James Cooney III of Womble Bond Dickinson, in Charlotte, North Carolina, responded by arguing that “you have to be actively discharging” to be subject to a violation under the Act.

He also rejected the environmentalists’ argument that the company needed a permit to discharge oil and gasoline from the pipeline.

“It’s not actively discharging,” Cooney said. “How am I supposed to get a permit for that?”

Holleman pushed back, saying while the pipeline has been repaired, the defendant companies were lax in their cleanup efforts and pollutants continue to leach toward the river to this day.

U.S. Circuit Judge Barbara Milano Keenan pressed both attorneys on how the Clean Water Act defines terms like “source point pollution” and “groundwater.”

While Cooney interpreted those phrases to mean that only spills directly into navigable waters violate the act, Holleman said that was a narrow, misinterpretation of the law.

Holleman said the key phrase in the statutory language is a prohibition on “any pollutants being added to navigable waters” whether the spill initially occurs on dry land or not.

“If it gets from point A to C, it counts?” Keenan asked.

“Yes,” Holleman said, noting the point of the Act was to “restore and protect the nation’s waters [and] stop pollutants” from getting into waterways.

He argued that restricting the Act’s rules to only pipe-to-water contamination would “thwart” the law and open the door to rampant polluting.

As arguments in the Kinder Morgan case wrapped up, a hearing on the U.S. government’s case against the Liberian oil company Oceanic Illsabe Limited was just getting underway.

Oceanic is appealing its conviction following a Sept. 2016, jury trial on charges the crew of one of it ships violated the Act to Prevent Pollution from Ships and then engaged in a conspiracy to obstruct justice and tamper with witnesses.

According to the U.S. Justice Department, in 2014 and 2015, crew members of the M/V Ocean Hope, a large cargo vessel operated by  Oceanic Illsabe Limited and Oceanfleet Shipping Limited, dumped tons of oily sludge into the Pacific Ocean by using a so-called “magic pipe” to bypass the vessel’s oil-water separator and pump the material overboard.

Prosecutors not only convinced a federal jury this occurred, but also that upon arrival at the Port of Wilmington, North Carolina, the crew members falsified records to deceive U.S. Coast Guard inspectors.

The government said when inspectors uncovered evidence of dumping, the defendants ordered lower-level crewmembers to lie to Coast Guard personnel.

After the jury rendered its verdict, the judge presiding over the case fined Oceanic $900,000, placed it on five-years probation, and banned it from U.S. ports until the fine is paid. The judge then fined Oceanfleet $1.8 million, placed it on five-years probation, and also banned it from U.S. ports until the fine is paid.

On appeal, attorney George Chalos, principal and founding member of  Chalos & Co. in New York, argued the government failed to connect the guilt crewman to the company in any meaningful way and that the case was compromised by a lack of evidence.

Chalos said testimony during the nine-day trial showed the ship’s crew was a collection of Filipino sailors contracted by a third-party staffing company. He said in addition to the illegal dumping, the sailors had also filled one of the vessel’s bilge water storage tanks with diesel fuel they intended to sell on the black market.

All of these activities, he said, were kept secret from the ship’s captain and other members of its crew. And because the companies and their direct employees had no knowledge of these activities, it was unfair — and unlawful — to hold them liable.

“The evidence from the people doing the bad stuff said it was hidden from the captain,” he said. “There’s no evidence [implicating] the crew and Oceanic”

But Emily Polachek, an attorney in the Justice Department’s appellate section, responded by arguing that the crewmen were in fact employees of the companies and that their willingness to

break the law falls on the company that employs them.

Polachek said the agreement signed by the crewmen included clauses that allowed Oceanic to fire them if they saw fit. They were also wearing uniforms with the company’s logo on them.

She also said crew members described themselves as employees of Oceanic during the earlier trial and that they were trained using an Oceanic employee handbook.

U.S. Circuit Judge Robert King asked the parties to clarify what the actual benefits from the “magic pipe” were.

“There was no [benefit],” Charlos said. “Why would you hire 12 mechanics to do the job properly [if they wanted them to break the law].”

But Polacheck told the panel that using the device actually saved the company significant machine maintenance costs.

“If you don’t use the [treatment] machine, you don’t have to pay for repairs to it,” she said.

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