Any shipowner who has had the unfortunate experience of having one of its vessels detained for purportedly falsifying the oil record book, bypassing mandatory anti-pollution equipment or discharging oil waste directly overboard knows that the process of securing the vessel’s release can be quite onerous.

If the Coast Guard suspects that a vessel polluted in the United States or international waters it will initiate an investigation and detain the allegedly offending vessel until the owners and/or operators post a security bond and execute a “Security Agreement.”

In many cases, this “Security Agreement” calls for the vessel interests to pay wages, housing, and transportation costs to crew members who may be detained in the United States for months, as well as facilitate travel for those crewmembers to court appearances, to encourage crew members to cooperate with the government’s investigation, to help the government serve subpoenas on foreign crew members located outside of the United States, to waive objections to both in personam and in rem jurisdiction, and to enter an appearance in federal district court.

The vessel interests in Watervale Marine Co. Ltd., et al v. United States Department of Homeland Security, et al. challenged the Coast Guard’s authority to demand these nonfinancial conditions as a term of the vessel’s release. The vessel interests appealed to the U.S. Coast Guard, Office of the Commandant, and then to the U.S. District Court for the District of Columbia. Both held that the Coast Guard’s authority to detain a vessel was not limited to financial forms of security. The U.S. Court of Appeals for the District of Columbia Circuit agreed last month.

According to the court of appeal, the International Convention for the Prevention of Pollution from Ships, as modified by the Protocol of 1978 (“MARPOL”) and implemented in the United States by the Act to Prevent Pollution from Ships, 33 U.S.C. §1901, et seq. authorizes the Coast Guard to hold a vessel in port, not just through the pendency of the investigation, but “until legal proceedings are completed.” As a result, the court of appeal commented that “the nonfinancial conditions can, therefore, be thought of as simply quid pro quo for allowing ships to depart” during the investigation, and through any civil and/or criminal proceedings.

The vessel interests have not petitioned for a panel rehearing or for a rehearing by the court of appeal en banc, but may still petition for a writ of certiorari for review by the U.S. Supreme Court.

The current decision is not binding outside the District of Columbia, but will likely be seen as persuasive authority in other jurisdictions where the Coast Guard’s authority has not been challenged at the appellate level.
Source: Phelps Dunbar LLP