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FOR IMMEDIATE RELEASE ENRD

WEDNESDAY, JUNE 20, 2007 (202) 514-2007


WWW.USDOJ.GOV TDD (202) 514-1888

U.S. Oil Tanker Firm to Pay $10


Million as Part of
Largest-Ever Penalty for Concealing
Vessel Pollution
WASHINGTON—Overseas Shipholding Group Inc. (OSG) was sentenced today in
Beaumont, Texas, to pay $10 million as part of a $37 million criminal settlement
with the United States involving 33 felony counts, 12 oil tankers and ports located
in Beaumont, Boston, Mass., Portland, Maine, San Francisco, Calif., and
Wilmington, N.C., announced Ronald J. Tenpas, Acting Assistant Attorney General
for the Justice Department’s Environment & Natural Resources Division and John
L. Ratcliffe, U.S. Attorney for the Eastern District of Texas.

The total $37 million penalty—announced on Dec. 19, 2006 in Boston—is the
largest-ever involving deliberate vessel pollution. The charges involving 12 OSG oil
tankers took place from June 2001 to March 2006 and include violations of the
Clean Water Act, as amended by the Oil Pollution Act of 1990; violations of the
Act to Prevent Pollution from Ships; conspiracy; false statements; and obstruction
of justice. In pleading guilty, OSG admitted that it deliberately falsified various
ships’ Oil Record Books, required logs in which all overboard discharges are to be
accurately recorded; made discharges at night; and concealed bypass methods used
to circumvent required pollution prevention equipment during U.S. port calls so that
the Coast Guard would not discover the criminal activity.

The $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. For the part of the case in East Texas, U.S. District Court
Judge Thad Heartfield today approved the proposed plea agreement with federal
prosecutors and sentenced OSG to pay a total of $7 million ($5.3 million criminal
fine and $1.7 million in community service) immediately for making false
statements to the Coast Guard. OSG was ordered to pay another $3 million in
escrow for additional charges that will bring the total to $10 million in the Eastern
District of Texas.
In accordance with the plea agreement, Judge Heartfield sentenced OSG to make
$1.7 million in community service payments to the National Park Foundation and
National Fish and Wildlife Foundation for the explicit goal of funding
environmental projects and initiatives designed to benefit, preserve and restore the
environment and ecosystems in the Eastern District of Texas, including the waters
along the counties of Jefferson, Orange, Hardin, Liberty, Tyler, Jasper and Newton.
Funds designations included environmental educations projects to be conducted by
the Environmental Learning and Research Center at Lamar University and to further
the acquisition of land to be added to the Big Thicket National Preserve by the
Conservation Fund. A total of $2 million ($540,000 in East Texas) is designated to
fund a satellite surveillance pilot program to monitor ships off the U.S. coast.

Prosecutors credited OSG’s self-disclosures, cooperation and compliance measures


taken by proposing fewer charges and reduced criminal fines. OSG is a U.S.
corporation headquartered in New York and is one of the largest publicly traded
tanker companies in the world. 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.

At the sentencing hearing today, 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,” said
Judge Heartfield. 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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