A Hong Kong-based ship management company was sentenced in federal court in San Francisco today to pay a $10 million penalty for three criminal convictions stemming from a 2007 oil spill in the San Francisco Bay.
Fleet Management Ltd. managed and hired the crew of the Cosco Busan, a container ship that spilled more than 53,000 gallons of heavy bunker fuel into the bay on Nov. 7, 2007.
The oil spilled from a 212-foot gash sustained by the ship when it struck a fender of a Bay Bridge support pier in heavy fog while en route from the Port of Oakland to South Korea.
U.S. District Judge Susan Illston said during a brief sentencing hearing that she considered the $10 million penalty recommended in a plea agreement to be appropriate.
The company pleaded guilty in August to one misdemeanor charge of negligently polluting the bay and two felony charges of obstructing justice and falsifying the ship’s passage plan after the spill.
Prosecution and defense attorneys had agreed on the recommended penalty, but the judge had the discretion to decide whether to accept it.
The penalty includes $8 million in fines and a $2 million contribution to a wildlife foundation for restoration of the bay and nearby coastal areas.
Assistant U.S. Attorney General Ignacia Moreno issued a statement saying, “Fleet’s systemic management failures played a significant role in causing the Cosco Busan disaster and they compounded the problem by attempting to cover up their conduct.”
Moreno, who heads the Justice Department’s Environment and Natural Resources Division, said, “The sentence today not only includes a significant monetary penalty but also will ensure that Fleet Management develops a culture that puts safety and the environment first.”
Fleet Management attorney Marc Greenberg declined to comment after the hearing, but in a sentencing brief filed last week the company said its guilty plea “acknowledged its liability for the actions of the crew” and said it will work with the U.S. Coast Guard to improve crew training.
The spill killed more than 2,000 migratory birds and caused more than $70 million in damage to beaches, wildlife and the fishing industry.
Pilot John Cota, 62, was also prosecuted. He pleaded guilty last year to two misdemeanor charges of negligently polluting the Bay and killing migratory birds and was sentenced to 10 months in prison.
The National Transportation Safety Board concluded last year that the accident was caused by a combination of medical impairment in Cota resulting from prescription medicines, ineffective oversight by the ship’s captain, and inadequate training and preparation of the Chinese crew by Fleet Management.
Several civil lawsuits filed against Fleet Management, Cota and the ship’s owner, Regal Stone Ltd. of Hong Kong, by fishermen and federal, state and local government agencies remain pending in federal court in San Francisco.
The 2009 plea agreement recommended that restitution should not be imposed in Fleet Management’s criminal case in view of the pending parallel civil proceedings.
In earlier maneuvers in the criminal case, Fleet Management unsuccessfully sought to plead no contest to the pollution charge and to a second misdemeanor charge of killing migratory birds.
A no-contest plea would have made Fleet Management liable for the same criminal fines as in a conviction, but the plea could not have been used as evidence in the related civil cases.
But Illston in 2008 declined to allow a no-contest plea, saying, “In a case such as this, the public has a substantial interest in a final determination of fault.”
Prosecution and defense lawyers also sparred over the amount of the fine for which Fleet Management could be liable.
Fleet Management’s attorneys sought to have sentencing laws interpreted in a way that would have limited the company’s liability for the two environmental crimes to $400,000.
But prosecutors won the right from Illston to proceed under a revised indictment that specified the cost of the spill damage was at least $20 million. Under that indictment, Fleet Management’s potential maximum liability for the charge of negligently polluting the bay was double that amount, or $40 million.
