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United States v. Apex Oil Co.



The United States appealed a decision by the district court dismissing the first count of a five-count indictment for conspiring to discharge cargo-related oil residues. In a case of first impression, the Ninth Circuit held that the rule of lenity required dismissal of the charge. According to the Ninth Circuit, discharge of the material in question was not clearly forbidden by law.

On January 30, 1996, the grand jury indicted Apex Oil Company (Apex), its subsidiary Trinidad Corporation (Trinidad), as well as the individual manager of engineering, manager of operations, and four vessel captains. The five-count indictment charged that the defendants “did knowingly and willfully conspire and agree to discharge cargo-related oil residues in violation of Title 33, United States Code, Section 1908(a) and Title 33, Code of Federal Regulations, Section 151.10(c).”[1] The four defendant captains piloted three ships that transported crude oil from Alaska to the West Coast of the Continental United States. The ships also transported grain to Africa, Asia, and Russia. Before grain could be transported, the ships had to be cleaned of oil residues. The cleaning process generated a large amount of cargo-related oil residue (CROR) and waste material such as oily rags, plastic suits, flashlight batteries, and plastic scrapers. These residues and wastes were disposed of at sea. Over 550 fifty-five gallon drums were known to have been discharged.

The district court first denied that primary jurisdiction belonged to the Coast Guard and termed the discharges a public welfare offense. The district court held that the applicable regulations did not plainly include such muck, or oil constituents. Because of the ambiguity, and because other provisions regarding disposal of cleaning waste arguably did include such constituents, the district court held that the rule of lenity mandated dismissal of the charge contained in the first count of the indictment. The government moved for reconsideration, contending that there were factual issues as to the nature of the discharged materials. However, the district court denied the motion to reconsider, stating that the term “cargo-related oil residue” was unconstitutionally vague under the rule of lenity.

The 1980 Act to Prevent Pollution from Ships[2] makes it a felony to knowingly violate the regulations promulgated by the Coast Guard. The regulation applicable to the case at hand states that “[t]he cargo related oil residues of an oil tanker, including residues from cargo pump room bilges and all oil residues mixed with oil cargo residues shall not be discharged overboard.”[3] On appeal, the government relied on the definition of “oil” which included petroleum in any form.[4] The government encouraged the Ninth Circuit to adopt a dictionary definition of the word “petroleum,” which would have allowed for regulation of the discharged muck. The Ninth Circuit followed its earlier decision in Cose v. Getty Oil Co.,[5] where it used the dictionary definition of petroleum. However, the court in Cose noted that crude oil tank bottoms would not be included in the definition of petroleum; cride oil tank bottoms are not subjected to various refining processes as required in order to meet the definition. Similarly, the muck in the case at hand was not refined petroleum. The Ninth Circuit did not label the government’s interpretation incorrect, but noted that other interpretations of “petroleum” and “oil” were equally plausible. Such ambiguity showed a lack of fair notice to the defendant that the muck they discharged was “oil.”

The government responded that the term “cargo-related oil residues” unambiguously included the muck in the case at hand. The Ninth Circuit, however, was not convinced, and held that the term “residue” also was ambiguous. The Ninth Circuit was unable to glean any guidance from the policy of the statute, namely to “prevent pollution of the ocean by oil without imposing too heavy a burden on oil transport by tanker,”[6] or from the legislative history. The Ninth Circuit found it incumbent upon the Coast Guard, the agency with expertise in the subject, to alleviate any ambiguity in the regulations. Because of the ambiguity, the Ninth Circuit invoked the rule of lenity in dismissing count one of the indictment.

[1]United States v. Apex Oil Co., 132 F.3d 1287, 1288 (9th Cir. 1997). The indictment was for violations of the 1980 Act to Prevent Pollution from Ships, 33 U.S.C. §§ 1901-1915 (1994) and its implementing regulations. Id.

[2]33 U.S.C. § 1908(a) (1994).

[3]33 C.F.R. § 151.10(c) (1997).

[4]Id. at § 151.05.

[5]4 F.3d 700 (9th Cir. 1993).

[6]United States v. Apex Oil Co., 132 F.3d 1287, 1291 (9th Cir. 1997).

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