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Chalos & Co was recently published in the February 2024 Issue of The Arbitrator, for its article “Sire, Hire, Price Majeure and a Global Pandemic: Are Vetting Clauses a Warranty or a Due Diligence Obligation?”  The article was part of a presentation made by George M. Chalos, Esq. at the November 2023 meetings of the International Congress of Maritime Arbitrators  (ICMA XXII) in Dubai.

The Arbitrator is published quarterly by the Society of Maritime Arbitrators.  To read the article in full, please click here.

We are thrilled to share a recent triumph at Chalos & Co that reinforces our commitment to justice and litigation expertise.  Last week, George M. Chalos secured a resounding defense verdict in a difficult premises liability trial presided over by NY State Supreme Court Justice, Dawn Jiminez.   At trial, the plaintiff alleged that an unreasonably dangerous condition caused an unfortunate series of events which lead to serious personal injuries and permanent partial disabilities.  With the assistance of our clients, our team meticulously presented evidence from various fact and expert witnesses to counter the plaintiff’s claims and to demonstrate the lack of liability on the defendants’ behalf.  After thorough examination of the evidence, the jury, comprised of six (6) thoughtful individuals, engaged in careful deliberation.  The persuasive arguments presented in a compelling summation and closing were well received by the jury which swiftly returned a complete defense verdict.  This victory underscores the depth of our firm’s litigators in navigating complex legal terrain and representing our clients in diverse challenging matters.

For more information on the Chalos & Co litigation team, contact us at: info@chaloslaw.com.

George M. Chalos of Chalos & Co, P.C. presented at the Marine Claims International 2023 conference in Dublin, Ireland during September 27-29, 2023. Mr. Chalos’ lively presentation posed the following question, “The United States and Maritime Claims: Have the Colonials become the Judge, Jury, and Executioner.” The presentation explored the United States’ commercial prominence in the shipping industry, and how U.S. authorities have exploited that position to enforce MARPOL and sanctions beyond the traditional limits of U.S. jurisdiction.

Chalos & Co, P.C. was also a proud sponsor of the event.  To learn more about the annual conference, please visit the website here.

For more information, please do not hesitate to contact us at info@chaloslaw.com.

The US National Transportation Safety Board (NTSB), reports that at least 38 people have died in Duck Boat casualties in the last 24 years. In 1999, the MISS MAJESTIC was carrying passengers on Lake Hamilton near Hot Springs, Arkansas. Due to what would later be determined by an NTSB investigation to be the tour company’s failure to properly repair and maintain the vessel, the Duck Boat began listing hard to port and sank, taking the lives of 21 people on board. In addition, the NTSB uncovered several other safety issues, including a need for improved oversight by the USCG.

Despite the concerns, additional action was not taken by the USCG. Nearly 20 years later, another fatal sinking occurred on Table Rock Lake near Branson, Missouri in 2019, which claimed the lives of 17 people when the STRETCH DUCK 7 took on excessive water during a severe weather event. That NTSB investigation found some of the same maintenance and safety related concerns previously outlined following the MISS MAJESTIC accident were contributing factors to the tragedy. We previously wrote about the criminal case against the former Master and Managers of the STRETCH DUCK 7, which was dismissed for lack of admiralty jurisdiction, and can be accessed here.  That decision dismissing the government’s criminal charges under the seaman’s manslaughter act was affirmed by the Eighth Circuit Court of Appeals. United States v. McKee, 68 F.4th 1100 (8th Cir. May 30, 2023).

The USCG has now sought to enact regulations which would subject Duck Boat vessels, their owners and operators to certain uniform and regulatory mandated safety requirements. The 9 requirements of the Interim Rule, which took effect September 11, 2023 are:

(1) Remove the canopies and any window coverings of such vessels for waterborne operations, or install a canopy that does not restrict horizontal or vertical escape by passengers in the event of flooding or sinking;
(2) If a canopy and window coverings are removed from any such vessel pursuant to paragraph (1), require that all passengers wear a personal flotation device approved by the Coast Guard before the onset of waterborne operations of such vessel;
(3) Re-engineer such vessels to permanently close all unnecessary access plugs and reduce all through-hull penetrations to the minimum number and size necessary for operation;
(4) Install independently powered electric bilge pumps that can dewater such vessels at the volume of the largest remaining penetration in order to supplement an operable Higgins pump or a dewatering pump of equivalent or greater capacity;
(5) Install in such vessels not fewer than four independently powered bilge alarms;
(6) Conduct an in-water inspection of any such vessel after each time a through-hull penetration has been removed or uncovered;
(7) Verify the watertight integrity of any such vessel through an in-water inspection at the outset of each waterborne departure;
(8) Install underwater light emitting diode (LED) lights that activate automatically in an emergency; and
(9) Otherwise comply with any other provisions of relevant Coast Guard guidance or instructions in the inspection, configuration, and operation of such vessels.

Vessel operators have 180 days from the date of this rule’s issuance to comply. See 88 FR 62295.

To read the interim rule click here.

For more information, please visit our website at chaloslaw.com, or contact us at info@chaloslaw.com.

Chalos & Co was recently published in The Arrest News for its article, “Foreign Seafarers as Material Witnesses—Modern Day Subjugation?”, which depicts the unfair treatment of foreign seafarers by the U.S. Government in MARPOL/APPS cases.

To read the article in full click here.

In January 2023, the U.S. Environmental Protection Agency’s Office of Enforcement and Compliance Assurance (OECA) issued the following link to the enforcement alert entitled, “EPA Reminder About Clean Water Act Vessel General Permit (VGP) Requirements”.  Commercial vessel owners and operators that enter ports and waterways of the United States are required to comply with the 2013 VGP, including filing a notice of intent for discharges that are incidental to the normal operation of a vessel.

The EPA has repeatedly expressed an ambition to become more aggressive in its approach to VGP enforcement activity.  The VGP rules and regulations are not well drafted and there remains confusion and disagreement amongst the technical community as to what is (and what is not) compliant.  For example, the VGP is written to require sampling three (3) times within the first ten (10) discharge events (not to exceed 180-day period). See VGP Section 2.2.3.5.1.1.5.2 at Table 4, page. 34. The VGP does not specify whether the sampling and discharge events are limited to within VGP waters or are meant to cover the Vessel anywhere in the world.  In the EPA “Response to Comments” on this issue, the EPA recognized that vessels may not be able to comply with this monitoring due to a variety of factors including a vessel that discharges fewer than ten (10) times within a 180-day period. The “Response to Comment” further indicates that a vessel that discharges fewer than ten (10) times may comply with this requirement by completing the required number of tests in the first ten (10) samples in whatever timeframe it takes to get to the 10^th discharge so as not to penalize those vessels that discharge less frequently. See EPA-HQ-OW-2011-0141-0480-A1, Excerpt 2.

Similarly, discharge limits in the VGP are expressed as CFU. See VGP Section 2.2.3.5 (pg. 29). However, the VGP allows for testing results using methods that are expressed in MPN. See VGP Section 2.2.3.5.1.1.4 (pg. 31). The VGP fails to provide any guidance, calculations or regulatory interpretation which express acceptable limitations utilizing MPN.  There is no way to convert MPN to CFU given the systemic differences in these bacteria measurement protocols, as one is a count and the other is a statistical estimation.

The VGP is also confused on when calibration should be performed. VGP section 2.2.3.5.1.1.3 (at pg. 31) states that applicable sensors and other equipment must be calibrated annually but clarifies in the next sentence that the equipment must be calibrated no less frequently than recommended by the manufacturer.  Understandably, vessel owners, operators and their QI’s have interpreted this requirement to mean that conducting maintenance in accordance with the equipment manufacturer’s recommended is sufficient and additional annual testing would not be needed if it was not called for by the manufacturer. The EPA appears to disagree and in recent enforcement actions has sought to impose a more onerous obligation.

For more information on the EPA enforcement of suspected VGP violations and/or for more information on best practices to comply with the existing regulatory requirements, contact Chalos & Co, PC – International Law Firm at: info@chaloslaw.com.

Sign at Larnaca International Airport, Larnaca Cyprus October 13, 2022

Worldwide, there are signs and placards throughout airports, train stations, seaports, and bus stops offering assistance to individuals who may be experiencing being held against their will.  They often pose a series of questions along the lines of the following:

 “Is someone . . . holding your passport or personal documents; threatening you or your family; controlling your movements; and/or forbidding you to go anywhere or speak with anyone you want.” 

 These are tale-tell warning signs of human trafficking, involuntary servitude, and modern-day slavery.  The posted signs are jarring, but they are not just for individuals to reach out for help, but to raise awareness for the public to be on the lookout for distressed individuals in need. There is no dispute that the persons being held against their will is a bad thing and has no place in the modern world.

However, in the United States, there is a government sanctioned regime whereby foreign seafarers are routinely held against their will as involuntary detainees and material witnesses in MARPOL/APPS prosecutions.  Pursuant to 33 U.S.C. §1908(e), the Coast Guard (and Customs and Border Protection acting at the Coast Guard’s instruction) can revoke and refuse to reinstate a foreign flagged vessel’s departure clearance until surety satisfactory to the Secretary is posted.  Such “surety” takes the form of an “Agreement on Security,” which requires not only the posting of a financial undertaking by the Vessel’s Owners and Operators, but also requires the removal of seafarers from the Vessel.  It is standard for the Coast Guard to insist that the Captain and the entire Engine Room Department be disembarked from their shipboard home, turnover their passports/travel documents, and remain in a hotel within the federal district where the matter is pending  for an unknown and unlimited amount of time during the government’s investigation.

The seafarers are not parties or signatories to the “Agreement on Security.” When a seafarer asks to go home or to have his passport returned to him, the government denies those requests. When a seafarer applies to the Court to have his travel documents returned or to have his deposition taken so he may leave the United States, the government opposes the requests.  Typically, the government will implement some combination of the following procedure to block a seafarer’s right to departure: 1) claim that the crewmember is in the United States voluntarily; 2) argue that there is no right to a deposition because criminal charges are not yet pending; and 3) if all else fails, obtain a material witness arrest warrant pursuant to 18 U.S.C. § 3144 to ensure that a seafarer remains for trial. The purpose of the material witness statute is to secure the presence of a witness who possesses information material to a criminal proceeding.

Some district courts have found that seafarers held pursuant to an Agreement on Security and/or material witness warrants in MARPOL/APPS cases were functionally detained as a result of this arrangement, even if not formally incarcerated, and therefore entitled to have their deposition taken so that they could return to their jobs and families abroad.  See, e.g.  In re Zak, 2017 U.S. Dist. LEXIS 222937, *17 (D. Me. 2017); United States v. Dalnave Navigation, Criminal No. 09-130, 2009 U.S. Dist. LEXIS 21765, 2009 WL 743100, at *2 (D.N.J. Mar. 18, 2009); Mercator Lines Ltd. (Sing.) PTE Ltd. v. M/V GAURAV PREM, 2011 U.S. Dist. LEXIS 153429, *28-31 (SDAL 2011).  However, even in those matters, the seafarers had to complain of detention for many months before the Court took action.

In two (2) recent cases, U.S. Magistrate Judges in the Eastern District of Louisiana and Southern District of California have refused to order depositions, instead finding that the government’s interests in completing charging decisions and live testimony of witnesses was of greater interest than the rights and liberty of the individual seafarers.  See, e.g., In re Joanna, 2021 U.S. Dist. LEXIS 114281, (ED La. 2021)(finding that the prosecutors’ subjective intent of the use of the material witness warrant was not reviewable, so long as the warrant was facially valid)(citations omitted). In another recent case, United States v. Evridiki Navigation, et al., in the District of Delaware, the Court finally ordered Rule 15 depositions after the crewmembers were detained for several months by government officials on the basis their testimony would be significant to the investigation and prosecution.  When the crewmembers returned for trial six (6) months later, the government shockingly did not call any of the seafarers as witnesses in the case.

The actions of the government is all the more egregious compared to how the material witness warrant statute is routinely used in other criminal matters in the United States.  For example, in U.S. v. Whited, the Court found that Christopher Cambron had material information relevant to a pending criminal matter in which the defendant was accused of armed robbery of at least seven (7) businesses.  Due to Mr. Cambron’s history of drug and alcohol abuse, the government sought a material witness warrant to keep him in custody to ensure his availability for trial. United States v. Whited, 3:21-cr-29, 2022 U.S. Dist. LEXIS 230521 (E.D. Tenn. 2022). The Court agreed and ordered Mr. Cambron detained.  However, the District Court directed his deposition to be completed within a week and Mr. Cambron’s deposition was completed the day after Christmas on December 26, 2022. He was released the next day after spending less than seven (7) days in custody. Similarly, in U.S. border cases, material witnesses are often detained, deposed, and then released within a matter of days. See, e.g., W.D. Tex. Local Criminal Rule 15b (setting out the procedure for deposition and release of material witnesses and requiring release within 24-hours of deposition or 45 days of first appearance in Court, whichever occurs sooner).

So why are seafarers, who are historically recognized as ‘wards of the Court’ to be afforded special treatment and protection, abused by the system in MARPOL/APPS cases. The reason is simple: the crewmembers are pawns utilized by the government as an additional pressure point on the Owner and Operator in these prosecutions.  The expense of paying for the total wage salary, per diems, hotel costs, and local travel expenses for the crewmembers detained in the district can reach $30,000 – $50,000 per month (or more).  Meanwhile, seafarers who most times have done nothing wrong, are forced miss important life events: births, deaths, anniversaries, family obligations, etc; a result that is all the more inhumane and disproportionate when considering that the US Courts routinely utilize remote appearances and/or video recorded deposition testimony in lieu of live, in-person testimony.

For more information on the US investigation and prosecution of suspected Marpol/APPS violations and/or the unfair treatment of foreign seafarers in the United States, contact: info@chaloslaw.com.

In Powers v. United States, 2:21-cv-00517-TSZ, a case from the Western District of Washington, has been full of dramatic twists and turns over the past two (2) weeks.  The matter involved the Plaintiff Michael Powers’ action against the United States pursuant to the Suits in Admiralty Act (“SIAA”) to recover for injuries suffered on May 2, 2019, when his boat, a 20-foot Duckworth Navigator, sank in navigable waters approximately 1.2 miles west of Deception Pass Bridge.  The Plaintiff alleged that his vessel was hit by a rogue wave, shattering the windshields, which caused the vessel to quickly fill with water.  His cousin died 20 to 30 minutes after being thrown from the Vessel. Plaintiff was pulled from the water approximately 8 hours later by the crew of the MACY RAE.

The Plaintiff alleged that his rescue was substantially delayed and his injuries worsened by the negligence of the Coast Guard and he sued under a “worsened the situation” theory of rescuer liability.  A third party called 911 to report what he believed to be an outbound boat disappear and capsize in rough seas.  The Coast Guard issued an Urgent Marine Information Broadcast and an unrelated vessel reported seeing a 22-24 hardtop boat inbound and not in distress.  From there, the Coast Guard negligently determined that it was a ‘false alert’ and issued directives to other agencies with assets in the water, the media, and the public that no vessel was in distress, effectively terminating third-party efforts to find and rescue Mr. Powers.

The government sought to dismiss the lawsuit on the grounds that the “discretionary function” exception applies to the Coast Guard’s conduct and therefore the court lacked subject matter jurisdiction over the claim.  The discretionary function exception, which has been held in the Ninth Circuit to be an implied exception to the waiver of sovereign immunity under the SIAA, applies if: 1) the conduct was discretionary (and not merely adherence to a mandatory statute, regulation or directive); and 2) if it was discretionary, whether the governmental decision was “of the kind the exception was designed to shield.”  The purpose of the doctrine is to protect governmental agencies from judicial second guessing when acts or omissions are based on “considerations of public policy.”

In rejecting the government’s motion, the Court found that evidence in the record showed the Coast Guard had failed to satisfy its own standard of care as a Search and Rescue Mission Coordinator, before determining the report was a false alert and ceasing search and rescue efforts.  As such, the Court ruled the exception did not apply because the decisions in the matter were discretionary and not based on considerations of public policy.  The Court ruled that it was an open factual question reserved for trial as to whether the Coast Guard’s actions or omissions were negligent.

On February 9, 2023, Powers’ attorneys filed a twenty-two (22) page motion for sanctions supported by a declaration and nineteen (19) exhibits, alleging that the government had improperly withheld key evidence in discovery and abused the discovery process. Most critically, the Plaintiff alleged that the government withheld documents and evidence which related to and conclusively refuted the government’s claim of discretionary function immunity, including a powerpoint presentation from Coast Guard personnel regarding the case in 2019 which included as section entitled “what the Coast Guard did wrong,” identifying key issues such as: anchoring bias, groupthink, status quo bias, attribution error and introspection illusion.  The outstanding discovery was not produced by the government until February 7, 2023, five (5) days after the motion to dismiss was denied and less than a month before trial was set to begin. Other allegations in the motion include that the government withheld: “’alignment’ emails discussing how to frame the facts of what occurred in the Case Study, emails discussing changes to the Coast Guard’s formal timeline of events (the MISLE log), communications between the Coast Guard and [third-party] agents regarding the case, and additional unproduced Coast Guard logs (“situation reports”). The documents also revealed that the government [allegedly] did not disclose at least ten people with knowledge of the incident, and demonstrate that certain Coast Guard witnesses had a much greater understanding of the case and its subsequent investigation than they testified to under oath.”

District Judge Zilly promptly held a conference on the motion earlier this week (February 13, 2023).  At the conference, the government announced that a settlement had been reached. On February 15, 2023, the Court entered the parties’ Consent Judgment directing the United States to pay Mr. Powers $875,000, with each party to bear its own costs and fees.

To read a copy of the District Court’s Order denying the Motion to Dismiss, please click here.

If you have any questions about this case or the Suits in Admiralty Act, please contact us at info@chaloslaw.com.

In a move identified by the U.S. Coast Guard as a necessary reflection of the substantial increase in the Consumer Price Index (CPI) since 2019, a new regulatory rule has been issued by the agency to increase the limits of liability for vessels, deepwater ports, and onshore facilities under the Oil Pollution Act of 1990 (“OPA 90”).  The new limits take effect March 23, 2023.

Pursuant to OPA 90, the responsible parties for any vessel or facility from which oil is discharged, or which poses a substantial threat of discharge of oil, into or upon the navigable waters (or adjoining shorelines/exclusive economic zone) of the United States, has strict liability for removal costs and damages that result from such an incident. OPA 90 places statutory limits on liability for a responsible party, except in cases of gross negligence, willful misconduct, and/or a violation of an applicable federal safety, construction, or operating regulation.

Regulatory inflation increases to the limits of liability are statutorily required by OPA 90 and the Coast Guard has explained that such increases are necessary to preserve the deterrent effect and “polluter pays” principle contained in OPA 90.  The rule change is nondiscretionary for the Coast Guard and the calculation of the increase in the liability limits is a ministerial task reflected by the change in CPI and the need to respond to inflation.  The Coast Guard followed 33 CFR 138.240 in setting the methodology and formula for the increase.  In short, the agency calculated an applicable annual percent increase in the CPI of 7.91, percent which has been applied uniformly across all types of vessels, deepwater ports, and onshore facilities to increase the maximum limit of liability.  For vessels, the adjusted limits are as follows:

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Source Category	Previous Limit	New CPI-Adjusted Limit
For a single-hull tank vessel greater than 3,000 gross tons.	The greater of $3,700 per gross ton or $27,422,200.	The greater of $4,000 per gross ton or $29,591,300.
For a tank vessel greater than 3,000 gross tons, other than a single-hull tank vessel.	The greater of $2,300 per gross ton or $19,943,400.	The greater of $2,500 per gross ton or $21,521,000.
For a single-hull tank vessel less than or equal to 3,000 gross tons.	The greater of $3,700 per gross ton or $7,478,800.	The greater of $4,000 per gross ton or $8,070,400.
For a tank vessel less than or equal to 3,000 gross tons, other than a singlehull tank vessel.	The greater of $2,300 per gross ton or $4,985,900.	The greater of $2,500 per gross ton or $5,380,300.
For any vessel other than those listed above, including for any edible oil tank vessel and any oil spill response vessel.	The greater of $1,200 per gross ton or $997,100.	The greater of $1,300 per gross ton or $1,076,000.

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The maximum limit of liability for Deepwater Ports and Onshore Facilities was also increased by 7.91 percent to $725,710.800 (up from $672,514,900).   The estimated number of vessels affected by these increases is expected to be minimal (i.e. less than three (3) vessels per year are anticipated to have an OPA 90 incident which would exceed the existing limit of liability).  The Coast Guard also estimates that the CPI adjustments will not result in an increase in responsibility guarantor insurance premiums across the industry.

To read a copy of the final rule in Federal Register, please click here.

For more information on OPA 90, please see Chalos & Co, P.C.’s article entitled: U.S. Pollution Law, Regulation and Enforcement – OPA 90.

If you have any questions about OPA 90 and/or need assistance with an oil spill incident or response, please contact us at info@chaloslaw.com.

On Wednesday November 16, 2022, a twelve (12) person federal jury sitting in the U.S. District Court for the Eastern District of Louisiana returned a unanimous verdict in New Orleans, Louisiana; finding Chief Engineer Warlito Tan, Jr. NOT GUILTY on all four (4) felony counts against him. The government charged Chief Tan with violating the Act to Prevent Pollution from Ships (APPS), violating the Ports and Waterways Safety Act, Obstruction of Justice, and Obstructing a Coast Guard Investigation.  The jury heard testimony from fourteen (14) witnesses over the course of seven (7) days. Chief Tan testified in his own defense and explained passionately to the jury that at all times he believed he was properly operating the oily water separator on board the vessel and that he never knowingly made any inaccurate entries in the oil record book. He further explained that he fully cooperated with the U.S. Coast Guard, never lied to the port state investigators, and returned on two (2) separate occasions to the U.S. to defend the charges against him, despite having been permitted to return home to the Philippines to attend to family matters while the case was pending over the past eighteen (18) months.

The jury rejected the testimony and evidence of the Coast Guard inspectors, investigators, and the retained expert hired by the Department of Justice.  Chief Tan’s testimony was clearly compelling to the jury as they returned the NOT GUILTY verdict in less than three hours.

For more information about the case or MARPOL/APPS and Ports and Waterways Safety Act matters, please contact us at info@chaloslaw.com.