Feds Seek Reimbursement of Costs To Salvage Grounded Fishing Vessel

posted in: December 2019, Fisheries | 0

The federal government is suing the owners of the Pacific Paradise for at least $1.66 million in an effort to recover costs associated with removing the fishing vessel from the reef off Waikiki where it ran aground in October 2017.

The claim was filed in U.S. District Court in Honolulu on October 17, two years and a week to the day that the 79-foot longline vessel drifted onto the reef, carrying 20 individuals, nearly all of whom were foreigners being brought to Hawai‘i from American Samoa to work on other vessels in the Honolulu-based longline fleet.

But whether any of this claim will be repaid, much less all of it, is not at all clear.

For one thing, the company that owned Pacific Paradise appears to have no assets at this time. That company, TWOL, LLC, had owned two longline vessels, Pacific Paradise and Pacific Dragon. Pacific Paradise was burned and damaged beyond repair as a result of the grounding, and now sits on the seafloor some 13 miles offshore of O‘ahu.

For another, the owners of TWOL – Loi Chi Hang and Nguyen Ngoc Tran – were determined in another federal action settled last August, to be virtually indigent. In that case, involving significant violations of the Clean Water Act, civil penalties were proposed totaling several hundred thousand dollars. After reviewing tax and other financial records of Hang, Tran, and TWOL, the Justice Department allowed them to settle for a total of just $13,000.

On February 15, 2018, barely two months after the Pacific Paradise was sunk, Hang and Tran formed a new company, LNK Fishery, LLC, and transferred ownership of the Pacific Dragon to this entity. That leaves TWOL without any apparent assets that could be attached to satisfy the Justice Department’s claim.

Oil Pollution Act Claims

The Oil Pollution Act of 1990 allows the government to recover any and all removal costs incurred by the Oil Spill Liability Trust Fund. In the case of the Pacific Paradise grounding, the fund was tapped to pay for costs of removing the vessel from the reef.

The contractor Resolve Marine undertook most of the removal efforts. The claim for its work comes to $902,350.17. All other claims are to reimburse the Coast Guard for contracts ($47,169.08), equipment ($282,453.31), personnel ($351,271.45), travel ($73,648.23) and civilian overtime ($475.93). In addition, the lawsuit says the government will seek to recover “interest, administrative and adjudicative costs, disbursements, and statutory attorneys’ fees recoverable” under the Oil Pollution Act. What’s more, “the United States expressly reserves the right to amend this complaint to add … claims for natural resource damages.”

According to the claim, the lawsuit was filed only after demand for payment was made upon the defendants: “The United States has made demand upon Defendants for reimbursement for all the outstanding response costs and damages owed by Defendant as a result of the [Oil Pollution Act] Removal and Response Action, and said monies remain unpaid.”

The complaint also alleges that the defendants are in violation of the Federal Debt Collection Procedures Act. Instead of “discharging debts owed to the United States,” the complaint says, defendants “transferred, sold, spun off, and assigned assets so as to prejudice and cause irreparable harm to the United States.”

The Response

On November 13, attorney Bryan Ho filed an answer to the complaint, which, he says, “fails to state a claim or claims … upon which relief can be granted.”

If the Coast Guard “sustained any damages as alleged … which is denied, defendants are entitled to limit their liability” under the Oil Pollution Act limits on liability, Ho claims.

Ho also denies that Tran and Hang were vessel owners and argues that, in any event, the government’s claims are “time-barred by the applicable statute of limitations.”

The government also proposes to fine the vessel master, Cong Van Nguyen, $5,000 for “operating a vessel in a negligent manner so as to endanger life, limb, and property.” No filing on Nguyen’s behalf was made by press time.

A scheduling conference has been set for December 16 before Magistrate Judge Rom Trader.

The Clean Water Act Violations

A federal lawsuit alleging violations of the Clean Water Act was filed June 21, 2018, and concerned illegal discharges of oily bilge water from the Pacific Dragon that occurred in early 2017.

“The Elizabeth has a history of violations of the Coast Guard’s pollution control regulations,” the Justice Department alleged early on in the complaint, although it does not provide any details of that history.

“Loi Hang and Nguyen Tran knew before December 1, 2016, that the Elizabeth” – now renamed the Pacific Dragon – “lacked the equipment and capacity to retain oily mixtures generated while underway and that the Elizabeth regularly discharged oil overboard during voyages,” it went on to say. Nonetheless, it continued, they “directed the Elizabeth to get underway for fishing voyages between December 1, 2016, and March 2, 2017.”

As described in the complaint, conditions in the vessel were not just in violation of federal law with respect to oily wastes, but unsanitary and unsafe as well: “Pathways for excess water to enter the engine room included a corroded and deteriorated metal bulkhead and a faulty shaft seal that allowed free flow of fluids between the engine room bilge and the fish hold. When ice melted in the vessel’s fish hold, water flowed through the unsealed shaft fitting and other holes in the bulkhead into the engine room bilge. Bilge water containing oil waste and other bilge contaminants could also flow from the engine room into the fish hold.”

These were the conditions found when, on March 2, 2017, a law enforcement team from the Coast Guard boarded the vessel as it was returning to port in Honolulu.

“TWOL LLC, Loi Hang, and Nguyen Tran are each liable for civil penalties of up to $46,192 per day of violation or $1,848 per barrel discharged” under the Clean Water Act, the complaint noted. And if those violations are proved to be “the result of gross negligence or willful misconduct,” the fines would rise to a minimum of $184,767, and up to $5,543 per barrel discharged.

In addition, the Elizabeth had no capacity to retain oily mixtures on board, making the defendants liable for penalties of up to $46,192 per day of violation, and it also did not display placards informing crew members of prohibitions on the discharge of oil in languages read by the crew and displayed in the engine room or ballast pump control stations. Rather, “Coast Guard officers found a ‘Discharge of Oil Prohibited’ placard written in English and no other language affixed to the mess deck door…. [F]oreign crew members working aboard the Elizabeth between December 1, 2016 and March 2, 2017, were unable to read English.”

A week after the complaint was filed, notice of a proposed consent decree was published in the Federal Register. The defendants were to correct the violations identified in the lawsuit and pay a total of $13,000 in penalties. “The penalty amounts were set after considering each defendant’s limited ability to pay a higher penalty, as demonstrated through documentation submitted to the United States and analyzed by a financial expert,” the notice says. “TWOL LLC must pay a civil penalty of $1,000; Mr. Hang must pay a civil penalty of $8,000; and Mr. Tran must pay a civil penalty of $5,000.”

Tran and Hang are listed on the state Department of Commerce and Consumer Affairs website as principals of two companies that hold longline permits. They are the sole members of LNK, LLC, which owns the Pacific Dragon. And they are listed as directors of Lady Karen, Inc., which owns the Lady Karen II.

— Patricia Tummons

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