One of the major obligations of production
operators is to report any oil sheens that occur
because a sheen is prima facie evidence that
a reportable oil spill has occurred. 4 To that
end, the NPDES permit requires the operator
to minimize the discharge of dispersants,
detergents. This is
these substances tend
to emulsify oil and
disguise the sheen,
thus making detection
more difficult. In
this particular case,
the produced water
was so polluted
that the cleaning
process did not result in water that met
CWA standards for discharge.
ABC Technologies contracted with
the platform operator to provide chemical
management services, and for a two-year period
sold chemicals to the operator and provided
associated consulting services on the platform.
Among the chemicals sold was Cleartron
ZB-103, which the foremen on the platform
requested despite ABC not recommending
its use. Employees of the platform operator
ordered more than 4,000 gallons of Cleartron
from ABC that was subsequently introduced
as a dispersant to hide oil sheens from the
produced water. ABC employees were aware of
how the production operators used Cleartron,
knew that such use was prohibited, and did
not report it to authorities. ABC employees
also inaccurately recorded the use of Cleartron
in reports, contributing to the regulatory
inspectors’ inability to detect its improper use
on routine inspections.
As a result of the plea deal, the company
was sentenced to a one-year probation, agreed
to pay a $1 million criminal fine, and paid
another $250,000 to a community service
program at a nearby estuary. The judgment
included many provisions that mirror a
compliance agreement, and the EPA took the
lead on the administrative resolutions, such as
a debarment action or compliance agreement.
Their plea deal avoided far graver criminal
have been charged as
well. Though avoiding
some of the worst
consequences, this is
still a pretty expensive
Note that the
developed out of
the misconduct of the business partner. ABC
Technologies was not the one dumping waste,
but they knew about it, profited from it, and
took steps to conceal it. Where profit is a motive,
or individuals have a stake, either through
bonuses or performance reviews that tie to
these business relationships, there is going to
be the temptation to look the other way. The
question is, what are you doing to mitigate it?
The risks involved with dealing with third
parties should be part of your risk planning
and compliance training—and remember,
misprision will have you singing the blues. ✵
The opinions in this article are the authors and do not
necessarily represent the position of any government agency.
1. See 73 F.2d 795 (10th Cir. 1934), June 21, 2017. Available at http://bit.
2. “USA v. Richard Baumgartner, No. 13-5580 (6th Cir. 2014)” Justia Law,
N.p., September 24, 2014. Available at http://bit.ly/2g1reVv.
3. Volokh, Eugene: “‘Misprision of felony’” The Washington Post,
September 29, 2014. Available at http://wapo.st/2yf T5LQ.
4. See 40 C.F.R. § 110.3(b). Title 40 C.F.R. § 110.4 prohibits the addition of
dispersants or emulsifiers.
Daniel Coney, CCEP, CFE, CFCS ( Danconey@comcast.net) has been
a law enforcement professional for nearly 33 years, with the last 25
years being both an agent and supervisor in four different Office of
Inspector General organizations. Dan can also be reached on LinkedIn
ABC Technologies was
not the one dumping
waste, but they knew
about it, profited from
it, and took steps
to conceal it.