If you observe any situation which presents a safety or pollution hazard during fuel transfer operations on a MODU, what action should you take FIRST?

Correct Answer: Option B — Shut down the transfer operation.

Immediate cessation of fuel transfer is the primary defense against pollution and fire hazards. Per 33 CFR 155.780, the person in charge must stop the transfer if any unsafe condition arises, preventing the escalation of a spill or fire before taking secondary actions like sounding alarms.