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July 31, 2002

NCL to pay $1.5 million in pollution case
Norwegian Cruise Line has issued a statement saying that, as a result of its voluntary reporting of irregularities, it has reached an agreement with the U.S. Attorney's Office for the Southern District of Florida and the US Department of Justice to plead guilty to a single count of violation of Title 33, U.S.C., Section 1908, for the knowing failure to maintain an accurate Oil Record Book aboard the S.S. Norway prior to May 2000. Under the plea agreement, NCL has agreed to pay a fine of $1 million, be placed on probation, and maintain a comprehensive environmental compliance plan.

In addition to the agreed fine, NCL has agreed to make community service payments in the total amount of $500,000 to two Florida-based environmental organizations as a condition of its probation.

NCL says that, during a fleet-wide independent environmental audit as part of a new management review shortly after Star Cruises gained control of the company in February 2000, it discovered reporting irregularities and improper use of on board oil/water separators.

A Department of Justice statement says that "the cruise line's environmental consultant actually witnessed an NCL engineer aboard the SS Norway in the act of circumventing the ship's Oil Water Separator, a required pollution prevention device. Ship officers deliberately used fresh water to trick the device designed to detect and limit the overboard discharges."

NCL says it "immediately reported these problems to the U.S. government in May 2000, and took steps to stop further violations and to correct the underlying problems."

The Department of Justice statement also said that NCL had admitted that it "engaged in a practice of systematically lying" to the U.S. Coast Guard over a period of years regarding the discharge of oil contaminated bilge waste from the Norway and at least one other ship."

NCL says the plea agreement represents the culmination of two years of cooperation between NCL and the U. S government agencies involved.

"Our company is committed to protecting the environment," said Colin Veitch, President and Chief Executive Officer of NCL since its purchase by Star Cruises Plc in February 2000. "We deeply regret the past actions we found upon our purchase of NCL. Along with the government, we deplore that the standards of this reputable company were allowed to drop in this way in the years leading up to its acquisition, but I am personally proud of the way our company has stepped up to its responsibilities for environmental protection during the past two and a half years."

The plea agreement cites the knowing failure to log and report as required the incorrect operation of the oil/water separators on the SS Norway and the overboard discharge of oily bilge water over the legal limit of 15 parts per million between 1997 and May 2000, when NCL reported its internal findings.

"We took responsibility and fixed the problem, at a very substantial cost," Veitch said. "Instead of stalling or stonewalling, we cooperated fully with the government throughout this period."

Remedial actions taken by NCL include terminating or accepting resignations of executive and management employees in the shore side operational group responsible for the running of its ships, putting in place across its fleet an entirely new environmental compliance program including upgraded equipment, comprehensive waste management and reporting systems, annual audits, Environmental Officers on all ships, and a new department shore side headed by a senior executive responsible for environmental and regulatory compliance.

"This agreement is a concrete example of NCL's commitment to full compliance with all environmental laws and regulations, and to operational practices of the highest standard," Veitch said. "We are pleased to have the investigation and correction of this regrettable violation behind us. We are a stronger and healthier company now."

NCL says the plea agreement reflects the government's recognition of the extent of NCL's cooperation, including substantial assistance in the investigation, waiver of privilege, institution of prompt remedial action, and installation of a compliance program to prevent future violations.


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