NORWEGIAN CRUISE LINE ADMITS TO ENVIRONMENTAL CRIME

WASHINGTON, D.C.– Norwegian Cruise Line Ltd., the world's fourth-largest cruise line, has signed a plea agreement with the United States acknowledging a felony violation of the Act to Prevent Pollution from Ships and further agreeing to pay a $1 million criminal fine after turning itself in and cooperating with prosecutors. The filing of a plea agreement with prosecutors in U.S. District Court in Miami, in response to the criminal charge filed by the United States against NCL, was announced today by the U.S. Attorney's Office for the Southern District of Florida and the U.S. Justice Department Environmental Crimes Section. A hearing has been set in Miami for 3:15 p.m. on Wednesday, July 31, 2002, before the Honorable Joan A. Lenard, United States District Court Judge.

NCL discovered the violations during an environmental audit ordered by new owners in April 2000, after the company learned that a former employee had reported the dumping of waste oil to the Environmental Protection Agency, according to a detailed factual statement filed in court. The cruise line's environmental consultant performing the audit 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 promptly reported the offense to the government, but after a whistle-blower had already made allegations to the EPA. The cruise line pledged its full cooperation with the United States in its ongoing investigation of potentially culpable individuals. NCL turned over its internal investigation and fired or accepted resignations from seven senior shore-side officials.

In a Joint Factual Statement and the plea agreement filed with the Court, NCL has admitted that it engaged in a practice of systematically lying to the United States Coast Guard over a period of years regarding the discharge of oil-contaminated bilge waste from the SS Norway and at least one other ship, according to court documents. The false statements were contained in the ship's Oil Record Books, a required log in which overboard discharges must be recorded. The intentional falsification of log books required to be carried by ships and regularly inspected by the Coast Guard was designed to conceal that oil contaminated bilge waste was being dumped overboard. The deliberate failure to maintain an accurate Oil Record Book violates the Act to Prevent Pollution from Ships, a law which implements an international environmental treaty known as the MARPOL Protocol.

Both the Department of Justice and the EPA have voluntary disclosure programs under which a company can seek non-prosecution if it discovers violations and reports them in a timely manner prior to a government investigation. The proposed resolution of this case – a single representative count in a single district – gives NCL credit for its prompt disclosure and substantial cooperation.

"NCL deserves considerable credit for its early disclosure of violations, before the government's investigation became manifest and without any promise of leniency," said Tom Sansonetti, Assistant Attorney General for the Justice Department's Environment & Natural Resources Division. "However, the sad fact remains that the practice of dumping waste oil and maintaining false log books has proved to be commonplace in the maritime and cruise ship industry. Our oceans are not dumping grounds and lying to the U.S. Coast Guard will be vigorously prosecuted."

Barry Sabin, First Assistant United States Attorney for the Southern District of Florida, said, "NCL's early and meaningful acceptance of responsibility sets an appropriate standard of corporate citizenship. By not seeking a higher penalty, we intend to provide a true incentive for companies to self-audit, promptly remedy problems and fully cooperate with law enforcement."

Until 1998, the SS Norway had a single Oil Water Separator that was referred to by the engineers as "an old piece of junk." Other equipment was used to dump the waste directly overboard. Even after a new and second Oil Water Separator was purchased, ship engineers continued to circumvent the pollution prevention machine until May 2000, when NCL's new owners stopped the practice, according to the factual statement. Ship officers continued to pollute and maintain false records despite the prominent display in the engine room of newspaper articles about the prosecution of Royal Caribbean Cruise Lines Ltd. for similar violations. NCL financially benefitted by not expending the resources necessary to maintain its pollution prevention equipment, failing to properly offload waste oil in port and not purchasing adequate equipment in the first place, according to papers filed today in court.

If approved by the court, the NCL plea agreement will make the seventh time a cruise line has been convicted of environmental crimes. Under the Act to Prevent Pollution from Ships, the court may award the whistle-blower up to one-half of the proposed $1 million criminal fine for providing information leading to conviction. If a reward is granted, it would be the fifth of its kind and the third in the cruise ship industry. In addition to the $1 million fine, NCL will also make community service payments of $500,000 for designated environmental service projects in South Florida.

In announcing the plea agreement today, Sabin and Sansonetti commended the investigation by the United States Environmental Protection Agency - Criminal Investigation Division, the Coast Guard Investigative Service, United States Department of Transportation - Office of Inspector General, the Federal Bureau of Investigation, the Miami-Dade Police Department Environmental Investigations Unit and the Florida Department of Environmental Protection Criminal Investigation Division. The case is being prosecuted by the U.S. Attorney's Office for the Southern District of Florida and the Environmental Crimes Section of the U.S. Department of Justice.

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