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“Nobody wants to be in federal court in Miami — or anywhere else.”
That was Carnival Corp. CEO Arnold Donald speaking at Skift Global Forum in September. But back in Miami federal court was exactly where he was on Wednesday, along with chairman Mickey Arison and other Carnival executives. They were there to detail the progress they’ve made on cutting down on ocean pollution and abiding by a court-mandated environmental compliance plan.
The hearing was a follow-up to a June court date, where the company pleaded guilty to six counts of probation violations for environmental crimes it was convicted for in 2016. The original crimes — the illegal dumping of oily waste from Princess ships into the ocean, as well as a subsequent cover up — took place for eight years until 2013.
The violations Carnival pleaded guilty to in June included thwarting attempts at oversight from court-appointed monitors, attempting to back-channel with the Coast Guard, falsifying training records, as well as additional ocean dumping in the Bahamas. For that, they were fined $20 million and had to consent to more stringent oversight during their remaining three years of probation. The terms of the settlement apply to all nine of Carnival Corp.’s brands and 100-plus ships, not just Princess Cruises.
The government’s quarterly status report on Carnival’s progress, filed one day before Wednesday’s hearing, will not make for easy reading for Carnival executives. The court appointed monitor “sound[ed] cautionary notes in light of persistent significant violations of Environmental Compliance Plan requirements, and continuing concerns of the ‘tone at the top’ and regular violations [of the plan.]”
Among many shortcomings, the report cited insufficient or non-existent data provided in response to some government requests — making it impossible to assess Carnival’s progress — as well as incomplete record keeping or a lack of due diligence on issues spanning food waste, single use plastic, shoreside waste vendors, gray-water discharge and others.
At Wednesday’s hearing, Senior U.S. District Judge Patricia Seitz said Carnival must work faster to fix its environmental issues, with fewer promises and more action.
James Walker, a maritime attorney and prominent critic of the cruise industry, was present at the hearing. He noted that Carnival’s rhetoric the hearing “seemed like a broken record, and a repeat of the promises made by Carnival’s CEO at the last hearing.” He added that “Judge Seitz appeared frustrated By Carnival’s failure to establish metrics/measurements by which the court could have evaluate whether Carnival is making progress reaching the goals of compliance, environmental regulation and safety.”
At Skift Global Forum in September, when asked about the guilty plea in June, Donald explained what actions the company had taken in response, though he was light on specifics.
“In the end we made a mistake and if you make a mistake you gotta own up to it, and you have to look at your systems and processes and say ‘okay, how do we make certain will we not only make that mistake again’ — which we have not — ‘but that we don’t make similar related mistakes.'” Donald said.
Donald detailed steps including bringing on Peter Anderson, a former federal prosector and court appointed monitor, to serve as chief ethics and compliance officer, along with adding additional talent and resources to that effort. He added there were “a number of initiatives in the area of food waste handling and single-use plastic reductions.”
However, on that latter point, the government’s status report noted that in response to a request to provide “the quantity, type, number and volume of single use plastic products being purchased per brand, per covered ship,” Carnival merely provided aggregated data for purchases in 2018, saying it would provide more granular numbers at the end of the fiscal year. It also made the unusual choice to exclude plastic bottles and gloves, reasoning that most of its bottles are recycled.
This seemed to baffle the government authors of the report, which noted this recycling claim is an entirely “unverified assertion” and that promising to provide more detailed data on plastics at the fiscal year’s end “seems oriented toward running out the clock rather than striving to make progress.”
Going further, the report read, “it does not appear from the response that Carnival is giving any thought whatsoever to reducing or eliminating what is no doubt the most significant volume of single use plastic on board its ships,” referring to plastic bottles.
On this issue, Carnival told Skift that their efforts to “dramatically reduce single use plastic” go beyond plastic bottles and include myriad other items, however it did not respond to the specific claim of a lack of proof of their recycling program.
The company has publicly announced a plan to reduce plastics by the end of 2021. John Heald, Carnival’s Brand Ambassador, posted a lengthy Facebook post earlier today outlining the cruise line’s strategy to eliminate different kinds of plastic waste on board, though it did not go into specifics about plastic bottles, noting he “will have more on that in the future.”
In response to the claim that Carnival provided insufficient metrics, Carnival wrote in its response to the government’s progress report that “there are numerous technical issues raised by the Government’s request for metrics: The Company believes that conferral with the Government will be the most useful way of making progress on metrics.” Carnival said it would provide a new method for providing metrics to the court appointed monitor and other relevant parties by Nov. 1.
In addition, Roger Frizzell, chief of communications for Carnival, told Skift the company has filed multiple documents with the court outlining its plans. “The environment and environmental compliance is a top priority for our company.”
Judge Patricia Seitz, who co-presided over Wednesday’s hearing before her retirement, had formerly threatened jail time for company execs if further violations were made as well as a desire to block Carnival’s ships from docking in U.S. ports.
So far this year, Carnival shares are down 18 percent to Wednesday’s closing price of $41.44.