Fast Company

One Big Problem - "Save the Waves"

With the cruise-ship industry's dramatic growth, the federal government made it clear that it was making an example of Royal Caribbean.

On last year's maiden voyage of Voyager of the Seas, the ship's Johnny Rockets burger-and-ice-cream joint was so popular that patrons often had to wait an hour for a seat. Yet any time Voyager was at sea, all of Johnny Rockets's outside booths -- half the diner's capacity -- were empty. No one was allowed to sit in them.

A senior Johnny Rockets manager explained that the wind on deck was brisker than had been anticipated, and guests weren't allowed to sit in the outdoor booths because the ship's officers were worried that waxed-paper hamburger wrappers might blow overboard and sully the Caribbean Sea.

That was quite a demonstration of environmental sensitivity for a cruise line that in the past two years has pleaded guilty in federal court to dumping thousands of gallons of oily bilge, dry-cleaning fluids, and photo-developing chemicals into the waters of the Caribbean; Alaska's Inside Passage; New York Harbor; and even the Port of Miami, where the cruise line is headquartered. Indeed, Royal Caribbean has acknowledged in its guilty pleas that in the early 1990s, the engine rooms on five of its ships were rigged with secret piping that allowed oily bilge to bypass expensive onboard pollution-treatment devices and to be poured directly overboard.

The pollution scandal, which involved an aggressive, five-year federal investigation, has been an ugly chapter for Royal Caribbean. It revealed waste-handling practices that were appalling -- and illegal. It also revealed a cavalier, defiant marine culture that was very much at odds with the company's gracious public image.

A Royal Caribbean ship was filmed as it trailed oil slicks across the clear, turquoise waters that make the company's business possible. Engine-room employees told federal investigators that dumping was done at night to avoid detection. And despite literally being caught in the act of polluting by Coast Guard officers, Royal Caribbean's ship officers lied to investigators. After grand juries handed down indictments, Royal Caribbean deployed a team of lawyers, including two former U.S. attorneys general, to argue not that the company was innocent, but that the U.S. government had no right to regulate or punish the acts of pollution because RCCL is a Liberian corporation and its ships are registered in other countries.

When that argument failed to persuade a Miami federal judge in June 1998, Royal Caribbean changed its plea from not guilty to guilty on the first series of charges, and it accepted a $9 million fine and five years' corporate probation.

"We deeply regret our role in polluting the marine environment, and we are particularly sorry for the attempts to conceal that pollution," RCCL president Jack Williams told the sentencing judge. "These acts were inexcusable, they were wrong, and we accept full responsibility for these violations."

The initial guilty plea did not end the Justice Department's investigation, and last summer, Royal Caribbean Cruises pleaded guilty to an additional 21 federal charges. It was hit with a second fine, this time to the tune of $18 million.

No senior corporate officials were charged in the cases, although Royal Caribbean replaced several high-level managers. After the indictments, Harri Kulovaara was promoted to senior VP of marine operations, and Jack Williams was hired as president, quickly becoming the company's public spokesman on the pollution charges. Williams appeared in federal courts for sentencing and toured several Alaskan cruise ports to apologize in person. "It is absolutely my number-one priority as president of this company to make sure we build the most environmentally sensitive workforce in the cruise industry," Williams said in Anchorage last October.

The company's current antipollution practices are supervised by a federal judge in Miami. Royal Caribbean has added former EPA administrator William Reilly to its board of directors, and each ship now has a full-time environmental officer on board. Gas turbines instead of diesels power the company's newest ships; this will dramatically reduce airborne exhaust.

The public posture of repentance is so extensive -- even as the investigation into past practices continues -- that every shipboard employee's name tag bears a tiny turquoise logo that says, "Save the Waves." The same logo hangs over cabin toilets and on deck rails, with signs urging passengers not to throw trash overboard.

But the practices have proved hard to root out, despite the extensive attention that they've received. Just a month after the first guilty pleas, a Royal Caribbean ship illegally dumped oil waste overboard. Royal Caribbean reported that incident to federal officials and dismissed two employees.

With the cruise-ship industry's dramatic growth, the federal government made it clear that it was making an example of Royal Caribbean. The $9 million and $18 million fines each set a record for the largest pollution penalty for a cruise-ship company. Together, the $27 million that Royal Caribbean paid exceeds the $25 million fine imposed on Exxon for the environmental damage caused by the grounding of the Exxon Valdez.

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