MIAMI -- A federal judge Wednesday threatened to stop Carnival Corp. from docking its ships at U.S. ports temporarily as punishment for possibly violating probation but said she would make a decision at a hearing scheduled for June.
Carnival has been on probation for the last two years as part of a $40 million settlement for illegally dumping oil into the ocean from its Princess Cruises ships for eight years and lying about the scheme to U.S. authorities.
While on probation, according to court filings, Carnival Corp. and its subsidiary cruise lines have sought to avoid unfavorable findings by preparing ships in advance of court-ordered audits, falsified records, dumped plastic garbage into the ocean and illegally discharged gray water into Glacier Bay National Park in Alaska.
The company also has tried to lobby the U.S. Coast Guard through a back channel to change the terms of the settlement, prosecutors allege.
The company has acknowledged these incidents.
In a statement issued after Wednesday’s hearing in front of U.S. District Judge Patricia Seitz, Carnival Corp.'s Chief Communications Officer Roger Frizzell said, "It appears there were some mischaracterizations made by others to the court. We intend to fully address the issues raised at today’s court conference.
"Our environmental responsibility has been and continues to be a top priority for the company. Our aspiration is to leave the places we touch even better than when we first arrived. This is only in the best interest of our guests, our company and the oceans upon which we travel."
Seitz will decide whether to revoke Carnival Corp.'s probation and punish the company at a hearing scheduled for June. On Wednesday, Seitz scolded the Miami-based cruise conglomerate's chairman, Micky Arison, and president, Donald Arnold, neither of whom were present.
"The people at the top are treating this as a gnat," Seitz said. "If I could, I would give all the members of the executive committee a visit to the detention center for a couple of days. It's amazing how that helps people come to focus on reality."
Seitz requested that Arison, Donald and other executives attend the June hearing to answer questions.
The five-year probation period that began in April 2017 requires a third-party auditor to inspect ships belonging to Carnival and its subsidiaries.
According to court filings, during 2017, Carnival had a program in place to prepare for court-ordered audits to avoid any negative findings by the independent court-appointed monitor. Seitz ordered Carnival to stop the practice in December 2017, and the company said it stopped at that time. But federal prosecutors allege that Carnival continued the practice into 2018.
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Prosecutors cited internal emails shared at Carnival’s brands discussing how to prepare for the audits. “It would be really important to go onboard on August 12 for one week in order to have time to manage issues before the audits and avoid findings,” said a 2017 internal email from Carnival’s German-based cruise line AIDA Cruises. A similar internal email from Carnival’s Seattle-based Holland America Line mentioned “prevent audit findings” as a goal in early 2018.
The company owns nine cruise brands and 102 ships.
According to court filings, the court-appointed monitor found that Carnival and its subsidiaries have repeatedly falsified records while on probation as recently as September 2018, when a second engineer on Holland America's Westerdam ship falsified maintenance records to make it look like he had cleaned and tested equipment when he had not.
During a ship audit in December 2018, according to court filings, monitors found the Carnival Elation ship had dumped plastic overboard; the plastic wasn't being separated from the food waste. Auditors also found plastic wasn't being separated properly on the Sea Princess ship in December 2017, the Ruby Princess ship in February 2018, and the Carnival Dream in August 2018.
At Wednesday's hearing, Seitz mentioned a 45-minute presentation she received as a guest aboard Carnival Corp.'s ultra-luxury cruise line Seabourn about how damaging plastic straws are to the marine environment.
"I was thinking to myself, 'I'm impressed,' " she said. "Obviously they talk the talk, but they're not walking the walk."
In addition, according to court documents, Holland America's Westerdam ship dumped 26,000 gallons of gray water into Glacier Bay National Park in Alaska in September 2018. Holland America paid a $250 fine to Alaska authorities and did not immediately report the discharge to the Coast Guard as required by federal law.
The Carnival Conquest ship illegally dumped 66,000 gallons of ballast water in Bahamian waters in November 2018. In that case, the engineer involved offered to falsify records to make it look like the dump happened at open sea to his superior, who instructed him to report it correctly.
Seitz requested that Holland America executives Stein Kruse, Keith Taylor and retired Rear Admiral Joseph Servidio and Carnival Cruise Line president Christine Duffy also attend the June hearing.
As part of Carnival's probation, court-appointed monitors have to report "major non-conformities" in their quarterly and annual reports. Carnival asked the government to exclude faulty ship equipment from the definition of "major non-conformity," and in March 2018 it declined to do that.
Servidio, Holland America Group's senior vice president for safety, environmental & management services, emailed his former colleagues at the Coast Guard seeking support for Carnival's definition, according to federal prosecutors. Coast Guard personnel directed Servidio to raise the issue with the monitors or the court. Carnival said Servidio's attempt to contact the Coast Guard was to get clarification about the definition, not to lobby.
Seitz also cited concerns that Carnival's corporate compliance monitor doesn't have enough authority to create the systemic change needed.
“This company is very successful,” said Seitz, calling the 2017 $40 million settlement -- the largest in history -- a drop in the bucket. “It prides itself on providing superb customer service. Well it is also a citizen of the world, it makes its money using the waterways and it has a responsibility to be a role model. Right now it is a criminal defendant and this is not the first time nor is it the second time.”