Omega Protein: The Compliance Promise Behind a Federal Loan

Omega Protein agreed to a $1 million False Claims Act settlement over allegations that it falsely certified environmental compliance to obtain a $10 million federal loan. The Justice Department alleged that the company promised the Department of Commerce it was complying with federal environmental laws while knowingly violating the Clean Water Act. A former employee brought the whistleblower case. If you know what happened at a plant or aboard a vessel, that knowledge can reach beyond the discharge to the promise that helped secure government money.

This case follows an environmental compliance certification into a specific Commerce loan. Our page on environmental violations and public money covers the broader connection; here, the story runs from the company’s operations to its financing paperwork and the civil settlement.

The Environmental Certification Behind the Commerce Loan

Omega sought the Commerce loan with a March 2010 certification that it complied with federal environmental laws, according to the Justice Department’s settlement announcement. For this public loan, environmental certification put the company’s operating practices behind its request for financing.

Omega produced fish oil, specialty fishmeal and organic fish solubles for livestock and aquaculture feed manufacturers. Its products came from menhaden, small, oily fish found off the East Coast. Processing those fish generated wastewater, and the criminal case later described both waste from the processing operation and oily wastewater from the fishing fleet. Someone familiar with either operation could understand a part of the business that a financing certificate would never show.

We see taxpayers asked to finance a company that the Justice Department alleged was knowingly violating the laws it promised to obey. The clean part was the paperwork.

What Omega Protein Agreed to Settle

Omega Protein Corp. and Omega Protein, Inc. agreed to resolve the civil allegations about the loan certification. The Justice Department announced the settlement on January 28, 2019, identifying a qui tam case brought by a former Omega employee. It also announced that the former employee would receive a share of the settlement proceeds.

The Justice Department’s Civil Division, the United States Attorney’s Office for the Western District of Louisiana and Commerce coordinated the civil resolution. The separate criminal case concerned Omega Protein, Inc.’s Clean Water Act violations in Virginia. The civil allegations concern what the companies told the lender; the criminal account describes what the processing operation and fishing fleet did with their waste.

What the Clean Water Act Criminal Case Described

Omega Protein, Inc. pleaded guilty to Clean Water Act violations in 2013, as the Justice Department’s civil announcement recounts. The United States Attorney’s Office for the Eastern District of Virginia described the underlying conduct in its account of the criminal case. Its account makes the physical operation concrete: what entered the wastewater, where it was discharged and how the vessels moved oily waste overboard.

Fish Waste Mixed With Other Pollutants

According to that criminal-case account, the processing facility generated bail water, a mixture of water and fish waste. It could discharge that material beyond three nautical miles from shore if the water had not been mixed with other chemicals or wastes. Both the contents and the discharge location mattered.

The announcement describes a statement of facts filed in the criminal case in which Omega combined bail water with pollutants from processing and a caustic substance. It then discharged the mixture into the Chesapeake Bay less than three nautical miles from shore. For a plant employee, the relevant knowledge could be as concrete as what went into the waste stream and where it went afterward.

Pumps Sent Oily Wastewater Overboard

The same criminal-case announcement describes vessels with bilge pumps connected directly to the skin of the ship, allowing oily wastewater to be pumped into the sea. Citing court records, the United States Attorney’s Office described those discharges as common practice during voyages from April 2009 through September 2010. That period includes the month Omega submitted its compliance certification to Commerce.

The pump arrangement and discharge practice matter to a civil whistleblower because they describe operations that can be compared with a company’s environmental representations to its public lender. An employee who knows the vessel may be able to explain what a person reading only the loan file would miss.

Environmental Statements That Reach Public Funding

Hino Motors supplies a parallel through state vehicle vouchers. California alleged that false emissions information in Hino’s vehicle-eligibility application supported clean-vehicle vouchers, and its settlement announcement describes the resulting state funding claims. Omega’s alleged representation reached a federal lender; Hino’s reached a state incentive program. In each, the funding application gives the environmental information a financial job.

What a Plant or Finance Insider Can Connect

A loan-certification case connects the operating facts to the certification, the people who prepared or approved it and the lender’s decision. We examine that connection through the records linking the operation to public money. For the Omega allegations, the central comparison is what the company represented to Commerce against what was happening when it made that representation.

A person familiar with processing may know what substances entered a waste stream. Someone working aboard a vessel may know how its pumps were configured and how they were used. The criminal account gives those observations a specific purpose in this case: they concern the same kind of environmental compliance that the civil announcement says Omega certified to obtain financing.

The finance side supplies a different part of the story. We would examine the signed certification and loan terms alongside the information available to the people who prepared and approved the representation. Internal communications, operating records and the agency’s response can help explain how a statement about compliance reached a decision about money.

The Former Employee’s Whistleblower Case

The former Omega employee brought the civil case under the False Claims Act’s qui tam provisions, which allow a private person to bring a case on the United States’ behalf and share in a recovery. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our work on energy and environmental whistleblower rewards begins with the public money involved and what your knowledge can establish about it.

You Know What the Compliance Promise Left Out

If you know that a company’s environmental certification for public financing contradicts the operation you saw, talk with our whistleblower experts about that promise and the money behind it. We develop the case with you, bring in environmental fraud whistleblower lawyers who understand federal financing claims, and stay beside you throughout the process.