The primary purpose of this study is to fill out the gap in the current research of environmental policy because the conventional approach still dominates it. By using soft-systems methodology based action research, problem-solving, the present study seeks the institutional design in overcoming the problem of sludge oil in Bintan seawater, Kepulauan Riau. Field research was conducted in several villages in Bintan coastal area, such as Pengudang, Tanjung Berakit, and Trikora. Participants in this study involved state and non-state actors, in particular, the Indonesian Coast Guard, Indonesian navy, environmental agency of provincial and municipal government, fisherman, and village government. Data were gathered with an in-depth interview, observation, and secondary resources. In summary, we offer a new institutional design to replace previous governance of the issue. This study contributes not only to add our understanding of the governance of marine waste, but also the practical solutions to address it.