If the USN takes any action against him it will be a big PR nightmare for the USN and the DOD, I believe the best way to avoid the issue is to tell him "we aren't going to punish you, but you aren't getting recognized for your actions"
I would actually think a NPLOC would not be a big deal, especially if it is handled internally. There is also recent examples of punishing someone and still recognizing their bravery, an Army officer at the Battle of Wanat was and decorated with a Silver Star but also received a letter of reprimand for the same battle. The letter was later withdrawn but it has happened.