Where did the Maritime Heritage Grant Money Go? - Part 2

In 2009, Congress mandated that all government vessels be recycled in the United States. The 1970 Bank Secrecy Act and the 2001 PATRIOT Act imposed additional reporting requirements concerning international wire transfers over $10,000. Finally, the Freedom of Information Act requires the government to share information in a timely manner. What do they all have in common? The former Coast Guard Cutter STORIS that was scrapped in Mexico in 2013.

The Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 is crystal clear: “no vessel that is owned by the Government of the United States shall be approved for export to a foreign country for purposes of dismantling, recycling, or scrapping.” Exceptions can be made but only if a four-pronged test is met: compelling need to dismantle the vessel; lack of availability in the United States; foreign dismantlement will be in compliance with U.S. law; and the export of the vessel will only be for dismantlement. This high bar is capped with notification to the House of Representatives Armed Services Committee and the Committee on Commerce, Science, and Transportation of the Senate that the exemption is granted.

Someone forgot to tell the General Services Administration (GSA) about the 2009 law.  In late June 2013, GSA auctioned off the STORIS to a buyer who immediately sent her to Mexico to be scrapped. Through papers released by GSA via the Freedom of Information Act (FOIA), some interesting details have emerged about the sale of the vessel.

For starters, the buyer completed the purchase using funds attained from an international wire. The Bank Secrecy Act and the PATRIOT Act requires the individual who sent the money to be identified. There is no indication in the GSA documents that the agency asked for this information. Similarly, there is no indication that GSA questioned why the buyer would need to receive an international wire of $50,000 to complete the purchase of a former U.S. military vessel, a ship that required the involvement of the U.S. Coast Guard, the Environmental Protection Agency, the Maritime Administration (MARAD), the Defense Department, and the U.S. State Department to authorize export.

The GSA web site claims that all purchases must be in compliance with all U.S. laws and regulations but when one reads the FOIA documents, additional questions emerge about GSA's knowledge of said laws and regulations. Prior to the STORIS sale, the buyer asked GSA and Coast Guard officials if there were any export restrictions on the vessel. They said no and it was only AFTER the auction ended that the buyer was notified of the requirement. Again, the STORIS was a former military vessel, so why GSA and the Coast Guard didn't know about the export control laws is puzzling.

Lastly, there is no discussion in the GSA paperwork about the 2009 domestic ship recycling requirement. At the time, not only were there multiple ship recycling facilities in Louisiana and Texas that could have scrapped STORIS but there was at least one facility in the Bay Area that could have done the work. For that matter, there is no discussion on the compelling need to dismantle the vessel in the first place, especially considering government officials were well aware that the ship had official federal historic designation. The only discussion is how to expedite the paperwork to send the STORIS to Mexico for scrapping.

So much for meeting Congress' intent of protecting the nation's maritime heritage as mentioned in part one of this series. The National Park Service designated the vessel as having national historic significance in December 2012. This designation was based on her World War II service on the Greenland Patrol, her 1957 transit of the Northwest Passage to become the first American ship to circumnavigate North America, and her decades of Coast Guard service. Two 501(c)(3) nonprofits had been actively trying to obtain STORIS through donation or a reasonable purchase price from GSA to turn her into an active museum in Toledo, Ohio, where she had been built. Imagine all the children she could have taught about America's glorious maritime history.

But none of that mattered to the federal employees bending over backwards to help the buyer – a scrap company which, according to the FOIA documents, was a known customer of the GSA auction site  -   take the STORIS apart in Mexico.  She ended up there because faceless federal bureaucrats mindlessly did their jobs and pretended that the laws don’t exist. 

The STORIS Act, introduced by Senators Vitter and Cassidy and Representative Graves, Vela, and Hunter will not bring back the STORIS but it will help ensure that funding from the sale of federal non-combatant vessels helps support our national maritime heritage groups, the U.S. Merchant Marine Academy and the six state maritime schools.  These entities desperately need money and the money we're talking are non-taxpayer dollars!

The third part of this story will explain the reluctance of government agencies to share information through FOIA and further discuss the illegal export of the historic STORIS to Mexico.

K. Denise Rucker Krepp, U.S. ship recycling advocate and former Maritime Administration Chief Counsel