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California Dreamin or West Coast Nightmare?

MarEx asks MARAD if new ship disposal policy on the West Coast represents mere pandering to California politicians or rather a sea change for all MARAD controlled obsolete tonnage.

Last week’s Department of Transportation announcement that its Maritime Administration (MARAD) had awarded – for the first time in almost three years – contracts to remove and recycle two obsolete WWII-era vessels at the Suisun Bay Reserve Fleet (SBRF) had West Coast politicians and media outlets both dancing in the streets. With both MARAD and local newspapers cloaking the announcement as proof of the Obama administration’s superior commitment to the environment, one editorial even went as far as to suggest that previous administration was guilty of “ignoring years of pleas for action to remove the Mothball Fleet anchored in Suisun Bay.” In reality, neither premise could be further from the truth. Here’s why:

The Suisun Bay Reserve Fleet is one of three anchorages maintained by the Department of Transportation’s Maritime Administration for national defense and national emergency purposes. The others are located at Hampton Roads, VA and Beaumont, TX. It is no secret that there are currently 84 non-retention ships moored in the Reserve Fleet, of which 57 are located in Suisun Bay. That the lion’s share of these decrepit vessels are located in California should also come as no surprise to anyone, since the Golden State has for years made it far too difficult to remove the vessels. Facing unreasonable restrictions on what work could be done, under what conditions and how that was to be accomplished, MARAD reluctantly turned its attention to similar vessels in the other two fleets.

According to an editorial published on Monday by the Contra Costa Times, it is alleged that,“To fix a problem, one must acknowledge that it exists. Under President Bush, the Maritime Administration had dragged its feet, downplayed the risk and made no progress toward removal of the ships. It was as if they never believed there was a legitimate hazard.” That was hardly the case. In fact, given a mandate by Congress to dispose of the aging, obsolete vessels from all three locations, MARAD has rolled up its sleeves and gotten the job done.

Over the years, scores of vessels have been disposed of through a variety of methods from both Beaumont and Hampton Roads. But in California and also handcuffed by a Coast Guard policy that supposedly addressed invasive species adhered to the vessel’s hulls and a local policy of not allowing the vessels to be moved until the “toxic” paint had been removed, MARAD had few options there.

Let’s leave behind all the rhetoric for a moment, however, and look at MARAD’s track record: Since 2001, the Maritime Administration has moved more than 120 ships out of its National Defense Reserve Fleet sites. Today, fewer than 24 ships are left in the James River (VA) waiting to be disposed of and without disposal contracts, and less than 10 such ships in the Beaumont site. And, as MARAD itself said not too long ago, California’s obstructionist policy has been a boon to the other reserve fleets, where the vessels have been flying out to recycling destinations at a rapid pace.

The first two ships slated for removal will first be drydocked at a San Francisco shipyard at a cost to the taxpayers of $1.47 million and then sent to Brownsville, Texas, where they will be recycled at a cost of $2.1 million. Compare this to other (East Coast and Gulf Coast) disposal 2009 contracts awarded by MARAD where the government actually received cumulative payments amounting to $204,000 for five vessels. Three other vessels were disposed of for a total price to the taxpayers of $1.84 million.

Whether or not MARAD gets paid for these ships or in fact has to pay others to take them away, typically hinges on the price of scrap steel. With as much as 10 percent of the world’s merchant fleet sitting at anchor waiting for cargo, it is no wonder that MARAD now has to pay to have these vessels taken away. Still, a $1.6 million price tag for eight vessels weighed against the whopping $3.6 million that it will take to move just two from Suisun Bay is a telling statistic.

Arguably, MARAD has done a pretty good job of moving the vessels that it could, especially given a limited annual budget for the task that hovers around $18 million. And, I know of no instances where any of these vessels from Hampton Roads or Beaumont had to be drydocked prior to their ultimate departure, except where a vessel might be slated for reefing. Hence, with 57 vessels slated for removal from California waters at an average cost of $1.8 million per vessel, it will take as much as six years to get the job done out there, assuming that MARAD neglects its responsibilities to the other two fleets at the same time. More likely, California – given its higher cost per vessel – is looking at 15 years or more to get the job done. Therefore, the euphoria on the left coast will be short lived once folks out there understand that this year's MARAD isn't going to be moving very much faster than the last version. That’s not the fault of MARAD or the Bush administration, for that matter.

MARAD itself can be forgiven for trumpeting the party line with regard to “Obama’s good environmental stewardship.” They have little choice in the matter. But the inference that MARAD is now doing the “right” thing raises other questions. We contacted MARAD for comment this week on whether or not East and Gulf Coast policy would now mimic that of California’s reserve fleet in that each vessel should go to drydock before being shipped off for recycling.

I wonder if there is more or less toxic paint and/or invasive species clinging to the hulls of the reserve ships moored in Beaumont or Hampton Roads, as compared to those moored on the West Coast. I’m willing to bet that it is an apples-to-apples situation. And, if the disposal procedures on the East and Gulf Coasts continue without any change, does that mean that California waters are more valuable than our other coastlines? We asked MARAD those very questions yesterday.

Responding to our queries, Olivia Alair, Deputy Press Secretary, Office of the Secretary, Department of Transportation, came back via E-mail and said, "Almost all of the NDRF’s priority non-retention vessels – those in the worst condition – are moored in Suisun Bay. Those 'priority' vessels are beset with issues like paint peeling in the water and hazardous hull growth. In this case, drydocking is the safest way to clean them to prevent contamination of the surrounding environment. In the future, the approach to cleaning and recycling non-retention ships will be evaluated on a case by case basis."

Alair continued, "The ships in California present the greatest challenges with their condition placing them at the top of the list for disposal. Dry docking allows us to clean the hulls of marine growth and remove the environmental concerns with exfoliating paint in an environmentally sound, cost effective, and safe manner." In doing so, she danced around the fact - that I pointed out to her, more than once - that more than 120 vessels in similar condition in the Gulf and East Coast fleets had been disposed of without drydocking in the past 8 years. Hence, I'm going to go out on a limb and bet that not one of the ships located in the Beaumont and/or Hampton Roads fleets will be evaluated and slated for drydocking. Not one.

As it stands now, however, the Obama administration does appear to be making progress in saving money for the taxpayers over at MARAD – at least in one respect. The only DOT modal arm left without a named administrator since Obama took office and Sean Connaughton departed in January has David T. Matsuda at the helm, for the time being. Certainly competent, he is also the second “placeholder” to assume the job. On the other hand, I’m having trouble keeping up without a scorecard since Matsuda was named by the President on July 28, 2009, and officially sworn into office on July 30, 2009 as Deputy Administrator. This week, he was identified in a press release as the Acting Maritime Administrator. Go figure. In response to our gentle requests for a timeline on a new Maritime Administrator, Alair politely told MarEx yesterday, "The White House is the best place to direct questions regarding appointed positions."

The new administration may be good environmental stewards (perhaps Greenpeace will give an award to go along with the Nobel Peace Prize), but their benign neglect of MARAD flies in the face of this week’s press release and inflammatory West Coast newspaper editorials, both of which would have you believe that all is now well and that the (previously) rudderless DOT arm is finally mending its lawless ways in California. More likely, however, Speaker Nancy Pelosi – with an ally finally in the White House – has convinced the current administration to reverse a solid policy of ship disposal that had, until now, been working just fine. The net result of all of that and its collective impact on the cost of ship disposal, and by default, the taxpayers, is unknown.

Decisions that affect the environment, especially where the waterfront is involved, are rarely cut and dry. Take, for example, this week’s news that Congressional negotiators may have reached a deal that would effectively exempt 13 U.S.-flagged bulk ships on the Great Lakes from a proposed federal rule meant to reduce air pollution. The aging vessels faced layup and the new rule would have forced others to use a greener fuel than the present mix. The added cost to Great Lakes shippers, according to industry estimates, would have exceeded $210 million. And yet, mothballing them would have forced much of that cargo onto trucks or trains, which emit more pollution than ships. In this case, the exemptions – for a change – make a lot of sense. A little bit of that "give and take" in Suisun Bay might have yielded a much quicker and less expensive disposal process there.

Last week, MARAD Acting Administrator David Matsuda said in a prepared statement, “The Suisun Bay Reserve Fleet is an important national security site. Performing our mission here needs to be done with great respect for the environment and we are committed to doing just that.” We’re left to wonder if the Obama administration holds the other two reserve fleets and surrounding environments in similar esteem. And if not, why not? In other words – what has really changed? – MarEx.

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Click HERE to see the Council of the European Union’s Council Conclusions on an EU strategy for better ship dismantling.

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Joseph Keefe is the Editor in Chief of THE MARITIME EXECUTIVE. He can be reached with comments on this editorial at jkeefe@maritime-executive.com. Join the Maritime Executive ‘Linked In’ group at by clicking http://www.linkedin.com/e/gis/47685>