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Op-Ed: New Bill Will Make it Impossible to Change OPA 90 Salvors

golden ray

Published Mar 23, 2022 8:11 PM by Joseph E. Farrell III

The statutory rights of vessel owners, underwriters, and the U.S. Coast Guard in time of a vessel emergency are under attack, and the result will be a degradation in response capability.  

Imagine a scenario where you hire a contractor who then sues you and lobbies the government to pass a law forcing you to use them indefinitely. Unfortunately, this could become a reality for all vessel owners, operators, and insurers if Section 401 of the U.S. House of Representatives’ proposed U.S. Coast Guard Authorization Act of 2022 is passed in the next few weeks.   

This section’s proposed change to OPA 90 would make it impossible to change a salvor during a project in U.S. waters. There are currently three major providers of OPA 90 Salvage and Marine Firefighting (SMFF) services, and two of them (Resolve Marine included) are opposed to Section 401. The third salvor is Donjon-SMIT, which requested the proposed legislation.   

When the M/V Golden Ray capsized off Georgia in 2019, Donjon-SMIT was the retained responder for the vessel owner.  After several months passed into the project, Donjon-SMIT were told that a tender process would take place and that they could potentially be replaced as the salvor on the Golden Ray.   

Donjon-SMIT's response to the request to change salvors was to sue the U.S. Coast Guard and other stakeholders in the wreck removal, arguing that the applicable regulations do not allow the switching of salvors during a response. This argument did not hold up in court because the regulations include a provision for switching salvors, known as the Chafee Amendment. The Chafee Amendment can be used by a Federal On-Scene Commander (FOSC) in an OPA 90 response if the FOSC determines that another responder could mount a better or faster response.   

Donjon-SMIT lost the case, then immediately resigned from the American Salvage Association (ASA). They went on to start the OPA 90 Forum, a group with a similar stated vision as the American Salvage Association, but without the other two SMFF providers who remained in ASA.   

Today, we see new language requested by Donjon-SMIT and the OPA 90 Forum in Section 401 of the U.S. House of Representatives’ Coast Guard Authorization Act of 2022 (H.R.6865), which would add the following text at the end of Section 311(c)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1321(c)(3)), which was enacted in OPA 90:   

‘‘(C) An owner or operator may not change salvors as part of a deviation under subparagraph (B) in cases in which the original salvor satisfies the Coast Guard requirements in accordance with the National Contingency Plan and the applicable response plan required under subsection (j). 

‘‘(D) In any case in which the Coast Guard authorizes a deviation from the salvor as part of a deviation under subparagraph (B) from the applicable response plan required under subsection (j), the Commandant shall submit to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate a report describing the deviation and the reasons for such deviation.” 

This is an attempt to ensure that regardless of how well or poorly the salvage operation is going, the OPA 90 salvor that was retained by the shipowner prior to the incident occurring is the only company authorized to perform the salvage operation. That salvor is guaranteed to stay on the project until the project is completed, and they cannot be replaced by another contractor unless the U.S. Coast Guard determines that the salvor has failed to satisfy the shipowner’s response plan and the National Contingency Plan (NCP) and the U.S. Coast Guard subsequently submits a report to Congress.  

The problem with this hurdle is that the U.S. Coast Guard’s requirements for the shipowner’s response plan and the NCP include only general response timeframes and capabilities for salvors, but do not include criteria for a successful outcome of the salvage operation.  Therefore, as long as the retained salvor shows up, it would be nearly impossible under Section 401 for the U.S. Coast Guard to make the required determination, even when the salvor performs poorly. 

For shipowners, this legislation will mean that if one of your vessels runs into trouble, you’re in a position of hoping that you’ve selected the right responder, not only for emergency response, but also for wreck removal. A simple wreck removal job can cost between $1 million and $20 million, but a more complex job can cost up to $500 million. While shipowners have a deductible, insurers are on the hook for all of the remaining cost of a salvage operation. Insurers will have to hope that vessel owners took a good look at the best OPA 90 firms available with capabilities for wreck removal. 

OPA 90 was written to ensure that there were adequate response capabilities in the U.S., as well as a formal retainer agreement in place so that shipowners were not negotiating rates while a ship was left burning offshore. The OPA 90 regulations were in no way intended to ensure that a responder is guaranteed to remain on a project regardless of performance or capabilities. This change would be bad for pretty much every stakeholder involved. For example, the SMFF responder that is best suited to put a fire out in the Gulf of Mexico may not be the best company to perform a wreck removal on the same vessel if it were to go aground, capsize, or sink in a channel.    

Resolve Marine believes that salvors should be selected for a project based on their capability and experience to provide an efficient and effective solution to the client. We put a lot of time, energy, and capital into ensuring that we are prepared for an incident and are vehemently opposed to laws that grant entitlement to companies that would prefer to minimize their own capability investments to reduce costs.

This proposed law would also put the U.S. Coast Guard in an impossible situation. They would no longer be able to ensure that a salvage job is efficiently and successfully completed and instead would have to hope that the best wreck removal contractor was previously selected by the shipowner.  The U.S. Coast Guard’s only leverage would be to revise their OPA 90 regulations to specify specific criteria for salvor performance to be included in the NCP and shipowners’ vessel response plans, but it would take several years for such regulations to be completed.   

Without proper vetting of actual response capabilities by shipowners and the U.S. Coast Guard, this legislation is likely to result in declining industry investment in U.S. salvage response resources. Since OPA 90 requires shipowners to retain a salvor, there would be no penalty for failing to adequately perform a salvage job, and salvors could reduce costs by reducing investments in order to underbid their competition for retainers that essentially guarantee them all of the response work. Is this the system that the U.S. House of Representatives wants? 

Resolve Marine, along with numerous other U.S. and international organizations and operators are actively opposing this legislation and we hope we can stop it. Unfortunately, this legislation seems to have momentum, so it will take a broad effort to educate Congress on the consequences if it is enacted.  

Joseph E. Farrell III is the Director Of Business Development at Resolve Marine Group.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.