Skimmers, Jones Act Point Up Bumbling US Cleanup Job
On the third day of the Deepwater Horizon disaster, the Dutch government contacted the U.S. government with an offer to provide heavy-duty skimmers to assist in the oil spill clean-up. As Geert Visser, consul general for the Netherlands located in Houston, told Loran Steffy, business columnist for The Houston Chronicle, the federal government's response was "Thanks, but no thanks." The disclosure of that response has set off a firestorm of criticism of the federal government's and BP's bumbling efforts in managing the Gulf oil spill clean-up.
The contentious issue has been whether there are legal restrictions preventing foreign-flag vessels from working in the cleanup. The focus of the restriction is whether and how the Jones Act might be limiting foreign oil skimming vessels from working here. This law is probably less of a problem than envisioned by critics of the government's cleanup efforts, but the lack of clarity about who does what and who makes which decisions in this whole spill management process has made the Jones Act an easy target. From the beginning, the government has relied upon the concept of a working partnership between the federal government and the responsible party, in this case BP, the operator of the Macondo well that blew out and is spilling oil. While this concept is embodied within the Oil Pollution Act of 1990, there needed to be a higher authority to analyze the spill needs and parcel out tasks. In our view, the biggest mistake made was not recognizing that each of the responsible parties for managing the clean-up have different skill sets that should have been capitalized upon.
Managing the thousands of small vessels and people needed to sweep up crude oil either offshore or on the beach is not a core competency of an oil company. Yes, they can do it, but probably not as efficiently as the military. The process requires logistical management skills on a huge scale. It is best handled by the government, and the military, specifically. Organizing and directing armies of people and vessels involves specific skills – command and control and logistics management. Dealing with stopping the well flow, however, is a core competency of an oil company. They know how to drill relief wells, how to manipulate subsea well equipment and how to control blowouts. Thus, in our view, the spill and cleanup project should have been split into two, with the Coast Guard overseeing the clean-up effort and BP managing capping the well. An early decision to split the process would have made clear who was responsible for what. That should have improved the speed of the response effort, made it more efficient in determining what needed to be done, and prevented the finger-pointing that has been going on since the early days of the disaster.
Under the law, the cleanup effort is to be managed by the Coast Guard and the Environmental Protection Agency in conjunction with the responsible party. These two governmental organizations should have an easier time assessing where and when waivers of existing laws are needed to help speed up the clean-up process. There is no question about who has the responsibility for paying for the cleanup – the responsible party. That party has been clear from day one. Should BP have some say in what actions are undertaken in the cleanup effort since it has to pay the bills? Maybe. The need for speed in the response effort might override that nicety.
The issue with the Jones Act restriction on foreign-flag vessels is pretty clear. Within state waters, foreign-flag skimmers can work only if there is no U.S.-flag skimmer available. Presumably a waiver of the Jones Act is required, but that can be obtained quickly with proof of a lack of comparable American vessels. Another complicating factor in this case may have been the existence of some 2,000 American oil skimming vessels in other parts of the country that are not allowed to move in order to maintain spill response capability at all times. Again, the government should have been able to deal with that situation if it was a problem.
Outside of the three-mile state water limit, foreign-flag vessels can work in the clean-up effort. The issue becomes one of whether these vessels ever have to go to shore to deposit cargos of skimmed crude oil. In that case, the issue of whether their offshore location can be construed as a U.S. port for regulatory purposes needs to be addressed and clarified. If it is a port, then the ships would be in violation of the Jones Act when they take their skimmed oil cargo to shore, having moved cargo from one American port to another. Can offloading their skimmed oil cargo into a U.S.-flagged vessel solve that problem?
From an historical perspective, a well drilled offshore Alaska in the late 1970s necessitated the use of ice-breaker supply vessels. At the time there were no U.S.-flagged ice-breaker supply vessels. The oil company was planning to load all the necessary drilling supplies on a large U.S.-flagged freighter that would be stationed near the drilling rig. This created two American ports and the foreign flagged ice-breaker supply vessels would be in violation of the Jones Act by moving supplies. Instead of the government granting a waiver, the solution was for the freighter to stay in motion sailing a circular route with the foreign-flag supply vessels pulling alongside and loading up before delivering the supplies to the drilling rig. In this way, there was only one American port. As they say, there is more than one way to skin a cat.
The bigger issue with the skimmers may have been their oil-cleaning technology and U.S. environmental laws. The large foreign skimmers suck in thousands of barrels of water, separate the oil from the water and then dump the cleaned water overboard. The problem is that the cleaned water is not 100% pure, so dumping it overboard can be a violation of U.S. environmental laws.The current rules prevent dumping water that has more than 15 parts per million of oil in the water. As a result of the less than 100% cleaning technology of the European ships, the EPA has been the agency restricting the use of foreign-flagged skimmers.
It appears from the latest news that the U.S. government is now accepting offers of help from 12 countries and international agencies. The latest list of offers and their status is contained in the nearby table and was posted on the U.S. Department of State's web site as of late on June 29th. What we have found out, based on comments from Lt. Erik Halvorson, a Coast Guard spokesman, is that "These offers are not typically offers of aid. Normally, they are offers to sell resources to BP or the U.S. government." So while the U.S. government picks up the tab for foreign aid in international disaster support, when it involves the United States, foreign governments want to be paid. An interesting double standard.
Arizona Senator John McCain has introduced legislation (S. 3525) designed to repeal the Jones Act. His press release brought out figures contained in presentations to Congress in the past as to the cost to the American economy from the restrictive provisions of the law. A quick response came from the Maritime Cabotage Task Force pointing out how its industry supports nearly 500,000 U.S. jobs. It also pointed out that the Jones Act was not limiting the use of foreign-flagged vessels and that waivers were not deemed necessary by the Coast Guard or the National Incident Command. The biggest problem seems to be American vessels waiting for supplies such as skimmers and booms.
There is clearly a rationale for maintaining the Jones Act as it assures support for the domestic maritime industry. This is particularly appropriate for our navigable rivers and coastal waterways. Does it inflate the cost of shipping goods? Yes, but we doubt that the higher cost exceeds that which might come with a weakening of our maritime industry. It is probably fair that this issue should be re-examined, but we don't think it has had much impact on the Gulf oil spill clean-up. We believe the lack of coordination has been a bigger problem, unfortunately to the detriment of the Gulf Coast.
Managing Director, PPHB LP