Technology Day 1993 - "Riding the Wave of Innovation: Oil Spill Issues"
MARCUS: I'd like to welcome you to our afternoon panel entitled Oil Spill Issues. I'm Hank Marcus from the Ocean Engineering Department. And we're celebrating our 100th anniversary of having ocean engineering at MIT, and so we're delighted to have you here, and we're delighted to have maritime panels this afternoon.
Since the grounding of the Exxon Valdez in March, 1989, the maritime industry has been a very exciting industry. Lots of things going on here. Now I'm sure you've all heard of the Oil Pollution Act of 1990. That's been one of the major events over the past four years. Let me just bring up two more points that you may not be as familiar with.
If you start comparing some of the oil pollution data from the early 70s to the early 90s, you see some interesting things. I chaired a marine board panel, and we dug out the data. And you see that if you start with the year '73, '75 at one end and 1990 at the other end, you see that over this time span, the amount of oil that has gone into the ocean as a result of tanker accidents has decreased by 45%, and the amount of oil that's gone into the ocean from tankers as part of their operational discharges, such as pumping out ballast water, has decreased by 85%. Now we still feel that there's more to be done and what we're doing today is still not acceptable, but we've had quite an improvement over the past two decades.
The second point I want to make is that we face a rather unique situation with the US Congress relative to the design of tankers in this country. And that has to do with the way they passed the Oil Pollution Act of 1990. Basically, we could we could say we have Congress designing our tankers. And given the naval architecture experience and expertise of Congress, that scares me.
Now it's certainly an overstatement to put it that way, but when Congress passed the Oil Pollution Act of 1990, they didn't say. Well, gee, why don't we identify all the causes of environmental damage from oil pollution, and then we'll analyze each one and see what the best cost ratio is so we know where to put our money to get the maximum ratio between benefits and costs? That would have been one approach. They didn't do that.
And they didn't say, well, why don't we come up with-- how do we develop some performance standards here, like we do with cars? What we say is, under these kinds of circumstances, you drive the car into the wall or whatever, we want the car to perform in a certain way. We could do that with ships, and then that way you leave it up to the designers and the naval architects and engineers to come up with the best way of meeting those needs. They didn't do that either.
Basically, they sort of said, read my ships, no new tankers without double hulls. And that's sort of an odd approach. They do ask for advice from the Coast Guard, and they did that in the act. But if you look at Congress's role in the design, the structural design of any other vehicle of any other transportation mode in the United States, Congress has never taken such a strong stand. Whether we're talking about cars, or trucks, or buses, or planes, or trains, this is a rather unique role.
Now you might ask, why is that? What is the Congress-- or how does the Congress or the general public perceive the whole maritime industry, or the universities that train people in these industries, or the types of research programs we have? Now indeed, you might ask that, but you can't ask that till after you hear from four experts we have here.
And this afternoon, first we're going to hear from our regulator, Admiral Kime from the Coast Guard, who has the responsibility of implementing many of the provisions of the OPA, as well as a few other things the Coast Guard does in their spare time, myriad number. Next we're going to hear from Epaminondas Embiricos, representing independent tanker owners who have to deal with all the regulations in the world. Then we're going to hear from Richard Quagen representing the oil companies who must deal with the regulations, and the independent tanker owners, and their own fleets of company-owned vessels.
Finally, we're going to hear from Lissa Martinez. It says representing environmentalists, what it says in your booklet. Now I happen to think that all of us up here are environmentalists, but indeed, Lissa has spent a lot of time working on environmental research and integrating the disciplines of engineering with environmental science. And she's going to put some of this discussion in a broader perspective of oil pollution in general.
The format we're going to follow is as follows. Each speaker will have about 15 minutes to come up and present his or her views, and then at the end, after we've had our chance up here, we'll give you your chance out there, and we'll have a fun time of questions and answers from the audience, from each other on the panel here. And so I think you will have a great afternoon with that.
And the other thing I will tell you is because you have-- these four experts have some very impressive backgrounds, and those are all well-written up in the booklets you have, so I'm not going to take time to describe that. I'll spend our time on discussions and questions and answers. So with that, I'd like to turn over the podium to Admiral Bill Kime, Commandant of the Coast Guard and president of Society of Naval Architects and Marine Engineers.
KIME: Thanks, Hank. And I greatly appreciate the opportunity to come back up to MIT, where I spent three very happy years. And the further I get from graduation, the happier the years seem to be. I last had the chance to come up and give one of the Robert Bruce Wallace lectures in 1991, and I'm surprised you invited me back. Maybe all the people who were there have moved on.
Let me ask you a question, why are we here discussing oil spill issues? Why is this something that's on people's mind? I think one reason is the Exxon Valdez, obviously, that woke up this country to the concerns of oil spill. Certainly woke up the Congress to pass OPA 90 after a gestation period of about 15 years.
But let me give you some of the other reasons why we're concerned. We've got 5% of the population in this country, and we use over 20% of the energy. As a country, we're against offshore drilling.
We're against opening up the ANWR. We don't like nuclear power. We hate to carpool. We won't use or say we don't have mass transportation.
That means we're going to continue to import at an ever-increasing rate greater amounts of oil by ship. And about 95% of this is going to come on foreign-flagged tankers. And as a result of that, spills are going to continue to occur. So I think the issue is, what can we do to minimize their probability, and to maximize the effectiveness of our response when they do happen?
I think this is something that is going to require the major dedication and cooperation of many people, ship designers, shipbuilders, ship owners, ship charterers, ship brokers, ship's crews, classification societies, the insurance industry, the P&I clubs, flag states, port states, and certainly, the oil companies. How are we going to do this? I think we're going to do it by effectively addressing five areas of concern. One , and one of the most important, the prevention of a spill in the first place, our preparedness to respond to spills once they do occur, how we actually do respond, the question of liability for the spiller, and then finally, compensation for those people who are impacted by the spills and the restoration of the environment.
Now, ideally, we would do this internationally through the IMO, the International Maritime Organization, which is a specialized agency of the United Nations, under whose auspices safety and environmental treaties are negotiated. The IMO is located in London, and I believe they have a lot 140 member countries right now. However, some problems in the past have led to unilateral action by the United States. And as Hank Marcus said, the Oil Pollution Act of 1990.
Now Congress didn't just jump on the Oil Pollution Act of 1990. They'd been working on this for about 15 years. And there'd been a lot of discussions about doing many of the things that are contained in the Oil Pollution Act for many, many years.
While there are 535 members in the Congress, and as Hank pointed out, no naval architects, they do have a memory. And they do recognize that the industry itself did not respond in what they felt was a reasonable way to incidences that have occurred. Certainly, we've cut down the operational pollution from tankers. We've cut down the accidental pollution from tankers. But by the same token, I think we're faced with a society right now that is more demanding and less forgiving for incidences.
OPA 90 was unilateral action by the United States. And that same type of unilateral action is threatened right now, perhaps even imminently, by the European community, and by the UK in particular, due to the fact that IMO standards in the past take too long to be developed, take too long to come into force, or they are ambiguous, or they represent the least common denominator, and they're not enforced in many cases. So my belief is that IMO is still the vehicle to attack all aspects of oil spills. But if we don't through IMO eliminate substandard ships, substandard crews, substandard owners, substandard insurance companies, substandard regulations, substandard enforcement, which I think is the biggest problem, substandard flag states, and substandard port states, unilateral action led by the United States and the EC is going to become the rule.
Let's look in some detail at each important area concerning oil spills. First, prevention, second, preparedness, third, response, then liability and compensation, and follow it up with a question of enforcement. There are many international conventions that deal with these subject, the Safety of Life at Sea convention, or SOLAS, the treaty to prevent pollution from ships or MARPOL, OPRC 90, the Oil Pollution Preparedness, Response, and Cooperation Treaty. Protocols, so the civil liability convention and the fund convention, the Convention on Standards of Training, Certification, and Watch-Keeping, all of these done by the Maritime Safety Committee of the International Maritime Organization and the Environmental Protection Committee.
There's also a new subcommittee there called FSI, which is the Flag State Implementation subcommittee that has recently been put into place. And I've also refer to a new code, the International Safety Management Code that we hope to bring into force at the IMO assembly in October. Now going to prevention first, that's covered in many aspects by the STCW convention, by SOLAS, MARPOL, and the International Safety Management Code. Let's look at some of the specific areas that need a bit more attention.
We spent a lot of time in STCW talking about training of people aboard ship. If you were a chief engineer, if you were the cargo officer, if you were their master, this is what training you had to have. But it is totally silent. And the maritime community has yet to face up to the issue of things such as minimum level of manning, crew fatigue, the amount of time you can spend on the ship, team training.
In 1995, the Secretary General of IMO, Mr. Bill O'Neil, has set this as a date for a significant revision of STCW. Hopefully, we will finally come to grips with these issues. If you asked me the reason we haven't, it's easy to talk about training. It doesn't cost a whole lot to talk about it. When you start setting manning standards and hours that people can work and fatigue standards, that starts to cost a great deal of money.
For prevention, we need vessel traffic systems. We've just looked at 23 ports in the United States, and are going to be phasing in vessel traffic systems very similar to the type of air control that you see in the nation's airways. We'll be using things such as dependent surveillance, where a ship will pick up a global positioning system signal from a satellite, it'll be corrected by differential mechanism to give it an accuracy of about 8 meters, and transmit that back to a Coast Guard control facility.
We're going to be requiring tug escorts in certain areas, like already in Prince William Sound, Puget Sound, and San Francisco Bay. We're going to see coming this summer a requirement that went in, the US navigable waters, which means anything from three miles in, two deck officers on the bridge, an engineer in the engine room no matter how automated the ship is, and automatic pilot ships will not be able to operate in these navigable waters except under certain circumstances. There can be tanker exclusion zones where tankers will not be allowed at all.
We're going to talk about ship construction. And Hank said that double bottoms, double hulls may not be the answer to a maiden's prayer. But certainly, they are going to go a long way towards preventing a lot of the pollution we have. Some people say things like the mid-deck design or vacuum designs are things that we ought to move toward, but we haven't seen any real ships being built that way, even any large scale models.
And we talk about Congress using performance standards for cars, and we see on TV pictures of Volvos and BMWs being driven into brick walls. We can't do that with a heavy industry. You've got to be a bit more prescriptive sometime. Or the industry, if they want to get out from under specific regulations, the Congress is going to have to come forward with more in the area of research and development.
One thing that's very encouraging to me is the damage resistant hull study that's being done by MIT. There's 11 contributors to this project, one of which is the Coast Guard. It's paying about 15% of the funding. This is the kind of thing I think we need more of if we want to keep the Congress from acting.
Shift to preparedness, and there it's the OPRC convention. Its parallel in the United States, again, is OPA 90, because OPA 90 kind of covers all of the areas of concern of these international treaties. Requires a national response plan for pollution. That's being revised right now to be published shortly. Area response plans.
The Coast Guard has established a national strike force coordination center and three strike teams that will be able to respond to a spill, and also to provide for training. Not only for Coast Guard people, but for others. And there's a simulation going on right now as we speak here in the Boston area.
There's going to be a requirement for prepositioned equipment. The Coast Guard has established prepositioned equipment in 19 sites around the country that we selected on the basis of need, past experience, type of cargo moved through the ports. And finally, shipping terminals are going to have to have response plans approved by the Coast Guard. They had to be submitted by the 18th of February, and you have to operate under these plans by the 18th of August or you can't operate a ship or a terminal in US waters.
And this is going to require that there be designated individuals to be in charge 24 hours a day should a spill occur, and that you identify and have under contract pollution response equipment. Leading us into response, again, internationally is the OPRC. And there, we're going to utilize the items I just mentioned, the equipment and the planning.
We also have other things that we need to do a better job in though in utilization and in response. One is dispersants. As a country, we have never been able to come to grips with the use of dispersants.
The Torrey Canyon was a major oil spill incident off the coast of England, and the British response to it was to soap up the entire Atlantic Ocean using an exorbitant amount of dispersants, doing probably more damage with the dispersants than was done by the oil. That caused in the United States a great reluctance to use dispersants. We've never brought this back to an even keel.
There are many cases where dispersants can be used, but we can't get beyond the political stigma of them. The scientific community can't come to grips with it. Local elected officials who have a veto in this cannot face up to the political realities. There are cases where dispersants could be used and aren't. We need to come to grips with this.
Bioremediation, another area where you provide nitrogen to existing microorganisms in the oil that will accelerate the degradation of the oil by the microorganisms. We certainly used this in Alaska. I spent three weeks in Alaska as the federal on-scene coordinator responding to the Exxon Valdez spill. There we saw bioremediation being used very well, very safely. But again, the same political concerns about it so we can't get the maximum use out of it.
In situ burning. We can't get a permit from the EPA, even though funding is available, to do testing to see if burning the oil on-site once it's in the water, and then measuring the effects in the water column, in the air to see if this isn't more beneficial than letting the oil come ashore. We can't get a permit to do that.
Mechanical cleanup, skimmers, booms, things of that nature. We're in the T model Ford stage in that particular area. OPA 90 wanted research in these areas, authorized a significant amount of money. US Coast Guard is the only federal agency that has sought and received money from the Congress to do research in this area. This is an area that we need a tremendous amount of cooperative effort, both nationally and internationally.
Now finally, we can talk about liability and compensation. And there are two international conventions that provide for this, the CLC and Fund Convention. It's a two-tiered approach.
The CLC Convention, the Civil Liability Convention provides that the ship owner has the first tier. He's the one that can keep the oil from spelling. He has liability up to a certain level. And then for spills that are in excess of that, country's, based on the amount of oil they produce or import, contribute a certain amount to an international fund that would take care of the very, very large case.
The United States did not sign this convention because these limits of liability from a practical basis were much too low. In 1984, the protocols were developed internationally that raised these levels significantly. But the United States did not ratify these protocols.
We didn't because ship owners and the oil companies torpedoed the US efforts to ratify. They hoped that they could use existing voluntary funds, called TOVALOP and CRISTAL instead. Well, they were fooled. Instead they got OPA 90, which had many features they don't like.
Now there is unlimited liability, no preemption of states. It's easier to break what limits of liability you have. Again, we got to where we are by the reluctance of responsible people to take responsible action.
Now OPA 90 has as its premise in this area that the spiller pays. The spiller, meaning the ship owner, pays first. They pay quickly, and they pay with certainty for cleanup, compensation, and restoration of the environment.
As a result of this, the Coast Guard has set up the National Pollution Fund Center, which manages a $1 billion trust fund. Money accrue to this-- money is accrued to this from $0.05 a barrel, $0.05 for every 42 gallons of oil either produced or imported into the United States. We're almost at the $1 billion level right now. That takes the place of the International Fund Convention.
There is a liability for a ship owner of $1,200 per ton as the first level. This is about $150 million in liability for the owner of a very large crude carrier. The ship owner also has to prove that he does have the assets to meet this liability.
And because of the nature of OPA 90 and the fact that we did not ratify the CLC and fund protocols of 1984, it has been very difficult to get this insurance, something we're working on. I think internationally, this is probably the major problem facing shipping and insurance right now. We're hopeful with some meetings coming up in Washington with the insurance and shipping industries in early July we can get around this. But again, we're where we are because we didn't take responsible action in the past.
Now finally, to talk about enforcement. The Flag State Implementation Subcommittee met for the first time about a month ago in London and came up with some requirements, we are seeing a proliferation of flag states now, states that have no infrastructure, but are flagging ships under their flag claiming they're meeting international conventions. They have no knowledge in their government to say that, in fact, these ships meet these standards.
They then delegate this to a classification society. We have a very great proliferation of classification societies now. Not the Norske Veritases, the American Bureau of Shippings, and the Lloyd's Registers of the world that we're used to, but ones, again, that have no real infrastructure, nothing behind it, no surveyors dedicated just to them.
So we're seeing the parts of a safety net. We're seeing more owners that are banks, that are management companies, not the old time ship owners that we have seen in the past. So what we are seeing is ships falling through a series of safety nets, the owner not being responsible. Hopefully, the new International Safety Management Code will help a great deal in that.
Next is the flag state not being responsible. IMO has passed a resolution that we'll vote on in London in October to provide standards of what you should be to be a flag state. Some countries, developing countries say it's their God-given right to have a commercial fleet of their own, and the shipping industry is willing to go to that, because the control is less, taxes are less, and they can hire just about anybody they want to as a crew.
Well, that's fine as long as they stay in their own waters. But when they come into other waters, there's certain requirements they have to meet. The IMO is going to pass a resolution to say what they are.
Classification societies. Up until now, there's been nothing to define what IMO and treaties call a recognized classification society. That is going to change with a resolution saying what it is.
Let me say, I'm very pleased that the classification societies under their International Association I Acts are putting together a self-auditing mechanism under ISO 9000 to see what their level of quality is. The IMO is participating in this. Unfortunately, the insurance companies who have complained about the work of the classification societies have not seen fit to join in, although it's been requested, and the classification societies have offered to pay the money.
Then finally, we have the insurance companies, who in the past, I think, have not taken a responsible look at insurance of ships. If you drive a car today, you pay on the basis of whether you're male, female, how old you are, whether you're married, what route you drive, what zip code you house your car in. Much insurance for ships in the past was just based on it being a ship.
To their credit, insurance companies are now starting to take a much closer look at this. But I think the thing boils down to the first safety net that we're talking about if we want to keep OPA 90 from happening. And that is response the responsibility of the owner and the crew of the vessel, because if they do what they're supposed to do, none of these other safety nets come into play. What I've tried to do is give you an overview of what I see the issues are, how we got to where we are now, and some of the things that I think we need to do in the future to improve it so we keep our 535 members of the US Congress from, again, writing the types of law that Hank indicated perhaps they shouldn't. Thank you very much.
MARCUS: Thank you, Admiral, for getting us off to a great start. Our next speaker is Epaminondas Embiricos, chairman of Embirico Ship Brokers Limited. And I'm delighted he could come here from London to be with us, and we're looking forward to your comments.
EMBIRICOS: Professor Marcus, ladies and gentlemen. A key goal of the Oil Pollution Act of 1990 was to reduce oil pollution to the maximum extent possible. It is ironic, therefore, that certain provisions of the act inadvertently tend to have the very opposite effect. These same provisions are also harmful to US interests in other respects.
I shall seek to explain why this is so, and I shall outline a possible remedy which would address some of the defects of the act, and thereby render its goal more attainable. It may help if at this juncture I made some comment about some of the relevant provisions of the act for those who are not familiar with them.
Under prior law, ship owners had the right to limit their liability for pollution damages pursuant to the Limitation of Liability Act of 1851. OPA 90 eliminated that right for all claims arising out of oil spill incidents. Liability for an oil spill under the act is on a strict liability, no fault basis.
In other words, a ship owner is liable if oil spills from his vessel, even though he and his servants were in no way at fault. The ship owner is liable, for example, even though the fault may have been that of a US pilot. OPA 90 furthermore expressly eliminated preemption of state law by federal law for oil spill incidents, thereby permitting states to adopt their own oil spill liability regimes, many of which now provide for unlimited liability.
Although in theory OPA 90 still gives the ship owner the right to limit his liability under federal law, albeit at higher levels, this right is in fact, illusionary since limits under the act are very easy to break, thereby leading to what is in effect unlimited liability. Thus, since OPA 90 came into force, a ship owner trading to the USA is faced with the prospect of unlimited liability in the case of an oil spill. This fact must be seen in the context of the potential costs of oil spills in the United States.
The Exxon Valdez oil spill cost Exxon well in excess of $2 billion. And this, of course, was before OPA 90 and the broader definition of environmental damage which pertains today. We now come to the nub of the matter. Unlimited liability is uninsurable. In fact, the maximum insurance that is available to a ship owner today for oil pollution liabilities is $700 million.
Any ship owner who chooses to trade to the States the day does so on a seriously underinsured basis. The under insurance is so severe when compared to the potential multi-billion dollar liabilities that in the case of a serious oil spill, a ship owner is, to all intents and purposes, trading uninsured. Furthermore, the uninsured liabilities are of a magnitude that dwarfs the net worth of even a large ship owner.
Not only is the owner uninsured, however, but he is in a jurisdiction where the courts have a propensity to seek to pierce the corporate veil. Thus, in effect, the United States is inviting those shipowners whose service her needs to come and play Russian roulette. Tanker owners are, of course, most at risk, but all ship owners are exposed. For example, any vessel can be in collision with a tanker, thereby exposing her owner to unlimited liability under state law. The collision between a bulk carrier and the British Trent is but a recent example of the potential danger.
I put it to you that these are not desirable consequences that one would expect to flow from a responsible, well thought out law. This state of affairs should be contrasted with today's international regime, where limitation of liability is fully recognized at levels well within the bounds of available insurance cover. Bear in mind that US trade today depends on foreign vessels. 80% of US petroleum imports are carried by foreign ship owners.
The consequences of OPA 90 are predictable. Responsible owners will either be driven from US trades, or alternatively, they will be encouraged to behave irresponsibly. I know that some say that OPA 90 has succeeded in as much as the world shipping community has continued trading to the US, that, however, is a shortsighted view.
The very large volume of US imports and exports makes it impossible for ship owners to withdraw from US trades in the short run. After all, they have acquired vessels on the basis of the existing volume of world trade, and they have no alternative today but to employ those vessels. I shall tell you, however, what is currently happening, and how matters will evolve. Ship owners are avoiding ordering the types of vessel which would need to trade to US destinations, such as, for example, Suezmax tankers. Future US trade will be affected accordingly.
The problem is further compounded by OPA 90's provisions, which require that new building tankers must have double hulls. Double hulls are a good pollution preventing design in the case of low impact groundings or collisions. They increase the likelihood of a catastrophic oil spill, however, in the case of a high impact grounding or collision. This is because the empty, uninverted tanks make capsizing and explosion more likely.
Exxon carried out a study after the Exxon Valdez grounding and concluded that had the vessel been of double hull design, she would have capsized and lost all her cargo. The double bottomed Aegean Sea exploded shortly after grounding with the loss of all her cargo. The Maersk Navigator was involved in a collision and was struck in way of a segregated ballast tank.
She was, in effect, double hulled in that area. She promptly exploded. The empty tank resulted in greater instead of less pollution.
These accidents should be contrasted with the grounding of the Braer in the Shetlands. The Braer was of conventional single hull design, and even though after grounding she was buffeted and pounded for days by hurricane and gale force winds, she did not explode. Of course, she finally broke up, but had a salvage operation been possible earlier, most of her cargo would have been saved.
The reality of the situation is that ship owners are required by OPA 90 to build double hulled vessels for the US trades in the full knowledge that in the case of an accident, this type of vessel is more likely to lead to a catastrophic oil spill for which the owner will be liable, and for which he will be uninsured, thus resulting in his ruin. It is not surprising, therefore, that ship owners are not queuing up to build $100 million dollar VLCCs when they know that not only can they lose their investment, but be bankrupted to boot if an oil spill occurs.
All this does not augur well for the future servicing of US trade. There is developing a trend of long-term disinvestment in the types of vessel required for US trade. Even assuming, however, which I do not, that serious ship owners will continue in the future to trade to and from the US, OPA 90 does not serve American interests well in as much as some of its provisions are inimical to its key aim, the reduction of oil pollution.
It is axiomatic that the businessman involved in a high risk business will be acting irresponsibly if he operates substantially uninsured. To create a situation where he is bound to do so cannot but breed irresponsibility. If ship owners are forced to act irresponsibly in this way, it is unrealistic to expect them to act responsibly in every other way.
Yet to avoid oil pollution, responsible behavior needs to be encouraged, not discouraged. It is never wise to demand the performance of the impossible. Ship owners trading to the states will be either discouraged and despondent, or they will have an indifferent, fatalistic, could not care less attitude. In either case, the likelihood of oil spills is increased.
Perhaps more importantly, however, it seems to me that where the potential uninsured losses are not only vast, but are also third party liabilities, the government has a duty as a matter of public policy to ensure that insurance is not only available, but is also compulsory. One would not expect the government to condone motorists driving their cars without insurance, yet those liabilities are minute compared to potential oil pollution liabilities. The United States should, as a matter of public policy, not permit a situation to exist in which all her petroleum imports are carried by substantially underinsured vessels, let alone to create such a situation.
This brings me to the remedy. The US government should require that all tankers trading to the states carry insurance to a very high level, say, $2 billion. Compulsory insurance to such a level is necessary to avoid a situation in which those ship owners who take out such insurance become uncompetitive and are driven from the US trades by other less responsible owners who are willing to take a chance and trade on a substantially underinsured basis.
Understanding that the market may not be able to provide capacity up to say, $2 billion in short order, the higher mandatory amount may need to be phased in over a period of time from the currently available $700 million, the mandatory nature of the insurance creating a sufficient premium base to allow higher levels of insurance to become commercially available in due course. Alternatively, the federal government should mandate a supplemental insurance regime similar to that currently under consideration for the aviation industry in the proposed legislation implementing the Montreal Protocols. The premiums should be charged on a per voyage basis, enabling the ship owner to pass them on down the chain, and thus ensuring that a proper level of premium can be paid for the necessary cover to be made available.
In this way, the main defect of OPA 90, that of the uninsurable liabilities it created, would be largely addressed, and the act would be strengthened significantly. There would be another benefit as well. Currently to the extent that ship owners are underinsured, all uninsured cleanup costs or claims associated with an oil spill will be paid by the federal government from the $1 billion federal oil spill liability trust fund created pursuant to OPA, thus the federal government has a direct and immediate interest in all shipowners having adequate insurance cover.
Nevertheless, there is, I understand, some reluctance to tinker with OPA. If that is a legitimate concern, the remedy which I have suggested could equally well be achieved by freestanding legislation. Proposals along these lines have been made by the international shipping community as long ago as January, 1992. But surprisingly, a response from the US government is still awaited.
There is yet a further aspect of OPA which is relevant and is worth mentioning. The scope of OPA includes all damage claims, both public and private, arising from an oil spill, and permits all claimants to pursue direct action against the ship owner's liability insurance. OPA 90 was intended, in addition to minimizing oil pollution, to provide an effective response and compensation system in cases of oil spills.
Financial responsibility is a central component of the act. Tanker owners trading to the US must have certificates of financial responsibility to cover an amount up to their theoretical limit of liability, which certificates must be subject to the direct action provisions of the act. The marine insurers that cover a shipowner's third party liabilities, known as protection and indemnity clause, when faced with the expanded scope of liability under OPA, both with respect to limits and claimants, have not surprisingly refused to provide the necessary certificates.
Interestingly enough, no US insurer, and certainly, no other foreign insurer, is willing to provide these certificates either. Without the backing of their insurers, practically no shipowners have access to financial resources sufficient to obtain certificates of financial responsibility. Without these certificates, ships cannot enter US ports. OPA 90, therefore, created the real risk that US trade would grind to a halt.
Faced with this dilemma, the Coast Guard understandably has delayed promulgating the regulations implementing OPA 90 in this respect while it searches for a solution. A solution has been put forward by the international shipping community, which has proposed that the government mandated supplemental insurance facility, which I referred to before, be subject to direct action and provide the backing necessary for the issuance of certificates of financial responsibility. Yet the problem is still with us. A solution to the question of certificates of financial responsibility will have to be found.
In seeking such a solution, the Coast Guard has the opportunity also to solve the much larger but related problem of inadequate insurance, which places both ship owners and the US government in serious financial jeopardy and leaves the environment at risk. We must hope, therefore, that this issue will be addressed in the near future, both by the administration, and by the Congress. Thank you.
MARCUS: Thank you very much for that shipowner's perspective. I think it's safe to say we'll have an interesting question and answer period. Stay tuned. Next, we have Richard Quagen, general manager, marine department Texaco to give us an oil company's perspective.
QUAGEN: Good afternoon. It's a pleasure being here. Not being an alumnus of MIT, I think I'm one of the only people walking around with a badge with no number. And somebody asked me why there wasn't a number, I said I was still working on my degree after 35 years. But I'm here to talk about the oil spill issues of the day. And if you can turn the slides on, please.
As of where we stand in June, 1993. I'm going to talk from an oil company perspective, both as the cargo owner, and as a tanker owner ourselves. We, like most major oil companies, operate our own fleet. We do a considerable amount of chartering with independent owners. And I'll briefly bring you through a little history to tell you how we got where we are today, what we see as some of the problems, and some of the things we're going to have to do.
I will refer to OPA 90, but I won't dwell on it since it's been covered so extensively by our previous two speakers. The tanker industry, and specifically, the oil company segment of that industry is, in fact, an industry in transition. The changes in the oil industry itself in terms of ownership of the oil, location of refineries, location of production, increasing regulation and whatnot, have changed the role of the green departments, the tanker departments of the various companies.
One of the things that brought us to the situation we're in today is the history of oil movements in the world by tanker in the past 20 or so years, 30 years. As you see, the oil movements peaked in the early 70s at a time where everybody was afraid there wouldn't be enough oil to last through the end of the century, and where prices were creeping up towards $35 to $40 a barrel, with projections that oil would cost as much as $100 a barrel by the 90s. The conservation methods that kicked in as a result of that high price brought a drastic reduction, particularly in the Middle East, the blue segment of the chart, which is the long haul segment of our oil industry, resulting in the early 80s of a depression in tankers, principally, because the industry reacted to that projected increase of oil movements by undertaking a tremendous building program, particularly in the very large crude carrier. The independent, seeing the need by the oil companies to move that oil, joined the oil companies in this building orgy.
A lot of the tankers that were built by the independents were in fact taken on charter, term charter as long as 20 years by the oil companies. In 1978, '79, the major oil companies therefore controlled about 60% of the tankers, either through ownership, or long-term charter, that were plying the oceans route. Again, as the demand fell off, a rather severe depression that lasted through the 1980s developed in the tanker industry because there were just too many bottoms chasing too few cargoes.
That lasted right through the end of the '80s, when briefly a somewhat healthy resurgence took place as the supply and demand of tankers became more imbalanced. That unfortunately resulted in another wave of new buildings, thereby increasing the number of [INAUDIBLE] and resulting in 1992 being a very depressed year.
As you can see, the construction of tankers peaked in the mid to late '70s. With the depression, the order book literally dried up. A good part of the world's shipbuilding capacity virtually disappeared. In Japan, about 30% to 35% of the shipbuilding capacity was actually destroyed. In Europe, many of the major shipbuilding companies are no longer in the business.
As the depression went through the '80s, the number of scrappings increased dramatically. We, in fact, Texaco scrapped VLCCs that were less than 10 years old that we had built for $25 to $30 million, and just turned them into razor blades for about $4 to $5 million. But we had to do it because they were all sitting in mothballs rusting away.
As we got into this little healthy period in the late '80s, again, there was a minor resurgence, but a significant enough resurgence in new buildings, and, equally importantly, an almost disappearance of the scrapping, resulting in a current continued oversupply of tankers. This is reflected in recent years in the freight rates that are paid to the tanker owner, either the oil company owner or by the oil company to the independent.
In 1990, we're fairly healthy. The blue line represents a VLCC going from the Persian Gulf west, either to Europe or to the US Gulf. The red line is a Caribbean to the US, a 30,000 ton product carrier. And you can see the effect on Operation Desert Storm. In 1990 and nearly '91, there was a very great surge in rates. It didn't last, and '92 became a disastrous year for not only the independents, but the marine functions of the major oil companies.
And today, the major oil companies control directly about 20% of the tankers, compared to the 60% I referred to in 1973. They charter in on a voyage basis, a single-voyage basis, perhaps another 15%. So as we go through this brief chat, keep in mind that the influence the oil companies have on the tanker industry has diminished significantly over the past 20 years, with greater influence going to oil-producing countries, who tend to move their own oil, and oil traders.
Unfortunately, over my lifetime in the industry, which is over 30 years now, there have been a series of accidents that have dramatically caught the public's attention, and starting with the Torrey Canyon is probably the first one, off the south coast of the UK. That was the first big spill. That was the first tanker that broke up that was of a size that really could spill a great deal of oil.
The Amoco Cadiz and, locally, the Argo Merchant in the late '70s again caught the public's attention as to the risk that was entailed with tankers carrying oil into the United States or into Europe. And most dramatically, the Exxon Valdez in 1989 has changed our lives in the industry forever.
Given that, and referred to I think by Hank before, tanker accidents cause a very small portion of the oil that makes its way into the environment on an annual basis. The greatest single source of oil is the industrial sewage type of disposal. An environmentalist told me at one point that there was the equivalent of approximately 20 Exxon Valdez going into the environment every year by people dumping lube oil into the sewer, into the ground.
Tanker operations, the bunker spills, less than scrupulous owners discharging oil over the side at night type of thing again represents a fairly small part, but a significant part. Of those tanker accidents, the statistics have shown continually that over 80% of the accidents are caused by human failure.
And I suspect that some of the other categories, such as equipment and structural, is indirectly a result of human failure, which tells us that this is where we have to look. One of the unfortunate aspects of the OPA in terms of the financial cost is that it is extremely expensive in terms of reacting to a spill. And I don't think nearly enough directed towards the prevention of a spill, through training and certification of mariners.
The Oil Pollution Act, as, again, previously stated, attacks-- addresses-- that was a Freudian slip, I think-- addresses several aspects of tanker operations. Certainly the construction through double hulls, tanker safety through licensing, the pollution liability, which has been talked about, contingency plans. And I'll refer back to this later because this is one of the positive areas, I think, that has come out of the act. And financial responsibility, which has been said is certainly currently the nuttiest problem we have on trying to resolve this issue.
Texaco and the oil industry, the tanker industry within the oil industry likes to talk in terms of the four Ps that we have to adopt in order to address the current situation. One of the things we have to realize, and we do realize, it's not the same game that it was five years ago, 10 years ago, or 20 years ago. The world, as far as we are concerned, has changed, and we have to recognize it and change with it. Prevention, protection, participation, and perception.
Prevention. We have to do what is necessary to prevent the accident from having occurred in the first place. And you talk about the billions of dollars required to clean up a spill, we have to concentrate on not having that spill in the first place. One of the ways is through proper maintenance of ships. One of the results of those previous graphs you saw on building and scrapping is that the average age of the world tanker fleet is getting old. The great bulk of VLCC capacity was built in the '70s, and is approaching 20 years old.
Now, the sea is a very hostile environment, as many of you know. It's a very corrosive environment in terms of the salt. VLCCs rounding Cape of Good Hope continually year after year, taking fairly good stress and strain, as going through the heavy season that area of the world. It's absolutely imperative that companies address the maintenance of their tankers to make sure they are up to the absolute best condition possible. Again, as Admiral Kime referred to earlier, we are working very strongly with the classification societies to increase the inspections of ships, to increase the rate of renewal on steel to make everybody come up with the best maintenance possible.
Training. I think that there's no substitute for training. This particular side shows a firefighting school at Texas A&M University, and Texaco, and other shipping companies, not only oil companies, use. Again, you may have heard in the paper yesterday or today or seen on television the explosion of the British Trent, a BP product tanker carrying gasoline that reportedly collided with a non-tanker and immediately exploded. All 30 odd crew member had to abandon ship immediately. 22 or 23 may have survived.
Fire is the thing that is dreaded most aboard tanker. There's no place to go when there's a fire, unless you put it out. But this type of training has the added advantage not only of teaching how to people to react to a crisis aboard ship, but it instills in the individuals a consciousness of safety. [INAUDIBLE] master of those skills that are necessary to operate a ship. These courses, which last a week, are basically crises courses.
We teach ship management, bridge teamwork, the passage planning, the ability to get the ship from A to B, trying to anticipate all possible contingencies. And then, as the exercise is going on, throwing in some unexpected development, just as going between a breakwater, the captain has a heart attack and the chief mate has to take over. Does he know what to do, how to do it. A ship that has radioed that it's going to act in a certain way, acts in a different way. By doing this on a simulator, obviously we get the benefit of the experience without going through the real thing, which we never want to do.
The crews on the ships are becoming increasingly important. Again, go back to the 80% manpower failure. We firmly believe in Texaco and other majors that the manning is becoming increasingly critical to prevent accidents. We hire crews on a permanent basis. In other words, become employees of the company. We go through training. This is a photograph happens to be of our newest tanker, the Star Ohio, a double hulled 150,000 ton crew carrier delivered in Korea last October.
The officers are Italian nationals. The senior officers have been with Texaco over 20 years. The junior officers a proportionately length of time. The Filipino crew have been with us for several years. We're proud that there's less than a 5% turnover among the Filipino crew. And we're proud of that because we spend a lot of money on training the crew.
We don't only concentrate on the officers, although we certainly focus on them very strongly, but we also train the crew. And it's important, we feel, that we develop this sense of loyalty to the company that the same individuals will keep coming back, working as a team and working together. One of the things that we do in our inspection program, and we, like many other majors, have an inspection program where we actually physically go aboard an independent ship and put it through a rather rigorous inspection before we will utilize a ship.
One of the things we're focusing on more and more, again, is the manning policies. In that depressed market in 1992, for an independent-- and not all of them did it, but some did, enough did to cause a problem-- if you have a lower income, the quickest way you can reduce your costs is lower maintenance and go after the cheapest possible crew you can find. And several of the ships that had recent accidents we turned down on inspection because we felt that the owner had compromised too much on his manning, and in effect was hiring casual labor. And we just felt this was totally unacceptable. We will continue to find it totally unacceptable.
Protection. We accept that we have an enormous responsibility to protect the environment, to protect the natural resources not only of the United States, but of the world. We do a lot of drills aboard ship. This happens to be an abandoned ship drill with protective gear, but we do firefighting drills, simulated drills of individuals getting caught in enclosed spaces and whatnot. And through the constant drilling, again, we attempt to instill the spirit of safety, the thought of safety throughout the crew.
We know the environment is our responsibility. By the way, I put that slide in because when I went to see-- the thing I used to love to do when going through the South Atlantic or the Pacific Ocean was stand on the bow and watch the dolphins kind of racing up ahead of the ship. So that was from me.
The industry has funded to the tune of $1 billion the MSR, Sea Spill Response Corporation. This is a corporation that has been set up. It is run by ex Coast Guard officers. It has been equipped with about a half a billion dollars' worth of equipment in terms of skimmers, barges and whatnot. It will be, and it is in the process of being, strategically located to complement the Coast Guard's capability around the country. It will be available in the event of a major spill. It is going to be, I believe, a Cadillac spill response capability, and one that hopefully we'll never have to use.
Participation. We have to recognize in the industry-- and I think we have recognized-- that, again, as things have changed over the years, we're not so much a private business as we were. We have partners. The US Coast Guard in the United States is certainly becoming a partner in our business. And internationally, regulatory agencies throughout the world are.
One of the good things I refer to in OPA, when the Coast Guard was required to prepare regulations for contingency planning aboard tankers, they invited through a regulatory negotiation process, the reg-neg process, all segments of the industry to sit around the table-- environmentalists, unions, oil companies, independent ship owners, spill response companies, state government representations.
And over a period of several months-- with a great deal difficulty, I might add-- they reached a consensus on what should be the capability of a tanker to respond to a environmental incident in the United States, through contracting for spill equipment, defining what is a logical or likely spill.
It didn't make anybody totally happy, I don't believe, but it made everybody partially happy, which is probably as good as you can get under the circumstance. But I do commend the Coast Guard, again, when the results of that reg-neg have been questioned or attacked by members of Congress for their own particular reasons, the Coast Guard has stood up very strongly and defended the process and defended the regulations.
We also have to recognize, as oil company charters and owners, that we have partners in terms of the independents. The oil companies have been in the past, and across the board, been accused of having a certain amount of arrogance. And I think that was true. We will tell you what to do, we'll tell you how to do it, and that's it. Otherwise, we won't work with you.
But I think now we do really have to work with the independent owner. These concerns that we have about safety and manning and training, we have to work with the independent owner to make sure that we feed him what we can in our experience, and on the other hand are satisfied that the owner is doing what he can to meet those requirements. We have to be partners with the regulatory societies, the classification societies. Again, we all have to work together, or we're all going to go down together.
And perception. The perception of the oil industry in general and the tanker industry specifically is a very, very poor one. There's absolutely no attention paid by the media or the public to the millions and millions and millions of barrels that are transported safely every day in and out of the US and around the world-- in and out of Boston, for that example-- without incident. The amount is phenomenal. Yet, when we do have an accident, we get front-page press and evening news shots, and the perception is negative.
We would like reception to be this. And this is what our goal is. And I frankly see no reason why it can't be. I mean, those of us that have gone to sea, whether it's in the Merchant Marine, the Navy, the Coast Guard, or private boats or whatnot, you know, love the sea. It's our livelihood. I spend some of the happiest years of my life sailing, both on yachts and then in the Navy and on tankers. And I will do anything to prevent damage to the sea.
And the industry has that feeling. Our problem is that we are unable to get that across to the public. And through [INAUDIBLE] such as this, this is what we are attempting to do.
Again, even though the slide shows a very calm sea with a beautiful sunset, somewhere in the mid-ocean, we recognize that there are a lot of problems ahead. A wise captain once told me something I never forgot. He asked me when I was on watch as a second mate where the nearest land was. And I very smartly pointed to an island that was about 50 miles off our port bow, and he said, no, it's right under you.
And I never forgot that. So even though we see a calm sea ahead, we know that there's a lot of reefs and problems there. And we're working very diligently to try to avoid them, and trying to work with you and with the government to provide a safer environment for all of us. Thank you.
MARCUS: Thank you very much, Dick, for the oil company perspective. Batting cleanup today, we have Lisa Martinez. And it's always a delight for me to share the podium with a former student. Lisa.
MARTINEZ: He says the sweetest things. Thank you, Hank. I'm supposed to be the cleanup, and ironically, I'm the only one on this crew that has never been involved with an oil spill cleanup. So the cleanup is purely a figure of speech. I'm also supposed to provide the broadening influence and the context. So for starts, let me wave in your general direction a 1926 US government report entitled Oil Pollution of Navigable Waters.
So my first element of context is time. Though we fret about this, this is not an absolutely new problem. It's one which we think we have solved a number of times. And my comments are essentially going to tell you, from my point of view, as I represent no organization other than myself and my computer, what I find tolerable, what I find intolerable. And what my biases are will become immediately clear.
My first context parameter, if we're going to use these MIT words, is oil spills in the context of issues facing marine transportation. It's not the most important problem we have, and I can barely tolerate the constant attention that oil spills get. By several measures, we have far more egregious situations facing this industry. And by example, I will give you the events of January 1993, which I looked up in a fairly reputable series of journals.
The Braer, 1993, Shetlands-- no crew lost. All crew rescued. Cargo, total loss. Vessel, total breakup. The [? Cody ?] [? 1-- ?] have you ever heard of it? A cement carrier, went down with all hands the same week as the Braer. The-- I can't even pronounce this-- [INAUDIBLE] a Polish flag [INAUDIBLE] cargo went down. Over 50 people died.
These were all events in the same month, but I would conjecture that, to the public, the only one that's recognizable as a marine casualty was the Braer, even though there was no loss of life. As a member of this profession, I find that distortion really intolerable on any kind of a permanent basis.
The other effect that this has as a member of the profession is that it distorts-- and I use these words quite deliberately-- the way you get to work in this profession. Oil spills attract a lot of attention, but there's only a limited number of maritime professionals and there's only a limited number of naval architects, and therefore other problems go waiting or go unnoticed, even though we have the statistics that should drive that work to tell us that those are the more important things for us to work on. The other kind of distortion that it does is it puts us in a reactive mode. Yes, the Oil Pollution Act of 1990 was a reaction to a series of events, but it bears almost no mark of the initiative of which I know my professional companions are capable.
Now, the other kind of context that I want to put this in is the context of oil spills in the larger context of marine pollution, even in marine pollution from ships. I'm the only one on this panel that works almost exclusively on stuff besides oil, but it's worth reiterating Bill Kime's remarks that we have a legal regime, and that we've talked about that legal regime in the context of oil. I will remind you now that it also covers bulk chemicals carried in liquid form, packaged goods carried in containers and other forms of boxes. It also covers solid waste and garbage, which you probably recognize as the plastics pollution.
In the United States, we also have controls over sewage from ships. And meanwhile, while we are meeting here, both at the international level and at the national level, we are working on new agreements and new controls on air emissions, both from the cargos and from the propulsion plants of the ships. There are proposals for a new international convention on solid cargoes, such things as grain, taconite, all the things that bulkers carry. And there is a lot of interest right now in controlling the discharge and the uptake of ballast water.
Now, I find this all kind of ironic-- and I can say this in this crowd-- we've spent the last umpteen years getting the ballast water clean. So we finally have it to the point where we've now established aquarium conditions, and you go from one continent to the other and you transfer living organisms quite successfully. So I feel like the agenda is changing, and we need to be aware of that.
But it is valid to say that oil spills trigger very intense reactions in people, and therefore they do tend to rivet the attention of the general public in a way that a number of these other issues don't. So I think it's valid to say that one of the oil spill issues is the way it rivets the attention. The director of the Monterey Bay Aquarium used a phrase that I just love, and I repeat it everywhere. She says it's charismatic megafauna. The reason people get emotive over the notion of oil spills is because they can relate. Those wonderful seals, all the damage is the megafauna.
And we also heard some indication today of what I dub today charismatic megaflora. I mean, clearly when you were running the America's Cup, you had to find out where the kelp beds were. OK, so I've now included charismatic megaflora in the jargon here. But all of those demand really very little attention to grab your attention. If you're going to focus on the problem of oil spills, if you're going to focus on the problem of marine pollution, you have to incorporate the nuance that Sylvia Earle was talking about this morning. You can't be satisfied with a short attention span or a short information span. We can't use two or three years of data to say it's OK or it's down the tubes.
In fact, this year, for example, at the Ocean Engineering Department, there's a gentleman doing some work on ship wakes, because it turns out you can see ship wakes for hours after the ship is gone. Now, this tells me that there is something dynamic happening in the surface layer of the ocean that we've never acknowledged. I don't know what it is, but it sure has something to do with the surface dynamics of what you're looking at when you're looking at an oil spill. So therefore, I would like to also say that I personally can no longer tolerate the notion, which seems to be the abiding dogma, that the open oceans are not our principal concern.
If you look at the way we have structured our international regimes and our national regimes, and to a certain extent our shipboard technologies, we're focusing on protecting the coasts. To an increasing degree, the data that's coming in on the middle of the ocean tells us that is not necessarily a valid conclusion. What that tells me as an engineer is that gives me the opportunity to change from an end-of-the-pipe kind of a control system to a work-it-from-the-beginning kind of a thought process, so that you don't have a high level of pollution coming out of a ship at any point during its operations.
Hank mentioned earlier another important point of context, and we saw the slide which shows that ships are, in fact, not the dominant source of oil or the dominant source of pollution in the ocean. This is an important statistic, but, in fact, it doesn't matter. We are responsible for ships, it is our job to do the best job we can cleaning up the operations of ships, and if those poor people on land cannot get their act together to do the same, perhaps they should look and see what we have accomplished and learn from us.
And I mean that quite literally. We have existing international agreements, and I understand that after the Rio summit there's lots and lots and lots of things ruminating about land-based sources of ocean pollution. We have a few models, we have a few precedents, we have a few incidents and examples of things to implement that are worth taking a look at because they've got a lot of hiccups and a lot of problems in them, but they are moving in the right direction.
Specifically on the topic of regimes and things like that, I also want to be very clear on one of my other biases, which is that once I found this 1926 report-- and it has all the elements of any report that you would write now-- I have to state that I can no longer tolerate the notion that we should be cleaning up. I'm working now towards a different performance standard, at least conceptually. The notion of less worse doesn't make it for me anymore. It may be a 30- or 40-year achievement, but we really have to start thinking about a different ship.
The notion that oil leaked and caused problems was on the books 70 years ago. It's not a new surprise. It shouldn't surprise us when these events happen, and we should be able to engineer our way at least so that we can respectably stand in front of the congressional types and say we have thought about this. Now, leads me right into my next statement, which is we've heard a lot of remarks, quite experienced voices speaking, about the problems with the Oil Pollution Act of 1990 and the 535 budding Naval architects in Congress.
You should be alarmed. And I'm telling you why. You should be alarmed because this shift in power is real. The shift in power away from this profession and to the legislature is something which-- can we talk here-- they like it that way. In the context of oil spills, I understand that the anxiety attacks are coming on largely in regards of how to cope with the outrageous demands that have been placed. However, all discussions regarding ship-source pollution have been changed by this discussion of oil pollution and oil spills.
I have personally been involved in discussions on air emissions from propulsion plants, garbage handling on board ship, and ballast water where I have seen congressional staff people talking about technical demonstration programs and starting to design technical demonstration programs. And they had neither the background nor did they have the executive branch people there who could help develop those plans.
There is a comfort level right now with intruding into the practice of marine engineering and intruding into the practice of naval architecture which, frankly, gives me the willies. I consider myself an environmental engineer, though the title seems to have gone to the civil engineers this year, and I don't understand the acquiescence or the overwhelming steamroller impression that this has made on the profession.
Finally, therefore, my personal stand is that it's up to us as marine professionals to integrate the criteria of marine pollution prevention into the core disciplines of this profession. Whether you're an engine designer, a fuel purchaser, a cargo handler, and I don't know what, every task that you should undertake should have the opportunity to at least articulate what the pollution prevention needs are, the possibilities, and whether you can execute them.
We should not remain in this reactive arrangement. We should not be constantly retrofitting our fleet. It's an exorbitant way to deal with things. It's also the old-fashioned way. Most of the other land-based industries have gone through at least one generation of pollution control, and we are getting the old news. We aren't getting the best formulas for pollution prevention.
We should certainly not wait until the next legislature decides what the technological fixes for your fleet or for your state, because in the case of air emissions, these ships were being targeted for action because the city was not in compliance with its-- I'm doing this because it's kind of a bubble concept, you know, the ozone concept.
It's really hard to bite your tongue when you feel like you've just been plowed over, but recently there was a very prominent professional group which had a meeting in Connecticut. Shall remain nameless, but the title of the session was-- this is a quote-- Bitter Medicine-- The Environment. Get a life, guys. This is not going to go away.
This is not a sometime thing. This is not something you can go hide in the locker room and it'll resolve itself. Stepping away from this issue will not resolve any aspect of it. In fact, labeling programs of prominent maritime associations with titles like that will only really give us the black eye that everybody's been waiting to give us for a long time.
So what I say to you as a community of ocean engineers and a community professionals in general is get in line and work on the problem. You need to deputize yourself. There's a quirk right now which a number of us have come to grips with, which is there's no textbook on marine environmental engineering. We've engaged a number of failed attempts to put one together. If you work in this field, publish your work, please. We need more documents out there that aren't marked Navy Secret to tell us what we're doing here.
And in general, the plea I would make to all of us as practicing marine professionals is use your expertise. You may not consider yourself an environmental professional, but you know more about the way a ship operates than any of the environmental advocates who are likely to come in contact with you. And if you don't volunteer that information, guess what? I've learned in the last couple of years a lot of people won't ask you. But if you tell them, they might actually appreciate it. So that's my message. Thank you.
MARCUS: Thank you.
Thank you very much, Lisa. You've done a great job of clearing the bases here. I'm going to add one number to your excellent presentation. And I'll ask the audience here-- Lloyd's casualty data has just come out for 1991, so I want you to think of what the number is of lives lost just on those ships who have been total losses, whether the ships have been casualty, sunk, whatever. Total losses.
How many lives have been lost in 1991? Think it's 100 or 200 or 300 or 500 or 300 or 800, 1200? More than 1200 lives lost. And I think the general public has no idea, with the focus on things like oil spills, that some of these other problems still exist.
Before I open up a question and answer period to the audience, I want to ask the first question to Admiral Kime. We have Mr. Embiricos talked about the liability issues. There is something called the regulatory impact statement, is that the right phrase? The Coast Guard is--
KIME: Regulatory impact analysis, an RIA.
MARCUS: Could you bring us up-to-date on that?
KIME: Yes. At the time that we were publishing our notice of proposed rulemaking several years ago, the industry, the shipping industry and the oil industry, went to OMB and said that, before this can become final, we in fact think certain questions ought to be asked as part of a regulatory impact analysis. And a little bit unusual, and in fact they gave OMB a list of questions.
Now, the Coast Guard has dutifully now published that list of questions, and we have received a great many answers to those. We have sent the regulatory impact analysis to the Department of Transportation. They have signed off on it, as we have. And we have also sent it to the Office of Management and Budget. And it's been there about six weeks. And we are waiting for that to come out. That will be out, we hope, sometime early this summer.
There will be an opportunity for people to make comment upon it. Many of the comments that Mr. Embiricos made are addressed in some detail in that. There will be 60 days for the public to comment, and then we would hope to move on to finalizing the rules at that time.
MARCUS: Thank you. Questions? If I can see you. Yes.
AUDIENCE: Mr. Chairman, as a shipbuilder, and even an MIT-educated shipbuilder, I would like to put some attention to something. I don't think has really come forward here. We've had some very good discussions on the operation thought to kill the patient. What type of operation? We've even heard of some other sicknesses that we didn't here in the beginning. What I'd like to put the tension to is perhaps the reason for the sickness.
And the reason for the sickness-- and there were very interesting curves that you showed. But unfortunately, you did put attention to the right things from the oil company's point of view. The reason is that we have too many ships. The reason is that we have oversupplied the global market in the '70s through Japanese and Korean expansion, through stupid European subsidies, and we have continued the misery in the '80s by over-aging the fleet to the tune of half a year per year.
The average age of global tankers and bulkheads, they are 15 years. You are quite correct in stating that the [INAUDIBLE] was built or the [INAUDIBLE] built in the '70s. And you are quite correct stating that if we looked at the tankers today, there are 2/3 of the tankers that I have the 20-years classification [INAUDIBLE]. And many of them, through a reputable company like yours are hopefully properly operated. But there are quite a lot that are not correctly operated.
The mystery today is that we don't get sufficiently in the transportation sector, or we don't get sufficient of the value added of the cargoes. In 1990, the total global value of cargo transportation was roughly $1 billion. Out of that, the ship owners is about 6 and 1/2%.
20 years back in your period of tankers, the price of oil was $2. The transportation cost was $0.70. Today, the oil is priced at what, some $20. The transportation cost is still $0.70.
Now I [INAUDIBLE] talk about education. We could talk about better crewing, we could talk about better ships. But we need in the global system an increase in the value added to the ship owners to the ship operators in order to do this.
And this is today where we have the mystery where all those old ships, because these old rust buckets are pushing down the market. And if we don't solve that problem, we will not solve any of these things that we've been talking about here now.
We must one way or another, by torpedoes or [INAUDIBLE]
MARCUS: Thank you. I'd recommend against torpedoes. But your point is very well made, sir. It's a lot easier to do all these extra things like training and more preparation when you're making money, when you can afford to buy a brand new ship with all extra features. When you're losing money, and most people have been losing money since 1973, it makes it much more difficult. Any comments for-- [INAUDIBLE]?
KIME: Yeah, I'd like to comment on that. I think it's a mistake to focus in on pure age of a ship. Like many other pieces of equipment, an older unit can actually be much better than an newer unit if it's properly maintained from day one. The fact that a ship is 20 years of age just means that it's 20 years of age.
For example, I'm sure there are many VLCCs built in the 1970s that are actually better ships, in better condition than some of built in the 1980s. Because of the economy, again, shipyards went to high tensile steel, cutting down the scant wings, the thickness of the steel with the same corrosion rate as the thicker steel in older ships. So again I, always felt it's a mistake to concentrate on age. It's the operation of the ship that makes a difference.
MARCUS: Anything else? Yes Everett.
AUDIENCE: One thing I didn't hear anything about is just navigating a ship. Now, [INAUDIBLE] with someone who [INAUDIBLE] talking about the fact that the navigation of a ship is [INAUDIBLE] traditional, and that there are a lot of new developments to make the navigation quite safer. For example, nowadays you know just exactly where the ship is. But if you know exactly where the ship is, but the people that are navigating the ship aren't paying any attention to where the ship is, you can get way off course.
But on the other hand, it's perfectly possible to have a-- to decide a course that you want. As for the ship, if you get off of that course, and markings, and all that sort of thing, it would now make the Valdez-- that was the primary problem, it was off course. And [INAUDIBLE]-- there's no excuse for that these days.
MARCUS: Okay, the question has to do with the impact of better navigation equipment, and do we have no accidents or do we have technology-assisted accidents?
QUAGEN: I'd like to comment There's no question that the biggest problems are not behind the wheel in any mechanical and driven thing Yeah you can have all the equipment in the world, but if you don't have the right people to man and operate that equipment. That ironically is one of the problems that I think OPA and perhaps in Europe, if they follow the same course is resulting it.
At a time where we should be encouraging, as a country and as a world, the finest young men and women to follow a career at sea, we're sending them a message by putting Joseph Hazelwood's picture on the cover of Time magazine, by jailing the chief mate on the ship that was in New York Harbor that ran into a rock 35 feet below the harbor bottom because he did not see the rock. And it turned out he'd had a beer the night before. He spent two nights in jail, a British officer.
The message we are sending to young people-- and I have three sons-- is stay away from that business. I mean, you have nothing to gain except a possible prison term. Again, OPA as introduced in the states have followed very strongly the criminal liability in terms of oil pollution.
So I think that's one of the problems we have to overcome. How do we keep those individuals that we spend millions of dollars in training and have long services with the companies, how do you keep them, particularly coming in the United States, and in our cases, where officers have refused to sail on ships coming into the United States for that reason? And how do we attract the new ones in? It's maybe one of our bigger problems.
MARTINEZ: Thank you. Everett, the comments I would like to add are that if I heard you, you weren't talking so much about navigation equipment as additionally the deliberate skill of navigating the vessel. And, I mean, in this country, Captain Gates has written a wonderful text called God, Ship Accidents, I think is what it's called, where he talks about, in essence, the loss of skill being the cause of a number of accidents where standard ops can be managed by a fairly routine, practiced event. It's this skill of saving a ship in a bad situation that was lacking in many of these circumstances, not that it was an impossible situation, but that the calls were wrong, or the bank section was too extreme.
Richard Cahill who is actually an American, but who is published in the UK, has written a couple of wonderful or horrible depending on how you look at these things. One is called Groundings. And the other was called Collisions. And they're case studies. And time and time again, it's a matter of pulling out the old chart or not-- making sure that the light you were looking at was the light you were looking at. And those sorts of things are sort of legendary.
And from what little I know as a spectator, it's initiatives like the bridge team management which will, if we're lucky, break through that impasse that when you've got these horror stories, we're all, hey, we could all see it was going on the rocks, but the old man was at the wheel, and we weren't going to overrule the old man, then you have to take a look at bridge team management as perhaps a solution. So I think that what I'm worried about is that the electronics will break and nobody will know what to do.
KIME: Hank, let me also say that I think bridge team management is something that's extremely important. Dick Quagen mentioned that they were concentrating on that. I think we can learn a lesson from the aviation industry.
There's going to be a seminar in Oslo, Norway on the human element in avoiding ship accidents taking place at the end of June. I'm going to have the privilege of being there. And we're also bringing the previous administrator of the FAA, also happened to be Vice Chief of Naval Operations at one time, and having a view of both the aircraft and the sea aspects of this to try to look at those things. I think that's necessary.
We're going a long way [INAUDIBLE] with navigational age, with differential global positioning systems that'll tell you within eight meters where you are. With ECDIS, which is Electronic Chart Display and Information System, which at any scale and with any color scheme put a chart on what looks like a radar scope through differential global positioning system tell you within eight meters where your ship is. Also there will be a collision avoidance system. All this will be, I think, a tremendous help to our people.
We need the proper people on the bridge. We need to properly trained people. And we also have to keep in mind, things that cause accidents also, even if you have those, are pressures sometimes placed on ships.
It was mentioned about the Aegean Sea that ran aground. That ship ran aground because it had been at anchor for a long time, and there was tremendous pressure from the owner to get that vessel in. And the vessel did go in under circumstances which it shouldn't move.
So that, again, is part of the equation, part of safety management from a corporation. No matter how good the equipment, no matter how good-- well the people are trained, if, in fact, there are pressures to go in, as there are many times under adverse conditions, we're going to have accidents. That comes under quality management by a ship owner.
MARCUS: Thank you. Lloyd.
AUDIENCE: Well, I have a couple of questions, one for [INAUDIBLE] Embiricos, one for Lissa Martinez. Mr. Embiricos, you took a pretty strong stand coming to [INAUDIBLE] not spill oil. Do you have any [INAUDIBLE] from high impact groundings, double bottom tankers where oil has been spilled? [INAUDIBLE] we do have Captain [INAUDIBLE], I guess he now has [INAUDIBLE] paper of 1973 where he then wanted many of double bottom, double hull groundings [INAUDIBLE] reached.
And I wonder if you have any [INAUDIBLE] which would negate those [INAUDIBLE]. We also have many banner agencies [INAUDIBLE] in 1972. They included [INAUDIBLE] Exxon and probably Texaco, where it was definitely found that double hulls and double bottoms are superior to single bottoms on any tanker. Can you [INAUDIBLE]? And I just wondered if you had any [INAUDIBLE]?
EMBIRICOS: Yeah. Let me try and answer that one. Let's talk about hard data first of all. Sure, now, the Aegean Sea is the most recent one. She was a double bottom ship.
And what happened is she ran aground. You have this huge double bottom, this empty space. The inner hollow was pierced. You got hydrocarbons in the empty space, and you got an explosion.
And it's only to be expected. I mean, data there is because there have been accidents where basically if you have a high impact-- and this is the important part of it-- you are going to pierce your inner shell. And that is inevitable.
And you'll pierce it whether it's by grounding or whether, as in the case of the Maersk Navigator, it's by collision. You have your structure in this inner shell. So the structure is in your double bottom or in your double hollow.
When you have a high impact, that structure is going to pierce the inner skin. You're going to get hydrocarbons into this empty space. And an explosion then is nearly inevitable. So really we're going for a design which does save pollution, there's no doubt about it, in the low-impact accidents, but does not do so in the high-impact accidents.
In addition to that, we are creating ships that are built to be higher up out of the water because you have all this empty space, so you are carrying your oil cargo much higher out of the water. When you breach your tank, what's going to happen is all this cargo is going to come pouring out until you have a hydrostatic balance. So the double hull is not a panacea. And we really have to accept this because otherwise we're kidding ourselves.
AUDIENCE: I respectfully disagree with you, sir.
KIME: Yeah Hank, could I also disagree with him because I think that's the reasoning that led us to OPA 90 and the Congress of the United States passing a requirement for double hulls. In the case of the Aegean Sea, this was a vessel that was driven at 12 to 15 knots into rocks. It was not a double hull tanker. It was a combination carrier that just happened to have a double bottom.
It's like saying that I'm going to take care of myself. I'm going to eat well, I'm going to exercise, and I'm going to live a long time, and then walk out into the southeast expressway here without looking and getting run over by a truck. If you-- no matter how you design a vessel, no design is going to protect you at a high-speed collision like that, which was pure human error. You cannot extrapolate that anytime you have an incident like that, you're going to have an explosion.
We've had LNG ships running around the world. Never lost a life in an LNG ship. One ran aground on a pinnacle in the Mediterranean, ripped out almost the entire bottom. There was no explosion. There was no loss of cargo.
Most chemical carriers, most liquefied gas carriers, have double bottoms, something that is much more prone to leakage than what you're talking about, much more volatile than a crude oil that you're going to see. Certainly, double hulls are not going to protect you in every case. But they are, in many cases, going to protect you.
To say that, in fact, the Exxon Valdez would have been unstable, she was unstable when she was on the pinnacle. That's why we rushed the Coast Guard and Exxon to salvage the vessel as quickly as possible and take the 80% of the cargo which didn't leak to make sure we didn't have a spill much greater off of there because she was structurally unsound. And she was unstable. She was only being held up by Bligh Reef. If, in fact, the vessel had had a double bottom, it would have come to rest like that. And only about 40% of the oil that leaked would have leaked.
When you talk about causing a double bottom and making a ship unstable because that raises the center of gravity up two meters or whatever, that's assuming that the naval architect is not ingenious enough-- I would have not passed around here if I had thought that had been given by Harvey Evans, or someone like that, a problem to design a ship. You've got to meet certain stability requirements. You can make a ship stable and still raise it up.
There are some constraints on it. They impact on the ability of the vessel to go certain places. But that can certainly be to be looked at. It will not-- as I said, my words were, "it's not the answer to a maiden's prayer."
But the American Trader's spill off of Newport Beach, California, would have been prevented by a simple double bottom. And I think that is something we need to keep in mind. It's not a panacea, but it will help in many, many cases. And I think there's no basis to the argument that you're creating an unsafe bomb. And certainly the Aegean Sea is no valid example in that case.
AUDIENCE: I have to finish.
MARCUS: Yeah, okay Lloyd. Question number two?
AUDIENCE: So I do want to add LNG ship, which I happen to be responsible [INAUDIBLE] full cargo in LNG with 40% of your bottom [INAUDIBLE]--
WOMAN: Is that a pressure hull?
AUDIENCE: [INAUDIBLE]. Those are thick walls and proceeded on her way. Reason Lissa--
AUDIENCE: --that Congress [INAUDIBLE] was caused a green industry [INAUDIBLE] against these protective sign, features [INAUDIBLE] since 1972 in an unconscionable manner. And they scuttled the whole thing. The Coast Guard apparently is not strong enough to stand up against. Later in '78--
MARTINEZ: Mm-hmm That one I remember.
AUDIENCE: --even though the President of the United States [INAUDIBLE] and actively [INAUDIBLE], it was scuttled again, irresponsible action which could've prevented much of this. And this is why Congress-- and I certainly helped them think through on that matter and helped as much as I could, [INAUDIBLE] I'm very proud of, to not risk my money after 19 years of being trustworthy by having common sense just thrown away at the jeopardy of all of us who live on the planet. They got their dander out, and they put through in that law. And I'm proud of everyone of those 435 Congressmen and 100 in the Senate.
MARTINEZ: Thank you.
MARCUS: Thank you, Mike. Right here.
AUDIENCE: Yeah, I have a question for all of the panelists. As an MIT graduate and a merchant officer who's worked as a deck officer on tankers, I have a question just to throw out as a thought kind of question. We saw this morning about the great presentation about what can be done with this "can do" American spirit and our technology. And we have just recently graduated a whole another class of this class of '93 for the Merchant Marine Academy, so young deck officers.
From my experience, I've seen a great number of people leaving this field because of the limited opportunity for young Americans. And what I'm wondering is how can we utilize this ability to [INAUDIBLE] of young American officers, how do you see them fitting into the solution to this problem given the limited opportunities for Americans to serve on the ships that are bringing this oil [INAUDIBLE] United States?
MARCUS: Tough question. Who wants to start on that.
KIME: Let me start by saying my boss, the Secretary of Transportation, Federico Peña, has been working extremely hard on a maritime reform initiative to try to build up the shipbuilding, and the shipping industry, and the associated jobs that go with it, and the national security aspects that also go with that. He was not successful in his first effort, but he's mounting up for another charge.
I think the way to add to that is what is going to have to be done, we have to provide some help to this industry. Other nations-- all nations in one way or another, whether it's through direct subsidy, financing, or something of that nature do provide that. I think that is going to be necessary if we're going to maintain a viable merchant marine industry in this country. And I think for many reasons that we need to do it. So we're behind my boss pushing, working on our part of it. And hopefully in the next go at this, he will be successful sometime later in the summer.
QUAGEN: As a ship owner in oil companies and a graduate of the Merchant Marine Academy, yeah, it's a concern to us. We're working on a project to build two to four American flag product tankers. The project, as it does in many corporations, is grinding it's way very thoroughly, but relatively slowly through the mill.
The problem is cost, quite simply. The American merchant marine officer has priced himself out or herself out of the international market, and to an extent that you really can't compete under the conditions. Mobil-- I don't know this for a fact, but I have it on very good authority, Mobil is experimenting this year with hiring a number of graduates to sail on their non-US flag fleets.
Now, I don't know under what terms and conditions. For example, we have Italian or British officers in addition to our American officers. And we are looking at this as a result of Mobil's effort. It would have to basically be had the same conditions as the European officers, but that's not starvation wages.
One of our concerns is that as we stay in as an American-controlled company with an international fleet, to the extent the US fleet diminishes, that resource of bringing people through the system I was a product of, joining Texaco as a third mate, that system is disappearing. And so there has to be some way of continuing our accessibility into what is an extremely valuable asset, and that's the young people coming out of the academies today.
MARTINEZ: Yeah, I'd like to try to answer it from a very personal perspective since I don't hire anybody. And that's probably the most that you guys can speak from. I'm now about, let's see, 18 years or so out of school. I miss not having any comp-- I mean, I miss having some company. There's hardly anybody that I feel a particular kinship to.
My MAR grad friends normally don't have a whole lot of education on environmental issues. And though the curriculums have changed, and people understand operationally what the directives are, the looking ahead skills are really not being cultivated in a way that I would love to have it done. My non-MAR grad friends who are coming out of naval architecture curriculums, and marine engineering curriculums, and elsewhere are finding it very difficult to find commercial work to do. So that in the year classes behind me, overwhelmingly, people took jobs doing Navy work, and they've learned how to design ships for the Navy, which is a fine skill, but not the same skill as designing and operating ships for commercial use or regulating ships that are in commercial use.
I don't have any particular solution. But I'm at the point now where I'm more or less the same age that the guys who worked with me when I was 22 and 23 were, and I learned a lot from working with them. And I really feel the lack of people to cultivate this particular skill set. And so, I don't have any solution, just sympathy for you.
MARCUS: Question over here.
AUDIENCE: I'm an alumnus from [INAUDIBLE], and I'd be interested in hearing about [INAUDIBLE] port design, [INAUDIBLE] configurations. Is this something that [INAUDIBLE]? And would [INAUDIBLE] design [INAUDIBLE] for instance, in terms of [INAUDIBLE] space, should we be going off-shore [INAUDIBLE]--
MARTINEZ: Oh, that different.
MARCUS: Good, I'd like to hear from the panel. It's the first thing I'll point out is that we are rather unique as a major industrialized nation in the way you have only one offshore terminal. And last count, there certainly more than 110. I don't know how many there are now. But we do not have many offshore terminals. And that certainly would move those ships away from our shores. This is one approach.
AUDIENCE: Can we have the question repeated?
MARCUS: Oh, I'm sorry. The question was really the role of ports, the potential impact of port design, and this whole problem. And one topic that's being discussed, or I don't know if it's still being discussed or not, but Chelsea Creek in the Boston area, where ships go up this-- if they don't hit the bridge on the way, they go up the Chelsea Creek. And certainly people have been talking about moving that entire system offshore and doing it through hoses and pipes. And I don't know to what extent OPA addresses those kinds of things at all.
KIME: OPA 90 does have restrictions on navigation and safeguards to be considered such as numbers of people on the bridge, tug escorts, tanker exclusion zones, things of that nature that are going to be addressed. But I think your point of whether we should go with offshore terminals or not is a very good one. We do have one offshore terminal loop down in Louisiana.
There has been consideration for a second offshore terminal off of Texas. The problem is right now that it is not economically viable to do that. And I think that's the thing.
Obviously, if the deep draft tankers could be kept off shore, I think loop last year-- I just signed the report to the Congress that we have to send up once a year-- I think they spelled 147 gallons of oil. And most of that probably vaporized before it hit the water. So obviously, that is a way to go. But the economics of it just don't seem to be there.
Also, you have to have an infrastructure. You have to see where the pipelines are, the distribution systems, et cetera. There are some offshore terminals off of California, but they probably contribute to as many accidents as they prevent, although some new initiatives have been taken with the Coast Guard and the State of California. Certainly that is an area we should look at more for future terminals. And certainly, environmentally, that is a tremendous way to reduce the types and dangers that we've seen recently.
MARCUS: I'm sorry.
MARTINEZ: Well, one comment on ports, ports are assumed to provide services to ships under several of the legal regimes in facilities called port reception facilities. I think it's fair to say that that's been one of the great catch-22s of the legal regime. And so it would be interesting to get your perspective as a planner on a port plan that dealt with that and was able to deal with the costs, and the constructions, and the local planning, and everything else because we keep returning to this now.
And now with the Flag State Implementation Committee and IMO, I'm really looking forward to seeing what people will finally confront on the notion of port reception facilities, and how do you provide them, and what are the minimum standards of performance? And so there is an assumption that ports as a participant in both operational and accidental pollution prevention, but it's always been more or less attributed without being articulated in a way that you can find the professional skill set to really tell somebody, if you're designing a new port, this is the way to go.
QUAGEN: I was just going to say, you brought back a memory, Hank. I was-- in 1964, I was second mate on a tanker that hit the Chelsea Bridge.
MARCUS: It's still there, but it's been beaten around a while.
KIME: You didn't kill it.
QUAGEN: No, I didn't kill it.
AUDIENCE: Yes, I guess my question's directed more to my friend Bill Kime than anybody else in the panel. I hope you don't mind.
I had the privilege of being a project leader on a program some years ago to develop an R&D program for the US Coast Guard on oil pollution R&D-- what to do, how much it will cost, how long it might take, so on. And so I'm very much interested in this whole issue summarily.
[INAUDIBLE] the Torrey Canyon, the [INAUDIBLE], and then the Valdez. And the Valdez, to me, all I read-- and I don't have the privileged informatio that [INAUDIBLE] Kime must have-- was a total chaotic state confusion between state authorities and federal authorities. And no one really dared to do one thing without having total approval. What's been done to change that? I mean, aren't we going to have the same kind of problems the next time we have a situation off of Valdez?
MARCUS: Good question.
KIME: Yeah, that's a good question, Alex. Let me say that all of the oil that spilled from the Exxon Valdez spilled in 11 hours. And Exxon made the statement-- and the scientific support coordinator who, from NOAA, who provided scientific advice to the federal on-scene coordinator agreed-- that had Exxon had right next to Bligh Reef at the instant the vessel grounded, the maximum amount of equipment that it had at any stage of the cleanup, it would've made about a 10% or 20% difference in the amount of oil that came out. The issue is to keep the oil in the ship in the first place.
Now, the question of the organizations surrounding the Exxon Valdez if any of you saw the HBO movie, reverse that about 180 degrees. And although my good friend, Frank Iarossi, came out very well in that, I was glad to see, it didn't talk about the reality.
What you had there was a port that had a spill. Alyeska and Exxon had representatives. The Coast Guard had a commander on scene. And the State of Alaska had a gentleman NC, the ADEC representative. And then this happened. And what happened was that everybody descended on scene-- the Secretary of Transportation, the Commandant of the Coast Guard, the district commander, the president of Exxon itself, the president of Exxon tankers, the Governor of Alaska, and every news anchor person that could buy a ticket all descending on scene.
When I was up there, one of the biggest jobs I had was taking care of visiting firemen. We had a protocol office. And we took care of these people and still let the cleanup go on. These people have a right to know. They have a reason to know.
But what we did not have in place at that time-- we had a great organization for a typical spill, of which there's 8,000 a year in our waters, but not a spill of national significance, of [INAUDIBLE]. And when rewriting the national contingency plan, we have put together an organization that we are going to utilize-- at least the Coast Guard is, the EPA is still looking at it-- but a very specific organization that will take the lessons learned from the Exxon Valdez to keep this kind of confusion or perceived confusion down so that the people that need to know will know-- the elected officials, the media-- and at the same time, the cleanup will go on at a well-organized way, resources will be brought to bear very, very quickly. So hopefully we have an organization that will solve that problem. I think it's a very good organization we've put together.
I use-- I was a federal on-scene coordinator when the American Trader went aground. And having been up in Alaska, we utilized those lessons learned. We'd didn't have them written down.
But Jim Card, whose name was mentioned, and I were there. And we were able to skim about 35% of the oil from that incident. That's the most anyone has ever skimmed. And we kept the media going, and kept this off the front page after about two days.
So I think we've learned some lessons. But that is a very key thing. And that, again, is something that OPA 90 has mandated, not just for a federal/national plan, but for local plans, and for the plans, as Dick talked about, for ships and terminals.
MARCUS: Do you have a follow-up for our last question?
AUDIENCE: Follow-up, and that is the Braer off the Shetland Islands. What we got here in this country is really TV news, CNN type of thing, where dispersants were used almost within hours, I think, of the grounding, and a lot of complaints about the farmers getting detergent on their fields, and therefore not having anything to grow. What have we as a community, technical community learned from that accident that is useful for future [INAUDIBLE]?
KIME: Well, certainly Lord Caithness and the British government are still doing their investigation of that incident. Concerning dispersants, I don't think we've learned anything since the Torrey Canyon about dispersants. We have this mindset that I discussed and in my comments, there are places to use dispersants and places not to use dispersants. There's the proper quantity to use. There needs to be preplanning approval as EPA does of the types of dispersants.
And then the plans that I talked about have to say at certain times of the year, under certain conditions, you go through a matrix. Yes you may, yes you may not, or you may under certain other circumstances use a dispersant. That's what we need to know. The farmers, I think, as a result of the Braer, were impacted by fumes from the oil that was coming out there. We're interested to see what really happened there.
Of course, they had a tremendous high-energy sea that had a great effect. We didn't have that in Alaska. We had a lot of low-energy beaches where natural dispersion didn't take place. How effective dispersants were, I don't know. We're going to have to wait to see what the British government says.
MARCUS: Any final comments from the panel. Let me thank the audience for there-- oh, Philip, we'll give you the last question if it's a short one.
AUDIENCE: So it's [INAUDIBLE].
KIME: Why is everyone picking on me? I got blamed here from my good friend for low-freight rates in the tanker industry, the Johnstown flood, and the fact that Michael Jackson can't hit his jump shot, probably Larry Bird's back. Go ahead, my friend.
MARTINEZ: Michael Jordan. Michael Jackson [INAUDIBLE].
AUDIENCE: --[INAUDIBLE] First of all, she was not-- she didn't want to get into the court because the refinery [INAUDIBLE] the court, because they had an empty tank. The ship wasn't [INAUDIBLE]. They had no interest in geting [INAUDIBLE]. It was all pilot. The pilot was more important. So I think it's a bit unfair to blame the ships.
But anway, let me come to my question, which has nothing to do with that. [INAUDIBLE] as you say, the important thing is [INAUDIBLE] the ship. So you have the ship is on. We're not going to go into that, that's too deep. But that seems like an emergency [INAUDIBLE], and that's why we're doing the research.
And there is also something which I think is very important. I mean, [INAUDIBLE] because [INAUDIBLE] are very [INAUDIBLE] surface tension. If we increase the surface tension of the oil, this will spread much less.
Now, I was speaking today with police of MIT about a specific problem. And apparently, they are looking into something. They have found something which apparently is a chemical that will be carried to the tank itself. And in case of an accident, you will break the [INAUDIBLE], or wherever it is. And this will somehow [INAUDIBLE] the problem. Now, I think that is the right kind of research.
Now, you can all the [INAUDIBLE] and all the ice cream stands which I refer to [INAUDIBLE] and to skimmers, I mean, it would never work. And you yourself as an expert witness, and you told us, I mean, the most we can handle is 20%. So I think we have to develop research and other measures. And I would beg you, sir, to put money to Congress-- to us in Congress on [INAUDIBLE].
MARCUS: Well, Admiral you can get the final-- you'll have the final comment.
KIME: That is something that should absolutely be looked at. OPA 90 does require a coordinated R&D regime in this country. The Coast Guard heads that up along with all the federal agencies. We are taking all the ideas that we can find, things such of that nature to solidify the cargo, to change its physical characteristics. Those are the things that are being looked at.
We're also, through the International Maritime Organization, [? ORE ?] sponsored an R&D seminar in this country to coordinate internationally. There's precious few dollars available, unfortunately, for R&D in this area. We've got to make sure we don't duplicate.
Finally Hank, let me, since I do have the last word, someone said we don't have a publication on environmental considerations in this country that we need coming from ships. As president of the Society of Naval Architects, that is an initiative I am undertaking. So if there are any of you out there who would like to be the editor of this publication or a contributor, hopefully at our national meeting not this September, but October of the following year in New Orleans, we hope to dedicate that technical session to these issues.
It's multifaceted. We've heard all parts of it. But we do think that as an industry, we need to pay the same attention to this as we do to structural design, machinery design, and things of resistance, and hull form that the society has traditionally paid attention to.
MARCUS: Thank you for ending on a positive note. I want to thank the audience for your attention and participation. And our panelists have been outstanding. Thank you very much.