Tuesday, December 31, 2013

Navigating legal waters of salvaging more treacherous than actual salvaging

By Michael A. Moore

The West Coast diving and salvage business has changed a lot since Mick Leitz was in charge of salvaging the Exxon Valdez. Mick is still in business with Portland's Fred Devine Diving and Salvage Company – and still uses Fred Devine's designed and built for salvage flagship, the M/V Salvage Chief with its 400-ton line pull.

The business these days is moving away from local masters of the trade like Mick Leitz and his Alaskan counterpart Dan Magone, and toward well-capitalized international big players – such as Resolve and Crowley – and high technology, such as remotely operated vehicles (ROV) and special software packages.

But big capital and high tech are not the biggest changes to hit the salvage and commercial diving industry – nor are rough seas and deep water the biggest challenges to successful salvage operations.

Mick Leitz says the legal shoals of myriad and often conflicting regulations are the biggest challenges salvors face these days. Some of those rules are a result of the Exxon Valdez grounding and subsequent oil spill.

In fact, Leitz wonders if the Exxon Valdez operation could be pulled off in today's regulatory climate. He says it was difficult enough in those pre-OPA90 times.

"Harbors of refuge was a problem before the Exxon Valdez ," he says. "It's still a major problem." Leitz says he had to write six different towing plans for taking the Valdez from Alaska to San Diego before the seventh was accepted.

"None of the harbors of refuge that were capable of handling the Valdez wanted anything to do with it," he said. "The final plan was to keep the tow route more than 200 miles offshore." Leitz lets the question of what would have happened if a problem arose during the tow remain unanswered.

Responder immunity is the biggest problem plaguing the industry from the fallout of the Exxon Valdez grounding says Leitz.

"It has to do with the way OPA90 is written," said Leitz. "The way things are now, the salvor is potentially liable, whereas environmental cleaners have responder immunity."

Leitz is referring to a responder immunity provision Congress included in the post-Exxon Valdez OPA90 legislation that was intended "to protect from liability those individuals or corporations who provide care, assistance, or advice in mitigating the effects of an oil spill."

"Unfortunately, the OPA 90 standard specific to responders has proven inadequate to protect responders from becoming entwined in such suits," writes Jonathan K. Waldron, a partner in law firm Blank, Rome, LLP, in the Fall 2011 edition of Soundings, published by the American Salvage Association. Waldron was referring to the legal problems encountered by emergency responders to the Deepwater Horizon oil platform disaster in the Gulf of Mexico.

"Immediately following the explosion on the Deepwater Horizon, emergency response vessels rushed to the rig to save lives, render assistance to those in peril and fight the fire.

"In the ensuing months, responder companies worked to clean up the oil that was pouring into the gulf in an effort to mitigate the spill. Notwithstanding these valiant efforts to help in the worst environmental disaster in US history, these emergency and cleanup responders are entwined in complex and protracted specialized multidistrict litigation (MDL) despite the fact that protections were put in place following lessons learned from the Exxon Valdez specifically to prevent such occurrences.

"Salvors could find themselves in the same situation in future incidents unless enhancements are made to current law," Waldron said. "Congress intended that responses to oil spills be immediate and effective and noted that without such a provision the substantial financial risks and liability exposures associated with spill response could deter a prompt, aggressive response.

"This immunity does not prevent any injured parties from recovering their full damages resulting from the spill incident, as OPA 90 provides that the responsible party (RP) is liable for any of the removal costs or damages that a responder is relieved of pursuant to this immunity consistent with the OPA 90 'polluter pays' principle," he said.

"This immunity does not apply if a responder acts with gross negligence or willful misconduct, or in cases involving personal injury or wrongful death."

That last sentence is the loophole big enough to tow the Exxon Valdez through when it comes to creating legal liability to salvors.

Which is what happened to emergency responders following the 2010 Deepwater Horizon explosion, which resulted in the deaths of 11 and injuries to 17 men working on the platform, plus the discharge of approximately five million barrels of oil.

Deepwater Horizon required thousands of responders working several months to contain and clean up under challenging conditions – numerous claims and lawsuits were filed.

"Unfortunately, the OPA 90 standard specific to responders has proven inadequate to protect responders from becoming entwined in such suits," said Waldron. "In these cases, plaintiffs have been successful in simply alleging gross negligence (without providing any supporting facts), and to cast "exposure" claims resulting from alleged exposure to released oil or from approved dispersants used to treat that oil as personal injury claims falling outside the scope of the specific responder immunity provisions."

The cases have been catalogued into pleading bundles called "Master Complaints" under various categories – including one bundle that named as defendants all the owners and/or operators of the rescue vessels that answered the Deepwater Horizondistress call and responded to the fire emergency after the explosion. This is similar to suits that could have been filed against salvors had there been salvage actions related to the incident, said Waldron.

Mick Leitz's way of dealing with the increased potential for lawsuits and liability in today's new world of marine salvage law is to be very selective about the jobs he takes on and the way the contracts on those jobs are worded.

"You try to protect yourself contractually, but you can still end up in court," said Leitz.

Leitz believes the increased regulatory and liability climate is counterproductive to the real mission of the salvor. "The sooner you get the vessel out of the water, the better – but the regulations slow you down," he said. "In the old days, you would use a sling to pick up a vessel and get rid of it.

"The risk the salvor runs now is if you get two drops of oil on the water, you are liable to get sued.

Anything goes wrong, debris, paint chips, oil – you can spend five years in court for a week's work."

Leitz's solution is to work for state agencies as much as possible. He says the states have funds to get rid of derelict vessels and they provide an umbrella of protection if something goes wrong.

Dan Magone took another tack to solving the perfect storm of challenges he found himself facing after more than 33 years of sailing into Alaska's wintry, storm-tossed seas to rescue fishing boats and other vessels in distress.

"We never had any competition until the big companies started to notice this neck of the woods," said Magone.

"Climate change and petroleum are bringing a lot larger vessel traffic up through Alaska's waters. The Arctic passage is spurring growth – next year they will be laying cable through the passage from Norway to Tokyo," he said.

Magone decided it was better to join the big salvage and diving companies than to compete with them. He joined forces this last August with Florida-based Resolve Marine Group.

"The result will be a greatly expanded, emergency response and marine services company that combines the long-standing, deep and local expertise massed by Magone Marine's Alaskan salvors with the extensive resources, personnel, and vast salvage & wreck removal experience of Resolve Marine Group," states the joint press release on the venture. "This newly-formed business will be named Resolve-Magone Marine Services (Alaska) and coincides with increased vessel traffic now in the environmentally-sensitive Aleutian Chain."

Magone's decision to hitch up with Resolve was not made on the spur of the moment.

"I decided to join forces with the best – plus I am friends with the co-owner of Resolve," he said. "We are like-minded guys, and had been discussing this move for several years. I knew I couldn't ante up to the level it's going to take to do business with the increased competition and regulations.

"We did all the wreck removals for the fishing fleet for 20 years. The big shipping companies that are coming up are way beyond my scope."

Magone says that another challenge his company and the rest of the industry is facing is finding reliable trades people and vessel crew.

Meanwhile, back in sunny Southern California, Richard Barta has built a niche for Long Beach-based Muldoon Marine Services.

"We do mostly ship repair and maintenance inspections," he said. "When we do emergency work it's with OPA90 partners. You have to have pollution insurance.

"It's the nature of the beast – when something happens, someone has to respond. Even with a small job like boat salvage, it can be a mess," he said.

Barta's strategy is to work as a member of a larger OPA90 responder team.

"Part of OPA90 is that ship operators of vessels over a certain size have to have an OPA90 responder," he said. 'We have worked with Marine Response Alliance – there are others, like Titan and Resolve.

"If something happens in LA or some other place like Ensenada, they call in small groups to help get the job done. We worked on the APL Panama."

Barta is referring to the hard grounding of the containership APL Panama in December of 2005 when it was attempting to enter the harbor at Ensenada, Mexico and missed the ship's channel.

"On big jobs, a large contractor steps in and brings in everyone who's got the right equipment and who can get there the fastest."

The salvage of the Costa Concordia by Crowley Maritime subsidiary Titan Salvage is the latest and greatest example of multi-contractor teamwork on a difficult salvage job.

Titan teamed up with Italian engineers Microperi – Titan brought its experience as a salvor and Microperi contributed their expertise at underwater construction and engineering.

The task of bringing the gigantic ship – which is twice the size of the Titanic – upright and off the rocks in one piece required the talents of 450 specialists from 19 countries working around the clock seven days a week. The project team included more than 100 specialized divers from more eight countries – who could only work 45 minutes at a time at the 150-foot depths before entering a hyperbaric chamber for decompression.

At the same time Titan and Microperi were taking care of the physical work, specialist representatives from Costa Crociere, Carnival Corporation, London Offshore Consultants and Standard P&I Club, with the collaboration of RINA and Fincantieri, worked behind the scenes to ensure that the project had the financial, legal and governmental support needed to move forward to a successful conclusion.

The final cost for the salvage of the Costa Concordia was approximately $400 million, according to Crowley.

Crowley's history in responding to maritime emergencies also goes back to the Exxon Valdez – Crowley Marine Services was the first on scene with high horsepower tugs positioned alongside the stricken tanker and these tugs were also used to assist Marine Pollution Control during the transfer of oil from the stricken tanker to lightering vessels.

That was the first step in a working partnership that eventually became today's Marine Response Alliance – Crowley's MRA partners include Marine Pollution Control, Titan Salvage, Marine Hazard Response and McAllister Towing.

Seattle-based Global Diving and Salvage may be closer to the new model for small and medium size salvors going forward.

The company's work mix consists of marine casualty response, marine construction and offshore support for the oil and gas industry. Global Diving has worked on projects from Alaska to Saudi Arabia.

Technology combined with top professionals and teamwork is the company's formula for confronting the challenges and minimizing the risks associated with marine emergency response and salvage operations.

"There have been a lot of technical changes in this industry," said Frank Immel, Global Diving's marketing director. " We use remotely operated vehicles (ROV) to do initial recons in salvage situations instead of risking a diver.

"We can put an ROV down to do a visual inspection and gather information that allows us to develop a salvage plan."

A major part of Global's salvage plan development involves the use of a software system that was developed for the design and evaluation of all types of ships and floating structures. The software addresses flotation, trim, stability and strength by calculating the forces involved using mathematical/geometrical models of the vessels.

"You could say we use the software in a reverse mode," said Immel. "Instead of using it to design a vessel, we input a shape for the hull line and other parameters – this enables weights and stability to be calculated to a greater degree of accuracy.

"This is really important when using a crane to do a vertical lift. You want to know where is the center of gravity, where do you connect for the pick, what's the weight of the vessel? The software makes the whole process more consistent and reliable," he said.

Global prefers to use cranes instead of lift bags when the water is deeper than 15 or 20 feet.

"A lift bag is great in shallow water," said Immel. "But you can't forget the laws of physics as you go deeper – you pressurize a lift bag at depth – as it rises the bag wants to go faster. It can get out of control – the bag comes up and then wants to go back down. With cranes you have more control, there is no volumetric expansion to deal with."

Immel says that Global's objective in every aspect of their operations is to minimize risk.

"Our first job is to minimize risk to keep people alive," Immel said. "We put people where they are not supposed to be."