Lessons from the US 'ghost ship' saga

The high-profile row over the shipment of 13 obsolete US military ships to a Teesside dismantling yard has left the contractor, Able UK, with spiralling legal and contractual headaches. At the centre of the dispute lies PCB contamination which Able claims amounts to no more than 35kg out of 120,000 tonnes of scrap. However, the Environment Agency faces embarrassing questions as to how it came to authorise shipments to a site which had yet to obtain the necessary permits. The case may offer a taste of things to come as governments face up to a legacy of hazardous substances in thousands of vessels world-wide.

The US Maritime Administration (MARAD) has 130 obsolete military vessels on its books awaiting salvage. Thanks to funding shortfalls, the inventory has been growing since the early 1990s - when the extent of PCB contamination in old ships became clearer and when the practice of overseas scrapping came to a halt.

Between the 1940s and 1970s, PCBs were used in a wide variety of marine applications, including cabling, seals and gaskets. MARAD's vessels each typically hold 30 tonnes of such PCB-contaminated material, often concealed behind fixed structures, although much of the PCB contents are in an extremely dilute form. PCBs in liquid form were also widely used in electrical and hydraulic equipment, but MARAD must remove these prior to exporting any vessels.

Another material shipbreakers find in abundance is asbestos. Indeed, the inventory of hazardous substances is much the same as might be found when decommissioning ageing industrial facilities such as power stations. The difference is that the structure in this case is mobile.

In 2001, MARAD was placed under a statutory deadline to dispose of its deteriorating vessels by 2006. So far this year, MARAD has awarded dismantling contracts worth $24 million to six firms, five of which are based in the US. The contracts deal with 25 vessels in total.

Able UK secured more than half the work. Its $14.8 million contract involves the dismantling of 13 ships, the first four of which arrived on Teesside in November. The other nine are to remain in Virginia for the winter pending a legal hearing to determine whether the US authorities acted legally in allowing the export of PCBs.

Go-ahead to export PCBs
The export of US vessels containing PCBs is in principle prohibited under the Toxic Substances Control Act. However, under statutory direction, the US Environmental Protection Agency issued MARAD with an "enforcement discretion" in May to consent the shipment to Able's yard. This followed a visit by US officials to the Teesside facility in February.

MARAD and the EPA had been directed to undertake an unprecedented pilot programme to "establish the feasibility and advisability of various alternatives" to the dismantling of vessels in the US. The Able contract represents the first fruit of this programme.

The enforcement discretion requires all electrical and hydraulic equipment containing PCBs to be removed from the ships prior to export. It also requires solid items containing PCBs above 50 parts per million to be removed - where "they are readily removable and their removal does not jeopardise the structural integrity of the ship."

The EPA documentation makes clear that solid materials such as gaskets thought to contain PCBs are to be consigned to landfill at Able's Seaton Meadows facility, which is a few hundred yards from the company's recycling yard. Cabling will be sent to a reclamation facility which will strip out the copper and return the debris to Able for landfill disposal.

Should any liquid PCBs be discovered during dismantling, they will be sent for high-temperature incineration in Ellesmere Port or Fawley. An Able spokesman said that any solid materials found to contain PCBs above trigger levels would also have to be incinerated.

Able estimates that the 13 ships hold a total of 701 tonnes of solid materials which might contain PCBs. But it projects that the total PCB content of these materials will be in the order of only 35kg.

The vessels are also believed to contain some 1,760 tonnes of asbestos-contaminated materials, 1,819 tonnes of oily water and 3,700 tonnes of oils. Some of the liquid wastes are to be handled by a nearby Shanks facility.

These figures are of course dwarfed by the 120,000 tonnes of scrap steel to be salvaged from the 13 ships.

Transfrontier shipment procedure
The US is not a party to the Basel Convention on international waste shipments. But, in combination with OECD rules, the 1993 EU Regulation on transfrontier waste shipments imposes a ban on imports of waste for disposal in Europe and places Basel-style controls on imports for recovery. Ship dismantling counts as a recovery operation.

There is nothing novel about wastes crossing the Atlantic for recycling operations. However, before the House of Commons Environment Committee on 20 November, the Environment Agency's director of operations, David Jordan, said that the Able UK case was "very unusual". It was the first time that the rules had been applied to a whole ship, as opposed to wastes carried as cargo on a ship.

"It is I believe testing international law," Mr Jordan said. "Getting a better grip of some of the international dimensions is essential."

The Agency first heard about Able's plans to import ships in February. Formal engagement followed on 26 June when MARAD submitted an application for transfrontier shipment authorisation covering the 13 vessels.

Under the EU Regulation, the Agency is allowed 30 days to process such applications. Failure to meet this deadline is treated as deemed consent. The Agency issued its authorisation to MARAD on 22 July.

The Health and Safety Executive was also called upon to grant authorisation for the importation of asbestos-bearing materials, overturning the usual ban.

Beyond asbestos, however, there is presently no power to block the importation of wastes contaminated with hazardous substances when the shipment is destined for recovery. This looks set to change under proposals to revise the EU Regulation on waste shipments issued by the European Commission in July (ENDS Report 342, p 59 ).

Among the proposed changes is that shipments contaminated with persistent organic chemicals, including PCBs, are to be reclassified as shipments for "disposal" - in effect prohibiting imports from a country like the US which has its own disposal facilities. It will, however, be left to a technical committee to agree on the thresholds above which waste would be deemed to be "contaminated" with PCBs. It is not clear what the impact will be on old ships.

"Common sense" regulator
At the Commons hearing, MPs quizzed the Agency as to why it authorised the shipment in July, despite uncertainties around various permits. Able's waste management licence required modifications before the yard could accept the ships. Meanwhile, Hartlepool Borough Council advised Able that its planning consent for a dry dock may no longer be extant - and that it should submit a fresh application.

Agency chairman Sir John Harman told MPs: "It would have been unreasonable to refuse consent, on the basis of evidence [then] available. I think we took a wider view of our responsibilities rather than just sitting on the regulatory niceties."

"Do you want a regulator to take a common sense view or to take a conservative view?" Sir John asked. Each regulatory body might refuse permission until everything else is set up, he argued. He added that waiting for the company to get the dry dock physically in place would have been "too rigid a test".

Environment Minister Elliot Morley told the Committee that the Agency was "trying to be helpful to the company".

The Agency had no reason to believe the consents would not be in place when the ships arrived, Mr Morley said. "Now as it turns out they are not but of course we are in a hindsight situation there."

MPs also questioned the Agency and the Minister on whether the US authorities had been alerted to the fact that the necessary consents were not in place when the ships set sail in early October.

Mr Morley quoted from a letter to MARAD from the Agency: "You will be aware of your contractual obligation to take the waste back if the shipment is not completed as planned. In the light of these developments, and the absence of an appraisal of alternative approaches you may wish to consider the timing of the departure of the vessels to the UK."

The Minister suggested that the letter may have been too politely worded. "I think part of [the problem] is two countries divided by a common language." The Americans had not appreciated that the Agency was advising against sending the vessels.

The Government's position is that the US authorities will have to take the ships back, in line with a financial guarantee, in the event that they cannot be legally dismantled in the UK.

Able's dry dock plans
Able and its sister companies have wide experience with structures contaminated with asbestos, oils and PCBs through their work in the dismantling of facilities ranging from power stations to offshore oil structures.

The company also has one of the biggest docks in Europe. The 10-acre dock at Seaton was used for shipbuilding until the 1960s. And it has a hazardous waste "monofill" landfill with seven million tonnes capacity.

In 1997, Able obtained planning consent to construct a cofferdam and gates to resume dry dock activities at the site. At the time, Able was hoping to secure the contract for dismantling the Brent Spar oil storage buoy.

Able proposes to bring all 13 US vessels into its dock before completing the works on the cofferdam. The proposed works will cost some £14.6 million and create 200 jobs.

However, the cofferdam is not yet in place - and Hartlepool Council argues that, because of the five-year time lapse, the planning consent is no longer extant. Able's position is that, because some preparatory works have indeed been undertaken, the consent remains in force. The matter will probably have to be resolved in court.

An alternative avenue hit a dead-end in September. Able had sought to overcome the uncertainties surrounding the 1997 planning consent by applying for a new one - only to be advised by the council in September that the development would fall under the revised EU Directive on environmental impact assessment. Alarmed at the implications, Able promptly withdrew the application, and fell back on its position that the existing consent was in any case extant.

Lawyers acting for community interests have brought a judicial review against the council on a separate planning matter. They argue that existing planning consents allowing the dismantling of marine structures do not allow Able to dismantle ships at the yard.

Able argues that it had an understanding with the then planning authority - Teesside Development Corporation - that its proposals included the option of ship dismantling. However, crucial documents were lost when TDC was wound up. The judicial review will be heard on 15 December.

In the meantime, Able is arguing that it would be possible to dismantle the vessels in its wet dock, even though the existing MARAD contract specifies use of a dry dock. At the Commons hearing in November, Sir John Harman said that the Agency would not consent to a wet dock.

Waste licence bungle
Able's waste management licence places a limit of 24,500 tonnes per annum on the amount of material to be received - nowhere near enough to cover the MARAD contract. The company applied for a licence amendment, granted on 30 September, to increase the annual limit to 200,000 tonnes.

The amendment also clarifies that ships and vessels can be accepted at the facility, whereas the original licence specified offshore structures.

Friends of the Earth reacted speedily to the licence amendment by declaring it unlawful, and seeking a judicial review - now due to be heard on 8 December.

In early October, however, the Agency reacted to FoE's statement by declaring itself "absolutely satisfied that we have complied with all the necessary legislation." Its press notice went on: "We are an experienced and competent regulator which has an excellent record of balancing the needs of industry and the sensitive environment on Teesside."

Within three weeks, however, the Agency was forced into an ignominious retreat - when it announced that the licence amendment was invalid.

The Agency has yet to spell out precisely the grounds for this decision, but it appears the nature and degree of assessment required under the EU habitats Directive is at issue. Teesside and the Cleveland Coast is a special protection area.

Two critical factors come in to play. One is that the dismantling of ships may pose wider potential impacts than the dismantling of offshore structures allowed in the original licence. The other is that the Agency's assessment issued in September only considered the potential impacts from dry dock operation whereas the licence amendment would also have permitted wet dock working.

Another twist is that the Agency is arguing that it was inappropriate to modify the tonnage limit stated on the face of the licence - since section 37 of the Environmental Protection Act 1990 allows only for the modifying of conditions attached to the licence.

The Agency is therefore arguing that Able must apply for a completely new licence rather than relying on modifications to its existing one.

However, in evidence to the Commons inquiry, Able said that it was normal practice on Teesside for licences to be written with tonnage limits on the face of the licence - and for these to be subject to amendment as required. The Agency's arguments were "in total contradiction of [its] current practice," the company said.

Media storm
Able says that it had not expected the furore that has surrounded the contract - which it argues is no different from the dismantling of offshore oil installations, which it undertakes without public complaint. "Problems appear to have arisen when Friends of the Earth started to question the decision-making process of Hartlepool Borough Council and threatened a judicial review."

Among the highest-profile figures to argue that the ships should be sent back was EU Environment Commissioner Margot Wallström. She said it was too risky to transport the ageing ships across the Atlantic.

The Commissioner's comments came some weeks prior to any hint of opposition from the Government. Eventually, once it was clear that Able lacked an appropriate waste management licence, Environment Secretary Margaret Beckett said that it would be "preferable" for the ships to return to the US while regulatory issues are resolved. But all four vessels that had set sail have now been accepted in the UK.

Hartlepool MP Peter Mandelson has emerged as a vocal supporter of the beleaguered company. He told the Commons inquiry that he would not support the operation if he felt it posed risks to his constituents or the environment.

"I do not believe that dirty jobs are bad jobs for Teesside or anywhere else in the country," Mr Mandelson said. "It is politics in many cases rather than environmental fact that have now moved centre stage on this issue."

Mr Mandelson also launched a withering attack on FoE for having "powerfully discredited" the vessels as a "toxic fleet". He accused FoE of scare-mongering, and "using statements that lacked any sense of perspective or scale."

FoE director Tony Juniper has written to Mr Mandelson to complain that his comments were defamatory.

Whatever the outcome of the ongoing disputes, the episode has helped draw attention to a set of problems in tackling obsolete vessels that are not going to go away. Mr Morley was at pains to point out to the Commons Committee that the decaying US military fleet was just one part of a much bigger picture. Around 2,000 single-hull oil tankers world-wide will have to be dismantled over the next 12 years, he pointed out. "It has potential to create a lot of jobs."

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