ustxtxb_obs_1992_08_21_50_00008-00000_000.pdf

Hollywood Marine opposed the double-hull measure since 80 percent of its fleet was single-hulled in 1979, according to Coast Guard records. Of the 32 barges owned by Hollywood at that time, only five were double-hulled. While Hollywood recently claimed that 30 percent of its current fleet is single-hulled, that means up to 70 of Hollywood’s current fleet of 230 barges could have been affected by the Coast Guard proposal. Since a double hull requirement could have forced early replacement of some of the 70 single-hulled vessels, Hollywood could have been forced to spend millions on new tank barge construction. Shipbuilders say that a new tank barge costs anywhere from $500,000 to $1.5 million. While double hulls are expensive, barge oil spills also carry a steep environmental price. Oil spills from barges are often overlooked by the public since they do not generate dramatic images like the Exxon Valdez disaster. But as a 1990 Department of Transportation staff memo pointed out, “In seven of the last 10 years, barges spilled a greater volume of oil than did tankers.” According to Coast Guard reports, barges spill anywhere from 2 million to 3.7 million gallons of oil each year. The data show that barges typically spill about half a million gallons more annually than tankers except in years where there is a major disaster like the Exxon Valdez. The reason? Barges are involved in more accidents because they operate in crowded, shallow and narrow inland waterways. Furthermore, the Coast Guard has said, barge oil spills cause more environmental damage because they occur in waters that are “ecologically very sensitive to oil pollution.” A Regulatory Reform? Despite the potential environmental benefits, the Bush task force convinced the Coast Guard to withdraw the double-hull proposal in 1982. Founded and chaired by Bush during his Vice Presidency, the former Task Force on Regulatory Relief was an informal cabinet group designed to eliminate government regulation of business. The Bush task force was the predecessor for Vice President Dan Quayle’s Council on Competitiveness. Quayle’s council is currently under congressional attack for its relentlessly pro-business activities. As Task Force Chairman, Bush announced to the press in August, 1981 that he was reviewing the double hull proposal as well as 29 other regulatory matters. According to Oil & Gas Journal, Bush described these regulatory proposals as “too burdensome” for industry. Seven months after Bush targeted the double-hull proposal, the Coast Guard withdrew the measure in March 1982. Under a section entitled “Reforms Completed,” an August 1982 Bush task force report claims credit for the Coast Guard’s change of heart on the issue. In its withdrawal notice, the Coast Guard cites that concluded that double hulls are not a cost effective deterrent to oil spills. In fact, in written responses to this inquiry, Hollywood Marine touts the NAS study. However, Hollywood’s remarks do not disclose that the NAS study was prepared by the “Committee on Reducing Tank Barge Pollution.” This nine-member committee included of Hollywood Marine President Berdon Lawrence and other industry representatives. No major environmental organizations were appointed to the committee. While the NAS study pointed out that a double hull requirement could bankrupt some barge companies, it also acknowledged that double hulls would reduce oil pollution though not nearly as much as the Coast Guard claimed. The Coast Guard said the measure would reduce oil pollution by 80 percent, while the NAS study compiled in part by Hollywood Marine contends the reduction would be only 35 percent. Besides participating in the NAS study committee, Hollywood Marine led the barge industry’s charge against the double hull proposal. During a 1980 workshop on the controversy, Hollywood’s Lawrence presented the industry’s position on double hulls. At that time, Lawrence was head of the Tank Barge Conference of the American Waterways Operators, the barge industry’s trade association. At the workshop, Lawrence said, “It’s easy to say that any oil spillage is bad. No matter how many hulls we use and how many, other measures we institute, we will have some pollution.” Lawrence also suggested that the environmental hazards of oil spills might be exaggerated. “Spillage of oil by barges or other sources has not been proved, despite research, to cause imbalances in aquatic systems.” Lawrence said. A Sierra Club spokesman disagrees: “There is lots of research that shows oil spills do cause harm to ecosystems, and it is totally absurd to say that it doesn’t.” Nevertheless, Bush’s task force apparently agreed with Hollywood Marine’s point of view, though some of its arguments against double hulls do not hold up to scrutiny. The August 1982 task force report claimed that the double hull requirement would be “more restrictive than foreign construction standards, placing U.S. shipyards at a competitive disadvantage.” However, many shipbuilders favored the double-hull requirement, since it would generate new construction business. Another reason the Bush task force opposed double hulls, according to trade press reports, was the “dubious safety value” of the measure. As Platt’s Oilgram News reported, “the White House noted that double hulls could increase the danger of explosion through oil seepage.” However, congressional studies indicate that there have been no explosions in double-hulled tankers. Furthermore, double hulls on barges have become commonplace. When the Bush task force compelled the Coast Guard to withdraw the double hull proposal, the agency said it “continues to believe that the frequency of accidental oil spills is too high.” The Coast Guard’s withdrawal notice added that industry had offered no alternatives “that would approach the same degree of pollution preventative effectiveness expected for double hulls.” Financial Impact? While the Coast Guard double hull proposal might not have directly affected Bush’s Hollywood investment, it could have enhanced Baker and Mosbacher’s larger stakes in the company. It is difficult to predict the exact impact the Coast Guard proposal would have had on Baker and Mosbacher’s investments, but based on available data, some educated assumptions can be made. If implemented, the double-hull requirement would have phased-out all single-hulled vessels 20 years or older beginning in 1985. The Coast Guard said it focused on 20-year-old vessels becoming involved in a pollution incident is significantly greater than that of newer vessels.” This apparently was the case with .the Hollywood barge which spilled 7,000 gallons of oil on Memorial Day in New Orleans. Records show the barge was built in 1969 and would have been replaced three years ago when it reached 20 years of age in 1989 if the Coast Guard proposals hadn’t been beaten back. However, because of high replacement costs, the incentive to continue to operate older barges is great for barge companies like Hollywood. The costs of replacing old barges could have had a great impact on Bush, Baker and Mosbacher’s Hollywood investments. For instance, all three are investors in Hollywood LPG No. 2, a limited partnership which owns four barges. While LPG is a natural gas product which would not have be affected by the double-hull proposal, LPG barges in some cases do carry oil products, according to Coast Guard officials. If this is the case with Hollywood LPG No. 2, the double-hull proposal could have been costly for the President and his partners. Two of the Hollywood LPG No. 2 barges were built in 1960. Assuming they were oil-carrying vessels, the barges might have been phased out in 1985 under the Coast Guard proposal. According to government records, the barges were still in service four years later, as of 1989. [The other two barges owned by Hollywood LPG No. 2 were built in 1978, and therefore could have avoided restrictions until 1998.] Contrary to Hollywood Marine’s claims that all of the partnership’s four barges are doublehulled, none contain double bottoms, according to Coast Guard records. In order for a vessel to be double-hulled, according to Coast Guard guidelines, it must have both double sides and double bottoms. Two of barges have double sides, while two vessels do not. Meanwhile, Baker and Mosbacher are both part owners in an additional 25 Hollywood vessels, and all of those barges were built between 1978 and 1981. Thus, the Coast Guard’s proposed impact on those vessels would not have been felt for at least six years, when those barges begin to reach 20 years of age. However, it appears that at least some of Mosbacher’s investments in an additional 20 Hollywood barges could have been immediately affected by the proposal. From 1985 to 1988, 13 of Mosbacher’s barges would have reached 20 years of age. If any of one those ves 8 AUGUST 21, 1992