A retired Navy hospital ship, abandoned by its previous owner and ostensibly bound for Greece under a new buyer, must remain in Baltimore's harbor after the Environmental Protection Agency obtained a warrant this week to search it for toxic chemicals and secured an injunction barring it from being exported.
The multiweek delay will cost new owner Potomac Navigation Inc. hundreds of thousands of dollars, according to documents filed in U.S. District Court in Baltimore. The company bought the vessel Sanctuary for $50,000 through a court-ordered auction in August.
It also brings the ship back into the government's purview.
The Sanctuary, now docked at a Locust Point pier, is one of dozens of old ships that has caused headaches for the U.S. Maritime Administration. Congress has charged the agency with disposing of obsolete and deteriorating vessels that threaten the waterways in which they're stored, including Virginia's James River.
Yesterday, the federal agency awarded a Virginia company a contract worth nearly $800,000 to dismantle two other 1940s-era ships. Those vessels, the Sphinx and the Hoist, were abandoned at the Sparrows Point Shipyard this year when a local business charged with scrapping them, North American Ship Recycling, disappeared after being ordered to pay a contractor the $750,000 it was owed.
130 to be disposed
More than 130 old ships from the National Defense Reserve Fleet, established in 1946, are still awaiting disposal, according to the Maritime Administration, which was supposed to have removed the ships by September 2006. Many of them are rife with hazardous materials, including asbestos and polychlorinated biphenyls (PCBs).
Maritime Administration removed more than 70 ships from the reserve fleet between 2001 and 2006. The agency said the process is complicated by inconsistent federal and state laws regulating ship scrapping and the handling of hazardous materials, and there are few companies authorized to do the work.
"We told [Congress] we would not be able to meet that deadline for a variety of reasons, the largest reason being the lack of capacity to be able to dispose of the vessels," said Shannon Russell, a spokesman for the Maritime Administration.
If PCB levels are low, breaking up a ship and selling its metal can be profitable. But ships full of PCBs, once mixed with equipment materials to make them fireproof, are costly to break up.
Texas shipbreaker International Shipbreaking Ltd. decided the Sanctuary wasn't worth the effort given the chemical concerns.
The company considered bidding on the ship at auction and sent a representative to Maryland to take paint samples. Lab results showed that the Sanctuary had very high concentrations of PCBs, leading International Shipbreaking "not to bid on the vessel," according to a deposition by company executive Kevin J. McCabe filed last week in the District Court.
Potomac Navigation has a report that shows low levels of PCBs on the ship, however.
Still, the possibility of high PCB levels has raised concerns among environmental groups who fear the ship will be towed abroad and illegally broken down without remediation. Such a move could harm the environment. It also could yield a profit of nearly $3 million.
Those worries led the EPA to intervene and seek a warrant through the District Court to board the ship in Baltimore and test it for PCBs, which are illegal to export under certain circumstances governed by the Toxic Substances Control Act. The warrant, and an injunction, were granted this week. Testing began Wednesday and is expected to continue through today.
If PCBs are found in certain concentrations, Potomac Navigation may have to remediate the ship in the United States or the EPA would have to issue an export exemption for the ship to be taken abroad.
Representatives of Potomac, which is registered in Delaware and run by a U.S. citizen living in Greece, have repeatedly said they want to keep the ship intact. They planned to tow it to Greece and give it a new life as a hotel platform or storage facility, even though that could cost millions.
The company had planned to tow the Sanctuary from Baltimore by next week, at a cost of $1.1 million, "a substantial portion of which has already been paid," according to a deposition by the company's main shareholder, Nicholas Couchell.
Canceling the tow "will result in substantial charges to Potomac - an additional $300,000 above and beyond the monies already paid," Couchell's deposition said.
"Clearly we had hopes it would have gone in a different direction," said Lawrence Kahn, Potomac's New York attorney. He added that Potomac is waiting for the EPA's results before assessing its options.
The Maritime Administration was in control of the Sanctuary until 1989, when it sold the former hospital ship for $10 to a Baltimore humanitarian group that wanted to turn it into a floating rehabilitation center.
After the group's founder died, a successor organization took control of the vessel and eventually abandoned it. In March, the Sanctuary broke free of its moorings, leading the U.S. Coast Guard to label the ship "an unacceptable risk to the port of Baltimore."
The Maryland Port Administration asked the Maritime Administration to reclaim the ship, but the agency refused. So the port filed a complaint in District Court trying to find a home for the Sanctuary, which a judge ultimately ordered to be sold at auction and removed by early December.
But the EPA intervention ensures the ship will remain in Maryland through the middle of next month and possibly into next year.