Rural Alaska

Feds pay $2 million disposing of derelict fishing vessel in Unalaska

The final bills are in, and the federal government spent nearly $2 million taking care of the abandoned derelict salmon processing vessel Akutan for five months in Captains Bay in Unalaska/Dutch Harbor. According to U.S. Coast Guard Lt. Brian Dykens in Juneau, the exact amount was $1,939,460 from two sources, the Oil Spill Liability Trust Fund, and the Superfund.

The Coast Guard scuttled the Akutan in late January, sinking the 166-foot ship in the Bering Sea 25 nautical miles north-northwest of Dutch Harbor. It arrived in August, escorted by the Coast Guard cutter Midgett, following a disastrous Bristol Bay salmon experience.

While in Unalaska, the 74-year-old vessel's fuel was removed by Resolve Magone Marine Services, which spent about half the federal funds, with the rest covering the expenses of federal agencies including Coast Guard teams from Anchorage and San Francisco, the U.S. Environmental Protection Agency, and paying a private environmental management firm, according to Todd Duke, Alaska operations manager in Anchorage for the Florida-based company. He hopes pending legislation will force vessel owners to accept responsibility.

The vessel was intended to provide an alternative market for a group of 15 Bristol Bay salmon gillnet boat fishermen last summer, Russian Old Believers from the Homer area. They formed their own company, Bristol Bay Seafoods LLC, and hired Akutan owner Larry Lang's company, Klawock Oceanside, to process and freeze their fish. But plans soon went awry. Mechanical failures plagued the boat. The Akutan didn't arrive in Nushagak Bay from Seattle until the salmon run was nearly over. The crew went unpaid, although the mortgage holder, a subsidiary of the Arctic Slope Regional Corporation, bought them tickets home and gave them $500 each as they passed through Anchorage.

Duke said that the Akutan had high hopes for a good salmon season, but then there were errors and problems. "The whole financial plan went to hell in a handbasket," he said.

So why did the vessel leave Nushagak Bay in August? The water is very muddy there during tidal changes, and at low water the anchored vessel's cooling systems would draw in silty seawater that could cause equipment to malfunction, Duke said.

In hopes of saving the frozen salmon for sale so the crew could get paid, Duke said the vessel's captain said Dutch Harbor seemed the nearest logical choice, free of muddy water threatening the refrigeration system.

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While the salmon's fishermen owners hoped their fish was still marketable, it was doomed by the smell of diesel fuel, declared unfit for human consumption, loaded into three shipping containers, and barged about a thousand miles to Anchorage for disposal.

According to Brehan Kohl of the Alaska Department of Environmental Conservation, "about 78.84 tons of fish was disposed of at the Anchorage Landfill on Oct. 11, 2017 due to diesel odor. We were informed that Bristol Bay Seafoods submitted samples for sensory analysis which revealed the diesel odor."

Resolve's crew found diesel contamination inside the vessel, in fuel-saturated styrofoam insulation. "It was a mess," Duke said. "It's a tough situation people find themselves in sometimes," he added.

While the local landfill was just a few miles away, it couldn't take the Akutan's salmon, because state environmental rules prohibited the disposal of diesel-contaminated material, according to Tom Cohenour, director of the Unalaska Department of Public Works.

While anchored offshore in Unalaska, local officials feared it might break loose and sail wildly around the bay, hitting boats and structures and people and even the bridge linking the community's two-island road system. At one point it dragged anchor and nearly grounded before another anchor was added to keep it in place. While the simple solution to preventing drifting is tying a vessel to a dock, Cox said no local organizations with docks would accept it.

Local officials and Resolve were both pleased with the deep-sixing of a problem that could have dragged on for years.

"It was a long drawn-out process that had a very positive ending," said Duke. "If it hadn't been for the DNR lawyers, the Akutan would still be sitting there," he said, praising the state Department of Natural Resources for navigating complex legal issues.

Duke said he supports efforts now underway in the state legislature to change the law on derelict vessels, to prevent a similar situation where he said underfunded vessel owners can take advantage of bankruptcy laws to avoid responsibility for vessels that are often underinsured. Senate Bill 92 proposes the major changes, with the support of the Unalaska City Council and the Alaska Municipal League.
The city's legislative priorities call for updating state statutes "regarding derelict vessels, which lack the ability to track vessel owners, agency enforcement authority, statewide coordination of response, funding and vessel insurance requirements."

"You've got exactly the same potential as the Akutan," unless the law is changed, Duke said. Resolve's costs included $100,000 for removing ammonia refrigerant, and $3.50 per gallon for treating thousands of gallons of fuel and oily water in Seattle.

USCG District Commander Michael McAllister in January declared an emergency allowing the scuttling to proceed, according to Dykens.

Since the Akutan was anchored in shallow water, a vessel owned by Resolve Magone Marine Service, the Makushin Bay towed it to the Coast Guard cutter Alex Haley, waiting in deeper water.

Unalaska city officials had asked the Coast Guard to sink the Akutan, with the help of city funds, in water at least 600 feet deep. The money was approved at the Jan. 8 city council meeting despite some grumbling.

While the council didn't like the idea of spending any local funds, member Shari Coleman said it was a "pittance" to pay for the removal of a hazard to navigation and the environment. Another council member, Roger Rowland, said the state should pay everything.

The city ended up paying $36,000, which covered nearly all the costs of scuttling, except for about $200 which the state won't bother to ask for, DNR Regional Manager Clark Cox said.

Without the emergency declaration, the cost of decontaminating the Akutan to normal standards could have cost over $200,000, according to the city. Duke said it could have cost way more, as much as $4 million, "to the point you can eat off it," including triple-flushing fuel lines, generating three times as much oily water requiring treatment.

While 8,000 gallons of fuel was removed by contractor Resolve Magone Marine Service, Unalaska Port Director Peggy McLaughlin said residual oil likely remained and Mayor Frank Kelty said undiscovered environmental hazards could still remain within the Aku-tan's funky old hulk. The state Department of Natural Resources asserted authority over the wreck in December, and set a minimum price for the vessel of $300,000, plus a $1 million bond, she said. The reason that serious money and not a token payment is required, she said, is that the $1 purchase prices have resulted in derelicts towed from port to port, causing the same problems but it in different locations.

Cox said no formal offers were made, though the department did receive inquiries from two "tire kickers," lacking the required re-sources for buying the Akutan.

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In a Jan. 8 notice setting minimum bid requirements, DNR said a new owner could assume the financial liabilities of the bankrupt vessel. Those include unpaid crew wages of between $144,000 and $148,000; the unpaid wages of the navigational crew and cook of $65,000 to $80,000; and a mortgage of $1.7 million held by Alaska Growth Capital Bidco.

The Akutan was built in 1944 by Sturgeon Bay Shipbuilding, according to DNR.

Jim Paulin can be reached at jpaulin@reportalaska.com.

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