Thursday, June 27, 2013


Updated 2/5/2015
Editor's note : We published the story that Namazu is commenting on in the winter of 2011-12 right after the trial that is described . Then Namazu found it last November and wanted to reprint it with his own commentary. He feels very strongly that the marine safety equipment should reflect "best available technology". We feel very strongly that one does not argue with a 3,000 year old giant catfish demigod whose nick name is "The Earth Shaker", so we reprinted it. Another winter is behind us and still there is no change in Coast Guard safety and survival equipment approval processes. Namazu has been monitoring the story and is most disappointed in the lack of progress. So he has asked for space to comment again. So what do you say to a giant catfish former demigod the size of Japan?  "Sure big guy take all the space you need." He did. Below are his thoughts.

NAMAZU THE EARTH SHAKER, Former Japanese Religious Icon and Now Coastal Environmental Analyst and Commentator


 I came across this previously published post while doing some research on another subject. When you live at the bottom of the sea as I do, you like to know that those two legged creatures moving about on the surface in their flimsy little ships will stay up there and not come drifting down to your home for an uninvited visit. Its especially unnerving when you get multiple dead bipeds as in the loss of entire crews. I mean think about it, how would you like your home littered with the corpses from a nearby bus crash?  Trust me it isn't pleasant. I've been following the developments described below for over a year now. I'm sorry to report that the Coast Guard has made no progress toward a reasonable process of approval of best available technology safety and survival equipment.

  A close second for a gross out experience at sea is a major oil spill, and it's always the bipeds who are responsible.  Now we 3,000 year old giant catfish demigods are usually a pretty conservative lot. It's a function of longevity. We like to stick with the tried and true. But when it comes to saving the marine environment and saving human lives sometimes you got to go with "best available technology". We, and by we, I mean all of us ocean dwellers and users, finny and biped alike have to use not just tried and true technologies, but the best available technologies. If you spill it you have to clean it up, you have to clean it up fast, and you have to do no additional harm in the process.

  As the story below indicates the trial of issues between the developer of the best available oil spill recovery equipment and some of his investors is over, and Hollywood Icon Kevin Costner scored one for best available technology. But we are sorry to report that the Coast Guard approval process drags on. There is no assurance that the technology will bear the Good Coast Guarding Seal of Approval by the next time it is needed. I asked that the story be republished now because I am going to follow up on this issue and I don't want any readers left behind. 

 I also identify with the protagonist in this story who is a Hollywood Icon trying to make a major contribution outside of his own professional field. As a former Japanese religious icon trying to make it in journalism I know how frustrating it can be.  So please read on......

Merchant Marine and Marine Environmental Safety:

The Coast Guard Safety Equipment Approval Process; Why Can't the Coast Guard Deal With "Best Available Technology"

 The Kevin Costner and Stephen Baldwin Law Suit is back from a New Orleans Jury. The Lessons for the Maritime Industry are Deeper than the Headlines

 Famed Hollywood actor Kevin Costner invested millions of dollars earned in the film industry in a little known corner of the maritime industry. He helped develop oil spill clean up technology  which offered the opportunity to actually recover and reuse oil lost at sea. The technology, we can assure you, works and it works better than the usual equipment deployed in the wake of major oil spills.

  For investors looking for something truly "green" to invest in, the Costner and friends company "Ocean Therapy Solutions" looked like a winner. Other possibly green minded Hollywood personalities also invested , among them actor Stephen Baldwin and his business associate Spyridon Contogouvis. 

 At one point Costner possibly lost as much as $20 million on his earliest attempts to develop and market the product. His major problem as we see it, was that he had a non Coast Guard approved product in what was basically a compliance market. While he had the best available technology the Coast Guard routinely operates its equipment approval processes on the basis of compliance with recognized codes and standards. 

 The Coast Guard seems to struggle and consume an inordinate amount of time and make incredible demands on those approaching it with major improvements in technologies seeking the all important "Coast Guard approved label. Oil spill clean up devices are just one example we are familiar with. The Navy and the Coast Guard itself buy "throw-able devices" for the rescue of crew and passengers lost overboard that are not Cost Guard approved simply because they know these products are superior, best available technology. Meanwhile commercial vessel owners continue to invest in the old style "ring buoys" because they are Coast Guard approved and they are obligated to have the prescribed number of these devices aboard. Such owners are loath to then go out and buy the "best available technology" just to have it. Safety equipment doesn't generate direct revenue for anyone but the sellers of safety equipment. So an antiquated approval process unable to deal efficiently with approval applications based on "best available technology" works to keep major improvements off the basically compliance based market.

 In the case of "Ocean Therapy Solutions" the 2010 British Petroleum Oil Spill in the Gulf of Mexico first pushed up the urgency of getting Coast Guard approval, then the desperation of British Petroleum led to a major purchase of the "best available technology" regardless of the status of the Coast Guard approval.

 Caught up in the uncertainty were Costner, Baldwin and Spyridon.
Costner apparently was willing to risk all. Baldwin and Spyridon sold out just before British Petroleum did the unthinkable and made a firm commitment to buy regardless of Coast Guard approvals. Baldwin and Spyridon sold their stock in Ocean Therapy Solutions for approximately $1.5 million. In doing so they missed out on a potential windfall that they estimated to be in excess of $17 million. Baldwin and Spyridon sued Costner.

 We can now report that the New Orleans jury found for Costner who maintained throughout the trial that he did not withhold any information from stockholders and that Baldwin and Spyridon were aware of the "tentative" commitment of British Petroleum to buy the technology. The sale of their stock, according to New Orleans press accounts, took place before the final actual signing of a contract for sale.

 Our purpose isn't to applaud or second guess the jury. We simply wish to point out that the root source of the struggle of Ocean Therapy Solutions began with an antiquated, inefficient and unresponsive Coast Guard safety equipment approval process and that this process keeps important lifesaving technological improvements off the market. In the Ocean Therapy Solutions case we don't know how many other stockholders like Baldwin and Spyridon became disillusioned and began to despair that their investment would ever make a profit. But we are dead certain that a maritime industry outsider or group of outsiders would be surprised by the inability and reluctance of the Coast Guard to approve best available technology. If the oil recovery equipment in question had obtained approval in a reasonable time the company would have followed a more normal growth pattern. It may have prospered or it might have even been knocked right out of the market by even better innovations. But the nearly impossible approval process bred investor frustration and deterred any better technology that might be out there. 

 Ours is a very complex and enclosed area of economic endeavor with lots of quirks, not always visible to even the most astute business man from outside this industry. Consider the barge surplus that began to manifest itself in the inland towing industry in the 1980s. The surplus was driven in large measure by medical doctors and other non maritime investors looking for a better return on their investments than what the stock market was producing at the relevant time. These outsiders invested heavily in new barges and at first prospered. Unfortunately, none of their investment counselors and brokers knew when to tell them to stop. Seemingly without warning, the barge market became flooded and cargo rates went down and resale value of even new barges plummeted for a while. Everybody lost. experienced barge lines lost revenues for a while, though their fleets were upgraded, some lost so much that there was some consolidation among the operators. As a result, a smaller number of barge companies operate today than before the doctors started to invest. Most of the doctors and other outside investors lost the lion's share of value in their investments.

 Costner, Baldwin  and Spyridon take away from the lawsuit an appreciation of how bitter things can become when investors who originally come aboard an enterprise for the long haul lose confidence. Those of us who are professionals in the maritime sector should take a few lessons away as well. First the primary regulator of our business, the U.S. Coast Guard needs attention across a broad spectrum of issues related to the regulation of our activities not just the equipment approval process. Second it is highly unlikely that the needed reform will come from either our hopelessly gridlocked Congress or some other logical outside source like the Department of Homeland Security's (DHS) Inspector General's Office. According to the National Mariner's association in the last four years the DHS Inspector General's Office of Audits has systematically eliminated or reassigned every real maritime expert they ever had and now appears incapable of performing any type of compliance or performance audit of Coast Guard activities. Of course, if one asks the DHS Inspector General about it you will be told that that they have "experts".  But check with the National Mariner's Association which tracks the operations of the office and you will learn that only one licensed merchant marine officer with a technical degree in maritime operations is still employed and he was removed from his lead position in the Coast Guard audit and reassigned non maritime duties. The "experts" the Inspector General speaks of are simply accounting trained general auditors that the Assistant Inspector General in Charge of Audits self designates "experts". They have no third party certification as such, and no occupational licenses related to marine operations, you would be hard pressed to even find a Navy or Coast Guard veteran in the group. Certainly no one in the maritime industry would recognize any of the DHS Inspector General's Coast Guard audit team members as a "maritime expert".The regulatory environment in our industry is a mess, but not the only mess affecting the investment outlook.

 At the time of the barge oversupply fiasco the WORKBOAT Magazine "Workboat Index" of related common stocks either wasn't being published or wasn't as well known as today. This first of its kind stock index is so far one of far too few investor's tools for learning about maritime sector investment opportunities. We never seemed to have evolved real investment counselors who know our industries. We "salty dogs" are not the only sources of innovation or investment in our industries. Sometimes great innovations come from unexpected , even inexperienced sources. We are by nature conservative, for ours is a dangerous calling and caution is a virtue. Innovations must be tested. But we must find a way to more efficiently test for best available technologies and better ways to guide new investors through the minefields of the group of businesses that admiralty law refers to as "marine adventure". The as yet unfinished experience of Ocean Therapy Solutions is far too common, and far too discouraging to the new comers to our "adventure". 

 As far as we know at the moment the oil recovery units still have not received final Coast Guard approval. If that is correct than the compliance market is still closed to this improved and proven technology and it will take another massive  environmental disaster to generate any more significant sales. Those of us who have been gainfully employed and invested in the maritime sector need to start examining our industry and demanding better service by the government regulators. We also need to encourage anything that generates more confidence in outside investment. We can not afford many more sad tales like the saga of Ocean Therapy Solutions. Hollywood wasn't a direction from which we were expecting investment cash and technological innovation but we sure prefer these American's to China as a source of capital and ideas. Who knows where the next great maritime idea will come from? What can we do as an industrial community to make the risks more transparent, make the predictions of reward more accurate, and the regulatory way more smooth? What is the price of continued inaction?   

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