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By Scott Harper, The Virginian-Pilot

VIRGINIA, 7 April 2002 --The nightmare goes like this:

Two rusty cargo ships anchored side-by-side in the James River Reserve Fleet rip open in a major storm. More than 282,000 gallons of heavy oil, as dark and thick as molasses, pour into the James.

Within 48 hours, a black blanket of petroleum washes north onto Jamestown Island, a national landmark. Across the river, the sticky oil laps against an intake pipe that draws cooling water for the Surry nuclear power plant.

The spill also rolls south to the tip of Newport News and Portsmouth. Along the way, it soils sandy beaches, state wildlife sanctuaries, a historical park, prime bird and duck habitat, scenic waterfront properties, oyster seed grounds, clam beds, inland creeks and tidal marshes. Doomsday fiction?

Hardly.

The potential disaster is described in a report prepared last November for the U.S. Maritime Administration. It concludes that damage could stretch for 50 miles along the river and take weeks to clean up. Assessing the ecological consequences could take years.

While some may dismiss the worst-case scenario as hyperbole, a growing number of regulators, marine inspectors, environmentalists and workers who oversee the fleet of mothballed ships say the nightmare is becoming more likely -- and probably is imminent if help does not arrive soon.

``They are truly ticking time bombs,'' said Patricia A. Jackson, executive director of the James River Association, an environmental group.

The fleet had a close call the last time a major storm swept through Hampton Roads. In 1999, more than 30 ships got loose under 40-mph winds and white-capped waves stirred by Tropical Storm Floyd.

Some vessels dragged their anchors and wandered into the main shipping lane. Others bumped into nearby beaches. None leaked.

It took about two weeks to tie the ships back together. The government, in response, invested $3 million for a new mooring system.

``That should help,'' said Michael J. Bagley, fleet superintendent. ``But there's only so much we can do if a big one hits here.''

The James River Reserve Fleet -- better known by its local nickname, the Ghost Fleet -- was created in 1925 off Fort Eustis in Newport News. It is the largest and oldest floating parking lot in the country, designed to hold government ships that might be used again in time of national crisis.

It also includes most of the flimsiest ships in the national reserve, stored in what one Virginia official describes as ``probably the worst place, from an environmental standpoint, that you could think of.''

The gray hulks used to be sold and scrapped, mostly overseas, for a modest profit. But tougher rules for worker safety and environmental protection have all but ended that option.

Today, 97 ships sit idle in the middle of the James. As they bob there, straddling the only shipping lane between Hampton Roads and Richmond, their fuel-filled tanks and hulls continue to deteriorate, and occasionally leak.

Together, the fleet holds about 7.7 million gallons of oils and fuels, according to the latest government estimates. That's slightly less than what the Exxon Valdez spilled off the coast of Alaska in 1989.

Furthermore, they are loaded with lead paint, asbestos and toxic PCBs, among other hazardous materials, according to the Maritime Administration, a branch of the U.S. Transportation Department responsible for safeguarding the fleet.

Congress has not approved requested money that would pay American shipyards to dismantle the most fragile cargo haulers and military support vessels, some of which were built during World War II.

Removing the 71 ships considered obsolete -- those without any hope of returning to service -- could cost $177 million, according to estimates. Since 2000, Congress has appropriated just $10 million, enough to get rid of six vessels.

Without sufficient cash, the Maritime Administration this winter issued an unusual open invitation. It urged anyone with a bright, cheap, new idea for safely disposing of the ships to step forward. Proposals will be accepted through July.

Some ships are in such bad shape that crews must frequently patch holes and weak spots to keep them from leaking or taking on water. The annual maintenance budget exceeds $1 million and has run as high as $3 million, records show.

An inspector general's report from March 2000 noted that one craft had been patched more than 20 times and still was awaiting a disposal contract. The report described environmental dangers as ``very real and increasing daily.''

``If just one of these ships breaks open, and we have an environmental catastrophe, we'd have every newspaper in the country calling and asking how in the world this could happen,'' said Steve Jackson, a Norfolk-based transportation analyst for the Maritime Administration.

``Well, I don't want to answer those calls. And there's no reason -- other than money -- why we should.''

THE GOO VS. THE RIVER

The Mormac Wave is one of the shabbiest ships in the fleet. Built in 1962, the retired cargo carrier is No. 14 on a list of the 20 biggest environmental risks in line for the scrap yard.

On board the sleeping giant, which stretches more than 400 feet in length, the smell of mildew and dung permeates the air. Access to one passageway is blocked by ankle-deep piles of pigeon droppings.

``Got to wear a respirator to get in there,'' Bagley said.

Throughout the Wave, peeling lead paint dangles from ceilings like icicles. Up on the bridge, log books from its final voyage, in 1982, remain open, as if the captain is about to return. Handwritten notes describe the journey from Baltimore to Cape Town and Mozambique in Africa.

A captain's mug, with coffee grinds still on the bottom, leaves a stain on a chart of the South Atlantic. Nearby on the floor lies an oil-pollution handbook, its plastic cover littered with paint chips and dirt.

About the only thing the Wave does nowadays is host war games. The FBI, Navy SEALs and other authorities often practice hostage rescues aboard the ship, mostly at night, armed with paint guns. They have been especially active in the aftermath of the Sept. 11 terrorist attacks, officials say.

For security reasons, the Maritime Administration would not say how much fuel is aboard each ship. But the fleet is not closely guarded, and staff members said they usually check for oil spills ``by visual inspection,'' meaning they look for oil sheens in the water.

``OK, let's go see The Goo,'' Bagley said.

The goo is thick oil known as ``Bunker C.'' It is jet-black and syrupy, the stuff that creates all the havoc in the worst-case scenario. If spilled in bulk in the James, it could stick to salt marshes and threaten to kill birds, fish and vegetation.

``If you step on it, you won't get it off your shoes,'' Bagley warned.

In the cluttered engine room, yellow police tape cordons off one greasy corner loaded with heavy machinery. ``Hazardous Materials Stored Within This Space'' reads a small sign turning brown with age. ``Disposition of contents to be determined at a later date.'' The sign was posted on Oct. 25, 1996.

Down one last flight of stairs, the air gets cold and moist, like walking into a meat locker. This section is below the water line. The Bunker C is here.

It has spilled from its holding tanks onto the steel floor, forming a 3-foot-deep lagoon that extends some 100 yards along the bottom of the ship.

A thinning hull is the only barrier between the goo and the river.

``I wish we could have every congressman climb down here and see this for themselves,'' said Jackson, the federal transportation analyst. ``Then, I bet you, we'd see things change.''

SALVAGE AT A STANDSTILL

It used to be easy to get rid of ships like the Mormac Wave.

When the government figured the vessels no longer were worth saving, it would hold a public auction and sell them to the highest bidder.

They sold like hotcakes. In the 1950s and '60s, shipyards and salvage companies in Norfolk and Portsmouth bought five, 10, 20 at a time. Workers would cut the hulks up, often in the open air and without much protective gear or concern for where bits of lead and asbestos landed. The steel sides, sliced into huge squares, brought a nice profit.

The Navy might also pick up a couple, take them offshore and blow them up. It was good, cheap target practice for pilots and demolition teams.

From 1954 to 1964, the U.S. Department of Agriculture stored millions of bushels of surplus grain in the bellies of World War II-era Liberty ships.

At its peak, in 1950, the James River fleet consisted of 800 ships, anchored in a line from Fort Eustis south to the James River Bridge. By the mid-1960s, though, most of the fleet had been sold off through auctions and purchase contracts. About 300 remained.

The easy turnover changed dramatically in the 1970s with the advent of federal environmental regulations. And as laws governing waste disposal, clean air and water, oil spills and hazardous materials have become stricter and more complicated, the American scrapping industry has lost interest.

``It's not cost-effective,'' said Leo Marshall, executive director of the South Tidewater Association of Ship Repairers. ``To comply with all the rules and regulations, you can't break even. It's not worth your time and money.''

For that reason, the government now is forced to subsidize ship-breaking, at about $2.5 million per vessel. Without such aid, few if any yards would bother with a reserve ship, Marshall and others said.

In 1973, as environmental rules slowly started deflating the scrapping business, the Maritime Administration came up with another idea: fishing reefs.

Virginia, North Carolina, South Carolina, Georgia and Florida sank reserve ships off their coasts that year to lure fish and anglers. Virginia created six reefs, off the Eastern Shore and the Virginia Capes, said Mike Meier, reef program manager for the Virginia Marine Resources Commission.

Sea bass, tautog and shark fishing are especially good near the reefs, Meier said.

But the U.S. Environmental Protection Agency intervened in the reef program, too, concerned that toxic PCBs, which are found throughout ship wires and ducts, might harm aquatic life.

Meier said the state has not sunk a James River vessel since the 1970s. However, a local effort now is seeking to raise enough money to create a reef off Virginia in honor of the sailors killed last year in the bombing of the destroyer Cole.

By the late 1980s, almost all reserve ships were being scrapped overseas, where environmental and worker-safety rules were much weaker, if they existed at all.

At the time, China, Pakistan, Bangladesh and India were dismantling about 85 percent of surplus vessels. From 1987 to 1994, 130 obsolete ships were purchased and towed to foreign yards, where their innards and fuels were removed, often by laborers working with few safeguards.

In 1995, pushed by Congress, the EPA began requiring that all PCBs and other hazardous materials be removed from scrap candidates before they could be sent overseas. The idea was to stop America from exporting its toxic wastes and health hazards to poorer nations lacking adequate protections.

Three years later, then-Vice President Al Gore announced a temporary moratorium on all foreign scrapping.

The two actions ``brought the ship disposal program to a virtual standstill'' for about six years, from 1994 to 2000, according to a report for Congress by the Maritime Administration.

The report concluded that while foreign workers and environments were safer, dozens of decrepit vessels were left stranded in U.S. waters, with no financial relief in sight.

Part 2: ''Ghost Fleet'' could unleash disastrous spill

A DOZEN LEAKS AND SPILLS

When U.S. Rep. J. Randy Forbes, R-Chesapeake, was a state senator last year, he helped pass a resolution urging Congress to use Coast Guard money to pump out oil and fuel from the 27 worst vessels on the James. That way, he argued, if the ships fell apart the river would be spared a major spill.

The resolution went largely ignored in Washington.

But it pleased state environmental regulators. They had been trying to persuade the federal government for two years to remove petroleum wastes from decrepit ships -- and they continue to do so today.

The state did not closely monitor the Ghost Fleet until 1998. Then, officials received a tip from inside Fort Eustis that oil sheens were almost constantly visible in waters around the fleet.

The tipster wanted to know why no one was doing anything about such an obvious problem. After investigating the call, the Virginia Department of Environmental Quality got worried, too.

``If MARAD (the Maritime Administration) is doing something stupid out there, this could get real political real fast, since we are touching something believed necessary for national defense,'' a state environmental inspector wrote to his supervisor in September 1998.

``Certainly the media would have a field day if the worst-case situation does exist.'

' Since 1998, more than a dozen oil spills and leaks have been documented and cleaned up, all resulting from corrosion and decay. The spill that first raised eyebrows occurred just days after the state inspector's memo.

The Export Challenger, a 493-foot-long cargo ship, lost ``several hundred gallons'' of oil that floated to the surface in ``quarter-sized globs,'' according to an incident report.

The spill was relatively small but struck a nerve, in part because the cleanup was marred by miscommunication and equipment failures, and because the media reported the event. It led to a violation notice from state environmental officials and a rebuke from the U.S. Coast Guard.

``I am concerned about the condition of the James River Reserve Fleet and its potential adverse impact on the marine environment,'' Coast Guard Capt. J.E. Schrinner wrote in 1998, following the Challenger cleanup. ``Any oil spills from the fleet will potentially impact the area's natural resources and possibly impede commercial traffic during cleanup operations.'

' In response, the Maritime Administration adopted a stricter regimen of hull inspections, fleet monitoring and emergency planning. The agency also began requiring that all fuels and oils be removed from incoming ships to the fleet.

Months later, though, the Challenger was leaking again.

After several minor spills in 1999, the government ordered all 221,000 gallons of heavy fuel pumped out from holding tanks. The final cleanup bill: $1.4 million.

Two years later, the Challenger was towed to Texas and scrapped.

The largest spill on record took place in August 2000. About 1,000 gallons of heavy fuel leaked from a hole in the corroded bottom of the ex-USS Donner. It created a sheen two miles long and a half-mile wide.

The incident was surprising because the Donner was considered a low-risk vessel at the time -- No. 30 on a list of 40 scrap candidates. It cost $250,000 to clean up the fuel.

That was followed a month later by a $700,000 accident involving the SS Builder.

The Builder started leaking in 1999, and was taking on water a year later, threatening to sink. The Coast Guard had warned the Maritime Administration in 1998 that the Builder had ``degraded sufficiently to be regarded as the next environmental threat to the James River,'' according to records.

But there was no money to do anything but try to plug holes.

Only after the Builder had spilled oil and had to undergo emergency patchwork by underwater divers did the government appropriate money to remove about 200,000 gallons of fuel oil, lube oil, oily water and oil-contaminated sewage.

The state got serious about the fleet in 2000, after the Donner spill.

The state environmental department sent the Maritime Administration a violation notice that recommended a temporary solution -- start pumping out waste fuels from suspect ships on a regular schedule.

The federal agency responded with a lengthy letter that said the fleet was ``not legally subject to the regulations and penalties of the Virginia State Water Control Law.'' In short, state regulators had no legal right to demand anything.

The letter from Jeffrey J. McMahon, ship operations and maintenance officer, said that fuels would be removed when the ships were scrapped, and that the agency was doing the best it could with limited resources and staff.

The state disagrees with the legal interpretation. But so far, officials have not pressed the matter, and they are not sure if they ever will.

To date, the spills have not caused any tangible environmental harm, officials and regulators agree. But because the lower James River contains so many natural resources, the consequences of a major spill could be immense.

Both shorelines are dominated by tidal marshes, which experts say are especially vulnerable to oil spills.

Thick oil, such as Bunker C, would lodge in salt grasses and be difficult to get out. The grasses -- and the marshes -- might later die.

The heavy oil also might sink, which could contaminate the river's bottom and the aquatic life there.

Just south of the fleet, Burwells Bay boasts some of the largest public oyster grounds in Virginia. Baby oysters, or seed, are harvested from there and moved to other salty growing areas.

Blue crabs and soft-shelled and hard-shelled clams are plucked from the same waters.

``Fish mortality and sublethal impacts may be possible,'' said the worst-case scenario report published last November. ``Bivalves (oysters and clams) are at risk of being killed by direct oil exposure.''

The report described other wildlife and natural areas that could be harmed. They include: federally protected terns and raptors that breed on the Hog Island Wildlife Management Area, and great blue herons and egrets that mate in the marshes along nearby Passamore Creek.

There are several duck species in the spill zone. Wood ducks, pintails, green-winged teals, snow geese and whistling swans might swim through oil-polluted waters and face contamination, the report said.

The federally protected piping plover and the state protected Wilson's plover live along beaches and marsh grasses. Bald eagles and osprey might be injured by eating oil-coated fish they grab from the river.

SKIMPY FEDERAL FUNDING

The Maritime Administration estimates that it would cost $2.5 million to scrap each of the 136 obsolete vessels moored today at its three national depositories -- on the James River; in Beaumont, Texas; and in Suisun Bay, Calif.

In 2000, the agency recommended a 14-year disposal program in which competing American shipyards would be paid to handle all the work. Estimated costs ranged between $666 million and $1.33 billion, and the program would involve more ships than just the obsolete ones.

The Clinton administration, in its final budget, appropriated $10 million in 2000 to begin the effort. Six vessels were scrapped that year, all from the James River, all towed to a salvage yard in Brownsville, Texas.

But last year, Congress did not appropriate any money.

This despite a congressional mandate that all ships be disposed of safely and in accordance with environmental rules by Sept. 30, 2006. Few officials expect that deadline to be met.

This year, President Bush asked for $11 million, a sum that would dismantle four to six ships. Lawmakers from Hampton Roads are lobbying various money committees in Washington to keep the funding intact.

The Ghost Fleet is ``located near sensitive estuarial wetlands which could suffer lasting adverse environmental impact if oil or hazardous substances are released,'' said a letter signed last September by U.S. Reps. Edward L. Schrock, Robert C. ``Bobby'' Scott, Jo Ann Davis and J. Randy Forbes, who collectively represent much of southeast Virginia.

Congress won't decide on its allocation until the fall, aides said.

``We need to educate a lot of people on the Hill about this problem,'' said William G. Schubert, a former merchant marine captain tapped by Bush to head the Maritime Administration last year.

``Our hands have been tied for years, and people need to know we need to move on this. It's too important not to.''

In an interview, Schubert said he has been pushing the EPA to complete its national standard for PCBs, and to give the Maritime Administration ``more flexibility'' in selling old vessels to foreign markets.

Schubert also said his agency will not drydock reserve ships deemed too fragile to stay in the water.

``With some creativity and financial support, I think we're going to solve this problem,'' Schubert said.

Not every ship in the Ghost Fleet is worthless. While 71 are considered obsolete, six are strong enough to go back in service in case of a national emergency, such as a war. There are 18 others that could be used again but probably will end up on the scrap list, officials said.

The fleet today includes two former nuclear-powered vessels, the Sturgis and the Savannah. They are tied together and likely will be dismantled -- when, or if, money is available.

The Navy, too, has a backlog of ships awaiting disposal. As of February, 71 were anchored at various ports pending their scrapping, according to Navy statistics. That includes five at the Norfolk Naval Shipyard in Portsmouth and four within the James River fleet.

The difference, though, is that the Navy seems to get the money it needs to avoid environmental risks. Between 1998 and 2002, for example, it awarded scrap contracts worth $61.7 million that got rid of 22 ships, statistics show.

Its disposal budget for this fiscal year is $4 million, and no one inside or outside of the Navy expects that request to be rejected.

WORSE THAN WORST-CASE?

Until last year, the Maritime Administration had not completed an oil-spill contingency plan.

At the urging of the Coast Guard and state regulators, the agency hired a consultant and compiled a plan, including a worst-case analysis, and published the report last November.

The state environmental department questioned whether the scenario was too rosy. It noted that millions of gallons of oil are stored within the fleet and that more than two cargo ships might split open in a big storm.

``God forbid, but if we get a direct hit from a hurricane, you could see a real environmental catastrophe out there,'' said David S. Gussman, a state enforcement officer.

The Coast Guard had other, more practical concerns. Since the fleet sits out in open waters, could response teams reach a big spill fast enough? Is there enough cleanup equipment nearby? Could anything more be done if a storm hit?

An emergency exercise was held last fall to answer some of those questions.

``They did pretty well,'' said Coast Guard Capt. Larry Brooks, commanding officer of the Marine Safety Office Hampton Roads. ``But they're still out there in the open environment, so there's nothing really to stop it. The oil will just move around. In a hurricane, you just end up chasing it later.'

' As for his own recommendation on how to lower environmental risks, Brooks chuckled and answered easily: ``Scrap more ships.''

``The way I look at it, I still have something like 9 million gallons of oil stored in ships in the middle of an ecologically sensitive area,'' he said. ``And I don't like that.''

Reach Scott Harper at 446-2340 or sharper@pilotonline.com