MSRC: A COMPANY OF CHANGE
TO MEET THE NEEDS OF ITS CUSTOMERSMSRC is a non-profit oil spill response organization with its primary response
capability located in the coastal regions of the United States, including the U.S. Virgin
Islands and Hawaii. MSRC is a progressive company which has evolved to meet its
customers' ever changing needs as the U.S. federal and state regulatory environmentchanges.
To understand the MSRC of today, we must first look at the history of theorganization, the events that created MSRC, and the changes that have occurred since
1989, both external and internal to MSRC. This will help explain the evolution ofMSRC which has occurred to meet the needs of its customers -- including the membersof the Marine Preservation Association.
Milestones in the Marine Spill Response Corporation's Development
The history of MSRC is traced to a sequence of events in the United States
beginning with the oil spill in Prince William Sound Alaska in March of 1989. Like
many catastrophic events, this one led to the enactment of legislation in the UnitedStates Congress to not only provide for a response system in the United States, but also
to attempt to prevent such environmental disasters. This law is known as the OilPollution Act of 1990, or OPA-90. While the U.S. Congress was debating the provisionsof this law, the U.S. oil industry through the American Petroleum Institute, or API,
was also taking action to determine what the industry as a whole could do to bothprevent and respond to such an incident in the future.
Prince William Sound Off Spill - March 1989
The oil spill in Prince William Sound was the catalyst for the creation of MSRC andits national response capability. The incident raised serious questions within the mindsof oil industry executives about the ability of the industry to respond to incidents ofsuch magnitude. The industry created a task force under the auspices of the AmericanPetroleum Institute to study not only the current U.S. response capability. but also
what capabilities needed to be created to respond adequately to such a spill.
This Task Force's members consisted of eight high level oil company executives
representing Amoco, Arco, BP America, Chevron, Exxon, Mobil, Shell and Texaco. TheTask Force was chaired by Allen Murray, then Chairman of Mobil Corporation. TheTask Force's mission was to review current U.S. response capabilities and prevention
efforts.

The Task Force released their findings barely three months after the Prince
William Sound incident. The report stated that the U.S.-- industry and government -was not prepared to deal with a catastrophic spill. The Task Force considered acatastrophic spill to be defined as a release of oil in the offshore environment similar tothe size of the Prince William Sound spill – about 30,000 tons, or as any release beyond
the local response infrastructure which could be a lot less than 30,000 tons in someareas.
The Task force Report also included recommendations including the support ofprevention programs and the establishment of the Petroleum Industry ResponseOrganization, or PIRO.
Petroleum industry Response Organization (PIRO) - Fall 1989
When the Task Force issued their Report in June 1989 they also established aSteering Committee to make recommendations on the implementation of PIRO. By thetime the Steering Committee Report was issued in January 1990. the membership in
PIRO had grown from the original eight major oil companies to 20 companies. They had
also established committees to study personnel, equipment, vessels, training, insurance
and other issues to include about 75 of the oil industry experts in each of theirrespective fields.
The Steering Committee Report recommended the formation of two organizations,
one to be the funding organization the other to be operational. When the Steering
Committee Report was issued the estimated 5-year costs for the two organizations(MPA/MSRC) were approximately US $400 million dollars. This included US $145
million for capital equipment, an annual operating budget of US $65-$70 million and afive year research and development budget of US $30-35 million and an organizationconsisting of 303 people nationwide.
Oil Pollution Act of 1990 (OPA-90) - August 1990
At the same time that industry was creating PIRO, the U.S. Congress was drafting
legislation in both houses of Congress to not only prevent but to also respond to suchenvironmental disasters as the Prince William Sound incident. Seventeen months after
the vessel ran aground in Prince William Sound the President signed the Oil Pollution
Act of 1990 into law on August 18, 1990. The new law was the first comprehensive oilpollution law in the United States, combining numerous U.S. laws into one.
OPA-90 had many provisions including:lExpanded federal authority and responsibility to the U.S. Coast Guard forresponse activitieslNational planning and response systeml

Mandatory response plans, relying on private response capabilitylIt applied to vessels, oil exploration & production platforms, terminals andpipelines

lEquipment requirements and inspections - both on the response and prevention
sidel

Federally mandated exercise and drill programl

No federal preemption of state legislationl

A strict implementation schedule by February 1993
OPA-90 also provided another important provision which is referred to as"responder immunity." This provision provided a responder with a limited exemption
from liability as long as the responder didn't cause personal injury or wrongful death,or act with gross negligence or willful misconduct. Since a response organization, much
like a fire station, doesn't choose the time of day, weather conditions or circumstances
to its response efforts, they should be protected from liability that may be placed onthem due to these factors. Most U.S. States adopted similar provisions, and as a result,the U.S. Congress and every coastal jurisdiction in the U.S. agree that this provision
has made good public policy to encourage response operations.
Marine Preservation Association/Marine Spill Response Corporation - September 1990
Shortly after OPA-90 was signed into law, and after the PIRO studies, the oilindustry announced the creation of two new organizations designed to provide the kindof response capability discussed in the law. The Marine Preservation Association(MPA) and the Marine Spill Response Corporation (MSRC) were created in Septemberof 1990. MPA is a not-for-profit organization created to fund the response capability ofMSRC. MPA members are entitled to contract with MSRC for response services. MPA
provides the funding which has allowed for the capital expenditures and annual
operating budgets of MSRC.
When the two organizations were founded, it was estimated that the five year costs
would be approximately US $825 million, double the amount estimated in January of1990. This figure now estimated capital equipment purchases to be about US $325
million, annual operating budgets to be approximately US $100 million, and the initial
estimation for R&D to remain at US $30-35 million for the five year program. The
estimated number of personnel necessary to operate and start up MSRC was estimatedat 395.

U.S. Regulatory Requirements Under OPA-90
OPA-90 tasked many different agencies of the U.S. government withimplementation and regulatory responsibilities, however, none more so than the U.S.
Coast Guard. Amongst other things, the U.S. Coast Guard had responsibility fordrafting rules to implement Vessel Response Plans (VRPs), Facility Response Plans(FRPs) and Guidelines for Oil Spill Removal Organization (OSRO) Classification
Systems. Two other agencies of the U.S. government also had responsibility for otherkinds of facilities, for example the U.S. Department of the Interior under the auspicesof the U.S. Minerals Management Service has responsibility for offshore facilities andthe U.S. Environmental Protection Agency for onshore facilities that arc nontransportation related facilities.
Vessel Response Plans
This rule was established through a negotiated rule-making process in which theU.S. Coast Guard, industry representatives (response, oil and shipping) and theenvironmental community developed the rule jointly. The rule established time frames
and capability for response within U.S. waters. The rule requires that any vessel
destined for a U.S. port must file and have approved a vessel response plan by the U.S.
Coast Guard (prior to entry into U.S. waters).
Oil Spill Removal Organization (OSRO) Classification System
The U.S. Coast Guard issued Guidelines in December 1995 to create a voluntary
classification system for Oil Spill Removal Organizations. MSRC, like many responseorganizations, chooses to participate in this program since it aids our customers in thewriting of their vessel response plans and ultimately the approval of the same.
Classification levels are issued for an U.S. geographic area based on the U.S. Coast
Guard Captain of the Port zone. Classifications are based on the responseorganization's capability to meet planning parameters for skimming, boom andtemporary storage capacity requirements in that area. These classifications in no way
remove a planholder from the responsibility of ensuring that their responseorganization is capable of meeting the planholder's obligations under OPA-90.

MSRC(1991-1995)
After its creation MSRC began to create a national infrastructure of oil spill
response capability that would provide its customers with the oil spill response
resources to meet their expected OPA planning requirements. MSRC contracted for theconstruction of specially designed and constructed Oil Spill Response Vessels (OSRVs).
The company also began resting and purchasing boom and skimming systems toprovide what the company believed would be the level necessary to meet the response
capability required by the law. MSRC developed a Research & Development Program,and created a Spill Management capability.
Dedicated Oil spill Response Vessels (OSRVs)
In 1991, MSRC contracted with two shipyards in the U.S. Gulf of Mexico to designand construct sixteen OSRVs prior to February 1993. The following are thecharacteristics for the Responder Class vessel:lLength Overall - 208'-5" (63.5 meters)lDepth - 17'-0" (5.1 meters)l

Max Draft - 14'-0" (4.3 meters)lBeam - 44'-0" (13.4 meters)lQuarters - 38 PersonslFuel Capacity - 112,890 Gallons (427,335 liters)
Additionally, each vessel has two oil/water separation systems on board, 4,000barrels of temporary storage, high capacity Trans-Rec skimming systems, oilcontainment boom, arid full remote command and control capabilities for responseactivities.
Dedicated Skimming Capabilities
MSRC currently has 106 skimmers nationwide. Originally, MSRC purchased 96
skimmers which has grown to the current level. MSRC's combined skimming capability(as rated by the U.S Coast Guard) is 454,178 barrels per day of Effective Daily Recovery
Capacity (EDRC) including the following types of skimming equipment:lTrans-Rec 350l

Aardvac 800l

Desmi Oceanl

GT-185lSeawoifl

Walosep W-4l

WP-l

l

Vikoma 3-Weir

Dedicated Temporary Storage
In addition to designing and constructing the OSRVs, MSRC purchased seventeen
offshore barges ranging in capacity from 32,000 barrels to 68,900 barrels. MSRC reoutfitted this barges to allow for crew quarters and made other changes to make thevessels suitable for oil spill response activities. MSRC also has 68 Shallow Water
Barges capable of containing 400 barrels of recovered oil each and 84 towable storage
bladders in 500 barrel and 3,000 barrel sizes. MSRC's combined temporary storage
capability is 902,300 barrels.
Dedicated BoomMSRC purchased 311,340 feet of boom including Offshore, Inshore and Intertidal
Boom. Thus providing MSRC with booming capabilities in all depths of water andenvironments.
Research & Development
MSRC's five year Research & Development program funded research in thefollowing areas:lRemote Sensing capabilitylIn-Situ Burningl

Dispersantsl

Oil/Water Separation SystemslCounter Measures Effectivenessl

Bioremediationl

Evaluation of Spill Effects

Spill Management
MSRC's Spill Management capability that was offered to its customers included
the following areas of expertise:lCommand & Control

lOperationsl

Health & SafetylPlanningl

Logisticsl

Finance & AdministrationlCommunicationslPublic AffairslGovernment AffairslScientific & Technical Support

Structure / Budget
MSRC operated out of five geographic Regional Response Centers, two on the West
coast, two on the East coast and one in the Gulf and from 21 pre-positioned equipment
Sites around the country. MSRC was designed to respond only to large oil spills thatwere beyond the capability of the local response infrastructure. MSRC did not provideplan citation or response capability to its customers for "Shoreline Cleanup." At the endof the five-year period, the total cost of MSRC had reached over US $900 million.
Catalyst for Change
As MSRC was being developed, other activities were occurring in the regulatorycommunity and in industry to change the U.S. approach to what was considered anecessary response capability in the U.S. In the regulatory environment, the U.S. Coast
Guard's rulemaking process proved to provide less rigorous standards than hadoriginally been anticipated after the enactment of OPA-90.
At the same time, some members of the oil industry who were the predominantfunding companies for MSRC and MPA no longer felt a strict obligation under the law
to maintain this kind of dedicated resource. This led to many changes in the structure
and composition of MSRC.
MSRC (1996 Onward)
MSRC realized that the changing regulatory and industry environments
necessitated change within the organization.

Restructuring / New Budget
Most importantly, MSRC maintained its commitment to retaining the dedicated oil
spill response capability that MSRC had established. During all the changes that haveoccurred at MSRC since the beginning of 1996, there has been no reduction in response
equipment. To reduce costs and focus our services on those most desired for ourcustomers, MSRC also eliminated offering Spill Management services. At the time,
many of MSRC's customers had the capability to provide Spill Management throughtheir own in-house resources or had contracted with various organizations in the U.S.
who provide these services. The loss of this service eliminated a redundancy thatexisted for many of our customers. Additionally, at the end of its five-year program,
MSRC eliminated its Research & Development program.
In January 1996 a new Senior Management Team took over the company andbegan to focus on continued customer awareness. By conducting customer surveys,
holding customer meetings, and becoming more aware of the needs of its customers,
MSRC restructured to meet these changing needs. MSRC's annual budget was reduced
from US $96 million (1995) to US $42 million and the number of employees dropped
from 441 to 177 nationwide. All of this while still maintaining the same level ofdedicated response equipment.
Regional Approach
MSRC's five regional concept was reduced to three: Eastern, Southern andWestern, Each region was uniquely designed to allow for MSRC to alter operations tosatisfy regional customer requirements. MSRC decentralized and placed moreauthority with the Regional Vice Presidents. The office which was previously known as
MSRC's ' now became the Virginia Group. The Virginia Group's responsibilities
include:lOversightl

Quality Assurancel

Services
The President, Chief Financial Officer. corporate attorneys, and others necessaryto run a company arc located within this group. This office also serves the regions byensuring that such administrative services as payroll and accounts payable do not haveto be duplicated by the regional offices.

Spill Team Area Responders (STARs)
MSRC also established an enhanced network of environmental responsecontractors known better as Spill Team Area Responders, or STARs. These 60+/companies represent environmental contractors recognized leaders in the response
industry. They provide such services as:lPersonnellResponse EquipmentlLocal KnowledgelLogistical SupportNew Services
MSRC also established a number of new services to provide its customers with therange of services they desired. MSRC now can provide the following services:l

Response to Spills of All Sizesl“Average Most Probable Discharge”

lShoreline CleanuplInternational Response (if certain criteria are met)lHazardous Materials (if certain criteria are met)

Business Opportunities / Customer Service
MSRC has also established other activities in the customer service and businessdevelopment areas. MSRC has refocused to become more customer service oriented.
The company presently is reviewing partnering opportunities with other OSROs, toprovide our customers with a more cost-effective approach to maintaining dedicatedresponse capability. Other areas of opportunity which MSRC focuses on include;international shipowner marketing, international business opportunities, as well asother business opportunities.
Alternative Technologies
MSRC continues to recognize alternative response technologies such as in-situ
burning and dispersants as a viable alternative, in some cases, to mechanical recovery
operations. As U.S. federal and state authorities have pre-approved the use of in-situ
burn capability in certain geographic areas, MSRC has purchased and located in-situ

burn systems in those areas of pre-approval. At this rime six of these systems are inplace in MSRC's area of service. With respect to dispersants, MSRC continues to review,in conjunction with industry, an appropriate infrastructure for this capability.
In Summary: The MSRC of Today
The MSRC of today has changed substantially in some regards, and minimallyothers, to the organization formed in 1990. Still committed to provide a dedicated,
stand-by response capability, the organization has increasingly embraced a customeroriented approach.
Key to this change has been the development of a business plan which:lEmbraces commercial efficiency

lProvides for total customer satisfaction

lEnhances a solid, external reputation

However, the incident in Prince William Sound was over eight years ago and time
tends to allow for a certain forgetfulness and a less rigorous regulatory environment
may continue to see an erosion in the national response infrastructure in the U.S.
MSRC will continue to adapt to the ever-changing needs of its customers' as
circumstances warrant.