Rescues at sea, and how to make a fortune

0:00Support comes from our 2025 lead sponsor of Planet Money, Amazon Ads. Less than half of customers fully trust their financial institutions. Amazon Ads helps financial brands build that trust through relevant ads, using first-party signals to reach the right customers. More at advertising.amazon.com. Before we start, a warning. This episode features sailors and people who curse like sailors. So, yeah, strong language ahead. This is Planet Money from NPR. So this is the kind of story that starts in a very classic way. Ah, yeah, twas a dark and stormy night. That is Captain Prentice Strong III. Everyone calls him Skip.

0:47And on a dark and stormy night about 30 years ago, Skip was in charge of an oil tanker called the Cherry Valley. They have been making their way up the coast of Florida, and they are getting slammed by this tropical storm. We've got waves coming on deck. We're probably in 12 to 15 foot seas and they're coming at us. So we're rolling, you know, probably seven, eight degrees to each side. Yeah. 15 foot waves, 50 mile per hour winds. For most smaller ships, these are extremely dangerous conditions. But the Cherry Valley, it's more than two football fields long, goes all over the world, crisscrossing oceans, delivering fuel.

1:26Yeah, it's not a carnival cruise where you only stay in the in the nice weather areas. I mean, we go wherever, we go where we got to go. At around 1 a.m. that night, a call comes over the radio that would set off an unusual chain of events. It's the Coast Guard telling them that there is a tugboat out there in this storm and it's in trouble. And the Coast Guard is saying, yeah, we'd like you to offer any assistance you can that, you know, to help these guys out. And I'm like, you know, finger off the mic, not talking to the mic. It's like, what the f*** did these guys expect us to do? overloaded oil tanker out here.

2:04Yeah, it is hard to imagine a ship less suited for a rescue operation. But Skip tells the Coast Guard, we'll swing by and take a look. Pretty soon, they get close enough to hail the captain of the tugboat on the radio. Skip finds out that one of the engines on this tug is completely dead. The other one, every time they try to turn it on, it catches on fire. This is the calmest guy I have ever heard on the radio, ever. in my life. It's like, yeah, we're having a little hard time fighting the fires in the engine room with our life jackets on. And without its engines, this tug is now at the mercy of this tropical storm.

2:45It's like, all right, once he has to shut that engine down because of the fireballs in the engine room, he's getting dragged two and a half to three knots towards the coast of Florida. And it's like, holy shit, this guy's having a bad night. Now, what happened next? The events of that night would lead to a surprising discovery, a record-setting lawsuit, and one of the strangest court battles in maritime history. Hello and welcome to Planet Money. I'm Jeff Kuo. Today on the show, the story of an audacious rescue attempt, the details of which would be dissected and argued over for years. At the center of the story, a big question about what is fair and how How do you put a price tag on trying to do the right thing?

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4:20Earn unlimited 3 % cash back on dining and entertainment. Capital One. What's in your wallet? Terms apply. Details at CapitalOne.com. It's about two or three in the morning of November 15th, 1994, and Skip and his crew are headed toward that tugboat that is in trouble. At the time, being captain of this oil tanker was the pinnacle of Skip's career. He was 32. His whole life had been about the water. He learned to sail when he was five years old. And one of the things you learn pretty early on as a sailor is that the open seas are a lonely and dangerous place. When you're out on the water, generally speaking, there's no 911.

5:02You've got to take care of your own stuff. But in those rare cases when someone is around to lend a hand, they should. Skip says that's an important part of sailing culture. We're taught from the time that you start working on the water, it's like if If someone needs help, you go off and offer them help up to the point that it puts you in jeopardy. Skip says that's what was on his mind that night when he gets that distress call from the tugboat. The captain of the tugboat tells Skip that they'd been towing this barge up the Florida coast when they get caught in the storm. And now, without their engines, the storm is pushing them right into the coast of Florida.

5:41Skip goes over to his navigation charts, and he realizes, at this rate, no one else, not even the Coast Guard, is going to be able to reach the tugboat before it is too late. So Skip and his chief mate Carl and his second mate Jim, they start working out a plan. Maybe they can catch up to this tugboat. If they get close enough, they can use what's called a line-throwing gun. It's basically a rocket that's attached to some rope. and maybe they can fire some lines over, secure the tug to the tanker, and pull everyone to safety. The tugboat captain tells Skip that part of the problem is this barge.

6:19It's big and tall and kind of acting like a giant sail. The two captains talk about cutting the barge loose, but Skip's like, I'm from New England. We hate to throw crap away if we can help it. So let's just try and scoop them both up. Skip orders the engines full speed ahead. They are going to chase down that tug. By now, the storm is getting worse. Waves are crashing over his ship. Anything not tied down is going to get swept overboard. I've got, you know, six, seven, eight feet of water rolling across the deck. That will hurt people, if not kill them. Skip is also worried about his cargo. He's got 10 million gallons of heavy fuel oil aboard.

7:01Just one bad scrape could mean disaster. Three quarters of an inch of steel was the thickness of our hull. That's it? That's it. And that's what's between the saltwater and the oil. You puncture that and you're either taking water in or oil's going out. But in order to rescue that tugboat, Skip would need to steer his oil tanker through rough seas into dangerously shallow water. I certainly had an idea of what the risks were, which was going aground, getting people hurt, spilling oil. Those were all the risks in there. I thought I could manage those risks to a degree that warranted me going in there and trying to help these guys.

7:45Around 4 a.m., they finally catch up to the tugboat. At this point, the rain has started. It is a downpour. The tug is just a set of hazy amber lights. Can't even see the barge. And the wind is getting worse. Some crew members go to retrieve the line-throwing gun. It's in the storage locker on top of the ship. Soon as they open it, the wind rips that solid steel door right off the hinges. Big 4x4 steel hatch cover just sent it flying off like a frisbee. Went spinning off in the downwind. We're lucky that didn't hit anyone. The crew grab the equipment. They take their positions on the deck. It is time to put this plan into action.

8:25Skip cuts the engines and the ship starts to slowly glide toward the tugboat. When they get within a few hundred feet, Skip radios to his second mate, Jim. tells him, fire that line-throwing gun. This gun goes off with a whoosh into the darkness. Fired it, no idea where that line went. Yeah, that first attempt does not work at all. And now they have overshot the tugboat. So Skip has to turn around and try again. But the turning radius on an oil tanker like this, it's half a mile. So circling back is going to take like 30 minutes. And this whole time, Skip is keeping a close eye on the depth charts because the tug and the barge, they are still drifting toward shallow water.

9:06So Skip marks a line on his charts. He tells his crew, past this line, it is over. The ocean becomes too shallow for their ship. This is the line of death. That's what we're not going to cross. No ifs, ands, or buts about that. When they first caught up with the tug, they were three miles from that line of death. But now, after their first attempt, the line of death is only two miles away. We're running out of time. So we make the second turn around. We get back in position. This time, he's going to try to get even closer so that one of the ABs, which stands for able-bodied seaman, can just throw a line over using a weighted knot the size of a baseball.

9:45We get probably 80 or 90 feet off the bow of the tug. One of the ABs makes a great throw, hits the tugboat with the line. The crew on the tug, they grab that line, they tie it off, and they start pulling it in. They are pulling, pulling, pulling. Seems like a success. And then the rope snaps. It was like shit. Yeah, almost. We were so close to having this done. Skip checks the charts. At this point, the line of death, where the ocean will be dangerously shallow, it is less than a mile away. We have time enough to do one more pass. Then I'm going to be out. Then I'm not going to be able to get in after that.

10:25But Skip and his crew, they have been out there in the storm trying to get this tugboat secured for over an hour. This is their third and final chance. Skip thinks he's finally got his speed under control. He does the slow U-turn, brings the ship around. And this time, they stop perfectly in front of the tug. The AB is looking straight at it. Instead of having to throw the heaving line, he walks up to the rail and hands the heaving line over to the guys on the bow of the tug. That's how close you were. Six inches. Holy crap. And with that, they get the line secured. Skip fires up the engines, and he finally starts dragging that tug to safety.

11:11And it's also starting to get light at this point in time, so we can now actually start to see things that were going on. As the sun starts to come up, Skip looks at what he's rescued. His eyes immediately go to the barge that the tug's been towing. We finally got my first glimpse of the barge. I've been going to sea at this point in time for just about 12 years. I'd never seen a barge that looked like this. You know, it looks like an old military barracks type of thing or an old aircraft hangar. Skip radios the captain of the tugboat. His name's Lonnie. I called Lonnie and said, what the hell do you have in that thing back there?

11:51And he said, it's a liquid fuel cell for the space shuttle. And I said, you mean the big, you know, the big orange tank? You know, that the shuttle hangs on? He said, yeah, that one. And he's like, huh, well, that's an unusual cargo. That barge, it was headed for Cape Canaveral. Skip and his crew have rescued a key component of the space shuttle. That iconic orange fuel tank. It was like, yeah, well, I guess I never thought they'd probably have to move those things by barges. They're too big to go any other way. Now that everyone is safe and everything is secured, Skip calls his bosses at the shipping company.

12:31And this is when he gets maybe the biggest surprise of the night. He's letting his bosses know that their oil tanker is now dragging along a wayward tugboat and a giant huck of NASA equipment. And everyone was like, congratulations, nice job, keep everyone safe, keep us updated. And then at the end of it, the in-house counsel comes on the phone and says, congratulations, Captain Strong, you now have salvage rights to everything behind you. Salvage rights. Skip had forgotten about the law of salvage. It's like my reaction at that point in time was, holy, yeah, oh, shit, salvage. The law of salvage is this very ancient maritime law.

13:14It goes back thousands of years. It says that if you help another ship that is in peril on the seas, you have a right to a reward. A reward based on the value of the stuff that you saved. And in this case, Skip and his crew had saved a very expensive, very valuable piece of the space shuttle. But getting the government to pay up would be way harder than anybody imagined. The story of that is after the break.

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15:58When NASA found out that Skip and his crew had saved their very expensive external fuel tank for the space shuttle, they were over the moon. I mean, they were absolutely thrilled with this. We got invitations to come and watch launches at Cape Canaveral. I got to ride on a bus with Buzz Aldrin to go watch a launch. And NASA was also happy to pay up. They were like, yeah, yeah, yeah, the law of salvage, of course. NASA said, great job, thanks very much. What do we owe you? The law of salvage is thousands of years old. The ancient Greeks passed it down to the Romans, passed it down to the Spanish and the French and the English, and now most of the world recognizes this principle, that if you save a ship from danger at sea, you get a reward.

16:45And there's a reason for this principle. Societies were trying to promote seafaring, to promote exploration and commerce and trade. So to encourage rescues at sea, the law of salvage promises rescuers a fair reward. A typical salvage award these days might be in the tens of thousands of dollars. But given the value of the tank, NASA said it would be willing to pay$5 million, which would be split between everyone in the crew and the owner of the ship. Oh, it was freaking awesome. Yeah, yeah. Oh, everyone was thrilled with that. I mean, the lawyers were happy. Crew was happy. That's a great number.

17:21We like that. NASA sent the settlement proposal to the Justice Department to get their sign off. But the Justice Department took one look at that bill and they were like, no way. That is an extraordinary amount of money. We think a fair offer is like one million dollars. So Skip and his crew and the owner of the ship, they took the government to court. They hired a trial lawyer. My name is Hugh Straub. I specialize in what Admiralty lawyers call wet work, which is dealing with collisions, strandings, fire, salvage. As soon as Hugh heard the story of what Skip and his crew had done, he was like, your salvage case against the government?

18:02This is the strongest case I have ever seen. My goodness, I knew this was something breathtaking. It really was. So I would say only a fool could lose this case. That is Hugh's official legal opinion about this case. Hugh thought that he could easily convince a judge that Skip and his crew were owed a lot more than$1 million. And here's what I think is so interesting about the law of salvage. The Supreme Court said back in the 1800s that salvage is not just compensation for someone's labor. Salvage is a reward. It is a reward for diving into a dangerous situation and pulling off something heroic.

18:47Salvage cases are about figuring out what is a fair reward for all that heroism. And that's a really difficult question. Now, there are some guidelines, some factors to consider, like how skillful were the rescuers? How much danger was there? How much risk did the rescuers put themselves in? Hugh built his case around those questions, what some call the moral factors in a salvage case. My primary strategy throughout was I wanted to tell the story of Men Against the Sea. And I wanted the judge to feel that as much as I could. Hugh brought on Captain Skip as his star witness, told him to really go into the details, the risks and the dangers of that day.

19:32I want you to throw a bucket of seawater on the judge. I want him to really feel what you guys were going through. The trial judge was Stanwood Duvall. Judge Duvall had this reputation for being a very methodical, very, you know, just the facts, please kind of judge. But when Skip took the stand... Literally, this is no hyperbole here. He had the judge and everyone else on the edge of their chairs listening to this story. The trial was supposed to take a week. But after just two days, Judge Duvall said, I have heard enough. I am ready to deliver my verdict. He said he was especially impressed at the incredible risks that Skip and his crew had taken that night.

20:16How close they had gotten to, you know, that line of death. Judge Duvall said they had shown heroism of the highest magnitude. And what did he think would be a fair reward for that heroism? Well, even with the guidelines or factors, salvage cases are famously subjective. What typically happens is the judge looks at the value of the rescued ship and cargo and then awards some arbitrary percentage of that. Could be 5 or 15 or 25 percent. According to one admiralty law textbook, the judge basically picks a number out of thin air. In this case, Judge Duvall picked the number 12.5 percent. And he valued the space shuttle tank at around$50 million.

20:57So in his opinion, a fair reward was$6.4 million. Captain Skip was there when the judge made this announcement. It was a euphoric atmosphere out of there. The lawyers were absolutely ecstatic about this. It was a historic moment. $6.4 million was apparently the most that any U.S. court had ever awarded in a salvage case. Skip and Hugh and all the other lawyers, they went out to celebrate. They got barbecued shrimp. But this case was not over. The government filed an appeal to the Fifth Circuit. And their main argument boiled down to this, that$6.4 million is just way too much money for what ended up being just two days of work.

21:43The decision about what is a fair reward was now up to the Fifth Circuit. And they had a completely different idea of what salvage law is all about. The Fifth Circuit said, let's look at the law of salvage through the lens of economics. It said, think of salvage as an economic transaction, a price that someone's paying for a rescue operation. As judges, all we're doing is figuring out what the right price for that rescue should be. And the Fifth Circuit was like, economics has a ready-made answer for that. The right price is just the market price in a hypothetical, perfectly competitive market for rescues.

22:20You know, like where you have all these boats submitting competitive bids for any given rescue. And using this principle, the Fifth Circuit said that in this case,$6.4 million is too much. We think the hypothetical market price is more like$4.1 million. When Hugh, the lawyer who worked on the trial and the appeal, read this opinion, he was like, what did I just read? And so this was like, you know, how can I say this in a polite way? This is like what's happening here. I don't I don't get this. And so, no, it was really disconcerting. OK, so I want to break down what the Fifth Circuit was trying to do here.

23:04The Fifth Circuit was influenced by this intellectual movement called law and economics. One of the goals was to use ideas from econ to make the law more rational, to take it out of the realm of subjective judgments. And in some ways, you kind of have to admire that effort. Salvage cases, you know, have historically involved this kind of impossible question about what is a fair reward for heroism and bravery. The law and econ approach tries to replace that moral logic with the logic of the market. And there is a logic to it. One of the fundamental ideas in economics is that if you have a perfectly competitive market, the outcome of that market maximizes welfare for all of society.

23:49Now, with salvage cases, putting that all into practice, it's maybe easier said than done. There's no such thing as a perfectly competitive market for, you know, heroic rescues at sea. Like, in a real emergency, nobody's negotiating. There aren't other boats waiting to submit competitive bids. So the Fifth Circuit was trying to imagine a fair market price in a market that doesn't exist. And if you look at the opinion, this law and econ approach, in the end, feels just as mysterious as what most judges in salvage cases have been doing for centuries. Which kind of leaves us in a really unsatisfying place.

24:30So I called up Judge Duvall, the one who handed out the original$6.4 million verdict. Good morning, Judge Duvall. Good morning, sir. Judge Duvall told me that, yeah, he read that Fifth Circuit opinion. And he respects what they're trying to do with law and economics. He says you can think about salvage law that way, as this economic transaction taking place in a hypothetical, perfectly competitive market. But the beauty of salvage cases is that you don't have to think about it that way. Judge Duvall told me that salvage is this rare opportunity in the law to recognize and reward heroic deeds. That's still how he remembers the story of what Skip and his crew did that night.

25:12It's one that I can look to when I'm maybe being a little cynical about humankind. It's something that is, shall we say, aspirational to use as an example of this is the best we can be. Talking to Judge Duvall made me realize something. We are so accustomed to the logic of the market already. We're kind of surrounded by it. You go to the grocery store, you look at the price of, I don't know, a gallon of milk, right? Say it's$4. Maybe that's the fair market price for that milk. But morally, is that a fair price for the farmer, for the consumer, for the store, for the cow? I don't know. And we don't often get chances to think about it that way.

26:03Salvage law is one of the few places where you do get to think that way, where judges have the opportunity, they want, to make moral judgments about the real value of something. In the end, Skip and his crew, they accepted the Fifth Circuit's number, the$4.1 million, which they split with the owner of the ship. Skip's cut of the total award before taxes was$300 ,000. He used a chunk of it to make a nice down payment on a house up in Maine. A few weeks ago, I went to go see him. Good morning. So this is the house that NASA bought. This is the house that that's about. These days, Skip lives on a beautiful harbor with his wife, Annie.

26:43He showed me the pier across the street where he takes his boat out in the summer. At the end of our conversation, I had one question for him. So in the end, after all of this, do you think that this award was fair? I do. I think it was fair. Could it have been more? Yes. Am I bitter about it or upset about it? No, not at all. I got a very nice award out of this. I live in a nice house. I get to tell a great sea story. I've got everything I need out of that. But then a few days later, Skip emailed me. He said that question about whether the award was fair, it kind of surprised him because no one had ever really asked him, was it fair?