Lake Carriers Association

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1 Lake Carriers Association The Greatest Ships on the Great Lakes JAMES H. I. WEAKLEY, PRESIDENT September 28, 2009 Via Environmental Protection Agency 1200 Pennsylvania Ave., NW Washington, DC Dear Sir or Madam: U.S. ENVIRONMENTAL PROTECTION AGENCY DOCKET () CONTROL OF EMISSIONS FROM NEW MARINE COMPRESSION-IGNITION ENGINES AT OR ABOVE 30 LITERS PER CYLINDER FEDERAL REGISTER, VOL. 74, NO. 166, AUGUST 28, 2009 Lake Carriers Association represents 18 American companies that operate 55 U.S.-Flag vessels on the Great Lakes. These vessels carry the raw materials that drive the U.S. economy: iron ore and fluxstone for steel production, coal for power generation, limestone and cement for construction, salt to de-ice wintry roads. When high water levels offset lack of adequate dredging, these vessels can carry as much as 115 million tons of cargo in a given year. We are a member of the Great Lakes Maritime Task Force ( GLMTF ) and fully endorse the comments of that coalition. With this letter we wish to reemphasize some of the key points of GLMTF s submission and address some concerns specific to our members. We must first reiterate that this proposal and specifically the establishment of an Emissions Control Area ( ECA ) on the Great Lakes threatens a significant portion of the U.S.-Flag Great Lakes fleet. The 13 steamships that would be retired because it is economically unjustifiable to switch to distillate fuel represent 24 percent of our members vessels. The 13 intermediate fuel vessels that would have to burn more costly distillate fuel represent another 24 percent of members hulls. In terms of carrying capacity, more than half, 50.4 percent, is in play. What s most tragic is that this proposed ECA will do more harm than good. The environment will lose the benefits of waterborne commerce the greenest form of transportation and suffer the increased fuel consumption and emissions that inherently follow modal and source shifts. The outcome is both lamentable and avoidable. The EPA simply must concede that it lacks the scientific data (as well as legal authority) to justify extending the coastal ECAs to the Great Lakes and postpone implementation until the need has been substantiated. There is in our opinion a very great likelihood that in-depth analysis will determine a Great Lakes ECA is unnecessary. Continued./ Suite Center Ridge Road Rocky River, Ohio Fax: Web site: The Association Representing Operators of U.S.- Flag Vessels on the Great Lakes AMERICAN STEAMSHIP COMPANY ANDRIE, INC. ARMSTRONG STEAMSHIP COMPANY BELL STEAMSHIP COMPANY CENTRAL MARINE LOGISTICS, INC. GRAND RIVER NAVIGATION COMPANY, INC. GREAT LAKES FLEET/KEY LAKES, INC. INLAND LAKES MANAGE MENT, INC. THE INTERLAKE STEAMSHIP COMPANY KK INTEGRATED LOGISTICS LAKE S SHIPPING COMPANY LAKE MICHIGAN CARFERRY SERVICE PERE MARQUETTE SHIPPING SOO MARINE SUPPLY, INC. UPPER LAKES T OWING COMPANY, INC. VA NENKEVORT TUG & BARGE INC.

2 U.S. Environmental Protection Agency Page 2 of 15 Full Comments Waterborne commerce is undeniably the most environmentally friendly mode of transportation. It boils down to physics. Since there s less friction as a ship or tug/barge glides through the water, less horsepower is needed to propel the hull. As a result, the U.S. Army Corps of Engineers ( Corps ) estimates that a Great Lakes vessel carries a ton of cargo 607 miles per gallon of fuel. In comparison, a train travels 202 miles per gallon; a truck, a mere 59 miles per gallon. 1 Less power used means less emissions. Again according the cited Corps report, a cargo of 1,000 tons transported by a Great Lakes carrier produces 90 percent less carbon dioxide as compared to the same cargo transported by truck, and 70 percent less than the same cargo transported by rail. Obviously then, our environment benefits tremendously from waterborne commerce. However, this proposed ECA threatens our environment by eliminating at least 13 U.S.-Flag lakers that are powered by boiler-driven steam turbines that were built to and must burn residual fuel. We will enumerate the reasons why the ECA will force these vessels to be retired, but first we must review this segment of the fleet and its impacts. LCA VESSELS THAT CAN ONLY SAFELY BURN RESIDUAL FUEL (Listed in Order of Per-Trip Carrying Capacity) Name Built HP Capacity (tons) HP/NT Cargos Typically Carried Edward L. Ryerson ,000 30, Iron ore American Victory ,000 29, Iron ore, coal, limestone Kaye E. Barker ,000 29, Iron ore, coal, limestone American Valor ,000 28, Iron ore, coal, limestone John G. Munson ,000 28, Iron ore, coal, limestone Arthur M. Anderson ,000 28, Iron ore, coal, limestone Cason J. Callaway ,000 28, Iron ore, coal, limestone Philip R. Clarke ,000 28, Iron ore, coal, limestone Herbert C. Jackson ,000 27, Iron ore, coal, limestone, grain American Fortitude ,000 24, Iron ore, coal, limestone, grain Wilfred Sykes ,000 24, Limestone, iron ore, coal, Alpena ,000 15, Cement St. Marys Challenger ,000 12, Cement Total Per-Trip Carrying Capacity 336,112 Rail HP/Ton 1.00 Truck HP/Ton What perhaps first grabs the reader s attention is the age of these vessels. The newest, the EDWARD L. RYERSON, is 49 years old. One, the ST. MARYS CHALLENGER, has been in service for more than a century. This is one of the aspects of Great Lakes shipping that makes it unique among the maritime industry worldwide. Since the Great Lakes are fresh water, vessels are not subject to the corrosion that salt water inflicts on oceangoing vessels, so a well-maintained hull can last for decades and decades. This allows the industry to modernize existing vessels to 1 Great Lakes Navigation System: Economic Strength to the Nation, pg. 2, February

3 U.S. Environmental Protection Agency Page 3 of 15 increase efficiency rather than build new hulls, a substantial cost savings for the owners, their customers, ultimately, the American consumer. The career of the CASON J. CALLAWAY listed in the table on pg. 2 illustrates this point. When launched in 1952, the vessel was 629 feet long and what the industry terms a straight-decker. Straight-deckers are vessels that do not have cargo unloading equipment integral to the hull, so must be unloaded with shoreside equipment. In the 1970s, America s steel industry was expanding at a feverish pace, so in 1974, the CALLAWAY was lengthened by 138 feet. This increased the vessel s per-trip carrying capacity by 28 percent. Also in the 1970s, pelletized iron ore came to dominate the market and self-unloading vessels became the industry standard. The CALLAWAY was converted to a self-unloader in This efficiency improvement reduced vessel unloading times from hours when employing shoreside equipment to 6-7 hours when self-discharging cargo. Furthermore, the reduction in time spent under the unloading rigs over a season allowed the ship to make more trips each year, another boost to efficiency. In short, the Great Lakes fresh water environment has allowed a 1952 hull to be made virtually as efficient as any vessel built to today and at a fraction of the cost. This cost savings continues to be enjoyed by the American consumer and can be for decades to come if the EPA does not force the vessel s premature retirement by banning the use of residual fuel. Most of the vessels listed in the table have similar histories, i.e., lengthening and/or conversion to self-unloading. On the Great Lake we don t throw out vessels, we recycle them. STEAMERS PLAY MAJOR ROLE IN GREAT LAKES SHIPPING As the table below illustrates, the 13 steamships move a lot of cargo. In 2008, they hauled more than 19 million tons, or about 19 percent of the 101 million tons carried by the U.S.-Flag Great Lakes fleet. CARGO MOVEMENT BY LCA-REGISTERED STEAMSHIPS (tons) Commodity 2008 Total % of U.S.-Flag Float % of Lakes Total Iron ore 8,194, Coal 3,158, Limestone 6,339, Cement 1,379, Grain* 106, Totals 19,178, * Most grain moving on the Great Lakes is for overseas export, a trade in which U.S.-Flag lakers cannot participate. U.S.-Flag lakers deliver grain to Buffalo, New York, but only one flour mill is still operational. The table on page 3 is generally indicative of the steamers workload. However, it must be noted that with the collapse of steelmaking in October of 2008, four of the steamers were withdrawn from 3

4 U.S. Environmental Protection Agency Page 4 of 15 service in early to mid-november, so that certainly impacted the iron ore total. (Under normal circumstances they would have operated through December and into January.) Also, demand for limestone from the construction industry has been sluggish for some time. In a strong economy, the steamers probably would have hauled another 2 million tons of limestone, perhaps even more. BURNING DISTILLATE ON STEAMERS PUTS LIVES AT RISK This will be one of the most detailed sections of this submittal, but we could probably dispense with all the technical arguments, for there is one simple, overriding fact. Burning distillate on a steamer can cause an explosion that could result in serious injuries, even death. That statement is not opinion, it reflects no bias, it is the reality of the situation. As the table on page 2 illustrates, the steamers are not new vessels. We are talking about powerplants, boilers in particular, that were designed and manufactured in the 1940s and 1950s. They were designed as heavy fuel marine boilers. This means their firebox (the area in the boiler where the fuel burns) was designed with a heavy, high BTU fuel in mind. The boilers can be safely lighted with No. 2 Diesel, but only during a cold start-up (i.e., a vessel that has been out of service for a lengthy period of time, such as winter lay-up) and only for as long as is necessary for atomization and heating of the primary heavy fuel. It is theoretically possible to switch the fuel supply system for the boilers to distillate fuel. However, it would require modifications including new fuel pumps, bypass of the fuel heating systems, new burners and burner tips, and possibly new air diffusers. A number of upgrades to the automation system would also have to been done to ensure the proper air to fuel ratio and that the fuel cut off valves are sufficient to ensure that absolutely no diesel fuel enters the boiler in the off position. Then there are the operational hurdles. First, vessels boilers do not operate at a steady load. The engineers are constantly lighting off or turning off burners to manage the varying loads required for maneuvering, generator needs, etc. These boilers can go from idle to full power in a very short period of time. This is another element of Great Lakes shipping that makes it unique in the maritime industry. A vessel crossing the Atlantic will, upon reaching its desired speed, maintain the speed for days on end. A vessel crossing Lake Superior holds its speed for 27 hours, but then spends the next 10 hours maneuvering through the Soo Locks and St. Marys River. The voyage across Lake Huron is 15 hours at a steady speed, but then it s 9 hours of maneuvering in the Detroit/St. Clair River, and then all the maneuvering upon reaching port. These boilers are up and down like fans at a sporting event. This also means the burners are not supplying fuel to the boiler at a steady rate. Each burner has a turn down ratio, which is the ratio the burner can be adjusted from maximum to minimum fuel. Once a burner hits either its maximum or minimum of the ratio, another burner would be needed to be added or subtracted to adjust for the change in steam demand. This is a great concern for the industry. As burners are added or turned off, there is a possibility of putting unburned fuel in the firebox for a short period of time, which could lead to a small explosion as the fuel ignites. If the explosion is large enough it can cause a boiler to breech its casing. Boiler explosions can result in a loss of life, risking both crew and vessel. 4

5 U.S. Environmental Protection Agency Page 5 of 15 We know the EPA does not want to jeopardize lives, but there is an extra safety consideration in the maritime industry that the agency must always bear in mind. Once a vessel leaves the dock, the crew is on its own. If there s a fire, damage to the hull, whatever, the crew is the first responder. If they cannot control the situation, they and the vessel can be doomed. There s no fire department or EMS in the middle of Lake Superior. The Coast Guard is often many hours away. That s why from just a safety perspective, burning distillate on the steamers and the resulting potential for an explosion is out of the question. The second operational issue is the flame pattern and burning of fuel. Again, these boilers were designed for heavy fuel. While each boiler is different, there likely would be issues with the distribution of the flame inside the boiler, and that would cause uneven heating of the tubes that surround the firebox. This uneven heating of the tubes would cause circulation problems with the water in the tubes. If this water does not circulate properly, hot spots develop which then burst, causing a rapid release of water and steam into the boiler. This can also breech the boiler, for as the water turns into steam, it expands at a rate faster than the boiler can relieve the pressure out through the stack and safety valves. As a result, the steam must escape through the casing, which would expose engine room personnel to the boiling hot water and steam. The calculations for safe operation and handling of fuel are based on analysis of carbon as the main constituent of fuel. Distillate would be based on calculations including hydrogen, which by volume would liberate more BTUs by volume and so create heat that exceeded the boiler s tolerances. Another issue involving distillate fuel is flash point. U.S.-Flag lakers are regulated by the U.S. Coast Guard and required to use products with a minimum flash point of 60 degrees C or 140 degrees F. 2 There are several terminals and truck racks that do not consistently meet the minimum flash requirements, so while diesel oil may appear plentiful, not all of it can be legally used on a U.S. Coast Guard inspected vessel. There is also a cost issue. Intermediate fuel weighs 8.1 pounds per gallon; distillate, 7.1 pounds per gallon. Just on weight alone, the vessel will burn 18 percent more fuel. Fuel consumption will increase even more given the lower BTU content of distillate. Distillate in the Great Lakes Region, based on a 4.5 year average, costs a dollar more a gallon, so this switch in fuel effectively prices a steam vessel out of the market. In summation, fuel delivery systems, marine boilers, and combustion control systems are carefully designed to match the vessel s power requirements and the fuel(s) intended to be burned. These boilers were designed and built to be fired on residual fuels and burners and furnaces were designed to match those specifications CFR Fuel Oil. 3 The U.S. Navy has used distillate fuels on steamships in order to avoid pre-heating fuel. However, the furnaces on those vessels were designed to operate under those circumstances. We note the Navy retired this design some time ago. 5

6 U.S. Environmental Protection Agency Page 6 of 15 NO SUBSTITUTE FOR STEAMERS The steamers carrying capacity cannot be replaced in either the short- or the long-term. The 43 vessels that remain cannot carry an additional 19.2 million tons of cargo. There are a number of constraints that cannot be overcome. First, vessels cannot go faster and so carry more cargos. They are already operating at their optimum speed. Second, there is virtually no excess capacity that can be activated quickly. Until this recession hit, the dry-bulk fleet was operating at 100 percent of capacity. The only dry-bulk carrier not in service was the JOHN SHERWIN, a straight-decker that last sailed in At a minimum, the vessel would have to be repowered; its original engines were removed in 2008 in anticipation of modernization. Furthermore, unless the vessel was also converted to self-unloading, it would be very limited in the ports it could serve. As a practical matter, it would take well over a year and $20-plus million to make this vessel serviceable. 4 Third, the shipping season has largely attained its maximum length. The iron ore and low-sulfur coal trades out of Lake Superior are governed by the March 25-January 15 season through the locks at Sault Ste. Marie, Michigan. While an extension could be granted under extraordinary circumstances, the U.S. and Canadian Coast Guards do not have enough icebreakers stationed on the Great Lakes to ensure vessels could continue to move. 5 Both Coast Guards would also have to increase the number of ice-capable Aids to Navigation they maintain in the connecting channels and harbors. There is always the potential for environmental concerns about the effects of a longer shipping season though the Soo Locks. Some fear transits in heavy ice will harm fish spawning areas in the St. Marys River and emergent wetlands. 6 The limestone trade cannot be lengthened unless we are experiencing an extremely mild winter. Limestone is rinsed prior to loading, so that trade must stop when temperatures dip below freezing. Only the Lake Erie coal trade and the cement trade could realistically extend their season beyond early March/late January, but that again presumes the U.S. and Canadian Coast Guards have bolstered their icebreaking forces, something both are loath to do right now. 4 That s what was supposed to happen. The vessel s owner signed a contract last fall to convert the SHERWIN to a self-unloader and repower her, but the project has been suspended until demand again justifies the expenditure and the regulatory uncertainties can be managed. 5 As evidence we note just three LCA members suffered $1.3 million in ice-related damages in March and April of The Memorandum of Agreement on Winter Operation on St. Marys River and Soo Locks Sault Ste, Marie Michigan signed by the U.S. Army Corps of Engineers, Michigan Department of Natural Resources, U.S. Fish & Wildlife Service, and U.S. Coast Guard in the summer of 1993 states, in Point 7 that Joint monitoring studies (MDNR, COE, FWLS, USCG) will be conducted for a period of 3-5 years on lake herring and whitefish spawning, emergent wetlands near the West Neebish Channel and spring spawning in Lake Munuscong 6

7 U.S. Environmental Protection Agency Page 7 of 15 REPOWERING STEAMERS TO MEET 2012 DEADLINE NOT FEASIBLE GIVEN ECONOMIC CLIMATE; NOR IS THERE ENOUGH SHIPYARD CAPACITY LCA members have, as business conditions permitted, converted some of their steamers to diesels. However, this is an expensive and lengthy proposition. The most recent repowering cost $22 million. The vessel was in the shipyard from November 2008 until June However, the engineering for this conversion began in As the graphic below illustrates, it can take as much as 30 months to repower a vessel: Event Ow ner Discussion &Economic Evaluation Contract Plans & Specifications Contract Plans & Specifications Approval by ABS Owner Send Out Bid Packages to S/Y's Owner Review & Select S/Y Prepare Detail Working Plans Including Approvals Order Major & Auxiliary Equipment Ship In Yard, Commence Repower Tests & Trials Delivery Week No. Estimated time for delivery from deliberation is months Marine engines, gear boxes, shafting and propellers are not stock items, they are all built to order. They also must be approved by the U.S. Coast Guard and American Bureau of Shipping, a timeconsuming process in itself. Then the lead time with the selected manufacturer is 1 to 2 years depending on world demand and equipment type. The economic climate right now precludes financing such an undertaking. It is just recently that operating rates at the nation s steel mills topped 50 percent, so through July, the iron ore trade on the Great Lakes in U.S. bottoms is down 62 percent compared to a year ago. With the construction industry so sluggish, limestone loadings in U.S. hulls are off 38 percent. The U.S.- Flag coal float is 18 percent off last year s pace. As a result, eight U.S.-Flag lakers have never entered service this year, and several others that did sail have been idled for lack or orders. While trade associations are not supposed to be predictive, we note economists are forecasting a slow and lackluster recovery from this recession. An alternative to repowering is converting a steamer to a self-unloading barge. In essence, the vessel s stern is removed and a notch built into which then fits a tug that pushes the unit. Notching a steamer could cost as much as $7 million. If an existing tug is acquired, the cost would be approximately $13 million. A new tug could cost as much as $20 million. So, the vessel owner or operator is facing an expense that ranges from $20 million to $27 million. The cost is prohibitive in this economic climate. 7

8 U.S. Environmental Protection Agency Page 8 of 15 There are drawbacks to converting a steamer to a barge. Since the vessel s displacement is reduced, there is a corresponding loss in carrying capacity. While the exact loss will vary from vessel to vessel, 1,000 tons is representative. That is per trip. Streamers often carry cargos per season. There will also be a loss of jobs. As a self-propelled vessel, a steamer requires a crew of 22 or 23. Tugs are governed by a different regulatory regime, so can operate with crews as small as 12. If all 13 streamers were converted to barges, roughly 140 billets would disappear. Over the course of a season, more than 200 mariners would have been required to fill those billets. New builds are out of the question. It is estimated it would cost $70 million to build a vessel the size of the CALLAWAY (767 feet long, 70 feet wide, and a maximum loaded draft of 27 feet). Given the long hiatus in new construction, it would take 6 months just to develop a design for a new vessel this size. Then, assuming financing could be arranged, and it cannot right now, construction would take another 18 months. So a vessel ordered today would not enter service until August of Lastly, even if business conditions and freight rates warranted repowering or notching the steamers, there is not enough shipyard capacity on the Great Lakes to undertake these projects and meet the 2012 deadline. There are four major shipyards. The largest is Bay Shipbuilding Company in Sturgeon Bay, Wisconsin. The next largest is Fraser Shipyards in Superior, Wisconsin. There are also yards in Toledo, Ohio, and Erie, Pennsylvania, but these operations have not been very active of late. There are of course shipyards on the U.S. coasts, but many of the steamers are too large to transit the St. Lawrence Seaway, so are Lakes-locked. Also, none of these vessels are certificated for ocean service, so the U.S. Coast Guard would have to grant special permission for those that can fit through the Seaway to be towed to a shipyard on the East or Gulf coast. This would be a dangerous undertaking. Great Lakes vessels are not built to withstand the rigors of ocean voyages and so would risk breaking up during the tow. ECONOMIC RAMIFICATIONS With the U.S.-Flag steamers accounting for 19 percent of the U.S.-Flag float, clearly the loss of this capacity will have major economic impacts on our members who operate those vessels and their customers. The anti-trust laws do not allow a trade association to have knowledge of freight rates and profitability, but our members earn their living carrying cargo. To collectively lose 19 percent of its business would hurt even the most profitable of industries. Maritime, particularly domestic, is historically a low-return investment. The extent of the impact varies from company to company. For one company, the steamers represent 9 percent of total cargo carried, but for the other four companies the steamers account for between 18 and 47 percent of total haulage. CUSTOMERS IMPACTED BY LOST OF CARRYING CAPACITY The loss of the cargo carried by the steamers will have a major impact on the region s and nation s economy. The 8.1 million tons of iron ore these vessels carried in 2008 are equal to a year s 8

9 U.S. Environmental Protection Agency Page 9 of 15 production at a large iron ore mine in Minnesota. 8.1 million tons of iron ore charged into a blast furnace will make 5,400,000 tons of steel, or a year s operation at a major steel complex such as the east side of ArcelorMittal s Indiana Harbor Works (the former Inland Steel complex), which includes the largest blast furnace in North America. We parenthetically note that if that blast furnace, No. 7, had to be supplied by rail, it would take a train MORE THAN 2 MILES LONG to feed it for ONE day. While we foresee modal shifts occurring following the loss of the steamers, the iron ore trade is somewhat unique in that many steel mills lack rail access. In fact, since the steelmaking process is so raw materials intensive (generally speaking it takes 1.5 tons of iron ore, 400 pounds of fluxstone, and a quantity of coke to make a ton of steel), our largest steelmaking complexes are generally at water s edge to take advantage of the efficiencies of ship delivery. It is also worth noting that when America s steel industry has had to restructure, first in the mid-1980s, and then again about the turn of this century, it was for the most part the inland mills, those that lacked direct access to vessel delivery, that were shuttered. At ArcelorMittal Steel s Indiana Harbor complex, the overall ratio of Lake Inputs to Prime Steel is 2.2:1. Lake Delivered Inputs per Ton of Finished Prime Steel (With Fluxed Pellets, No Sinter. Does Not Include Any Lake-Delivered Coal or Coke) Process Output Lake-Delivered Input Ratio Input/Output Taconite Pellets Fluxing Stone 0.13 Blast Furnace Ironmaking Taconite Pellets 1.50 Siliceous Ore + Bauxite 0.03 Lime Production Limestone 2.00 Steel Slab Production BF Iron 0.96 Lime 0.05 Coil Production Steel Slabs 1.26 Overall Ratio, Lake Inputs/Prime Steel 2.20 What we foresee in the case of iron ore and finished steel is a sourcing shift. The United States will cut its steel production by 5.4 million tons and import a similar amount. It is not a given that this steel will be delivered to the region by oceangoing vessels transiting the St. Lawrence Seaway. The Lakes grain trade has decreased significantly, so with less potential for a backhaul cargo from the Lakes, oceangoing vessels will likely discharge this steel at coastal ports. The steel will then have to be railed or trucked to the Great Lakes basin. That s where it is needed. The Great Lakes region is home to 70 percent of our nation s auto plants and 55 percent of all heavy manufacturing. To move 5.4 million tons of steel by train or truck will push our overburdened rail and trucking industries to the brink. It would take 270,000 trucks to move 5.4 million tons of steel. More than 63,000 railcars would be required. Energy usage would skyrocket. Moving goods by truck consumes 9.7 times as much energy as a vessel traveling the same distance. Rail needs 2.2 times more energy. Marine transportation uses 9

10 U.S. Environmental Protection Agency Page 10 of 15 an average of.25 horsepower per ton. Rail uses an average of 1.0 horsepower per ton. Trucks use between 12 and 20 horsepower per ton. The 6.3 million tons of limestone hauled by the steamers are also a significant quantity. They are roughly equal to a year s production at a quarry in Michigan s Upper Peninsula, and the equivalent of about 65 percent of the annual capacity of the largest quarry that ships on the Lakes. Here we fear both a sourcing shift and a modal shift. As a general rule, limestone is not a rare commodity; the United States has an abundance of quarries. The region s construction industry may chose to buy its aggregate from local, landlocked quarries. However, it will take more than 250,000 trucks to carry the limestone moved by the 13 steam vessels. (In this instance, rail does not appear to even be an option. Most of the quarries are located in Michigan, and that state s rail system is inadequate. The quarries themselves generally lack rail access. One Ohio quarry dismantled its rail connection in the 1960s.) There is another potential environmental consequence. While aggregate is not in short supply, several Lakes quarries ship a type of limestone that has the chemical properties ideal for use in scrubbers in coal fired power plants. Its high calcium carbonate (>97 percent) and low bond work index make it easier and less expensive to grind in mills. The high CaCO3 scrubs more SO2 with less stone. Would it not be ironic if this EPA effort to reduce sulfur emissions from vessels had the effect of increasing emissions from power plants and other industrial activities and so forced utilities and industrial facilities to shut down, as they no longer could meet the emissions standards applied to them? One Great Lakes power company is concerned that the reduction in carrying capacity will impact its ability to supply a Michigan powerplant with stone for scrubbers. The annual need is more than 200,000 tons. Two steamers are dedicated to the cement trade. Since cement is face-powder fine, it can only be transported in vessels with cargo handling systems designed specifically for that commodity. It would take nearly 14,000 rail cars or 55,000 trucks to replace these two vessels carrying capacity. When the Great Lakes Commission compared switching the 262,500 tons of cement vessels typically deliver to Detroit per year, here s now emissions stacked up (in tons): MARINE RAIL TRUCK CO HC NOx SOCIETAL IMPACTS: LOSS OF LIFE AND LOSS OF JOBS We sincerely believe in the modal shifts we have forecast. A Great Lakes ECA will put waterborne cargo on trains and trucks. There will be a resulting loss of life. First let s look at the maritime industry s safety record. The last foundering on the Great Lakes was in 1975 when the EDMUND FITZGERALD sank. 29 men were lost. Then in 1990, the tanker JUPITER suffered an explosion while discharging in the Saginaw River. The vessel settled on the bottom. One crewmember died while abandoning ship. 10

11 U.S. Environmental Protection Agency Page 11 of 15 There have also been two incidents where commercial vessels hit recreational craft. Five lives were lost on the recreational craft. So since 1975, Great Lakes shipping has suffered 35 fatalities. According to the Federal Railroad Administration, in 2008, 210 people lost their lives in the eight Great Lakes states because of accidents involving trains. As noted, in 2008 the steamers carried 19.2 million tons of cargo. For the railroads to handle that much cargo, another 192,000 railcars would criss-cross the Great Lakes basin. The Great Lakes Commission s 1993 report estimated there would be 32 fatalities for each one million tons of ship-delivered cargo shifting to trucks. The 13 steamers that would be retired upon implementation of this proposal have on average 22 billets per vessel. A billet is a position on the ship that must be filled by a professional mariner. Since vessels operate 24/7, over the course of a year it takes on average 1.5 mariners to fill a billet. This means another 429 men and women will join the Midwest ranks of the unemployed. The loss of shipboard jobs is just the start. Every winter these vessels are maintained and modernized at Great Lakes shipyards. The retirement of these vessels will force shipyards to trim their employment. 7 And what about suppliers? Over the course of a season, a vessel operator will spend $150,000 just to feed the crew on a vessel. More jobs gone. BAN ON RESIDUAL FUEL PUTS INTERMEDIATE FUEL VESSELS AT RISK The steamers cannot safely operate on distillate fuel. That is a simple fact. However, the ban on residual fuel threatens another 13 U.S.-Flag lakers that burn intermediate fuel. Although the same in number as the steamers, they represent a much greater carrying capacity: LCA VESSELS BURNING INTERMEDIATE FUEL (Listed in Order of Per-Trip Carrying Capacity) Name Built HP Capacity (net tons) HP/NT Cargos Typically Carried EDWIN H. GOTT ,500 69, Iron ore PAUL R. TREGURTHA ,120 69, Coal, iron ore EDGAR B. SPEER ,260 69, Iron ore JAMES R. BARKER ,000 67, Coal, iron ore MESABI MINER ,000 67, Coal, iron ore AMERICAN SPIRIT ,000 66, Iron ore PRESQUE ISLE ,000 58, Iron ore, limestone ROGER BLOUGH ,000 50, Iron ore, limestone CHARLES M. BEEGHLY ,040 35, Iron ore, coal, limestone LEE A. TREGURTHA ,040 32, Iron ore, coal, limestone JAMES L. KUBER ,880 28, Limestone JOSEPH H. THOMPSON ,500 23, Iron ore, coal, salt MAUMEE ,240 14, Limestone, coal, salt Total Carrying Capacity 653,007 7 With business conditions so depressed, Bay Shipbuilding Company forecasts 405 lay-offs as it is. See Chicago Tribune, August 26, 2009, Shipbuilder Notifies State of 405 Layoffs. 11

12 U.S. Environmental Protection Agency Page 12 of 15 Since this group of vessels includes seven of the thirteen 1,000-footers, they represent a very significant share the industry s hauling power: CARGO MOVEMENT BY LCA-REGISTERED VESSELS BURNING INTERMEDIATE FUEL (tons) Commodity 2008 Total % of U.S.-Flag Float % of Lakes Total Iron ore 18,213, Coal 7,401, Limestone 2,284, Salt 702, Sand 190, Not Known Totals 28,792, While these vessels can safely burn distillate fuel, the addition cost - $1 per gallon is an increase of nearly 70 percent. That is the equivalent of taking the price of gasoline from its current Midwest average of $2.46 to $4.18. The highest gas has ever been is $4.10. We all remember how those soaring gas prices increased the price of everything from milk to clothes. Switching these vessels to distillate could well make them non-competitive and force more cargo to land-based modes. ABILITY TO MOVE SALT IMPACTED One of the vessels burning intermediate fuel is the 1929-built MAUMEE. This is one of only six U.S.-Flag lakers that carry that commodity. Salt is extremely corrosive, so many operators decline to carry that cargo. As a result of carrying the salt, the MAUMEE is a very expensive vessel to maintain. Steel renewal is essentially an annual event. According to the operator, the vessel does not generate enough revenue to cover the additional costs associated with burning distillate fuel. The ship would have to be scrapped. NO STRONG CASE FOR GREAT LAKES ECA On August 25, 2009, representatives from Lake Carriers Association, its members, some major customers, and some fuel suppliers met with EPA staff in Ann Arbor, Michigan to discuss the vessel emission controls and ECA. When asked why a part of Alaska is exempted from the ECA, an EPA representative responded the agency did not have a strong case for the Aleutian Islands and Arctic Alaska. We submit the same is true for the Great Lakes. The EPA has presented nothing that documents a need for an ECA on the Great Lakes. We fear this is a repeat of the EPA s 1999 National Emission Inventory, which, upon examination, was found to vastly overstate vessel emissions in the Port of Cleveland, Ohio. What made matters worse was that the EPA then used those flawed Cleveland findings as the marine transportation mode emissions baseline that was extrapolated to all other Great Lakes port states, cities, and counties based on port tonnages. When LCA 12

13 U.S. Environmental Protection Agency Page 13 of 15 performed its own analysis of vessel emissions in the Port of Cleveland, Great Lakes marine mode emissions were shown to be about one-half of the original study estimates. 8 A complete copy of LCA s analysis is included with GLMTF s submittal. To summarize the findings, we determined the EPA had overestimated HC by 279 percent; NOx by 193 percent; CO by 112 percent; PM-10 by 310 percent; and S02 by 321 percent. NO CORRELATION BETWEEN VESSELS AND NON-ATTAINMENT AREAS At the August 25 meeting with EPA, a representative stated that emissions from vessels can travel hundreds of miles. If vessels are so polluting, then it strikes us odd that the northern shore of Lake Superior is not a Non-Attainment Area for Particulate Matter in the EPA graphic below: Sustainable Must Mean Healthy Air: U.S. Ports and Nonattainment Areas More than 40 major ports are located in PM 2.5 or ozone nonattainment areas About 88 million people live in 39 areas that do not meet the PM 2.5 NAAQS or that contribute to violations in other counties In a typical year, the Ports of Superior (Wisconsin), Duluth (Minnesota), Two Harbors (Minnesota), Silver Bay (Minnesota), Taconite Harbor (Minnesota) and Thunder Bay (Ontario) ship and receive 55 million tons of cargo (remember the entire U.S.-Flag fleet moves 115 million tons per year) which requires the loading and discharge of perhaps 2,000 vessels that are in port for at least 5 or 6 hours, usually about 10, and in the case of oceangoing vessels, for days. The graphic above does show that Greater Detroit (generally handling 15 million tons) and Greater Cleveland (typically handling 13 million tons per year) are Non-Attainment Areas. While these are major ports, they are also major industrial centers, home to steel mills, auto plants, power generation facilities, factories of all sorts. We suggest it is shoreside activity, not waterborne commerce, that determines where the Non-Attainment Areas are in the Great Lakes basin. 3 8 Great Lakes Marine Air Emissions We re Different Up Here! by Richard W. Harkins, P.E., and Vice-President Operations, Lake Carriers Association. Copy attached with GLMTF statement. 13

14 U.S. Environmental Protection Agency Page 14 of 15 QUESTIONABLE IF THERE S ANY NET BENEFIT In the previously-cited LCA 2006 study, the emissions of various marine propulsion plants were compared. As the table below illustrates, steamers emissions are a small fraction of diesels emissions for HC, NOx, and CO. It s really only in Particulate Matter that diesels are superior. (Dissolved oxygen [O2]) is not a pollutant.) U.S. EPA Recommended Specific Emission Factors for the Great Lakes (August 2006) Engine Category HC NOX CO PM PM-10 PM-2.5 O2 Cat 2 (on MDO) Cat 3 medium speed-mdo Cat 3 medium speed-ro Cat 3 slow speed Steam (RO) Aux medium speed-mdo HC and NOx are major contributors to ozone. We submit that to achieve the health goals of the Notice of Proposed Rulemaking, the EPA should be encouraging the retention of steam, not regulating its demise. TRANSPORTATION RATE SAVINGS FORFEITED The U.S. Army Corps of Engineers report referenced on page 2 (environmental superiority of waterborne commerce) also determined that Great Lakes shipping is a tremendous economic asset. That report determined that Great Lakes shipping annually saves its customers $3.6 billion in transportation costs compared to the next least costly mode of transportation. Since the steamers carry approximately 20 percent of the U.S.-Flag float, one can conclude that their extinction, thanks to this rulemaking, will reduce the savings by 20 percent, or $720 million per year. If the vessels burning intermediate fuel are also retired because they can no longer compete, the fleet loses 52 percent of its capacity and the saving is reduced by $1.8 billion. Can U.S.-based manufacturing in the Great Lakes and beyond compete globally with the increased costs? Will the proposal result in the movement of jobs and carbon shifting? ONCE FLEET IS GONE, CAN T BE REBUILT As noted earlier, there are four major shipyards on the Great Lakes. If the 26 vessels affected by this rulemaking were scrapped, but demand for waterborne commerce remained steady, these are the yards that would have to rebuild the fleet. These yards do not have the capacity to build 26 vessels in a reasonable period of time. Only Bay Shipbuilding has been actively engaged in building large vessels in recent years, all of which were either barges or small ferries for use outside of the Great Lakes Region. The level of activity at the Toledo, Ohio and Erie, Pennsylvania yards has been extremely low of late. The cost of replacing the U.S.-Flag Great Lakes fleet would be more than $3 billion, an expense that could be undertaken only with long-term haulage contracts. However, long-term contracts are a thing of the past. Steel companies and utilities no longer sign 25-year haulage contracts. 14

15 U.S. Environmental Protection Agency Page 15 of 15 IN SUMMATION The economic and environmental impacts of applying this diesel engine and fuel standard designed and evaluated for oceangoing vessels to vessels operating exclusively on the Great Lakes will be significant and negative. This ban on the use of residual fuel on vessels will force the premature retirement of perhaps as many as 26 U.S.-Flag Great Lakes vessels. The loss of carrying capacity will produce both modal and source shifts that will eradicate any environment benefit from exclusively using distillate fuel for our vessels. The U.S. EPA has failed to fully examine the consequences (both cost and benefits) of this proposed rulemaking within the Great Lakes Basin. Therefore, the EPA must withdraw this proposed application and properly study the Great Lakes environment, economy, and the impacts of Great Lakes shipping. Only then can the agency proceed with such a rulemaking. Sincerely, JHIW:GGN:lca G:\WEAKLEY\0-LETTER\2009\ EPA ECA.doc James H. I. Weakley President cc: Members - LCA Board of Directors Members - LCA Fleet Engineers Committee Members - LCA Navigation Committee Mark H. Ruge - K&L Gates Barry Hartman - K&L Gates Bruce Bowie - Canadian Shipowners Association 15