Maritime

Friday, October 31, 2014

Metro Vancouver Completes Overpass Project

By Mark Edward Nero

Port Metro Vancouver on Oct. 24 celebrated the completion of the new Roberts Bank Causeway Overpass, a major infrastructure project that is expected to improve container handling capacity at Canada’s largest container terminal.

The project is expected to improve the efficiency of the Roberts Bank Rail Corridor, which serves the Deltaport Container Terminal in Delta, British Columbia. Deltaport handles 50 percent of the containerized cargo that moves through Canada’s West Coast.

The overpass, which is also expected to increase rail capacity and enhance the safety and fluidity of traffic to and from the terminal, involved the construction of a two-lane overpass to provide grade separation between rail tracks and the Roberts Bank Causeway access road adjacent to the terminal.

The separation of road and rail traffic will improve safety for transportation operators involved in the movement of goods for international trade, according to the port, and also significantly improve the fluidity of inbound and outbound containers, plus contribute to additional capacity at the terminal, roughly 150,000 to 200,000 new 20-foot equivalent units annually.

The overpass project, which began construction in early 2013, is an element of the Deltaport Terminal Road and Rail Improvement Project, a plan developed by the port to reduce delays and inefficiencies in rail and truck operations and to increase cargo-handling capacity at Deltaport.

“The Deltaport Terminal, Road and Rail Improvement Project at Roberts Bank is increasing the efficiency of the Deltaport terminal so that it can better handle growing demand for container trade to and from Asia,” Port Metro Vancouver President & CEO Robin Silvester explained. “This portion of the project is eliminating delays and congestion for truckers and increasing rail capacity by providing a roadway over rail lines on the Roberts Bank causeway.”

The total cost of the project was $44.7 million: Port Metro Vancouver contributed $24.8 million, while the federal government pitched in $19.9 million.

San Diego Port Finances Rebound

By Mark Edward Nero

The Port of San Diego generated a $12.5 million surplus during the 12 months ending June 30, 2014, the port’s Board of Port Commissioners was told during it Oct. 14 meeting.

The port’s Fiscal Year 2014 revenue of $157.8 million exceeded the budget of $150.4 million, while expenses of $133.3 million were lower than the budgeted $139.3 million, which resulted in the surplus after deducting $12 million in debt service, capital items and reserves.

The surplus is a turnaround from the most recent recession and ongoing recovery period. Even during the recovery, the port has continued to experience a decrease in revenues while faced with the increasing cost of doing business. As a result, the port’s annual budget process has faced challenges, as the Board and management grappled with resetting the agency for long-term financial sustainability and future success.

Since 2009, the port has reduced employees nearly 20 percent via attrition, but without layoffs. In 2009, the port was among the first agencies in California to reform its retirement plan and health benefits and in 2011 the port began a multi-year reorganization that included an early retirement incentive program, furloughs and a hiring freeze.

“In recent years, the Port of San Diego has been faced with hard choices. Our strong budgetary performance for Fiscal Year 2014 shows that we have achieved a financial recovery, providing us with additional resources to support our stewardship of San Diego Bay,” Board of Port Commissioners Chair Bob Nelson said. “This budget surplus reflects the combined efforts of port staff, labor partners and the Board. We’re on our way out of this economic downturn.”

The port’s management has said that as the economic recovery continues, the port will continue developing its cruise, cargo and commercial real estate business lines to generate revenue, while remaining vigilant about cost control.

Waterways Assn. Announces Award Winners

By Mark Edward Nero

The Pacific Northwest Waterways Association, a nonprofit trade association that advocates for federal policies and funding in support of regional economic development, recently honored five people for their contributions to the Northwest navigation, energy, irrigation and recreation communities.

The recipients of the 2014 Distinguished Service Awards were announced in conjunction with PNWA’s 80th annual convention, which was held Oct. 15-17 in Vancouver, Washington.

This year’s honorees were: Capt. Paul Amos, president of the Columbia River Pilots; Kevin Brice, the deputy district engineer for programs and project management for the US Army Corps of Engineers’ Portland District; Martin Callery, the chief commercial officer for the Port of Coos Bay; Ann Glassley of the US Army Corps of Engineers, Walla Walla District (retired); Port of Everett Executive Director John Mohr; and Port of Portland Executive Director Bill Wyatt.

All were lauded for going “above and beyond the call of duty to support Northwest transportation infrastructure, trade, tourism, and environmental restoration,” according to the PNWA.

Also during its annual convention, the PNWA also announced US Rep. Mike Simpson (RID) as the recipient of the Waterways Association’s 2014 Legislator of the Year award.

“PNWA and its members are especially grateful for his leadership on the House Energy & Water Appropriations Subcommittee, and his support for inland and deep draft navigation on the Columbia Snake River System,” the organization, which represents over 130 public and private sector member organizations in Oregon, Washington, Idaho and California, said in an announcement.

2014 Seattle Cruise Season Exceeds Estimates

By Mark Edward Nero

Port of Seattle cruise terminals welcomed 179 vessel calls and 823,780 revenue passengers in 2014, according to port data, with each cruise vessel bringing in an estimated $2.2 million for the local economy.

The port says it anticipates 192 vessel calls and 895,055 revenue passengers in 2015.

“Our cruise industry has grown into a major economic driver for the Puget Sound region,” Port Commissioner John Creighton said. “For the seventh straight year, our cruise business exceeded 800,000 passengers. We remain committed to growing that number, as well as getting cruise-going visitors to stay here a few extra days.”

Seattle’s cruise business, which currently leads all cruise homeports on the West Coast in passenger volume, is responsible for nearly 4,000 jobs, $372 million in annual business revenue, and $16.6 million annually in state and local tax revenues, according to port data.

The seven homeport cruise lines at Seattle are: Carnival Cruise Lines, Celebrity Cruises, Holland America Line, Norwegian Cruise Line, Oceania Cruises, Princess Cruises and Royal Caribbean.

In 2015, with the addition of Holland America’s Statendam vessel every other Monday, there will be seven cruise lines with eleven premier home port vessels offering seven, 10 and 14-day cruises to Alaska, according to the port.

Tuesday, October 28, 2014

The EPA and the Clean Water Act – Don't Hate the Player, Hate the Game

By Isaak Hurst

On August 4, 2014, a tailings dam ruptured at the Mount Polley mine site, sending an initial estimate of 14.5 million cubic meters of mine waste into the salmon-rich waters of British Columbia’s Fraser River. Shortly after the spill, Imperial Metals Corp., the owner of the mine, revised these numbers to 25 million cubic meters of waste. By way of comparison, if this waste were oil, the amount spilled would be enough to power the whole of Great Britain for 100 days; fill 78 supertankers; or replicate the Exxon Valdez catastrophe 208 times over. Indeed, with numbers like that, there is no question that the Mount Polley incident will be one of the most disastrous environmental events in modern history.

Naturally, Alaska has no interest in seeing its salmon populations decimated by an incident like the one above. Concurrently, Alaska has no interest in shutting down its mining operations out of fear of replicating the above incident. After all, the cumulative production value of Alaska’s mining industry is around $3.4 billion annually, which makes Alaska’s minerals its second largest export commodity after oil. Moreover, Alaska’s mining industry provides nearly 4,600 Alaskans with jobs (many of which are directly tied to maritime transportation and trade), which creates $360 million in payroll every year. Indeed, for better or for worse, Alaska’s economic wagon is hitched to its mining industry.

In recent months, however, a wave of Federalist panic has hit Alaska’s mining industry. It seems that, in addition to unleashing 25 million cubic meters of waste, the Mount Polley mine disaster has unleashed a barrage of congressional overreach arguments concerning the Environmental Protection Agency (EPA). The concern being that the EPA will use the Clean Water Act as a regulatory means to shut down or severely restrict mining activity in Alaska in an effort to prevent a Mount Polley incident from occurring in Alaska. Most of these concerns about congressional overreach, however, are unwarranted.

The Clean Water Act
Under the Clean Water Act, the US Army Corps of Engineers is authorized to issue permits for discharged dredged or fill material at specific sites in US waters. However, a particular section of the Clean Water Act, 404(c), grants the EPA unilateral veto authority over the site selected by the Army Corps of Engineers to receive the discharge. Section 404(c) states in relevant part:
The [EPA] Administrator is authorized to deny or restrict the use of any defined area for specification as a disposal site, whenever he determines… if the discharge of such materials into such areas will have unacceptable adverse effects on municipal water supplies, shellfish beds, and fishery areas (including spawning and breeding areas), wildlife, or recreational areas.

Put another way, 404(c) authorizes the EPA to withdraw any approved discharge site permit whenever it determines the discharge will have an adverse effect on the environment. Incidentally, like most legal arguments, millions of dollars depend on the interpretation of a single word—whenever.

The Mingo Logan Decision
The “whenever” term of art was challenged in Mingo Logan Coal Company v. EPA, in 2013. There, a West Virginia coal company (Mingo Logan) applied for a 404 permit under the Clean Water Act in order to discharge dredged materials from a mountaintop coal mine into three steams and their tributaries. Initially, Mingo Logan obtained the necessary permit from the Army Corps of Engineers, which allowed it to discharge materials at the requested disposal sites. However, four years later, the EPA invoked its 404(c) authority and withdrew the permit (citing environmental concerns with the project). Subsequently, Mingo Logan filed a lawsuit challenging: (1) the broad nature of the term “whenever” under 404(c), and (2) the EPA’s authority to withdraw a permit after the Army Corps of Engineers has already issued a permit.

As to the first legal issue, the court found that Section 404(c) of the Clean Water Act imposes no temporal limit on the EPA’s authority to withdraw the Corps’ permit. The court determined that by using the expansive conjunction “whenever,” Congress made plain its intent to grant the EPA authority to prohibit/deny/restrict/withdraw a permit at any time. As a result, the court held that the unambiguous language of 404(c) manifests Congress’ intent to confer on the EPA a broad veto power extending beyond the permit issuance, which meant that the EPA was acting within its authority when it vetoed Mingo Logan’s permit.

As to the second legal issue, the court found that the EPA’s timing of the veto was outside the EPA’s Clean Water Act authority. After all, the EPA withdrew the permit four years after the Army Corps of Engineers had initially issued it. In reaching its decision, the court reasoned that awarding the EPA such broad authority would assert “a scenario involving the automatic self-destruction of a written permit … after years of study and consideration. Poof!” However, this legal victory was short lived, and the Court of Appeals reversed the district court’s decision. Since then, the Supreme Court has declined to hear Mingo Logan’s final appeal, which now means that Section 404(c) of the Clean Water Act expressly empowers the EPA to prohibit/deny/restrict/withdraw a discharge site permit “whenever” the EPA makes a determination that the statutory “unacceptable adverse effect” will result.

Setting a Precedent
Opponents of 404(c) argue that the EPA is setting a dangerous precedent for future projects by preemptively stopping mining projects before they enter the permitting process. To this end, the opponents are right. After all, the Mingo Logan decision supports a legal argument that the EPA may veto a site selection even after the Army Corps of Engineers issues a site permit. So, intuitively, what would prevent the EPA from preemptively stopping projects before they start?

That said, to say the EPA is setting a dangerous precedent is a bit dramatic. In fact, in its 42-year history, the EPA has only exercised its 404(c) authority thirteen (13) times, and only two of those determinations have been in last twenty years – one of which being the Mingo Logan decision. 
Considering the Army Corps of Engineers processes approximately 60,000 permits a year, the odds of the EPA flagging the average mining operation anytime soon are pretty slim. Statistical probability aside, however, the fact that the EPA rarely uses its 404(c) authority does not mean it will hesitate to use its authority in the future. Interestingly enough, this is the Pebble Project’s biggest fear.

Pebble Mine v. EPA
On May 22, 2014, the Pebble Limited Partnership (PLP) filed a lawsuit in district court seeking an injunction to stop the EPA from preemptively vetoing the Pebble Project under 404(c) of the Clean Water Act. Similar to the Mingo Logo complaint, Pebble is arguing that EPA’s actions exceed its authority under the Clean Water Act. In all likelihood, however, with the current case law and regulatory framework in place, the PLP’s injunction will not stop the EPA from invoking its authority under the 404(c).

As we have seen in the Mingo Logo decision, the EPA’s authority under the Clean Water Act has been well defined and well tested in US courts, and although there has been an occasional judgment overturned, none of these judgments have survived the appeal process. Indeed, the US Court of Appeals always arrives at the same conclusion: the EPA has broad discretional auditory under 404(c) to prohibit/deny/restrict/withdraw a permit that fails to address the EPA’s environmental concerns. Put another way, any legal attacks the PLP makes on the EPA’s authority under Section 404(c) of the Clean Water Act will not be successful.

Conclusion
Although the Mount Polley mine disaster has unleashed a torrent of congressional overreach arguments, the average Alaskan should not worry about the call to arms over the EPA’s alleged overreach of judicial power. The veto authority is there and has been for 42 years. Indeed, nothing short of an act of Congress is going to change this fact. For the Pebble Project, however, 404(c) might just be the final nail in the coffin.

Isaak Hurst is an attorney with the International Maritime Group, PLLC – a boutique law firm that provides legal services to the maritime, oil and gas, mining, and international business communities of the Pacific Northwest. He can be reached atIsaak.Hurst@InternationalMaritime.net.

Matson Pleads Guilty to Harbor Spill

By Mark Edward Nero

Matson Inc. said Oct. 21 that it has pled guilty and agreed to pay $1 million to settle charges that it spilled more than 230,000 gallons of molasses into Honolulu Harbor in September 2013.

Under the agreement, Matson Terminals pleaded guilty to two counts of violating the Rivers and Harbors Act of 1899. The charges had been filed by the US Attorney’s Office in Hawaii in response to the spill, which occurred on Sept. 9 and 10, 2013 when the molasses leaked at Pier 52 through a hole in a pipe. About 233,000 gallons of molasses spilled into Honolulu Harbor.

The spill is believed to have caused or contributed to the deaths of about 25,000 fish and much of the reef in both the harbor and nearby Keehi Lagoon.

“Matson has cooperated with the US Attorney’s office and the EPA Criminal Investigation Division throughout their investigation of the September 2013 molasses incident,” Matson President and CEO Matt Cox said in a statement announcing the resolution. “While we regret the incident, we are focused on resolving the matter, subject to the court’s approval of the agreement. We continue to cooperate with the state and the EPA in an effort to address impacts from the incident.”

Of the $1 million Matson has agreed to pay, $400,000 is a fine, while $600,000 is a community service payment. Of that amount, half is to be donated to the Waikiki Aquarium, while the other $300,000 is earmarked for the Sustainable Coastlines Hawaii environmental organization, which organizes local beach cleanups.

Matson, which halted its molasses pipeline system at the harbor’s Sand Island terminal after the spill, said it has yet to resolve any civil claims by the U.S. Environmental Protection Agency or claims by the state of Hawaii arising from the spill.

The agreement is still subject to approval by the US District Court.

Crowley Barge Aiding Canal Expansion

By Mark Edward Nero

Crowley Maritime Corp.’s heavy lift barge 455-4 has successfully delivered the first in a series of new gates for the ongoing Panama Canal expansion, Crowley said Oct. 25.

The 455-4 was contracted by Sarens, a Belgium-based heavy lift company, to transport the gates from Cristóbal, a port on the Atlantic side of the Canal, to a construction dock built to receive the gates on the canal’s Pacific side.

The 105-foot wide barge, currently the largest capable of transiting the canal, was towed by Panama Canal Authority tugs and made the transit in just one day.

Crowley is scheduled to help transport all eight of the gates involved in the Pacific side lock expansion of the canal.

“Crowley provided Sarens the barge to complete this important step in the historical expansion of the Panama Canal,” Crowley Solutions Group Vice President John Ara, said.

The 455-4 is one in a series of eight high deck strength barges in Crowley’s fleet able to handle uniform loads up to 4,200 pounds per square foot. The barge is scheduled to transport three more gates during both November and December.

The Canal expansion project involves widening the channel and adding a third set of locks, one set on the Pacific and the other on the Atlantic side. The new locks require 16 gates which, when complete, will increase efficiency and allow larger, post-Panamax ships and extended width barges to traverse the canal.