Inland Port 2015 • Issue 1
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Controlling Your Port’s Emissions Exclusive Interview with Louisiana Senator David Vitter New Industry Studies Released
Inland Port
2015 Issue 1 • Volume VII ISSN 2156-7611
www.inlandportmagazine.com @inlandportmag Published bimonthly by
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Hudson Jones Publications, LLC Houston, Texas • Tulsa, Oklahoma 281-602-5400 EDITOR Daron Jones djones@inlandportmagazine.com DIRECTOR OF ADVERTISING Jo Anne Hudson jhudson@inlandportmagazine.com Entire contents ©2015, all rights reserved. Reproduction in whole or in part, without written permission of Hudson Jones Publications, LLC, is prohibited. The publisher accepts no responsibility for content of any advertisements solicited and/or printed herein, including any liability arising out of any claims for infringement of any intellectual property rights, patents, trademarks, trade dress and/or copyrights; nor any liability for the text, misrepresentations, false or misleading statements, illustrations, such being the sole responsibility of the advertisers. All advertisers agree to defend, indemnify and hold the publisher harmless from all claims or suits regarding any advertisements. Due to printing and ink variances, the publisher does not guarantee exact color matching. Opinions expressed by writers are not necessarily those of the publisher or staff. Readers’ views are solicited (djones@inlandportmagazine.com). Publisher reserves the right to publish, in whole or in part, any letters or correspondence received. Publisher assumes no responsibility for unsolicited material.
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Are Your Port’s Emissions Under Control?
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Senator David Vitter Honored by WCI
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New Studies Underscore Economic Impact of US Ports and Waterways
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Wisconsin Ports React to Governor’s Proposed Budget Cuts
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Coalition Applauds Quick Action on Vessel Discharge Legislation
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WCI Comments on President Obama’s FY 2016 Budget Request
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Recent Maritime Law Case Summaries
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Liebherr Launches Giant Mobile Harbor Crane LHM 800
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Terex Port Solutions Delivers New Harbor Cranes; Stepan Named New Tenn-Tom Authority Administrator
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Alabama Port Authority Receives A-Minus Rating from Fitch
Inland Port 2015 • Issue 1
By Robert P. Newman, P.E., BCEE, Principal, Zephyr Environmental Corp., Columbia, Maryland
Exclusive IP interview with the Republican senator from Louisiana.
Reports from the National Waterways Foundation and the American Great Lakes Ports Association.
By Paul J. Loftus, Dinsmore & Shohl, LLP, and Katherine E. Beyer, University of Kentucky College of Law
20 Industry News & Notes
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Are Your Port’s
s n o i s s i Em
By Robert P. Newman, P.E., BCEE Principal Zephyr Environmental Corporation Columbia, MD 4
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2015 Issue 1
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Under Control T
he United States is served by some 360 coastal and inland commercial ports that, as a whole, represent a significant part of the country’s economy. Each year, U.S. ports are responsible for handle about 2 billion tons of cargo (import, export, and domestic). Shipping is projected to substantially increase in the next decade. Since ports in the U.S. are such major hubs of economic activity, they also can be major sources of pollution. Enormous ships with engines running on a variety of fuels, thousands of diesel truck visits per day, mile-long diesel locomotives hauling cargo, and other activities at marine ports cause an array of environmental impacts that can potentially affect local com-
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munities and the environment. One of the most significant of the environmental impacts is air pollution. This impact is amplified by the fact the most of the major ports are in regions of the county currently classified as in non-attainment with the USEPA Clean Air Act (CAA). To compound air quality issues, most major ports in the U.S. are undergoing expansions to accommodate even greater cargo volumes. The growth of international trade has resulted in the rapid growth in the amount of goods being shipped by sea. Other factors, such as the eventual widening of the Panama Canal, will allow for more, and much larger, vessels carrying increased cargo tonnage inlandportmagazine.com • @inlandportmag
to frequent US ports. For decades, the size of the Panama Canal has been a constraint on the maritime industry, which has been building ships that significantly exceed the canal’s navigable dimensions, limiting direct international trade options, most especially for East and Gulf Coast ports of the U.S. These factors will affect coastal ports, but will also have a direct and immediate impact to America’s inland port facilities. Managing air quality issues at America’s inland ports fall within two categories. EMISSIONS FROM PORT IMPROVEMENTS The first is to address emissions associated with port improvements, 5
such as dredging and land-side construction activities. Such activities can actually require regulatory approval under the provisions of the Clean Air Act, specifically a statue known as General Conformity. The General Conformity Rule establishes conformity in coordination with, and as part of, the National Environmental Policy Act (NEPA) process. It applies to regions that are in non-attainment with USEPA air quality standards. The rule takes into account air pollutant emissions associated with actions that are federally funded, licensed, permitted, or approved, and ensures emissions do not contribute to air quality degradation, thus preventing the achievement of state and federal air quality goals. Succinctly, General Conformity re-
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fers to the process of evaluating plans, programs, and projects to determine and demonstrate that they meet the
requirements of the CAA and applicable State Implementation Plan (SIP). Conformity determination is a twostep process: (1) applicability analysis, and (2) conformity analysis. Applicability analysis is achieved by comparing the project’s annual
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emissions to “de minimis” pollutant thresholds outlined in the conformity rule. The more severe the “non-attainment” status of a region, the smaller the corresponding de minimis threshold is set. Projects that are over the thresholds are required to offset emissions by mitigation or the use of emission reduction credits (ERCs). There are exemptions to the General Conformity applicability that are favorable to inland ports. For example, dredging that is considered “maintenance” is not regulated by the process. OPERATIONAL EMISSIONS The second category of emissions ports need to be concerned with are operational emissions, both landside and waterside.
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This is typically done by the use of an Emission Inventory (EI). An EI will allow a port to better understand the emissions from typical port activities; will help the port, its tenants and the community to prioritize emissions reduction efforts; and will provide a baseline for tracking progress in reducing air pollution. Air pollution emission inventories can also become the basis for trends analysis, regional and local scale air quality modeling, greenhouse gas studies, regulatory impact assessments, and human exposure modeling. Understanding operational emissions will also help in determining compliance with local air quality regulations and permits. There are many regulatory drivers that will continue to restrict air pollutant emissions from port operations. Many States have adopted requirements in their SIP that restrict operations of ships and vehicle fleets (e.g., idling times). The EPA has also adopted the International Maritime Organization (IMO) requirements that provide timelines for aggressive emission reductions of a variety of pollutants including SOx, NOx, and particulate matter. IMO has also adopted mandatory technical and operational energy efficiency measures which will significantly reduce the amount of CO2 emissions from international shipping. The IMO has recently introduced Emission Control Areas (ECAs) to reduce emissions of air pollutants further in designated sea areas around globe, including the U.S. IDENTIFY YOUR PORT’S EMISSIONS To characterize emissions from port operations there are a wide range of analytical methodologies. The procedures can be quite varied and complex due to the diverse nature of emission sources at ports. The main emissions sources include ocean-going vessels, harbor craft, cargo handling equipment, rail operations, and heavy duty trucking. Each of these categories will have 2014 Issue 5
numerous types of sources and parameters, each with unique emission signatures. For example, for marine vessels the determination of the emission factor to be used (g/HP-hr), horsepower of engine, and load factor would of prime importance in calculating emissions. Addressing air quality challenges at U.S. inland ports is manageable, but does take a well-planned and focused approach. The protection of air resources, while at the same time ensuring economic viability and competitiveness, is the key. An important part of any strategy is to build partnerships among port stakeholders to promote ongoing efforts to reduce emissions from port operations. Such stakeholders include community groups, local governments, terminal operators, shipping carriers, and other business entities. IP Robert P. Newman, P.E., BCEE, is a Principal at Zephyr Environmental Corporation in Columbia, MD.
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Senator David Vitter Honored by WCI
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helped spur me to lead the effort on these issues, first in the Louisiana state legislature, later in the House of Representatives, and now as the lead Republican on the Senate’s infrastructure subcommittee.
regarding US waterways going forward? There were, of course, negotiations and substantive policy disagreements, but we were able to work through them. Sen. Barbara Boxer (D-Calif.) was the chair of the committee while I was the Ranking Member. We’re obviously on opposite ends of the political spectrum, but we put our differences aside to pass a strong bill. We passed strong versions of this bill through both the Senate and the House of Representatives, and the final bill passed with bipartisan majority votes. Frankly, the biggest obstacle moving forward is getting the Corps of Engineers and the Administration to quickly and accurately implement and fund the provisions we included in WRRDA.
What, in your view, were the most difficult obstacles to overcome in finally getting WRRDA passed last year? Will those obstacles still be problems for further legislation
What is your stand on the call for a uniform national framework for the regulation of vessel discharges? I’m a strong supporter of establishing a reasonable national standard
aterways Council recently named Senator David Vitter (R-LA) and Senator Lamar Alexander (R-TN) the recipients of WCI’s 14th Annual Leadership Service Awards for their strong and continued leadership on ports and inland waterways issues. In the following exclusive IP interview, Senator Vitter was kind enough to share his thoughts on where our industry stands, and where it is going. We will have our interview with Senator Alexander in the next edition.
How and when did America’s inland ports and waterways system become important to you as a public servant? As a Louisianian, I’ve always understood the importance of our inland ports and waterways. I grew up in New Orleans, right down the street from the Port of New Orleans, and I’d watch the barges and container ships roll down the Mississippi River. And I live with my family just outside the city now. That background
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WCI President Mike Toohey (center) presents Waterways Council, Inc.’s 14th Annual Leadership Service Awards to Senator Lamar Alexander (R-TN, left) and Senator David Vitter (R-LA, right).
for vessel discharges, and I’m a co-author of legislation to fix this problem. Our maritime industry operates across the country – it can’t manage 50 different sets of regulations. The best way is to have an achievable, science-based national standard. What is ahead, in terms of legislative battles regarding America’s inland ports and waterways? What should the industry prepare itself for? Congress, the Administration and the Corps of Engineers need to make sure all of the funds paid into the Harbor Maintenance Trust 10
Fund are used to maintain our nation’s ports and waterways to their authorized width and depth. We also need to make substantial investments to build and rehabilitate our deteriorating inland waterway locks and dams. Many of them are operating beyond their 50-year lifespan and are at risk for shutting down parts of our inland waterway system. Looking forward, the industry should also prepare for the expansion of the Panama Canal to accommodate larger vessels. How important is the next presidential election for our industry?
It will be extremely important. Our next President, which I hope is a Republican, needs to make investing in our port and waterway infrastructure a top priority. Our country made tremendous investments in infrastructure during the mid-20th century and that led to increased economic growth. Today, this Administration is more focused on cutting that investment – as evident in the President’s most recent budget proposal – and pushing egregious regulations that stymie economic growth. Also, I will strongly convey to any president that we need to ensure that the Corps has
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a strong, unified, efficient plan of action in place to avoid bureaucratic delays to various projects. In a general sense, it seems as if the general public simply does not think about the waterways – if they think of them at all – as a vital economic conduit that must be properly maintained and funded. How would you explain to the uneducated, or “non-believers,” that the ports and waterways system is just as important economically as road or rail, not only in your state of Louisiana, but the entire country? All it should take is look2014 Issue 5
ing at our country’s greatest natural resource, the Mississippi River. It serves 31 states in America’s heartland. Moving goods and services through our ports and waterways is considered the most efficient, economical, and environmentally friendly mode of commercial transportation. One out of every six American jobs depends on trade and maritime commerce. $180 billion of goods per year travel on American waterways, to and from American ports. And if that isn’t persuasive, consider that many of the products we use in our daily routine – like cellphones, cars, and computers – were imported through our coastal and inland ports. If we don’t maintain those ports and waterways, the increased cost to ship those products will be passed on to consumers.
added additional criteria to the allocation of HMTF funds such as commercial fishing and energy sector activities, and lowered the federal maintenance depth from 45-feet to 50-feet to accommodate larger vessels. Is your state doing anything specifically to prepare for the changes that will come when the Panama Canal expansion is complete? I absolutely believe we have to position Louisiana to take advantage of the Post-Panamax vessels coming online. I’ve led the charge with many of Louisiana’s maritime industry leaders to deepen the Mississippi River to 50-feet in order to accommodate those vessels. I’ve also held multiple meetings with Corps leadership that have resulted in the deepening study being funded in the past two fiscal years and included in the FY 2016 President’s Budget. I am encouraged that Louisiana and the Corps will complete this study expeditiously and begin the important work of deepening the Mississippi River ship channel. IP
Speaking of Louisiana in particular, how would you grade the condition of your state’s waterways infrastructure (locks, dams, ports, etc.)? I believe we’ve done a good job developing Louisiana’s ports. The Port of South Louisiana is the #1 port in the country in terms of moving commercial tonnage. We have another four deepdraft ports — on the Mississippi and Calcasieu rivers — in the Top 15. That’s pretty impressive for one state. Our coastal ports – Port Fourchon, Terrebonne, Morgan City, and Iberia – are industry leaders in the servicing and supply of the Gulf Coast Oil and Gas industry. And our inland ports operating on the Red, Ouachita, and Mississippi rivers are vital to north Louisiana’s economy and critical for the movement of agricultural and aggregate for export. However, Louisiana has over 2800 miles of inland waterways, and we need to be doing more to capitalize on their efficient and economical mode of commercial transportation. For example, I made sure that WRRDA ramped up HMTF expenditures to achieve full utilization over ten years, prioritized funding for ports that move 90% of our nation’s commerce, 2014 Issue 5
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New Studies Underscore Economic Impact of US Ports and Waterways National Waterways Foundation
The National Waterways Foundation (NWF) has commissioned and released a two-year, ground-breaking study by the University of Tennessee and the University of Kentucky, “Inland Navigation in the United States: An Evaluation of Economic Impacts and the Potential Effects of Infrastructure Investment” (November 2014). The study examines the waterways’ national economic return on investment and the need for, and benefits of, an accelerated program of waterways system improvements that sustain and create American jobs. The study evaluates the inland navigation system as it is currently funded and configured, and as it might be through renewed infrastructure investment. The study begins with a basic analytical framework examining navigation’s role as a productive input in various industrial processes and reflects actual, real-world economic interactions and consequences if the system were
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to suddenly shut down and then if proper infrastructure investments were made. The study found: • Investment in badly needed modernization improvements to our inland waterways’ aging lock and dam infrastructure could lead to 350,000 job-years of new, full-time employment with a present value of more than $14 billion over the 10-year period examined in the study. • If we invest in our inland waterways, we can sustain 541,000 jobs and more than $1 billion in new job income annually. • If 21 priority navigation projects could be completed at an estimated cost of $5.8 billion total, the 20-year sum of related economic output activity would exceed $82 billion. • Although not likely in the current fiscal environment, if the completion of those projects were accelerated to 10 years, between 10,000 and 15,000
new jobs with an annual economic value of $800 million could become available. In the second decade, the completed navigation improvements could result in 10,000 new jobs throughout the economy each year
• While Members of Congress debate the many needs of the nation with constrained funding, our inland waterways transportation system must not be overlooked. This study underscores the need for investment spending that directly results in efficiency and productivity gains across sectors, sustainment and creation of jobs, and curbs on traffic congestion from truck and rail. The US is at the brink of a watershed era where transportation planning tools will be even more important. For example, as a direct result of large and unforeseen increases in available and affordable domestic energy resources and other areas of opportunity, there is a growing sense that the U.S. economy can capitalize on increased productivity. But realizing these opportunities requires the nation’s transportation sector to adapt accordingly. “The research in this important study sponsored by the National Waterways Foundation is an effort to help develop a more effective framework for policy-makers to understand and measure the current navigation system and look to future possibilities and job creation if proper infrastructure investments are made,” said Mark Knoy, National Waterways Foundation Chairman.
If we invest in our inland waterways, we can sustain 541,000 jobs and more than $1 billion in new job income annually. with a total income of $740 million in the first year to more than $1 billion by year-20. • New freight capacity could result in robust economic impact in the creation of some 12,000 new full-time, permanent jobs each year with annual incomes in excess of $500 million. • If commercial shipping on our waterways were to cease entirely, there would be immediate, devastating economic consequences with a total 10-year loss of $1.063 trillion, when discounted to reflect that some of the loss is still several years away. Shipping costs would increase by $12.5 billion, which would ultimately be passed onto American consumers in the form of higher costs for goods. The Gulf Coast and Lower Mississippi River regions would be hardest hit by a potential complete waterways system closure. High-value petrochemical products dominate industrial production in that region and alternative transportation in the region is limited. • With the loss of waterways’ shipping, an estimated 75% of freight would be diverted to truck and/or rail, and there would be a 25% loss due to decreased production. Given that the capacity of just one standard river tow (15 barges) equals 1,050 trucks or 216 rail cars and six locomotives, the nation would face certain traffic gridlock. • For more than half of Americans, there would be a 7.8% spike in the price of electricity, triple the average annual increase, if the waterways were not available to shippers.
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American Great Lakes Ports Association
The results of a year-long infrastructure investment survey were released today by the American Great Lakes Ports Association and the Canadian Chamber of Marine Commerce. The survey was commissioned by a coalition of U.S. and Canadian Great Lakes-Seaway maritime industry stakeholders, and was conducted by Martin Associates of Lancaster, Pennsylvania. The purpose of the survey was to document the level of public and private sector investments being made throughout the navigation system. More than 600 entities, including vessel operators, ports, terminals, and government agencies were contacted. The survey quantifies investments made over the past five years (2009-2013), as well as amounts already committed for future years. 2014 Issue 5
Data is broken out by industry sector, by country, by state and province, and by public vs. private sector. Findings included: • A total of $7 billion is being spent on asset renewal and infrastructure improvements by both public and private sectors. • Between 2009-2013, more than $4.7 billion has been invested in ships, ports and terminals, and waterway infrastructure. • An additional $2.2 billion has been committed for infrastructure investments in the system by companies and governments. • American, Canadian and international ship owners are spending more than $4 billion on the biggest renewal of the Great Lakes fleets in 30 years. • Total port, terminal and waterway infrastructure investments by state and province total $2.9 billion. Stakeholder reaction to the study: • Betty Sutton, U.S. Saint Lawrence Seaway Development Corporation Administrator: “This study documents the significant investments, both public and private, that are being made in the Great Lakes maritime industry and signals a long term commitment to Great Lakes Seaway shipping. Through our Asset Renewal Program, the Saint Lawrence Seaway Development Corporation is making the necessary investments to provide for a modernized infrastructure and cutting edge technology to ensure the safety, efficiency and reliability of the System for vessel traffic. Collectively, these financial investments reflect confidence in marine transportation as the most fuelefficient, cost-effective and environmentally-friendly way to move goods to and from the ‘Opportunity Belt’ – the heartland of North America.” • Steve Fisher, Executive Director, American Great Lakes Ports Association: “The survey results quantify what the Great Lakes maritime industry has long suspected - that businesses are bullish on the future of the region’s economy. Hundreds of individual companies have independently made the same decision - to risk capital and reinvest in the Great Lakes maritime industry. The monies being spent reflect a commitment to the health and safety of the workforce as well as the environment. New technology and equipment will ensure that cargo moves efficiently, sustainably, and safely.” • Mark Barker, President, Interlake Steamship Company: “Fleet renewal is an important aspect of our business plan. To see dollar figures over $300 million for U.S. capital vessel investments is gratifying. To have capital investments total more than $4 billion on both sides of the border for new ships and vessel upgrades is proof that the industry continues to be a vital part of the economic engine for North America for the long term.” · Mark Pathy, President and Co-CEO, Fednav Limited: “Our investment in new fuel efficient, greener ships underscores Fednav’s commitment to the bright future of international shipping on the Great Lakes-Seaway System, and our continued commitment to our customers and our partners in the industrial heart of North America. We look forward to accepting delivery of six additional vessels between May and November 2015 as part of a series of 27 new ships (of which 14 are Lakers) as part of our fleet renewal which began in 2012.” IP 2014 Issue 5
Wisconsin Ports React to Governor’s Proposed Budget Cuts Loss of bonding would slow down economic contribution of Wisconsin ports
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isconsin ports are expressing disappointment with Gov. Scott Walker’s proposed budget, which cuts funding to the Harbor Assistance Program (HAP). The fund, which helps pay for harbor projects like dock repairs, dredging, shipbuilding, etc., consists of segregated transportation funds and bonding. The HAP received $12.9 million in the last budget, but under the current budget proposal, all bonding from the Wisconsin Department of Transportation has been eliminated, leaving only $1.3 million in the next budget for the HAP. “Most harbor improvement projects have a long lifespan when completed, which makes them suitable for bonding. It’s a good way to invest,” said Dean Haen, director of Brown County Port & Resource Recovery and president of the Wisconsin Commercial Ports Association (WCPA). “But if the proposed budget holds, it will eliminate all bonding from the HAP, essentially putting Wisconsin’s 15 ports in a holding pattern outside of making minor repairs.” The HAP was created in 1979 to help harbor communities maintain and improve waterborne commerce. Local government and owners of harbor facilities are eligible for funding through a grant application process. WCPA is encouraging other ports to write to their legislators, urging them to restore full funding needed for the HAP. “Our government is charged with funding transportation projects,” said Haen. “If the budget doesn’t change, improvements to facilities and infrastructure will slow down considerably, hindering Wisconsin’s ability to draw in new business and help current port businesses grow. In the end, that hurts the entire state economy.” IP
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Coalition Applauds Quick Action on Vessel Discharge Legislation
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he bipartisan effort to establish a uniform national framework for the regulation of vessel discharges took another step forward as the Senate Committee on Commerce, Science and Transportation approved S. 373, the Vessel Incidental Discharge Act, with strong bipartisan support. A broad-based coalition of nearly 60 organizations recently joined the American Waterways Operators in urging the committee to approve VIDA. This measure would replace a patchwork of overlapping and conflicting federal and state regulations with a uniform, science-based federal framework for vessel discharge regulation. AWO and the coalition will work with the Commerce Committee to bring S.373 to the Senate floor for passage this spring. “AWO thanks Chairman John Thune (R-SD) for his leadership in bringing VIDA before the Commerce Committee at its first markup session of the 114th Congress,” said Tom Allegretti, AWO President & CEO. “AWO also commends Senators Marco Rubio (R-FL) and Bill Nelson
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(D-FL) for their bipartisan leadership in moving this important legislation forward.” Saying that a uniform national framework for the regulation of vessel discharges is urgently needed, the American Waterways Operators and a broad-based coalition of organizations that rely on marine vessels to transport essential cargoes had recently called upon the Senate Commerce Committee to move quickly to approve VIDA. In a letter to Senators Thune and Nelson, respectively the Chairman and Ranking Member of the Commerce Committee, the coalition stated that vessel discharge reform legislation would rectify an untenable situation “by establishing a uniform, science-based federal framework for the regulation of ballast water and other vessel discharges that will benefit all segments of the U.S. maritime industry.” The coalition strongly supports S.373, which would establish a nationally uniform and environmentally sound standard for ballast water and other vessel discharges, in lieu of the current “overlapping patchwork of federal and state regulations that makes compliance complicated,
confusing and costly.” Mariners must comply with regulations from the U.S. Coast Guard, the Environmental Protection Agency and as many as 25 individual state requirements. Signers of the coalition letter included nearly 60 organizations representing U.S. and international vessel owners and operators; fishing vessel, passenger vessel and charter boat operators; labor unions; industries that rely on marine vessels to transport essential cargoes in domestic and international commerce; marine terminals; and port authorities. “The bill is good for the maritime transportation industry and the industries that rely upon it, good for the health of the nation’s waterways, and good for the American taxpayer,” the letter concluded. H.R.980, introduced by Coast Guard and Maritime Transportation Subcommittee Chairman Duncan Hunter (R-CA), Rep. Elijah Cummings (D-MD) and Rep. Frank LoBiondo (R-NJ), is substantively identical to S.373. For more information about AWO, please visit www.americanwaterways.com. IP
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2014 Issue 5
WCI Comments on President Obama’s FY 2016 Budget Request W
aterways Council, Inc. released its organization’s official reaction to the FY 2016 budget request made by President Obama, as follows. In WCI’s view, the budget: • proposes $4.732 billion for the U.S. Army Corps of Engineers’ Civil Works program, a 13.25% cut from the $5.454 billion FY’15 appropriation for the program; • proposes a 28.5% reduction to the Construction account, from FY15’s $1.639 billion to a proposed $1.172 billion; • proposes $2.710 billion for the Operations and Maintenance (O&M) account, $110 million more than the Administration requested last year for the account, but a $198.5 million cut (6.8%) from what Congress appropriated for the current fiscal year;
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• requests $97 million for General Investigations, but provides no funds for Preliminary Engineering and Design (PED) for the Navigation Ecosystem Sustainability Program (NESP), authorized in WRDA 2007; • proposes funding as recommended by the Inland Waterways Users Board at $180 million for the Olmsted Lock and Dam Project and $52 million for the Lower Mon 2, 3, 4 Project -- both to be cost-shared from the Inland Waterways Trust Fund (IWTF). Of note is that the Administration request for IWTF projects is more than $100 million below what could be supported by revenues going into the Trust Fund; • once again, suggests a $1 billion inland waterways user fee that has been proposed in past budgets and
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rejected by Congress; • provides no funding for Kentucky Lock or Chickamauga Lock, leaving that $100 million in supportable investment from the Trust Fund to languish; • requests only $915 million be appropriated from the Harbor Maintenance Trust Fund (HMTF), which is well below expected revenues into the Trust Fund for FY 2016, and is significantly less than WRRDA’s target level for FY16, and which would leave a balance of just under $10 billion in the HMTF on September 30, 2016. The Corps’ Civil Works Work Plan Fiscal Year 2015, which details how the Corps will spend the money it was allocated, is now online at www.usace. army.mil/Missions/CivilWorks/Budget.aspx. IP
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Maritime Case Law Update
By Paul J. Loftus, Dinsmore & Shohl, LLP, and Katherine E. Beyer, University of Kentucky College of Law COMMERCIAL FISHING – SARBANES OXLEY ACT – EVIDENCE DESTRUCTION Yates v. United States, 574 U.S., (United States Supreme Court, February 25, 2015) • The United States Supreme Court ruled that a fish is not a “tangible object” under the Sarbanes Oxley Act of 2002, reversing the conviction of a commercial fisherman prosecuted for destroying evidence related to federal fisheries violations. John Yates, a commercial fisherman, caught undersized grouper in federal waters of the Gulf of Mexico. In order to prevent federal authorities from confirming his harvesting of the undersized fish, Yates ordered his crew to toss the fish overboard. Yates was tried and convicted under federal law for knowingly destroying a “tangible object” (i.e. the fish) under Sarbanes Oxley, and for the destruction of property to prevent seizure under other federal law. The Defendant did not contest his conviction for destroying property to prevent seizure. However, he did contest that the fish were the type of evidence addressed by the Sarbanes Oxley act, which he argued applied to documents and other things where financial data and information are stored. The Supreme Court agreed, and held that a “tangible object” under Sarbanes Oxley, a law criminalizing corporate fraud and cover-ups, must be an object to record or preserve information, and therefore, not a fish. MAINTENANCE & CURE – FAILURE TO DISCLOSE PRIOR INJURY Meche v. Doucet, 2015 U.S. App. LEXIS 946 (5th Cir. Jan. 22, 2015) • Crew boat captain asserted claims under the Jones Act and general maritime law for an injury to his back while lifting a hatch cover against his employer and supervisor. At the bench trial the District Court found that Plaintiff merely strained his back and that Defendants were not negligent nor was the vessel unseaworthy. However, the lower court found the Plaintiff aggravated a preexisting back injury when lifting the hatch cover, and awarded him maintenance and cure from both his employer and his individual supervisor. On appeal, the Fifth Circuit reversed the award of maintenance and cure against the supervisor, noting that the maintenance and cure duty only extends to an employer, or in some cases the vessel. The appellate court also reversed the award of maintenance and cure against the employer under the McCorpen rule, whereby maintenance and cure is precluded when an employee knowingly fails to disclose a preexisting medical condition in his pre-employment physical examination. Applying an intentional misrepresentation/concealment standard to the facts, the Court found that the Plaintiff’s failed to disclose prior back 16
problems in an employment medical examination with a previous employer, which was later acquired and absorbed by the Defendant employer. The Plaintiff seamen had actually suffered 3 prior back and neck injuries that were not disclosed to the company hiring the Plaintiff, which was later acquired by Defendant. The Court vacated the award of maintenance and cure, interest, punitive damages, and attorney’s fees awarded by the District Court based on Plaintiff’s concealment of his medical history. CHARTER PARTIES – LIABILITY FOR NEGLIGENCE & UNSEAWORTHINESS Barron v. BP America Production, 590 Fed. Appx. 294 (5th Cir. 2014). • Crew member of vessel performing oil spill cleanup monitoring under BP’s “Vessel of Opportunity” program appealed the dismissal of his Jones Act and general maritime law claims. The Plaintiff asserted claims against BP, whom he alleged was the owner pro hac vice of the vessel upon which he was injured. The vessel in question was chartered by BP. The Fifth Circuit affirmed the lower court’s dismissal of the claims against BP because the charter party between BP and the vessel owner was a “non-demise time charter,” as opposed to a “bareboat” or “demise charterer.” The distinction the Court drew was whether the charterer exercised “control” over the vessel. The Court held that BP under the charter agreement and the facts of the case did not control the vessel, and therefore, was not liable for negligence or unseaworthiness claims made by the vessel crew. LHWCA – VESSEL NEGLIGENCE Weinlein v. Anapa Shipping Ltd., 2015 U.S. Dist. LEXIS 20953 (D. N.J., Feb. 20, 2015). • Stevedore employee injured while climbing a ship-board crane to begin unloading operations asserted vessel negligence claim under § 905(b) of Longshore and Harbor Workers’ Compensation Act (LHWCA). The Plaintiff alleged the vessel was negligent in failing to turn vessel over to the stevedores free of obvious hazards relating to crane ladders. The Court found Plaintiff’s negligence claim against the vessel was in reality an unseaworthiness claim based on allegations of negligent design of the ladder, and thus unavailable to the harbor worker employee under the LHWCA. PUNITIVE DAMAGES – GENERAL MARITIME LAW CLAIMS Cook v. Kim Susan LLC, 2015 U.S. Dist. LEXIS 16806 (E.D.La. Feb. 11, 2015). • Contract employee hired by charterer of vessel inlandportmagazine.com • @inlandportmag
to clean tanks was injured in fall from gangway while disembarking vessel. Plaintiff sued the vessel owner and insurer, seeking damages, including punitive damages. With regard to the punitive damages claim, the Court addressed the recent 5th Cir. case of McBride v. Estis Well Service, LLC (See Inland Port, 2014 Issue 5), where the unavailability of punitive damaged under the Jones Act and general maritime law for injured seamen was affirmed. However, the injured contract employee was a non-seaman, and therefore McBride did not preclude punitive damages claim by non-seaman under general maritime law. JONES ACT – SEAMAN STATUS Turner v. Wayne B. Smith, Inc., 2014 U.S. Dist. LEXIS (E.D.Mo. Dec. 3, 2014) • Employee injured while riding in a water taxi used by his employer to transport crew members was held not to be a seaman under the Jones Act. The Court considered the status of the employee who worked as a welder, working on his employer’s towboats, barges, and land-based facilities. Based on the Plaintiff’s contribution to function of his employer’s vessels and his connection the vessels in navigation, the Court dismissed his Jones Act claim because Plaintiff’s work as a welder did not regularly expose him to the dangers and special hazards to which seaman are exposed, nor was he regularly assigned to vessels, but rather, his work assignment was to his welding truck. JURISDICTION – GENERAL MARITIME LAW Harrold v. Liberty Insurance, 2014 U.S. Dist. LEXIS 158320 (E.D.La. Nov. 6, 2014) • Injured Plaintiff sued his employer in Louisiana state court making claims under the Jones Act and general maritime law. Defendant removed the case to federal court on the basis of the recent revision to 28 U.S.C. § 1441, contending general maritime law claims based on federal court original jurisdiction where now removable. The U.S. District Court originally retained the general maritime law claim, and sent back to state court (remanded) the Jones Act claim. On its own initiative, or sua sponte, the federal court remanded the case to state court to preserve the Plaintiff’s right to a jury trial, to uphold the non-removability of Jones Act cases, and because the court held revisions to §1441 do not permit the removability of cases filed in state court under general maritime law. The court’s decision highlights an intra-circuit split between District Courts in the Fifth Circuit on the effect of §1441 amendments on removal of general maritime claims. IP Author contact: paul.loftus@dinsmore.com. 2014 Issue 5
Liebherr Launches Giant Mobile Harbor Crane LHM 800 L
iebherr Maritime Cranes recently introduced its new flagship mobile harbor crane to the market. The LHM 800 is a mobile solution for ever growing vessel sizes and heavy industrial goods, taking container, bulk and general cargo handling to the next level. The new LHM 800 represents a forward-looking extension at the head of Liebherr’s mobile harbor crane range. The dimensions and capabilities of the LHM 800 are unique, designed to outperform all existing mobile harbor crane models in the
market. Liebherr’s newest addition to the portfolio meets growing customer requirements for larger cargo handling solutions in order to efficiently complete new and future tasks. “The LHM 800 is a breakthrough for the mobile harbor crane sector, outperforming the existing maximum lifting capacity by nearly 50 percent. Also in terms of container and bulk handling, the LHM 800 is the new benchmark. We are optimistic that this new model will strengthen our market leading position,” said Matthias Mungenast, Sales Director for
Liebherr mobile harbor cranes. Like the complete Liebherr mobile harbour crane range, the LHM 800 relies on the highly successful xshaped undercarriage. The cruciform supporting system is unrivalled in terms of stability and operational safety. The wheelsets have been slightly adapted to ensure optimum load distribution of this new giant, which weighs approximately 745 tons. Thanks to its rubber-tired undercarriage the crane is mobile and can be moved to where it is needed most.
Due to the modular LHM concept, customers may alternatively opt for a space-saving rail mounted portal, a fixed pedestal or a barge mounted solution. In addition to the undercarriage, the worldwide-proven functional LHM design ensures that the LHM 800 is a valuable addition to the portfolio. The new giant LHM 800 provides a lifting capacity of 308 tons, which exceeds the previous maximum capacity of their strongest mobile harbour crane, the type LHM 600, by more than 100 tons. IP
Liebherr’s LHM 800
2014 Issue 5
inlandportmagazine.com • @inlandportmag
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Terex Port Solutions Delivers New Harbor Cranes T
erex Port Solutions (TPS) recently received several contracts from existing and new customers. One of the customers was Italian freight forwarder Roberto Bucci S.p.A. (Bucci), who ordered a Model 7 mobile harbor crane in the G HMK 7608 variant for its Flavio Gioia Terminal in Naples. Further orders came from port operators in Haiti, Chile, UAE, Finland, Belgium and Indonesia. The crane for Bucci will begin commercial operation in spring 2015 and will be part of an overall fleet of five Terex Gottwald mobile harbor cranes in the Flavio Gioia Terminal. The new machine, with its maximum radius of 54m and lifting speed up to 100m/min, will help Bucci to further extend its operational flexibility and to enter new market segments. It will load and unload container ships and handle a range of general cargo. The crane’s powerful capacity curve with a maximum lifting capacity of 150 tons will also allow Bucci to handle special heavy project cargo. Thanks to a high tower with a boom pivot point of 23.2m and a crane operator eye level of 29.3m, Bucci’s new crane will be able to load and unload container ships with up to five containers stacked on deck, explains Rosario Tripicchio, General Manager at Flavio Gioia Terminal. “The G HMK 7608 will also help us to face the challenge of the rising demand for project cargo handling required from companies from Naples and beyond. The acquisi-
tion of the crane is thus an important strategic step for us and will sustainably strengthen our position in the Mediterranean Sea.” Bucci has operated the terminal since 1994 and has relied on Terex Gottwald cranes right from
the start. Tripicchio states: “Both the high productivity and reliability of the four existing machines and the competent and efficient support of TPS’s service team have always impressed us. This is why we opted again for TPS.” A comprehensive service and spare parts package is also included in the recent order. “The new crane for Bucci is an example of how customers can continue to develop their infrastructure and business with the help of TPS mobile harbor crane technology”, says Gino Gherri, Regional Director Sales & Services, Terex Port Solutions. “We are happy to continue accompanying the growth of this important Italian customer. For almost two decades now Bucci has gradually enhanced its fleet’s size and performance and is currently operating four cranes: one HMK 170 E, two HMK 280 E and one HMK 300 E Terex Gottwald Generation 4 crane.” Gherri continues: “With the G HMK 7608, Bucci now opted for the first time for a Generation 5 crane. This also underlines the growing importance of cost efficiency and eco-friendliness. The new crane offers the customer lower specific fuel consumption and emissions.” As an example of eco-friendliness, the crane has already been prepared for operation from an external power supply source, allowing Bucci to upgrade the machine with equipment for use of power from the terminals mains at a later stage. IP
Stepan Named New Tenn-Tom Authority Administrator
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he Tennessee-Tombigbee Waterway Development Authority has hired J. Craig Stepan of Fairhope, Alabama, as its administrator. He succeeds Bruce Windham, who resigned last year due to illness. Stepan will also serve as president of the Tennessee-Tombigbee Waterway Development Council, the authority’s trade association. “The members of the authority are pleased to have someone with Craig Stepan’s extensive background and experience in marine transportation to lead our efforts to promote the development of the waterway and grow its benefits to our region,” said Brian Roy, vice-chairman of the waterway compact. Before joining the waterway agency, Stepan was President/ Owner of Superior Shipping and Consulting Services LLC, specializing in multi-modal transportation matters. He has over 38 years of experience dedicated to marine transportation. “In addition to having many years of involvement in all the major modes of transportation, Craig also understands the respective roles of the Corps of Engineers, the Coast Guard, and that of waterway stakeholder groups like the Council to make the waterway an efficient and dependable mode of transportation,” said Lucian Lott, chairman of the Tenn-Tom Waterway Council. He will provide needed leadership and direction for our group.” The waterway is the largest water resource project ever built in the U.S. It features 10 locks and dams, a 175-foot deep canal connecting the Tennessee River with the Tombigbee River watershed, and 234 miles of navigation channels between the Tennessee River and Mobile, Alabama. IP
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inlandportmagazine.com • @inlandportmag
2014 Issue 5
Alabama Port Authority Receives A-Minus Rating from Fitch
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itch Ratings upgraded its rating to A-minus, with a Rating Outlook of Stable, for the Alabama State Port Authority’s (ASPA) outstanding dock facilities revenue bonds. The rating agency’s endorsement recognized the Port Authority’s strong debt service coverage, as well as the diversification of revenue sources. “We’re very pleased that Fitch has recognized the substantial improvements in the port’s financial position,” said James K. Lyons, director and chief executive for the Port Authority. Fitch’s rating reflects the Port Authority’s record volumes in steel, iron and forest products in Fiscal Year 2014, and its success in diversifying the Authority’s revenue stream that partly mitigates the Authority’s dependence on coal shipments. Fitch further noted the Authority’s “excellent intermodal connections and the port’s limited service area overlap with other major ports,” as well as its role in the State of Alabama’s industrial development policies. Another key contributing factor in the upgrade was the Port Authority’s modest $145 million capital plan, which is expected to be funded through Port Authority revenues, public/private partnerships and grants. “Our management team has been highly focused on securing new business streams and alternative forms of financing our capital programs short of entering the bond market,” Lyons stated. “This strategy has met our objectives to modernize terminals, while exceeding our debt service obligations.” IP
Phase I of the new steel coil handling facility at the Alabama State Port Authority’s Pier D terminal began in December. The 178,200 sq. ft. AST Terminal serves import/export steel coil via rail, barge, ship and truck.
BARGES
The Greener Way to Go Inland barges produce less carbon dioxide while moving America’s important cargoes. Inland barge transportation has the lowest carbon footprint of the other major modes. Moving identical amounts of cargo by rail generates 30% more carbon dioxide than by barge, and 1,000% more emissions by trucks than by barge.
499 S. Capitol Street, SW, #401, Washington, DC 20003 202-765-2166 www.waterwayscouncil.org 2014 Issue 5
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Industry News & Notes One of Arkansas’ navigable rivers is now on par with larger American inland rivers such as the Mississippi and Ohio Rivers. The McClellan-Kerr Arkansas Navigation System (MKARNS) has been reclassified from moderateuse to a high-use system. “Currently, Arkansas has the distinction of being 3rd in the nation in the number of river miles, but 32nd in tonnage transported,” says Gene Higginbotham, Executive Director of the Arkansas Waterways Commission. According to the U.S. Army Corps of Engineers (USACE), a waterway is defined as high-use if it carries more than 10 million tons and more than $3 billion tonmiles of commodities per year. USACE reclassified the MKARNS based on data from the Waterborne Commerce Statistic Center (WCSC). The Port of Green Bay closed has great optimism for 2015 after the 2014 season surpassed its goal of 2 million metric tons of cargo, edging out 2013 totals. Overall, a total of 2.3 million metric tons of material were imported and exported during the shipping season, an increase of 3 percent from 2013. Reaching beyond the 2 million mark in tonnage was accomplished by several significant material increases. “Shipments of petroleum coke increased by 130 percent; its highest level in 15 years,” said Dean Haen, Port and Resource Recovery director. “Limestone tonnage also increased for the third consecutive year and surpassed 700,000 metric tons for the second time in Port history.” Haen says that while seeing increased numbers is always good, the successful season makes an even more important statement. “This shows that using waterborne transportation continues to be a valuable asset to businesses,” Haen said. “Businesses are looking for transportation options that are safe, fast and cost effective and the Port of Green Bay has been able to demonstrate that time and again.” Haen says he’s optimistic about what 2015 will bring. “The economy is gaining strength every day so I’m confident we will again be able to hit our 2 million tonnage goal,” Haen said. “That being said, we do anticipate coal movements to decrease by 24 - 40 percent due in part to Georgia-Pacific’s new boiler which runs on natural gas, not traditional coal. But we also saw new cargo this year like sand and aluminum components so I’m confident we will find that balance to remain strong.” Overall, Haen says our area is fortunate to have a port that can help businesses thrive, support hundreds of jobs and impact the area economy. “We can offer businesses a competitive edge when it comes to transportation needs that other cities can’t because of the Port,” Haen said. “I’m confident the Port will remain a valuable resource because it can meet today’s market demands
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and has potential to draw new business to the area.” Kvichak Marine Industries and Vigor Industrial are merging to unite their strengths in the design and fabrication of aluminum workboats, shipbuilding, and boat building. Under the terms of the merger, Kvichak will become a wholly owned subsidiary of Vigor. Kvichak’s current owners (Jim Meckley, Brian Thomas and Keith Whittemore) will join Vigor as shareholders and as members of the leadership team. The St. Lawrence Seaway is looking forward to a strong 2015 after closing the 2014 season with 40 million tons of cargo, which represents a full recovery from the 2009 global financial crisis and its ensuing aftermath. A blowout volume of grain moving through the Seaway was the standout feature of the season, as farmers and grain merchants furiously sought avenues to move the bumper crop from 2013 that had clogged rail lines. “There can be little question that the Seaway proved its value as a vital transportation artery in 2014” said Terence Bowles, President and CEO of the SLSMC. “Carriers moved over 12 million tons of grain through our locks, the highest volume since the turn of the century some 14 years ago. We are also pleased with our various marketing initiatives and toll incentives, to which we attribute about 2.5 million tonnes of new business during 2014”. The rebound to 40 million tons of cargo in 2014, a 7% increase over the 2013 result, was principally due to the boom in grain shipments, accompanied by strong volumes of iron and steel products, and shipments of road salt to replenish inventories that had been severely depleted during the harsh winter of 2013. The influx of ocean vessels into the St. Lawrence Seaway was unprecedented in recent history. On multiple occasions in 2014, there were over 50 ocean vessels within the Great Lakes St. Lawrence Seaway System. U.S. Saint Lawrence Seaway Development Corporation Administrator Betty Sutton said “The Great Lakes St. Lawrence Seaway System plays a strong role in facilitating economic growth throughout the Great Lakes Region, which is quickly becoming the ‘Opportunity Belt’ of North America. In particular, the increases in iron and steel cargo this shipping season reflect new growth in manufacturing, construction, energy and other industries throughout the region. The strong finish to the Seaway’s 2014 navigation season contributed to the resurgence in the overall economy and foreshadows a positive outlook for increasing use of maritime transportation to move goods throughout the region.” The Port of Indiana-Burns Harbor handled more shipments in 2014 than any year since the port opened in 1970. Total tonnage was up 30 percent over 2013 driven by strong shipments of steel, grain and salt. “It was a terrific year thanks to our port companies, steelmakers and businesses that use our port,” said Rich Cooper, CEO for the Ports of Indiana. “Federal Marine Terminals, the port’s terminal operator, and its labor force did a tremendous job handling the significant cargo increases that arrived at the port by ship and barge. They extended their work hours and even worked weekends on a number of occasions to meet customer expectations.” The port also had a 35-percent increase in ocean vessels over 2013 and nearly a 25-percent increase in river barges moving through the Illinois/Mississippi river system. “Steel going into the manufacturing sector was a key driver for the increase in port shipments,” said Port Director Rick Heimann. “In 2013, the port handled its highest steel volume since 2006 and 2014’s steel tonnage more than doubled the previous year’s total. The port also handled over 500 barges in 2014 for the first time in several years.” River barges provide a vital link for the port to over inlandportmagazine.com • @inlandportmag
20 states, 12,000 miles of rivers and ocean vessels in the Gulf of Mexico that provide year-round access to world markets when the St. Lawrence Seaway is closed for the winter. This port’s strategic location at the intersection of two of the world’s busiest waterways and all of the nation’s Class I rail lines provides significant competitive advantages for multimodal companies who locate at the port. The port continues to serve as a preferred inland hub for large dimensional specialty cargoes, including beer tanks, wind turbines and fuel processing equipment. In 2014, 29 beer fermentation tanks, each with over 20,000-gallon capacity, were shipped from Germany through the port to Lagunitas Brewing Co. in Chicago-one of the largest craft breweries in the U.S. The port also received an 885,000-pound project cargo shipment via barge that contained a fuel processing unit being transported from Oklahoma to Ohio. The entire unit was off-loaded at the port’s specialized Ro-Ro dock, which is used to roll-on and roll-off specially-designed trailers that are too large or cumbersome for cranes. Two port companies announced major expansions in 2014 as NLMK invested $8 million to expand its steel mini-mill operation and Carmeuse Lime & Stone pumped $11 million into its limestone processing facility. Maritime operations at the Port of Indiana-Burns Harbor generate $4.3 billion per year in economic activity and support 33,000 total jobs. Randy Rogers recently took the helm of the Waukegan Port District as the new General Manager. In addition to familiarizing himself with the Great Lakes maritime industry, Rogers has set an ambitious course forward by focusing on attracting new business to the port. Those plans include promoting commercial shipping at the port, offering improvements at the marina, and expanding the runway at the Waukegan National Airport. At the American Great Lakes Ports Association (AGLPA) winter meeting in Cleveland, Ohio, the Waukegan Port District was welcomed as its newest member. The AGLPA represents the interests of commercial ports and port users on the United States’ side of the Great Lakes. JAXPORT’s Board of Directors approved an expanded, long-term lease with Crowley Liner Services Inc. Crowley will relocate its Puerto Rican service from its private terminal along Jacksonville’s harbor to JAXPORT’s Talleyrand Marine Terminal and expand its current leasehold in preparation for deployment of the company’s two new revolutionary LNG-powered Commitment-Class ships. The new facilities lease agreement becomes effective on Jan. 1, 2017, for a term of 20 years plus two 10-year mutual renewal options, and calls for Crowley’s current 12-acre Talleyrand leasehold to be expanded to 50 acres. “This agreement clearly reinforces our commitment to the Puerto Rican trade lane and our valued partners who serve the island--both critical components of our business for more than 50 years,” said JAXPORT CEO Brian Taylor. “In addition, by supporting the vision of a business like Crowley and ensuring they remain successful here in Jacksonville, we are fulfilling our larger mission to create private sector prosperity through the use of our public seaport properties.” “Over the years, Crowley has enjoyed an excellent working relationship with JAXPORT and that continues here today with this exciting development for the authority and for Crowley,” said John Hourihan, Crowley senior vice president and general manager, Puerto Rico services. “Concluding this lease agreement is an important milestone for Crowley as we look to transition to stateof-the-art, Commitment-Class ships, which will require terminal space like this to allow us to perform both lift-on/ lift-off (Lo/Lo) and roll-on/roll-off (Ro/Ro) cargo operations. Our ships, the first of which is under construction in Mississippi, will be larger and faster than our existing Puerto Rico vessels.” IP 2014 Issue 5