Despite Soo shutdown, new lock a long shot

WASHINGTON – It’s seldom that one of the locks at Sault Ste. Marie has to be taken out of commission in the middle of a shipping season — and rarer still that it has to be drained for repairs.

But when an interruption at the Soo Locks doubles from 10 to 20 days as it did this summer, it causes deep concern. All of the ships had to be rerouted through the only lock capable of handling the largest vessels at a time when as much as 9 million metric tons of freight passes through a month.

Add to that an unscheduled outage of the only other working lock, the Poe, and the argument is all but made for many why a long-sought new lock is needed, and now. The locks are a vital choke point between the iron ore mines of northern Michigan and Minnesota on Lake Superior, and the steel mills dotted along the lower Lakes. And they were brought to a standstill for an hour as a result of the shutdowns.

The recent closing of the MacArthur Lock has heightened concerns about a piece of the nation’s manufacturing supply chain that, if shut down for any length of time, could have catastrophic effects on the U.S. economy with ripples that could devastate the global supply chain for those manufacturers who rely on timely shipments of steel.

During the 20-day period that the 73-year-old MacArthur Lock was closed for repairs by the Army Corps of Engineers, more than 100 vessels — carrying iron ore, coal, grain and more — were delayed at least 166 hours. All this at a time when shippers, steelmakers and the businesses that count on them have been agitating for a new lock, keenly aware that interruptions at the aging Soo are on the upswing.

“It was the first time we’ve had a lock outage for that length of time and it was the first time in 20 years we’ve had both locks closed at the same time,” said Mark Barker, president of the Interlake Steamship Co. in Ohio, which is one of the major carriers on the Lakes, moving upwards of 20 million tons of freight a year. “The fact that we had two out was pretty scary.”

But if recent history is any indication, it’s likely to get worse before it gets better.

It has been almost 30 years since Congress, recognizing the need for reliability at a crossroads so significant federal troops were sent to protect it during World War II, authorized construction of what now would be a new $600-million-plus Poe-sized lock at the Soo, where only two of the four locks are currently usable.

Since then, however, funding has been slow to come, if ever, and no money has been spent in six years. Competing projects in other river systems — the Mississippi, the Ohio, the Monongahela — have been greenlighted, while money for a new lock at the Soo has dried up.

And while policy-makers, local legislators, shippers and businesses believe they may have a leg up on getting it restarted, it’s almost certain to be years, if not decades, before a new lock is built — if even then.

“The private sector interest is there,” said James Durkay, a former budget and policy expert for the Corps who is now an adviser with Dawson & Associates, a lobbying firm in Washington, D.C. “(But) they look at the federal, state governments and there is no political will to invest in infrastructure.”

At present, the best-case scenario for a new Poe-sized lock at the Soo is this: The Corps agrees to fund a new cost-benefit study, which could take several years. Assuming it indicates the Corps should move ahead, it could be put into the pipeline of annual funding requests to Congress. If funded, it could take 10 years to build. With cost overruns or funding interruptions, it could be longer.

But no one knows if the Soo, even with annual maintenance and a large overhaul of the Poe being looked at in the years to come, will last that long without a major shutdown.

“They’ve assumed they were going to maintain the Poe and it would never fail,” said James H.I. Weakley, president of the Lake Carriers Association, a trade group representing major shippers on the Lakes. “There is a ... backlog of maintenance at the locks that’s been ignored. ... We’ve been screwing around with this (new) lock since 1986.”

Delays and closings

A Free Press review of Corps records suggests the potential for problems: While average annual tonnage of iron ore — the No. 1 commodity traversing the Soo — remains as high as ever, the hours one or more of the locks has been closed to approaching vessels has grown dramatically since 2005, to more than 3,500 hours — the equivalent of 145 days — in 2014.

Out of the more than 180 lock systems the Corps operates, the Soo does better than average in terms of the percentage of vessels delayed and the average delay per vessel in hours, proof of its continuing reliability and the maintenance work performed each year by the Corps.

But those numbers have been on the increase as well — from fewer than 20% of vessels delayed between 2006 and 2010, to more than 30% the past three years and surpassing 40% last year.

Some of that is because of weather, with ice cover on the Lakes hitting near record levels the past two years. But much of it is mechanical as well, as Corps officials recognize.

“(With the MacArthur Lock outage) it’s an indication of the age of the structure and wear and tear. ... The Poe Lock isn’t quite as old, but it’s starting to show some of those same issues,” said David Wright, director of operations at the Corps’ Detroit District headquarters.

Anyone wanting an argument for building a new lock at the Soo won’t lack for justification: Only the 47-year-old Poe is big enough to handle the 1,000-foot freighters that carry up to 70,000 tons of iron ore to steelmakers around the Lakes. If it went out for any significant period of time, 70% of the freight on the Upper Lakes would be stopped.

And the effect could be devastating.

A Corps presentation this year, repeating that a 30-day shutdown at the Soo could cost industry at least $160 million, said that’s an economic loss greater, within the same time frame, than any other lock system in the nation. A draft study done by the Department of Homeland Security — unreleased publicly, but circulated privately — says a six-month shutdown would be catastrophic to the global supply chain, hitting automakers and appliance makers and any other manufacturers who rely on timely shipments of steel.

“The Soo Lock system, particularly the Poe Lock, serves as the linchpin in ensuring the efficient delivery of raw materials from the Iron Range to integrated steelmaking facilities,” said Dan Cornillie, logistics manager for ArcelorMittal USA, a subsidiary of the world’s largest steelmaker.

Web of bureaucracy

It’s no wonder then that Gov. Rick Snyder’s office, as well as both of Michigan’s U.S. senators, several members of Congress and others are lobbying to get the project under way once more. But caught in a web of bureaucracy — where even getting little more than $1 million in unspent federal dollars freed up to pay for a study — can take months if not years, its future is anything but certain.

Part of the problem is with the Corps, which a decade ago determined the cost-to-benefit ratio of a new Poe-sized lock and argued against the project. Since then, however, a new study — again, not made public — suggests that, in the event of a shutdown, there would be nowhere near enough rail lines, rail cars or tractor-trailers to make up for the loss.

That argues for a new cost-benefit study, which may get under way if congressional appropriators, Corps brass and the White House Office of Management and Budget can agree to shift about $1 million to pay for it. That’s now being debated.

But even if that gets done, it’s a long way from a lock being built, considering the pressure on the Corps and the backlog of projects it’s trying to complete.

Annually, the Corps gets $1.6 billion to $1.8 billion for construction against a backlog of at least $60 billion, which the Goverment Accountability Office says is probably larger. And while Weakley says the Soo project should still qualify for a piece of that pie based on its importance, it’s worth noting that it wasn’t mentioned when Congress passed a new authorization bill for the Corps last year.

So as Congress prepares to return to Washington to battle over road and bridge funding, government appropriations, an Iran nuclear deal and more, Michigan’s members of Congress, its governor, the Lake carriers and businesses continue to lobby to get the Soo project off the ground.

Where the money will come from, there is no idea, said U.S. Rep. Dan Benishek, R-Crystal Falls.

“I don’t know the answer to that, to tell you the truth,” said Benishek, who represents the Soo and has brought key members of Congress Up North to make his pitch.

Up at the Locks, he says, folks are crossing their fingers in the meantime, hoping the rest of the 2015 season goes smoothly.

“The way the guys at the lock explained it to me,” he said, “it could happen any time.”

Contact Todd Spangler: 703-854-8947 or tspangler@freepress.com. Follow him on Twitter at @tsspangler.

COMPETING PROJECTS

Here’s a short list of some other big projects a new $600-million navigation lock at Sault Ste. Marie — if it were prioritized by the Army Corps of Engineers — would have to compete with. The Corps’ 2015 work plan actually includes more than 130 construction projects and is funded at $1.6 billion.

The Herbert Hoover Dike, Lake Okeechobee, Fla.

Classified as very high urgency, $800 million has already been spent on work at the 143-mile-long dike surrounding the lake, with fears that a high-water incident could cause huge flooding, potentially giving a population of about 40,000 in the area only about an hour to react.

TOTAL COST: $2.1 billion

FUNDING REQUESTED THIS YEAR: $64 million

FUNDING NEEDED TO COMPLETE: $1.2 billion

Olmsted Locks and Dam, Illinois and Kentucky

A long-standing project to replace two existing locks on the Ohio River with twin, 1,200-foot locks expected to reduce tow and barge delays through what’s called the busiest stretch of river in U.S. inland waterways. Originally estimated to cost $775 million in the 1980s, the cost has more than tripled since then.

TOTAL COST: $2.9 billion

FUNDING REQUESTED THIS YEAR: $180 million

FUNDING NEEDED TO COMPLETE: $880 million

Locks and Dams 2, 3 and 4, Pennsylvania

A project to repair or replace three of the oldest navigation facilities on the Monongahela River — some with components dating back nearly 100 years — which also receive the highest volume of commercial traffic on the waterway. The work includes new locks, dam removal and more. Portions of the project were begun in 1999.

TOTAL COST: $2.7 billion

FUNDING REQUESTED THIS YEAR: $52 million

FUNDING NEEDED TO COMPLETE: $2 billion

Note: Olmsted and Mon Locks also are funded in part through the Inland Waterway Trust Fund, supported by a 29-cents-per-gallon tax on commercial barge fuel.

Source: Army Corps of Engineers data, Free Press research

HOW THE LOCKS KEEP GREAT LAKES SHIPS MOVING

Shipping locks to help vessels traverse the 21-foot drop from Lake Superior to the lower Great Lakes along the St. Marys River date to the 1700s. Locks on the U.S. side of the river date to 1853 and represent one of the busiest choke points on the Great Lakes, with only one lock — the Poe — big enough to handle the 1,000-footers, the biggest and most significant cargo carriers on the Lakes.