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Great Lakes shippers fuming over EPA fuel proposal

Murphy Oil marine terminal manager Joe Cuseo checks the terminal's control panel while the American Century takes on fuel at the facility. Steve Kuchera/

Federal efforts to clean up laker emissions are fueling a heated debate throughout the St. Lawrence Seaway.

"It's a threat to the economics of shipping on the Great Lakes," Adolph Ojard, executive director of the Duluth Seaway Port Authority, said of rules recently proposed by the Environmental Protection Agency.

The EPA wants to wean older lakers off their diet of inexpensive No. 6 "bunker" fuel to reduce sulfur levels 50 percent in 2012 and help prevent tens of thousands of premature deaths. The entire fleet would convert to low-sulfur marine diesel by 2015.

But lake carriers say the effort could backfire if it drives more cargo to trucks and trains, which burn more fuel and emit more pollutants per ton of cargo than ships do. And they say the transition may well shrink the fleet of freighters serving the Twin Ports and other Great Lakes communities.

"We foresee 13 steamers potentially being retired," said Glen Nekvasil, a spokesman for the Lake Carriers Association, a trade organization that represents companies operating freighters on the Great Lakes.

That would include such iconic Duluth visitors as the Alpena and the Edward L. Ryerson, vessels that are powered by older steam engines instead of more modern diesels.

In all, 13 U.S.-flagged steamships remain in active service -- 20 percent of the U.S. laker fleet -- and Nekvasil said the cost of repowering these vessels could run in the neighborhood of $22 million apiece. Even if fleet operators choose to make this hefty investment, it would require ships to be taken out of service at least temporarily.

"Marine engines like these don't come off the shelf," Nekvasil said.

Mark Barker, president of Interlake Steamship Co., based in Richfield, Ohio, said he would have little choice but to quit operating the two remaining steamers -- the Kaye E. Barker and the Herbert C. Jackson -- in his eight-vessel fleet and write them off as obsolete in 2012 if the proposed rules are adopted.

Environmentalist assails "dirty fuel"

But change is overdue, said Jennifer Nalbone, a campaign director for Great Lakes United, an environmental advocacy group.

While she described the domestic fleet of lakers as a mixed bag, Nalbone said: "Many of them have engines that are decades old and that burn dirty bunker fuel. It's time for them to do their part."

The United States and Canada have been working together to establish North American "emission control areas." Newly proposed rules would regulate the type of fuel ships can use when operating within 200 nautical miles of the coastline.

The EPA projects its proposed regulations annually would eliminate 1.2 million tons of domestic nitrogen oxide emissions and would slash the quantity of particulate matter released into the atmosphere by about 143,000 tons by 2030. Regulators say that's beneficial not only for the environment but for the welfare of humans.

The agency predicts that if its proposed new rules are adopted, by 2030 we could annually prevent 13,000 to 33,000 premature deaths associated with exposure to particulates and 220 to 980 premature deaths related to ozone.

"To the extent that shipping companies will be required to clean up the fuel they burn, I think this will be a step in the right direction," said Mary Marrow, a staff attorney at the Minnesota Center for Environmental Advocacy.

She said that reducing sulfur dioxide and nitrogen oxide emissions also should help in the battle against haze that has besmirched once-pristine views of Isle Royale and the Boundary Waters Canoe Wilderness Area.

"Anything that can be done to improve the airshed is greatly needed," Marrow said. "This requires a regional effort, because air has no boundaries."

Shift away from lakers?

But Ojard fears the EPA has given inadequate consideration to the possible repercussions of applying the proposed fuel rules to the Great Lakes.

The new rules would hit the Great Lakes especially hard when fully implemented, because vessels operating in the 2,342-mile St. Lawrence Seaway system will be compelled to use more expensive marine diesel instead of bunker fuels.

In contrast, ocean-going vessels calling on coastal ports will only need to switch to more costly marine diesel when within 200 miles of their destination. For most of their journey they'll be allowed to operate on cheaper bunker fuels.

If the new rules take effect, Ojard predicts salties may think twice about entering the St. Lawrence Seaway, given the higher operating costs they will face there.

Should costs rise, domestic shippers also may shift their cargo from lakers to trains or trucks, said Dave Podratz, general manager of the Murphy Oil USA refinery in Superior. Barker considers a shift of freight from the lakes to land quite likely if the EPA rules are enacted. He said vessels now burning intermediate fuels would need to switch to distillate fuels costing at least $1 per gallon more, and carriers could not absorb this added expense without adjusting rates.

"Haulage or freight contracts can be lost to shipping and railroad competitors for just pennies a ton," he said.

Since trains provide a less fuel-efficient means of transportation than ships, Ojard said, shifting freight to rail will dump far more greenhouse gases and pollutants into the atmosphere than lakers currently do.

"It may do more harm than good," he said. "I think it would be detrimental to both the environment and the economy."

Rep. Jim Oberstar, D-Minn., has shared his concerns about the proposed rule changes with the EPA, said John Schadl, his communications director. Representatives of Great Lakes states met with the EPA last week, he said.

If laker rates climb, Schadl fears it could hurt demand for taconite and slow the pace of economic recovery.

"We're finally at a point where the recession looks like it could be turning around," he said. "We're not going to jeopardize a recovery just because the EPA has made a rule that is ill-considered."