Obey/Oberstar Compromise Saves Midwest Jobs, And Still Protects the Great Lakes Environment

Washington, D.C. - The Environmental Protection Agency ("EPA") today finalized sweeping new air emission regulations for large ships in U.S. waters, including a temporary exemption for 13 U.S.-Flag steamships on the Great Lakes as part of a legislative compromise brokered by Representatives Dave Obey (D-WI) and Jim Oberstar (D-MN).

The compromise between officials from EPA, Rep. Obey, Rep. Oberstar, and others in the Great Lakes delegation, addressed a defect in the EPA's original proposed rule. The compromise will save tens of thousands of jobs in the Great Lakes mining, steel, and shipping industries, while maintaining unprecedented new air quality requirements for the region.

"You really can't say enough about the way Congressmen Obey and Oberstar worked with the EPA to find a reasonable middle ground and so avoid further devastation to the Midwest economy," said Don Cree, President of Great Lakes Maritime Task Force, the largest coalition ever to promote shipping on the Lakes. "Before they became involved, we were talking about the potential loss of thousands of jobs in a region that cannot afford to lose even one job."

In August, the EPA first proposed regulations to control emissions from large oceangoing vessels, and also extended those requirements to Great Lakes vessels. One provision would have required the 13 U.S.-Flag steamships on the Lakes to burn distillate fuel, something that cannot be done safely on a steamship.

Without this exemption, the regulation would have eliminated those 13 vessels by 2012. Those vessels represent 25 percent of the U.S.-Flag Great Lakes fleet that moves iron ore and other raw materials to steel mills, power plants, manufacturers, and others in the Midwest. Seven Canadian steamships also would have been impacted by the rule.

In addition to the steamship exemption, the new air regulations provide some flexibility in their application to another 13 U.S. and 53 Canadian diesel-powered vessels. They, like thousands of other ships that call on the U.S., which otherwise will be required to switch to low-sulfur fuel by 2012 and then to ultra low-sulfur fuel in 2015.

American manufacturers, shippers, and others remain highly concerned that the additional costs associated with the new air requirements will render Great Lakes industries uncompetitive and open the door to unnecessary foreign imports. Under the EPA regulations, some Great Lakes vessels' fuel costs could increase by 70 percent based on historical numbers, potentially impacting their economic viability and eventually costing Great Lakes consumers more than $100 million in additional fuel costs per year. However, in the report accompanying the legislation, Congress, calling for an economic impact study, stated the EPA should provide a waiver in cases where fuel was not available or upon a showing of "serious economic hardship." Some oil refiners doubt the required fuel for lakers will even be available at any cost.

Oceangoing vessels trading to the Lakes will also see their fuel costs increase, as they will have to burn the lower sulfur fuel the entire time, two weeks or more, that they are on the Lakes, whereas deep-sea vessels calling on coastal ports will only be in U.S. waters for a few days.

"This really was only superficially about Great Lakes shipping," said James H.I. Weakley, 1st Vice President of Great Lakes Maritime Task Force, and President of Lake Carriers' Association. "This was about protecting family-sustaining jobs from regulations that had no basis in fact. Had the regulations been finalized as originally proposed - misapplying regulations designed for oceangoing vessels to lakers - we would have lost jobs on the Lakes, the mines and quarries, the steel mills, and all the other industries that depend on waterborne commerce."

Weakley noted that loss of carrying capacity on the Lakes can have only one of two results. "There will be either a modal shift or a source shift. A modal shift means ship-borne cargos go to trains and trucks. The U.S. Army Corps of Engineers recently determined that ships produce 70 percent less carbon dioxide than trains and 90 percent less than trucks. A source shift means we import what we now produce and in the process, lose more American jobs."

"Great Lakes shipping, domestic and international, is a cornerstone of the U.S. transportation system," said John D. Baker, 2nd Vice President of GLMTF, and President Emeritus of the ILA's Great Lakes District Council. "The temporary exemptions for U.S. and Canadian lakers will keep it so. As we move forward, we must ensure that these new fuel standards do not dissuade oceangoing vessels from coming to the Lakes. These vessels will be facing increased fuel costs. The nation will not benefit from a modal or source shift." The Great Lakes region, often referred to as "America's Fourth Seacoast," benefits from the greenest form of transportation: Short Sea Shipping. The term recently coined to describe the use waterborne transportation over shorter distances is being actively promoted to reduce the release of greenhouse gases and other pollutants, particularly in European countries.

"We all want clean air," said Pat O'Hern, 3rd Vice President of GLMTF, and Vice President and General Manager of Bay Shipbuilding Company. "Congressmen Obey and Oberstar are renowned for their commitment to the environment. They would not have championed Great Lakes shipping if this temporary exemption posed any threat to public health. They saw it for what it was: A needless loss of jobs."

U.S.-Flag Great Lakes operators have modernized the engines on their vessels. In the past two years, two steamships have been converted to diesels. A vessel that burns intermediate fuel entered a shipyard last month to have new engines installed. Another Great Lakes operator is seeking a Federal grant to help with the cost of repowering one of its intermediate-fuel vessels. Another company is using a Federal grant to assist in replacing generators. The EPA, through the finalized rule and other programs, continues to promote the upgrade of these and other transportation engines to more modern and cleaner power plants. With another worldwide fuel standard coming into play in 2020, the greenest form of transportation will continue to reduce its carbon footprint. The EPA's final rule gives the carriers time to adapt and provides incentives to do so sooner.

Founded in 1992, Great Lakes Maritime Task Force promotes domestic and international shipping on the Great Lakes. With 87 members, it is the largest coalition to ever speak for the Great Lakes shipping community and draws its membership from both labor and management representing U.S.-Flag vessel operators, shipboard and longshore unions, port authorities, cargo shippers, terminal operators, shipyards and other Great Lakes interests. Its goals include restoring adequate funding for dredging of Great Lakes deep-draft ports and waterways, construction of a second Poe-sized lock at Sault Ste. Marie, Michigan; protecting the Jones Act and other U.S. maritime cabotage laws and regulations; maximizing the Lakes overseas trade; and opposing exports and increased diversions of Great Lakes water.

For additional information contact:

James H.I. Weakley, 1st Vice President, Great Lakes Maritime Task Force (440-333-9995)
Glen Nekvasil, Secretary, Great Lakes Maritime Task Force (440-333-9996)
Steve Fisher, Executive Director, American Great Lakes Ports Association (202-625-2102)
Andy Lisak, Executive Director, The Development Association of Superior and Douglas County (715-392-4749)
Adolph Ojard, Executive Director, Duluth Seaway Port Authority (218-727-8525)