THE NORTHWEST SEAPORT ALLIANCE MEMORANDUM

Transcription

1 THE NORTHWEST SEAPORT ALLIANCE MEMORANDUM MANAGING MEMBERS Item No. 4B BRIEFING ITEM Date of Meeting December 5, 2017 DATE: November 27, 2017 TO: FROM: Managing Members Ralph Graves, Sr. Director Capital Development, The Port of Seattle Presenter: Bari Bookout, Non-Federal Sponsor Project Liaison SUBJECT: US Army Corps of Engineers Seattle Harbor Navigation Improvement Project A. BRIEFING REQUESTED Status of feasibility study and project timing for the US Army Corps of Engineers Seattle Harbor Navigation Improvement Project B. BACKGROUND As part of the strategic plan for gateway competitiveness, the Port of Seattle partnered with the US Army Corps of Engineers to initiate a deepening project for the Seattle navigation channels. This project will allow the North Harbor terminals to handle the big containerships that are already being deployed in the transpacific trade and accommodate growth for the next 50 years. The project has three distinct stages: Feasibility Study, Preconstruction Engineering & Design, and Construction. The project is nearing the end of the Feasibility Study. C. CURRENT STATUS Industry Trends The shipping industry is rapidly increasing the size of ships to realize savings through economies of scale. These large ships can carry more containers with the same amount of fuel burned by smaller ships. Smaller, less efficient ships have become obsolete and been scrapped. Within the last 10 years, has seen an increase in average ship size, and now sees regular calls of ships in the 10-14,000 TEU range. Almost all of the new ship capacity coming on line are 10,000 TEU and larger ships. The industry is also consolidating to fewer, larger shipping lines. The top 5 shipping lines now control 79% of fleet capacity of ships 9000 TEU and larger. Ports in North America are investing in infrastructure to handle these ships efficiently, and the evolution of ship size is likely to mean consolidation of the industry to fewer, larger terminals that can handle large ships efficiently. These ships have drafts up to 54. With the additional 10% of draft under keel required by the Puget Sound Pilots for safe transit, channel depth needed for a fully laden ship is -57 at Mean Lower Low Water (MLLW). Currently the berths and navigation channels in the North Harbor are MLLW.

2 Page 2 of 5 The Port of Prince Rupert has 60 of water or deeper at berth, and the Ports of LA and Long Beach have either completed, or are in the planning process to construct deeper channels and berths at a majority of their terminals. Because the Pacific Northwest is rich in export cargo like seafood, agricultural and forest products which are very heavy, ships need to be able to arrive and depart our port at their fully laden draft. If ships are restricted in movement by depth, they must either depart without a full payload of cargo, or wait on the tide for enough water. These measures create financial and operational impacts through less efficient ship and terminal operations. Less efficient ship economics could mean our gateway loses future business to those ports with water depth to handle them. USACE Feasibility Study Deepening of Federal Navigation Channels in the United States is performed by the US Army Corps of Engineers. There are three distinct phases to channel deepening, and the process can take 10 years or longer. The stages are (1) Feasibility Study & Environmental Assessment (2) Preconstruction Engineering and Design, and (3) Construction. Each phase requires federal authorization and appropriation of funding, as well as a cost-share agreement by the non-federal sponsor. The Port of Seattle is the non-federal sponsor of this project. In anticipation of increases in ship size and to remain competitive as a gateway, in 2012 the Port of Seattle requested that the US Army Corps of Engineers conduct a feasibility study to evaluate deepening of the navigation channels in the Seattle Harbor. The federal channel in the West Waterway is currently only authorized at -34 and the East Waterway at -50 to -34 in sections, which means there is no obligation on the Corps to do any maintenance dredging at depths greater than the authorization. The Seattle Harbor Navigation Improvement Feasibility Study and Environmental Assessment was federally authorized in 2014, and is expected to be completed by May The cost share obligation of the Port for the study was $1.5M, with some of the funds contributed as work in kind. Cost Share for Feasibility Study and Environmental Assessment Cost- Description Share Obligation Expenditures to Date Remaining $1.5M $1.1M $400K US Army Corps of Engineers $1.5M $1.2M $300K Total Feasibility Study Expenditure $3 Million $2.3M $700K The US Army Corps of Engineers modeled the economic cost/benefit of deepening the channels by forecasting vessel and trade activity over the next 50 years, and by conducting a detailed simulation of vessel traffic under different depth scenarios. They used a design vessel assumption equivalent to an 18,000 TEU ship with a draft of 52. When the study was begun, this ship size seemed unlikely to be deployed on the West Coast for a number of years. However, in 2016 the CMA CGM Benjamin Franklin, an 18,000 TEU ship, called Seattle on a test run.

3 Page 3 of 5 The NWSA is already seeing regular calls of 13,000 TEU sized ships and these ships also have a maximum draft of 52. The shipping line deploying these ships recently raised concern about depth of our berth and channels, which are currently 50 in Seattle. The study is expected to be completed in May 2018, with the issuance of the signed Chief s Report. The US Army Corps of Engineers recommended authorization of a National Economic Development Plan (NED) of -56 MLLW and supported authorization of a Locally Preferred Plan (LPP) of (-57 ). To maximize future benefit, the Port of Seattle, in coordination with the NWSA, submitted a letter requesting the Locally Preferred Plan granting an authorization of -57 MLLW. The final Feasibility Report and Environmental Assessment has been completed and the remaining milestone is the Civil Works Review Board, which will take place in January of If all goes well, the final authorization recommended in the Chief s Report will be -57 MLLW in both the East and West Waterways. The Chief s Report will only be issued if all decision-making authorities including the Federal Government, the EPA, Department of Ecology and the Tribes agree on the recommended authorization. Environmental Review A full environmental assessment was performed by the US Army Corps of Engineers as part of the feasibility study, and was made available for public review and comment. The NWSA and Port of Seattle contributed review and comments at multiple points during the study. Elements of the review included habitat, benthic organisms and other wildlife, water quality, air quality, hydrology, cultural resources, hazardous & toxic waste, and public health and safety. Construction of the Corps channel deepening project will not take place until the other remediation projects in the waterways are completed. These are the East Waterway CERCLA cleanup in the East Waterway and the Lockheed Martin Shipyard CERCLA cleanup project in the West Waterway. Contaminated sediment will be removed from the waterways during these cleanups. For the remaining project area, a preliminary analysis of sediment characteristics was performed during the Feasibility stage and a more detailed analysis will be carried out during design. Any remaining sediment that is unsuitable for open water disposal under DMMP will be transported to upland disposal sites. Mitigation of Impact to Treaty Reserved Fishing Access In addition to economic benefit, the Feasibility Study and Environmental Assessment measures impacts to the environment, including Indian Trust assets and cultural resources. The Muckleshoot Indian Tribe and the Suquamish Tribe are both signatories to the Point Elliott Treaty of 1855, which guarantees the rights of taking fish at usual and accustomed grounds and stations. The usual and accustomed grounds for both tribes overlap the project area, where they harvest salmon and other seafood. Tribes have the authority to participate in all decision making with potential to affect protected treaty fishing. After the Draft Feasibility Report and Environmental Assessment was released for public comment (NEPA) in August 2016, the Muckleshoot Indian Tribe requested a government to government meeting and formally opposed the project due to impact to usual and accustomed treaty fishing, and requested clarification on other elements of the study. The Suquamish Tribe raised similar concerns in a comment letter. The US Army Corps of Engineers will not issue a final Chief s Report, or proceed with construction of the project if objections are raised by Native American tribal interests or other federal agencies.

4 Page 4 of 5 The Corps worked with the tribes to revise the report language in areas where questions were raised. Under federal policy, it is the non-federal sponsor s responsibility to work through financial impact claims. Since 1995, all Port of Seattle capital port development and marine facility improvement projects within the harbor have included agreements to compensate Treaty tribes for adverse in-water effects on Treaty fishing in instances where displacement of fishing access could not be avoided or minimized. Compensation measures linked with port development have in most cases consisted of payments to the Muckleshoot and Suquamish Indian tribes. The tribes requested mitigation to impacts to Treaty fishing for both the T5 Modernization Project and the North Harbor Deepening Project before allowing either to proceed. The agreements were negotiated simultaneously. The T5 tribal mitigation agreement was approved by Managing Members on August 4, The mitigation agreement for Seattle Harbor Deepening was reached with the Muckleshoot Indian Tribe and the Suquamish Tribe as described in the attached action memo. Once the agreements are signed, the Tribes will transmit letters to the US Army Corps of Engineers giving their approval for the Chief s Report to be issued and permission for design and construction to move forward. Mitigation payments will become part of the internal project authorization amount and will be brought forward for approval by Managing Members at the same time that construction costshare funds are requested. Our obligation for payment to the tribes is 30 days in advance of construction. Remaining Project Timeline and Estimated Cost The Corps process for deepening includes three distinct phases, each of which requires federal appropriations and authorization before they begin. Cost-share for each phase will be made by the non-federal sponsor. In the case of the Feasibility Study, the remainder of the $1.5m budget was transferred to the Alliance upon formation. Managing Members will have not made a policy decision about funding of harbor navigation projects, but will do so at a future date. Phase 1 Feasibility: Authorized in 2014 and will be concluded in May 2018 with the issuance of a signed Chief s Report. The remaining budget for the $1.5M cost-share obligation was placed in the NWSA budget upon formation of the Alliance. Phase 2 - Preconstruction Engineering and Design (PED): Will begin in October of 2019 if funding is appropriated in the FY19 Army Corps Work Plan or a congressional appropriations bill. Congressional authorization must then be granted either through the next WRDA bill in 2018 or another appropriations bill. During this phase, the project design will be completed and bid documents will be prepared. The Non-Federal Sponsor will sign a Design Agreement to cost share PED. Phase 3 Construction: The Non-Federal Sponsor will sign a Public Partnership Agreement for cost-share of the project. Construction must first receive authorization under the 2018 WRDA bill, and must receive funding in the President s Budget. If all goes well,

5 Page 5 of 5 funding will start in the FY22 President s budget. Construction for the West Waterway is expected to take two seasons and at the earliest would be completed by It is expected that the Lockheed Cleanup project will be completed by the start of West waterway construction in The East Waterway will take one season, but timing is dependent upon the completion of the separate CERCLA cleanup project in that waterway. Current timing estimate would mean earliest completion by Cost Share Estimate for Phase 2 (PED) and Phase 3 (Construction) of Locally Preferred Plan (-57 MLLW) in 2016 dollars, including Tribal Mitigation Non-Federal Seattle Harbor Project Estimate Total Cost Federal (Port) East Waterway (EWW) $10M $2.5M $8M West Waterway (WWW) $50M $20.5M $29M TOTAL Both Waterways $60 Million $23 Million $37 Million Tacoma Harbor Deepening Feasibility Study The Port of Tacoma, as non-federal sponsor, has requested that the Corp undertake a Feasibility Study to determine if there is a federal interest in deepening the channels in the South Harbor. This study was not included in the 2017 President s budget and Corp work plan. The corps and the port internal team, are lobbying for inclusion in the FY2018 budget and work plan as a new start. The Tacoma Harbor Deepening Feasibility Study and Deepening Project would follow the same process as Seattle Harbor. The first cost-share commitment is for the Feasibility Study, which is $1.5M over three years. Some of the $1.5M will be contributed as work in kind, including staff time for data analysis, research, meetings and review. If the study is funded, expected earliest completion of the full project would be 2027 or later.