Mr. Speaker, I would like to submit the following for the Record. Summary of Testimony Presented to the Committees on Agriculture, Forestry and Economic Development of the Arkansas Legislature at Camden, Arkansas, April 29, 2004 (Prepared…
Mr. Speaker, I would like to submit the following for the Record.
Summary of Testimony Presented to the Committees on Agriculture,
Forestry and Economic Development of the Arkansas Legislature at
Camden, Arkansas, April 29, 2004
(Prepared by the Arkansas Waterways Commission, 101 E. Capitol, Suite
370, Little Rock, AR 72201)
This summary provides a digest of testimony presented both
verbally and in writing to the Committee on Agriculture,
Forestry and Economic Development of the Arkansas
Legislature. Although not a verbatim transcript, the summary
is intended to faithfully represent the facts, statements and
comments made during the hearing.
Economic Catastrophe
Catastrophic job loss and far reaching economic and
environmental disruption to south Arkansas and northeast
Louisiana will result from failure to fund Corps of
Engineers' operations and maintenance of the Ouachita/Black
River Navigation System. An approximately $8 million savings
to the Army Corps of Engineers would result in a net loss in
tax revenue to the federal treasury.
The above summarizes unanimous consensus of more than two
dozen representatives of city, county and state government,
business and industry who testified in support of continued
funding of the Ouachita/Black River Navigation System during
a meeting of the Arkansas Legislature's House and Senate
Interim Committees on Agriculture, Forestry & Economic
Development, April 29, 2004 in Camden, Ark. The hearing was
attended by some 150 interested participants.
The 336-mile long Ouachita/Black River Navigation System
that includes 117 miles in Arkansas, is facing a $8.2 million
funding cut in the proposed 2005 budget that begins in
October, 2004. The budget proposal of $1.9 million budget for
recreation on the system will not only eliminate maintenance
on the system's four locks and dams, two of which are in
Arkansas, but will prohibit their operation, thus eliminating
navigation on the waterway. This also puts many of the other
economic, environmental and recreational activities supported
by the river system in jeopardy.
The waterway was targeted for a budget cut because it falls
into a category of waterway considered by the federal Office
of Management and Budget as ``low-use.'' OMB considers
waterways as low-use if cargo shipped on the system is less
than 1 billion ton-miles annually. The Ouachita/Black River
Navigation system had more than 800 million ton miles of
usage in 2001. Other economic factors or benefits of
waterways projects are not considered in the ``low use''
definition.
Representatives from private industry, river associations,
municipalities in Arkansas and Louisiana as well as federal
and state agencies presented concerns in terms of the
industry and economic losses in light of two possible
scenarios: if navigation on the system were discontinued or
if the navigation pools created by the system locks and dams
were not available. Environmental and recreational losses
were also addressed.
A representative from Arkansas Governor Mike Huckabee's
office and congressional staff members from the Arkansas
delegation presented statements in support of continued
funding of the waterway at current levels. Their concerns
have been expressed to the President and appropriate
committees in the U.S. Congress.
Consensus emerged on several key points:
The savings to the federal government by reducing funding
on the Ouachita/Black River Navigation System would be far
outweighed by the tax revenue lost.
Reduction in the funding of the river system has much
broader consequences than simply the loss of navigation. The
river has become a source of economic development, jobs,
power and water supply as well as recreation. Considerable
investments by private businesses and governments to harness
the resources of the river were made with the assurances that
it would continue to be available for use.
Before any decision to close or change the operation of the
Ouachita/Black River Navigation System is made, a thorough
study should be made to identify long term environmental,
social, economic and hydraulic impacts.
The modern day history of the Ouachita River begins with
settlements at Monroe, La. and Camden, Ark. in 1783. More
than $700 million was invested in construction of the current
four locks and dams.
Colonel Rick Clapp, commander of the U.S. Army Corps of
Engineers, Vicksburg District, said the Vicksburg District is
capable of using as much as $18 million annually on the river
system for operations, and maintenance. Clapp said the
district is evaluating possible reduced operation
alternatives if the Ouachita River receives only the $1.9
million as proposed in the 2005 budget.
He anticipated that in that case, the lock gates would be
shut and the locks would cease operation on October 1, 2004.
The dam gates would be positioned and most of the project
staff would be moved or furloughed. Minimum staff would
remain for safety and security purposes. Clapp speculated
that the 2 budget would be used for these minimum activities
and to initiate a study that would identify long term
environmental, social, economic and flood control impacts of
project closure. No studies have been done on the impact of
closing the Ouachita/Black River Navigation System.
Clapp said that if the project were put into caretaker
status, meaning the locks closed and dam gates set with
minimal maintenance performed, there could be deterioration
on the project that could take significant funds to put it
back into operation at a later date.
Loss of Navigation
Closure of the locks on the river system would eliminate
navigation and significantly affect the area's industry and
economy.
Denny McConathy, owner of Cross Oil Refining in Smackover,
Ark. testified that his company, in business since 1923, uses
the river to bring oil via barge from Louisiana and Texas
gulf coasts to make products that go into a variety of oils,
adhesives, metal working fluids, rubber compounds and other
materials.
Last year the company brought 79 barges of oil up the river
and expects to bring up more than 100 barges this year. That
oil is valued at more than $68 million. It would take more
than 11,000 trucks to transport that volume- a task that
would be physically and logistically impossible as well as
economically prohibitive.
Cross Oil has more than 500 customers and projects 2004
sales of between $125-150 million. Cross Oil employs 125
people, has an annual payroll of $6.5 million and the
majority of employees live within 25 miles of the plant. In
2003, the company paid property taxes of more then $350,000
to Union and Ouachita Counties. Of that, $290,000 funded the
Smackover school system and more than $16,000 was paid to the
city of Smackover.
Investments the company has made in its facilities were
made with assurances that the Ouachita River would be
available for use. Loss of the use of the river threatens the
company's existence and the local economy. In 1995 the
company invested more than $47 million in the refinery,
packaging plant and river terminal and a $2 million expansion
of the lube oil packaging plant that is underway
with completion expected by July. Local companies
performed all the expansion work. In addition, the company
has 970 accounts payable vendors, most within 100 miles of
the plant, who were paid approximately $100 million in
2003.
``Cross alone puts more money back into our government in
the form of payroll taxes, employee income taxes, income
taxes, etc., to more than pay for the costs of maintaining
the navigation system,'' McConathy wrote in a letter to the
Arkansas Waterways Commission.
Keith Garrison, executive director of the Arkansas
Waterways Commission, said that waterborne transportation has
a significant economic impact in Arkansas. A 2002 report by
the Mack Blackwell Center for Rural Transportation concluded
that waterborne transportation had an $811 million annual
economic impact on the state. He emphasized the efficiency of
barge transportation, pointing out that one barge can carry
the equivalent of 60 semi-trucks or 15 freight cars. It would
take an additional 40 million trucks on our nation's highways
or 10 million rail cars to carry what is not carried on our
inland waterways nationwide, he said.
Garrison said that cuts in funding to the Corps of
Engineers budgets for navigation
maintenance have been going on for more than 12 years while
there have been steadily increasing repair and maintenance
needs on our nation's waterways.
With freight movements predicted to double to 12 billion
tons by 2015, the use of the waterways will be even more
important. More than 70 percent of freight currently moves by
truck. Without increased use of our waterways, the U.S. would
have to more than double the interstate highway miles
available to meet that demand.
Paul Revis, executive director of the Ouachita River Valley
Association, emphasized that the river's four locks and dams
are critical to the operations on the river system.
Maintenance work is 20 years behind schedule because of
continued budget cuts to the Corps of Engineers.
International competitors like Europe, China and Brazil have
recognized the value of their inland waterways and are
investing more money in them while the U.S. is cutting
waterways budgets, making the U.S. less competitive. He said
that benefits used for authorizing a project are frequently
different from those needed to keep it open, referring to the
impact the river has on industry and the economy in the area
beyond its intended navigation benefits.
Doug McNeely of Bunge North America, said his company is
part of the world's largest processor of grains and oil
seeds. It operates in 19 states on the Mississippi River and
its tributaries. Bunge employs 100 people at 13 facilities in
Arkansas and 250 people in 14 locations in Louisiana. McNeely
manages two grain elevators on the Ouachita River in
Louisiana. These elevators purchase soybeans, corn, wheat,
and sorghum from 400 local farmers. In a half-century of
presence on the river, he said that the use of waterways to
move grain has significantly increased farm income. McNeely
said any decision by the federal government to abandon its
investments in rivers like the Ouachita and Black will be
immediately felt in the pocketbooks of local farmers and
communities. His company estimates that loss of river
transportation for the grain and soybeans shipped by these
facilities would add transportation costs and decrease prices
paid to farmers by approximately 14 cents per bushel. This
could mean a loss to farmers of $1.4 million each year.
Greg Richardson of the Louisiana Port of Columbia, located
about 25 miles south Monroe, La. on the Ouachita River, said
public ports in Louisiana contribute $33 billion to state's
economy each year and create 270,000 jobs. He said that the
volume of tonnage has always been a problem on the Ouachita
River system and that this funding battle is fought every
year. Richardson emphasized the need to actively fund the
river system to make it more user-friendly.
Ouachita Terminals is working to develop, construct and
operate an intermodal/multimodal containerized cargo facility
in West Monroe, Louisiana. With the continuance of the
Ouachita's nine-foot navigation channel, Ouachita Terminals
believes the facility has the potential to bring in enough
cargo to end the future concerns over the ton mile criteria
used for funding the river system.
In addition, representatives from Davidson Terminals and
Sunshine Oil Company; Tressenderlo Davison Chemical LLC;
Louisiana Oil Marketing Association; West Monroe, Louisiana
Port; Placid Oil & Refinery; Valero Petroleum; Tensas Basin
Levee District; and Petron, Inc. presented oral or
written testimony outlining their concerns about the
effects that would result from the inability to use the
Ouachita River for navigation.
Expected Job Losses and Increased Costs
Tressenderlo said it would be a loss of 50 jobs and the
jobs associated with $11 million spent on barge use.
Cross Oil, loss of 125 jobs, revenue to area including
money paid in taxes and to outside vendors.
Estimated $1.4 million loss to farmers resulting from lower
prices paid from Bunge.
Placid Oil, gasoline and fuel manufacturer, said closure of
terminal on Black River in Archie, LA would cause prices to
rise because oil would have to move by truck, increasing
costs by $500 million and wear and tear on roads.
Velero Energy estimates fuel prices could rise up to 8
cents per gallon for consumers around the Monroe, LA area if
terminal in Monroe is closed due to loss of navigation on
Ouachita River.
The Tensas Basin Levee District in LA fears loss of
navigation will mean bank destabilization, threatening 120
miles of flood control levees that would put many towns and
citizens in danger with no identifiable source of revenue to
fund bank stabilization projects and levee setbacks.
Loss of Navigation Pools
Closing of the Ouachita/Black River Navigation system
presents not only a challenge for navigation, but also
threatens industry and economic development as well as the
economy of south Arkansas and northeast Louisiana. Although
the system was built as a navigation project, over its more
than 100-year history, the river's resources have been used
to provide water to local communities as well as a benefit to
industry. Any changes to how the river is operated and
maintained has the potential to change the quality and
quantity of pools of water formed between the locks. These
pools of water have served as the life-blood of many cities
and industries. In addition, without the ability to use the
waters of the river, restrictions on the use of the ground
water of the already-stressed Sparta Aquifer would have to be
put into place to insure the area would have a viable water
supply in the future.
Pete Parks, vice chairman of the El Dorado Water and
Wastewater Commission and Ken Rudder, vice president of the
Union County Water Conservation Board said El Dorado and
Union County have invested $6.8 million over the last 5 years
to develop the Ouachita River as an alternative water source
other than the Sparta Aquifer. The aquifer, which currently
provides potable water to areas along the Ouachita River and
in Louisiana, is in a critical ground water area. Water from
the Sparta Aquifer is being used faster than it can be
replenished. The entire project will cost more than $67
million and area businesses have invested millions of dollars
more in water conservation measures in addition to donations
of land and right-of-ways for facilities. In addition, Union
County is working on a multi-million project with several
area companies to provide treated discharge water back into
the Ouachita River. The great pools of water available now
allow for dilution. If the water would have to be further
treated to meet EPA and ADEQ standards, additional millions
of dollars would have to be spent by El Dorado and Union
County. This could possibly result in the closure of two El
Dorado plants.
In deciding to use the Ouachita River for its water source,
the Union County Water Board explored every other option to
come up with a water supply. This included looking at creeks
and hollows to build a dam to create a lake for water and it
was not possible because the necessary water resources in
that part of the state do not exist. The river was the best,
most economical and viable source of water.
Georgia-Pacific Corporation, which operates seven
facilities along the river in Arkansas, provides more than $2
billion to the economy of Arkansas along with more than 3,200
jobs. These plants and jobs would be threatened if Georgia-
Pacific could not use the Ouachita River for its operations.
The Arkansas Electric Cooperatives use the Ouachita River
to both run a power generating station near Camden and
receive the fuel oil used at the facility.
The plant uses river water for power generation. The pool
levels maintained as part of the navigation system are vital
for allowing the plant to generate, especially during periods
of low river flow and high temperatures, when electrical
demand is peak. If the pool level were no longer maintained,
the plant may be forced to discontinue operation during these
periods due to operational concerns and environmental
restraints. This would cause not only an impact on the
electrical system in the area, but could result in a loss
of jobs and a blow to the local economy.
Mark Bowles, environmental support manager for Entergy
Services, Inc. said two Entergy power plants located in
Monroe, LA rely heavily on a dependable water supply from the
Ouachita River as cooling water for the power production
process. The company's Sterlington plant uses its river
intake system to take in approximately 1.5 million gallons of
river water per day. Both plants were built along the
Ouachita River in the 1950's and early 1960's with the belief
that there would be an adequate and dependable supply of
water to meet the area's electricity demands. The loss of
pool elevation along the Ouachita River would require
modifications to the intake facilities that would cost
several million dollars at each plant. These costs would be
passed along to ratepayers. The loss of minimum river levels
would immediately cease operations at both plants and make
future operations of these plants at a reasonable cost
unlikely. Loss of these plants would impact Entergy's ability
to provide low cost power to customers, especially during the
peak electricity demand summer months.
John Terry of the U.S. Geological Survey, testified that
the inability to use the water supply of the Ouachita/Black
River Navigation System, would further endanger the Sparta
Aquifer, the region's ground water supply that is already
stressed.
Todd Fugitt, of the Arkansas Soil and Water Conservation
Commission, testified that a budget cut in the operation and
maintenance budget of the Ouachita/Black River Navigation
Project would force the commission to consider water use
permits and associated allocation of water from the river in
south Arkansas. Budget cuts to the river system would
threaten the growth and sustainable use goals of the surface
water and ground water resources of all of southern Arkansas,
and would impact Louisiana as well. If water from Ouachita
River could not be diverted for use, the Commission would be
forced to consider regulation of groundwater to bring areas
like Union County within reasonable, sustainable water use
scenarios. This would mean a reduction of about 64 percent of
the current ground-water use in Union County.
James Tilley, manager of Camden Water Utilities, said that
the city of Camden's only source of potable drinking water
has been the pools of water created by the Ouachita/Black
River Navigation System. If the river system was closed and
the pool elevations change, Tilley said it would be highly
likely that there would be periods during the year that
Camden would be unable to provide water to its customers. In
2003, Camden drew about 900 million gallons of water out of
the Ouachita River to supply 6,000 domestic customers and
four water associations in the surrounding area. Recently,
Camden has spent more than $11 million in upgrades to
the water system. The city has no alternative water source.
In addition, representatives from TECO/Union Power Station;
Union County Water Board, El Dorado Chemical/Great Lakes
Chemical/Lion Oil; International Paper; and the City of
Monroe, LA presented oral or written testimony expressing
their concerns about the effects to their businesses or
cities if the navigation pools on the Ouachita River were not
available for use.
Expected results of loss of pools on Ouachita/Black River Navigation
System
Increased depletion of the Sparta Aquifer resulting in
ground water restrictions for areas of south Arkansas and
resulting economic impact of those restrictions.
The loss of millions of dollars already invested to develop
the river as a water source for El Dorado and Union County
and increased expenses to treat water being returned to river
by industrial users to meet EPA and ADEQ standards.
Potential closure of three electric power plants serving
the area along with increased costs to area consumers for
electrical power.
Potential closure of seven paper products facilities
located on the Ouachita River and elimination of as many as
3,200 jobs.
Potential loss of water supply for the city of Camden, AR
and resulting undetermined costs of studying and developing
an alternative water source.
Environmental and Recreational Losses
The precise dollar value of changes to the environmental
and recreational climate of to south Arkansas if the
Ouachita/Black River Navigation System is closed are
difficult to calculate.
The Arkansas Game and Fish Commission believes the loss of
the navigation pool on the Ouachita River would have far
reaching environmental and recreational impacts. The river
has a high recreational value and attracts hundreds of
thousands of visitors each year for fishing, boating, hunting
and other recreational activities. These visitors pour
millions of recreation dollars into the local economy.
In Arkansas alone, there are 37 public access areas
constructed by the U.S. Army Corps of Engineers, Arkansas
Game and Fish Commission and other groups on the Ouachita and
Saline Rivers. Changes in the operation of the lock and dam
system would make many of the rivers' boat launching sites
unusable. These changes will also affect the environmental
characteristics of the river and associated wetlands and
overflow areas.
The Arkansas Department of Parks and Tourism reports that
in 2003, travelers in the five Arkansas Counties in the Lower
Ouachita River Valley spent more than $118 million,
generating more than $9 million in tax revenue to state and
local governments.
Summary
Closure of the Ouachita/Black River Navigation System would
have a profound, far-reaching effect on the economy and
environment of south Arkansas and northeast Louisiana.
Although the system was built as a navigation project, its
economic benefit has gone far beyond its value as a
navigation system. The river has become the very life-blood
of many cities, industries and recreational pursuits. Its
value to the environment and as a water resource supporting
the continued growth and economic vitality of south Arkansas
and northeast Louisiana is beyond measure. Operation of the
navigation project should not be closed, nor should it be
changed, without a comprehensive study of the consequences of
such actions.