A plan to build a new $1-billion lock on the St. Marys River at Sault Ste. Marie, Mich., has taken a step forward with the release of a new Army Corps of Engineers report stating that the project’s benefits would be more than twice its cost.
The report, dated June 29 and released on July 2, estimated the envisioned 1,200-ft-long Soo Lock’s benefit-cost ratio at 2.42 and 2.32, using two different discount rates. That analysis is much more bullish about the project’s payoff than a 2005 Corps study, which estimated the benefit-cost ratio at only 0.73.
(View summary of economic validation analysis here).
Members of Michigan’s congressional delegation hailed the Corps report. “Great news…for the Soo Locks!” Sen. Debbie Stabenow (D-Mich.) said in a June 29 Twitter post. “After a long bipartisan effort, we are one step closer to moving this project forward.”
The project still faces hurdles. For one thing, its $341.7-million construction authorization, set by Congress in 2007, and its existing cap of $532.9 million, need to be increased substantially to fit the updated cost estimate. The new figure is slightly more than $1 billion, counting future inflation.
The project currently is authorized to be funded completely by federal dollars.
A possible vehicle for that higher estimate, or “post-authorization change,” would be water resources legislation. The House passed its Water Resources Development Act by a wide margin in June; a Senate bill has cleared committee.
The new Soo Lock also would require significant appropriations. Congress did appropriate $32.1 million for the lock's construction some time ago. But that’s far short of the projected overall price tag.
The Corps said it will seek further appropriations for the project, starting in the Trump administration’s fiscal year 2020 budget, which is expected to be released in the first half of 2019.
The Soo Lock will face tough competition for Corps construction appropriations dollars—the agency’s backlog of authorized but unfunded projects is about $100 billion, according to the House Transportation and Infrastructure Committee’s top Democrat, Peter DeFazio of Oregon.
The Soo locks, located at the eastern end of Lake Superior between the U.S. and Ontario, Canada, are viewed as an important link in the supply chain for shipments of taconite—a type of iron ore—as well as other freight moving through the Great Lakes. In all, about 80 million tons of commercial goods pass through the Soo Locks each year, the Corps says.
Supporters of the project note that of the current Sault Ste. Marie locks only the 1,200-ft Poe Lock can handle 1,000-ft-long ships. Since that lock was opened in 1969, such vessels’ share of the lakes shipping market has increased, according to the Corps.
If the Poe Lock experiences an unplanned shutdown, the other lock at the site “does not have the capacity to keep up with the transportation demand, effectively creating a bottleneck,” James C. Dalton, Corps director of civil works, said in a June 29 letter recommending the increased authorization for the project.
The new lock “is necessary and prudent to ensure reliability at this critical location in the Great Lakes navigation system, which is essential to U.S. manufacturing and national security,” said Lt. Col. Dennis P. Sugrue, commander of the Corps’ Detroit District, in a memo to Corps headquarters recommending the project.
The Corps says that most of the increase in the project's estimated benefits come from factoring in the sizable economic impact of a loss of taconite shipments if the current Poe Lock had a lengthy shutdown, the use of a different discount rate and including "engineering reliability data." (View Corps Post-Authorization Change Report summary here.)
The new lock would replace two others on the site—one opened in 1914, the other in 1919—that the Corps says are obsolete.