Port commission discusses new gravel export tariffs

By Diana Haecker
The Port Commission met in a work session and regular meeting last week to finalize wharfage ratesdealing with gravel, sand and rock exports, noting that the amount of gravel going over the causeway has dramatically increased in the past year. They also addressed the Consumer Price Index adjustment and an addition to the port tariff that addresses the port’s right to retain fuel in the fuel lines to conduct mandatory pressure testing of the fuel lines.
The port panel heard that gravel exports are reaching new levels as projects in the region require vast amounts of material. When 40,000 tons of gravel in the past marked the highest amounts, bigger projects, such as the Cape Blossom road project in Kotzebue, saw gravel exports nearing 300,000 tons last year. The port panel saw fit that the categories for tariffs of gravel and sand be expanded from three to six price classes. Until last year, the price per ton existed for exports under 2,000 tons, 2,001 to 40,000 tons and 40,000 tons and up. The 2021 base rate was $2.15 per ton and taking into account the Consumer Price Index rise of 3.67 percent, the 2022 base rate rose to $2.23.
The panel agreed that exports from 0 to 50,000 tons pay the base rate of $2.23/ton; 50,000 to 100,000 pay $1.89/ton; 100,000 to 200,000 pay $1.67/ton; 200,000 to 300,000 pay $1.45/ton; 300,000 to 400,000 pay $1.23/ton and 400,000 and up pay $1.11/ton.
The panel reasoned that giving discounts to higher volume exports would keep Nome as a gravel source competitive and therefore bring business not only to the port but also to Nome sand, rock and gravel sellers.
Port commission chairman Jim West Jr., who also exports gravel over the port’s docks, said that Barrow is looking for 800,000 tons of gravel for a project and that the port commission should come back and revisit the categories.
The panel needed clarification on how the State of Alaska Dept. of Labor and Workforce development arrived at the 3.67 percent CPI adjustment and port director Joy Baker was tasked to find out.
The Consumer Price Index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
The panel also discussed adding language to the tariff dealing with federal mandates to test fuel lines for leaks. The hydrostatic pressure test require fuel in the line, explained Harbormaster Lucas Stotts. Proposed language is that “at the Port of Nome’s discretion, bulk liquid petroleum delivered to onshore tank storage through the City-owned header and pipeline on the causeway may temporarily retained in the line to enable the city of Nome to pressurize the City-owned pipeline to meet USCG regulations for hydrostatic testing.” Port Director Baker explained that in the past it was gentleman’s agreement with fuel vendors. Scot Henderson with Bonanza Fuel stepped before the port commission however and took exception that he and the other fuel vendors were not consulted with this new language. He pointed out that it still is a contentious issue who owns the fuel once it flows through the City’s pipelines. He pointed out that fuel transfers are a high risk operation and the liability needs to be worked out before new language should be added to the tariff.
In other business, the port commission heard that the Army Corps of Engineers Alaska District intends to shed responsibility for the East Dock, the South sheet-pile bulkheads and return them to the City’s ownership, under which the city would be obligated to maintain and improve them. The issue came to a head when the port asked the Corps to upgrade the Southwall, which needs to be upgraded to support a higher load. Right now, it is not built to support loads for cranes or even fuel trucks. The Corps explained in a letter that it takes an act of congress to “de-authorize” the federal features and turn them into “local service facilities.” Baker explained that the upgrade to the Southwall was planned to be completed before the bigger port expansion project would begin. As it stands, the Commissioner Charlie Lean had concerns that the port could neither financially nor logistically could handle two big projects at once. Asked how much the upgrade for the Southwall would cost, Baker said that a rough estimate was about $6.3 million. At the same time, the Corps expanded the footprint of its dredging obligations inside the harbor and at Belmont Point and the Snake River. But should Nome accept responsibility for upgrade and maintenance of the East dock and Southwall in exchange for the bigger dredging footprint? Joy Baker said the Corps set precedence as they have dredged the inner basin since 1919. No action was taken.
The next work session to further discuss the tariff overhaul is scheduled for February 8, with a regular meeting of the commission to take place on February 10 to make recommendations to the Nome Common Council in time for their February 14 meeting to sign off on the 2022 tariff schedule.