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River lock closure prompts call to aid 2 businesses

Mike Mosedale//May 13, 2015

River lock closure prompts call to aid 2 businesses

Mike Mosedale//May 13, 2015

When Congress voted to authorize the closure of the Upper St. Anthony Falls navigational lock on the Mississippi last year, it effectively signaled the end of Minneapolis’ dream of developing a river port to rival the far more robust operations just downriver in St. Paul.

While that vision failed, the impending closure of the upper lock will still have a major impact on the two remaining barge-reliant businesses that are above St. Anthony Falls: Aggregate Industries, which ships sand and gravel to its riverfront facility in north Minneapolis, and Northern Metal Recycling, which ships processed metal out of its massive shredding facility just south of the Lowry Bridge.

After the last barge passes through the Upper St. Anthony lock on June 9, both companies will be forced to switch to a considerably more expensive means of transport: trucks.

Should the state of Minnesota provide compensation to those companies?

Several lawmakers think so.

Under legislation introduced this session at the Capitol, the state would appropriate $40 million to the Department of Employment and Economic Development to provide assistance to Northern Metal and Aggregate.

Although the bill is effectively dead for this legislative session, its sponsor in the upper chamber — Sen. James Metzen, DFL-South St. Paul — is preparing the proposal for another run next session.

At an informational hearing before the Senate Transportation and Public Safety Committee on Friday, Metzen acknowledged that finding the big pot of money will be difficult.

“It’s a serious problem. We’ve got to look under every rock to try to help these people,” he said. “[The lock closure] is not their fault. They should get some relief.”

While lawmakers on the panel were sympathetic to Metzen’s argument, several expressed concern about the precedent.

“How many businesses are we going to be on the hook for in the future?” asked Sen. Scott Newman, R-Hutchinson. “I would be very concerned about Pandora’s box.”

Teasing that out, Newman imagined a scenario under which coal-fired power plants in northeast Minnesota might be shuttered because of new federal regulations, driving up the costs the taconite industry.

“Where does this stop if we begin reimbursing businesses for actions of the federal government?” Newman said.

Jack Perry, an attorney at Briggs and Morgan who represents both Aggregate and Northern Metal, characterized the circumstances around the lock closure as unique.

He also noted that the federal legislation authorizing the closure specifically included a note urging the state to find ways to compensate affected businesses because, he said, “there is zero chance that the federal government is going to pay for this.”

While Congress authorized the closure in response to fears about the possible upriver spread of invasive Asian carp, Perry pointed out that the political muscle came from Minneapolis City Hall, where officials are seeking to refashion the industrial riverfront above St. Anthony Falls into a mix of park land and commercial and residential developments.

Steve Ettinger, president of Northern Metal, told lawmakers that his company currently ships about 85 percent of the metals processed at its shredder by barge. When the lock closes, he said, the company will be forced to switch to trucks, adding approximately 1,000 vehicles a month to the I-94 corridor and costing Northern Metal an additional $3.5 million per year.

Perry said Northern Metal is considering moving its metal shredder off the river but called relocation of the facility “a massive undertaking.”

“It’s probably a $30 million cost just to do it,” said Perry. Northern Metal has investigated a potential site in Sherburne County with railroad access but said the company would need at least $20 million to justify the move.

“You’ll never make him [Ettinger] whole. He knows that. He’s a big boy,” said Perry. “That’s what he needs to do it.”

Sen. Scott Dibble, DFL-Minneapolis, pointed to another potential complication: When the locally owned American Iron sold its operations to Northern Metal in 2006, the Isaacs family retained possession of the riverfront property. Dibble said any deal would be contingent on the transfer of that property.

Perry responded that such a requirement would likely drive up the costs of any prospective deal. “If the government wants to take the property, it would be a $300 million ask, not $40 million,” he said.

For Aggregate Industries, relocation is more problematic because the company wants to remain on the river, where potential sites are scarce and growing scarcer

Lawmakers also struggled to identify likely sources of funding.

Dibble bristled at the idea of tapping Minneapolis’ local government aid allocation, calling that a “very divisive suggestion.”

Newman wondered whether Legacy funds might be appropriate because the stated reason for closing the Upper St. Anthony Lock — to prevent the spread of Asian carp — is intended to protect the state’s sport fishing industry.

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