Lake Michigan ferry fight builds big lobbying tab

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Lake Michigan ferry fight builds big lobbying tab

WASHINGTON — On one side is the S.S. Badger, the only coal-fired steamship left in the United States and a multimillion-dollar linchpin for the economy of Wisconsin’s historic lakeshore town of Manitowoc. On the other is the $18 million high-tech, high-speed Lake Express ferry, based in Milwaukee.

Both traverse Lake Michigan daily during the summer sailing season, carrying passengers and cars between Wisconsin and Michigan. Both have spent an inordinate amount of time and money in the nation’s capital trying to sink each other.

The battle has involved an alphabet soup of federal agencies from the EPA to the DOT, lawmakers from both sides of the aisle — and the lake — and a federal lobbying tab nearing $1 million. So far.

The Badger has been crossing the lake for more than 60 years, and it contributes as much as $14 million annually to the Manitowoc region’s economy. Its sentimental value is even greater, some say.

Manitowoc Mayor Justin Nickels recently hailed it as “a beautiful boat that honors our city every day with her graceful presence and multitude of wonderful visitors.” Historians in town recall making the lake crossing as children, and they say a group of local residents still turns out to greet passengers when the Badger chugs into port.

But the ship has been discharging tons of ash into the lake each day — the remnants of burning coal to power its steam engines — and the Environmental Protection Agency determined in 2008 that it had to stop. The company that runs the Badger, Lake Michigan Carferry, was given until the end of 2012 to comply. Company officials said at the time that the Badger would be forced out of business if it had to stop dumping ash.

Competing Milwaukee ferry Lake Express then hired a Washington lobbying firm to ensure that happened. Lake Express has so far paid Broydrick & Associates a half-million dollars to lobby against the Badger. The Badger has so far paid its own lobbyists $480,000.

When the steamship applied for a $14 million federal transportation grant to convert its coal-fired engines to diesel fuel in 2010, Lake Express opposed the application, saying the money would provide the Badger with a “huge advantage in a market like this,” and would represent “an egregious overreach by the federal government.” The Department of Transportation ultimately declined to award the funding.

The next year, the coal-fired ferry was nominated for status as a national landmark and Badger officials appealed to the National Park Service for the designation saying it would play a “critical role” in its survival as an “invaluable” asset in negotiations with the EPA. Lake Express lobbyist Bill Broydrick opposed that, too, saying it would amount to nothing more than “special treatment for a polluter,” according to an Associated Press report. The park service tabled the measure.

Lawmakers supporting the Badger and representing its lakeshore port cities — including Republican Reps. Tom Petri of Wisconsin and Bill Huizenga of Michigan — then tried to protect it by sponsoring legislative language that would allow the Badger to continue sailing despite the EPA mandate. Broydrick reported lobbying against the effort, and it also failed.

As the deadline approached in December 2012, the Badger applied for an extension and ultimately reached an agreement with the EPA that allowed it to keep sailing until the start of next year’s sailing season, when it faces another deadline to stop dumping coal ash.

For their part, the operators of the Lake Express say they just want a level playing field. If the Badger is allowed to run as is, it has lower overhead costs, which means the steamship can charge less for passage than Lake Express.

“When these guys avoid a year’s worth of compliance, it’s worth somewhere between something like $400,000 and several million dollars’ worth of costs,” Lake Express marketing director Aaron Schultz said.

The Lake Express charges $163 round-trip per passenger, while the Badger charges $130. The ferries ply parallel routes across the lake; the steamship takes four hours to cover about 60 miles, while the diesel-powered Express makes its 80-mile crossing in 2½ hours.

Both sides have given generously to federal lawmakers who champion their cause. And the Badger vehemently fought the launching of Lake Express a decade ago and paid its own Washington lobbyist $120,000 to try and block federal assistance to build the ferry.

Lubar & Co., the Milwaukee investment group that owns Lake Express, applied to the U.S. Maritime Administration for $14 million in loan guarantees to help it build the boat. But Robert Manglitz, the president of Badger operator Lake Michigan Carferry, said there was only room for one ferry on the lake and federal assistance would provide an unfair market advantage to Lake Express. In the end, however, the Badger’s lobbying effort failed, and Lake Express secured the guarantees and built its ferry, launching in June 2004.

At the time, Manglitz decried it as a “pork barrel” carve-out.

Both companies appeared to compete cordially for the next few years. That is, until the Badger cut prices and engaged in what its own officials called a “ferry fare war” in the summer of 2009.

“We take passengers from them and they take passengers from us,” Manglitz later told the Ludington Daily News. “There is a finite number of passengers out there.”

Shortly after the fare war began, Lake Express hired its lobbyist and the battle was on.

The latest salvo came last month from U.S. Rep. Gwen Moore, a Milwaukee Democrat who fired off a letter to Attorney General Eric Holder in July asking him to crack down on the Badger for an alleged violation of its agreement with the EPA. She asserts the ferry didn’t reduce the amount of coal it burned in 2013.

The Justice Department has not responded to the letter and did not comment for this report. The EPA declined to weigh in on the potential violation, as decisions about the Badger’s compliance have yet to be made.

Petri and Huizenga say they are frustrated by the efforts to push for a crackdown on the Badger.

“It’s my understanding that the Badger is already reducing discharge of coal ash and is on track to stop all discharge,” Petri said. “It should be allowed to continue operating without political interference.”

The Badger’s spokeswoman, Terri Brown, maintains that the steamship is on track to stop dumping coal ash into the lake by the deadline. She says the company plans to install a system that will allow the steamship to keep the ash on board and dispose of it in port, rather than in the lake, although she’s not sure exactly what that system will look like.

Schultz, the marketing director for Lake Express, calls the ferry showdown “a spaghetti ball of outside influence,” but he says the Badger remains an “anachronism.”

“They’ve had a good run, and I think they’ve gotten a little spoiled in thinking they should be able to run as is forever,” he said. “You find any other business that runs at 1950s standards and gets rewarded for it? I’d be shocked if there’s even a one out there.”

Follow @donovanslack on Twitter.

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