Iii. Dredged Material Management

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

EXECUTIVE SUMMARY

This report presents the findings of a study examining the costs, benefits, and management issues related to maintaining North Carolina s shallow draft channels. It examines the historical dredging of these waterways, the use and management of the dredged materials, and the economic impacts and safety related concerns of the State s shallow draft waterways. The necessary equipment, regulatory costs, contracting alternatives, and potential methods for financing the ongoing maintenance of the channels are examined.

While the duty and cost of maintaining the shallow draft waterways has traditionally been undertaken by the United States Army Corps of Engineers (USACE) as part of the maintenance of federal channels, it is becoming apparent that the funding for such efforts is declining. The current administration has proposed to eliminate this responsibility from the federal budget. Upcoming budgets will provide some valuable information on whether Congress wants to reverse the administration s direction as well as whether the administration is sticking to this decision to eliminate funding for shallow draft navigation channels. With the decrease or elimination of federal funding, the State of North Carolina is faced with examining alternatives to keep the shallow draft waterways open. The first step in this process was to assess the current level of dredging being performed on these waterways. More than 100 million cubic yards and over 800 dredging projects have been conducted to maintain North Carolina s shallow draft inlets and channels over the last 30 years, an average of 3.4 million cubic yards annually. This equates to an average annual cost of almost $15 million. Peak years in FY1985 and FY1986 had dredging of more than 5 million cubic yards for the shallow draft waterways each year at a cost of more than $25 million annually (today s dollars). It is apparent that there is a potential backlog along the AIWW that will likely require attention in the near future. A variety of dredge types have been used to accomplish this work. Sidecaster dredges have provided most of the inlet clearing and pipeline dredges have performed the bulk of the inland channel dredging.

The type of dredging performed and environmental concerns influence the placement of material dredged. Currently, most inlet dredged material is placed into open water along the channel, some in upland disposal locations and some used for beach nourishment. Material dredged from the AIWW and inland waterways is generally placed in upland sites or used for beach nourishment. Additional work needs to be performed on the remaining capacity of existing placement sites and the permitting of increased beneficial use opportunities.

The intrinsic value of maintaining the shallow draft navigation channels of North Carolina is clear from talking to any coastal resident or visitor. The coastal shallow draft inlets and intracoastal waterways form a key part of the State s coastal heritage and economic potential, especially from fishing and tourism. Ascertaining the precise economic impact provided by a resource such as a waterway is difficult. Traditional approaches examining freight tonnages and valuations passing through a waterway do not capture many of the benefits provided by shallow draft channels. Despite the difficulties in gathering economic data directly

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

attributable to the shallow draft waterways, it is clear that if even a small percentage of the boating related sales, coastal tourism, fishing industry, and waterborne commerce are attributed to the existence of the shallow draft waterways and inlets, the annual benefit delivered to the citizens of North Carolina is substantial, in the hundreds of millions of dollars annually.

The lack of maintenance of shallow draft channels and inlets represents a significant safety risk both for boaters due to increased groundings and associated hazards and to search and rescue operations using the waterways. Increased shoaling can also result in being forced to select longer rescue routes and more open ocean travel due to fewer safe access inlets.

There are several options outlined that have been used to finance dredging of navigable waterways in other coastal states. Specific boat use related taxes and waterway user fees, property taxes in counties benefited by the waterways and fuel taxes could be used to provide funding for ongoing maintenance. Several states supplement the USACE s budget with these funds rather than providing full funding of the required dredging program.

The unique and varied requirements of dredges capable of operating in exposed coastal inlets, in shallow drafts, and the desire to place the material in beneficial ways on the beach require diverse equipment. Much of this equipment is so specialized that private industry does not currently have all of the dredge types required. Many of the sheltered waterways can be dredged by commercial pipeline dredges and the deeper inlets, such as Oregon Inlet, by commercial hopper dredges. The shallow exposed inlets, however, require the specialized equipment of sidecaster and special purpose dredges that only the USACE currently maintains. The Corps specialized dragheads and disposal methods also allow this fleet to be exempted from turtle and bird environmental windows providing nearly year-round use.

Environmental windows to protect birds, turtles and fisheries restrict the times of year that in- water operations such as dredging may occur as well as when upland or beach placement is allowed. The USACE currently has the required environmental permits to dredge the authorized federal shallow draft channels in North Carolina. If the State or contractors working for the State were to perform dredging in the same locations, a new set of environmental permits would be required. This could result in considerable costs in time and money.

It would appear the most prudent option, given the uncertainty in the ongoing federal funding of the maintenance of the shallow draft channels within the State, would be to supplement the efforts of the USACE. This could be accomplished by entering into an agreement with the Wilmington District to supplement its budget. In addition, the State may chose to purchase a dredge to perform some of the work or contract some directly to private industry. The main obstacles to approaches other than contracting with the USACE are the regulatory issues, capital investment, and long-term commitments required to allow private industry to acquire the specialized equipment required.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

SUMMARY OF FINDINGS

The key findings with regard to the costs, benefits, and management issues related to maintaining North Carolina s shallow draft navigation channels are:

Over the last 30 years, over 800 dredging projects and 100 million cubic yards of material have been dredged to maintain the shallow draft waterways.

Recent annual costs have been almost $15 million to dredge an average of 3.4 million cubic yards. Peak years have reached over 5 million cubic yards at a cost of $25 million (today s dollars).

Most shallow draft dredging projects have a depth of 6 to 14 feet.

Recent dredging has concentrated on key coastal inlets and the associated channels while the AIWW has developed a significant backlog.

Dredged material from inlets is typically placed in open water in close proximity to the channel. The AIWW, its inlet crossings, and inland waterways are generally dredged by pipeline with upland or beach placement.

The shallow draft navigation channels provide a significant impact on the State s economy.

The shallow draft waterways primary economic impacts are on recreational boating, commercial fishing, tourism and marine trades.

Despite the lack of currently available economic data specifically linked to shallow draft waterways, the economic impact can be shown to be in the hundreds of millions of dollars annually.

The people of North Carolina consider these shallow draft channels a part of their way of life and heritage.

Poor maintenance represents a safety hazard to vessels using the inlets and waterways and impacts travel along the AIWW.

Numerous options exist, in the absence of federal funding, to finance the maintenance of shallow draft waterways. Other jurisdictions have successfully implemented approaches including property taxes, sales taxes, fuel taxes, licensing fees and user fees.

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FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

The shallow draft inlets and channels of North Carolina present unique technical challenges to dredging that have resulting in the Wilmington District of the USACE maintaining a fleet of dredges not currently available from private contractors. These dredges, specially suited to operate in shallow exposed coastal inlets, include two sidecasters and one special purpose (small split hull hopper) dredge. The use of special dragheads and the open water disposal allow these dredges to be exempted from turtle and bird environmental windows and operate nearly year round.

The USACE has existing environmental permits to dredge the federally authorized shallow draft projects within the State that cannot be directly transferred to a state or local entity.

One of the main difficulties the State would face if it assumed dredging operations would be obtaining environmental permits. Little documentation is available for the existing USACE permits and significant time and money expenditures would be required to develop these new permits. New regulations may also impact these permits and alter preferred disposal methods.

At present, the most straightforward option given the uncertainty regarding future federal funding and need to maintain these vital State waterways would be to enter into contractual agreements with the USACE to supplement their dredging budget as needed for projects of State interest.

The economic and social importance of maintaining these waterways justifies the annual cost.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

TABLE OF CONTENTS

I. INTRODUCTION AND BACKGROUND ...... 1 North Carolina s Shallow Draft Waterways...... 1 Dredge Types and Capabilities...... 2 II. HISTORICAL PROJECT INVENTORY ...... 6 USACE Dredge Projects 1975-2004...... 6 Equipment ...... 7 Annual Costs ...... 13 Project Characteristics...... 16 Size of Project...... 16 Depth of Channel or Inlet...... 17 Location of Projects ...... 19 Frequency of Projects and Usage of Various Dredging Equipment...... 21 Placement of Dredged Material ...... 23 Ferry Division Dredge Projects...... 24 Equipment and Costs...... 24 Division of Water Resources Dredge Projects ...... 25 Equipment and Costs...... 25 III. DREDGED MATERIAL MANAGEMENT...... 27 Dredges...... 27 Existing Disposal Methods...... 27 Overboard and Open Water...... 27 Upland Disposal...... 28 Beach Nourishment ...... 28 USACE DREDGING PROJECTS...... 30 Northern Area...... 30 Edenton Harbor, NC - Upland ...... 31 Manteo (Shallowbag Bay)/Oregon Inlet, NC Open Water, Beach, and Upland...... 31 Stumpy Point Bay, NC - Upland...... 32 Central Area ...... 32 Atlantic Beach Channels, NC - Upland...... 33 Avon Harbor, NC - Beach ...... 33 Beaufort Harbor, NC Upland and Beach...... 33 Channel from Back Sound to Lookout Bight, NC Upland and Open Water ...... 33 Drum Inlet, NC Beach and Open Water...... 34 Far Creek, NC - Upland...... 34 Hatteras Inlet, NC Open Water and Upland...... 34 Ocracoke Inlet, NC Open Water ...... 34 Rollinson Channel, NC - Beach ...... 35 Silver Lake, NC - Beach ...... 35

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Waterway Connecting Pamlico Sound and Beaufort Harbor, NC Upland...... 35 Waterway Connecting Swanquarter Bay with Deep Bay, NC - Upland ...... 35 Wrights Creek, NC - Upland ...... 36 Southern Area...... 36 Bogue Inlet and Channel, NC Open Water and Beach ...... 36 Cape Fear River, NC Open Water, Beach and Upland ...... 37 Carolina Beach Inlet and Channels, NC Open Water and Beach ...... 37 Lockwoods Folly Inlet, NC Open Water and Beach ...... 37 Lockwoods Folly River, NC Open Water and Beach ...... 38 Masonboro Inlet, NC Open Water and Beach ...... 38 Mile Hammock, NC - Upland...... 38 New River Inlet, NC Open Water and Beach ...... 38 New Topsail Inlet, NC Open Water and Beach...... 38 Ocean Isle Beach, NC - Beach ...... 39 Oak Island Sea Turtle Habitat, NC - Beach...... 39 Shallotte River, NC - Beach ...... 39 Wrightsville Beach, NC - Beach...... 39 Atlantic Intracoastal Waterway ...... 40 Atlantic Intracoastal Waterway (AIWW), NC Upland and Beach ...... 40 FERRY DIVISION DREDGING PROJECTS ...... 42 Aurora (Pamilico River-South Side) Upland ...... 42 Bayview (Pamlico River-North Side) - Upland...... 43 Cedar Island - Upland...... 43 Cherry Branch - Upland...... 43 Currituck - Upland ...... 43 Ft. Fisher - Upland...... 43 Hatteras-South Side - Upland ...... 43 Hatteras-North Side - Upland ...... 43 Knotts Island - Upland ...... 44 Manns Harbor - Upland...... 44 Minnesott Beach - Upland...... 44 Southport - Upland...... 44 Swanquarter - Upland...... 44 Ferry Division Environmental Considerations...... 44 DIVISION of WATER RESOURCES DREDGING PROJECTS...... 45 Manteo to Wanchese and North Navigation Channels Upland and Beach ...... 45 Cape Lookout Access Channel- Beach...... 46 Walter Slough - Upland...... 46 Alternative Disposal Options ...... 47 Existing Sites...... 47 Increased Beneficial Use ...... 47 Beach Nourishment ...... 47 Habitat Creation...... 47 Find New Sites ...... 48

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Summary ...... 48 IV. ECONOMIC IMPACTS...... 49 Data Collection...... 49 Commercial Fishing ...... 51 Businesses and Jobs In The Commercial Fishing Sector...... 51 Commercial Fisheries Trips and Landings...... 55 Recreational Boating ...... 66 Marine Trades Industry ...... 69 Tourism Industry ...... 73 Commercial Shipping...... 77 Summary of Economic Impacts Study...... 79 V. SAFETY CONSIDERATIONS...... 80 VI. FINANCING...... 83 Current North Carolina Programs ...... 83 Existing Federal and State Imposed Taxes and Fees ...... 84 Financing Programs For Waterway Management In Other States...... 86 Florida Inland Navigation District ...... 87 Maryland Waterway Improvement Program...... 88 Financing Options For North Carolina...... 89 Property Taxes ...... 89 Boat Sales Taxes...... 91 Boat Registration Fees ...... 92 Fuel Taxes ...... 92 Personal Property Taxes on Boats...... 93 Waterway User Fees ...... 93 Summary of Financing Options ...... 93 VII. EQUIPMENT AND OPERATING COSTS ...... 95 Equipment Options...... 95 Environmental Operating Climate...... 96 Ancillary Equipment ...... 98 Facility Requirements...... 99 Appropriate Dredging Equipment to Meet North Carolina s Shallow Draft Waterway Maintenance Needs ...... 99 Probable Costs...... 100 VIII. REGULATORY COSTS ...... 103 Existing Permitting...... 103 Existing Permitting Process ...... 103 Environmental Windows and Restrictions ...... 103 Future Permitting Issues...... 104 Transfer of Existing Permits to the State...... 104

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Obtaining New Permits ...... 104 Permitting Costs ...... 105 IX. CONTRACTING ALTERNATIVES ...... 107 State Owned and Operated Dredges...... 107 USACE Contracted Dredges ...... 108 Private Industry Contracted Dredges ...... 109 Probable Costs Associated with Various Options...... 109 Summary and Recommendation ...... 112 X. SUMMARY OF FINDINGS...... 113 XI. REFERENCES ...... 115

LIST OF FIGURES

Figure I-1. Typical Mechanical Dredge (Clamshell Bucket) with Bottom Dumping Barge .... 2 Figure I-2. Typical Hopper Dredge...... 3 Figure I-3. Typical Cutterhead Hydraulic Dredge ...... 4 Figure II-1. Authorized River and Harbor Projects in North Carolina ...... 8 Figure II-2. USACE Dredging Projects, FY 1975-2004 ...... 9 Figure II-3. Special Purpose Dredge (The Currituck)...... 10 Figure II-4. Sidecaster Dredge (The Merritt) ...... 11 Figure II-5. Dredge Type Used for USACE Shallow Draft Projects ...... 12 Figure II-6. Annual Dredge Volumes, by Project Type ...... 15 Figure II-7. Typical Annual Costs, Based on FY 2000-2004 Expenditures ...... 16 Figure II-8. Project Sizes (FY 1975 2004) ...... 17 Figure II-9. Authorized Depth of Projects Completed FY 1975- 2004 (by Project)...... 18 Figure II-10. Authorized Depth of Projects Completed FY 1975- 2004 (by Volume) ...... 18 Figure II-11. Location of Dredge Projects Completed FY 1975-2004 (by Project) ...... 20 Figure II-12. Location of Dredge Projects Completed FY 1975-2004 (by Volume)...... 20 Figure II-13. Dredge Type Usage for Projects Completed FY 1975-2004 (by Project) ...... 21 Figure II-14. Dredge Type Usage for Projects Completed FY 1975-2004 (by Volume) ...... 22 Figure II-15. Locations of Ferry Division Shallow Draft Projects...... 24 Figure II-16. Locations of Division of Water Resources Shallow Draft Projects...... 26 Figure III-1. Typical Annual Disposal Methods for USACE Projects (FY 1975 2004)...... 28 Figure III-2. Northern Area USACE Shallow Draft Project Locations ...... 30 Figure III-3. Central Area USACE Shallow Draft Project Locations...... 32 Figure III-4. Southern Area USACE Shallow Draft Project Locations ...... 36 Figure III-5. AIWW Upland Disposal Sites...... 40 Figure III-6. Ferry Division Project Locations...... 42 Figure III-7. Division of Water Resources Project Locations...... 45 Figure IV-1. Distribution of Commercial Fishermen by County (2001) ...... 53

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Figure IV-2. Total Commercial Fishing Trips in North Carolina (2000-2004) ...... 56 Figure IV-3. Average Yearly (2000-2004) Commercial Fishing Trips by County...... 57 Figure IV-4. Average Yearly (2000-2004) Commercial Fishing Landings Value By County 58 Figure IV-5. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body North Region ...... 60 Figure IV-6. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body Central Region...... 61 Figure IV-7. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body South Region ...... 62 Figure IV-8. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body North Region ...... 63 Figure IV-9. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body Central Region...... 64 Figure IV-10. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body South Region ...... 65 Figure IV-11. Waterway Usage At the Great Dismal Swamp and Albemarle & Chesapeake Canal (2001-2005)...... 67 Figure IV-12. Distribution of Marinas and Boatyards by County ...... 71 Figure IV-13. Total Boat, Motor, Trailer, and Accessory Purchases (1997-2001)...... 72 Figure IV-14. Waterway Usage and Estimated Tourism Expenditures for Great Dismal Swamp Canal and Albemarle & Chesapeake Canal...... 74 Figure IV-15. Total Average Annual (1995-1999) Tourism Expenditures By County ...... 76 Figure IV-16. Alternate Transportation Mode Comparison Source: USACE, Inland Waterway Navigation, Value to the Nation ...... 78 Figure V-1. Locations of USCG Fifth District Small Boat Stations in North Carolina...... 82 Figure VI-1. Percentages of State Marine Fuel Taxes Returned To Boating Programs (Adapted from Dickinson, January 2004) ...... 86 Figure VI-2. Total Real Taxable Property Value For North Carolina Coastal Counties (FY 2004-2005) Source: North Carolina Department of Revenue...... 90 Figure VI-3. North Carolina Vessel Registration/Titel/Renewal Fees (N.C. Wildlife Resources Commission) ...... 92 Figure VII-1. Percent Exceedance of Significant Wave Height at North Carolina Inlets...... 96 Figure VII-2. Monthly Percent Exceedance of Significant Wave Height Offshore Oregon Inlet ...... 97

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

LIST OF TABLES

Table I-1. Comparison of Various Dredge Types ...... 5 Table II-1. Projects Not Primarily for Shallow Draft Channel Maintenance...... 6 Table II-2. Wilmington District Dredge Vessel Characteristics ...... 11 Table II-3. Annual Dredge and Cost Data, FY 2000 - 2004 ...... 13 Table II-4. Classification of Projects as Inlet or Inland...... 19 Table II-5. Project Dredging Frequency, FY 1975 2004...... 23 Table IV-1. Employment Statistics for Commercial Fishing Sector (2001)...... 52 Table IV-2. Number of Seafood Processors, Employment Production Values from 1994-2001 ...... 54 Table IV-3. Number of Seafood Wholesale Companies and Average Employment (1997- 2000)...... 54 Table IV-4. North Carolina Marine Recreational Fishing Trip Estimates ...... 68 Table IV-5. Summary of Findings of the Economic Impact of the Pirate s Cover Annual Big Fish Tournaments (Ditton et. al., 1999) ...... 69 Table VI-1. Equivalent Property Taxes...... 91 Table VII-1 Operational Characteristics of U.S. and Canadian ...... 98 Table VII-2. Dredge Capabilities and Limitations by Type...... 100 Table VII-3. Probable Cost Comparison by Dredge Type...... 101 Table VIII-1. Range of Probable Costs for Typical Permit Application for an Existing Project ...... 106 Table IX-1. Probable Cost Comparison by Dredge Type ...... 110 Table IX-2. Comparison Options ...... 110 Table IX-3. Probable Cost Comparison by Potential Options ...... 111

APPENDICES

APPENDIX A. USACE Authorized River and Harbor Projects in North Carolina APPENDIX B. USACE Historical Dredging Database (1975-2004) APPENDIX C. Summary Charts (Both Historical Volumes and Costs) for Top Eight Projects APPENDIX D. Economic Survey Request Letter and Mailing List APPENDIX E. State Grant Programs APPENDIX F. State Boating Tax Usage APPENDIX G. North Carolina Department of Revenue - Taxable Real Property By County APPENDIX H. Percent Exceedance of Significant Offshore Wave Height for Various North Carolina Inlets

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

I. INTRODUCTION AND BACKGROUND

This report was prepared for the North Carolina General Assembly and outlines the final results of the study examining the costs, benefits, and management issues related to maintaining North Carolina s shallow draft navigation channels. The first phase of the study focused on United States Army Corps of Engineers (USACE) dredging projects performed in shallow draft channels and inlets over the past five years. It outlined the historical costs and dredging equipment used by the USACE, both their in-house and privately contracted equipment, for projects completed or maintained during the last five years.

This final report includes eight subtasks concerning shallow draft navigation: Historical Project Inventory Dredged Material Management Plan Economic Impacts Safety Financing Equipment and Operating Costs Contracting Alternatives Regulatory Costs

The historical project inventory focuses on data for projects completed since 1975. Prior to 1975, the number of projects and quantities dredged are not considered to be representative of present conditions. The dredged material management plan includes data on the approximate frequency, quantity, and disposal methods for these historical projects. The economic impacts subtask examines the impacts of shallow draft waterways on tourism, fishing, shipping, and other industries. Data from the US Coast Guard and private towing/rescue interests were analyzed to provide information regarding safety concerns. The financing subtask presents alternative methods the State could employ in order to fund shallow draft dredging projects. An opinion of probable costs of startup and operation for a statewide shallow draft dredging program is provided in the equipment and operating costs subtask. The contracting alternatives include information on options for working with both private industry and the US Army Corps of Engineers. A discussion of permitting issues and probable costs for preparing and obtaining permits for the projects currently maintained by the USACE is provided in regulatory costs.

North Carolina s Shallow Draft Waterways Dredging is vital to the maintenance of transportation routes through state waterways and for providing safe, reliable access to the Atlantic Ocean along the coast. Without the clearing of shoals from navigation channels by dredging, mariners would face serious problems in navigation along the North Carolina coast. The Wilmington District of the USACE maintains 308 miles of the Atlantic Intracoastal Waterway (AIWW), rivers, small harbors, and seven

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

major inlets along the coast. There are many communities and significant commercial fishing activities that rely on small harbors and the associated shallow draft channels. Recreational boat traffic along the Atlantic coast also uses these waterways and inlets.

Dredging in North Carolina is performed by the Wilmington District of the United States Army Corps of Engineers (USACE), the State of North Carolina Division of Water Resources, the NCDOT Ferry Division, and by private interests. The USACE maintains federally mandated channels but is under increasing budgetary constraints with regard to its ability to regularly maintain channels and inlets.

Dredging of shallow draft navigation channels supports commercial fisheries and public transportation (ferries, recreational boaters) and helps ensure boater safety (elimination of shoals and inlet dredging can reduce breaking wave hazards). These are significant sources of economic activity for coastal communities.

Dredge Types and Capabilities Dredging equipment can be broadly divided into two categories, mechanical dredges and hydraulic dredges.

Mechanical dredges are analogous with land-based excavating machinery and include shovel- type excavators such as clamshells, buckets, ladders, and draglines. These dredges generally are unable to transport dredged material over long distances, lack a means of self-propulsion, and have relatively low production rates. Their main advantage is the ability to operate in tight spaces along docks and jetties. Mechanical dredges can be land based or mounted on barges. Figure I-1 illustrates a typical mechanical dredge with material placed in a bottom dumping barge.

Source: USACE

Figure I-1. Typical Mechanical Dredge (Clamshell Bucket) with Bottom Dumping Barge

Hydraulic dredges are characterized by the use of a centrifugal pump that produces a high velocity stream of water in a pipeline in which solids are entrained and transported to a discharge area. Hydraulic dredges are further categorized by their method of excavation,

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

method of placement, and the nature of the intake element that is in contact with the material to be dredged.

Hopper dredges are the most common hydraulic dredge used offshore, consisting of a self- propelled, ocean-certified vessel that is capable of storing dredged material onboard in hoppers and transporting it to a disposal site (Figure I-2). The material is pumped into the hoppers through a pipe and draghead. The draghead configuration varies depending on the material being dredged but is frequently a trailing suction configuration with a draghead supported by dragarms trailing the ship. The bottom sediment is entrained like a vacuum cleaner by plain suction. It is typical to dump the dredged material at a disposal site through bottom doors, although some hopper dredges have pump off capabilities where the material can be pumped via pipeline from the hoppers to the shore. Hopper dredges have the advantage of requiring less auxiliary support equipment than pipeline dredges (discussed below) since they are self-propelled. They can be readily moved and can operate in wave conditions that are not feasible for other dredge types. A hopper dredge can transport material to a disposal location for dumping, however, during the transport it is not performing dredging. If the dredged material is to be placed on land it requires double handling once to pump into the hopper and once to pump out onto the land.

Source: USACE

Figure I-2. Typical Hopper Dredge

Some trailing suction dredges, called sidecasters, do not have hoppers and instead discharge the dredged material through extended, cantilevered arms. Sidecaster dredges dispose of the dredged material back into the region from which it is dredged. The dredged material is cast off to the side of the dredging vessel through a boom some distance from the channel from which it was removed. This method has the advantage of continuous operation and limited increase in draft during operation since the material is not carried on the vessel as with hopper dredges.

Pipeline dredges use pipelines to pump material from the location of dredging. The dredging action may be by plain suction, cutterhead, bucket wheel, or dust pan. Cutterheads have a rotating cutter which removes the material from the channel bottom at the suction intake of

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

the pipeline. Different cutters can be employed for various bottom materials. A bucket wheel is essentially as the name suggests; a rotating wheel of buckets which excavates the material. A dustpan received its name from the shape of the suction head, which resembles a dustpan or vacuum cleaner head. Pipeline dredges usually are not self-propelled and consist of a large centrifugal pump mounted on a specially designed barge. The bottom material is pumped through a suction pipe to the barge and then through a pipeline to the disposal area. The head of the suction pipe is typically equipped with a revolving cutter head that loosens the bottom materials. The pipeline is floated by pontoons and can extend thousands of feet. Booster pumps can be used to achieve increased distances. The main advantage of a pipeline dredge is the large volume of material that can be moved in a short time. The disposal area must be relatively close to the dredge site and the wave and wind conditions must allow for the operation of the dredge and maintaining the pipeline. Pipeline dredges are typically classified by the diameter of the discharge pipeline with larger diameters generally having higher production and discharge distance capabilities.

The most common and most versatile hydraulic dredge is the cutterhead, which is equipped with a rotating cutter (excavator) surrounding the intake of the suction line. (Turner, 1996). A conventional cutterhead dredge is held in position by two spuds at the stern (see Figure I-3). One spud is pushed into the bottom and the dredge is moved in a sideways arc to dredge the channel width using two swing anchors. It can operate continuously and discharge the dredged material directly by pipeline to water, beach, or upland disposal areas. One of its limitations is its inability to work in severe wave climates (even heavier pipeline dredges with special equipment cannot operate in seas greater than 6 feet).

A comparison of the various dredge types is presented in Table I-1.

Source: USACE

Figure I-3. Typical Cutterhead Hydraulic Dredge

Dredged materials can be disposed in various ways. Upland disposal places the sediments in confined upland sites. The main issues are cost and dewatering of the sediments. In-water disposal is another option. The dredged material can be placed in the flow-lane adjacent to the channel, in open-water offshore of the dredging location, or in a sump region (temporary

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

in-water holding site). In-water disposal is often the simplest but raises concerns regarding water quality, sediment transport, water circulation (from the resulting disposal mounds), fisheries and habitat impacts. If the environmental conditions are suitable and appropriate planning has been done, dredged material can be disposed of in-water in the active littoral zone where it returns to the natural sediment transport and beach building processes system. Another alternative for the disposal of dredged material is to use it for beach nourishment by placing the sediment on the beach or in the shallow water adjacent to the beach. This requires the dredged material to be compatible with the beach material and often requires reworking/grading of the material as it is placed.

Dredged material in the past was often though of as waste material or dredge spoil and disposed of in the cheapest and quickest manner possible. Current thinking views dredged material along the coast as a resource to potentially restore beaches, build habitat areas, and protect shorelines. Table I-1. Comparison of Various Dredge Types

Dredge Type

Factor Mechanical Sidecaster Hopper Pipeline

Common Excavation Suction with Scooping Trailing suction Trailing suction Method cutterhead Into hoppers Pump directly to Discharges to which are bottom nearby disposal Material Placement Into barges side of channel discharged at site, in water or disposal site on land In wider Exposed channels with channels, larger deep shoals Exposed rivers and inlets (lower traffic In harbors Common Use channels and (mobile so can areas since around docks inlets operate where floating pipeline other traffic is maybe a present) navigation obstruction) Relatively calm Relatively Relatively rough Relatively rough seas (floating Usage Conditions protected calm seas seas pipeline can areas break apart) Sediment that can be broken Consolidated, Loosely Common Material up and mixed hard-packed, compacted, Heavy sands Dredged with water debris coarse-grained forming pumping slurry

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

II. HISTORICAL PROJECT INVENTORY

This section details historical USACE dredging activities, with a focus on projects completed during the federal fiscal years of 1975 to 2004 (30 years). The federal fiscal year runs from October 1 through September 30. Existing State dredging activities within the Ferry Division and the Division of Water Resources are also described.

USACE Dredge Projects 1975-2004 All dredging activities undertaken by the USACE and its contractors are illustrated in Figure II-1 (USACE, 1990). Appendix A lists these dredging projects. Authorized shallow draft navigation channels in North Carolina include many inlet, sound and river channels, the Atlantic Intracoastal Waterway (AIWW), and numerous small harbors. While there are many dredging projects within the State, this report focuses on the USACE projects that have occurred within the thirty years between 1975 and 2004 (see Figure II-2). Data were obtained from the USACE Navigation Data Center and the Wilmington District; the databases are included in Appendix B. Other supplemental data were collected by contacting dredge contractors listed in the database and the USACE port captain.

The study is limited to shallow draft projects with dredging depths less than 20 feet. Therefore, it does not include the dredging activities associated with the harbors at Wilmington and Morehead City or the Military Ocean Terminal at Sunny Point (MOTSU). Dredging projects that were not primarily for shallow draft channel maintenance were also excluded from this study. A list of excluded projects is included in Table II-1.

Table II-1. Projects Not Primarily for Shallow Draft Channel Maintenance

Projects Excluded from Analysis

Carolina Beach Renourishment

Kure Beach Renourishment

Hatteras Hwy 12 Breach Repair

Oak Island Sea Turtle Habitat Restoration

Ocean Isle Beach Renourishment

Wrightsville Beach Renourishment

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Equipment Dredging along the North Carolina coast to maintain shallow draft navigation has historically used four main types of dredging equipment: pipeline dredges, hopper dredges, sidecaster dredges and a USACE special purpose dredge. The special purpose dredge is a small- capacity hopper dredge specially designed to avoid turtle impacts and minimize draft requirements.

The Wilmington District maintains the USACE s small draft dredging fleet for the Atlantic coast. Currently, this includes operation of three dredges suitable for shallow draft navigation channel and inlet dredging. These specialized dredges are capable of operating in ocean- exposed inlet conditions and shallow draft waters. There are no readily available commercial dredges with the combination of ocean certification and the capability of shallow water operation. This combination is optimal to dredge the shallow inlets along the North Carolina coast due to wave conditions at the inlets. These dredges are also outfitted with specialized trailing suction heads to avoid turtle impacts and allow for nearly year-round operation. Dredging of the interior, sheltered channels is primarily accomplished by the USACE through contracts with commercial dredging firms.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Figure II-1. Authorized River and Harbor Projects in North Carolina

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Figure II-2. USACE Dredging Projects, FY 1975-2004

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The Wilmington District operates the Currituck (Figure II-3), which is referred to as a special purpose dredge. It is a unique 315 cubic yard, shallow draft, split hull hopper dredge, capable of filling its hopper in approximately 30 minutes. The Currituck can deposit dredge material in less than 8 feet of water. The District also operates two sidecaster dredges. The Fry is capable of sidecasting approximately 10 cubic yards per minute. The Merritt (Figure II-4) is similar to the Fry and both are equipped to operate in hazardous inlet conditions.

Figure II-3. Special Purpose Dredge (The Currituck)

Specifications for the Wilmington District dredges are provided in Table II-2. These dredges have been used primarily to maintain the shallow draft inlets, with some additional work at Lock & Dam 1 north of Wilmington and along the AIWW. Over the last ten years, the Merritt has spent over 94% of its time and the Fry has spent over 75% of its time dredging in North Carolina. The Currituck is more frequently used in other states, spending 28% of its time working in North Carolina waters.

Work along the Intracoastal Waterway and at some of the larger inlets has been periodically contracted to private dredging companies. Contract dredgers have used primarily pipeline dredges ranging in diameter from 12 to 30 inches. The Corps dredges typically operate in 12 hour shifts, 5 to 7 days per week while contract dredges usually try to operate 24 hours a day,

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7 days a week. Figure II-5 shows the dredge type used to complete projects from 1975 to 2004.

Figure II-4. Sidecaster Dredge (The Merritt)

Table II-2. Wilmington District Dredge Vessel Characteristics

Vessel Vessel Name Characteristic Currituck Fry Merritt Type Special Purpose (Hopper) Sidecaster Sidecaster 175 long tons (light) Displacement 354 long tons 342 long tons 615 long tons (loaded) Length, Overall 150 104 2 104 Beam, Molded 30 7 30 30 Draft, Light 3 4 4 8 4 8 Draft, Loaded 7 6 5 11 5 6 12 diameter, 80 12 diameter, 80 long plus 10 Discharge Pipe N/A long, cast material extension, cast 100 from centerline material 100 from centerline Hopper Capacity 315 cubic yards N/A N/A Dredging Depth No Data 6 to 25 6 to 25 Total Complement 12 (2 crews of 6) 14 (2 crews of 7) 14 (2 crews of 7)

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Figure II-5. Dredge Type Used for USACE Shallow Draft Projects

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Annual Costs The average project sizes, daily production rates, annual total amounts dredged and costs were summarized for Federal fiscal year (FY) 2000 to FY 2004 by dredge in Table II-3. These years were summarized specifically to estimate recent trends, costs, and production rates of the dredges and overall operation. It was felt that the last five years would provide an accurate picture of trends, costs, and rates that could be used for future projections and to normalize the historical cost data.

The Currituck has a daily production rate about half that of the sidecaster dredges. The pipeline and larger hoppers are capable of dredging greater volumes if conditions allow for continuous operation. The average cost of shallow draft dredging activities was almost $15 million annually over the FY200 to FY2004 time period. The average amount dredged in a year was more than 3.4 million cubic yards. The current fleet of sidecaster dredges has an average daily production rate of approximately 4000 cubic yards at a cost of about $2.39/cy. The special purpose dredge, Currituck, costs about $4.31/cy and on average dredges 1900 cy/day.

There is some variability in the unit costs of projects using the same dredge equipment. Mobilization results in higher costs for small projects (i.e. Currituck in FY 2003) and storm or hurricane related downtime also increases cost (i.e. pipeline dredge in FY 2003).

Table II-3. Annual Dredge and Cost Data, FY 2000 - 2004

FY 2000

Average Daily Average Project Production Total Amount Average Cost Dredge (cy) (cy/day) Dredged (cy) per cy Total Cost Currituck 17,589 2,119 123,120 $4.31* $530,647 Fry 62,881 4,066 943,220 $2.54* $2,395,779 Merritt 71,000 3,277 993,999 $2.29* $2,276,258 Contract Pipeline 342,234 2,937 1,368,936 $6.57 $8,993,910 Contract Hopper -- 4,558 419,305 $5.23 $2,192,965 TOTAL 3,848,580 $16,389,558

FY 2001

Average Daily Average Project Production Total Amount Average Cost Dredge (cy) (cy/day) Dredged (cy) per cy Total Cost Currituck 13,638 2,256 81,825 $4.31* $352,666 Fry 76,926 3,612 615,410 $2.54* $1,563,141 Merritt 78,191 4,044 1,016,484 $2.29* $2,327,748 Contract Pipeline 605,714 3,222 1,817,142 $5.95 $10,811,995 Contract Hopper ------

TOTAL 3,530,861 $15,055,550 * Based on average of three years of available data.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

FY 2002 Average Daily Average Project Production Total Amount Average Cost Dredge (cy) (cy/day) Dredged (cy) per cy Total Cost Currituck 26,942 1,940 80,825 $4.46 $360,480 Fry 71,660 3,683 931,586 $2.38 $2,217,175 Merritt 87,629 4,777 1,051,545 $2.54 $2,639,378 Contract Pipeline 385,941 3,380 1,157,824 $7.00 $8,104,768 Contract Hopper -- 36,641 732,829 $6.83 $5,005,222 TOTAL 3,954,609 $18,358,569 FY 2003

Average Daily Average Project Production Total Amount Average Cost Dredge (cy) (cy/day) Dredged (cy) per cy Total Cost Currituck 6,733 1,092 26,930 $8.55 $230,252 Fry 47,842 4,001 669,790 $2.92 $1,955,787 Merritt 49,163 4,882 1,229,067 $2.24 $2,753,110 Contract Pipeline 291,354 4,075 582,707 $14.27 $8,315,229 Contract Hopper -- 1,824 107,631 $6.14 $660,845

TOTAL 2,616,125 $13,915,232 FY 2004

Average Daily Average Project Production Total Amount Average Cost Dredge (cy) (cy/day) Dredged (cy) per cy Total Cost Currituck 42,476 2,080 169,905 $3.56 $604,862 Fry 49,439 3,913 395,510 $2.26 $893,853 Merritt 55,116 4,493 1,267,659 $2.16 $2,738,143 Contract Pipeline 555,844 3,589 1,111,688 $4.78 $5,313,869 Contract Hopper -- 7,394 147,871 $5.29 $782,238

TOTAL 3,092,633 $10,332,964 Five Year Average (FY2000-FY2004)

Average Daily Average Project Production Average Amount Average Cost Average Dredge (cy) (cy/day) Dredged (cy/yr) per cy Annual Cost Currituck 21,476 1,897 96,521 $4.31 $415,616 Fry 61,750 3,855 711,103 $2.54 $1,804,323 Merritt 68,220 4,295 1,111,751 $2.29 $2,547,504 Contract Pipeline 436,217 3,441 1,207,659 $6.88 $8,307,954 Contract Hopper 351,909 12,604 281,527 $5.67 $1,596,084

TOTAL 3,408,562 $14,671,482

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To gain historical perspective on the costs, the amount dredged over time was examined. Figure II-6 presents the annual total dredged volumes from FY 1975 to FY 2004, by project type. As shown, the total dredged volume reached a peak in the mid-to-late eighties and has recently decreased, especially in the AIWW and other inland waterways. To obtain the typical historical yearly cost in today s dollars, the average unit costs from FY 2000 to FY 2004 for each distinct type of dredge were used. For inland, AIWW and AIWW inlet crossings projects, contract pipeline dredge unit costs were multiplied times the amount of material dredged. For inlet (bar and channel) projects, the volumes were divided amongst sidecaster, special purpose, and contract hopper dredges based on the overall percentage of each used (by volume) over the 30-year period of record and multiplied by the corresponding unit costs. Results of the cost analysis reflect the higher cost of contract pipeline dredging versus the use of USACE fleet and are presented in Figure II-7. While the average over the FY 2000 to FY 2004 time span was under $15 M, shallow draft dredging expenditures have historically peaked at over $25 M, in today s dollars.

6,000,000

5,000,000 ) y

c 4,000,000 ( d e g d e r D 3,000,000 e m u l o V l a t

o 2,000,000 T

1,000,000

5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 Year

AIWW AIWW Inlet Crossings Inlets (Bar and Channels) Other (Inland)

Figure II-6. Annual Dredge Volumes, by Project Type

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

$30,000,000

$25,000,000

$20,000,000 t s

o $15,000,000 C

$10,000,000

$5,000,000

AIWW AIWW Inlet Crossings Inlets (Bar and Channels) Inland (Other)

Figure II-7. Typical Annual Costs, Based on FY 2000-2004 Expenditures

PROJECT CHARACTERISTICS This section examines the USACE data for FY 1975 to FY 2004 with respect to a number of factors including the project size, dredge type used, and authorized depth of the project.

Size of Project The volume and timing of a project influences the selection of the appropriate equipment for dredging. Figure II-8 illustrates the size of projects undertaken over the FY 1975 to FY 2004 time period. Most of the dredging projects associated with shallow draft navigation in North Carolina were 150,000 cubic yards or less in volume.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

250

200 30 s t c e

j 150 o r P

f 37 o r e b 100 14 m u

N 21

50 20 15 14 11 14 7 8 6 2 40 94 109 170 71 34 23 21 20 1 0 5 7 5 8 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 0 5 0 0 0 0 0 0 0 0 0 0 0 0 -1 -2 -5 0 5 0 5 0 5 0 5 0 0 0 0 0 0 -1 -1 -2 -2 -3 -3 -4 -4 -5 ,0 ,0 0 0 0 0 0 0 0 0 0 0 0 -1 -2 ,0 ,0 0 0 0 0 0 0 0 0 0 0 0 0 5 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 ,0 0 0 1 2 0 0 0 0 0 0 0 0 0 ,0 ,0 5 0 5 0 5 0 5 0 5 0 0 1 1 2 2 3 3 4 4 0 0 5 ,0 1 Total Project Volume (cy)

Inlet (Bar and Channels) Inland (AIWW, Rivers and Other Waterways)

Figure II-8. Project Sizes (FY 1975 2004)

Depth of Channel or Inlet The congressionally authorized depth of the channel or inlet affects the type of equipment that can be used. The dredge must have a draft shallow enough to access the channel or inlet and a dredge reach suitable for the desired dredging depth. Commercially available, ocean certified, cutter-suction pipeline dredges, for example, typically have a minimum dredging depth of approximately 12 feet and ocean-going hopper dredges have drafts greater than 10 feet.

Figure II-9 and Figure II-10 illustrate the distribution by authorized depth of the shallow draft projects in North Carolina over the last thirty years. The data is presented as a percentage by the number of projects and by the volume dredged. 60 percent of the projects undertaken were to dredge channels and inlets of 8 feet or less, and 30 percent of the total volume dredged was removed from channels of 8 feet or less.

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Authorized Depth: Percentage of Number of Projects Completed (FY1975- FY2004)

18 ft Unknown 1% <1% 15 ft 4 ft 2% 1%

14 ft 19%

6 ft 7 ft 16% 4%

12 ft 17% 8 ft 39%

10 ft 1%

Figure II-9. Authorized Depth of Projects Completed FY 1975- 2004 (by Project)

Authorized Depth: Percentage of Total Volume Dredged (FY1975-FY2004)

Unknown 18 ft <1% 1% 4 ft 15 ft 7 ft <1% 1% 2%

6 ft 9%

14 ft 37%

8 ft 19%

10 ft 12 ft 1% 30%

Figure II-10. Authorized Depth of Projects Completed FY 1975- 2004 (by Volume)

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Location of Projects The projects are generally divided into two locations. Inlet and channel dredging comprised most of the dredging activity, while dredging of the AIWW and inland channels and rivers constitutes the remainder. In sheltered inland waterways, the choice of dredging equipment is broader than in the exposed ocean inlets. For purposes of this data analysis, inlet and channel projects include the inlet itself (channel and ocean bar) as well as associated back channels located in close proximity to the inlets, for example, Hatteras Inlet and Rollinson Channel. Inland projects include the AIWW channel and inlet crossings (where the AIWW crosses an inlet) as well as rivers and other inland waterways. Classification by project is shown in Table II-4.

Table II-4. Classification of Projects as Inlet or Inland

Inlets (Bar and Channels) Inland (AIWW, Rivers, and Other Waterways)

Bogue Inlet and Channels AIWW Through Channel and Inlet Crossings Carolina Beach Inlet and Channels Atlantic Beach Channels Drum Inlet Avon Harbor Hatteras Inlet/Rollinson Channel Beaufort Harbor Lockwoods Folly Inlet Cape Fear River Manteo (Shallowbag Bay)/Oregon Inlet Channel from Back Sound to Lookout Bight Masonboro Inlet Edenton Harbor New River Inlet Far Creek New Topsail Inlet and Channels Lockwoods Folly River Ocracoke Inlet/Silver Lake Mile Hammock Shallotte River Stumpy Point Bay Waterway Connecting Pamlico Sound to Beaufort Harbor Waterway Connecting Swanquarter Bay with Deep Bay Wrights Creek

A summary of the location of dredging projects is given in Figure II-11 and Figure II-12 as a percentage of the number of projects and the volume dredged, respectively.

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Project Location: Percentage of Number of Projects Completed (FY1975-FY2004)

Inland (AIWW, Rivers, and Other Waterways) 25%

Inlets (Bar and Channels) 75%

Figure II-11. Location of Dredge Projects Completed FY 1975-2004 (by Project)

Project Location: Percentage of Total Volume Dredged (FY1975-FY2004)

Inland (AIWW, Rivers. And Other Waterways) 34%

Inlets (Bar and Channels) 66%

Figure II-12. Location of Dredge Projects Completed FY 1975-2004 (by Volume)

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Frequency of Projects and Usage of Various Dredging Equipment Most shallow draft dredging projects performed by the USACE in North Carolina over the FY 1975 to FY 2004 time span have used sidecaster dredges to maintain channels and inlets along the coast. Additionally, a large volume of dredged material has been moved by contract pipeline dredges. The special purpose dredge, the Currituck, has performed a number of projects in North Carolina, but is also used in other regions along the eastern US coastline. Figure II-13 and Figure II-14 illustrate the dredge type usage by both frequency (number of projects) and quantity (volume dredged).

Dredge Type: Percentage of Number of Projects Completed (FY1975-FY2004) Special Purpose/ Sidecaster Combination Hopper Bucket <1% <1% 4%

Special Purpose 14%

Pipeline 29%

Sidecaster 53%

Figure II-13. Dredge Type Usage for Projects Completed FY 1975-2004 (by Project)

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Dredge Type: Percentage of Total Volume Dredged (FY1975-FY2004)

Bucket Special Purpose/ <1% Sidecaster Special Purpose Combination 5% 1%

Hopper 9%

Sidecaster 36%

Pipeline 49%

Figure II-14. Dredge Type Usage for Projects Completed FY 1975-2004 (by Volume)

Table II-5 summarizes the total number of times dredging has occurred at various locations, the amount dredged, the channel/inlet depth and the equipment used over the last 30 years. Sidecaster dredges performed the bulk of the shallow inlet and channel dredging. Pipeline dredges were generally used when the dredge depth was 12 feet or greater, in sheltered areas, or for projects with upland or beach placement.

The seven most frequently dredged inlets throughout the historic record were: Oregon, Carolina Beach, New River, New Topsail, Bogue, Lockwoods Folly, and Ocracoke Inlets. These inlets, and the associated channels, were often dredged multiple times per year. The only inland project that was dredged as frequently was the AIWW including through channel and inlet crossings. Summary charts (both historical volumes and estimated historical costs) for the top eight most frequently dredged projects can be seen in Appendix C.

To obtain a total annualized cost for each project, the average annual volume dredged was multiplied by the percentage of volume dredged for each dredge type. These volumes were then multiplied by the unit cost of each type of dredging from the FY 2000 to FY 2004 time period and summed to give an indication of the annual maintenance cost of each project.

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Table II-5. Project Dredging Frequency, FY 1975 2004

Percent of Each Project Volume Dredged by Each Type Total Average # Times Total CY Annualized Cost Site Annual Special Dredged Dredged Hopper Pipeline Sidecaster Bucket (Based on 2000- CY Purpose 2004 Costs) Manteo (Shallowbag Bay) Oregon Inlet 153 37,123,466 1,237,449 24% 34% 41% 1% - $ 5,848,400 Carolina Beach Inlet and Channels 115 5,409,168 180,306 - - 68% 32% - $ 546,977 New River Inlet 93 6,592,485 219,750 - 2% 90% 8% - $ 582,275 AIWW Through Channel and Inlet Crossings 87 25,679,867 855,996 - 97% 2% 1% - $ 5,799,379 New Topsail Inlet and Channels 69 3,938,396 131,280 - 9% 82% 9% - $ 391,560 Bogue Inlet and Channels 67 4,568,817 152,294 - - 94% 6% - $ 386,161 Lockwoods Folly Inlet 51 3,517,840 117,261 - - 63% 37% - $ 366,693 Ocracoke Inlet/Silver Lake 39 3,202,220 106,741 - - 98% 2% - $ 262,206 Lockwoods Folly River 33 2,008,234 66,941 - 15% 62% 23% - $ 236,859 Beaufort Harbor 18 988,287 32,943 - 100% - - - $ 226,647 Cape Fear River 13 780,384 26,013 - 93% 7% - - $ 170,585 Hatteras Inlet/Rollinson Channel 12 960,731 32,024 - 63% 37% 1% - $ 167,258 Waterway Connecting Pamlico Sound and Beaufort Harbor 12 875,212 29,174 - 98% 1% 1% - $ 198,735 Channel from Back Sound to Lookout Bight 11 601,988 20,066 - 36% 32% 32% - $ 92,714 Drum Inlet 7 863,949 28,798 - 12% 23% 12% 53% $ 160,014 Waterway Connecting Swanquarter Bay with Deep Bay 7 1,937,063 64,569 35% 65% - - - $ 416,513 Shallotte River 5 217,161 7,239 - 94% - 6% - $ 48,656 Far Creek 4 723,605 24,120 - 100% - - - $ 165,947 Atlantic Beach Channels 3 130,298 4,343 - 100% - - - $ 29,882 Avon Harbor 2 126,877 4,229 - 100% - - - $ 29,097 Masonboro Inlet 2 2,026,491 67,550 - 99% 1% - - $ 460,435 Stumpy Point Bay 2 364,767 12,159 - 100% - - - $ 83,653 Edenton Harbor 1 17,066 569 - 100% - - - $ 3,914 Mile Hammock 1 280,000 9,333 - 100% - - - $ 64,213 Wrights Creek 1 66,584 2,219 - 100% - - - $ 15,270 TOTALS 808 103,000,956 3,433,365 - - - - - $ 16,754,044

Placement of Dredged Material Environmental restrictions or project requirements regarding the disposal and placement of the material dredged influence the type of dredging equipment best suited for a project. To clear channels and inlets, disposal of the dredged material quickly in close proximity is likely the lowest cost and simplest. Placing the material along side the channel with a sidecaster or bottom dumping the material offshore with a hopper dredge are some examples. If the material is desired for beach nourishment, then placement on the beach will usually involve the use of a pipeline to transport the dredged sand onto the beach. Dredged materials can also be placed in the nearshore active zone where the material theoretically re-enters the natural littoral drift system. Many projects in North Carolina have involved some sort of in-water disposal. However, a number of the pipeline dredge projects have placed the dredged material onto upland disposal sites or onto the beach. The Dredged Material Management Plan section describes the placement methods for each project in detail.

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FERRY DIVISION DREDGE PROJECTS The Ferry Division of the North Carolina Department of Transportation (NCDOT) is also responsible for a limited amount of North Carolina s shallow draft dredging. Turning basins and approach channels at ferry terminals are serviced by the Ferry Division (Figure II-15). Disposal areas for Ferry Division dredging projects are located at upland disposal sites adjacent to the turning basins with the exception of the Hatteras projects, which use an upland disposal site next to the Ocracoke ferry terminal.

Figure II-15. Locations of Ferry Division Shallow Draft Projects

Equipment and Costs The Ferry Division currently owns a 12 pipeline dredge and the equipment necessary to operate and maintain the dredge. They own a 55 tug boat for transporting the dredge to and from sites and two 40 tenders for setting up the dredge which includes moving anchors, adding discharge pipes, and transporting supplies and personnel. The Ferry Division possesses 9,500 ft of polyethylene pipe and a McElroy bunt fusion machine for putting the

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pipe together. The division also owns a fuel and water barge, a pipe barge, and a utility barge for transportation of necessary equipment. Costs for the Ferry Division to dredge were $4.23 per cubic yard for FY 2004, not including mobilization and demobilization. Total spending for FY 2004 was approximately $525,000.

DIVISION OF WATER RESOURCES DREDGE PROJECTS The North Carolina Division of Water Resources has undertaken maintenance of three shallow draft navigation channels where there was a strong public interest in maintaining the usability of the channels. The projects are the Manteo to Wanchese and North Navigation Channels, the Cape Lookout Access Channel, and Walter Slough (Figure II-16).

The Manteo to Wanchese and North Navigation Channels are authorized Corps of Engineers channels, but the Corps has placed a low priority on budgeting funds for their maintenance. These channels are essential to the operation of the Elizabeth II historic replica ship, which is based in Manteo but has an educational mission throughout coastal North Carolina. The Division of Water Resources began maintenance of the channel at the time the Elizabeth II was constructed and has continued since. There is a great difficulty in finding and constructing dredged material disposal areas for this project, resulting in high unit costs.

The Cape Lookout National Seashore access channel has been maintained by the Division of Water Resources in partnership with the US National Parks Service to provide access for a ferry, which transports fishermen and vehicles to the National Seashore and is also used by individual boaters to get access to the National Seashore. This channel is critical for evacuation of the National Seashore in case of medical emergencies or storms.

Walter Slough is a key connecting channel, which is heavily used by commercial fishermen, boaters, and the Coast Guard. The channel has now been authorized for maintenance by the Corps but no federal funds have been budgeted for its maintenance.

Equipment and Costs The Division of Water Resources does not maintain any in-house dredge equipment. Most projects have historically been conducted by private contractors. On at least one occasion, Ferry Division equipment has been used to dredge the Manteo to Wanchese and North Navigation Channels. In addition, USACE staff has indicated that the DWR has recently contracted with them to add a portion of one of their projects to an authorized project being conducted by the USACE. The most recent costs for the DWR projects were as follows:

Manteo to Wanchese and North Navigation Channels: $1,192,000 for 100,000 cy, or $11.92 per cy, in 2002; Cape Lookout Access Channel: $300,000 for 17,328 cy, or $17.31 per cy, in 2001; Walter Slough: $122,000 for 19,000 cy, or $6.42 per cy, in 1998.

Each of these projects was most recently completed by a private contractor.

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Figure II-16. Locations of Division of Water Resources Shallow Draft Projects

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III. DREDGED MATERIAL MANAGEMENT

This section details dredged material management for maintaining North Carolina s shallow draft navigation channels and inlets. This includes examination of USACE historical dredging projects from 1975 to 2004, as well as the existing state-maintained NCDOT Ferry Division and Division of Water Resources projects. Dredge quantities, disposal methods and sites are presented for each project. Alternatives for future dredging of North Carolina waterways are discussed.

Dredges As discussed previously, shallow draft dredging in North Carolina is generally accomplished by the use of four types of dredge equipment: pipeline dredges, hopper dredges, sidecaster dredges, and a USACE special purpose dredge. The Wilmington District of the USACE maintains a dredging fleet consisting of three dredges: two sidecaster dredges (Fry and Merritt) and a special purpose dredge (Currituck), which is a unique split hull hopper dredge. These dredges are capable of operating in ocean exposed inlet conditions and shallow draft waters, a combination not available through the use of commercial dredges. Therefore, commercially available dredges are most often employed in the interior sheltered channels such as the AIWW. Contract dredgers have primarily used pipeline dredges along with hopper dredges in a few cases. In addition, the NCDOT Ferry Division operates its own 12 pipeline dredge.

Existing Disposal Methods Various disposal methods exist for dredged material depending on environmental restrictions, quantity of material dredged, and time or money limitations. Typical disposal methods used in North Carolina include overboard or open water, upland disposal, beach nourishment, and various combinations of the three. For a typical year s production, the percentages of each type of disposal are shown in Figure III-1.

Overboard and Open Water Overboard or open water disposal is characterized by disposing the dredged material in open waters quickly and in close proximity to the channel. This can be done using a sidecaster dredge to place dredged material along the side of the channel or a hopper dredge to dump the material at an offshore site. Only clean dredged material may go to ocean sites. Over the thirty year period of FY 1975 to FY 2004, an average of 39% of the volume of dredged material has been placed overboard or in open water and an average of 15% has been placed in open water and upland sites (historical records do not allow full differentiation of placement location for all projects). Within the past five years (FY 2000- FY 2004), the majority of USACE shallow draft dredging projects in North Carolina have used this method of disposal (overboard and open water), accounting for 89% of all projects and 67% of material volume that has been dredged.

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Typical Annual Disposal Methods Percentage of Typical Annual Dredged Volume

Overboard and Beach Nourishment Open Water and Upland 39% 46%

Open Water and Upland 15%

Figure III-1. Typical Annual Disposal Methods for USACE Projects (FY 1975 2004)

Upland Disposal Upland disposal is a land disposal method in which specific measures are taken to confine the dredge material. Placement occurs above the high water line and out of wetland areas. Usually this involves the use of a pipeline dredge. In cases where the disposal area is far from the dredging activity, hopper dredges are used to transport the material to the site where it is then pumped onto the land. Retention structures are typically set in place to contain the sediments. The dredged material is pumped into the area in combination with water. The area is then divided up into smaller areas called cells through which the water and sediment mixture flows. As the water flow slows down, the sediments settle out and clean water is then discharged from the site. This method provides disposal space for material considered unsuitable for open water disposal. Coarse or fine sediment are both appropriate for upland disposal. Upland disposal has comprised only 3% of the USACE shallow draft dredging projects in North Carolina over the past five years (FY 2000- FY 2004), corresponding to 12% of the volume of material dredged.

Beach Nourishment Beach nourishment consists of placing dredged material on the beach as an erosion control or shoreline protection method. This is generally accomplished through the use of a pipeline dredge to transport the dredged material onto the beach. Some times, the dredged material is placed slightly offshore, by means of a hopper dredge, for the waves and currents to transport

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it to the beach. The dredged material is usually sand coming from inlets, coastal entrance bars, or main offshore waterways. Over the past 30 years, an average of 46% of the volume dredged from shallow draft waterways has been placed as beach nourishment or in upland sites. Within the last five years (FY 2000 FY 2004) USACE North Carolina shallow draft dredging projects have used beach nourishment as a disposal process 2% of the time, accounting for 5% by volume of material dredged. These numbers do not include projects where the primary purpose of the work was beach nourishment, for example, the Wrightsville and Carolina Beach projects, because those projects were not included in this study.

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USACE DREDGING PROJECTS This section provides an overview of shallow draft dredging projects completed by the USACE from FY 1975 to FY 2004. A description of each project is presented along with historical quantities and disposal methods. Projects are listed by region and then in alphabetical order. It is noted that while beach nourishment projects were excluded from the project characteristics analysis, they have been included in this section because they are considered to be potential disposal sites for dredged material.

Northern Area Figure III-2 shows the locations of the three projects located in the northern Outer Banks area.

Figure III-2. Northern Area USACE Shallow Draft Project Locations

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Edenton Harbor, NC - Upland The Edenton Harbor project consists of a channel 12 ft deep and 150 feet wide extending from the 12 ft contour in Edenton Bay to the foot of Broad Street with channels of the same cross-section leading from the main channel along the waterfront to the east and west. 17,066 cy of material was dredged using a pipeline dredge in 1975. The exact location of dredged material disposal is unknown. However an upland disposal site close to the harbor was most likely used.

Manteo (Shallowbag Bay)/Oregon Inlet, NC Open Water, Beach, and Upland This project area consists of the Oregon Inlet ocean bar channel, authorized at 400 ft wide and 20 ft deep but maintained only at 14 ft deep, which runs in between Bodie Island and Pea Island along with various connecting channels which run throughout Pamlico and Roanoke Sounds. The Bridge to Old House Channel (120 ft wide by 14 ft deep) and Old House Channel (100 ft wide by 12 ft deep) extend from the inlet southwest through the Pamlico Sound. The Channel to Wanchese (120 ft wide and 14 ft deep) extends from the inlet northwest through Roanoke Sound to Wanchese Harbor. Walter Slough (60 ft wide by 7 ft deep) extends from Bodie Island to connect with the Channel to Wanchese. The Wanchese to Manteo Channel (100 ft wide by 12 ft deep) runs north from Wanchese Harbor, through Roanoke Sound and Shallowbag Bay to Manteo. The North Channel continues north to the Albemarle Sound (100 ft wide by 10 ft deep). This project area has been dredged 153 times with hopper, pipeline, sidecasting, and special purpose dredges, accounting for 37.1 million cy of dredged material over the period of record. This is an average of 242,637 cy per project. The most recent dredging in the record for this report was performed in 2004.

From 1973 to 1982, USACE sidecaster dredges were used almost exclusively to maintain the ocean bar channel, depositing the material immediately adjacent to the channel. From 1983 to 1990 the ocean bar channel was maintained by a combination of commercial hopper dredges and USACE sidecaster dredges. Hopper dredge material was deposited off the north end of Pea Island in approximately 20 ft of water while sidecaster dredge material was deposited adjacent to the channel. From 1993 to the present, the ocean bar channel has been maintained by USACE hopper and sidecaster dredges and commercial hopper dredges. Commercial hopper dredges deposit the material in shallow water disposal areas located off the northern end of Pea Island. Also from 1993 to the present, the area under Bonner Bridge has been maintained by commercial ocean certified pipeline dredges which deposit the material along the northern 2 to 3 miles of Pea Island.

Connecting channels leading through Pamlico and Roanoke Sounds typically use a series of islands as confined disposal areas. The channel from Oregon Inlet to Wanchese Harbor is maintained by commercial pipeline dredges and material deposited in confined areas adjacent to the channel. These include Islands D, F, G, H and The Wanchese Marsh Disposal Area. Material dredged from the Manteo to Wanchese and North Channel has historically been deposited in two ways. Some material has been used to nourish beaches in the town of Nags Head. Other material has been placed in upland disposal areas on Roanoke Island. Material from Old House Channel and the Bridge to Old House Channel is usually placed on Parnell

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and Wells Islands although Islands D, F, G, and H can also be used. Dredged material from Walter Slough is placed on the Island D disposal area.

Stumpy Point Bay, NC - Upland This project area consists of a channel 75 ft wide and 10 ft deep leading from Pamlico Sound through Stumpy Point Bay to a basin at Lake Worth. Dredging has removed 364,767 cy of material by use of a pipeline dredge during two dredge periods in 1979 and 1992. This amounts to 182,384 cy per period. The dredged material is placed in an upland disposal site adjacent to Highway 264 and the entrance channel to Stumpy Point on the U.S Fish and Wildlife property, Alligator River Refuge.

Central Area The locations of the projects located in the central coastal area are shown in Figure III-3.

Figure III-3. Central Area USACE Shallow Draft Project Locations

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Atlantic Beach Channels, NC - Upland This project involves two channels, both 6 ft deep and 50 ft wide. Money Island Channel extends from the Intracoastal Waterway in Bogue Sound to the Marina east of Money Island. The Causeway Channel extends from the intersection with Money Island Channel in Bogue Sound to where it meets Atlantic Beach. From 1975 to 2004, the Atlantic Beach Channels were dredged three times with contract pipeline dredges RICHMOND and EAGLE. The total amount of material removed during all dredging events was 130,298 cy, averaging 43,433 cy per project. According to the dredge database, the last year the project area was dredged was 1990. The material from Atlantic Beach channels was placed in an upland facility known as Brandt Island.

Avon Harbor, NC - Beach This project consists of a channel 6 ft deep and 100 ft wide extending from Pamlico Sound to a basin at Avon. The USACE has estimated that less than 50,000 cy of material is dredged approximately every six years. The beach disposal area for this site begins at a point 1.15 miles south of Avon Harbor and extends 3.1 miles to the north.

Data compiled from USACE records indicates dredging projects took place in 1986, when 12,541 cy of material was removed with contract pipeline dredges BLUERIDGE and RICHMOND and most recently in 1999 when 114,336 cy of material was removed with a pipeline dredge.

Beaufort Harbor, NC Upland and Beach This project consists of dredging Bulkhead Channel (100 ft wide by 15 ft deep), Gallant s Channel (100 ft wide by 12 ft deep), and Taylor s Creek Channel (100 ft wide by 15 feet deep), all adjacent to the town of Beaufort. This area has been dredged eighteen times over the period of record by pipeline dredge. 988,287 cy of material has been removed, averaging 54,905 cy per project. The last year on record in which dredging took place is 1994. Material removed from this project is stored in the Brandt Island upland disposal site for 8 to 10 years. Then the material is deposited on beach at the east end of Bogue Banks.

Channel from Back Sound to Lookout Bight, NC Upland and Open Water A 100 ft wide, 7 ft deep channel runs from Back Sound, between Shackleford Banks and Core Banks, to Lookout Bight. This channel has been dredged eight times from 1975 to 2004 with the use of pipeline, special purpose, and sidecaster dredges, accounting for 412,492 cy of material. This is an average of 51,562 cy per project. The channel was last dredged in 1988. The dredged material not disposed in open water by sidecasters is placed on a sandbagged island adjacent to the north end of the channel in Back Sound. The control-of-effluent method of disposal is used, allowing the effluent to be discharged back toward the channel.

Barden s Inlet has also been dredged in connection with this project. The inlet is located between Core Banks and Shackleford Banks, with a 100 ft wide by 7 ft deep channel

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extending from Harker s Island to Cape Lookout. USACE records show that the inlet has been dredged three times in 1980, 1984 and 2001 using the sidecaster MERRITT and the special purpose CURRITUCK. A total of 189,496 cy of material was removed, an average of 63,165 cy per project. Dredged material was placed in open water adjacent to the channel. The dredging of Barden s Inlet is being investigated as source of material to be placed in front of the Cape Lookout lighthouse and historic structures.

Drum Inlet, NC Beach and Open Water This project area consists of a channel 150 ft wide and 7 ft deep from the gorge in the inlet to the Federally improved channel in Core Sound and a 150 ft wide by 9 ft deep channel from the inlet gorge to deep water in the ocean. Drum Inlet has been dredged seven times over the period of record with various dredges, including sidecasters, pipeline, bucket and special purpose, accounting for 863,949 cy of material. This is, on average, 123,421 cy of material. Most recently, the inlet was dredged in 1998. Material not placed beside the channel by the sidecasters or special purpose dredge is deposited on the beach at Core Banks from a point 2,000 feet to the side of the inlet, extending one mile southwest.

Far Creek, NC - Upland This site is a channel (12 ft deep and 100 ft wide) extending from Pamlico Sound through the wide section of Far Creek and into a basin at Engelhard. From 1975 to 2004, the channel was dredged four times with a contract pipeline dredge (RICHMOND). A total of 723,605 cy was dredged for an average of 180,900 cy per project. The creek was most recently dredged in 1991. The disposal location for dredged material from Far Creek is an upland disposal area adjacent to the harbor.

Hatteras Inlet, NC Open Water and Upland The 10 ft deep, 100 ft wide channel from Hatteras Inlet to the town of Hatteras, located southwest of Cape Hatteras, has been dredged six times from 1975 to 2004. Most work was done by USACE sidecaster dredges FRY and MERRITT. The USACE special purpose dredge was used once. Dredged material amounted to 296,750 cy, averaging 49,458 cy of material per project. The inlet was last dredged in 2004. The National Park Service does not allow disposal on the beach so material from this area not disposed in open water (see also, the Rollinson Channel project) is placed on Cora June Island, a North Carolina Wildlife Resources Commission (NCWRC) disposal island.

Ocracoke Inlet, NC Open Water Ocracoke Inlet is located between Ocracoke and Portsmouth islands, with a 400 ft wide and 18 ft deep channel extending from Ocracoke Island to the 20-ft depth. The USACE dredge database indicates the use of sidecasting dredges, and, on one occasion the special purpose dredge, to remove 559,586 cy of material over the past thirty years during eleven different dredge periods. This is an average of 50,871 cy per project. The last year in the record that the inlet was dredged was 2003.

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Rollinson Channel, NC - Beach This project covers a 100 ft wide by 12 ft deep channel extending northwest from the town of Hatteras through Pamlico Sound for approximately 5 miles. The USACE dredge database indicates the use of primarily pipeline dredges to remove 663,981 cy of material over the period of record. This was accomplished during six dredging periods averaging 110,664 cy per period. The last year on record that the channel was dredged was 2004. The material from Rollinson Channel is placed on the beach just south of Hatteras Harbor extending 6 miles north to a point north of Frisco, NC.

Silver Lake, NC - Beach The project area consists of a 150 ft wide by 12 ft deep channel extending from the gorge in Ocracoke Inlet through Teaches Hole Channel and Big Foot Slough to a basin in Silver Lake. Another channel extends through Big Foot Slough Channel to the 12 ft contour in Pamlico Sound and then continues across Bluff Shoal in Pamlico Sound. Silver Lake has been dredged twenty-eight times over the period of record, removing 2,642,634 cy of material. This amounts to 94,380 cy per project. The project area was last dredged in 2003. The material is deposited on the beach from a point 2,000 ft northeast of Ocracoke Inlet, extending approximately 2,000 ft further northeast.

Waterway Connecting Pamlico Sound and Beaufort Harbor, NC Upland The channel starts just east of Beaufort Inlet, extending east past Harker s Island. The channel then turns northeast, running through Core Sound until it reaches Wainwright Slough in Pamlico Sound. The Atlantic Harbor of Refuge is also dredged in connection with this project. The project area consists of a channel of varying width and depth (approximately 60 to 75 ft wide and 6 to 7 ft deep).

The waterway has been dredged twelve times over the period of record, removing 875,212 cy of material. This amounts to an average of 72,934 cy per project. The area was last dredged in 1999 and a pipeline dredge has primarily been used. The material from Wainwright Slough is placed on Wainwright Island, a valuable bird nesting site owned by the National Audubon Society, using the control-of-effluent method in a sandbagged area. The sandy material from the Atlantic Harbor of Refuge is placed on the sand spit adjacent to the entrance channel. Fine material is placed in a sandbagged upland disposal area nearby.

Waterway Connecting Swanquarter Bay with Deep Bay, NC - Upland This project area consists of a 60 by 8 ft channel connecting Swanquarter and Deep Bays. Also included is a 10 ft deep and 60 ft wide channel extending from Swanquarter Basin to the 10 ft contour of Swanquarter Bay. From there the channel follows the State Ferry channel and is maintained by the State. This area has been dredged seven times, primarily using a pipeline dredge. A total of 1,937,063 cy of material has been removed over the period of record. This amount to an average of 276,723 cy per project. The last year on record that the channel was dredged is 1984. The dredged material is placed on an upland site adjacent to the Swanquarter Ferry Terminal.

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Wrights Creek, NC - Upland This project area consists of a an 80 by 8 ft channel extending from the AIWW in the Pungo River up the north prong of Wrights Creek to a basin. Wrights Creek was dredged in 1977 with a pipeline dredge, removing 66,584 cy of material. The material from Wrights Creek was placed in an upland disposal site adjacent to the entrance channel and harbor.

Southern Area

Figure III-4. Southern Area USACE Shallow Draft Project Locations

Bogue Inlet and Channel, NC Open Water and Beach Bogue Inlet is located on the western side of Bogue Banks. The inlet entrance channel (150 ft wide by 8 ft deep) and the channel leading to the Intracoastal Waterway (90 ft wide and 6 ft deep) have been dredged sixty-seven times over the thirty-year period of record. Sidecaster dredges were primarily used. The USACE special purpose dredge was used on six occasions. 4,568,817 cy of material has been removed during this process. On average, 68,191 cy is

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removed each time the inlet is dredged. The most recent dredging on record took place in 2004, when the inlet was dredged twice.

Material removed with the sidecaster dredges is deposited 90 to 100 ft to the side of the dredge in open waters. Maintenance dredging of the AIWW inlet crossing at Bogue Inlet, typically completed on an annual basis as part of the AIWW inlet crossings contract, is done with a pipeline dredge that disposes the material on the west end of Emerald Isle, 1,500 ft east of the inlet shoulder.

Cape Fear River, NC Open Water, Beach and Upland The portion of the Cape Fear River subject to dredging extends 111 miles from Wilmington to Fayetteville, and is generally 25 ft deep and 200 ft wide. Thirteen dredge projects took place from 1975 to 2004 using mostly pipeline dredges and a few sidecaster dredges, removing 780,384 cy of material. This is an average of 60,030 cy per project. The last time the river was dredged was at Lock and Dam 1 (approximately 37 miles upstream of Wilmington) in 2002. Sand from the deepening of the Cape Fear River has been placed on Caswell Beach, Oak Island, and Holden Beach. Sand was also used to raise dikes on Eagle Island, a 930-acre USACE dredge disposal site along the Cape Fear River. Most often, one or more impoundments at Eagle Island will be suitable for shorebirds during migration, and occasionally waterfowl and waterbirds. According to the NC Audubon Society, the impoundments attract thousands of shorebirds during migration.

Carolina Beach Inlet and Channels, NC Open Water and Beach Carolina Beach Inlet consists of a channel 8 ft deep and 150 ft wide that connects the Intracoastal Waterway to the Atlantic Ocean cutting through Myrtle Grove Sound. This inlet and its connecting channels have been dredged 115 times over the period of record accounting for 5,409,168 cy of material. Sidecasters and the USACE special purpose dredge were primarily used, with open water disposal. This is an average of 47,036 cy per project. Carolina Beach Inlet was last dredged in 2004, when the sidecasters FRY and MERRITT conducted operations during 9 occasions.

The inlet sediment trap is dredged approximately every 3 years and the material is placed on 14,000 linear feet of shoreline south of the inlet with a pipeline dredge as part of the Carolina Beach storm damage reduction project. Historical data on the beach nourishment operations has been excluded from the project characteristics analysis.

Lockwoods Folly Inlet, NC Open Water and Beach Lockwoods Folly Inlet is located between Long Beach and Holden Beach. The entrance channel is 12 ft deep and 150 feet wide and connects the AIWW with the Atlantic Ocean. From 1975 to 2004 it was dredged fifty-one times, primarily by sidecaster dredges and the USACE special purpose dredge CURRITUCK. Material from the AIWW inlet crossing in this area and material not disposed in open water has been placed on the beach at the east end of Holden Beach and west end of Oak Island. Records indicate that 3,517,840 cy of material has been dredged over the period of record, averaging 68,977 cy of material per project. The

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last year the inlet was dredged was 2004, when the sidecasters FRY and MERRITT conducted operations on 5 occasions.

Lockwoods Folly River, NC Open Water and Beach Lockwoods Folly River project area consists of a 100 ft wide by 6 ft deep channel extending from the Intracoastal Waterway to the bridge at Supply. It has been dredged thirty-three times from 1975 to 2004, with sidecaster dredges as well as pipeline and USACE special purpose dredges. Some material from the river channel has been placed on the beach at Long Beach strand. Over the period of record 3,458,467 cy of material has been dredged, averaging 60,856 cy per project. The river was last dredged in 2002.

Masonboro Inlet, NC Open Water and Beach Masonboro Inlet, located just south of Wrightsville Beach and north of Masonboro Island, consists of a channel of varying width and depth extending from the Atlantic Ocean to the AIWW. The entrance channel is 400 ft wide and 14 ft deep and a turning basin between with mainland and Wrightsville Beach is authorized at 15 ft deep by 300 ft wide by 700 ft long. The area was dredged in 1986 by a commercial pipeline dredge removing 2.0 million cubic yards of material (with beach placement) and in 1997 by a USACE sidecaster dredge (with open water disposal), removing 28,970 cy of material. This inlet has also been dredged to provide material for the Wrightsville Beach renourishment project (see the Wrightsville Beach, NC project).

Mile Hammock, NC - Upland Mile Hammock Bay, located just northeast of New River Inlet on Camp LeJeune property, was dredged in 2000 with a pipeline dredge. A total of 280,000 cy of material was removed. This project was done for the United States Marine Corps (USMC) Camp LeJeune and material was placed on an upland site constructed adjacent to Mile Hammock Bay on Camp LeJeune property. No congressionally authorized channel dimensions are available for this project.

New River Inlet, NC Open Water and Beach New River Inlet is located to the north of Topsail Island. The ocean bar channel (6 ft deep and 90 ft wide) has been dredged multiple times annually from 1980 to 2004 using USACE sidecaster dredges or the special purpose hopper dredge CURRITUCK. The channel that connects the inlet to the AIWW is maintained by pipeline dredge (part of the AIWW inlet crossings contract) and the material is deposited on the beach at the north end of Topsail Beach. The inlet and its connecting channel have been dredged ninety-three times over the period of record, removing 6,592,485 cy of material. This is an average of 70,887 cy per project. The most recent dredging on record was performed in 2004.

New Topsail Inlet, NC Open Water and Beach New Topsail Inlet, just south of Topsail Beach, has been dredged sixty-nine times over the period of record. The USACE special purpose dredge, CURRITUCK, and the sidecasters MERRITT and FRY maintain the inlet channel (8 ft deep and 150 ft wide) and contract

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pipeline dredges maintain Topsail Creek and Banks Channel (7 ft deep and 80 ft wide). Material from Topsail Creek and Banks channel is deposited on the beach at the south end of Topsail Beach. 3,938,396 cy of material has been dredged from the inlet and channels over the period of record, an average of 57,078 cy per project. The last year on record the inlet was dredged was 2004.

Ocean Isle Beach, NC - Beach Ocean Isle Beach, located on the west side of Shallotte Inlet, was the site of a beach renourishment and storm damage reduction project in 2001. Sand dredged from Shallotte Inlet was placed on 3.25 miles of beach along the eastern portion of Ocean Isle Beach, extending from Shallotte Blvd. west to Duneside Drive. Almost 2 million cy of material was dredged by contract pipeline dredge to the Ocean Isle Beach area. The sand was used to create a berm elevation of 13.5 ft and dune elevation of 18.5 ft within the project extents.

Oak Island Sea Turtle Habitat, NC - Beach Oak Island, located east of Cape Fear, was the site of a turtle habitat improvement project in 2001. Sand from Yellow Banks disposal area, situated across the AIWW from Oak Island, was pumped by a pipeline dredge onto a one mile section of beach. Approximately 2.65 million cy of sand was placed on the project area adding 70 ft of width and creating a dune berm approximately 11 ft high.

Shallotte River, NC - Beach Shallotte River is a 4 ft deep and 36 ft wide channel extending from the mouth between Holden Beach and Ocean Isle Beach to the town of Shallotte. The river has been dredged five times from 1975 to 2004, accounting for 217,161 cy of material. This is an average of 43,432 cy per project. Much of the material dredged by pipeline dredges has been placed on the Ocean Isle Beach shoreline. The river was last dredged in 2002.

Wrightsville Beach, NC - Beach Wrightsville Beach is located just north of Masonboro Inlet. The borrow areas surrounding the beach, including Masonboro Inlet channel and turning basin, have been dredged multiple times using a pipeline dredge and a hopper dredge. Over 8 million cubic yards of material from Masonboro Inlet and Banks Channel have been placed on the beach as part of dune reconstruction and beach fill and nourishment.

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Atlantic Intracoastal Waterway The location of the AIWW and upland disposal sites adjacent to the waterway are presented in Figure III-5.

Figure III-5. AIWW Upland Disposal Sites

Atlantic Intracoastal Waterway (AIWW), NC Upland and Beach The AIWW (through channel and inlet crossings) consists of a waterway 12 feet deep with width varying from 90 ft in land cuts to 300 ft in open waters. The project was dredged eighty-seven times from 1975 to 2004, mostly by pipeline dredge. Approximately 25.7 million cy of material has been removed.

Section I Section I of the AIWW extends from Beaufort to Swansboro. Tangent B, near Beaufort, is typically dredged every five years, typically removing less than 50,000 cy of material. The dredged material is placed on the beach at Pine Knoll Shores in the vicinity of Coral Bay. Tangent H through F, at the Bogue Inlet crossing, are dredged annually. Less than 100,000 cy is typically taken and placed on the beach approximately 2,000 ft from the inlet going east

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toward Emerald Point Villas in Emerald Isle on Bogue Banks. Additional dredging is placed in upland sites in the right of way adjacent to the AIWW.

Section II Section II of the AIWW extends from Swansboro to New River. Tangents F, G, and H, near Browns Inlet, are typically dredged every two years, removing less than 200,000 cy. The material is placed on the beach at Camp LeJeune, 3,000 ft west of Browns Inlet, extending westward. Material from Tangents I and J (the New River Inlet crossing) is dredged annually and is placed on the beach at North Topsail Beach, 3,000 ft west of the inlet extending westward to Maritime Way. Additional dredging is placed in upland sites in the right of way adjacent to the AIWW.

Section III Section III of the AIWW extends from New River to Wrightsville Beach. Tangents 1 and 2 (Mason s Inlet crossing) are dredged annually and material is placed near Shell Island resort, on the north end of Wrightsville Beach. Additional portions of Section III are dredged every six years, typically removing less than 50,000 cy and placing it on the beach at Topsail Island in the area of Queens Grant, near Surf City. Additional dredging is placed in upland sites in the right of way adjacent to the AIWW.

Section IV Section IV of the AIWW extends from Wrightsville Beach to Carolina Beach. Tangent 1, (Carolina Beach Inlet crossing), is dredged annually. Typically less than 50,000 cy is removed each time and placed on the southern end of Masonboro Island at a point 2,000 ft from Carolina Beach Inlet extending northward toward the Johns Bay area. Additional dredging is placed in upland sites in the right of way adjacent to the AIWW.

In addition to the above listed sections, other portions of the AIWW are dredged less frequently, including the Alligator-Pungo Cut, Core Creek and the northern reaches. Disposal of the material from these portions is in upland sites adjacent to the waterway.

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FERRY DIVISION DREDGING PROJECTS The Ferry Division of the North Carolina Department of Transportation is responsible for maintenance of turning basins and approach channels at ferry terminals throughout the state. This section details each project, including the typical frequency and volume of dredging activities. The project locations are shown in Figure III-6. Disposal areas for Ferry Division dredging projects are located at upland disposal sites adjacent to the turning basins with the exception of the Hatteras projects which use an upland disposal site next to Ocracoke ferry terminal.

Figure III-6. Ferry Division Project Locations

Aurora (Pamilico River-South Side) Upland This project area is located on the south side of the Pamlico River near Aurora. The approach channel is 1,850 ft long, 100 ft wide, and 10 ft deep. The turning basin is 400 ft by 400 ft and 10 ft deep. The project area is dredged every three to four years, removing approximately 10,000 cy each time.

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Bayview (Pamlico River-North Side) - Upland This project area is located on the north side of the Pamlico River near Bayview. The approach channel extends out 2,500 ft and is 100 ft wide and 10 ft deep. The turning basin is of the same dimensions as the one on the south side of the river at Aurora. The project area is dredged around every five years, removing approximately 12,000 cy of material each time.

Cedar Island - Upland Cedar Island ferry terminal is located in the southern portion of Pamlico Sound, slightly north of Drum Inlet. The approach channel is 600 ft long, 200 ft wide, and 12 ft deep. The turning basin is 400 ft by 400 ft and is 12 ft deep. The project area is dredged every four to five years, removing approximately 20,000 cy of material each time.

Cherry Branch - Upland Cherry Branch ferry terminal is located on the south side of the Neuse River in Cherry Branch, NC. The approach channel is 2,100 ft long, 150 ft wide, and 10 ft deep. The turning basin is 957 ft by 400 ft and is 10 ft deep. The project area is dredged every four to five years. Approximately 50,000 cy of material is removed each time.

Currituck - Upland Currituck ferry terminal is located on the west side of Currituck Sound near Coinjock Bay. This project involves a 500 ft long approach channel that is 100 ft wide and 10 ft deep. The turning basin at this terminal is 250 ft by 300 ft. Currituck is dredged every four to five years, removing approximately 30,000 cy each time.

Ft. Fisher - Upland Ft. Fisher ferry terminal is located just south of Kure Beach. The project consists of a 5,200 ft long and 100 ft wide approach channel with a 350 ft by 350 ft turning basin that is 14 ft deep. This area is dredged every three to four years. Approximately 110,000 cy is removed each time.

Hatteras-South Side - Upland This project area is located on the south side of Hatteras Inlet on Ocracoke Island. It consists of a 2,400 ft long, 100 ft wide, and 10 ft deep approach channel. The turning basin is 400 ft by 400 ft and 10 ft deep. This project area is dredged on a yearly basis. Approximately 75,000 to 100,000 cy of material is removed each time.

Hatteras-North Side - Upland This project area is located on the north side of Hatteras Inlet on Hatteras Island. The approach channel is 3,200 ft long, 100 ft wide, and 10 ft deep. There is a 600 ft by 200 ft turning basin that is 10 ft deep. The project area is dredged every six to seven years, removing approximately 40,000 cy of material each time.

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Knotts Island - Upland Knotts Island ferry terminal is located just south of the Virginia border near the Virginia Beach area. The approach channel is 100 ft wide, 10 ft deep, and 300 ft long. The turning basin is 250 ft by 400 ft. This project area is dredged about every four to five years. Approximately 30,000 cy of material is removed each time.

Manns Harbor - Upland Manns Harbor is located west of Roanoke Island on the opposite side of the Croatan Sound. The approach channel consists of a 4,500 ft long, 10 ft wide, and 9 ft deep channel. The turning basin is 1,200 ft by 150 ft and is also 9 ft deep. The project area undergoes dredging every four to six years, removing approximately 2,000 cy of material in the process.

Minnesott Beach - Upland Minnesott Beach ferry terminal is located on the north side of the Neuse River at Minnesott Beach. A 1500 ft long, 100 ft wide, and 9 ft deep approach channel exists with a 200 ft by 175 ft turning basin that is also 9 ft deep. The project area is dredged every three to four years, removing approximately 15,000 cy of material each time.

Southport - Upland Southport ferry terminal is located on the inland side of the Cape Fear River across from Bald Head Island. The project consists of a 1250 ft approach channel that is 100 ft wide and 14 ft deep. The turning basin is 400 ft by 400 ft. This area is dredged approximately every three to four years, removing around 60,000 cy each time.

Swanquarter - Upland Swanquarter ferry terminal is located in the Pamlico Sound near the mouth of the Pamlico and Tar Rivers. The approach channel consists of an 800 ft long, 600 ft wide, and 12 ft deep channel. The turning basin is 1400 ft long, 50 ft wide, and 12 ft deep. The project area is dredged every eight to ten years. Approximately 50,000 cy of material is removed each time.

Ferry Division Environmental Considerations The dredging window for the Ferry Division is from November 1 to February 28. Dredged material is confined to high ground behind dikes or other retaining structures to prevent spillover of solids into surrounding waters. The diked disposal area must be constructed a sufficient distance from the Mean High Water (MHW) line of any marshland to eliminate possibility of dike erosion. The disposal area effluent must be contained by pipe, trough, or other device to a point below the normal low water mark to avoid gully erosion. The terminal of the pipeline must be positioned at or greater than 50 ft from any part of the dike and a maximum distance away from the spillway to allow adequate settlement of suspended solids. A water control structure must be installed at the intake end of the effluent pipe. The disposal activity must be conducted so as to prevent turbidity increase outside the area of discharge.

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DIVISION OF WATER RESOURCES DREDGING PROJECTS There are three shallow draft dredging projects currently being operated by the State Water Resources Division, as shown in Figure III-7. This section describes those projects, including typical frequency and quantity of material dredged. All dredging was done with hydraulic pipeline dredges.

Figure III-7. Division of Water Resources Project Locations

Manteo to Wanchese and North Navigation Channels Upland and Beach The channel from Manteo to Wanchese and North Navigation Channels is approximately 100 ft wide and is typically dredged to 10 to 12 ft. The channel has also been dredged to 12 ft with 2 ft of advance maintenance. Disposal locations for the material have historically included upland placement at Collins Tract, the Pirate s Cove development, and on the beach near Whalebone Junction, all located in close proximity to Roanoke Island. Since 1985, the State has dredged this project area six times, 5 times through private contractors and once with Ferry Division plant. The amount of material removed each time ranged from 8,000 cy to 276,000 cy.

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Cape Lookout Access Channel- Beach The Cape Lookout Access Channel navigation channel (30 ft wide and 7 ft deep) is located just north of Drum Inlet. It was dredged in 1991 and 2001 by the State in partnership with the National Park Service through private contractors. Approximately 17,000 cy was removed each time. The disposal area for material from this site is on the beach at Cape Lookout.

Walter Slough - Upland Walter Slough is a 60 ft wide channel near south end of Bodie Island extending from Oregon Inlet Fishing Center to the Oregon Inlet Channel in Pamlico Sound and is dredged to 9 ft by the State (USACE authorized depth is 7 ft). The project area was dredged in 1994, 1996, and 1998 by the State through private contractors. Disposal sites for this project include Islands C and D as well as an upland disposal site next to the Oregon Inlet Coast Guard Station. The amount of material dredged ranges from 5,000 cy to 50,000 cy.

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ALTERNATIVE DISPOSAL OPTIONS This section details alternative disposal options for future North Carolina shallow draft dredging projects. These included, use of existing disposal sites, increased beneficial use of dredged material, and finding new disposal sites.

Existing Sites One alternative is for future state operated shallow draft dredging projects to maintain use of the same dredging equipment and disposal sites that are currently used. This would require detailed examination of current capacities of existing sites and evaluation of how much longer they could be used, as current databases do not have this information available. If management were to change from the USACE to the State, an extensive permitting process would be required as discussed in Section VIII.

Increased Beneficial Use Dredged material can be a valuable resource; beneficial use is considered to be a preferred method of disposal. However, environmental impact issues must be addressed for beneficial uses to be approved. This often involves an Environmental Impact Assessment (EIA) and an Environmental Impact Statement (EIS). Beneficial uses, though, can greatly decrease the amount of traditional disposal that occurs, reducing the strain on disposal sites that are near capacity.

Beach Nourishment Beach nourishment can be used to enhance the beach profile and moderate the wave climate at the shoreline, allowing for better stabilization and coast protection. In addition, beach nourishment can improve recreational beaches by making them larger or keeping them from eroding. Berm creation from bottom discharge of hopper dredges can also be used to modify the wave climate and stabilize the shoreline.

If the State were to assume control of shallow draft dredging in North Carolina, this alternative could be widely used. It would most likely be required by the North Carolina Division of Coastal Management that dredged material of sufficient beach quality be placed on beaches rather than open water or upland disposal. The use of sidecaster dredges to maintain coastal inlets might be an exception, because the material remains in the littoral system. Beach placement is much more expensive than open water or upland disposal given the double-handling and shaping that is required.

Habitat Creation Nesting meadows and mammal habitats can be developed on upland disposal sites. These sites are typically no longer used or have long periods between dredged material placement. This allows for natural vegetation to grow. Habitat creation could also be an option for material that is not of sufficient quality for beach nourishment.

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Dredged material can improve fishery habitats by mounding the material on the bottom, which creates a refuge habitat for fish. Additionally, fine grained sediment transport can be controlled by capping with coarse grained dredged material.

Dredged material can also be used for wetland restoration. The dredged material helps to bring degraded wetlands up to the appropriate elevation so the tidal cycle has the desired effect. Furthermore, dredged material can be used as a wind barrier to allow native vegetation to grow. As in beach nourishment, dredged material can be used to stabilize an eroding wetland shoreline or act as an erosion barrier. Using dredged material for habitat creation, particularly wetland restoration, can be extremely expensive due to the extensive planning and design required and the more precise placement of material that is needed.

Find New Sites Due to limited capacity of existing disposal sites, an option is to identify potential new sites. These may include upland or open water sites as well as beaches or habitats that may benefit from nourishment activities. This option may be costly and time consuming due to the extensive research and testing needed to identify potential sites and obtain required permits. Permitting issues are discussed in detail in the Regulatory Costs section.

SUMMARY The principal findings of the Dredged Material Management Study are as follows: The AIWW through channel is generally dredged using pipeline dredges, with material placed at upland sites along the waterway in the right-of-way. Historically, it has been dredged annually, with typical project amounts ranging from 300,000 to 1 M cubic yards. The AIWW inlet crossings are typically dredged annually with pipeline dredges. Amounts vary by location, typically ranging from 75,000 to 200,000 cubic yards. Material from the inlet crossings is generally disposed on the beaches adjacent to the inlets. The shallow draft inlets are usually dredged multiple times annually with sidecaster dredges. Typical project amounts are 75,000 cubic yards. Interior inlet channels (for example, Old House Channel) are most often dredged with pipeline dredges, with disposal on upland disposal islands located adjacent to the channels. They are typically dredged every two to three years, with amounts varying by location and ranging from approximately 50,000 to 100,000 cubic yards. Because data are not available, a separate study is recommended to determine the remaining capacity of the existing upland sites. Expanding beneficial use is a great option, but extensive permitting work and suitability analyses will be required as well as analyses of additional costs. New upland or open water sites would have similar permitting and analysis hurdles, therefore beneficial use options should be investigated first.

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IV. ECONOMIC IMPACTS

In recent years, decreased maintenance of shallow draft navigation channels has become a rising concern for the State and local governments that rely on the waterways to support businesses, recreation, and industry within North Carolina s coastal communities. An underlying issue for lobbyists and active stakeholders pressing for additional funding from the Federal government for shallow draft channel maintenance is the restriction that the benefit- cost analyses conducted by the USACE can only consider commercial tonnage. Therefore, the benefit-cost associated with maintaining shallow draft channels is largely underestimated, as it does not consider the significant economic impacts of recreational boating, which promotes tourism, businesses and jobs in North Carolina. Rosemary Lynch, Executive Director of the Atlantic Intracoastal Waterway Association (AIWA) indicates that recreational use has several times the economic impact of commercial traffic (Lydecker, 2001). In support of recreational boating, consumers spend more than $500 million annually on boats, motors, and boating supplies (SBTDC, 2005) in North Carolina. The marine related businesses making these sales provide over 30,000 jobs in the State (Gabriel, 2005). Therefore, many marine-related sectors help to build the North Carolina economy and, in doing so, rely on safe and navigable waterways and inlets.

A more-detailed assessment of the economic significance of these waterways would assist the State in proving to Federal interests the true value of these water highways and in developing a plan to ensure that this vital transportation network continues to serve North Carolina s coastal communities. Therefore, this portion of the study involved assembling, organizing, and analyzing existing information on the economic impacts of the shallow draft channels in North Carolina. The economic evaluation involved determining the number and types of users of the shallow draft navigation channels and estimating the economic importance of the channels in terms of the numbers of jobs and businesses dependent on them. The overall economic significance of the shallow draft channels for key economic sectors (e.g. tourism, recreational boating, commercial fishing, etc) was evaluated and where possible, summarized regionally or by specific waterways. It should be noted that the focus of this subtask was to develop a broad-brushed picture of the economic impacts provided by shallow draft navigation to North Carolina. A more detailed study is currently underway by the North Carolina AIWW Economic Study Team, which will examine these issues in much greater detail. The study team includes members from the University of North Carolina at Wilmington (UNCW) and Appalachian State University and is being funded by the North Carolina Department of Environment and Natural Resources (NCDENR), NC Sea Grant, and various local governments and community organizations through the North Carolina Beach, Inlet & Waterway Association (NCBIWA).

Data Collection As stated, the stakeholders who are able to communicate the economic impacts of the shallow draft channels are widespread and have varying interests in the waterways. As an example of

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the strong interest, a meeting organized by the Onslow Bay Fishing Club to address the lack of Federal funding for shallow draft channels brought over 700 concerned attendees.

For this study, M&N conducted a thorough literature review on the subject and contacted key individuals in maritime or related organizations to discuss available information on the economic impact of the shallow draft channels. Additionally, to address the various communities and businesses impacted, M&N mailed letters to coastal counties, chambers of commerce, related associations, and legislators requesting economic impact data for the given regions.

The mailed letters requested any general information on the use of the shallow draft channels and pertinent economic impact data including hotel room occupancy rates, percentage of rooms resulting from shallow draft waterway use, average room costs, average nights per stay, boating related sales and employment or other related statistics. A copy of this letter and the list of groups to whom letters were mailed is provided in Appendix D.

The responses from the mailed letters and collected information varied from a detailed economic assessment for an annual sport fishing tournament reliant on the waterways to generalized region-wide assessments encompassing various impacted groups. The extent of information received from the mailings did not cover every geographic region or shallow draft waterway considered in this study. Due to the varying nature and extent of the collected information, it was reviewed and key economic sectors were identified. The following economic sectors will be addressed in this chapter.

Commercial Fishing Recreational Boating Marine Trades Industry Tourism Industry Commercial Shipping

Other economic considerations including the advantages of waterborne goods transport and indirect economic impacts such as higher fuel costs will also be discussed.

It should be noted that the availability of detailed economic data directly related to the shallow draft navigation channels in North Carolina is minimal. However, existing data related to recreational and commercial waterway usage, tourism expenditures, numbers of related businesses and jobs will be presented and to the extent possible, related to the shallow draft channels. Furthermore, disseminating the collected data into primary economic sectors and assessing a real economic value from each sector is challenging, given the overlap and variability in data collected for the given sectors. Nevertheless, this study will include an order of magnitude economic impact from the combined sectors.

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Commercial Fishing Commercial fishing is a prominent sector of the North Carolina coastal economy. In 2001, there were approximately 5800 commercial fishing vessels, 4600 commercial fishermen, and 670 fish dealers in the State (Bianchi, 2003). Industries that support and rely on commercial fishing such as seafood processing, wholesaling and retail also have economic impacts in North Carolina. Other indirect economic impacts may include jobs resulting from commercial fishing, and/or vessels and fuel purchased for commercial fishing. The direct economic impact which the shallow draft waterways provide to the commercial fishing industries is difficult to assess; however, geographically organized commercial fishing data can be used to discern the portion of the industry that uses the shallow draft channels and an order of magnitude economic impact value can be included.

In 1997, the North Carolina General Assembly passed the Fisheries Reform Act, which requires that the North Carolina Division of Marine Fisheries (NCDMF) develop state fishery management plans utilizing biological, social, and economic data related to the marine fisheries industry (Bianchi, 2003). In response to the need for related socioeconomic data, numerous studies have been completed to date, which include economic impact evaluations of the State s commercial marine fisheries industry (Bianchi 2003; Cheuvront 2002; Diaby 1999, 2000).

A majority of previous economic analyses have relied on commercial fishing data and statistics collected by the NCDMF through the Trip Ticket Program. Since 1994, the Trip Ticket Program has been a mandatory tracking initiative whereby trip level fish dealers report information about the fisherman, the dealer purchasing the product, the transaction date, the number of crew, area fished, gear used and the quantity of each species landed for each trip. The coverage area for the Trip Ticket Program includes all water bodies that make up the Albemarle-Pamlico estuarine system, all inshore waters in the southern part of NORTH CAROLINA and the Atlantic Ocean. These areas comprise 19 coastal counties and 31 water bodies defined for reporting areas of use.

Previous economic impact analyses of North Carolina s commercial fishing industry, existing data obtained from the NCDMF, and the local government responses to requested data were used to characterize the economic importance of the commercial fishing industry to North Carolina coastal counties. Location specific data were summarized regionally, by county, and/or by water body, where possible, to infer the direct economic significance of the shallow draft waterways to the commercial fishing industry.

Businesses and Jobs In The Commercial Fishing Sector The economic significance of the commercial fishing sector is initially characterized by the number of individuals employed and businesses operating in the industry. Data from Diaby (1997), Bianchi (2003) and information provided by local governments and organizations were reviewed to characterize the number of jobs within and created by the commercial fishing industry and numbers of related businesses.

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Bianchi (2003) utilized data obtained from the NCDMF License and Statistics section and the Trip Ticket Program to summarize, by county, the number of individuals employed as commercial fishermen during 2001. Study findings included the number of full-time fishermen in comparison to the average annual number employed in all industries. This data was used to compute the percentage of the workforce represented by fishermen in each county during 2001. These data are given in Table IV-1, sorted from highest to lowest percentage of workforce. Figure IV-1 illustrates the geographic distribution of commercial fishermen by county. In summary, commercial fishermen totaled approximately 4600 in the coastal counties in 2001. In five of these counties, namely Hyde, Carteret, Tyrell, Pamlico, and Dare, commercial fishermen represented greater than 3% of the total workforce in 2001. The average annual salary for fishermen in North Carolina was reported as approximately $20,000 (gross income) in 1997 (Diaby, 1997). Assuming a workforce of approximately 4,600 fishermen, this yields average annual total payroll of $92 million.

Table IV-1. Employment Statistics for Commercial Fishing Sector (2001) Employed Average County Total Percent of County 1 2 Fishermen Employment Workforce Hyde 238 2,970 8.01% Carteret 1,199 27,680 4.33% Tyrell 71 1,680 4.23% Pamlico 211 5,200 4.06% Dare 615 17,060 3.60% Beaufort 329 17,710 1.86% Camden 44 3,130 1.41% Brunswick 447 32,510 1.37% Onslow 616 46,460 1.33% Currituck 110 8,850 1.24% Perquimans 56 4,630 1.21% Pender 156 16,060 0.97% Chowan 49 6,410 0.76% Washington 28 5,810 0.48% Pasquotank 69 14,630 0.47% New Hanover 283 78,750 0.36% Craven 93 34,850 0.27% Bertie 9 8,050 0.11% Hertford 5 10,200 0.05% TOTALS 4628 342,640 1.35% Source: Bianchi, 2003; Notes on Original Data: 1 Number of fishermen was determined using Trip Ticket Data and only accounts for participants who recorded landings during 2001 and is based on residence. 2 Data obtained from the North Carolina Employment Security Commission Labor Market website http://www.ncesc.com/ (NCESC 2002) and the North Carolina State Data Center LINC website http://linc.state.nc.us/ (NCSDCL 2002)

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Figure IV-1. Distribution of Commercial Fishermen by County (2001)

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Numerous related sectors rely on commercial fishing and generate a direct economic impact for the State and local governments. Key industries include seafood harvesting, seafood processing, seafood wholesale and seafood retail (e.g. restaurants). It is difficult to assess the dependence which these components have on the shallow draft waterways. However, available data including numbers of jobs and businesses is presented.

Bianchi (2003) summarized data collected from the National Marine Fisheries Service (NMFS) which included estimates of the number of seafood processors, average employment and seasonal employment and the associated value of the pounds of seafood processed yearly from 1994-2001 (Table IV-2). It should be noted that these estimates are likely underestimated as the original data source was based on voluntary reporting. Additionally, Bianchi described the number of seafood wholesalers in North Carolina and the average employment for these companies during 1997-2000 based on data obtained from the Bureau of Land Statistics (BLS). Table IV-3 summarizes these data. Previous estimates of the number of seafood retailers were deemed speculative given the range of retailers marketing. Most recent estimates (2001) indicate a total of 136 companies related to seafood processing and wholesale, employing on average approximately 1700 individuals. The estimates of seasonal employment for seafood processors (Table IV-2) gives an indication of the variability of the commercial fishing industry in general.

Table IV-2. Number of Seafood Processors, Employment Production Values from 1994-2001 Year No. of Average Annual Peak Seasonal Production Companies Employment Employment Values 1994 79 1,479 1,669 $63,106,597 1995 52 1,140 1,206 $50,689,683 1996 47 1,165 1,202 $57,412,688 1997 52 1,451 1,454 $81,888,487 1998 47 1,353 1,376 $63,384,979 1999 41 1,276 1,301 $51,698,282 2000 40 1,082 1,112 $53,280,537 2001 36 903 978 $52,018,045 Source: Bianchi, 2003; Original data from NMFS

Table IV-3. Number of Seafood Wholesale Companies and Average Employment (1997-2000) Year No. of Average Companies Employment 1997 100 893 1998 97 873 1999 96 851 2000 100 870 Source: Bianchi, 2003; Original data from BLS

Several local governments and organizations that responded to M&N s request for economic impact data cited the importance of the commercial fishing industry to their local economies. The subsequent examples address local significance of the shallow-draft channels, but are not

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intended to disregard other counties where commercial fishing may be a major economic sector.

For Hyde County, where approximately 8% of the workforce were employed as commercial fishermen in 2001, information was provided by the local Chamber of Commerce and County Manager. This information indicated that there are currently at least 185 commercial fishing boats operating in the County which typically have at least two crew members per boat, yielding 370 workers.

The Carolina Ad-Hoc Committee, a committee formed by the Carolina Beach Town Council to research impacts that would occur with elimination of shallow draft channel maintenance, also noted the importance of the commercial fishing business in a recent publication (Killough, 2005). It was noted that the inlet is used by more than 100 commercial fishing boats that make 10,000 commercial fishing trips annually.

Commercial Fisheries Trips and Landings Commercial fishing trips and landings provide an indication of the level of usage of the State s waterways and the economic revenue generated from fish landings. Data collected by the NCDMF s Trip Ticket Program can be used to determine the numbers of commercial fishing trips and the total pounds of fish landed annually by region, county, and waterbody. The total pounds of specific finfish and shellfish can be used to compute the total values of these landings. Recent summarized data from the Trip Ticket Program are provided in the Annual Fisheries Bulletin, 2004 Commercial and Recreational Statistics (NCDNR, 2005). This publication reports the total pounds of finfish and shellfish landed in North Carolina, the associated value of these landings, and the total commercial fishing trips for 2000 to 2004 for all of the coastal counties. The total commercial trips and landings values for North Carolina from 2000 to 2004 are plotted in Figure IV-2. From 2000 to 2004, on average, 217,453 commercial fishing trips were made yielding an average of $91.61 million in commercial landings value.

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North Carolina - Commercial Fisheries Total Trips and Landings (2000-2004)

300,000 $120

246,914 250,000 243,933 $110

$108.33 213,513 T o

197,314 t a

200,000 $100 l

185,591 L a n d i n s g p i s

r $94.74 T V

l 150,000 $90 a a l t u o e T

$88.14 ( $87.12 M i l l i o

100,000 $80 n s $79.73 )

50,000 $70

- $60 2000 2001 2002 2003 2004 Year

Total Commercial Trips Total Commercial Landings Value

Figure IV-2. Total Commercial Fishing Trips in North Carolina (2000-2004)

More detailed Trip Ticket data were requested from the NCDMF for the time period of 2000- 2004 and aided in relating the significance of the commercial fishing industry to specific counties and coastal water bodies. First, the number of commercial trips and total landings values by county during 2000-2004 were obtained. Using this data, the average yearly commercial fishing trips and commercial landings values were computed for each county. Figure IV-3 illustrates the ranges of commercial fishing trips which occurred on average yearly in each county and Figure IV-4 illustrates the ranges of commercial fish landings values for the coastal counties. As shown, the commercial fishing industry is most prevalent in those counties adjacent to Pamlico Sound. During 2000-2004, Dare County and Carteret County ranked highest with average yearly landings values at $23.1 and $19.5 million, respectively.

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Figure IV-3. Average Yearly (2000-2004) Commercial Fishing Trips by County

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Figure IV-4. Average Yearly (2000-2004) Commercial Fishing Landings Value By County

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Similar data giving the yearly trips and landings values by water body during 2000-2004 were obtained from the NCDMF. As discussed, the NCDMF Trip Ticket Program mandates that dealers report the water body fished during each commercial trip. NCDMF defines 31 water bodies along coastal North Carolina. Using this data, the average annual fishing trips and landings values were computed and mapped for each water body. The number of commercial fishing trips are summarized in Figure IV-5 thru Figure IV-7, showing the North, Central, and South regions of the North Carolina coast, respectively. Similar plots of the commercial fish landings values are shown in Figure IV-8 thru Figure IV-10 for the three regions. On all plots the water bodies as defined by NCDMF are labeled. Commercial fishing done in the ocean is represented by four water bodies, two each north and south of Cape Hatteras, with one region comprising 0 to 3 miles offshore and the second region for fishing in waters greater than 3 miles offshore.

As shown in Figure IV-5 thru Figure IV-7, the most frequently fished regions along the North Carolina coast include Albemarle Sound and Pamlico Sound which are fished on average approximately 35,000 and 34,000 times per year, respectively. These regions account for approximately 32% of the total commercial fishing trips occurring on average annually in North Carolina. In terms of landings values (Figure IV-8 thru Figure IV-10), Pamlico Sound ranks highest in total average annual values at approximately $18.8 million. Following this region, are Albemarle Sound ($13.8 million), and the offshore region (> 3 miles) north of Cape Hatteras ($12.8 million). The ocean fished regions south of Cape Hatteras also represent a significant portion of the total landings values with $9.1 million within 0-3 miles and $8.1 million in the region more than 3 miles offshore.

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Figure IV-5. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body North Region

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Figure IV-6. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body Central Region

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Figure IV-7. Average Yearly (2000-2004) Commercial Fishing Trips By Water Body South Region

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Figure IV-8. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body North Region

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Figure IV-9. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body Central Region

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Figure IV-10. Average Yearly (2000-2004) Commercial Fishing Landings Value By Water Body South Region

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Based on the above presented data related to commercial fishing trips and landings, it is evident that the economic revenue generated from the commercial fishing industry is widespread along the coast, with a majority of commercial fishing traffic occurring within the inshore regions of Albemarle Sound and Pamlico Sound. Based on the nature of our coast, it is reasonable to assume that most commercial fishing vessels must utilize some shallow draft channel to access a given fishing region. Along with the main channels through the Pamlico and Albemarle Sounds, commercial fishermen access other shallow draft channels providing access to local harbors and seafood dealers. For example, it is likely that commercial fishing traffic is heavy along Manteo (Shallowbag) Bay Channel in the northern part of Pamlico Sound and Roanoke Sound, which provides access to the Wanchese Seafood Industrial Park. The Wanchese Seafood Industrial Park, is located along the south end of Roanoke Island, Dare County, and supports businesses in the seafood and marine-related industries, including seafood dealers and processors. Similarly, in Hyde County, where commercial fishing was noted as a predominant percentage of the workforce, fishermen likely access the Pamlico River and the Swan Quarter Bay Channel, delivering fish to local dealers in Swan Quarter.

Ocean bound commercial fishing vessels are likely larger boats with greater drafts, while inshore fishing may only require smaller vessels. Without being able to distinguish specific travel routes or boat sizes, it is a reasonable assumption that most commercial fishermen are reliant on the shallow draft channels. Therefore, the total average annual landings value, estimated as $91.61 million, is a good quantitative economic impact value from the commercial fishing sector. Furthermore, the commercial fishing industry provides more than 6,000 jobs annually between fishermen and individuals employed in related seafood processing and wholesale companies.

Recreational Boating Recreational boating comprises a wide range of activities such as recreational fishing, sport fishing, sailing, and charter fishing, which generate a tremendous economic impact to the State. Nationally, each year the recreational marine industry contributes more than $30 billion to the nation s economy, accounting for nearly 400,000 American jobs (NMMA, 2005). Recreational boat traffic and the associated economic impacts in North Carolina are poorly defined in comparison to commercial fishing usage. The most extensive data available relates specifically to recreational fishing and sportfishing tournaments. Additionally, recreational usage estimates can be related to expected expenditures to evaluate an order of magnitude economic impact.

The National Marina Manufacturer s Association (NMMA) estimates that North Carolina is ranked eleventh nationally with approximately 360,000 registered boats (NMMA, August 2005). Assuming an average of 3.5 people per boat per boating excursion, this yields approximately 1.26 million boaters at any given point in time (NMMA, August 2005). Recreational boat usage in North Carolina likely consists of two major components: 1) boaters from North Carolina and other states who transit the waterways on longer trips and 2) boaters who live in North Carolina and practice pleasure boating for short durations (e.g. fishing,

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sailing, etc.). Additionally, a significant economic impact arises from sportfishing tournaments taking place in the State.

The economic impact of transiting boaters is likely linked to tourism expenditures and retail expenditures for gas, food, and supplies. The Atlantic Intracoastal Waterway Association (AIWA), reports that approximately 13,000 recreational vessels transit the AIWW each year (Lydecker, 2001). In North Carolina, a good indication of the magnitude of recreational waterway usage is given by the yearly counts of boat transients tracked at the locks along the Dismal Swamp Canal and the Albemarle and Chesapeake Canal. These canals are located in the northeastern portion of the State and form alternate routes along the AIWW between Albemarle Sound and the Chesapeake Bay, Virginia. The tracked waterway transients are typically yachts, trawlers, and sailboats, and do not account for commercial usage or smaller boats (trailered boats, jet skis, etc) that use the waterways. Figure IV-11 shows the combined waterway usage recorded for these canals from 2001 to 2005. It should be noted that the 2005 total is based on extrapolated counts reported as of July 2005. Also, these lock transients represent the total reported for both canals. Therefore, it is possible given the connection between these canals that some transients may be double counted if boats circle the canals. The average number of lock transients recorded between 2001 to 2005 is 14,600 which is close in magnitude to the number of AIWW transients reported by AIWA. The economic impact of this usage will be addressed in the discussion of tourism, based on average expenditures for transiting boaters.

Waterway Usage Great Dismal Swamp Canal And Albemarle & Chesapeake Canal

18,000

16,000 15,404 15,646 14,863 14,133 14,000 13340 s t

n 12,000 e i s n a r

T 10,000 k c o L

f 8,000 o r e b m

u 6,000 N

4,000

2,000

0 2001 2002 2003 2004 2005 Year

Number of Lock Transients

Figure IV-11. Waterway Usage At the Great Dismal Swamp and Albemarle & Chesapeake Canal (2001-2005)

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The economic impact from local pleasure boating, typically involving shorter duration trips with activities such as fishing or sailing is also difficult to quantify, given the wide range of activities. The NCDMF reports estimates of the numbers of recreational fishing trips yearly between 2000-2004 (NCDNR, 2005). These estimates are obtained for the purposes of fisheries management and are based on surveys conducted through telephone interviews and on-site angler interviews. The Annual Fisheries Bulletin, 2004 Commercial and Recreational Statistics reports the estimates of marine charter boat fishing trips and private boat fishing trips between 2000-2004. These data are presented in Table IV-4.

Table IV-4. North Carolina Marine Recreational Fishing Trip Estimates Year Charter Boat Trips Private Boat Trips 2000 193,056 2,224,041 2001 201,731 2,168,925 2002 183,262 1,940,880 2003 173,573 2,180,687 2004 179,264 2,563,591 Average 186,177 2,215,625

As shown, the average numbers of chartered and private boat trips for the purposes of fishing are approximately 185,000 and 2.2 million respectively. Based on review of charter boat fishing businesses located along the North Carolina coast, average costs of such trips range between $1000 to $1500 per boat for offshore fishing and $500 to $1000 per boat for inshore fishing. Typically, boats carry approximately 6 people. If a conservative estimate of $500 per trip is assumed, the total revenue generated from the marine charter boat trips is in the range of $90 million on average annually. In Florida, detailed studies conducted to evaluate the economic impacts of the State s coastal waterways, derived an estimate of $74 spent on supplies (e.g. gas, food, ice, beverages, etc) before a boat is even launched for the purposes of private boating (David Roach, Florida Inland Navigation District, correspondence). Applying this figure to the average annual number of marine private fishing trips yields a total revenue of approximately $160 million. Again, this figure is likely a conservative estimate of the dollars spent per private boating trip.

Of the respondents to the mailed letters requesting local economic impact information, several mentioned the economic revenue generated from local sportfishing tournaments. A local North Carolina coastal guide lists more than 60 saltwater fishing tournaments planned for 2005 (Coastal Guide, 2005). On a local level, the Edenton/Chowan County Tourism Development Authority noted several annual tournaments gathering several hundred boats annually. The most extensive economic data related to sportfishing tournaments two concurrent studies of the Pirate s Cove Big Game Tournaments near Oregon Inlet, Dare County (Ditton, 1999). These studies were conducted in 1999 by Texas A&M University and concluded approximately $3 million direct revenue per year to Dare County from the tournaments. Two tournaments, namely the Pirate s Cove Billfish Tournament (PCBT) and the Alice Kelly Ladies Only Memorial Billfish Tournament (AKMBT) were evaluated. For

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each tournament, the studies reported various economic indicators derived from mailed surveys and telephone interviews. Pertinent data are summarized in Table IV-5.

Table IV-5. Summary of Findings of the Economic Impact of the Pirate s Cover Annual Big Fish Tournaments (Ditton et. al., 1999) Tournament Factor PCBT AKMBT Number Anglers Registered 655 540 Average Tournament Related Expenditures $950,000 $150,000 NC Residents (not from Dare County) $1,600,000 $190,000 Spending in Dare County Non-NC Residents Spending in Dare County $1,000,000 $150,000

In summary, data collected on marine based recreational boating indicates that revenue generated from charter boat fishing and private fishing trips alone are an astounding economic impact. Totaling the estimates of expenditures for these activities yields $250 million in revenue. Additionally, it is reasonable to assume that sport fishing tournaments at a minimum generate revenue on the order of $30 - $50 million yearly given the number of events likely to occur each year and findings of the Texas A&M study of the Pirate s Cove tournaments in Dare County. As stated for commercial fishing, it is reasonable to assume that most recreational vessels must utilize some shallow draft channel to access a given region. For example, Pirate s Cove, which hosts a number of tournaments, is located along the east side of Roanoke Island, in Dare County. Some sport fishermen access the shallow draft channels in the vicinity of Roanoke Island, such as Manteo Shallowbag Bay Channel and Oregon Inlet to enter the defined fishing regions coming to/from local marinas. Additionally, several large sport fishing tournaments are based in Morehead City, Carteret County, and likely increase usage of shallow draft channels in this region, including portions of the AIWW across Bogue Sound. While the direct use of shallow draft channels for recreational boating is not tracked specifically, a conservative direct economic impact estimate on the order of $200 - $300 million annually would not be unreasonable, given that a majority of the value placed on recreational boating in the above discussion only involved fishing.

Marine Trades Industry As stated, both commercial and recreational boating are closely tied to marine trades and other related businesses. This sector includes a wide range of businesses from boat builders to steel industries that supply boat-making materials to marinas and recreational harbors that provide access to and refuge from waters for boaters. The economic impact analysis for this sector was based on local responses to the mailed letter initiative, data published by the NMMA and North Carolina s Small Business and Technology Development Center (SBTDC) Marine Trades Services (MTS), and a detailed economic study of the Wanchese Seafood Industrial Park. It is even more challenging to associate an economic impact derived from marine trades businesses operating in North Carolina directly to shallow draft waterways.

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This discussion will address the available data which generally includes numbers of businesses, jobs, and retail sales statistics to give an indication of the magnitude of economic impact derived from these supporting industries.

First, local governments and related groups noted the importance of marine trades businesses to their economies. For example, the Edenton-Chowan Chamber of Commerce and Tourism Development Authority both note the prevalence of boat building businesses and support companies (e.g. welding, marine supply) that employ more than 500 in the region. Furthermore, it was noted that the Town of Edenton spent over $1 million developing boat slips for transient boaters, indicating that boating induces an economic impact to local businesses. Hyde County noted approximately 22 marinas or recreational fishing facilities within the county and that approximately 5,900 boats use the marinas or recreational fishing facilities annually.

North Carolina s SBTDC MTS is a statewide, special market development service supporting business and employment growth for the state s marinas, boatyards, boat dealers, boat builders, marine construction firms, and product/service providers. This organization maintains a database of businesses within marine trades sector which is made accessible to the public via the internet (www.ncwaterways.com). According to the MTS, marine trades businesses in North Carolina total approximately 3,000, provide over 30,000 jobs annually and are responsible for $500 million in sales of boats, motors and boating equipment annually.

Marinas and boatyards represent an essential infrastructure component of the marine related sector as these businesses provide access to and refuge from the waters. According to the MTS database, there are currently 273 marinas and boatyards located along the coastal counties of interest on this study. Figure IV-12 maps the distribution of marinas and boatyards by county in relation to the waterways, inlets and channels along the North Carolina coast. As shown, Carteret County ranks highest with approximately 71 marinas and boatyards. This region also contains Beaufort Inlet, which is one of the few federally maintained deep-draft channels.

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Figure IV-12. Distribution of Marinas and Boatyards by County

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North Carolina is ranked eighth nationally in retail sales of powerboats, outboard motors, trailers, and after-market purchases (Gabriel, 2005). Recent estimates indicate over 120 boat builders operate in the State, with 84% located along the coast, 12% in the western portion of the State, and 4% in the Piedmont. The National Marine Manufacturers Association (NMMA) reports the distribution of boat, motor, trailer, and accessory purchases for each State. This data was available for the time period of 1997-2001. The total of these purchases were computed for each year and are shown in Figure IV-13. The average over the five year time period is approximately $400 million. As shown, a significant increase in sales occurred from 1998-1999.

Annual Boating Sales Estimates

$500,000,000

$450,000,000

$400,000,000

$350,000,000 s e s a

h $300,000,000 c r u P d e

t $250,000,000 a m i t s

E $200,000,000 l a t o T $150,000,000

$100,000,000

$50,000,000

$0 1997 1998 1999 2000 2001 Year

Figure IV-13. Total Boat, Motor, Trailer, and Accessory Purchases (1997-2001)

A detailed economic study of the Wanchese Seafood Industrial Park located in Dare County was completed by Miley, Gallo & Associates, LLC in July 2005. The Park is located on the South end of Roanoke Island, North Carolina and supports businesses in the seafood and marine-related industries. At the time of the study in early 2005, the Park had approximately 390 employees. The purpose of the study was to develop a better understanding of the business environment in the Park and to determine the economic impact of the Park on three regions. The regions analyzed included Dare County, the area comprised within the Northeast Regional Partnership (16 counties in northeastern North Carolina), and the State. The study evaluated the economic activity impact, or the impact upon the respective region from the current levels of employment and production occurring in the Park.

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Findings of the study defined six primary categories of businesses in the Park, including:

Boatbuilding and Related Companies Marinas and Related Charter Fishing Fish Packing Broadcasting Regulation and Administration

The study employed a program called IMPLAN (Impact Analysis for Planning) which is used to generate a set of balanced economic/social accounts and multipliers. The program predicts multipliers which measure the response of the economy to a change in demand or production. For example, a multiplier of 1.5 indicates that there is an additional $0.50 increase in economic activity for every dollar spent, based on interrelationships to other industries. The analysis evaluated the direct, indirect, and induced economic effects. The economic impact of the Park was determined to be $98 million for Dare County, $101 million for the Northeast region, and $113 million to the State. This economic analysis encompasses a wide range of businesses that fall into various categories being discussed in this chapter.

In summary, the statistics from the MTS, indicating that the marine trades businesses in North Carolina total approximately 3,000, provide over 30,000 jobs annually and are responsible for $500 million in sales of boats, motors and boating equipment annually indicates the overwhelming economic impact of this sector alone. It should be noted that these estimates are statewide and therefore account for businesses and job located in the central and western portions of the State that may support recreational boating along inland waters. A more detailed study that looked at direct, indirect, and induced economic impacts of the Wanchese Seafood Park in Dare County indicated close to $100 million economic impact to the County alone. Even without being able to specifically evaluate the impact derived from shallow draft channel usage, it is reasonable to assume that the annual economic impact exceeds $100 million.

Tourism Industry The tourism industry is one of the leading economic sectors in North Carolina. More than 49 million people visit North Carolina annually and spend more than $13 billion in the State. A good deal of research has been conducted on the travel and tourism industry in North Carolina, although minimal research focuses on coastal North Carolina or tourism related expenditures associated with the use of coastal waterways, channels, and inlets. Available data related to overall tourism expenditures in coastal counties or regions demonstrate that even assuming a minimal percentage of the total revenue is attributed to shallow draft waterway usage yields a significant economic impact. This analysis relied on data collected from local governments and groups, supported by tourism expenditures for counties presented by DeBellis (2001). Additionally, work completed by the Carolina Beach Inlet Ad-Hoc Committee provided the framework for relating annual hotel occupancy revenues and per

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diem revenues (retail, food, beverage, and transportation) to accessibility of shallow draft channels.

A good initial indication of the magnitude of direct tourism impacts was derived from the yearly counts of boat transients tracked at the locks along the Dismal Swamp Canal and the Albemarle and Chesapeake Canal, as presented under recreational boating. Revenue estimates provided by the Great Dismal Swamp Visitor Center assume that each boat transiting a given canal spends an average of eight days in North Carolina and spends on average $300 per day per stop (national figure). Figure IV-14 shows the number of transients per year and includes the estimated dollars spent in North Carolina based on the yearly transients. Assuming an average of approximately 14,600 boats transiting, these estimates indicate an average of $35 million in revenue generated yearly in North Carolina.

Waterway Usage Great Dismal Swamp Canal And Albemarle & Chesapeake Canal

18,000 $40,000,000

$37,550,400 $36,969,600 17,000 $37,000,000 $35,671,200 s t n

e $33,919,200 i s

n 16,000 $34,000,000 a

r 15,646 T

k 15,404 $32,059,200 c o L f o

r 14,863

e 15,000 $31,000,000 b m u N 14,133

14,000 $28,000,000

13340

13,000 $25,000,000 2001 2002 2003 2004 2005 Year

Number of Lock Transients Associated Revenue From Waterway Usage

Figure IV-14. Waterway Usage and Estimated Tourism Expenditures for Great Dismal Swamp Canal and Albemarle & Chesapeake Canal

In a letter to President Bush, the Carolina Beach Ad-Hoc Committee summarized the findings of a study, which evaluated the loss of revenue from tourism that would occur if Carolina Beach Inlet were closed. The analysis involved data collection from the local communities of Carolina Beach and Kure Beach, including estimated expenditures made by visitors using the Carolina Beach Inlet. The procedure used to compute the overall economic value of the inlet to the tourism industry provides a framework and basic assumptions that may be applied to other counties. Data utilized in this economic analysis included the number of rooms for rent

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in the area of interest (Carolina Beach/Kure Beach), the average occupancy rate, average cost per room, and an assumption that 5% of the room traffic is driven by accessibility of the Carolina Beach Inlet. In addition to rental revenue the per diem revenue was estimated based on the number of people per room, average nights per stay, and the average spending on retail, food and beverages, and/or transportation. In summary, the economic analyses indicate that visitors using the inlet spend an average of $15 million on the island annually. The direct economic impact associated with this value would be $75 million over five years. An additional indirect economic value of $115 million (based on 1.5 multiplier) would result from this usage over the five year period, yielding a total economic impact of $190 million over 5 years.

Based on this study, it is anticipated that a similar procedure could be applied to all counties and the base assumption that 5% of expenditures are driven by inlet accessibility could be assumed for all shallow draft waterways. In the request for economic impact data submitted in the letters to local coastal counties and chambers of commerce, M&N specifically requested data such as hotel room occupancy rates, percentage of rooms resulting from shallow draft waterway use, average room costs, and average nights per stay. Unfortunately, most counties or chambers of commerce did not have this detailed data. Several responses included related data such as total occupancy receipts, occupancy taxes, and/or total retails sales. For example the Outer Banks Chamber of Commerce recorded total occupancy receipts of approximately $260 million in Dare County during 2004. Similarly, New Hanover County reported approximately $110 million in occupancy receipts from hotels, motels, inns, and other properties during fiscal year 2004-2005.

Given that detailed occupancy data on was not available for all counties, a generalized economic assessment conducted for the State of North Carolina was used to develop an order of magnitude economic impact for the tourism industry. DeBellis (2001), characterized North Carolina s travel and tourism industry and included a summary of tourism expenditures by county from 1995 to 1999. These data provided baseline quantities for the economic impact of North Carolina s coastal regions. Using these data, the average annual tourism expenditures were computed for each county. The range of tourism expenditures for each county are shown in Figure IV-15. As shown, the counties that ranked highest in annual average total tourism expenditures were Dare (~$400 million), New Hanover (~$250 million), Carteret (~$200 million), and Brunswick (~$200 million). The total average annual tourism expenditures for all coastal counties was determined to be approximately $1.5 billion.

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Figure IV-15. Total Average Annual (1995-1999) Tourism Expenditures By County

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In summary, if it is assumed that 5% of the total average annual tourism expenditures reported by DeBellis (2001) may be directly related to usage of the shallow draft channels, the total direct economic impact for the coastal counties becomes $73.5 million. Additionally, the lock transients tracked at the Great Dismal Swamp Canal and Albemarle and Chesapeake Canal indicate an economic impact on the order of $35 million annually based directly on shallow draft waterway usage. While these two data sets may overlap, it is still reasonable to assume that the economic impact of the shallow draft waterways from the tourism industry in North Carolina exceeds $100 million.

Commercial Shipping Another key sector that has direct economic impacts, which rely on the shallow draft channels in North Carolina, is commercial shipping of goods. It is also important to address the value of these waterways to larger regions and the Nation, as well as some indirect economic implications that would result if the channels were not maintained.

A primary economic impact of the waterways to our Nation is the value of waterborne goods movement over other modes of transport. In North Carolina, commercial traffic transiting the State occurs along the AIWW. Commercial waterways operators pay a fuel tax which is deposited in the Inland Waterways Trust Fund. This fund supports half of the cost of new construction and major rehabilitation of the inland waterway infrastructure.

Navigable inland waterways provide a cost-effective means for moving major bulk commodities such as grain, coal, and petroleum. The economic value of inland waterborne trade is valued in the range of $100 million to $1 billion in North Carolina (USACE, undated) based on the value of cargo shipped from the State on average annually. The ability to move more cargo per shipment by water is not only more cost-effective than other modes, but is more fuel efficient and environmentally advantageous. Figure IV-16 illustrates the capacities in tons for various transportation modes and illustrates various equivalent units for different modes. For example, the cargo capacity of one barge is equivalent to 15 large railroad cars.

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Figure IV-16. Alternate Transportation Mode Comparison Source: USACE, Inland Waterway Navigation, Value to the Nation

The implications associated with having to move goods via an alternate mode include increased traffic along already congested railways and highways, increase in potential accidents, and/or negative environmental impacts from increased emissions. All of these implications pose potential costs to the State.

There are also several indirect economic implications associated with reduced shallow draft channel maintenance. First, many businesses that operate on the waterways face higher fuel costs from having to take alternate, longer routes. These economic strains may result in businesses closing or moving to other locations. As a result of reduced maintenance along North Carolina waterways, local industries that ship goods along the waterways have been forced to reduce loads to maintain a shallower shipping draft. This limitation is placing an economic strain on local industries in North Carolina. For example, Nucor Steel and PCS Phosphate have realized additional costs of $1 million per year due to light loading of their barges. Hanover Tow and C&P Tug and Barge, which ship fuel, fertilizer, sand, etc. have also reported lightening loads over the last ten years. Shoaling conditions in the AIWW have resulted in barge groundings, hull damage, and delays while awaiting high tides for passage.

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Summary of Economic Impacts Study In summary, the economic impacts study indicates that the key economic sectors reliant on the shallow draft waterways include commercial fishing, recreational boating, marine trades industry, tourism industry, and commercial shipping. Based on the limited data available, it is estimated the direct economic impact of the shallow draft channels is likely on the order of hundreds of millions of dollars annually. This order of magnitude estimate can be derived based on the estimated economic impacts of the sectors analyzed. There are approximately 30,000 jobs and 3,000 businesses within the marine trades industry statewide in North Carolina. Finally, the number of individuals that use the waterways annually for recreational purposes is likely in the millions. Additional economic considerations include the significance of the inland waterways for efficient goods transport and the businesses that rely on such transport. Given the annual expenditures by the USACE for maintaining these shallow draft channels, there is little doubt that the money spent is a very wise investment. Finally, the North Carolina AIWW Economic Study Team from UNCW and Appalachian State University is conducting a more detailed study of the economic impacts associated with the State s shallow draft channels, and efforts to collect specific data are currently underway.

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V. SAFETY CONSIDERATIONS The potential safety-related impacts associated with decreased maintenance of North Carolina shallow draft navigation channels are extensive and varying. Safety and risks to human life are important considerations when determining the need for funding maintenance of North Carolina s waterways and inlets. This portion of the study evaluated key safety-related issues including the use of specific channels and harbors for search and rescue by the U.S. Coast Guard (USCG) and other agencies, for harbors of refuge, and for gaining access to protected water from the ocean.

An initial literature review on the subject was conducted to gain an understanding of the potential implications of decreased maintenance of North Carolina shallow draft navigation channels to both recreational and commercial boater safety, including those conducting search and rescue efforts. In addition, key organizations for more detailed data collection and research related to boating safety were identified. Following the initial literature review, research and data collection efforts were focused on collecting supportive data and insight from the following organizations:

U.S. Coast Guard North Carolina Sector Search and Rescue BoatU.S. Boat Owners Association of the U.S Government Affairs Office Sea Tow Services International, Inc. Private Marine Assistance Company Atlantic Intracoastal Waterway Association (AIWA)

It should be noted that minimal data and information were available for assessing the potential safety related impacts associated with shallow draft channel maintenance. While multiple, and specific, requests for data to the above mentioned groups were made, the available information was primarily anecdotal accounts of specific incidents and general observations of trends. Therefore, the supportive information presented is more general in nature, primarily based on publications collected from the above groups and through a thorough literature review of safety issues that may be associated with shoaling of navigation channels.

Search and rescue groups in North Carolina are facing increasing rescue demands, increasing response times due to shoaling waterways, and are at a higher risk completing their jobs. The groups involved in search and rescue in North Carolina include the U.S. Coast Guard (USCG), local safety departments such as fire and rescue groups, and private towing companies such as SEA TOW or TOWBoatU.S.

North Carolina, as part of the Fifth District of the USCG, has nine small boat stations along the coast which perform search and rescue. The approximate locations of these groups and the USCG stations are shown in Figure V-1. Coast Guard Group Fort Macon coordinates search and rescue operations performed along the southeastern coast from Drum Inlet to South Carolina. Group Cape Hatteras covers the area north of Drum Inlet to the Virginia border. In general, based on contacts at the USCG, there is no supportive information or data collected by the North Carolina Groups or Stations that would support any trends related to

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safety along North Carolina s shallow draft waterways. Based on the Station location map, it is clear that search and rescue efforts originating from these locations likely access shallow- draft channels. The USCG Fort Macon Group conducts more than 1,200 search and rescue cases annually from five small boat stations and four cutters.

Although lacking specific data, based on recent press releases and articles, boat groundings are an increasing risk in shoaling channels, as many boaters are unaware of the channel depths and navigational charts have not been accurately updated. Recent publications, a majority of which are targeted at promoting long-term maintenance of the Atlantic Intracoastal Waterway (AIWW), suggest that rescue calls are on the rise. In 2002, BoatU.S. (Boat Owners Association of the U.S.) reported that the year-to-date breakdowns and requests for on the water towing assistance had increased over 9% from the previous year, and cited that the primary reasons for calls completed in the South were submerged object strikes and groundings (BoatU.S., May 2002). Additional literature suggests that groundings are a particular problem for tow boats and barges along the AIWW, placing boaters at risk. One article cites a tug boat operator who estimates his company alone experiences at least one grounding every 24 hours (BoatU.S., 2005) along the AIWW. In North Carolina, experienced search and rescue Captains in New Hanover County at the Federal Point Fire and Rescue typically respond to more than 40 water-rescue calls, including boaters and swimmers, between Memorial Day and Labor Day and expect that number to double if Carolina Beach Inlet is shoaling (Killough, 2005).

Additionally, shoaling of waterways and inlets has forced boaters to take alternative and often more dangerous routes to reach their destinations. This response has resulted in at least one fatality along the North Carolina Coast, where two fishermen opted for an open ocean route to save time, given shoaling conditions in Lockwoods Folly Inlet and along the AIWW, and were capsized in high seas. The USCG rescued one of the fishermen during the incident at a cost of $64,647. (Lydecker, May 2004)

In general, all search and rescue groups face problems resulting from decreased maintenance of shallow draft channels such as increased response times as a result of taking alternate routes and higher risks. In Carolina Beach, Captain Harold Woods of the Federal Point Fire and Rescue stated that shoaling of the inlet would nearly triple the response time for oceanside or inlet rescues to greater than 40 minutes (Killough, 2005). In some cases, longer response times, may pose a severe threat to stranded boaters (e.g. injured boaters, or boaters stranded in cold water).

In summary, primary safety related concerns arising from decreased maintenance of shallow draft maintenance include increases in boat groundings, risks associated with boaters taking alternative and often more dangerous routes to avoid shoaling channels, and longer response times for search and rescue due to shoaling channels. Even lacking significant supportive data, anecdotal accounts of accidents show the importance of maintaining safe and navigable waterways for all boaters.

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Figure V-1. Locations of USCG Fifth District Small Boat Stations in North Carolina

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VI. FINANCING Multiple financing options were investigated to evaluate various strategies that could be used by North Carolina to finance shallow draft navigation channel maintenance. A thorough literature review as well as gathered information from other coastal states and from public administration experts on methods that might be considered by North Carolina to finance shallow draft navigation maintenance, including various types of taxes and fees. Viable options were further evaluated to determine the feasibility of a given strategy if applied in North Carolina.

Based on information gathered, various options exist for financing shallow draft dredging of North Carolina s waterways. These include usage of one or more of the following:

property taxes general funds boat sales taxes boat registration fees fuel taxes personal property taxes on boats waterway user fees

This chapter will first provide an overview of existing taxes and fees collected at Federal and State levels in North Carolina and other States. Then, unique financing strategies implemented through programs in Florida and Maryland specifically for waterway maintenance and management will be presented. Finally, a review of the above options and their viability for financing shallow draft waterway maintenance and management in North Carolina will be reviewed.

Current North Carolina Programs North Carolina has an existing program for financing small navigation projects. The General Assembly typically appropriates amounts in the range of $20 Million annually to the Division of Water Resources (DWR) for water resources projects. Some of these funds are used for financial assistance to local governments for navigation projects. Support for local navigation and beach restoration projects are available through the Water Resources Development Project Grant Program administered by the DWR. The cost share percentages provided by the State are 80% for general navigation projects with commercial traffic and 25% for recreational navigation. Appendix E contains a sample application package. Under this program, the sponsoring local government plans and designs the project and supervises construction. A list of dredging projects funded by the State of North Carolina for FY 1996 through 2006 is provided in Appendix E. The Department of Environment and Natural Resources Division of Water Resources also prepares a six year Water Resources Development Plan, which is updated on an annual basis. The plan provides a forecast of State

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funding requirements, lists and prioritizes State water resource development projects including dredging.

Existing Federal and State Imposed Taxes and Fees Revenues from various taxes and fees are currently being collected on federal and state levels to support various boating and waterway related programs. It is important to understand the current federal and state programs to identify potential funding for shallow draft channel maintenance, and where revenue sources could be shifted.

The federal government collects 18.4 cents per gallon on gasoline used for motorboats. Of this amount, 13 cents is placed in the Wallop/Breaux Trust Fund which supports boating and fishing (mostly dealing with safety and sport fish restoration). Additionally, the Federal government collects fuel tax revenues from commercial waterways operators which are deposited in the Inland Waterways Trust Fund. Users of the AIWW alone pay an average of $1 million annually to this fund. However, this fund only supports half of the cost of new construction and major rehabilitation of the inland waterway infrastructure (mainly locks), and does not support existing waterway maintenance.

Since there is no record of whether fuel is used for marine or other purposes, each state has a formula for calculating the amount of fuel tax to be captured for boating programs. This formula is based on studies which show that marine fuel accounts for a minimum of 1% of all gasoline sales. Many states utilize marine fuel taxes for building bridges and highways, not for the development of boating programs. This has led to states enacting their own laws to capture state taxes for boating programs in an effort to copy the success of the Wallop/Breaux Trust Fund.

Most states, coastal and inland collect various taxes and fees for property (boats) and fuel. However, not all of this revenue is used to fund waterway improvements or boating related programs. In support of boaters and waterways, the BoatU.S. (Boat Owners Association of the U.S.) Government Affairs group conducted a study of all U.S. states to address the following questions:

1. Is marine gas tax revenue received and utilized for state boating programs? 2. If gas tax is received, what programs are funded? 3. Is the gas tax revenue protected by law? 4. Is there a general revenue fund that supports boating programs? 5. Are the state s boat registration fees used to support boating programs? 6. Is there a sales tax on boats, and, if so, does this money support boating programs? 7. Is there a personal property tax on boats, and, if so, does this money support boating programs?

A table summarizing the information gathered for all states is included in Appendix F. For North Carolina, it was determined that the state currently utilizes 1/6 of 1% of the total gas tax

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revenue for general boating programs. The amount collected was cited as approximately $1.4 million (representing 1/6 of 1% of NC s total gas tax revenue). General boating programs typically imply that the funds support law enforcement, safety education and promotion, and boating facilities such as docks and ramps. The State s gas tax revenue is protected by law. Currently the State does not have a general fund to support boating programs, but utilizes 100% of the boat registration fee for boating related programs. There is currently a 3%, or maximum of $1500 sales tax on boats in North Carolina; however, this money does not support boating programs. In addition, the counties collect personal property taxes for boats which are also not used to support boating programs.

Thirty two states return some portion of state gas tax revenue to boating programs. For the most part, the money is used for general purposes such as law enforcement, safety education and promotion, and boating facilities such as docks and ramps. Figure VI-1 shows the range of percentages that are returned to boating from State marine fuel taxes. Forty seven states use boat registration fees as a source of revenue towards boating programs. Approximately two thirds of those states use 100% of the registration fees toward boating programs. Of states that impose a sales tax on boats, only four, Maryland, New Mexico, Texas and Virginia put revenue generated from this sales tax toward boating programs. In fact, Maryland s waterway improvement program is supported almost entirely by boat sales tax revenues and will be discussed in more detail later in this chapter. The state of Montana is the only state which uses personal property tax (as paid on motor vehicles and boats) revenue for boating programs.

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Figure VI-1. Percentages of State Marine Fuel Taxes Returned To Boating Programs (Adapted from Dickinson, January 2004)

Many states, including North Carolina, offer refunds on fuel taxes paid in the State. In North Carolina, recreational boaters can apply for a refund of the state sales tax on gasoline and diesel fuel that is purchased at a highway pump for use in boating. The current refund amount is approximately $0.18 per gallon of the current tax of $0.242 and subtracting a user fee of $0.06.

Financing Programs For Waterway Management In Other States In review of existing literature and through contact with key individuals knowledgeable of various financing strategies employed in other states for waterway maintenance, Florida and Maryland were identified as two key states that have unique and successful state-level waterway management strategies. The following section will detail the programs practiced in these states for waterway management.

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Florida Inland Navigation District The Florida Inland Navigation District (FIND) is an independent taxing authority established for 12 counties along the waterways in Florida with the exception of Monroe County (Florida Keys). FIND was established in 1927, and is tasked with the responsibilities of funding and maintenance of Florida s waterways as well as providing financial and technical support to local governments for maintenance of waterway related projects, installation and maintenance of manatee regulatory signage, and public education. One mission of FIND is to serve as the local sponsor of the AIWW project in Florida, which is a State/Federal navigation project. Through this project, FIND is responsible for providing all land, including rights of way and lands for dredged materials disposal. Mr. David Roach, Executive Director of FIND, provided a wealth of information related to FIND s various programs, taxation process, and the unique cooperation with the USACE and local governments.

The primary source of funds for FIND is property tax revenues from counties along Florida s waterways. The property tax is levied on all real properties within the 12 counties under the jurisdiction of FIND. The rationale behind the taxation is that all property in the county benefits from the economic activity generated by the waterways or its use. The tax is a millage rate of 0.0385 which is equivalent to $3.80 per $100,000 property value. Annual tax revenues reported for 2004 were approximately $17 million. The cost of maintaining Florida s waterways is approximately $14 to $16 million per year. USACE funding is typically less than $5 million per year. FIND spends approximately $8 million on average annually for dredging. Approximately 500,000 cubic yards of material are dredged annually. The total spent, including USACE funding, typically ranges from $10 to $12 million annually. Aside from dredging and dredged material management costs, revenue from FIND supports various initiatives including waterway assistance grants for local governments, manatee signs, and public information.

For dredging and maintenance of the AIWW, FIND has established a unique State/Federal collaboration with the USACE which has been successful largely due to extensive project planning. FIND and the USACE maintain a future five year project list including expected costs and meet quarterly to discuss all planned projects. All dredging projects are discussed to determine whether the project should be completed independently by FIND or jointly with the USACE. Factors that weigh on these decisions include permitting, size of project, efficiency, cost, and manpower. Since 1987, FIND has had in place a Memorandum of Agreement with the USACE, which defines the responsibilities of each group and details how cooperative funding from FIND is implemented. For those projects done in cooperation with the USACE, FIND typically waits for bids to be received before transferring money to the USACE. This strategy helps to assure that funds go directly to support a given dredging project. The USACE requires that money be transferred before the final contract is agreed upon.

Due to increasing difficulty associated with identification and permitting of suitable dredged material management areas, in 1986, FIND initiated a program for long-range planning of dredged material management. The goal of this program is to provide a permanent

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infrastructure of maintenance facilities for all dredged material from the AIWW and Okeechobee Waterway.

As mentioned, FIND also maintains good cooperation with local governments and provides them with technical and financial assistance to improve and manage waterways. The Cooperative Assistance Program allows FIND to ensure that all constituents benefit from their payment of waterway property taxes. Technical assistance is provided for the improvement of boat docks, boat ramps, and distribution of public information. FIND also assists in the development of waterway parks, fishing piers, and boardwalks for non-boaters to ensure that everyone benefits from payment of waterway property taxes. Financial assistance is provided through grants programs which receive approximately 40% of the FIND budget annually. This is equivalent to approximately $8 million per year.

Maryland Waterway Improvement Program The Maryland Division of Natural Resources Waterway Improvement Fund was established in 1966 to fund projects improving the conditions and safety of Maryland s waterways and expanding the recreational and commercial capabilities of these waterways. Since 1966, the program has funded more than $600 million for waterway improvement projects. Mr. Robert Gaudette, Director, of the Waterway Improvement Program provided information related to the program initiatives, funding, and expenditures. Additionally, the Department of Natural Resources, Waterway Improvement Program publishes the Waterway Improvement Fund Grants Manual which is provided in Appendix E. The fund provides support in the form of grants to local governments, the Department of Natural Resources, and federal agencies for various projects and services for the boating public. These include maintaining channels and harbors, improvement of waterway structures, increased boating education and information distribution, and promotion of marine law enforcement.

The funds are generated from a 5% excise tax paid when a boat is purchased and titled in the state. This tax is in lieu of the state sales tax. The fund also receives 0.3% of the state motor fuel tax as a result of fuel purchases made for marine vehicles. This fuel tax amounts to approximately $1.7 million annually. Approximately $20-25 million is spent on waterway improvements each year. Approximately one third, or $8 million of this goes toward dredging projects annually.

Applications for project funding are made to the Waterway Improvement Program by local governments. Projects found to be eligible for state assistance receive funds in the forms of grants. For recreational dredging and navigation projects a range of grant levels are established. The level of funding is determinant on various factors including the scope of the project, statutory guidelines, technical and environmental considerations and the expected project benefit to the general boating public. The highest level of funding is 100% state funded projects which includes projects done in cooperation with the USACE, and projects which provide significant public benefits such as access to public boating facilities, waterways or connecting key destinations. Next, grants in the form of matching funds not

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exceeding 50% may be provided for projects that are in locations that do not provide essential sevices to the general boating public. For those projects that serve a very limited segment of the boating public, the program may fund the applicant in the form of a tax district loan, which is an interest free long term loan (up to $300,000). Finally, various agencies and local governments may cooperate with various funding levels to support a given project. For example, a project could be funded by 50% DNR State sponsored tax district loan, 25% County benefit tax district, and 25% local government funds.

Grants provided to local jurisdictions cover the engineering and management of the projects, but no overhead. Any cooperation with the USACE is directly with the local jurisdictions. Typically, in the past, if a project does not generate enough federal interest, local governments undertake the jobs themselves.

Financing Options For North Carolina Financing options were analyzed further to determine the feasibility of implementing various taxes or fees to support the maintenance of North Carolina s shallow draft waterways. Detailed analyses evaluated the use of revenues from taxes on real properties in the coastal counties and taxes on the sales of boats in North Carolina as outlined in the Florida and Maryland models. In addition, the feasibility of boater registration fees, marine fuel taxes, personal property taxes, and/or waterway user fees to support waterway maintenance will be presented.

Property Taxes First, the FIND model, which utilizes revenues from property taxes applied on 12 coastal counties located along Florida waterways, was applied in North Carolina. Current fiscal year 2004-2005 taxable real property values for each county were obtained from the North Carolina Department of Revenue. The total taxable real property values included residential property, commercial property, industrial property, present-use property, historic property, roadway corridor property (none in coastal counties), and other property. The table summarizing these data is included in Appendix G. The taxable values from each of these categories were summed to yield the total taxable real estate for each county. Figure VI-2 shows the total taxable real estate determined for each county in billions of dollars.

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Figure VI-2. Total Real Taxable Property Value For North Carolina Coastal Counties (FY 2004-2005) Source: North Carolina Department of Revenue

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The total taxable real property value in the 19 coastal counties considered was calculated as approximately $62.1 billion. Based on this value, the equivalent millage rates that would have to be imposed to support total shallow draft channel maintenance costs ranging from $8 million to $30 million annually, at $2 million increments, were computed. Table VI-1 shows the resulting millage rates and the equivalent rates per $100,000 property value. As shown, this analysis indicated significantly higher rates would have to be imposed in North Carolina than current rates excised through FIND. The millage rate imposed by FIND is equivalent to $3.80 per $100,000 value and generates on average $17 million annually. To achieve the same revenue in North Carolina, the tax rate would have to be approximately $27 per $100,000 real property value. Table VI-1. Equivalent Property Taxes

Annual Equivalent Dredging Millage Tax Per Costs Rate $100,000 (Millions) Value $8 0.13 $12.88 $10 0.16 $16.10 $12 0.19 $19.32 $14 0.23 $22.54 $16 0.26 $25.76 $18 0.29 $28.98 $20 0.32 $32.20 $22 0.35 $35.42 $24 0.39 $38.64 $26 0.42 $41.86 $28 0.45 $45.08 $30 0.48 $48.30

Boat Sales Taxes As described, the Maryland Waterway Improvement Program utilizes revenues generated from boat sales taxes, collected in lieu of standard sales taxes. The tax applied in Maryland is 5% of the boat sale price. In North Carolina, a 3% sales tax or maximum of $1500 is currently imposed on all boat sales. As stated previously, this revenue does not currently support boating or marine-related programs. To evaluate the feasibility of implementing a similar strategy in North Carolina to support waterway maintenance, this percentage was applied to the average annual boat sales in North Carolina. Average annual boat sales in the State were reported by the National Marine Manufacturer s Association for the period of 1997-2001. The total annual boat sales statewide ranged from $170 million in 1997 to $300 million in 2001 with a substantial increase occurring between 1998 to 1999. The average over 1997-2001 is approximately $231 million, and during 1999-2001 is $268 million. Applying 3% to these average annual sales yields approximately $6.8 to $8.1 million in revenue. This is based on the assumption that the $1500 maximum tax would not be imposed.

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Boat Registration Fees As stated, North Carolina currently utilizes 100% of the boater registration fees collected in the State to support boating related programs. Figure VI-3 shows the portion of the Vessel Registration Form published by the North Carolina Wildlife Resources Commission displaying the range of fees applied on new and transferred vessels and renewal registration fees. As shown, new vessels titled within the state currently pay a $30 registration fee for one year and renewals are $10 for one year. With approximately 360,000 boats currently registered in the State, the revenue generated from yearly renewals is approximately $3.6 million assuming a one-year renewal registration fee of $10. In comparison, South Carolina charges $40 to register and title a new vessel, and Florida prorates the registration fee based on the boat size, ranging from $7 for 12 foot boats to over $100 for larger boats exceeding 65 feet. Since North Carolina already utilizes 100% of the collected fees for boating related programs, generating additional revenue for shallow draft waterway maintenance would require increasing fees or shifting existing funding.

Figure VI-3. North Carolina Vessel Registration/Titel/Renewal Fees (N.C. Wildlife Resources Commission)

Fuel Taxes As stated, both the federal government and state government collect taxes paid on gasoline or diesel fuel purchases made in the state. In North Carolina, one-sixth of 1% of the total State fuel taxes is collected and used to support general boating programs. Based on the recent survey conducted by BoatU.S., this amounts to approximately $1.4 million revenue. As stated, many other coastal States including California, Oregon, Mississippi, South Carolina, and Maine (see Figure VI-1) collect at least 1% of the marine fuel taxes for boating related programs. California generates approximately $47 million annually by collecting 1-2% of the total gas tax revenue, and uses this money to fund boating facilities, education and safety. If North Carolina increased the amount collected to 1% of the total State fuel taxes, the expected revenue would be approximately $8.4 million. Excluding $1.4 million already earmarked for boating related programs, the available funding would be approximately $7 million. It should also be noted that North Carolina currently offers fuel tax refunds in the amount of $0.18 per

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gallon for applicants who report fuel purchases made for recreational boating purposes. Excluding this program may also increase the potential revenue generated from collection of a portion of marine fuel taxes.

Personal Property Taxes on Boats In North Carolina, personal property taxes are excised on owners of boats, trailers, and/or motors similar to personal property taxes paid on motor vehicles. These taxes vary by county and are typically based on the value of the vessel. The revenue generated from these taxes does not currently support boating related programs. As stated, there are approximately 360,000 registered boats in North Carolina. Without knowing the total value of these boats and the various tax rates excised in each county, it is difficult to assess the potential revenue that is currently generated from personal property taxes. Since these revenues currently go to each county, the rate may have to be increased to generate additional revenue to support shallow draft waterway maintenance.

Waterway User Fees Similar to personal property taxes, the state could impose user fees for waterway usage. User fees are widely implemented for various initiatives throughout the U.S. For example, many state and national parks employ a user fee program through park access fees. Additionally, many coastal jurisdictions charge beach access user fees in various forms ranging from hourly fees paid at a beach access point to seasonal permits. In May 2003, the Atlantic Intracoastal Waterways Association reported on potential user fees to be implemented by the Federal government on inland waterway users. These proposed fees would have supported operations and maintenance programs, as current fuel taxes collected from commercial waterway users can only be used towards new construction. North Carolina could implement a user fee program wherby recreational boaters accessing the waterways, channels, or inlets must have user access via a permit paid seasonally or annually. Fees could be set so that the State generates all or a portion of the revenue required to maintain the shallow draft channels based on the average number of boats registered in North Carolina and the percentage of those boaters that use the coastal waterways. Challenges in implementation would be enforcement which would require personnel unless coupled to all boaters as part of yearly registration fees.

Summary of Financing Options Various financing options were reviewed and the viability of their implementation in North Carolina for shallow draft channel maintenance and management presented. Existing State and Federally imposed taxes and/or fees, most importantly the use of existing marine fuel taxes, were addressed. State-level programs implemented in Florida and Maryland which utilize specific funding to support waterway maintenance and management were detailed. Directors of these State programs both noted that key elements to their success included cooperation with local governments and the USACE, and long-term project planning.

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Based on the total costs of dredging and associated management of shallow draft channels various strategies could be employed by the State utilizing one or more of the various taxing or fee-based programs. The property tax assessment indicated that North Carolina would have to impose a substantial tax on real property within the coastal counties to achieve a range of financing levels required. Given that these rates were significantly higher than the rates imposed through FIND, the viability of this option alone is questionable. Other options that include existing taxes or fees that are currently funneled to specific programs, such as boat sales taxes and registration fees may also be difficult to implement unless rates of taxation or fees were increased or funding purposes shifted. Based on findings of the economic impacts study, it is certainly a reasonable argument that North Carolina s shallow draft channels should be considered State highways that must be maintained. Of the presented options, several other coastal states are collecting a higher percentage of marine or total fuel taxes to support marine and boating related programs. Waterway user fees may be another viable option which are not currently imposed and could be coupled with annual registration fees. These fees are further justified if only charged to recreational boaters who use those waterways and directly benefit from their maintenance.

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VII. EQUIPMENT AND OPERATING COSTS

The maintenance of North Carolina s shallow draft navigation channels requires a variety of dredging and support equipment. This section discusses the appropriate dredges, equipment, facilities, and the probable costs associated with different dredging approaches.

Equipment Options Various types of dredges can be used to perform the shallow draft dredging required along North Carolina s waterways and channels. As discussed previously, the primary suitable dredge types are pipeline dredges, sidercasters, special purpose, and hopper dredges. Each has certain advantages and disadvantages. The shallow drafts and exposed environments of the coastal inlets provide unique challenges for dredging activities.

The pipeline dredge is the most widely used dredge in the U.S. Private industry operates more than 100 along the east coast. Pipeline dredges can provide continuous dredging and transport dredged material by pipeline to the placement location. Various types of cutterheads provide usefulness for dredging a large range of materials. The pipelines can typically move sediment slurry thousands of feet from the dredging location. With the addition of booster pumps, this can be increased to distances over 10,000 feet. Pipeline cutterhead dredges generally range in size from 6 to 30 inches, providing production rates of 25 to 10,000 cubic yards per hour (USACE, 1983). Some of the difficulties encountered with pipeline dredges are the inability to operate in wave conditions greater than 2-3 feet and the requirements for ancillary support equipment for their operation such as tugs and pipeline tending equipment.

Sidecaster dredges are shallow draft seagoing vessels designed for dredging of small unprotected coastal inlets. Sidecasters can operate in water too shallow for traditional hopper dredges and too rough for a pipeline dredge operation. As a self sustaining dredging vessel, a sidecaster can dredge 325-650 cubic yards per hour and operate in wave conditions up to 7 feet (USACE, 1983). The dredge material is deposited to the side of the channel being dredged through discharge booms. This allows the sidecaster to maintain a near constant draft and operate in shallow water.

The special purpose dredge, Currituck (owned by the USACE), is essentially a small hopper dredge specially adapted to operate in shallower water. It is a split hull self-propelled seagoing vessel, which can perform similar projects as the sidecasters, but can transport the dredged material within the hoppers in its hull. This material can then be deposited downdrift within the surf zone to aid eroding beaches. The limited hopper capacity of approximately 315 cubic yards, limits the production rate of its dredging to about 250 cubic yards per hour.

Hopper dredges are ocean going vessels that store the material dredged onboard for transit to disposal sites offshore or can be fitted with the capability to pump off the dredged material to onshore sites by pipeline. The larger size of typical hopper dredge vessels generally limits their use to deeper water inlets and rivers.

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Based on the annual volumes of material dredged, and the various conditions and desires for placement of the dredged materials, a fleet of dredges is required to maintain the shallow draft waterways in North Carolina. This fleet requires, as a minimum, a dredge capable of exposed inlet operation (sidecaster or special purpose) and a dredge capable of dredged material placement (pipeline).

Environmental Operating Climate The severity and frequency of waves can significantly affect the downtime associated with dredging activities and even the capability of certain dredges to operate. Thus, wave conditions, which vary seasonally, impact the choice of appropriate dredging equipment.

Figure VII-1 illustrates the various wave conditions offshore of some of the inlets that are dredged. The wave data is from the latest Wave Information Studies (WIS) United States coast hindcast model covering the period of 1980 to 1999. For example, it can be observed from Figure VII-1 that 50% of the time waves offshore of Oregon and Ocracoke Inlets are higher than 3 feet.

100

90 Offshore Oregon Inlet Offshore Ocracoke Inlet

80 Offshore Bogue Inlet Offshore Carolina Beach Inlet Offshore Lockwoods Folly Inlet 70 ) % (

e 60 c n a d e

e 50 c x E t n

e 40 c r e P 30

0 0 2 4 6 8 10 12 14 16 18 20 Significant Wave Height (ft)

Figure VII-1. Percent Exceedance of Significant Wave Height at North Carolina Inlets

The potential seasonal range of conditions is illustrated for offshore of Oregon Inlet in Figure VII-2. The relative calm of the summer months allows for greater options in the operation of dredging equipment than the more severe winter months when downtime will be great, and dredging by many methods will not be feasible. However, regulatory agency dredging windows due to impacts on turtles and birds require most projects to be completed during the

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more severe winter months. Appendix H contains monthly wave height exceedance curves for additional locations along the coast.

Table VII-1 provides an understanding of the range of conditions in which a cutterhead pipeline dredge might operate. The values in this table represent the percentage of dredging contractors who responded yes to being able to operate in the listed conditions. Note that the percentage drops off substantially with wave heights greater than 3 feet (0.91 m) and again when wave exceed 4 feet (1.22 m). Additionally, dredging is frequently restricted during the calmer summer months for environmental reasons or to reduce interference with boat traffic.

100%

90% JAN FEB MAR APR

80% MAY JUN JUL AUG

70% SEP OCT NOV DEC ) % (

e 60% c n a d e

e 50% c x E t n

e 40% c r e P 30%

20%

10%

0% 0 2 4 6 8 10 12 14 16 18 20 Significant Wave Height (ft)

Figure VII-2. Monthly Percent Exceedance of Significant Wave Height Offshore Oregon Inlet

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Table VII-1 Operational Characteristics of U.S. and Canadian Cutterhead Dredges in Open Water

Percentage of Conditions Contractors Surveyed

Dredge operation in waves (swell): 2-3 feet (0.6 - 0.9 m) 58 3-4 feet (0.9 - 1.2 m) 35 Over 5 feet (>1.5 m) 10

Dredge operation in wind waves: 2-3 feet (0.6 - 0.9 m) 74 3-4 feet (0.9 - 1.2 m) 40 Over 5 feet (>1.5 m) 11

Operation of floating pipeline in waves (swell): 2-3 feet (0.6 - 0.9 m) 74 3-4 feet (0.9 - 1.2 m) 34 Over 5 feet (>1.5 m) 11

Operation of floating pipeline in wind waves: 2-3 feet (0.6 - 0.9 m) 84 3-4 feet (0.9 - 1.2 m) 44 Over 5 feet (>1.5 m) 11

(Source Survey of Cutterhead Contractors from Chapter 8 of Herbich, 2000)

The wave climate in the inlets along the North Carolina coast negates the use of pipeline dredges for much of the year, especially since the environmental dredging windows preclude working during calmer periods. This necessitates the use of dredging equipment capable of operating under harsher wave conditions. Self contained and propelled vessel dredges, sidecasters and hoppers, are required.

Ancillary Equipment Dredges require ancillary equipment in support of the dredging operation. Different types of dredges require varying degrees of support equipment. Sidecasters and special purpose hopper dredges are essentially self contained vessels with the ability to travel to the dredging location, dredge, and dispose of the dredge material. Such dredges require equipment associated with the maintenance of the vessel. Since dredges operate in harsh marine environments, regular maintenance, especially welding services are required.

FINAL REPORT ON COSTS, BENEFITS, AND MANAGEMENT ISSUES RELATED TO MAI NTAI NI NG NORTH CAROLI NA S SHALLOW DRAFT NAVIGATION CHANNELS

Pipeline dredges require considerably more ancillary equipment for operation. Barges and tugs are required to transport the dredge to the work site. The Ferry Division owns a 55 tug boat for transporting the dredge to and from sites and two 40 tenders for setting up their pipeline dredge, which includes moving anchors, adding discharge pipe, and transporting supplies and personnel. Floating and land placed pipelines need to be positioned from the dredge to the dredged material placement region. If the material is being used for beach nourishment, additional earth moving equipment such as bulldozers are required to place and grade the beach material placed.

All navigation channel dredging requires surveying to delineate the dredged area and to properly mark the channels and inlets for navigation. This requires survey vessels and equipment to perform underwater profiling.

Facility Requirements A dredge in operation requires only temporary facilities to refuel, or harbors of refuge to escape approaching extreme weather events. The permanent facilities to house a dredge are fairly minimal since ideally the dredge is in operation most of the time. Permanent facilities include a docking location (wharf frontage), storage building and yard for equipment and piping. These facilities could make use of existing State areas used for the ferries and ferry maintenance or could be rented from private parties. Ideally dredges would be located closest to areas of most frequent use or where mobilization in emergency situations, such as clearing an inlet after a hurricane, is easiest.

The base of operation for the State Ferry Division dredge is the Cherry Branch Ferry Terminal located at the mouth of the Neuse River near the Cherry Point Marine Corps Air Station. There is limited space available so support vessels, tugs and tender boats, are moored at Hatteras, Cedar Island, and Manns Harbor when not in use. To minimize the facility requirements, the equipment and vessels are divided between multiple storage locations when not being used. The purchase of additional dredging equipment would likely require the acquisition of additional lands and facilities.

Appropriate Dredging Equipment to Meet North Carolina s Shallow Draft Waterway Maintenance Needs The most versatile dredge type for shallow draft projects depends to a great extent on the purpose of the dredging, the material being dredged, the environmental conditions, and the desired/required disposal (method or location). If the goal or focus of the dredging activity is to provide beneficial use of material along a beach, then a pipeline cutterhead is likely most efficient. If the focus is simply to clear a channel quickly, then a sidecaster is well suited for the task. Hopper dredges, on the other hand, provide transport potential to place sediment in offshore berms or remote disposal locations. The selection of the most versatile dredging equipment that will meet the needs of the widest variety of shallow draft navigation channel dredging performed in North Carolina must consider all these factors. An ideal dredge would have a draft less than 6 feet, be capable of operating in wave exposed inlets, dredge depths of

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6 to 20 feet, and be capable of placing the dredged material for beneficial use. No one dredge can satisfy all these requirements. A balance of equipment and contracting strategies is required. Table VII-2 outlines the capabilities and limitations of each subject dredge type.

Table VII-2. Dredge Capabilities and Limitations by Type

Dredge Type

Factor Special Purpose Sidecaster Pipeline (cutterhead) Small Hopper

Range of Depth for 6 to 25 feet 6 to 25 feet 12 to 50 feet or more Dredging Bottom dump - can transport sediment to Pump to nearby Discharges to side of Material Placement nearshore waters, location in-water or channel storage sump, or onto land offshore disposal site Not self-propelled, Ease of Deployment Mobile, flexible Mobile, flexible pipeline must be installed

Environmental ** All Year All Year Nov. 16 Apr. 30 Windows Restricted depending Wave Conditions Ocean inlet capable Ocean inlet capable on wave size (Typically 3-4 ft.) Approximate Average 3500 Daily Production 4000 1900 (depends on size and (cy/day) downtime) Approximate Average $2.38 $4.31 $6.88 Cost per cy* * Costs based on most recent five years (FY 2000-2004) ** Beach and upland placement are restricted due to bird and turtle nesting and habitat considerations (see Regulatory Costs section)

Probable Costs The Wilmington District has spent almost $15 million annually on shallow draft navigation channel dredging in North Carolina over the last five years. The average quantity of materials dredged is over 3.4 million cubic yards per year. Historical dredge volumes over the past 30 years are similar; however, FY1985 and 1986 were peak years with quantities of greater than 5 million cubic yards dredged at a cost of more than $25 million.

While exact costs of purchasing non-typical dredges is difficult to ascertain, the probable cost of a sidecaster dredge would be $2.8 M and a dredge similar to the Currituck, $3-4 M (based on raw manufacturers estimates). The cost of a pipeline dredge depends on the size of the dredge. The government cost to obtain similar dredges is often significantly higher due to additional regulation, requirement specifications, project administration and procurement costs. Table VII-3 presents a breakdown of estimated probable costs for the various alternative dredges and typical daily operating costs. The costs presented do not include the

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cost of a facility to house the dredge. A facility for the dredges under consideration would typically include about 150 feet of wharf footage, a yard to store pipeline (if a pipeline dredge is selected), a small office trailer, one or two acres of land, and possibly a small warehouse. These facilities would have a probable cost of several hundred thousand dollars to a couple million dollars, depending on the location. Since the dredge will travel along the coast, some temporary dock facilities may also occasionally need to be rented.

Table VII-3. Probable Cost Comparison by Dredge Type

Sidecaster Special Purpose Pipeline*

Initial Capital $2,800,000 $3,300,000 14-inch cutterhead Cost $2,000,000

20-inch cutterhead $3,500,000

24-inch cutterhead $7,750,000

Typical Fry*** Currituck*** 14-inch** Average Daily $10,264 $9,068 $10,000 Costs While Merritt 20-inch Operating $8,817 $25,000

24-inch $35,000

Typical Fry Currituck 14-inch Average Daily $3,500 $2,800 $3,800 Costs While Merritt 20-inch Idle**** $3,100 $9,500

24-inch $12,800

* Includes Purchase of dredge, a typical length of pipeline with ball joints and pontoons, tender boat, tug and spare parts. ** Daily costs, including the dredge, fuel, repairs, labor *** USACE average cost per operating day (FY97-03) **** Storage and labor costs

The operating cost of a State owned dredge could potentially be greater than that of the Corps or private sector since it may have to be idle for certain portions of the year due to environmental windows, whereas a contractor or the Corps can move dredging equipment to other jurisdictions during these periods.

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The dredging of navigation channels requires surveying to be conducted both to assess the existing conditions and verify the post-dredging conditions. Also, if beach placement of the dredged material is performed additional costs are incurred to move pipelines and material on the beach. Table VII-4 outlines some of these additional probable costs.

Table VII-4. Probable Additional Costs

Item Cost

Condition Surveying $5,000-10,000 each for a typical size (pre and post-dredging) project in this study Monthly Rental and Operating*: Track-type tractor/dozer $27,593 Shore equipment to support a Wheel Loader $12,610 beach nourishment placement Rough Terrain Crane $15,913

* Derived from the Rental Rate Blue Book for Construction, Volume 1, Quarterly Revision: 2nd Half 2005

The costs of operating a dredge include the capital cost of the dredge itself, required ancillary equipment to support the dredge operation, surveying, labor, fuel, maintenance, downtime, and housing costs. These costs vary by the type of dredge and the desired material placement location and method.

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VIII. REGULATORY COSTS

The regulatory issues associated with shallow draft channel maintenance are discussed in this section. Both dredging and disposal have associated permitting requirements which are detailed. An opinion of probable costs for the State to obtain permits for shallow draft projects is also provided.

Existing Permitting This section examines current permitting documentation, including important environmental permitting issues, for the dredging of North Carolina s shallow draft waterways.

Existing Permitting Process The USACE operates dredge and disposal operations under separate policies governing their activities. The USACE also issues permits for dredging and disposal of dredged material as part of the Section 404 process. Currently, the USACE has an authorization which exempts them from the State s Coastal Area Management Act (CAMA) permitting process. The USACE has prepared National Environmental Policy Act (NEPA) documentation for all projects and has obtained necessary State and Federal environmental clearances to perform the work. The permitting process would be different for a state or local entity and is described in the Future Permitting Issues section.

Environmental Windows and Restrictions The seasonal bird window in North Carolina (NC Wildlife Resources Commission) where no material placement is allowed is from April 1 through August 31 and applies to nesting islands and some beaches. However, according to the USACE, historically placement of material on beaches has been carried out between November 16 and May 1 with no impacts to nesting waterbirds. This can be project specific and coordinated with the appropriate State and Federal agencies.

The turtle nesting window designates no beach placement from May 1 to November 15. However, exceptions have been made with proper assessment, monitoring, and mitigation. The Wilmington District uses a self-imposed window that restricts commercial hopper dredging to the period from January 1 to March 31 to reduce the probability of entraining turtles. USACE protocol requires work stoppage upon taking three turtles, and consultation with the USACE South Atlantic Division prior to resuming work. If five turtles are taken, the dredging activities are terminated. Oregon Inlet has historically required a variance to the turtle window due to the harsh conditions in the winter months making dredging difficult.

The USACE dredges, Fry, Merritt, and Currituck, have been evaluated for impact to endangered and threatened species. The dragheads used have been shown not to affect sea turtles in field testing and the dredged material is cast adjacent to the channel or in nearshore waters and not on the beaches where it could impact nesting. Therefore, these dredges can operate nearly all year.

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Additional coordination with State and Federal fishery management agencies is required on a project specific basis to determine potential impacts to fisheries.

Future Permitting Issues This section explains permitting issues that would arise if management of North Carolina shallow draft waterway dredging were to be assumed by the State and/or new alternative methods of disposal were to be adopted.

Transfer of Existing Permits to the State The majority of the clearances currently in use by the USACE are not transferable due to an authorization which exempts them from the CAMA permitting process. Also, per the Federal Coastal Zone Management Act, consistency coordination authorization cannot be transferred to a State or local entity. The State would be required to obtain CAMA permits, and as part of that process, Federal Section 404 dredge and fill permits (the CAMA major permit application is reviewed by the USACE and the federal resource agencies). Some of the NEPA documentation for ocean disposal sites may be transferable, or the USACE may be able to issue a permit to allow the State to use the ocean sites.

One potential possibility would be for a Memorandum of Understanding (MOU) to be developed between the USACE, the Division of Coastal Management, and the State agency assuming responsibility for the dredging wherein an agreement is established allowing the State to proceed with the existing projects as currently maintained. This would require negotiations among the State agencies and USACE but is one option that should be investigated further due to the time-consuming process anticipated in obtaining new permits.

Obtaining New Permits A discussion was held with CAMA officials to determine the permitting requirements for the State to assume responsibility for shallow draft projects. For those projects which already exist, new permits would likely be obtainable, but the process will be time-consuming. Since existing permit information is outdated, much time will need to be spent collecting new and updated information from which to start the permitting process. Also, new permit requirements would be more stringent than those in place when the original project was started and new environmental conditions would likely apply.

For most existing projects, a CAMA major permitting process would be required. The CAMA major permit includes a joint process where the State and Federal agency reviews are coordinated by CAMA on the State side and by the USACE on the Federal side. The Federal Section 404 dredge and fill permit would be jointly issued with the CAMA permit. A Clean Water Act Section 401 Water Quality Certification would also be required. Comments from State and Federal agencies including the USFWS and National Marine Fisheries Service (NMFS) as well as their State agency counterparts are part of this process. Disposal along the AIWW would probably be the least difficult to permit, because authorized disposal sites are readily available. New disposal sites would be subject to a similar permitting process.

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Upland disposal sites would not require State Environmental Policy Act (SEPA) documentation. Any new open water disposal would require SEPA documentation during the CAMA major permit process. The permitting process for new open water disposal sites involves interagency issues, for example, the USFWS may be amenable to the construction of bird islands, while NMFS may believe that bottom habitat would be more beneficial. Additionally, open water dredged material disposal would have to consider the Coastal Habitat Protection Plan (CHPP) and the Essential Fish Habitat (EFH).

Should the State wish to dredge shallow draft channels for advanced maintenance to a greater depth than authorized, CAMA major permits, and most likely a full SEPA process, would be required. This procedure would take multiple years and could have to apply to each project individually. Alternatively, a programmatic or tiered EIS could be developed to encompass the entire range of projects. This would be a significant investment in time and funds but would establish the framework for a State-run program to operate.

The time frame for obtaining a CAMA permit for an existing project is approximately three months, assuming that the conditions remain unchanged. If the material is to be disposed on beaches, an additional one to two months could be expected to be added to the waiting period. For large beach nourishment projects (greater than 200,000 cy) the process could take an additional three to six months. These time estimates were provided by CAMA officials and are dependent upon only one project permit submittal at a time. If CAMA staff become overloaded with permitting requests, these timelines would be expected to increase.

Permitting Costs Obtaining a CAMA major permit, as will be required for most projects, carries a fee of $400. There is a fee of $475 for a Section 401 certification.

In addition to the permit fees, there would be further costs associated with collecting and updating the information about each project that is necessary to start the permitting process, including surveying and mapping the project and disposal areas. In cases where an EIS is necessary, extensive testing and monitoring may be necessary.

An opinion of probable costs for updating the permit for a typical existing project would be on the order of $30,000 to $50,000 depending on disposal method and location (see Table VIII-1). If permit conditions are changed and a full EIS is required, however, individual permit costs could exceed $500,000, with a multi-million effort anticipated for a programmatic EIS.

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Table VIII-1. Range of Probable Costs for Typical Permit Application for an Existing Project

Typical Probable Cost for Item Existing Project

Bathymetric Surveys and Mapping $10,000-$15,000

Environmental Surveys $5,000-$10,000

Environmental Documents $10,000-$15,000

Permit Coordination $5,000-$10,000

TOTAL $30,000-$50,000

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IX. CONTRACTING ALTERNATIVES The selection of an appropriate contracting strategy to address the maintenance of North Carolina s shallow draft navigation channels will be influenced by numerous factors. As discussed previously, these factors include, but are not necessarily limited to the following: the purpose of the dredging; the material being dredged; anticipated disposal methods; and environmental constraints. Furthermore, issues such as the level of financial commitment planned by the State as well as the planning horizon over which the State is willing to commit these financial resources will also influence the ultimate resolution to maintaining the State s shallow draft navigation channels. However, three diverse approaches to contracting the required services can be delineated. Each of these strategies are identified below and discussed in detail. Combinations of these approaches are possible. Following this discussion, a summary is provided and a strategy is identified and recommended for consideration by the state.

State Owned and Operated Dredges One alternative is for the state to pursue a strategy wherein the state would be responsible for performing all required maintenance dredging activities. In order to execute such a strategy, the state would be required to purchase, staff, operate and maintain a fleet of dredges capable of executing the required dredging operations. Due to the magnitude (approximately 3.4 million cubic yards per year) and the diversity of dredging methodology required, the state would have to acquire both a large and diverse fleet of dredging equipment. The exact numbers of dredges is difficult to pinpoint specifically at this time since the amount of beneficial reuse (in the form of beach nourishment) the State would chose to pursue is uncertain. Additionally, the ability of the state to modify existing environmental windows in order to allow for a longer dredging season is also unclear. But assuming the state intended to execute the dredging plan in a fashion similar to that which is executed today, it is reasonable to assume the state would need to acquire two sidecaster dredges (like the Fry and the Merritt); one special purpose-small hopper (like the Currituck); and one 14-inch and one 20- inch hydraulic dredge. The recommendation for one 14-inch and one 20-inch dredge is intended to provide the State a broader range of performance capability recognizing the differences between dredging in protected inland waterways and exposed coastal inlet channels. It is estimated this fleet would have a combined annual utilization of approximately 60% (219 days per year). Such a utilization rate would afford the state adequate capacity to accommodate seasonal fluctuations in shoaling volumes as well as a limited capacity to respond to shoaling caused by episodic events (i.e. hurricanes).

The main risk associated with this strategy is obviously the considerable cost of purchasing equipping, staffing, and maintaining the required fleet of dredges.

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USACE Contracted Dredges An alternative strategy to that described above would entail the state contracting directly with the USACE for services of their existing dredging fleet plus the USACE contracting out remaining hydraulic pipeline and excess hopper dredging work to private industry. This strategy is effectively identical to the current operational situation in place except that the USACE is presently funding the work. Under this scenario, the state would provide some or all of the funding for the USACE s operations rather than the federal government.

The State would contract with the Corps by supplementing its budget. This would take advantage of the Wilmington District s experience dredging the shallow draft channels and inlets along coastal North Carolina and its existing fleet of suitable dredging equipment. Currently and in the past, the Corps and its contractors have performed most the shallow draft dredging with the main exception of the State s maintenance of its ferry channels. The Corps already has environmental clearances to dredge the federal shallow draft channels in North Carolina. If the State or a private contractor on the State s behalf were to dredge these same channels, environmental permits would have to be obtained. (Based on preliminary discussions with the NC Division of Coastal Management. See regulatory costs section of this report.)

Based on our discussions with the USACE, the State and the Corps could enter into a memorandum of agreement to provide dredging services for a particular project, on an annual basis to supplement the Corps dredging activities of the shallow draft waterways within the State, or a more comprehensive multiyear agreement. Such agreements have been drafted in the past and the Wilmington District appears open to a cooperative relationship with the State to address dredging needs. The nature of the agreement depends on the nature of the dredging desired. If the need is simply to dredge waterways on the Corps schedule, which were unfunded or under funded federally, then the State could provide supplemental funds to perform the dredging of agreed upon channels. If the dredging is for State waterways, not federal channels, the agreement would be complicated by the need to obtain environmental permits.

The Corps would want to maximize its fleet by scheduling and sequencing dredging activities to minimize the expense associated with transit of equipment. The Corps projects its dredging schedule for the upcoming year. This schedule would have to be shared with the State and adjusted to meet the addition of State-funded works.

The District Commander can typically authorize agreements up to $2 M, amounts greater than that require approval of the Assistant Secretary of the Army. Given the cost of dredging activities, a broader longer term agreement covering a State and Corps dredging contract would probably be desirable.

It is important to note that there are numerous restrictions and regulations attached to the acceptance by the Corps of non-federal funds to accomplish projects. Detailed negotiations

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may be required to determine to what extent North Carolina could reach a satisfactory agreement with the Corps for adequate maintenance of North Carolina shallow draft channels.

The main risks associated with this strategy are the lack of potential control over the dredging operations and the reliance on the USACE and federal policy allowing continued maintenance of the Wilmington District s dredge fleet and performance of State-funded works.

Private Industry Contracted Dredges The remaining strategy entails contracting for all dredging services from private industry. However, this presents several challenges and risks. Presently, the private industry dredging fleet is equipped to undertake only about half of the work being performed (i.e. the contract pipeline and contract hopper portions). More specifically, the fleet is not equipped with the specialized sidecaster and special purpose-small hopper dredges currently owned and operated by the USACE. In order to implement this strategy, considering the capital investment required to acquire the necessary equipment, significant coordination would have to be conducted with the private industry dredging community in order to: a) demonstrate the long-term commitment of the state to engage their services once the equipment is procured; b) demonstrate that adequate work load will be available to allow more than one contractor to compete for and perform portions of the required dredging; and c) allow a phase-in period for contractors to construct the equipment necessary to perform the required dredging. The aforementioned steps are particularly attributable to the sidecaster and special purpose-small hopper dredges since these are unique tools that would likely have limited opportunities for employment outside of the state. A hybrid version of this option may involve only contracting certain portions of the dredging work using the industry s existing pipeline and hopper dredges for the larger deeper inlets and the channels where dredge material placement for beach nourishment or habitat creation is desired. This approach mirrors what is being done by the USACE, that is, using contractors to supplement USACE dredging where specialized equipment such as sidecasters and the Currituck are not required.

Probable Costs Associated with Various Options While it is difficult to quantify the cost of the various contracting options due to the number of unknowns, the following section compares some potential contracting strategies in terms of recent unit costs and probable capital and initial costs.

The probable costs of the various types of dredging equipment that may be used are presented in Table IX-1. Please note that the probable costs are direct quotes from dredging manufacturers and do not include additional costs due to the procurement process. Depending on the complexity of the procurement process, these acquisition costs can be substantially more.

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Table IX-1. Probable Cost Comparison by Dredge Type Special Sidecaster Pipeline Purpose Initial Capital Cost * $2,800,000 $3,300,000 $3,500,000 Annualized Initial Cost ** $211,000 $248,000 $263,000 Average Number of Days 270 310 165 Average Daily 4000 1900 3500 Production Rate Total Annual Cubic 1,080,000 589,000 577,500 Yards Dredged Unit Cost *** $2.39 $4.31 $6.88/$5.10**** * Includes dredge and ancillary equipment costs. ** Assumes a discount rate of 4.25% and a dredge life of 20 years. *** Unit costs include all labor, maintenance, fuel, etc. **** Unit cost may be higher if majority of pipeline projects are also beach nourishment projects. Also, an in-house pipeline rate of $5.10 has been estimated based on Ferry Division experience (rate +20% Mob/Demob).

Certain options bear costs that other do not. As previously discussed, regulatory costs to obtain permits are required for options that do not use the USACE, which already has the required permits. Also, if the State purchases equipment, the amount of equipment will determine the cost of obtaining suitable facilities to house it.

The options considered for this comparison mirror the potential contracting strategies discussed and are given in Table IX-2. Another option was developed where the State would purchase one sidecaster and one pipeline dredge and contract out the rest. This option would lessen the personnel, facilities and overall management burden to the State but would still provide control and use of two versatile dredges on short notice.

Table IX-2. Comparison Options Option 1 Option 2 Option 3 Option 4 The State The State The USACE Private purchases its purchases and its dredging own dredge fleet some dredging Description contractors contractors to perform all equipment and performs all perform all required contracts dredging. dredging. dredging. remaining work. Number of 2 1 ------Sidecasters Number of Special Purpose Small 1 ------Hopper Dredges Number of Pipeline 2 1 ------Dredges

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Table IX-3 compares the probable costs for the above options.

Table IX-3. Probable Cost Comparison by Potential Options Wholly State- Some State Contract With Owned Fleet Equipment USACE All Private

Initial Capital Cost * $15,900,000 $6,300,000 n/a n/a Initial Regulatory Cost $1,250,000 $1,250,000 n/a $1,250,000 Initial Facilities and Housing Cost $2,000,000 $1,000,000 n/a n/a Annualized Total Initial Costs ** $1,440,460 $643,130 n/a $94,025

Total Annual Cubic Yards Dredged 3,433,000 1,657,500 3,433,000 n/a Total Annual Cost for Owned Dredges (with annualized initial cost) $16,950,000 $5,527,000 $16,714,000 $94,025 Total Annual Dredging Amount (cubic yards) 3,433,000 3,433,000 3,433,000 3,433,000 Remaining Cubic Yards 0 1,775,500 0 3,433,000 Private Contract Rate Unit Cost (assumes pipeline) $6.88 $6.88 $6.88 $6.88 Total Annual Cost for Remaining Work 0 $12,215,000 $0 $23,620,000 Total Annual Cost $16,950,000 $17,742,000 $16,714,000 $23,714,000 * Includes dredge and ancillary equipment costs. ** Assumes a discount rate of 4.25% and a life of 20 years.

As can be seen from the above table, the probable annual costs of all options are very similar with the exception of the All Private option. This option may be somewhat less than estimated depending on the unit rate that private industry would charge for a sidecaster (none currently in use). In any case, there appears to be no significant financial driver for the State to select one contracting alternative versus another.

An incremental approach is also possible whereby the State might experiment with supplementing the Corps of Engineers funds and/or contract some work with private dredging firms. As a potential next step, the State could then purchase one piece of dredging equipment, which could be followed by additional purchases as necessary. This type of incremental approach would allow the State to get experience with various solutions while the prospect for federal funding gets clarified.

The final decision should be based upon the State s level of comfort in the following issues: desired level control of dredging scheduling and prioritization, level of management, personnel, facilities, and maintenance the State is willing to accept in developing and

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overseeing its own program, and the level of effort and risk associated with starting at square one with required permits (both in money and time) to complete these projects if the State were to manage the program itself.

Summary and Recommendation Based on the discussion provided above, the three identified contracting strategies offer widely divergent means of satisfying the state s dredging requirements pertaining to their shallow draft navigation channels.

In comparing the pros/cons of each plan, it can be fairly stated that, while affording the state the highest degree of control over their dredging requirements, the State Owned and Operated Dredges plan presents the most aggressive and significant commitment for the state. However, the state would be required to obtain their own environmental permits to allow the dredging activities to occur. This would take a significant time and monetary contribution and the State would run the risk of increased permit restrictions.

Conversely, the USACE Contracted Dredges plan requires no capital investment by the state and represents the most easily implemented plan of the three since the State would only be funding an otherwise existing operating scheme, and could continue the existing dredging program under the USACE s existing environmental clearances. This plan also affords the state the greatest flexibility in adjusting/modifying their involvement in future years based on the variability of federal funding. This approach, however, has uncertainty about the kind of agreements that can be negotiated with the Corps for priorities in scheduling and how much time equipment will be dedicated to North Carolina in the future.

The Private Industry Contracted plan also requires no capital investment by the state but would require the State to obtain their own environmental permits to allow the dredging activities to occur as well as requiring the state to assume significant managerial responsibility in managing the execution of the dredging program. Nonetheless, the State could avoid this as well if a program manager was contracted to oversee the work. However, this suboption would necessitate additional funds for the already most expensive option.

Based on our analysis of the three presented contracting strategies, we recommend the State consider pursuing the plan identified as USACE Contracted Dredges or a hybrid involving this option, where permits can be easily obtained. The State s involvement could be balanced against any ongoing federal funding and needs of the State. We believe the lack of capital investment coupled with the ability to conduct operations under existing environmental clearances represents the most practicable plan for the State.

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X. SUMMARY OF FINDINGS