Port and Feds Are In a Serious Misunderstanding

By Mike Lednovich

The Port of Fernandina is in peril of having to pay back about $1 million in federal grant funds because it has not established a barge service as promised in terms of the grant. Also at issue is the port’s use of a tugboat purchased with $800,000 of the grant.

The purchase of the tugboat in 2021 with $1.2 million in funds from the U.S. Department of Transportation Maritime Administration (MARAD) was to establish a barge service to and from the Port of Fernandina to nearby ports like Savannah and Charleston. The goal was to eliminate truck traffic onto Amelia Island and reduce air pollution. The grant followed action by MARAD classifying waterways as M-95 (ocean highways).

But the purchase of the tug Fort Clinch, a non-ocean going vessel, is being questioned by MARAD. By design, the Fort Clinch does not have barge service capabilities. The tugboat is used by the port to dock and disembark ships. No barge service currently exists.

MARAD has been pressing OHPA and its port operator Nassau Marine Terminal for answers on the use of the Fort Clinch and why no barge service is running as conditions of its grant.

The port operator Nassau Marine Terminal submitted its explanation of the tug’s usage to MARAD and asked OHPA commissioners to endorse its statements officially at its meeting Wednesday. OHPA withheld issuing a “letter of concurrence” and instead scheduled an emergency meeting for Feb. 5 to address MARAD’s concerns.

“Regarding the use of the tug, we reiterated (with MARAD) that it is a docking tug and that was the original intention and we are using it for docking activities,” said Greg Haehl, director of operations for Nassau Marine Terminal. “One of the other (MARAD) statements was about the market and the M-95 (barge service) intentions of the grant … we don’t see those original intentions as viable in the market right now, it’s also our opinion it won’t be for a long time.”

Haehl said Nassau Marine Terminal is seeking MARAD’s approval that the tugboat is being used as intended in the grant and “we’re trying to avoid any clawback.” The term clawback refers to any money or benefits that have been given out, but are required to be returned.

In its response to MARAD, the port operator is relying on this sentence in the grant: “The procurement of this tug will reduce in-port operational costs associated with a weekly docking and undocking of a barge and tug.”

OHPA Commissioner Danny Fullwood said during the discussion, “I don’t know where they (MARAD) got the idea it was going to be an ocean going tug.”

OHPA Chair Miriam Hill said the primary focus of MARAD’s inquiry was the failure to establish a M-95 barge service.

“It (the grant) doesn’t say it has to be an ocean going tug, it says it requires there be a M-95 service,” Hill said to the port operator. “A program that says establish M-95 and a program that says M-95, that’s really (the answer) what I’m looking for.”

Commissioner Ray Nelson said in addition to the purchase of the tugboat, the port also paid for six trucks with grant money that were intended to support the activities of a barge service.

“You (OHPA) may also want to look at that,” Nelson said. “I was on a phone call with MARAD in late 2023 and they mentioned that the tug and those trucks went hand-in-hand. That’s all one deal there, not just the tugboat.”

Hill said she supported Nassau Marine Terminal’s support of M-95 “in spirit of what you’re trying to do. I think we need concrete answers to MARAD because it has been so long (in providing answers).”

Hill said MARAD has requested letters of commitment (to the barge program) from customers be provided.

“We don’t have that,” Haehl said. “We haven’t satisfied the M-95 service and we explained why. We explained a couple of opportunities that are in the pipeline that are close. And in our opinion, we don’t think M-95 is viable or demanded in the market. So we’re asking for more time.”

Haehl said OHPA needed to issue a letter of concurrence supporting the operator’s position.

But Nelson disagreed.

“What it (the tug) is being used for now does not fit the framing that the grant was granted for. I would caution before we agree to concur (with Nassau Marine Terminal). We better know what we’re concurring to,” Nelson said. “We’ve got two stories out there. We need to find out. The tug was supposed to be used as a barge service. That tug was never used as it was intended.”

Chair Hill also noted that the deadline to use the grant funds had expired. There is $200,000 still remaining of unspent grant funds.

“We need to educate ourselves on what was submitted and what our options are (regarding MARAD),” Hill said.

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Noble Member
1 month ago

thanks for the update!