Marine Transportation System

Congress Got It Done

In Congress, Government, Infrastructure, Legislation, Ports, Water Resources on May 23, 2014 at 1:13 pm

While strolling through the park one day
In the merry merry month of May
I was taken by surprise…

Two recent May events are fresh in mind. Maybe not of the surprising sort but perhaps, eventually, capable of the unexpected. On May 6th the Maritime Administration convened its second symposium aimed in the direction of a National Maritime Strategy. And just this week, Congress gave final approval to the first water resources development act legislation enacted in seven years. Both have significance to the maritime sector but, for the time being, we may be able to gauge the significance of just the one.

So, let’s talk WRDA…rather, WRRDA.

You don’t have to have inside-the-beltway know-how to know what “werda” is.  For nearly 50 years, and for more than a century earlier under different names, WRDA has been the path that harbor deepening and inland waterway projects—not to mention flood protection and shore and environmental restoration projects—have taken to Federal approval.

Project ideas graduate from feasibility studies to be authorized for funding by Congress. WRDA is how the Harbor Maintenance Tax and Trust Fund became law in 1986. It is how the near-completed 50-foot deepening in the Port of New York/New Jersey was authorized in 2000. And it is how the Corps of Engineers will be given the go-ahead to deepen and otherwise modify channels in the ports of Boston, Savannah, Jacksonville, Canaveral, Palm Beach, Freeport, and Corpus Christi.

Those ports, and various States and counties, will be relieved when the Water Resources Reform and Development Act of 2014, HR 3080, is signed by President Obama.

Passage of WRRDA 2014 was cheered in the halls of Congress. To be sure, some of the voices heard where those of lobbyists, but more prominent were the self-congratulatory speeches and tweets (#WRRDA) let loose by the legislators, especially those with projects at stake. Even Tea Partiers, who two years ago questioned why Congress should even have a role in public works, voted for the conferenced measure and made floor speeches hailing its importance to their town or to the national economic interest.

No small amount of pride was declared in proving to themselves and to the nation that Congress is capable of agreeing on major infrastructure legislation despite the fractious partisanship and anti-spending sentiment that has come to characterize this town. The bill’s reforms and deauthorization provision, which will dump $18 billion in previously authorized projects, provide the calculated and rhetorical coverage they consider essential to allow them to vote for a bill with an estimated, eventual cost in the neighborhood of $12 billion.

Yes, public works can be costly. Of course, not building such infrastructure also can be costly.

If there is an indicator that the conservatives have been hungry to vote in the affirmative on an [insert favorite jobs creation modifier] infrastructure bill and to show that Congress can do something, it is that only four House members opposed final passage despite it being a Heritage Action “key vote.” Only seven senators—also Republicans—opposed the final bill this week.

It helps that some planned projects—including unsexy port channels for goodness sake!—have in recent years been regularly reported across the country as important to US competitiveness in global commerce. The House Transportation & Infrastructure Committee leadership used it early on to educate colleagues and the public alike. Who hasn’t heard that the Panama Canal is being expanded to accommodate big ships? They must not have been listening to the President, the Vice President, the news media, etc.  Those are the same ships that the aforementioned ports in Massachusetts, Georgia, Florida, New York and New Jersey, among others, hope will come their way.

WRRDA lacks the earmarking that turned some in Congress sour on public works legislation. Instead it prescribes a more detailed process by which the legislature will receive and act on project recommendations. It is a rational process, devised on the House side and intended to be something other than earmarking while reserving the prerogative for Congress to authorize projects i.e., not leave it to the Executive to make the decisions.

The added “R” in the bill is more than for show. Reforms to current law and practice are many. Some are intended to speed the famously bureaucratic civil works process. Others introduce new process and calculus to how Harbor Maintenance Trust Fund monies are budgeted and appropriated. (I may devote some words to that in a future post and so will limit my comment here to wishing “good luck and great wisdom” to the folks at Corps headquarters whose task it will be to interpret and implement the intent of Congress.)

It will have to be seen how well the reforms will enable the Corps of Engineers to meet, and will hold them to achieve, a 3-year study mandate, for example. One test of that will be the extent to which project sponsors are willing to leave the fate of their projects in the hands of Federal planners and analysts. That is because the bill gives more flexibility to project sponsors, such as port authorities, to study, construct and finance their projects. As we have seen in Florida and South Carolina, financial commitments are being made in State capitals in order to get projects constructed and completed well ahead of whenever Federal process and funding get done.

So there is a lot in WRRDA to cheer, not the least of which is the fact that it is done. And should the congressional committees actually live up to the sense of Congress, in Section 1052, to wit, “Congress should consider a water resources development bill not less than once every [two-year] Congress,” there will be even more to cheer in the years ahead.   Pbea

Do something. But not just anything.

In Government on May 2, 2014 at 12:34 pm

I took perverse pleasure in the breaking stories on the GW Bridge screw-up last fall. They seemed to promise that glaring lights would be aimed at the problem that has been consuming the nationally prominent, first-ever American public authority. Something needed to be done. Maybe this would be the tipping point.

Six months later, there is reason for optimism.

The subject of the Port Authority of New York & New Jersey and the utter mess that the 93 year old agency finds itself in has been on my mind for many years; the seeds of the problem were sown quite some time ago. It’s just that by this time the sprouted weeds, not invisible if one were looking, have grown thick to the point of crippling and discrediting a once very creditable institution.

A once sought-after model for other public authorities, one that recovered admirably from the most destructive and tragic foreign attacks on American soil is now associated with political abuse, patronage, vindictiveness, and incompetence and scandal that has been a constant source of headlines since November 2013. But the blame cannot be limited to persons of the Christie Administration who took it upon themselves to play traffic doctor and “study” how to turn a town’s congestion into paralytic pneumonia.

My interest in the subject is easily explained and offered as a disclaimer. Jersey bred and a student of government, I was once an employee. A fair number of former colleagues–smart, dedicated, and weary-from-what-ails-the-agency professionals–are still on duty there. I joined the Port Authority in 1980 and remained for over 25 years. We of a certain age witnessed its rapid change from a vigorous, highly ambitious and self-confident agency, especially when it came to tackling regional economic problems, to being heavily politicized and lacking sufficient resources both to maintain adequate staffing and to meet mounting capital and maintenance requirements.

The foundation is still sound, but major structural repairs are needed and the sooner the better. And not in the way the governor of New Jersey may be thinking.

The Port Authority stopped spinning gold for New York and New Jersey several decades ago. External conditions having to do with the economy, changes in the region’s population and commuter choices, and the demands both of aging infrastructure and of ambitious governors put agency revenues on a downward slope and its capital spending on an uphill path. It faced great  challenges, but nothing that couldn’t be managed.

In its colorful history, well documented in James Doig’s Empire on the Hudson, the Port Authority has been far from perfect, but it had served as a model for other states and municipalities searching for ways to manage essential public services. It has been the principal entity to provide New Jersey and New York with a regional framework of public works serving the daily commuter as well as interstate and foreign commerce. With steel, fiber optic cable and the pooling of its revenues for mostly transportation projects, it strengthened and bridged the metropolitan area’s borderless common interest.

Politicians are inclined to see borders as bright dividing lines. Many office holders like to see and use those lines as defensive moats or walls from which to lob obstructions and insults to the other side. Over the years the Port Authority itself has been the target, especially of mayors whose towns host its bothersome facilities. (Rudy Giuliani found nothing to like there and tilted at the agency with borderline animus.) Governors, on the other hand, have known it as a resource.

As recent articles have detailed, and as agency employees have known for years, the precipitous institutional decline in the agency and in the morale of its workers can be pegged to George Pataki’s decisions soon he took office in 1995. He and other conservatives employed a mantra reflecting the Ronald Reagan theme that government is the problem and that the private sector has the solution.

Public employees were denigrated and their jobs eliminated. In their place were private sector contracts. (Consulting, a profession where I now reside, took off in a big way as Federal, State and Municipal agencies were made to hire outsiders who were presumed to be more expert and cheaper than public employees.) Why have a law department when you can hire a law firm? Why have engineers and architects on the payroll when you can hire a name corporation? Perchance, did favoritism ever play a role in privatization? You tell me.

Governor Pataki, as is documented, showed his ideological stripes–and perhaps his indifference–early by naming George Marlin, a failed Conservative Party candidate and portfolio manager as Executive Director in charge of an agency with close to 10,000 employees. Governor Christie Whitman objected, but ultimately went along with the appointment by exacting some insurance. She got to name the Deputy Executive Director. One can hardly blame her; however it only served to accelerate the regional agency’s decline by starting the bifurcation of the executive offices of the Port Authority and more intimate levels of decision-making through the taut strings that ran back to Trenton and Albany.

Marlin lasted two years; the damage to the agency’s planning capacity and staff morale, among other things, however, was lasting.

Then came the events of 2001, not to forget the bombing of 1993. The emotional hit within the organization was inestimable, starting with the loss of 84 Port Authority civilian and uniformed personnel, including its capable executive director. (How the surviving workers enabled the huge, and financially significant organization immediately to relocate headquarters staff to maintain operations, recover and quickly pivot into heightened, anti-terror security initiatives deserves its own telling.) The toll on agency finances, both in terms of revenue and the costs associated with recovery and the largely political decisions as to how to manage the World Trade Center site was immediate and continues to this day.

Fast forward to today.

While the George Washington Bridge incident is scandalous, it is not a Port Authority scandal. It is a New Jersey Governor’s Office scandal. Fundamentally, it also is a New York governor’s and Board of Commissioners’ scandal.

It is not the result of Port Authority professionals run amok. It is the consequence of one governor after another, Democrat and Republican, drawing an ever deeper red line and effectively saying, “my commissioners and I will do what we want to do on my side of the line.” Regardless of cost. Regardless of whether it is a credible Port Authority mission or within the long-established geographic scope of the Port District. A rail extension in the Meadowlands. An airport in Atlantic City. A crumbling Skyway. A substitute for a bankrupt state transportation trust fund. And that’s just in New Jersey.

This is a good time to mention something that isn’t being said enough. Nothing of any political or economic consequence is decided at a high level in the Port Authority without the implied or direct consent of the governors or through their proxies at the Port Authority or in the governors’ offices. If it had to do with something on the New Jersey side, it was allowed or caused by a Christie, a Corzine, a McGreevey. If a project was approved in New York, it was okayed by a Cuomo, a Spitzer, a Paterson.  If a press release was written, well… So it can be very misleading when a major action—and this is not intended as a reference to Bridgegate—is described as “the Port Authority” did something or decided another. This is deliciously illustrated by the most recent and messy toll hike, the details of which I will leave to The Record.

By their actions a good many governors dismissed the formative notion that an independent public authority is needed to foster and serve the bistate common interest. They strayed from the classic boardroom model and the thoughtfully limited, statutorily set, gubernatorial power to veto board actions. They enjoyed the privilege of political patronage. Patronage may have had its start with George Pataki and Christie Whitman, but what succeeding governor didn’t want to put his own people in nicely salaried jobs, even if those jobs had to be created? The genie was let out of the bottle.

David Wildstein may be an extreme illustration of what can result from doling out patronage and power. We shouldn’t assume it is limited to him and others appointed by Governor Christie but let’s keep the spotlight there for a moment. By all telling in recent years Wildstein was a noxious, destabilizing presence that employees and persons outside the agency found threatening, which is as he wanted. Wildstein and Bill Baroni—himself, notorious for his performance before a US Senate committee—were two of perhaps several persons who were placed in positions of authority and did real damage. Whatever legitimate accomplishments they might have achieved along the way, they bruised and helped bring about early ends to the careers of responsible professionals at the agency.

As it happens, some of those Christie people now find themselves at the curb—fired or resigned. Some facing litigation. Some saving face.

Governor Christie suggests maybe it’s time to split up the agency. But that would only finish the bifurcation of the agency. It also would complete the corruption of the original intent to establish a public authority that plans, builds and invests in public works with a little separation from the election-oriented office holders. If we have learned anything it is that the recent revelations point to the need for just that kind of separation.

Instead of splitting the baby, Governor Christie and the inscrutably silent Governor Andrew Cuomo should take to heart the views of Professor Jameson Doig, RPA chief Robert Yaro, and former Port Authority executives Peter GoldmarkDick LeoneMartin Robins, among other experienced and thoughtful persons. They should also listen to Chuck Schumer. Yes, that Chuck Schumer.

A panel recently was formed by the current Board of Commissioners to explore reform ideas. In a speech on April 28th, the Senator invited the Port Authority leadership to consider his proposed reforms and come up with any additional ones for consideration in Congress, where the Port Authority Compact was first approved in 1921.

In his “seven point plan” are guidelines for the selection and responsibilities of the Port Authority commissioners and executive director, who should have “full managerial authority and responsibility for “the entire Port Authority organization.”

That very basic reform can get at the root of the problem, but it wouldn’t get at the problem of whether a bad or indifferent governor is in office. That’s a problem for the electorate. But it can help return the Port Authority to having leadership that has “a fiduciary duty” to the agency and full managerial responsibility. Maybe it even will be possible to stuff that patronage genie back into the bottle.

And that is why I was happy to hear how traffic came to a standstill in Fort Lee.   Pbea

2013: The Year Before the Year of LNG?

In Efficiency, Energy/Environ, Green Transportation, Infrastructure, Ports on December 29, 2013 at 4:51 pm

A year in which U.S. shipyards announced contracts for over twenty new ocean going vessels (with options for several more) is noteworthy, especially given the recent difficult times experienced by the shipbuilding industry.  What makes this fact even more significant is that LNG as a propulsion fuel is a central feature in each of these vessels, either as the intended fuel source upon delivery or at some point in the future.

So does this mean that the U.S. maritime industry in America has reached the LNG tipping point, where a tidal wave of even more marine projects will be announced in the coming year?  My short answer would be a heavily qualified, but nonetheless definite: “maybe.”

A distinction has developed between ships that will be “LNG-ready” as opposed to those that are “LNG-capable,” the difference being those vessels that will use LNG upon delivery and those that can be converted to operate on LNG at some later date.  While certain design modifications are incorporated into these ordered vessels, such as foundations for LNG fuel tanks and dual fuel main engines, they will operate on conventional diesel fuels when they are delivered.

The reasons for taking a half step to LNG rather than making the plunge are several, among them the additional cost of the entire fuel gas system, including the fuel tanks.  However I suspect the greatest reason is uncertainty related to LNG supplies in the ports where these vessels will call.  This is particularly the case with the product tankers that have been ordered that, unlike the LNG-powered container vessels do not operate in a classic point-to-point liner service.  Their deployment is largely dictated by cargo availabilities throughout the United States and thus, until LNG is more widely available, the owners will likely hold back on a full commitment to LNG.

If one is looking for positive signs on the infrastructure front, they are there.  The Port Fourchon terminal project on the Gulf of Mexico in Southern Louisiana is being developed by Harvey Gulf Marine to serve its fleet of LNG-powered offshore service vessels.  It will be the first operational LNG bunkering facility in the United States and is expected to be operational next year.  Clean Energy has announced its intent to construct facilities dedicated to the marine industry in Jacksonville.  Tote, Inc. issued a request for proposal (RFP) to potential LNG suppliers to provide LNG for their vessel operations based in Tacoma, Washington and Jacksonville, Florida.  Each announcement of new LNG-powered ships results in a deluge of phone calls from potential LNG suppliers seeking meetings and making proposals to vessel owners.  So again, there is clear movement, growing interest and some tangible progress; but it is slow and these projects still face regulatory challenges and uncertainty that may result in delays and higher costs.

Given the delivery schedules of the Tote, Inc. ships, in late 2015 and early 2016, and the Crowley vessels in 2017,  it seems that the window for putting bunker infrastructure in place—completing land acquisition, clearing Federal and local permit requirements, and facility construction—is growing very tight.  This raises the possibility of ships being delivered and no LNG being available, which will greatly increase operating costs due to the requirements to use ultra-low sulfur diesel (ULSD) to meet Emission Control Area (ECA) regulations.

So, to offer a slightly more elaborate answer to the tipping point question, the U.S. is closer today than a year ago but one cannot conclude that the LNG revolution has begun.  Of the limited number of Jones Act liner operators, three have already announced projects–Matson being the third–and another has announced intentions to convert existing vessels to LNG. The product tanker market has been effectively replaced over the last ten years so there are limits to the expansion there.  I think the greatest opportunities for achieving critical mass in a marine fuel transformation can be found when and if several large harbor services or tug and barge companies either convert existing tugs to LNG or CNG or acquire new tonnage or the top-tier international liner companies announce new construction programs with LNG-fuelled vessels.  Either – and certainly both – of these developments would be a critical next step to accelerate widespread LNG deployment.

Marine vessels represent the potential for a large concentrated market for LNG/CNG, and a port that has both ocean going and harbor vessels that need LNG for fuel would surely provide sufficient basis for investments in LNG marine terminal infrastructure for bunkering.

While there is still a way to go until we all agree that the breakthrough has occurred we are seeing some decisions and investments that are the necessary predicate to making LNG a common transportation fuel throughout the country.  John E. Graykowski

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