Marine Transportation System

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Ports Then, Ports Now

In Congress, Federal Government, Infrastructure, Ports, Surface Transportation Policy on May 4, 2015 at 10:08 pm

Not all that long ago U.S. ports—principally through the public port authorities—were minor and largely absent players in the Federal transportation policy discussion. Port authorities and marine terminals engaged attorneys who tended to the infrequent channel project and to regulatory matters before Federal commissions. Seaports were (and still are) creatures of states and municipal level government. There was no Federal funding to speak of. Ports were assisted in the form of navigation channels constructed and maintained by the U.S. Army Corps of Engineers through the Civil Works program—a program in the control of legislators, who reserved the authority to approve projects, and engineers, who were told to implement the projects. Even in the case of port channels the appropriated sums did not go to port authorities but were cycled within the Federal government and to its contractors.

Back then U.S. maritime related policy was tightly focused on promoting U.S. flag shipping, American shipyards and American crews. Ports were in a policy no-man’s-land between the water and land modes. In its early years the U.S. Department of Transportation had maritime jurisdiction through the U.S. Coast Guard. USDOT was all about building the interstate highway system and tending to railroads, aviation and mass transit. It was not until 1981 when the Maritime Administration moved into USDOT after 31 years in the Commerce Department. Even then the agency continued to be concerned with vessels, not ports and harbors.

By 1980 only a handful of ports had need for Washington representation focused on Capitol Hill and transportation programs and policy, beyond that provided by the American Association of Port Authorities (AAPA).

The 1980s were a time of change. Transportation regulation was giving way to forms of deregulation. By the close of 1978 we saw deregulation take hold; railroad, motor carrier and aviation policies were being reshaped. At times ports were very interested stakeholders as Congress ushered in deregulation. If anything, they wanted to be assured of sufficient rail service, preferably the competitive kind. The Shipping Act of 1984 took the maritime sector a few steps toward deregulation, with some implications for harbors, but greater reforms had to wait until the Ocean Shipping Act of 1998.

It was not until the mid-eighties that ports entered the center ring of Washington policy deliberation. Most of the Carter and Reagan years constituted a legislative dry spell for water resource bills. Ready plans for navigation improvements and proposed feasibility studies awaited action. “User fee” had a certain cachet in the Reagan years. The message to Congress was clear: in return for the president’s willingness to sign a projects bill some reforms would be required and Federal project costs would be offset. Local project sponsors would have to share the cost of improving channel projects. Port users would have to cover a substantial portion of Federal channel maintenance costs. Defining who was to pay, and how much, divided ports into two opposing coalitions. It was not a lasting split but it highlighted differences among the harbors, their physical characteristics, their cargo volume, and their cargo kind.

The resulting Water Resources Development Act of 1986 was landmark legislation that reset navigation and other water resources policy. It also triggered an awareness on the part of ports to be present and active in Washington, both through individual representation and associations.

In the 1990s the Department of Transportation developed an interest in the port sector and the condition of water and land access routes to marine terminals. The department’s jurisdiction did not include the system of channels–and the Corps of Engineers jealously guarded that historic jurisdiction–but it rightly saw the importance of efficient access to the port facilities regardless of the mode taken. Moreover, port and other freight interest groups collaborated in calling on policy makers to give their attention to freight mobility.

In 1991 Congress enacted surface transportation legislation–its prior iterations known simply as “the highway bill”–and in doing so finally adopted intermodalism as a desirable direction for policy. The Intermodal Surface Transportation Efficiency Act of 1991 did not create an avenue for Federal aid for port facilities but it did hint at a line that would be crossed years later, when Federal dollars helped make improvements inside the terminal gates. The ISTEA sausage-making experience inspired trade groups to form the Freight Stakeholders Coalition. In the twenty-five 25 years that followed the coalition celebrated some successes and today is still at work looking to strengthen Federal freight infrastructure policy.

One of the first intermodal efforts by USDOT, in conjunction with the National Academy of Sciences’ Transportation Research Board, was to examine the state of access to ports by the land modes. TRB’s 1993 report, Landside Access to U.S. Ports was followed the next year when the ISTEA-created National Commission on Intermodal Transportation published its report, Toward a National Intermodal Transportation System. The case was being made with evidence mounting. In 2000, the results of another congressional mandated study was reported by USDOT on National Highway System Intermodal Connectors. Freight infrastructure as it led to and departed from marine terminal areas was in poor condition. Actually doing something about it had to wait a while longer for SAFETEA-LU (2005) and MAP-21 (2012).

One other marker along the policy path deserves mentioning. In 1997 Transportation Secretary Rodney Slater initiated a look into what he referred to as the “marine transportation system,” which by definition is port-centered and extends beyond the terminal gate to include the access modes and intermodal operations. USDOT convened stakeholder sessions in port cities and then a national conference on the MTS. The resulting 1999 report–An Assessment of the U.S. Marine Transportation Systemincluded recommendations, among them the facilitation of landside access to ports and the formation of an interagency Committee on the Marine Transportation System and a stakeholder Marine Transportation System National Advisory Council. Those and certain other recommendations were implemented and have contributed to improvements in both freight operations and the port policy discussion.

In September 2001 the rationale for port security measures was instantly revised, making it so much more than a matter of smuggling and cargo theft. Securing both the ports and vessels took on an urgency that made for a sharp learning curve for government and private sector alike. A ship entering a port represented a new vulnerability for the U.S. For a start, Congress produced the Maritime Transportation Security Act of 2002. The Coast Guard was given new responsibility, multi-stakeholder port security committees were formed, and facility plans were required. Fences and cameras went up where there had been none. The Transportation Worker Identification Credential (TWIC) was created for the maritime sector. The Port Security Grants Program was created and before long it was funded annually at $400 million, the dollar level being a particular success of the ports’ American Association of Port Authorities.

Then, in 2009, the severe recession prompted the new administration and Congress to formulate an economic stimulus package that included a $1.5 billion dollar competitive grant program for “shovel ready“ construction projects. What came to be called TIGER grants were awarded not just for the usual road and transit systems but also to ports and heavy rail. Freight related projects snared a third of the grants to the surprise of everyone including the folks at USDOT who realized that freight investments could be evaluated in cost/benefit terms more readily than Biden in Charlestonthe usual stretch of highway or transit rail. To date, TIGER grants have gone to 24 port projects in 16 states for a total of over $344 million in Federal funds alone.

Today the Federal government takes great interest in ports. They are seen as vital gateways for U.S. exports and critical modal connectors that when not functioning well can diminish American competitiveness. They are potentially vulnerable to terrorist attacks and are bell-weathers for our economic well-being. And they make impressive backdrops for politicians.

In 1985 I convened a meeting of a few port lobbyists to talk about shared issues. Thirty years later, a considerably larger Washington Port Reps group continues to meet and discuss a much larger issue agenda.  Pbea

(Thank you, Lillian Borrone and Jean Godwin, for your memory-jogging assistance.)

Much Ado About a Budget Resolution

In Congress, Infrastructure, Ports on March 31, 2015 at 12:31 am

At 4:24 am last Friday the Senate called it a night (or morning). Shortly before, the “world’s greatest deliberative body” quit deliberating, bringing its “vote-a-rama” session to a merciful end. “Deliberation” doesn’t apply very well here. When the Senate takes up its annual budget resolution and an around-the-clock offering of amendments it is anything but “long and careful consideration or discussion,” as defined in Oxford.

Senator Patty Murray (D-WA) coached visiting constituents on Wednesday morning that this was great time to see the Senate from the gallery. The senator was right to the extent that one doesn’t often get a chance to see a majority of Members on the floor for an extended period of time. As promised, she and her colleagues were there touting and voting on amendments to the FY 2016 Budget Resolution in a rare display of a constant quorum in search of a budget framework. Probably more than a few of them were also in search of an expeditious deliverance from what at times has the appearance of an exhausting, even pointless, legislative exercise.

Senate Concurrent Resolution 11 is serious business, much like its cousin, H. Con. Res. 27, which on Wednesday the House of Representatives dispatched in far fewer bleary-eyed hours. When/if the process is concluded, the Congress will have a single congressional budget resolution—no White House signature needed, thank you—that sets enforceable limits on appropriations in broad categories, e.g. transportation, for the next fiscal year. It is a budget discipline that Congress created in 1974.

In this case, both chambers and their Republican majorities last week produced resolutions that maintain the increasingly constrictive caps and the across-the-board cuts of sequestration of the infamous Budget Control Act of 2011 (BCA). Both resolutions project balanced budgets in ten years. Both put downward pressure on spending for  non-defense and defense discretionary (non-entitlement) programs. But both, ultimately, also create exceptions so as to boost defense spending above the BCA ceiling that John McCain (R-AZ) called “reckless” and “a disasterin his attempt to end the grip of sequestration on the DOD side of the ledger.

There are differences between the Senate and House resolutions, which may be resolved in conference between the two budget committees.

So, you might ask, what exactly is a “vote-a-rama” in the US Senate?” In large part, it is a chance for a large number of amendments to be taken up in a short amount of time. Everybody, in theory, has the opportunity to shape the broad framework for spending. Well, not really. It might better be described as rapid-fire amendments so one can go on record—or put the other guy on record—for or against something. Standard Senate rules are put aside for purposes of budget resolution consideration. No chance to spend 20 minutes airing an issue or in orderly exchanges with a colleague over some weighty matter. Instead, senators mostly were asked to vote on vaguely worded issue proxies that have little practical effect on spending decisions or the issues themselves.

Serious subjects may be raised but a senator has a minute to state her case, assuming her amendment—one of nearly 800 introduced—is among the few that actually get floor time. Some are approved without objection, others rejected or agreed to by recorded vote. Some are withdrawn—the point already made—or ruled out of order.

Susan Collins (R-ME) said “the process gets misused just to make the other side cast uncomfortable votes,” adding that “the budget should be a serious process…” One didn’t have to look far for a handy example, this one covering two political hot buttons in one amendment. A senator wanted to “establish a spending-neutral reserve fund relating to limiting the ability of Environmental Protection Agency personnel to carry guns.” The italicized phrase is the common form used in the amendments, helping make it pertinent to the budget resolution and within its dollar limits.

Where any subjects of relevance to the port/logistics world proposed in the wearying session last week? Yes.

Two proposed amendments were inspired by the recent West Coast longshore talks and slowdown. One was by Deb Fisher (R-NE) relating to a request that has been (or will be) made for the GAO to investigate “the impact of service disruptions at West Coast ports during 2014 and 2015.” The other was by Cory Gardner (R-CO) with the notion “to prevent labor disputes at seaports in the United States from causing national economic disruptions and crippling businesses across the United States.” Neither would have practical effect beyond perhaps establishing Senate sentiment as to what took place during the longshore negotiations. (No vote)

Deb Fisher, chair of the Surface Transportation and Merchant Marine Infrastructure, Safety and Security Subcommittee, and Barbara Boxer (D-CA), ranking Democrat on the Environment & Public Works Committee, sponsored an amendment to “strengthen waterborne commerce in our ports and harbors, which may include increasing the percentage of the amounts expended from the Harbor Maintenance Trust Fund that are dedicated to port infrastructure and maintenance.” What does that mean? They associated themselves with the notion of increasing O&M spending from the HMTF. Nothing more. (Adopted)

A freight-related amendment by Dean Heller (R-NV) aspires to ensure that the DOT Secretary prioritize “the construction of projects that are of national and regional significance and projects in high priority corridors on the National Highway System…” (Adopted)

In the same vein, Cory Booker (D-NJ) sought to “encourage freight planning and investment that incorporates all modes of transportation, including rail, waterways, ports, and highways to promote national connectivity.” (Adopted)

A Gary Peters (D-MI) amendment related “to supporting trade and travel at ports of entry.” (Adopted)

Patty Murray (D-WA) called for increasing funding for the TIGER grant program. (Adopted)

Sheldon Whitehouse (D-RI) proposed one “to ensure high-income earners pay a fair share in taxes and to use the revenue to invest in repairing our Nation’s bridges, coastal infrastructure, and damage from wildfires.” (Withdrawn)

Majority Leader Mitch McConnell (R-KY) got a vote on his amendment relating to EPA regulation of “greenhouse gas emissions, which may include a prohibition on withholding highway funds from States that refuse to submit State Implementation Plans required under the Clean Power Plan of the Agency.” (Adopted 57-43)

Today EPA’s Gina McCarthy today said, no problem, Senator. “EPA doesn’t have the legal authority” to do that anyway.

Pbea

What Will This Congress Do?

In Congress, Infrastructure, Marine Highway, Politics, Ports, Security, Surface Transportation Policy, Water Resources on January 9, 2015 at 1:45 pm

Nearly a dime’s worth of days into the New Year, this is no time to rehash what happened in the last Congress. A new Congress—the 114th of our maturing nation—is now underway. And what a new Congress it is.

Republicans now rule Capitol Hill and veteran Senate Democrats are being reminded of how it feels to be called Minority. (Republicans have held the majority in the House and Senate more often than not in the previous 10 congresses, since 1995.) At the other end of the avenue is a president who has confronted more than his share of domestic and international crises. January is the starting gun for his latest test – working with the 114th Congress and its routinely unfriendly and uncooperative Republican membership. In that respect, so far, there is not much new about this Congress.

The leaders in the House and Senate themselves face internal and external challenges as they assume on behalf of their caucuses the collective role of governing. Politico used apt “cliff” and “landmine” metaphors for what faces Speaker Boehner (R-OH) and Majority Leader Mitch McConnell (R-KY) as they advance legislation through their own caucuses. The leaders know that the GOP is well positioned to turn around the “do-nothing Congress” label that the Republicans made possible—even intended—over recent years. (Yes, the dethroned Harry Reid hardly facilitated the legislative process in the Senate but Messrs Boehner and McConnell are faced with colleagues in the rank and file who came to Washington to stand in the way of government. Twelve Republicans found reason to vote against returning Boehner to the Speaker’s chair, as if he is didn’t well serve the cause(s) of conservative Republicans.) This go-round Democrats, with little control over committees, the bills they produce, and the floor schedule, will not be plausible scape goats for a failure to legislate. And in the Senate McConnell may be 6 votes shy of a filibuster proof majority but he has a pool of moderate Dems and an Indie who are potential “ayes,” such as we will see with the upcoming Keystone XL vote.

The success of a legislature is measured by legislative productivity. Can this Congress be productive with the Obama White House, which has vetoed exactly two bills in the past six years?

As previously noted, President Obama also will be tested. How well he will deal with the new Congress, his constitutional partner in making law? No doubt we will see more vetoes in his last two years in office but his legacy will depend more on what is accomplished than what he blocked.

In other words, they need each other. Few points will be awarded if progress is not seen in Washington. So, the question is whether the president can find within him the resolve of Bill Clinton, who famously made lemonade out of the GOP blowout of 1994, and whether the Republicans will function as if they want to be remembered as the “did-something Congress.”

All of that is background to a rundown of just some of the issues and questions that are of interest to the port/maritime industry and the larger freight sector.

The president put his previously stated policy view into surprise policy action with his late December announcement on normalizing diplomatic relations with Castro’s Cuba. Any number of ports, exporters and others were pleased by the news. There is bipartisan support among some in the House and Senate but Congress will either come down hard on the White House initiative or, rhetoric aside and with an eye on what Castro might do in the months ahead, show a willingness to reconsider the long-standing trade embargo that can only be ended by a change in law.

Last year, Congress came close to hitting the “target” of spending $1.2 billion from the Harbor Maintenance Trust Fund. The enacted water resources law (WRRDA 2014) sets ambitious, incrementally higher targets for Congress to meet with funding for channel maintenance and other work authorized to be supported by trust fund monies. Will the Republicans, as the saying goes, “put trust back in the trust fund” or continue to allow the Harbor Maintenance Tax assessment on cargo to be used as general revenue applied against the Federal budget deficit?

Last year the House and Senate produced a “sense of Congress” statement generally in support of the US-flag and Jones Act sectors. It can be interpreted as reaffirming existing maritime policy. Around the same time John McCain (R-AZ) reaffirmed his own maritime policy to undo the Jones Act in a speech to the Heritage Foundation. He and the petroleum industry actively urge changes to current law, which is to say, the end of the Jones Act. Meanwhile the Maritime Administration and the Secretary of Transportation will steer a draft National Maritime Strategy through the policy and political wringers of the White House. What will that document say about Administration policy and what if anything needs to be done to improve the US merchant marine or American ports?

In 2015 Congress will have to tackle surface transportation policy and funding. Will it include real money to renew freight corridors and build new infrastructure to support modern, intermodal commerce? Will Congress bite the bullet and find the money to pay it or, for that matter, to save the failing Highway Trust Fund? Past refusal by Congress to tackle this issue has depressed road and transit funding and been a principal expression of austerity economics—advocated by most Republicans, but abetted by many Democrats who also have avoided new revenue proposals—during a time when the country was climbing its way out of The Great Recession. Should this Congress produce a transportation bill that only perpetuates an inadequate level of funding and papers over the structural deficiencies of Highway Trust Fund financing it will not make for a convincing accomplishment.

The issues that may arise in the new Congress are many. Committees are establishing their work plans for the year ahead. What will the Republican majority serve up in the way of budget cuts and appropriations? Will a uniform ballast water policy finally become law? Will the TWIC reader rule that seems to assume container terminals to be at a lesser risk be implemented without alteration? How will Title XI vessel financing fare and will marine highway policy wither from inattention? Will Congress see a Federal role in helping ports, cities and businesses plan for rising sea levels and assist in improving waterfront infrastructure for the coming decades? Will the Coast Guard prepare helpful guidance and rules on cybersecurity and will the industry actively engage in developing it? Will Federal policy foster clean fuel initiatives for the freight modes and encourage off-shore wind energy development? How will the committees answer shipper complaints about railroads? Will a Republican Congress and a White House Democrat come to terms on tax reform, infrastructure funding, and trade policy?

At bottom, how well do the legislators of the new Congress—both Republicans and Democrats—understand, and how will they respond to, these and other issues of relevance to the port/maritime sector?  Pbea

New Congress. New Maritime Policy?

In Congress, Leadership, MTS Policy, Politics on November 15, 2014 at 3:30 pm

As the first draft of this piece was being put to page some small percentage of voters were practicing their citizenship at the polls. The prospects for the Democrats, as a whole, were not very good. Ten days later, and as I now refine this text, the field still is being cleared of Election Day debris. Not just the sloppily pinned signs on the road medians but prognosticators’ tattered reputations and a few shattered incumbents were strewn on the political landscape in need of reclaiming. By far more than the paid pollsters divined in the weeks before November 4, the Republicans were handed the reins in Congress and a number of State Houses. The party consolidated its control of the House and leapt into the majority in the Senate with at least 53 seats and a net gain of eight. The final count awaits a December conclusion in Louisiana where GOP prospects in the run-off are good.

Public dissatisfaction with government in Washington is close to universal but for reasons I will leave to others to explain the Republican Party benefited substantially more than its competition and that will keep them in power, especially at state level, for several years to come. As if speaking for his fellow Republicans across the country re-elected Gov. Sandoval (R-NV) said, “This is a night to savor.”

By the numbers, incumbent US Senate Republicans will be vulnerable in 2016…but let’s not get ahead of ourselves. The matter before us is the next two years of the 114th Congress.

This week the rank and file of both parties in both chambers opted to retain current leadership. Soon we will learn the names to inhabit chairmanships, ranking minority posts, and committee lists. Meanwhile, in the current lame duck session the legislature is expected produce appropriations to keep the government functioning through the fiscal year. They will decide whether the Keystone XL pipeline project should be started, and take up a few other must-pass items before bringing the 113th Congress to a close.

Long before Election Day the US-flag maritime community nervously eyed voter surveys because of what a possible Republican return to power in the Senate could mean. Now, the controlling party is known; how that majority will be reflected in maritime related legislation will be something to watch.

One can easily find Republican legislators who are considered friends of the US maritime industry, whether driven by interest in US-flag cargo preference policy, shipyard activity, the labor force, other sectors that benefit by existing policy, or just a sense of what a nation should say about its maritime capability, security, etc. But that doesn’t mean that the maritime community in Washington, DC was sanguine or unconcerned about the prospect of the GOP taking the lead in producing legislation. In fact, unions, shipyards, US flag operators and others with a stake in the status quo were in varying degrees of pre-election anxiety.

The community has been frustrated with the Obama Administration’s willingness to ease cargo preference requirements. Now, potentially as problematic, Republican legislators who, for philosophical or constituency reasons, have not been inclined to extend Ex-Im Bank authorization or fund cargo preference policy—both key issues for the US merchant marine—will have more influence in policy setting. Add to that the fact that congressional support for the Jones Act is lacking in some quarters where the marketplace is revered and shipper interests—including domestic petroleum producers—would exchange the US flag for lower vessel costs. Some ports hit hard by disruptive events and who need short term Jones Act waivers in order to manage logistics crises, may find some more receptive offices.

A few years ago Jones Act and US-flag interests started Maritime Industry Congressional Sail-In Day to lobby the Hill with a particular aim to educate legislators who are new to maritime issues. The old guard–those who recall there once was a House Merchant Marine and Fisheries Committee, soon 20 years defunct—are nearly gone from Congress as a consequence of natural and electoral attrition. (The American maritime sector has suffered from attrition as well, with a reduced presence in international shipping and, in some respects, an aging Jones Act sector.)

More recent Republican additions to Capitol Hill are a decidedly more conservative population—some of them Libertarians and self-identified tea partiers—who are more market- and less government-oriented. They arrive in Washington with little knowledge of the American maritime tradition and even less of its policy and the rationale behind that policy. They read material from policy critics and, presumably, its advocates.

On the Senate Commerce, Science & Transportation Committee are Marco Rubio (R-FL), Ted Cruz (R-TX) and Ron Johnson (R-WI) who, for example, have opposed reauthorizing the Ex-Im Bank (“corporate welfare”) and could be in the mix to chair the subcommittee with jurisdiction over maritime policy. Veteran John McCain (R-AZ), the likely next chair of the Armed Services Committee, has a record of proposing the repeal of the Jones Act. Referring to a McCain quote in a Wall Street Journal blog, a union newsletter carries this heading: “Sen. John McCain Calls Jones Act’s National Security Benefits Laughable.”

Maybe change is coming, maybe not.  If anything, there is a good chance we will see more jousting on US maritime policy.   Pbea

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

The Murray-Cantwell Approach to Problem Solving

In Competition, Congress, Infrastructure, Intermodal, Water Resources on September 23, 2013 at 7:05 pm

This past week State of Washington Senators Patty Murray and Maria Cantwell introduced the Maritime Goods Movement Act of 2013 (S. 1905). Their inspiration for legislation came from what I have described as the unintended consequences of the Harbor Maintenance Tax, starting with complaints from the ports of Seattle and Tacoma that the Canadian competition to the north and the shippers, who are obliged to pay the Harbor Maintenance Tax when entering U.S. ports, were taking full advantage of the cost-differential where the HMT does not apply.

It is a complaint that was given some appearance of validity in a Federal Maritime Commission report issued last year and, a bit more convincingly, by data comparisons published by The Journal of Commerce last month.

At the request of the senators the FMC studied the role played by the HMT (0.125% of cargo value) in decisions to use the Vancouver and Prince Rupert gateways. The report, adopted by the FMC commissioners on a party line vote, didn’t make a strong case as to cause and effect. It did suggest that if an equivalent of the tax were applied in Canada “a portion of the U.S. cargo…likely would revert to using U.S. West Coast ports.” The report concluded by suggesting any remedy is in the hands of Congress not the regulatory agency.

The JOC looked at the issue by comparing market share within the PNW and among U.S. West Coast ports, where the HMT is uniformly applied. This is their finding in a nutshell:

Port data collected by The Journal of Commerce shows clearly that while Seattle and Tacoma have lost no market share relative to U.S. West Coast ports, their market share in the Pacific Northwest, a region that includes the Canadian ports of Vancouver and Prince Rupert, has slipped significantly in recent years.

That may not be conclusive of HMT culpability but it is indicative of competitive weakness just south of the 49th Parallel.  The comparative strength in British Columbia could be attributed to the HMT in addition to other factors, among them the efficient intermodal delivery system established as part of Canada’s ongoing Pacific Gateway Transportation Strategy.

Enter the Maritime Goods Movement Act User Fee proposed in the bill. The HMT would be repealed and then, for all practical purposes, recreated as the “MGMA User Fee.” In virtually every respect it would be like the HMT. The principal difference is that it also would be applied to U.S. bound cargo that first enters North America through Canada or Mexico.  Shippers would pay when the cargo crosses the land border.  On this bill rest the hopes of Puget Sound’s largest ports.

But the senators didn’t stop there. They also decided to try to fix the issue that is troubling most U.S. ports—the Harbor Maintenance Trust Fund. The bill would make several changes—including expanded uses of the HMTF such as are found in the Senate-passed WRDA (S. 601)—but let’s here focus on the greatest failing of the law as it now stands. That is the under-spending of HMTF funds.

Unlike the RAMP Act that would rely on a parliamentary mechanism to leverage full funding over the objections of appropriators, and unlike the WRDA bills of the Senate and House that set funding targets at which appropriators might aim, the MGMA bill uses a direct approach. At the bottom of page 10 is this: “[N]o fee may be collected…except to the extent that the expenditure of the fee [for allowable activities] is provided for in advance in an appropriations Act.” It is a rarely used means tying revenue collections to the spending of those revenues. The transaction would occur outside the section 302 allocations that cap appropriations committee spending. In doing so it would remove the incentive for appropriators to limit allocations and would treat the HMTF more like a dedicated trust fund.

This approach is employed in other areas of government where a user fee is collected to support a specific function of government. The only downside is that to meet the requirements of budget rules Congress also would have to identify offsetting revenue to fill the hole that would be created when, as a first step to creating the new MGMA User Fee, the HMT would be repealed, thereby eliminating 10 years of projected revenue.  Yes, it gets murky down deep in the budget process. But the result would be the very easily understood concept of “dollars in, dollars out,” as a Murray aide summarized.

Finding the offset, in the range of billions of dollars, presents a real challenge to the bill sponsors. There is a reason why other attempts at legislative solutions have produced little more than “sense of Congress” statements of principle and funding targets that are…well…just targets. The climb up this legislative Hill is very steep and the obstacles—including leadership objections and the search for offsetting revenue—have been daunting.

While we are noting the degree of incline ahead, let’s add to this particular bill the likelihood of complaints to the State Department from Mexico and Canada, who are major U.S. trading partners, and opposition from shippers and the railroads that carry their cargo into the U.S.

But that doesn’t mean it is the wrong solution to an HMTF problem that has existed since the early 1990s. It is the right one because it would be a more effective and lasting way to link the revenue to the reason for the revenue, which is to keep American harbor channels maintained and our ports competitive.  Pbea

Bottom Line Thoughts on the MTS

In Congress, Federal Government, Infrastructure, Marine Highway, MTS Policy, Ports on September 17, 2013 at 11:30 pm

AASHTO, the association of State DOT chiefs, issued this summer the last of its “bottom line” modal reports. This one–Waterborne Freight Transportation–is a useful addition to the studies and papers that indicate a marine transportation system in great need of policy attention. It is not that the MTS is in failing condition–certainly not that part engaged in international commerce–but “the very success of the MTS has masked serious underlying structural problems” that, if left unaddressed, “pose critical threats to the long-term health of the MTS and the nation as a whole.”

The report notes that unlike the American interstate highway system the MTS “has evolved without larger scale coordinated policy and planning.” Indeed the ports and related infrastructure and services that developed without a “master plan” make the MTS a “collection of competitors.”  Persons who follow action in the ports of Charleston and Savannah, both overseen by State port authorities and championed by their respective State legislatures, can be fascinated watching that competition in real time.

The AASHTO report, the focus of which lands principally on the MTS infrastructure, identifies areas requiring attention. Waterway maintenance needs are not being met, navigation projects often take far too long to accomplish, funding for MTS expansion needs is uncertain, national investments are not being effectively targeted to meet national needs, and responsibility for the MTS in official Washington is widely diffused.  That last item can be easily understood by looking at the “comprehensive matrix” spreadsheet on the CMTS website.

In a statement that could apply to maritime elements of the private sector as much as it most definitely does to government policy, the AASHTO report offers this bottom line thought: “Embracing business as usual will inevitably lead to significant further declines in MTS condition and performance, and to lost opportunities for our transportation system and economy.” Today, former Pennsylvania Governor Ed Rendell, the nation’s inconvenient truth teller on matters infrastructure, and National Association of Manufacturers CEO Jay Timmons used the Philadelphia port as a backdrop for a similar message that is bolstered by a survey of manufacturers. “Improving our ports, highways, and bridges is essentially an economic driver. Modernized ports and transportation systems enable American manufacturers and businesses to export their goods to countries around the world, which strengthens our economy here at home,” said Rendell.

Much of that message in Philly and the AASHTO report is centered on international commerce, understandably. Ports and their modal connectors enable U.S. exports to make it to other markets in competitive fashion. They also speed imported goods to Costco shelves and components to American assembly plants.

One had to look for it, but the AASHTO “bottom line” document also makes the suggestion, however briefly, that the MTS can play an increasingly important role stateside. With reference to the potential for Marine Highway freight transport the document notes that “with growing highway congestion, waterborne transportation becomes an even more attractive transportation alternative.” It concludes with the statement that “[w]aterborne trade and transportation will be cornerstones of the 21st century economy.”

Among the actions called for in the report is the establishment of an office of multimodal freight at USDOT, an oft-made recommendation by various stakeholders and in the reports of appointed and self-appointed commissions. Among the tasks of the office would be to create a “system map and classification of MTS facilities, analogous to the National Highway System and the National Freight Network.” Congress specified in MAP-21 that the designated NFN be highway only, a decision that reflects more the congressional committee jurisdictions and the “highway bill” tradition than it does the multimodal operating freight sector. (A recently introduced House bill, H.R. 2875, grandly named the “Waterfront of Tomorrow Act,” would amend MAP-21 to “ensure that ports and harbors are incorporated into the national freight network.”)

The recommended freight office would also be used to prepare a “long-range vision plan for the national MTS development and investment to meet national transportation and economic development objectives.” The report also calls for full utilization of Harbor Maintenance Trust Fund monies for navigation infrastructure maintenance as well as an exemption from the Harbor Maintenance Tax for “domestic Marine Highway services.”

These recommendations are pointed in a constructive direction. But there is a missing element in the report. More significantly, it also is missing from the national transportation policy discussion on Capitol Hill, in those many departments and agencies tagged on the CMTS spreadsheet, and in the White House, then and now.  What is missing is visible interest in what the national maritime policy need be. The weakest element of the multifaceted American marine transportation system, oddly enough, is marine transportation. The long, sloping trend line representing flagging support for U.S.-flag merchant shipping, an aging Jones Act coastal fleet that frustrates Marine Highway development, and a shrinking ship building sector needs to be reversed.  It’s far from being the cornerstone of the economy that it once was and perhaps still can be.  Pbea

The Late Senator Frank Lautenberg

In Congress, Environment, Federal Government, Leadership, MTS Policy, New York Harbor, Politics, Ports, Security, Surface Transportation Policy, Water Resources on June 9, 2013 at 11:53 pm

Frank_Lautenberg,_official_portrait

Senator Frank Lautenberg
1924 – 2013

Last Friday was a somber day of steady rain as New Jersey Senator Frank Lautenberg was buried at Arlington National Cemetery. News reports this past week cited how his passing was notable because he was the last sitting senator of the “greatest generation,” that chamber’s last veteran of World War II. His death came just months after Hawaii’s Senator Daniel Inouye, a wounded veteran of that war, took his resting place among the nation’s noted military and civilian leaders at Arlington.

(They also had a common  interest in the MTS—the marine transportation system. Inouye was a reliable and principal advocate for American shipping; Lautenberg for the landside elements—the ports and intermodal connections. Both were friends of labor.)

It need be said that Senator Lautenberg’s death on June 3, also is notable because it marked the passing of a champion of Federal policy to making communities healthier, the environment cleaner, and industry and travel safer and better. It was a personal agenda well suited to his home State of New Jersey but carried out with no less than the nation in mind.

In his 28 years as a senator he served on virtually every committee and subcommittee that touched on authorizing and funding transportation, civil works and environmental policy. For a period he chaired the Transportation Subcommittee on Appropriations while as a senior member of the Environment & Public Works Committee (EPW).  For a few years after the attack of September 2001 he also was on the Homeland Security & Governmental Affairs Committee. In recent years he chaired the Surface Transportation and Merchant Marine, Infrastructure, Safety and Security Subcommittee of the Senate Commerce, Science & Transportation Committee (CST). In recent years he served on EPW, CST and Appropriations, including the Corps funding subcommittee, concurrently.

As was evident in his committee work his approach to legislating was to cover all the bases, or at least as many as he could. He championed improving airports and the aviation system, expanding the use of transit and passenger rail, modernizing freight transportation, bringing American port infrastructure to world standards, and securing them all from the those who would do us harm.

He was appointed to the President’s Commission on Aviation Security and Terrorism after the tragic downing of Pan Am Flight 103 over Lockerbie, Scotland, and returned to the Senate, after a two-year hiatus, to help write and oversee anti-terrorism law after the downing of the World Trade Center towers. In those towers he had served on the Board of Commissioners of the Port Authority of New York & New Jersey before being elected senator in 1982. His time with the Port Authority–and his building the Automatic Data Processing Corporation (ADP) from scratch–were credits on his resume in which he took great pride and enjoyed telling people about if the occasion would allow.

Frank Lautenberg put much effort into environmental issues. He gave his attention to the recovery of old industrial wastelands through brownfields initiatives and Superfund legislation and to making the Toxic Substances Control Act more effective. He was protecting the coastline whether the recreation beaches or the nurturing marshlands. In his last year he walked the Jersey Shore in the wake of Superstorm Sandy, secured bi-partisan support for his toxic substances legislation and, from his wheel chair, cast his final vote in support of tighter gun legislation.

He was a tough fellow and could be an relentless advocate.  Just ask the trucking industry that couldn’t budge him from the centerline where he stood in the way of increasing truck size and weight limits year after year after year. Ask the FAA whose employees’ merit increases were at risk while their work was incomplete on the redesign of East Coast airspace in the Newark/LaGuardia/JFK market. Ask Norfolk Southern and CSX who found the Senator immovable on key issues pertaining to assuring competitive rail service for his home port when Conrail’s assets were on the block. Was he always the advocate that some of us wanted him to be? No, but then you rarely find a senator who is that agreeable.

From start-to-finish Senator Frank Lautenberg was an advocate for his New Jersey and his United States, which he strove to make  better by improving the quality of people’s lives and the means of commerce.    Pbea

(A version of this ran on The Ferguson Group blog.)

 
 

What’s the Big Deal about Public Works?

In Congress, Federal Government, Infrastructure, Ports, Surface Transportation Policy, Water Resources on March 9, 2013 at 12:04 am

Questions of the Remotely Curious:

  • Why should I care if Congress approves a WRDA bill…and what’s WRDA anyhow!
  • So what if the surface transportation bill expires!
  • What business does Washington have to do with the  sewage treatment plant the county is trying to build!
  • And why the hell does the Army Corps of Engineers have anything to say about clearing the muck from the marina where I keep my boat!

Yeah, and what’s the big deal about public works!

The average person who has no experience with government-at-work might be given a pass if he made such not-really questions.  The average Federal elected official should be expected to know…or at least quickly learn…the answers.

Would it surprise you to learn that too many folks in Congress today don’t know and…judging by the rhetoric…may not care.

Over 200 persons were first sworn into House of Representatives membership in just the past four years.  Many of them came to reside in Congress without prior legislative or other public office experience; many came with the intent to shrink government and cut spending. While those objectives are worthy of debate we are seeing in the fiscal brinksmanship and political gun play (“Call of Duty 6: Fiscal Warfare”?) how the give and take of real debate has been hard to come by here in Washington. (Consensus? Fugetaboutit.) New congressional Republicans, those of the Tea Party strain, have been a particular challenge for their Republican colleagues who came…well…to legislate.

Not too deeply into the last Congress Rep. John Mica (R-FL), then chair of the House Transportation & Infrastructure Committee, came to publicly bemoan how a troubling number of freshman who were assigned to his committee had little interest in producing the aviation and surface transportation bills that were overdue for Hill attention.  Mica publicly would cite the large number of legislative neophytes who–oddly–were poised to vote against the meat-and-potato policy and program of a public works committee. Why? Because they said they took the trip to Washington to gut government and its budget.

So it is to Chairman Mica’s credit that his committee eventually did produce the transportation authorization bills, albeit ones that didn’t adequately address the full cost of tackling the nation’s infrastructure needs.

Today, Rep. Bill Shuster (R-PA) heads the committee.   He faces the same challenge as his predecessor, Mica, and expectations as his father, Bud.  From the get-go he identified his committee objectives, which include the first water resources bill (WRDA) since 2007 and a robust surface transportation reauthorization bill including possible funding initiatives to repair the failing revenue stream for the Highway Trust Fund.

The chairman knows a price tag comes with maintaining and improving American infrastructure but he is all too aware that for some in the House and Senate it is a price they may be unwilling to pay. So before Shuster rushes headlong into bill writing he wants his colleagues on the committee and in the House to learn why it is essential for Congress to take up these issues. He has been conducting “roundtable” sessions for his committee members so they may hear from trade associations and other public and private sector stakeholders. He convened a hearing with a 101 course title–The Federal Role in America’s Infrastructure—and a Peaceable Kingdom kind of witness list.  And he has called on any and all persons who want to see transportation and infrastructure bills to get past third base to start their own education efforts on Capitol Hill.

Maybe, just maybe, the 113th Congress can be the did-something Congress.

FMC on HMT: Unintended Consequences

In Congress, Federal Government, Infrastructure, Ports, Water Resources on October 18, 2012 at 11:52 am

In July the Federal Maritime Commission released a study that claims a relationship between the Harbor Maintenance Tax (HMT) charged in U.S. ports and logistics decisions that result in some imports bypassing U.S. gateways and moving through Canadian ports to American destinations.

Concerns at the Ports of Seattle and Tacoma that the HMT are tilting the competitive field prompted the study.  These are long standing concerns that predate the cargo fee.

In the mid-80s Congress eventually acceded to the Reagan Administration’s insistence that the cost of maintaining Federal coastal channels be recovered through a new user fee.  The main question was how to collect the fee, which at that time was proposed to cover 40 percent of channel O&M.  It is now 100 percent.

The issue of maintenance fees and cost-sharing on improvement projects—another Reagan demand—prompted a split among port authorities. A “small port coalition,” consisting of ports of all sizes, many of which handled cargo that made it easy to find political allies, wanted to avoid a fee that would burden low margin cargo such as export grain and coal.  Some of those ports with outsize channel maintenance requirements fought any suggestion that the new policy require their dredging costs to be supported by fees collected in their ports.  If a port had to rely on its cargo volume to cover its dredging costs the New Yorks, Norfolks, and Oaklands would have an advantage, not to mention those ports with naturally deep water.

Notwithstanding the efforts of the “large port coalition” that dominated the container trade and favored a charge on cargo tonnage, the small port coalition had success in defining the revenue mechanism. Key committee leaders, most notably Chairman Bob Packwood (R-OR) of the Senate Finance Committee, settled on a fee that would go easy on American export commodities and, as it happens, raise a tidy sum for the new Harbor Maintenance Trust Fund. The new HMT would be applied to cargo value, not tonnage.

Seattle and Tacoma (members of the large port coalition, for the curious reader) opposed the HMT provision. They sought to be exempt from the cargo fee, fearing the advantage it would create for nearby Vancouver, B.C. in the container trade. (Did they even imagine a Prince Rupert was in their future?) Their objections to the HMT won them only a section in the new WRDA ’86 law that tasked the Treasury Department, where the Customs Service was located, to study and report to Congress on any effect the HMT had on diverting cargo from U.S. ports.

A year or so later Customs reported back with its conclusion: no effect of diversions.  With no formal report to refer to one wondered how Customs arrived at that determination.

In the 25 years that passed since the HMT became law we have seen the tax increase from 0.04% to 0.125%, the Supreme Court quickly came to a 9-0 decision and voided the HMT on exports, and the Harbor Maintenance Trust Fund’s unexpended and seemingly untappable balance has ballooned to over $7,000,000,000.

Through those years, and with the addition of Prince Rupert to American West Coast woes, the Sea-Tac ports have pressed the argument that the HMT contributes to the loss of cargo. The fact that those ports benefit little by the HMT revenues—they require little in the way of dredging—is salt in the wound.

Enter the Federal Maritime Commission. Washington State senators asked the FMC for analysis of the extent to which the “HMT and other factors impact container cargo diversion from U.S. west coast ports to west coast Canadian and Mexican ports.”

The FMC was fertile ground for such a request. In the 1980s Maryland Port Administration attorney Richard Lidinsky energetically fought “Canadian diversion.”  Today he chairs the FMC.

The FMC inquiry commenced in late 2011, public comments were received, and the resulting “Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports” was released in July 2012.  The conclusion: no FMC related law or regulation is violated in the use of the Canadian ports but the HMT plays a role to the extent that it adds to the cost of transportation.

The FMC study noted that ports compete on “a wide variety of variables.” (Such was the essence of the shipper and carrier comments–easily the most detailed and responsive comments submitted in the public process–that didn’t confirm the report’s presumption that the HMT is a factor in decisions to use Rupert.)  The study found no significant difference in cargo transit times moving through the U.S. and Canadian gateways. It acknowledged that the rates through Prince Rupert are lower but stated that other factors in the supply chain make it “difficult to conclude that transportation costs are significantly lower.”

The study employed a ports elasticity model developed years before by Dr. Robert Leachman. The FMC concluded that if the HMT (estimated to average $109 per FEU) were eliminated in the Sea-Tac ports, or if an equivalent charge were put on the U.S. bound cargo when crossing the land border, “up to half” of the containers “could revert to using U.S. west coast ports.” The report concluded that the HMT “does appear to be one competitive force that is not based on natural competition, but may indeed be a legislative disadvantage on some U.S. ports” i.e., an unintended consequence.

What is one to make of the study?  It is not conclusive in the way we like to have questions settled.  The FMC document has its critics within the agency, with two commissioners voting against its release. One called it “a political policy paper to justify a predetermined conclusion.” The other wondered why, if the HMT is such a discouragement, does Canada-bound cargo use U.S. ports?

After 25 years do we yet know the extent of the problem, assuming it is a problem?

If anything, the study gives Sea-Tac and their advocates in Congress something to quote as they lobby for a fix. One such fix, an exemption from the HMT, is not in the cards. (Why would other ports go along with that?)

Legislation has been drafted to apply an equivalent charge on U.S. cargo when it crosses the land border (a “land border loophole”?), the revenue from which might be put to making freight improvements. But is the FMC study enough to convince Federal policy makers to slap a fee on cargo entering through Canada or Mexico? Dress it up to look like a user fee to support infrastructure improvements but it still will come off as a penalty for not using an American gateway. The cargo interests will fight it, probably the railroads, too. And don’t expect the Commerce and State Departments and the White House Trade Representative to be mute on the question.

The valuable but imperfect HMT (title  for another blog entry?) continues to create problems while feasible solutions elude us.  Meanwhile, look to the east. There on the horizon are Nova Scotia ambitions to establish a Rupert-on-the-Atlantic.

The fight against the HMT is 25 years long and counting.  Pbea

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