Marine Transportation System

Archive for the ‘Ports’ Category

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.)

 
 

WRDA Words

In Infrastructure, Ports, Water Resources on May 7, 2013 at 12:05 am

The Senate is about to take up the first water resources bill since President George W. Bush signed WRDA 2007 into law.  By the count of many stakeholders–ports, river dependent shippers, flood weary communities–it is around four years late.  So if, for argument’s sake, the Senate passes the bill this month of May will WRDA 2013 spring into House action and to the desk of President Obama before Tidal Basin cherry trees feel the autumn cold and drop their leaves?  There’s reason to doubt it will happen that quick. But rather than peer that far into the legislative fog, let’s take a look at what is before the Senate now.

Committee Chairman Barbara Boxer (D-CA) and Ranking Member David Vitter (R-LA) proudly produced S. 601 with the full support of the Committee on Environment and Public Works. They patterned their WRDA 2013 bill after MAP-21, which emerged from a dysfunctional Congress with bipartisan support. The water resources bill would authorize Army Corps of Engineers civil works projects to move ahead, update and reform parts of the base law dating to WRDA 1986, and attempt to streamline Federal process and delivery (construction) of projects. There is a lot to pick at and find fault with as with most public works bills. Some stakeholders will see more benefit than others. But for an economy that has been going wanting for the stimulus of public works construction the bill’s advancement to the Senate floor is being trumpeted. Five hundred thousand jobs, or so they say.

The bill has run into some buzz-saws. Environmental organizations and “tax-payer” groups have  loudly complained. It might be said that both are traditionally unfriendly to water project bills. The former argues for keeping navigation and other projects to an absolute minimum while favoring “environmental projects,” such as habitat restoration. The latter assumes there will be wasteful spending, which I would argue was certainly more true before the reforms of WRDA 1986 than it is today. The bill will result in “overspending, overcapacity, and substantial and unnecessary damage” to estuaries and harbors, or so they say.

Then there are the complaints made by leaders of the Senate Appropriations Committee who predictably don’t like sections having to do with with the Harbor Maintenance Trust Fund. House and Senate Appropriators don’t like being told they have to fund seaport channel maintenance at the rate of collected Harbor Maintenance Tax revenue. And it’s not just because setting funding levels is their prerogative. It’s the little matter of having to come up with around $700,000,000 in additional funds. That’s a big lift in good fiscal times…and these are not good fiscal times.

Meanwhile Great Lakes senators who want the bill to assure full-use of HMT revenues for port channel maintenance are nervous, on behalf of their generally small-sized port industry, by the wording of the bill. The bill gives “high-use deep draft” ports priority status for HMTF expenditures. They want certainty that all small commercial ports are not “perennially put at the ‘back of the line’.” There are lots of other small ports in the country that would like that assurance spelled out.

Then there are the Washington State senators who have been champions of the ports of Seattle and Tacoma. Budget Committee chairman Patty Murray (D-WA) is in a strong position to say something about how much HMTF funds are budgeted, how the monies are being used and, more parochially, how the collection of the HMT in Pacific Northwest ports can be a reason for U.S. imports to enter North America through Canada.

Let’s not forget the Administration in all this. The White House official view cites reasons why the bill “doesn’t currently support all” of the Administration “key policies and principles” but it is carefully worded not to threaten a veto. It echoes the complaints of environmental organizations in the Statement of Administration Policy released today. The bill’s project streamlining provisions, among other things, undermine “the integrity of several foundational environmental laws.”

In her testimony before the committee where she once worked, Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy told Boxer and Vitter last February that the Obama Administration supports a channel maintenance  spending level that “reflects consideration for economic and safety return of each potential investment” in maintenance as well as taking into consideration “other potential uses of the available funds,” the meaning of which is troubling for ports whose primary concern is ensure the use of “available funds” for harbor maintenance only. The testimony includes a flat statement in opposition to the idea of fully using collected HMT revenue for channel maintenance. Spending “should not be based not the level of receipts from the current tax.”

The SAP has a few odds things in it, including an incorrect description of the proposed change to the cost-sharing requirement that ports have to pay part of the incremental cost of maintenance of  channels deeper than 45 feet. The bill would shift the sharing of costs to apply to channels deepened beyond 50 feet. It is in the bill as recognition of the increasing standard size of vessels and the fact that cost-sharing was to be required only when greater depths are needed exceptionally large vessels, which in 1986 were super tankers and colliers, not container ships.

Senators Boxer and Vitter have been preparing a “manager’s amendment” to serve as a substitute for the version of S. 601 that emerged from their committee. We await its debut because it will reflect the compromises that have been made to address some of those complaints.

Word is that the HMTF full-use provisions were weakened at the appropriators’ insistence in return for a pledge to increase O&M appropriations somewhat. Word is that changes were made to accommodate some concerns of environmental organizations. We now wait to see the words.      Pbea

 

A Red Cape Wish List

In Environment, Infrastructure, Ports, Water Resources on March 17, 2013 at 11:28 pm

The first formal expression of what the Obama Administration is looking for in a water resources bill came to light the other day in a March 14 letter from Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy to Senate Environment & Public Works Committee Chairman Barbara Boxer (D-CA). The letter provides requested “input on the development of a Water Resources Development Act.” It arrives none too soon. The chairman, with ranking Republican David Vitter (R-LA), is about to release their bipartisan recommendations for WRDA 2013.  A Committee mark-up session is scheduled days from now.

Ms. Darcy outlines a sort of policy wish list, one that has familiar themes from current and past Administrations–watershed planning, process improvement, and authorization of projects “most likely to generate a high return to the Nation.”  More notably the letter’s message crosses into territory that knowingly will have the effect of a matadors’ red cape in a dirt-floor arena.

For flood plain communities…the letter suggests that Congress “re-examine the Federal role following a flood in reconstructing public infrastructure including levees and other flood and storm damage reduction features.” It goes on to suggest reconsideration of “law and policies that influence where and how we rebuild.”

For shoreline and other flood prone communities…the Administration view goes further, calling on the legislature to “retroactively revise the stated purpose of all existing [Corps of Engineers] authorities that include flood control, storm or hurricane protection, or shore protection as a project purpose.” Reducing “the risk of flood damage in areas beyond the shore” is one thing; protecting and defending a shoreline alignment “for its own sake” is quite another.  Either way, it’s a timely subject just months after Superstorm Sandy carved its mark on the coastline.

What is driving this call for new water resources policy? Probably not much more than concerns about program cost and environmental consequence, aggravated by a whole lot of meteorological weirdness. Yes, global warming. And while both of those are concerns shared by some folks in Congress the letter’s recommendations run counter to civil works tradition and to the inclination of public officials to say yes to building and repairing solutions to flooding and the disappearance of coastline back home.

The letter doesn’t have a lot new—or reassuring—for the port/navigation community.  The statement on the navigation trust funds may break a few hearts but not new ground. The letter reiterates the Administration’s proposed fix for the broken Inland Waterways Trust Fund including a new fee structure, which the waterway industry has opposed in favor of building on the existing fuel tax regime.

It also expresses an unambiguous view in counter direction to the lobbying by ports and dredgers to increase channel maintenance funding and have full-use made of the Harbor Maintenance Trust Fund. Instead, the Darcy letter flatly states, “spending should not be based on the level of receipts from the current tax.”

That principle could be debated, but it fails to acknowledge the fact that the Corps of Engineers she oversees is on record as saying the annualized national need for port maintenance dredging is in the neighborhood of $1.5 billon, which is a whole lot closer to the HMT annual tax receipts, projected to be $1.659 billion this year, than the roughly $850 million budgeted by the Administration for O&M this year.

It’s hard to understand walking away from the obligation to maintain what you built when the lack of money ain’t an available excuse.  This from the White House that recently announced a “Fix It First” policy for U.S. infrastructure.

Interestingly enough, arriving the same day as ASA Darcy’s letter was an email message with a transcript of a recent meeting at which President Obama talked to mayors, seemingly off-the-cuff, about the need to address port and waterway infrastructure in order to keep the U.S. competitive on the export market. In fact there are faint signs that his next budget (FY 2014) will have a fairly strong channel maintenance budget, but the Darcy letter is a clear indication that we should not look for any structural improvements in policy to guarantee full-use of the HMTF.

The Senate committee will meet soon to take up a WRDA bill. It will attempt to address the HMTF issue, the insufferable slowness of the civil works project planning process, the brutalizing of coastal areas by powerful storms, and a lot of other things in need of attention. But views expressed in the Darcy letter, on behalf of the Administration, may not be represented to any significant degree, in a bill that is a bipartisan product. And it won’t come close to resembling the bill that the Republican dominated House will produce later this year.  Pbea

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.

Two Trust Funds in Search of a Solution

In Infrastructure, MTS Policy, Ports, Water Resources on October 25, 2012 at 3:31 pm

Yesterday Tennessee Senator Lamar Alexander (R) stood near Chickamauga Lock in Chattanooga and said, “We have two trust funds to deal with waterway infrastructure like the Chickamauga Lock, and neither of them works.”  He tells the truth.

The senator and former governor convened a presser to preview legislation–the American Waterways Act–that he and others will introduce when Congress resumes its session after the November election. The still in draft bill would tackle some financially challenging issues because the Inland Waterways Trust Fund (river system) and the Harbor Maintenance Trust Fund (for the most part coastal ports) are both at the center of current navigation infrastructure problems and the ultimate solutions to those problems.

The IWTF fund, with collections from a fuel tax on commercial vessels operating on the inland system, raises insufficient funds for what is a large, backlogged demand for lock and dam construction and rehab work. The users of the system have proposed changes in cost-sharing as well as increases in the fuel tax.

As has been discussed elsewhere in MTS Matters the Harbor Maintenance Trust Fund is a problem of a different kind. The ad valorem tax on cargo raises sufficient funds to cover the nation’s channel maintenance requirements but the Administration and Congress do not spend O&M funds at a rate commensurate with collections. The crafters of the planned bill are said to be working on how to assure annual appropriations at full-use levels as well as to free the accumulating surplus–now above $7 billion–for port projects.

The greatest challenge in drafting the legislation is the high hurdle presented by congressional budget rules. Based on what we have heard, the drafters intend to enable  the spending of tens of billions of dollars for construction and maintenance work over a 5 to 10 year period.  Even if the existing and future collections from the fuel and cargo taxes can handle that, as is the plan, Congress would have to effectively waive budget rules to get past procedural barriers. That doesn’t happen often. Moreover, it would require consensus among the key actors and probably a majority in the House and a super-majority in the Senate.

And while there has been significant growth in the ranks of advocates on these issues, solutions to the IWTF and HMTF problems have yet to achieve that kind of consensus.

The AWA–if it isn’t premature to assign an abbreviation to a measure not yet introduced–would have other provisions.  Senator Alexander identified these:

  • address regulatory and permit process streamlining projects by adopting the MAP-21 approach to speeding projects;
  • shift the 50/50 cost-sharing requirement for coastal channel maintenance from 45 feet to apply to those channels deeper than 50 feet;
  • open the HMTF to now ineligible port projects, to include landside projects (especially to satisfy ports like Los Angeles that don’t have much in the way of O&M dredging needs);
  • authorize a 5-year construction program to advance projects to deepen ports to accommodate post-panamax ships needing around 50-foot depths (to include Charleston and other planned deepenings that meet the present 3.0 benefit/cost test);
  • make the increasingly expensive Olmsted Lock project on the Ohio River a fully Federal responsibility, which would free IWTF resources to start other waiting construction projects; and
  • require the Federal government to follow the Inland Waterways Capital Development Plan developed by the industry and Corps of Engineers for an increase in the fuel tax and a 20-year schedule for projects.

The guts of the Inland Waterways Capital Development Plan were put into legislative language found in HR 4342, the WAVE 4 Act,  introduced earlier this year byRep. Ed Whitfield (R-KY). Worth noting, the Administration put forward a different proposal to address the ITWF problem and had been at loggerheads with the industry with no agreement in sight.

The likely sponsors of AWA are from both parties and will include principal sponsors Lamar Alexander and Lindsey Graham (R-SC), plus others who may include Dianne Feinstein (D-CA).  Feinstein and Alexander are the lead senators on the appropriations subcommittee that funds the civil works program.

Why are senators talking about introducing a controversial reform bill soon before the 112th Congress comes to a close? There are several answers, one of which is that the House and Senate are preparing to tackle major fiscal and revenue decisions (see “fiscal cliff“). Resolving the navigation trust fund problems could be made easier as part of the larger debate.  Also, as I mentioned in The WRDA Mantra post, an effort may be made to move water resources legislation (WRDA) during lame duck.  The AWA is squarely in WRDA territory and Alexander needs to be ready to jump on-board even if the odds of WRDA advancing are slim to none.  Push come to shove, the senators who introduce the AWA bill this year will be staking claim to the issue in the next congress.

Let’s face it.  The American Waterways Act, as it has been developing in the months leading up to Senator Alexander’s announcement, is an extremely ambitious package.  It will entail getting Congress to approve significant hikes in commercial navigation project spending, increase the fuel tax, venture into the touchy subject of expanding uses of the HMTF, and streamline permitting on some water resource projects that have been a favorite target of environmental conservation organizations…none of which are reasons to put a halt to such ambitious foolishness.

Said Lamar Alexander yesterday, “The Harbor Maintenance Trust Fund collects a lot of money, but doesn’t spend it well. The Inland Waterways Trust Fund doesn’t collect much money, but spends it well. This bill would fix the way our ports and waterways are funded so that we can meet the challenges they face…”

Here’s a challenge for a do-something Congress.  Pbea

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

One Hundred Percent Security

In Congress, Federal Government, Ports, Security on July 23, 2012 at 8:46 pm

Not even Ivory Soap is 100 percent.  It may float but, as the once ubiquitous slogan puts it, Ivory doesn’t do better than “99 and 44/100 percent pure!”

So if the blue chip labs of Proctor & Gamble can’t deliver a simple matter of 100 percent pure soap why should anyone think it’s possible to implement 100 percent cargo scanning before the boxes hit our shore?  …Or think 100 percent secure U.S. coastlines is possible. Okay, sure, that last one sounds a bit silly but we’re dealing in facts here.

In the months following the attacks of September 11 former Rep. Gene Taylor (D-MS) insisted that America could be completely secured along the over 12,000 miles of seacoast. A tight seal that would catch whomever and whatever might dare to sneak into our collective nightmare.  He persisted, earnestly, in pressing that point to a hearing witness, a retired Coast Guard rear admiral who found it hard to believe the congressman was serious.

In more recent years the Department of Homeland Security (DHS) has struggled with that kind of no-exceptions, no-excuses expectation. The sort that has plagued the TSA for much of its existence. Congress directed the U.S. agencies to go forth and have image and radiation scanning equipment installed in every overseas port that exports containerized cargo to the U.S. We don’t want terrorists to view our ports as easy gateways for nuclear weapons guised as consumer goods.

One result of al-Qaeda proving the nation’s vulnerability was an almost immediate national awareness of our seaport system. Open doors in the global village. America had security in place at airports–tragically loopholed as it was–while at our ports the Federal agencies were on the lookout mostly for contraband, plant disease, and the occasional stowaway. Flood-lit attention quickly zeroed in on the seaports and land borders. Persons such as Stephen Flynn filled the vacuum as government and news agencies required expert testimony and quotable expressions of alarm.

The policy response was understandable. New laws, quickly crafted regulations, and a flood tide of security personnel. A new department was created when small-government Republicans largely dominated in Washington.

By 2007 two maritime security laws had been enacted and a considerable security regime was in place in our harbors, on cargo ships and in the supply chain. Countries and companies trading with the U.S. were told to meet our terms. Hundreds of millions of grant dollars were spent to harden security in large and small ports. (Over $2,000,000,000 for port security grants since then.) Funding also was provided for three pilot tests of 100 percent scanning  in overseas ports. Then Congress upped the ante.

A new “full-scale implementation” requirement was put in place to deny entry to cargo containers unless they were “scanned by unobtrusive imaging equipment and radiation detection equipment at a foreign port before it was loaded on a vessel.” The shipping/logistics industry explained why that wasn’t good policy or particularly feasible. Nevertheless a deadline of July 2012 was set for 100 percent scanning along with authority for the Secretary of Homeland Security to extend the deadline as necessary.

Not surprisingly, in June Secretary Napolitano reported to Congress that the deadline would not be met and has pushed out the compliance date to July 2014.  Months before, the GAO gave testimony on the state of containerized cargo security.  It is a readable statement about the layered, risk-based security regime that is in place and the challenges the government has experienced both here and abroad in securing the country against smuggled nuclear devices.

The legislators stand 100 percent behind their 100 percent requirement. In an op-ed piece three House Members acknowledge that the original deadline was ambitious but want to keep the pressure on an executive branch they doubt wants to see full-scale implementation. “Cost and technology have never been the primary obstacles to meeting this mandate. What is missing is a sense of urgency and determination.” Rep. Edward J. Markey (D-MA) said in a Washington Post story, “I personally do not believe they intend to comply with the law…. This is a real terrorist threat, and it has a solution. We can’t afford to wait until a catastrophic attack.”

Don’t expect this issue to be resolved anytime soon. Few in Congress will go on record to remove the requirement.

Should we expect–even want–100 percent security at any cost? In a global supply chain so extensive and complex is absolute security possible? Ask voters if they are willing to be subjected to metal detectors and armed guards at their local Loews Cinema after what just happened in Aurora. Where will the next troubled mind chose to bear arms?  At the Harris Teeter meat counter?

In 2002 I met with the fellow who headed the transportation branch at the Office of Management and Budget. He and his colleagues were struggling with the budgetary response to September 11. They faced the practical questions of what can be afforded even when we had horrific cause to be generous with tax dollars–and indeed, the money flowed–and whether unlimited spending could really make the nation secure. How do we determine risk in order to set priorities? Could money buy the “full-scale” securing of the American transportation system? How does one make a public transit system 100 percent secure?

Go to the Ivory Soap website–actually a Facebook page–and you see this absurdly-reassuring corporate statement that could be a Madison Avenue rewrite of the preamble to the U.S. Constitution. “Ivory provides freedom from nonsense and complexity by giving you everything you need and nothing you don’t.”

Just don’t look for 100 percent.   Pbea

HMTF: A Bump and RAMP Strategy

In Infrastructure, Ports, Water Resources on April 27, 2012 at 1:19 pm

Bump and RAMP doesn’t sound like a sophisticated legislative strategy.  It certainly isn’t a complicated one.  But when one is talking about the world of dredging one must do what one can to make it sound interesting.

As I’ve discussed previously the RAMP Act is an attempt to remedy a failing of current law.   A tax is collected on some of the beneficiaries of port infrastructure–specifically channels, turning basins, anchorages–in order to cover the cost of maintaining–specifically dredging–that Federal navigation infrastructure.

You can read about the Harbor Maintenance Trust Fund (HMTF) by going to previous postings:  RAMP Gets Its Chance and  The Seven Billion Dollar Clue.  (Hmm…those like a lot like Hardy Boys titles.  Who?…oh, never mind.)

The procedural (point-of-order) solution in the RAMP legislation is not a complete solution.  There is nothing to mandate full funding of channel maintenance.

Absent an automatic funding mechanism that effectively bypasses congressional appropriations–which ain’t happening–the president will have to budget for channel maintenance every year and Congress will retain the prerogative to decide how much to spend.

Yesterday, today and tomorrow ports and other stakeholders have to make the case to Congress in support of the Corps of Engineers channel maintenance program.  While the RAMP lobbying effort, led by the dredging industry, has proceeded so has the routine effort to increase the level of appropriations for channel maintenance. Bumping up the annual funding has been the persistent and particular point of emphasis for the American Association of Port Authorities along with others.  And the effort has seen success.

Since FY 2009 the appropriation from HMTF funds has progressively grown from $773 million to $833 million in FY 2012.  The FY 2013 budget, now subject to appropriations committee attention, estimates $839 million will be used from the fund.

Most, but not all, of the appropriated amounts apply to port O&M costs.  Some goes to dredged material management facility construction, offsets for St. Lawrence Seaway tolls on the U.S. side, and for administrative overhead costs. If we look at the HMTF allocation to O&M the growth over that same timeline has been from $737 million to $767 million, in actual spending, and $779 million budgeted for FY 2013.

That’s modest growth, especially considering the fact that over the same period HMTF annual revenue (HMT receipts + interest) grew from $1.253 billion to an estimated $1.864 billion in FY 2013.

But it is growth in a time when Federal spending isn’t exactly growing like gangbusters.

One might attribute the growth to the RAMP effort, which commenced in 2008, and to AAPA’s bump-up strategy.  Those complementary and not exclusive efforts have shone a bright light on the inconvenient fact that the infrastructure maintenance buying  power of dedicated user-taxes has been capped while Federal-managed channels are allowed to shoal.

As of this writing, 44 percent of the House Members have cosponsored Rep. Boustany’s RAMP Act (HR 104) and over one-third of the Senate has signed on to Sen. Levin’s S. 412.  Those numbers reflect a bipartisan sensitivity to taxes collected but not used-as-promised as well as a greater awareness of the correlation between full-depth channels and the ability of U.S. exports to compete successfully on the global market.

That increased appreciation on Capitol Hill for the muddy, mundane world of maintenance dredging explain the two most recent and significant developments to date.

First, the House of Representatives voted, by voice, in support of full funding of Federal channel maintenance.  The vote was an easy one.  It doesn’t have an enforcement provision,  so there is nothing in the approved amendment to ensure full funding in future appropriations.  That explains why the amendment–a watered down HR 104, also sponsored by Rep. Boustany–didn’t have the opposition of committees that object to the RAMP Act as well as any other proposals for mandatory spending from trust funds.

That said, it is slightly stronger language than the “sense of Congress” provisions contained in the House and Senate transportation bills and which simply say what the Administration and Congress should do.  So, for the first time, the full House is associated with the view that the total spending from the HMTF should equal HMTF revenue.

Second, and quantifiably more significant, the House Appropriations Committee this week approved a record level of funding from the HMTF for FY 2013.   It is a handsome, marvelously round number of $1 billion.  It is over $150 million more than in the president’s budget, which itself represents an increase.

We don’t know as yet what is the comparable HMTF allocation on Senate side but the draft committee report is quotable:

The Committee understands that the O&M budget fluctuates from year to year due to periodic maintenance dredging requirements, however, the general trend should be for this budget to increase.

Yes, indeed…all the way to the annual level of user-taxes being paid to keep the channels fully maintained.  So far, the trend is in the right direction.  Pbea

HMTF: RAMP Gets Its Chance

In Congress, Ports on February 14, 2012 at 11:33 am

HR 7, the surface transportation (and energy) bill that was reported from the Transportation and Infrastructure Committee in the wee hours of February 3, has a wee Water Transportation title whose only provision is hortatory language about full use of the Harbor Maintenance Trust Fund.

The HMTF, along with the Inland Waterways Trust Fund, was left out of the full-funding fixes that the transportation committees muscled through Congress for the highway and transit programs in 1998 (TEA-21) and Airport Improvement Program in 2000 (AIR-21).

Chairman John Mica (R-FL) wanted to do something to remedy that oversight and, for the moment, that something is the “sense of Congress” that the HMTF “is not being used for its intended purpose” and fails “to provide the service for which it was established is unfair and places the National at economic risk.”  The Administration “should request full use” for channel work and “Congress should fully expend” what is in the fund.

Optimistically, the language is a placeholder for something with a bit more teeth, specifically the text of HR 104, the RAMP Act, that Rep. Charles Boustany (R-LA) and 171 colleagues sponsored in the hope of prying more out of the trust fund for deep draft channel O&M.  RAMP is an opaque acronym for Realize America’s Maritime Promise, the coalition that has advanced the issue.

HR 104 is modeled on the point-of-order approach employed in AIR-21 and which has had a role in leveraging substantial funding from the Aviation Trust Fund. However that doesn’t mean the procedural remedy would ensure full-funding from the HMTF. There is no guarantee. For that reason HR 104 is thought to have a better chance of winning Hill approval than would, for example, a mandatory spending requirement that is  the Hill committee turf battle equivalent of Iraq invading Kuwait for its oil.

The bill is intended to force the hand of the Appropriations Committees. But, you see, appropriators like to protect their prerogative to appropriate when, how much and for what. That explains why appropriations leaders are fighting RAMP. That and the fact that the appropriators have a long and bruised memory of being bested by one of Mica’s predecessors, Bud Shuster, in the TEA-21 and AIR-21 “truth in budgeting” fights.

There’s another reason. Assume the RAMP Act becomes law. If appropriators were forced to add, say, another $500,000,000 for channel maintenance they would have to do so within the parameters of the annual budget cap established through a separate budget process. If that cap isn’t increased by $500,000,000 then the added O&M money would have to come from other program areas. Having to cut a half-billion dollars is when it isn’t any fun being on the Appropriations Committee.

Chairman Mica decided on a strategy to add the HR 104 to HR 7 when the latter moved to the House floor for amendments. With 171 co-sponsors and a sustained advocacy effort on the part of ports, dredging contractors, the U.S. Chamber of Commerce and others, an amendment stands a pretty good chance. RAMP advocates also are pressing for the Senate counterpart measure, S. 412, to be added to the MAP-21 surface transportation bill, S. 1816.

On February 1, the Ways and Means Committee held a maritime taxes hearing. Rep. Boustany, who chairs the Oversight Subcommittee of the tax panel, used the hearing to make the case for his bill. He polled witnesses from four ports and Louisiana’s agricultural commissioner.  All spoke to the economic efficiencies of vessels operating at full capacity when provided sufficient channel depth. When allowed to make the most of a ship’s capacity US exports prove to be more competitive on the world market.

On February 3, Ways and Means met on a bill to extend the Highway Trust Fund related taxes, the essential revenue piece for HR 7. Ways and Means Committee does not have jurisdiction over the HMTF even though it does have jurisdiction over the Harbor Maintenance Tax. That didn’t prevent Rep. Jim McDermott (D-WA) from offering an amendment to 1) add the RAMP Act to the bill and, 2) increase eligible uses of the HMTF. Having naturally deep water the ports of Seattle and Tacoma are among a small number that have little need for channel maintenance funding and in that way do not benefit by the cargo tax collected in those ports. (See the fairness discussion in the previous MTSM post.)  Rep. McDermott explained that by expanding eligible port uses of the HMTF to include “infrastructure improvements or repairs” Seattle, for example, might obtain funding for a needed seawall project. As noted, the committee had no jurisdiction. The amendment was withdrawn. Rep. Boustany said he would work with Rep. McDermott on the matter.

This week on the House floor Boustany amendment #180 will be offered to HR 7. Rep. McDermott will attempt his amendment #178. And you can watch it all on C-Span.  Pbea

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