Marine Transportation System

Posts Tagged ‘appropriations’

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 The HMT would be repealed and then, for all practical purposes, recreated as the “MGMA User Fee.”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

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

 

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

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

HMTF: The Seven Billion Dollar Clue

In MTS Policy, Ports, Water Resources on February 11, 2012 at 6:04 pm

The Harbor Maintenance Trust Fund (HMTF) is overdue for a remedy. How do we know? The unspent balance of Harbor Maintenance Tax (HMT) receipts, plus interest, is a mere $7,000,000,000.

HMT receipts are accounted for in the channel “maintenance” trust fund. However (not to be too picky) the Federal channel system is not fully maintained, and not for lack of money (see “mere” above). That and other information can be found in this 2011 report by the Congressional Research Service.

(A Moment for Trivia: The HMT is considered by some folks a user fee but as the Supreme Court figured out, unanimously and with little effort, the value-based charge on cargo bears little relationship to the service being provided i.e., maintaining channel depths and other dimensions for vessels, and “therefore does not qualify as a permissible user fee” under the export clause of the Constitution.)

The HMT is collected on import and domestic cargo handled at most US ports. On cruise tickets, too. The majority of what is collected comes from the high volume, high value imports; much less from comparatively low value domestic cargo moving between American ports. US exports cannot be charged, sez the Supreme Court.

The HMT was set to cover 100 percent of the cost of coastal channel maintenance. But if 100 percent of the channel maintenance that is needed isn’t done then 100 percent of the funds isn’t spent. It’s the kind of math that even I can understand.

Well, you might say, that’s okay because the money is safe in a trust fund. It is dedicated for maintenance dredging, right? It will be there when it’s needed, right?

Sure, but the balance has grown every year since 1994 and, more to the point, full funding is justified now. According to the Corps of Engineers the total channel system, including small recreational harbors, would cost around $1.3 billion a year. And even if the money is sitting in a trust fund collecting interest, it actually is being put to an unrelated purpose. Turns out the HMTF is a handy offset, especially when you are running a Federal deficit. Makes the deficit a little lower–$7,000,000,000 lower.

The money is collected for a specific purpose but is not being spent fully for that purpose. More than a few folks argue that is not fair. Especially the ones who have a direct stake in channel dredging such as ports and dredging contractors.

But then fairness has been an issue since the HMT and the HMTF were made law.

In the mid-80s Congress deliberated how to offset the cost of Federal channel maintenance (originally by 40 percent and then a few years later by 100 percent). Some ports argued that because heavy cargo weighs down a ship the new user fee for maintaining channel depth should applied to cargo tonnage.

Other ports took the opposite view, pointing to how heavier cargoes are often low value as well as low margin US exports. They said the charge should be on cargo value, arguing that containerized cargo could afford the charge. And since the vessel operators had already succeeded in fending off a fee on the vessel (arguably the direct user of the channel) it came down to which ports and kinds of cargo had the most, or least, votes in Congress.

The “fairness” question was decided in favor of the greater number of ports, which were export oriented and/or whose channel maintenance costs might be expected to exceed channel fee collections in those harbors.

As was patently obvious the major international gateways would produce a substantial portion of the revenue. Indeed in 2005—yes, most HMTF data is musty stuff because the Federal government unreliably produces the mandated annual report—the top cargo value ports of LA (13.7%), NYNJ (12.2%) and Long Beach (12.2%) represented nearly $380 million, which was more than one-third of HMT receipts. The top ten ports by value handled over 68 percent.

Some of them, as it happens, also require little in the way of channel maintenance. (I’ll get more into that subject in a later post.)

The HMT and the HMTF are in ways unfair and they are imperfect by design. The value basis of the tax can be explained as a seaport maintenance policy crafted for nation where no seaport has the same cargo, cargo type, volumes or geography and whose Constitution forbids Congress giving “preference” to one port over another (Article 1, Section 9).

We can’t be so generous and understanding with the way the HMTF is crafted in law and managed in the budget process.

Changing the basis of the HMT is politically unlikely (see “snowball’s chance in Honolulu”). As for the HMTF, changing the law is not easy but it is doable. (To be continued.) Pbea

Functional (Not WTF) Government

In Federal Government, Leadership, Politics, Surface Transportation Policy on August 2, 2011 at 3:51 pm

~ Political Drama in Three Acts ~

Cast:  Persons who come to positions in government to make a point and others who come to govern.  Neither conservatives nor liberals alone are cast as good at governing.

Forward:  Some like wielding power but their interest wanes when it comes to the nuisance of making government function well. Governing can get in the way of principles, pledges and making points. For some, government isn’t complicated; it’s just in the way. It’s the root of all ailments. They reach for the lancet with no less confidence as to the result than did medical men whose all-purpose remedy was to bleed the patient. Governing is not always done well, which makes it easier for the talented among the electeds and civil servants to stand out. 

I.  The urge to rant about the needlessly protracted debt ceiling decision-making is resisted here.  Today Congress finally sent “the deal” to the White House.

There is little evidence of  the art of politics; instead we witness the game of brinkmanship. Think playing chicken on a narrow country road. In the the driver’s seat are persons with an unswerving belief in what government shouldn’t be and a disinterest in the map of governance.  (They also sign a pledge to drive the car without benefit of headlights.)  They would just as soon call people names than to the negotiation table.

Props to the White House writer who came up with this for President Obama: “…for the first time ever, we could lose our country’s AAA credit rating…because we didn’t have a AAA political system to match…”  

That some people did come to town to be Governers may be what eventually pulls our national fanny out of the fire but one fears that the flames will burn hot for a good while longer.

Governers brought about the Simpson-Bowles fiscal reform commission, sweated over the details of its report, and were prepared to act on that report. Governers tried to make the “Biden negotiations” work…and didn’t walk out.  Governers make up the Senate’s bipartisan “Gang of Six.”  Whatever terms of agreement over fiscal policy to emerge from the fire over the next year will be founded in such efforts.

II.   The House panel that held longest to a bipartisan spirit in an era of increasing rancor is the Transportation and Infrastructure Committee.  Road projects know no party as the saying goes.

In July, Chairman John Mica (R-FL) released the highlights of his planned surface transportation bill.  It read much as he said it would.  Reforms, consolidations, and reined-in spending to match reduced Highway Trust Fund revenue. It is based on harsh reality and a tax-averse party caucus.

That interest groups responded with concerns about program eliminations and slashed funding was hardly surprising but the response from Mica’s Democratic counterpart was.  Nick Rahall’s (D-WV) sharp words may not sound unusual in today’s Washington but observers noted the change for a committee where the chair and ranking member stand together on most things and respectfully disagree on the rest.

In the last scene is the Federal Aviation Administration bill.  Mr. Mica takes on both House Democrats and Senate counterparts of both parties over disputed issues in the long unresolved bill that authorizes funding for aviation programs. He put a provocative provision in the House-passed extension and dared the Senate to not approve it. It didn’t. As Congress beats it out of town for the August recess this other Capitol stand-off leaves USDOT holding the bag with 4,000 non-critical FAA staff forced to stay home and contractors around the country ordered to stop work on airport projects.

III.   Not without reason many States are concerned, even alarmed, at the damage that can be done by non-indigenous invasive species.  Great Lakes States have a long history of struggling with what can arrive in vessel ballast water.  But what concerns certain regions of the country also concerns the United States and other nations.

Solutions to an international problem carried in the tanks of global shipping rightly belong to Washington and the International Maritime Organization.  A patchwork of regulation at the State level is opposed by the maritime community that values uniform rules from port to port.

When New York State’s Department of Environmental Conservation (DEC) issued its regulation the response from the industry was predictable and especially vigorous. Why? Besides being imposed at the State level it set an un-enforceable, technologically unachievable standard that initially is 100-times more restrictive and, later, 1000-times tougher than the IMO standard, which the US Coast Guard also is expected to require initially. (A committee background memo provides a summary on the issue.)

Governor Andrew Cuomo and his environmental commissioner inherited the DEC requirement that the agency regulators have insisted on despite all reasoned arguments and documented findings to the contrary.  Those regulators made individual vessel operators–a thousand?–apply for an extension of the implementation date so they would not have to meet the un-meetable standard.  They were held in suspense until February 2011, beyond the implementation date, when DEC finally sent out letters of extension. Most recently, Steve LaTourette (R-OH) decided that New York was not taking the concerns of others seriously. So he did something to get Albany’s attention.

Perhaps reason will prevail.  Industry and other States from whose waters shipping would be effectively barred if the regulation is enforced in New York waters await a decision by the new administration.  It’s called governing.   Pbea

WRDA: Commonsense Earmarking

In Federal Government, Infrastructure, Leadership, Politics, Water Resources on December 20, 2010 at 8:01 pm

A restaurant is moving into our nearby Del Ray Alexandria neighborhood (and not nearly soon enough, I might add).  It is unabashedly called Pork Barrel BBQ.

The name–chosen by a  couple of former Senate staffers now opening their first restaurant–has plenty of context in the Washington area where “pork barrel” is a mud that gets slung by persons of all partisan and ideological stripes  deservedly or not.  The observation goes…”One man’s pork barrel is another man’s needed project” (or favorite eatery, as the case may be).

But let’s reject the term for such time as it takes to rationally debate the issue of earmarking.

The previous post on this blog discusses how a broad brush is being used in the “earmark” debate in Congress where schizophrenia has been in great evidence as party members opine on the subject of how earmarking should be treated by House and Senate rules starting next year.

You can tell that rhetoric and ideology are getting their way when House GOP leadership is telling the rank and file to cut their griping and just deal with it.  It being a prohibition on all earmarking (writ broad).

The thinking person should have problems with that.  Putting aside an obvious constitutional argument, let’s consider how not all project types are alike.  And to keep this short, let’s stipulate that while some earmarks are  little more than grand ideas others have been subjected to considerable analysis.  Put water resource projects in the latter category.

Federal water projects go back to 1824 when Congress told the US Army Corps of Engineers to make rivers safe for navigation.  Today the Corps’ civil works mission includes navigation (the Federal system of coastal and inland channels), protection against floods and shore erosion, and other project types.  Today projects are put through  an extensive and expensive series of wringers: environmental, engineering and economic analysis, EISs, White House sign-offs, reports to Congress, contracts between local project sponsors and the Federal government (covering sharing of costs, provision of lands, etc.), congressional authorization of projects that satisfy the various tests (see WRDA), and  subsequent funding decisions by Congress.  Oh, and there’s the public input opportunities along the way as well as more recent provisions for “peer” review of Corps feasibility studies.

As Amy Larson of the National Waterways Conference put it in her letter to Republican leaders, “water resources projects are scrutinized, arguably, to a greater extent than any other capital investment program in the government…”

In his letter of November 29, 2010, Kurt Nagle of the American Association of Port Authorities told the leaders “it is vital to find a solution that provides a process that enables investments in needed improvements in transportation infrastructure to move forward in a non-earmark environment, especially new-start construction projects.”

Yes, you are bound to find “pork” by someone’s definition even among scrutinized water resources projects but that can be managed through oversight by appropriators.  But if the leadership is not taking the time to understand differences among project types, the high hurdles that navigation projects must overcome to qualify for authorization and funding, or the simple fact that most of the nation’s navigation system consists of FEDERAL channels that Congress is obliged to maintain and improve in the national interest, then they appear to be engaging in little more than indiscriminate mud slinging.   Pbea

 

Congress Should Ban/Allow Earmarking

In Federal Government, Politics, Water Resources on December 17, 2010 at 1:28 am

Step right up to the Washington Sideshow! See the lobbyist do strange things.

Go ahead.  Don’t be afraid.  Ask me about earmarking.  Then watch my head spin, my eyes bulge, and listen as I speak in exasperations, convolutions and contradictions.

Outside the Beltway earmarking might be a specialty of tattoo artists.  Inside the Beltway, and in the public sector among countless State and local officials–and even in the private sector–earmarking is about addressing solving problems and getting business done.  It is what you ask of your Senator or Member for your town or company or non-profit.

Earmarking, rarely adequately-explained in the media, is usually defined as bacon-brought-home.  The water supply project.  The library addition.  The in-the-bag contract with the Army.  The jet fighter the Air Force doesn’t want but your constituents want to build.  The genome research grant.  The road extension.

The claim is that earmarking costs money that otherwise would not be spent and, in any event, should not be spent in this time of record deficits.  Others respond that it represents “only” less than 1 percent of the cost of a major funding bill.

Defenders of earmarking reach for the Constitutional argument: Congress and Congress alone was given responsibility for making funding decisions.

Besides, goes the insulting tag line, why should Congress defer to “faceless,” “unelected” “bureaucrats” to decide what projects to fund or grants to award?

As a practice congressional earmarking grew significantly over the past 10 or so years.  Today thousands of earmarks populate annual appropriations.  Over 6,000  projects were in the last enacted surface transportation bill, SAFETEA-LU.  (The name that includes the then committee chairman’s wife’s name is itself an earmark.)

Recent congresses have adopted ever tighter rules to improve transparency and to formalize making earmark requests.  However in this post-election period we see earmark critics empowered to the point of sending once-proud practitioners to the public confessional from which they emerge chastened and converted to the cause.

The Washington Sideshow can be entertaining.  Righteous conservatives decry earmarking and then do an about-face as if it the real implications of an earmark ban on their ability to help their districts suddenly dawn on them.  (Doh!  I need that road project!)

Okay, enough about Congress.  What about your head spinning?

Okay. Here goes. Earmarking has gotten out of hand.  It’s the self righteous indignation about earmarking that has gotten out of hand. It used to be about bringing home the pork; today the farmyard is emptied of its livestock.  But there is an unreasonable demand for purity by tea party adherents and Republican leadership. Yes, but there definitely are bad earmarks and that’s got to stop.  But there is nothing bad about helping your district get funds for needed sewer lines. Something needs to be done.  Yes, something needs to be done.

Okay, okay.  So your head can spin.  What does this have to do with the MTS?

You will have to read the next post.  Here’s a clue…WRDA.    Pbea

Follow

Get every new post delivered to your Inbox.