Marine Transportation System

Posts Tagged ‘Congress’

The Murray-Cantwell Approach to Problem Solving

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

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

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

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

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

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

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

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 The HMT would be repealed and then, for all practical purposes, recreated as the “MGMA User Fee.”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

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

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

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

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

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

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

Bottom Line Thoughts on the MTS

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

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

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

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

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

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

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

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

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

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

The Late Senator Frank Lautenberg

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

Frank_Lautenberg,_official_portrait

Senator Frank Lautenberg
1924 – 2013

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

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

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

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

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

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

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

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

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

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

 
 

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

The WRDA Mantra

In Congress, Infrastructure, Water Resources on October 16, 2012 at 7:28 pm

Perennial Question: Will there be a WRDA?  Perennial Answer: Eventually.

The WRDA question is one of the more predictable queries heard over the course of every two-year Congress.

It is legislative Zen among the water resources community in Washington where mind-and-body is focused on achieving “WER-da.”

Likewise, that focus is found in the hinterland where flood control, navigation, shore erosion and environmental restoration projects are the infrastructure of economic stability and survival.

The Water Resources Development Act and its ancestral statutes dating back to the early years of this country are the bases for the civil works program conducted by the U.S. Army Corps of Engineers on behalf of the Nation, States, municipalities, ports and communities.

For the better part of the 112th Congress WRDA has been missing inaction (pun intended).  But at a Senate Environment and Public Works Committee hearing just weeks ago WRDA was anything but dead. The urgency to get a bill done was the message of the day that Chairman Barbara Boxer (D-CA) wanted everyone to know.  Her witnesses, requiring no prompts, were on-message.

The U.S. Chamber, International Union of Operating Engineers, Cargill, the American Association of Port Authorities, and the American Society of Civil Engineers said for the record why it is important for Congress to produce water resources legislation.

As the absent Ranking Minority Member James Inhofe (R-OK) said in his printed statement, “Our witnesses are here to further demonstrate the case for passing a WRDA bill.”  And so they did.

They talked about infrastructure integrity, jobs, trade, economic growth, competitiveness, etc. There were no hard questions, only ones to elicit a single response. {We want WRDA.}

“I hear you,” said Chairman Boxer.

Everyone including those committee members present talked toward the same goal of producing a WRDA bill to address various economic, infrastructure and public safety needs. One senator, observing that the one key witness not present for a hearing on this subject, the Corps of Engineers, made the point that significant reforms in the Corps civil works process are needed in the next WRDA.  The witnesses also said reforms and process streamlining are needed.

In her opening statement Barbara Boxer said “there’s no reason why we can’t get WRDA done.”  She held up as a model the bipartisan MAP-21 surface transportation bill that the committee produced earlier in the year and now is law.

Senator Boxer spoke in fully bipartisan terms. Pointing to how the labor and business witnesses were sitting side-by-side at the table before her she said that was purposely done:  “I want to make the point that we are united.”

The chairman said the hearing was to lay the groundwork for action in the lame duck session after the election. She told her colleagues that in the next weeks she will send around a draft bill and wanted their comments and suggestions. It’s going to be a bipartisan and “strong” bill.  Senator Inhofe‘s statement referred to how the lead senators already are “working hard to negotiate a WRDA bill.”

Senator Boxer asked the witnesses if they would be ready to work to get WRDA done much as stakeholders worked to see MAP-21 made law. They said they will. The supporting statements of other trade groups were added to the hearing record. No doubt they are unanimous in their views. {[We want WRDA.}

Congress adjourned a few days later for the final campaign stretch. The House and Senate will return for what promises to be a contentious lame duck session to address some unfinished items not the least of which is the looming “fiscal cliff.”  We’ll see then if Chairman Boxer is able to form a water projects and policy bill with her party  opposites on the committee.

I’m not clever enough to thrive in Vegas but I can handle this odds analysis. It’s not a good bet that a WRDA bill will become law this year.

In a short amount of time Boxer and Inhofe will have to get committee consensus on what can be the politically, and sometimes environmentally, touchy subject of water projects back home. The civil works process itself has been a particular target of senators who know the problem but lack agreement on a solution. Assuming the Boxer-Inhofe committee comes to agreement on detailed legislation the bill will have to be good enough to pass muster in the full Senate where one senator’s objection in the last weeks of Congress can kill a bill. Then there is the House where the no-earmarks rule has chilled even the thought of a WRDA bill escaping from the Transportation & Infrastructure Committee. Then there is the White House, which continues the long tradition of executive disinterest in the civil works program.

It’s a bumpy road ahead.

Chairman Boxer, who along with others of her colleagues genuinely want to move WRDA through Congress, put a good face on things at the hearing. Alas, there is little time left. After the election who knows how much interest legislators will have in the hard work of producing a projects and policy bill when some of them are packing up to leave Congress and others just want to get home for the holidays.

Then again, as Senator David Vitter (R-LA) said in noting it has been five years since WRDA 2007 was made law, the committee should start now even if their efforts have to extend into the new Congress that convenes in 2013.

Eventually.    Pbea

Now They’ve Gone and Done It!

In Congress, Infrastructure, Surface Transportation Policy on July 3, 2012 at 9:54 am

Washington, which is to say Congress, got it done.  Really.

The “it” is the surface transportation authorization legislation that sets the programs for highway, transit and related infrastructure–hereafter referred to as MAP-21 (“Moving Ahead for Progress in the 21st Century” for those of you who feel a need to know.)  The bill, H.R. 4348, won bipartisan approval of both chambers by large margins.

The roughly $52 billion per year measure’s importance can be gauged by the fact that the soon-to-be law determines how much the States and transportation agencies will receive for system maintenance and improvements. It also sets national policy for everything from truck size and weight to reducing transportation emissions to traffic safety.

MAP-21 is the successor to the 2005 SAFETEA-LU (no, I won’t spell that one out for you). Arguably, MAP-21 is a significant successor. It includes some reforms recommended by national commissions that were formed–and informed–by the earmark-excessive SAFETEA-LU.  It also contains provisions on two areas of interest that are, in their own way, groundbreaking: freight and channel maintenance.

Back in 2005 once the dust had cleared following the House and Senate negotiations that produced SAFETEA-LU the freight interest groups were surprised to see the main freight infrastructure funding provision laying there in the dust.  It had been cut out.  It took the Freight Stakeholders Coalition–ports, railroads, shippers, truckers, you name it–no time to regroup and work to get–seven years later–freight policy provisions in the next bill.

Today there is reason for celebration. While a $2 billion National Freight Program didn’t survive the conference some freight provisions were adopted in the final version that is going to the White House for signature.

  • A National Freight Policy is established with goals to improve the “condition and performance of the national freight network.”
  • A National Freight Network consisting of critical freight routes and other routes on the interstate system and in rural areas, is to be designated by the Transportation Secretary.
  • USDOT is to prepare a National Freight Strategic Plan in consultation with States and public and private stakeholders. The plan is to identify freight gateways and corridors (and their bottlenecks), future freight volumes, and needed improvements.
  • USDOT is to report on the condition of the freight network and improve data and planning tools to support outcome-oriented infrastructure investments.
  • States are encouraged to develop freight plans and organize freight advisory committees to give stakeholders input into freight project planning.
  • In lieu of a separate allocation of funds for freight projects the bill offers an incentive for freight project funding by allowing the Secretary to reduce the non-Federal share of a project’s cost if it meets criteria for improving freight mobility.
  • The bill also increases to $1 billion (over a five-fold increase) the popular TIFIA credit assistance program and authorizes $500 million for Projects of National and Regional Significance (PNRS).  Both of those have been particularly helpful in financing large freight related projects.

The other noteworthy provision in MAP-21 isn’t nearly as significant in dollar and program terms but deserves a mention.  In this so-called “highway bill” is a provision bringing attention to the underfunding of port channels and the continuing Harbor Maintenance Trust Fund problem.  The best that the House and Senate sponsors of the RAMP Act legislation could achieve was to get “sense of Congress” language that reminds the White House and Congress that the full measure of HMTF resources should be spent each year to keep U.S. port channels at their most efficient.

It was much less than the RAMP Act supporters (I among them) wanted but there is a legitimately positive way to spin it.  For the first time Congress–in the surface transportation bill, no less–acknowledges the need to make full use of the user-paid revenues to maintain the underwater highways for shipping. It is a stepping stone to greater funding as I suggested a few months back after the House Appropriations Committee approved a record $1 billion to be spent from the HMTF.

Let’s be clear. MAP-21 is not all that it should have been. For starters, it is only a 2-year bill compared to its 4- and 5-year antecedents. Why? Because the House, Senate and Administration conspired to avoid the crucial issue of new revenue as if it were a tick infested bed of poison ivy. Yes, that is a kicked can that you see down the road (to double down on metaphors). The corollary to that is the inability of the legislation to afford the demonstrable need for greater funding for infrastructure  improvements and maintenance.   The funding in the bill is half of what it should be.

The surface transportation bill also is not as multimodal as it should be. It is time for rail and domestic marine freight transportation to be folded into the nominally intermodal surface transportation policy. Commuter rail is. Passenger ferries are. The adage “freight doesn’t vote” continues to apply.

With the exception of rail freight project eligibility for TIFIA and PNRS financing the program remains a predominantly highway one. It’s time we move to a different policy paradigm that addresses transportation infrastructure needs in modally neutral terms.

But let’s not spend too much time lamenting what should be but isn’t. The legislators returned to their home offices over the Independence Day recess able to say they got something worthwhile done on a bipartisan basis.  Imagine that.   Pbea

That Transportation Can Got Kicked Again

In Congress, Infrastructure, Surface Transportation Policy on March 30, 2012 at 11:51 am

Congress this week again extended SAFETEA-LU by approving H.R. 4281, what might reasonably be labeled the kicking-the-can-down-the-road road bill.  This 9th extension buys 90 days of time for the House and Senate to come to terms on a new, surface transportation authorization measure.   And while putting off a decision on a multi-year bill is not favored by stakeholders the alternative—a complete expiration of program authority—would be far more problematic.  (The House Transportation & Infrastructure Committee release refers to “a devastating shutdown of highway and bridge projects” if the Senate didn’t follow suit.)

The Senate-passed MAP-21, S. 1813, which garnered 74 votes in that chamber, was touted by Senate and House Democrats as the simple answer to the House Republican Leadership’s unprecedented dilemma of having difficulty amassing sufficient votes to approve a surface transportation bill that was reported from committee nearly 2 months ago. But that short-cut to a final bill was unlikely for reasons including House rules.  House Members approved the extension, through June, by a vote of 266 to 158.  The vote was held off until a couple days before SAFETEA-LU was to expire and legislators are to start a two-week recess to give the Senate side few options other than to take the House extension or risk program shutdowns.

Attempts were made by Environment and Public Works Committee Chairman Barbara Boxer (D-CA) to substitute the short-term H.R. 4281 with her 2-year MAP-21 but her motions failed to win the necessary (to make for speedy consideration) unanimous consent.  Minority Leader Mitch McConnell (R-KY) objected each time.  If Senator Boxer had succeeded the bill then would have to go back to the House where one might expect it to be blocked, MAP-21’s bipartisan credentials notwithstanding.

That doesn’t mean that the Senate bill doesn’t stand a chance on the House side.  The bill’s co-author is conservative James Inhofe (R-OK) and MAP-21 won the votes of a substantial number of Senate Rs.  And while Inhofe has stayed clear of the “pass MAP-21″ chanting another Republican–DOT Secretary Ray LaHood–hasn’t held back.  And there are others.

MAP-21′s urban and rural transit provisions are more to the liking of that sector and while its freight sections are not all that they could have been–major provisions produced in the Commerce, Science and Transportation Committee having been left out on the way to passage–those titles have more to recommend than one finds in the House version. Among other things the Projects of National and Regional Significance category is given new life in the Senate bill.  (On the down side, neither bill goes farther than to offer an anemic “sense of” Congress provision on the growing problem of under spending Harbor Maintenance Trust Fund resources on navigation channels.)

So, expect the pressure to build for House action on a version closely resembling the Senate bill  if the Majority continues to struggle in assembling votes for its 5-year version, H.R. 7, the American Energy & Infrastructure Jobs Act.

What now?  Speaker John Boehner (R-OH) and John Mica (R-FL), chair of the Transportation and Infrastructure Committee, continue their recruitment effort to get sufficient votes to pass H.R. 7.  They face the opposition of many Democrats, which puts much of the onus on the majority side to produce the votes. The lack of earmarks in the bill certainly doesn’t help that but then part of the problem all along has been that the Republican Conference’s many anti-earmark freshmen just have not warmed to the idea of a 5-year, $260 billion dollar transportation bill.

And if you think a 90-day extension actually gives Congress 90 days to find common ground you don’t know Washington math.  There are fewer more than 30 legislative days on the calendar between today and the start of July…when the next extension may be needed.   Pbea

(An earlier version of the above appears on The Ferguson Group Blog at http://thefergusongroup.typepad.com/grants/2012/03/ninety-days-and-counting.html)

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