Marine Transportation System

Posts Tagged ‘USDOT’

LNG: Ports as a Catalyst?

In Energy/Environ, Green Transportation, MTS Policy, Ports on October 10, 2013 at 8:47 am

MTS Matters welcomes a well-known and regarded figure in D.C. transportation circles. John Graykowski, a Principal of Maritime Industry Consultants, served as Deputy Administrator of the Maritime Administration, and for two years as Acting Administrator, during the Clinton Administration. He is an attorney with experience in both private and public sectors. The subject of LNG-fueled transportation and how it might develop in the context of maritime policy and port communities has been a focus of his attention in recent years. This is the first of his contributions to this blog’s musings on port/maritime policy—present and future.

Over the past year, LNG as a marine fuel has gone from novel concept to an accepted alternative fuel here in the United States. Some LNG-capable vessels are operating and more will be under construction as appreciation is growing for the environmental, economic and energy security benefits offered by LNG. This transformation of a marine cargo commodity to emerging marine fuel in here and elsewhere might lead one to conclude that the broad deployment of LNG throughout the U.S. is underway and faces no challenges or constraints—but this is not the case. Lagging behind LNG-fueled vessel development here are the necessary market and regulatory structures that promote its widespread development.

The most common platitude in any discussion of LNG is the “chicken and egg” problem. Ship owners are loathe to make the large capital investment in LNG technologies absent certainty of supply.  Meanwhile gas suppliers are averse to spending $150 million or more on bunkering infrastructure without firm, long term purchase contracts by ship owners. This reflects the lack of historic relationships between the gas supply industry and marine operators, who purchase bunker fuel in virtually every port on a spot basis and never needed long term contracts.

Compounding that is a lack of understanding and knowledge about each other’s industries. Marine operators are not familiar with gas production, transportation and market dynamics and gas suppliers have little direct knowledge about the marine industry practices, requirements, and the like. Emblematic of the divide between the two industries is the simple fact that marine operators purchase fuel on the basis of metric tons or barrels of oil, while the gas industry sells LNG on the basis of million BTUs. Potentially complicating this market disconnect, are increasingly stringent accounting rules that likely require a long term LNG contract to be carried as a contingent liability, thus impairing a balance sheet and constraining future capital expenditures for a marine company.

Beyond these market issues are significant regulatory challenges related to both operational procedures for bunkering vessels and, more importantly, the siting, permitting and operation of small and medium sized LNG marine terminals. It may come as a surprise to some, but there are no existing uniform federal regulatory structures that apply specifically to LNG marine fueling terminals.

The United States Coast Guard (USCG) and Pipeline and Hazardous Materials Administration (PHMSA) each have regulations that apply to LNG fueling terminals. These regulations, however, were developed with large scale export and import facilities in mind and thus are largely inapplicable to a small marine fuel terminal and the fueling of other than LNG carriers. In many cases these regulations may conflict, which creates a large area of potential regulatory confusion and will most likely result in ad hoc development of LNG regulations. Adding to this uncertainty is the probable requirement that these facilities will be subject to local permitting actions, which can provide opponents of LNG the opportunity to intervene and delay the project.

Where do ports fit in this puzzle of a marketplace?

Ports can and should be a catalyst to spur LNG development throughout the transportation industries since they are at the center of marine activities in the United States. They provide a ready-made, multi-modal market for LNG expansion beyond large oceangoing vessels, which includes ferries and harbor craft, trucking, and rail operations. Port agencies may have some degree of jurisdiction, and even control, over property where LNG operations will occur. Depending on the port, it may have a role in the siting, permitting, financing, development, or even operations of an LNG fueling terminal. As a responsible economic development agency, a port can also play a critical role in the public education and promotion of LNG and the mitigation of local opposition to such projects.

Public port agencies generally understand this is a constructive role they are in a position to play. We are seeing that in isolated initiatives, notably on the West Coast, as well on an international scale with Antwerp leading a working group that includes the Ports of Los Angeles and Long Beach.

The expansion of LNG and compressed natural gas (CNG) as a replacement fuel in port related operations, already showing benefits, is also a powerful tool that ports can use to achieve significant emissions reductions and thus reduce the cost and impact of increasingly more stringent environmental regulations or measures to meet local community demands. If LNG is used to fuel vessels’ auxiliary generators while in port there may be no need to install costly shore power systems for cold ironing since equivalent emissions results could be obtained with LNG.

Collectively, ports can be in the forefront of a “Green” initiative, leading to the expansion of LNG as a transportation fuel throughout the nation. Individually, ports that facilitate LNG bunkering operations could find them to be a competitive factor in attracting and retaining liner business as those companies bring LNG-capable vessels on line to meet IMO global standards by 2020.

Much has been written of the significant impact that domestically produced natural gas and its liquefied form will have on our on our nation. Ports are where all surface modes of commercial transportation intersect and where LNG distribution will naturally occur. They are in a position to be influential in the development of national policies that promote and accommodate the broad deployment of LNG as a transportation fuel.
John E. Graykowski

 

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

So Spake the Freight Stakeholders

In Congress, Federal Government, Intermodal, Surface Transportation Policy on June 4, 2012 at 11:49 am

The Freight Stakeholders Coalition–a group of 18 or more organizations–spoke  freight to power.  But in today’s Washington, where the policy makers often wear policy blinders, will the Deciders (to use Dubya-speak) listen to the goods movement call for change?

Back in 2005, when SAFETEA-LU came out of the House-Senate conference cooker, the Stakeholders were dumbfounded to realize that the negotiators cut from the bill a key freight provision on which there had seemed to be agreement.   It was a 2 percent set-aside funding requirement for freight related projects.

It didn’t take long for the Stakeholders to regroup, this time in sync with the 50+ State DOT leaders (AASHTO), and produce a 10-point paper making a collective case for goods movement policy.    Still feeling the SAFETEA-LU sting years later the Stakeholders sent a letter to House and Senate conferees–the people tasked with coming up with a surface transportation bill to send to the President.  The letter contains the 10-point paper and concludes:

Now more than ever, the needs of our goods movement network must be addressed as system use continues to grow in lockstep with America’s recovering economy. The inclusion of a national freight plan with supporting policies, strategy and funding will help ensure America’s international competitiveness, create jobs and bolster the U.S. economic recovery.

But will the conferees–who largely take their cue from a small number of party and committee leaders–get it done?  As we learned from the sad SAFETEA-LU experience just because there are fairly substantial freight provisions in the MAP-21 Senate bill (S. 1813) doesn’t mean the final product will take goods movement seriously.   Besides, the House-passed version (H.R. 4348) was a Plan B vehicle to get to conference with the Senate.  It doesn’t have freight provisions.  For that matter, the version that was reported from the Transportation & Infrastructure Committee, but which failed to get to a House vote, H.R. 7, contains little in the way of substantive freight provisions.

Will the conferees get it done?  Larry Ehl rightly has cause to ask a more basic question: Are Transportation Bill Negotiations on the Rocks?  Ben Goldman also see bad news clues.  Pessimists, which may include most who work around Washington these days, would observe that this particular Congress seems to want to get not much done.  Some legislators–tea partiers especially–would proudly label that an achievement.

I still think it can get a bill done, however, despite a significant push by the private sector for strong freight provisions, one wonders what the House conferees will agree to.  Moving on…

Days after sending their letter to the conferees the Stakeholders gave cheers for a senator’s letter to Secretary of Transportation Ray LaHood.

In her letter of May 31, Maria Cantwell (D-WA) told Secretary LaHood to “tear down bureaucratic barriers and inefficiencies” in the modally stove-piped department by creating a freight-focused operation in the Office of the Secretary.  The senator pointed to ways that her home state has realized benefits of “freight coordination, prioritization, and collaboration” between the public and private sectors.

Over the years Congress has been importuned to create a freight office, establish an assistant secretary post for goods movement, etc.  But silly arguments about expanding government and creating new bureaucracy usually keeps those ideas from being given a serious hearing.  The implementing agency of national transportation policy remains structured as if the modes rarely if ever meet.

But as we know, in the real world they are meeting with ever increasing frequency as the market seeks ever more efficient ways to getting the job done.  On dock rail.  Intermodal yards.  Trains to airports.  Boxes shuttled from trucks to ships to barges to trucks to rail to….

The senator’s letter speaks to the need for a  “high-level and coordinated multimodal freight initiative.” *  She reminded the Secretary he doesn’t have to wait for Congress to create a formal structure.

… I strongly encourage you to establish a high-level and coordinated multimodal freight initiative at the U.S. Department of Transportation using your existing administrative authority.  If established, this initiative office should report directly to you, include a special assistant designated with specific responsibility for freight movement, and endeavor to improve federal freight policy, planning, and investment across all modes.

Or as one might say in Obama-speak: Yes, he can.

Secretary LaHood is leaving the Obama Administration later this year.  Let this be his gift to his successor.  He can set up a freight office down the hall from his own.  He can start the process of directing the DOT stovepipes, which in truth do talk to each other about some freight objectives and the occasional project, to be even more intentional about it.  He can ask his modal administrators and freight staff for their input on how best to get it done.  But most of all he can make a serious effort–as serious as his pretty effective distracted driving campaign–to bring his department and government policy to where the mostly private sector freight innovators have been for a good long while.   Pbea

* Kudos to the Coalition for America’s Gateways and Trade Corridors for its diligent efforts in advancing the freight message on Capitol Hill.

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

Make Time for Maritime Policy

In Federal Government, Marine Highway, MTS Policy on July 2, 2011 at 11:37 pm

The piece below appears in the June 2011 edition of the Eno Transportation Foundation newsletter, EnoBrief.  I appreciated the invitation to pen something on a maritime theme and decided to continue on the topic of American maritime policy, which is in need of attention.  Comments are welcome.  Pbea

“Now, what about our national maritime policy?” posed Norman Mineta in 2007, no longer Transportation Secretary, before answering himself. “Frankly, it is comparatively meager and unfocused.”

In his remarks to an industry finance audience he drew comparisons to the other modes that are more completely housed at USDOT, underpinned by substantial programs and funding, and enjoy large, strong and active stakeholder bases.

The former cabinet officer and present day Eno Board member’s prescriptions to address the sector’s ailments included things that might explain his waiting to address this “comparatively meager” sector only after he was out of office.

He said his recommendations can be accomplished “by overcoming the inevitable opposition – not only from without but from within.” He continued, “Within the maritime industry there are many agreements of mutual mediocrity.  People…will not want to see it changed.  The ground is shifting under their feet and they imperil needed financial investment and the innovation and the efficiencies it brings.”

He also mentioned some difficult issues that “need to be addressed within the industry” but “they are not reasons to oppose raising the importance of maritime issues on the national agenda.”

Secretary Mineta thought there was reason to issue an urgent call.  “Compared to the resources and focus that we have devoted to surface transportation and aviation, I believe we must quickly and dramatically increase our attention, our funding, and our national purpose with respect to maritime issues.  To fail is to become a second rate economic power with a decrease in our quality of life here at home and a reduced ability to effect change in international affairs.

“Simply put:  the United States must develop a comprehensive maritime policy and implement it through a thoroughly reorganized federal structure.” He said the public sector “must work with industry stakeholders to educate American citizens and their decision makers regarding U.S. reliance on a strong national maritime system.”

Four years later his concerns about maritime policy still deserve consideration.  And while Secretary Mineta’s remarks did not dwell on the issue of “ships and crews” the vessel aspect of present policy also warrants attention, especially if marine transportation is to play a role in addressing some of our nation’s transportation challenges.

The declining American flag presence in foreign commerce is being examined by the House Transportation & Infrastructure Committee, which prompted USDOT to commence a study, soon to be completed, to quantify the competitive disadvantage of American shipping.  Facing a competitor that flies flags of convenience, builds ships in China and Korea, and hires low wage crews the American operators will always find it tough to capture market share.

So let’s drill down to examine the protected American market. Not surprisingly, much of the Jones Act trade is carried in dry and liquid bulk vessels that lend themselves to commodities like grain and petroleum.  As for container shipping, the Jones Act fleet has only 26 vessels in service with a total carrying capacity of 56,631 TEU.  Most of those are in the Alaska, Hawaii and Puerto Rico trades. Sixty-eight percent of American container vessels (including barges) are at least 26 years old with 41 percent exceeding 30 years. (One can’t resist noting that a major program at the Maritime Administration is managing the disposal of U.S.-flag vessels.)

Meanwhile the capacity of U.S. commercial shipyards to build container and roll-on/roll-off ships is rapidly diminishing.  The Aker Philadelphia Shipyard is surviving for the moment on an emergency injection of State funds to build to ships on spec.  Aker, General Dynamics’s NASSCO Shipyard (CA) and Bay Shipbuilding (WI) announced layoffs last year. All 5,000 jobs at Northrup Grumman’s Avondale facility (LA)—a defense shipyard that could convert to commercial construction—are slated to end in 2011.

Why talk about U.S. container and ro/ro ship capacity?  Secretary Mineta, his successors at USDOT, and others have suggested that marine highway development is not only needed but inevitable for goods movement here.  The reasons include the mode’s inherent efficiency, its intermodal capabilities, public benefits to be derived from shifting part of the growing freight burden from land routes, and the extensive use of short sea and waterway service in other developed nations. Congress acknowledged as much by enacting the “short sea transportation” provisions of the Energy Independence and Security Act of 2007.

But to realize any of the above benefits—not to mention the renewal of a shrinking industry—these are needed: 1) a modern Jones Act fleet capable of meeting tough emissions standards effective in 2012, 2) cost-competitive commercial shipyard capacity to build the fleet, 3) vessel financing, 4) sufficient trained seamen and officers, and, let’s add, 5) a clear signal that Washington does not want America to lose its capacity to move goods on the water.

This telling is absent a call for or against Jones Act strictures. There are arguments for the status quo and for alteration.  But, as Secretary Mineta might say, the existence of the Jones Act in a world where cabotage requirements are commonplace is not reason “to oppose raising the importance of maritime issues on the national agenda” and reversing a decline in the American maritime sector.

“Now, what about our national maritime policy?”  

If you only have hot dog money in your pocket maybe you just buy a hot dog…but which hot dog?

In Efficiency, Infrastructure, Surface Transportation Policy on June 2, 2011 at 9:36 am

My previous post about the surface transportation reauthorization bill—TEA for short—ended with a bit of wait-and-see optimism.  That was then.  Here is a bit of face-facts pessimism to balance it out.  It’s the kind of yin yang see-sawing that this town sets the mind to doing.  Spend more than a few minutes thinking that things will turn out fine and then…

It would be so much easier if the main actors in the TEA deliberations agreed to settle for current revenue projections.

There is real money and then there is wish money.  Real money is in the bank, or will be. Wish money is what we want Congress to produce though new transportation revenue measures.  And what is the chance of that happening when?

We can speculate, as many do, that after the 2012 election office holders will muster what it takes to vote for new revenue. But after watching these first months of the New Washington—where donkeys and elephants can’t even agree which of them has the trunk—the best we may have reason to expect of the House, Senate and White House is that they will come to some basic agreement on the overall Federal budget.  Set your sights low.  A big transportation bill won’t figure into that deal.  And a more conservative Senate after the elections may cause our sights to be five clicks lower.  Meanwhile the TEA can gets kicked farther down the road.

Barring the use of creative accounting—the sort that will not serve us well as the government feels its way to solid fiscal footing—the options for a 6-year TEA bill could be limited to $556 billion (Obama), $339 billion (Boxer) and, maybe, $230 billion (Mica). The last of those assumes only projected Highway Trust Fund receipts. Those are the choices. In which case…

Let’s here assume Congress, at best, will extend the soon to expire excise taxes to avoid a total collapse of current programs.  The choice then that policy makers have is between A) extending current law authorization i.e., SAFETEA-LU and sit tight, and B) approving a new TEA bill that fits the revenue stream.

While hardly our preferred road to travel, the “B” route may not be a bad option.  Yes,  it would shrink transportation funding on which States and locals—already strapped for cash—now rely for road maintenance, transit projects, bike paths, and other uses enabled by over one hundred programs.  But—here’s the yang part–it also could have its benefits along with the pain.

  • Get past SAFETEA-LU by enacting reform policies e.g., performance metrics, that have emerged from the various advisory panels.
  • Give States maximum flexibility to put available Federal funds to their best use.
  • Focus Federal policy on what is in the national interest (building stage coach museums vs. easing interstate chokepoints).
  • Provide added impetus to enact creative leveraging of other sources of infrastructure funding e.g., expansion of TIFIA, new infrastructure bank.
  • Force government at all levels to adjust how investment decisions are made—where the priorities are and whether projects can be delivered more efficiently. (Recent testimony from the Congressional Budget Office—“The Highway Trust Fund and Paying for Highways”—provides a helpful review of options and makes the point that “selecting projects carefully can increase the highway system’s contribution to the performance of the economy.”)
  • Cause States to re-examine their own transportation funding mechanisms and, in States like New Jersey, face up to the under capitalization of transportation trust funds.
  • Give the nation the taste of intentional under-investing in America and the significant economic consequences of that.

Chairman John Mica (R-FL), facing the facts for months now, has vowed to get a 6-year bill done this year using existing revenue. That’s the best he can do given the current House majority and leadership.

Sen. James Inhofe (R-OK) is the top Republican on the Environment & Public Works Committee that will produce the bulk of the TEA bill.  As bullish as he has been on the need to produce a full 6-year bill (with earmarks!) he disagreed this week with his committee counterpart, Chairman Barbara Boxer (D-CA), who said she will put a full bill before her committee. Inhofe acknowledged that Congress may have to make do with current levels of revenue in a 2-year bill.

So here is a tough-love case for moving ahead today: improve the policy but face the fact that Washington, sadly, is not yet ready to go the full measure in addressing the terrible under-investment in our infrastructure.   Pbea

The Mineta Speech as a Starting Point

In Federal Government, MTS Policy, Surface Transportation Policy on March 30, 2011 at 11:34 pm

Former Secretary Norman Mineta provided a service in making his 2007 speech on the maritime sector (excerpts found starting here).  Since he went to the trouble, let’s use his suggestions as a starting point for an overdue discussion on rethinking and recharging US maritime policy.

Secretary Mineta called for moving maritime related functions of other agencies to the  Maritime Administration and renaming the agency according to the “Federal [ ] Administration” template used for the other modes.  There are 18 or so departments and agencies with program interest in marine transportation including USDA, NOAA, EPA and the Navy.  Reason enough to create an interagency Committee on the Marine Transportation System (CMTS).  Perhaps some functions could be consolidated in USDOT.  Others not so easily.  The navigation portion of the USACE civil works program, one that often is mentioned as a prospect, may not transfer well.  Not that the status quo is worth maintaining.  The excruciatingly-slow project evaluation and preparation process has ports pulling out their metaphorical hair.  But it’s not simply a Corps of Engineers process failing but one that Congress abets by being very unreliable in implementing the key stages of project authorization and funding.   The channel program is ripe for change.  But it is not a given that USDOT is the best place for it.  For that matter, program consolidation can cause problems as much as fix others.

The former Secretary suggests that MARAD must shift its focus to the condition of the nation’s ports and away from its long attention to “ships and crews.”  Actually that shift started during the Clinton Administration under Secretary Federico Pena.  He gave attention to port issues (including the dredging process) and MARAD has done all it can to grow its portfolio in this direction.  The agency has functioned as project manager for federally funded port projects in Alaska, Hawaii, Guam and elsewhere. (Mostly with DOD money.)  The 111th Congress authorized MARAD to manage such “port infrastructure projects”as money is made available.

I disagree with Mr. Mineta that there is too much focus on ships.  As long as there is a US flag requirement (see Jones Act), a diminishing shipyard industry and capability, and a US merchant fleet that is a shadow of its former self someone should pay it attention.  Clearly current law and policy isn’t getting the job done.  For that matter, I can’t recall a modern administration of either party that has cared much about cargo moving on US flag vessels.  (No, I won’t go back as far as Roosevelt.)

The suggestion also is made to rename the US Merchant Marine Academy and “give it our time and attention.” Reports issued during the Bush and Obama administrations, including one called “Red Sky in the Morning,” made clear that oversight and investment had been lacking at King’s Point.  So a turnaround effort continues today with Kings Point being .  But let’s face it.  Why bother making it a top notch maritime academy if the effort isn’t being made to grow the anemic maritime sector?  It would be nice if the young men and women who want a career in the merchant marine can actually find good paying jobs there.

Secretary Mineta suggested that if “ports and waterways funding is always being relegated to parts of the surface transportation bill, or the defense bill, they will remain second-class subjects…” He is saying that the sector needs, in effect, a SEA-21 much as there were TEA-21 and AIR-21—the highway and aviation authorization bills of the 1990s.  A dedicated maritime bill to advance maritime policy and related projects.  I think a maritime bill is in order, especially for addressing failings of current policy and the paucity of programs tuned to today.  But as long as Washington continues to think in terms of modal stovepipes the marine stovepipe will remain offshore and remote from the “surface” modes, system development and corridor planning where intermodal policy, transportation solutions, and major projects tend to be reserved for road and rail.

Marine transportation related provisions belong in an intermodal, multimodal surface–wet and dry surface, if you will–transportation  bill.

More on this subject to come.  Comments welcome.   Pbea

The Mineta Speech, Pt.3

In Federal Government, Infrastructure, Leadership, MTS Policy, Ports, Water Resources on February 8, 2011 at 3:07 pm

Former Transportation Secretary Norman Mineta offered his audience at the North American Port and Intermodal Finance and Investment Summit recommendations “we can act on immediately” to address the inadequate “role of maritime issues in our national transportation policy.”    Here are Pt. 1 and Pt.2. Pt.3 follows…

It struck some people as a bit odd.  Here Norman Mineta was talking about changes that are needed to strengthen U.S. maritime policy but he waited until he was out of office  to raise them.  Perhaps these were ideas that coalesced in his mind only once relieved of the day-to-day tasks of office.  Maybe not.   Ultimately it didn’t matter.  At least he was raising them now.

“What is the path to victory?  I have ten recommendations we can act on immediately.  Some are major and some seem to be minor, but are critical to success.

“First, the Federal government must reorganize the Maritime Administration – MARAD.  I would rename it for what it should become – the Federal Maritime Administration, and I would combine virtually all of the Federal maritime responsibilities there.  It should reinvigorate the uniformed Federal Maritime Service and transfer the aids to navigation responsibilities from the Coast Guard to it.

“The portion of the Army Corps of Engineers whose responsibilities and capabilities for our domestic ports and waterways should be relocated to the Federal Maritime Administration.  The Army performing as domestic civil Federal engineers is not a role for the military and the country would save money and get a better product if these services were transferred to a single maritime agency.

“Secondly, the new agency must shift its focus to the condition of the nation’s ports and waterways and the role of this infrastructure in the totality of the U.S. transportation system.  The current agency has too many of its resources and its structure focused on the issue of ships and crews.

“Thirdly, the Merchant Marine Academy in Long Island should be renamed the National Maritime Academy.  It should be a Federal service academy where every graduate must perform his or her service in the Federal Maritime Service or as a commissioned officer in one of the other services as they do now including the Department of Homeland Security.  This Academy is one of the major assets of the Federal government and we need to give it our time and attention.

“Fourthly, the Federal government must develop a legislative reauthorization process that puts maritime issues on the same priority and level of importance that surface and aviation assets currently have.  If ports and waterways funding is always being relegated to parts of the surface transportation bill, or the defense bill, they will remain second-class subjects where the hope is to get your particular project an earmarked status.

“Fifth, the U.S. must revitalize its role in international maritime organizations and its maritime relations with other countries.  Whether its treaties or issues involving security and trade, the U.S. needs to give more time and attention to these areas.

“Earlier I said to achieve this refocus on maritime importance, state and local governments, port authorities, and other government entities reliant upon maritime trade must work with industry stakeholders to educate American citizens and their decision makers regarding U.S. reliance on a strong national maritime system.

“Therefore, I believe the next set of actions should begin with port and waterway interests and industry stakeholders – including financial players who want to enter this sector – creating a national association whose charter is to accomplish the following action items:

“Educate the Congress and the presidential candidates on the role of the national maritime system and get hard commitments to take action.  Educate American decision makers and others on the role maritime assets play in how freight and goods are delivered to them.  Then enroll them in the effort to get maritime’s fair share of infrastructure resources.

“My final recommended action is that you accomplish all of the above by overcoming the inevitable opposition – not only from without but from within.  Within the maritime industry there are many agreements of mutual mediocrity.  People are familiar with this system and will not want to see it changed.  The ground is shifting under their feet and they imperil needed financial investment and the innovation and the efficiencies it brings.

“Also, there are issues that need to be addressed within the industry – labor agreements, the role that technology will play in the labor force, and how security issues will be addressed.  These are important issues that need to be vigorously debated and resolved – but they are not reasons to oppose raising the importance of maritime issues on the national agenda.  Take a side in these issues, fight for them, but do not let it dominate the larger objective.

“Finally, for those of you who are looking for quick investments in ports and maritime infrastructure, I’m not sure I’ve given you a lot of useful information.  And for you I’m afraid there is more bad news.  There are no quick rates of return to be made here.  Private investment into ports and infrastructure will have to be a true and long-term partnership.

“The up side as we say is that this is an industry that has the potential for tremendous growth and to have a real impact on our national transportation system.”

So there you have it.  A message that is important not so much for the specific recommendations made–although there are some good ones there–but for the fact that he was putting the spotlight on a problem that few public officials and industry people bother to talk about or even acknowledge.  See the next post for some additional  thoughts.   Pbea

The Mineta Speech, Pt.2

In Federal Government, Infrastructure, MTS Policy on February 2, 2011 at 11:16 pm

This is the second installment of a speech by former Secretary of Transportation Norman Mineta, who pointed to some ways that U.S. maritime policy was lacking.  While by no means a comprehensive critique of a policy and sector in need, his remarks were a high altitude flare signaling something needs attention. The first of three installments are here. The speech didn’t garner much attention at the time.  It is worth going back to take a look.

Norman Mineta was Secretary of Transportation when the Bush White House in late 2004 released the Administration’s U.S. Ocean Action Plan.  The Plan was a response to the recommendations made by the blue ribbon U.S. Commission on Ocean Policy.  The Plan included a presidential directive to elevate an existing inter-agency coordinating panel to be the cabinet-level Committee on the Marine Transportation System or CMTS.  USDOT was made one of the coordinating entities–the others being NOAA, USACE, and USCG–in the 18 agency CMTS.

During Mineta’s tenure and that of his successor, Mary Peters, the DOT Secretary’s Office evidenced more interest in a functioning, productive Committee on the Marine Transportation System than did the department’s own marine transportation agency.  To a certain extent it was understandable.  MARAD generally played second maritime fiddle to the Coast Guard when that uniformed service was under USDOT.  Now, with the Coasties out of USDOT and under the newly created Department of Homeland Security, MARAD leadership had little interest in sharing a coordinating role with other agencies since MARAD considered itself the U.S. maritime agency.

One even heard that Secretary Mineta made an attempt to gain program control over the construction and maintenance of navigation channel infrastructure, long the responsibility of the Army Corps of Engineers.  After all, the Department of Transportation had jurisdiction over other modal infrastructure and USACE had its share of critics.  I don’t know if any serious attempt was made then but, obviously, nothing ever came of it.  Not surprising.  Washington turf  comes in an especially change-resistant variety.  Nevertheless it remained a policy objective, as you will see.

The dispersal of marine transportation related matters among a dozen-and-a-half government agencies was just one of the conditions the former secretary pointed to 2007.  The Mineta Speech continues…

“Now, what about our national maritime policy?  Frankly, it is comparatively meager and unfocused.  Jurisdictions are scattered throughout the government.  One agency advocates for maritime trade, another oversees aids to navigation.  Another helps build and maintain ports and waterways, another regulates shipping, and another oversees security.

“With respect to congressional funding, surface transportation and aviation each have  major reauthorization bills with billions of dollars budgeted for projects, while maritime funding is scattered, uncoordinated, and subject to diversions for other purposes.

“Some of this is a result of history.  Our aviation system was essentially created by the federal government at the birth of commercial aviation prior to World War II.  And the federal government’s role in our national road system was guaranteed by the postwar vision of President Eisenhower who had witnessed the benefits of the German autobahn.

“But America was a collection of ports before it ever was a nation.  Most Americans became Americans by transiting on ships.  And the long history from colonies, territories and states with their own ports has created a tangled network of jurisdictions and authorities.

“Let me quickly add that I am not advocating for a central maritime system.  We only need to look at the knot of federal environmental laws and custom regulations to see how the federal government can inhibit the process with good intentions poorly implemented.

“However, in the increasing globalized economy; in a just-in-time-freight logistics system; in unprecedented energy challenges; and in ports that are at risk of becoming outdated; the Federal government must respond – and its response must be more than opening its checkbook.  And the private industry must do more than look for low hanging investment fruit opportunities.

“What is the path to victory?”

The text continues in the next post: The Mineta Speech, Pt.3.   Pbea

 

The Mineta Speech, Pt.1

In Federal Government, Infrastructure, Leadership, MTS Policy on February 2, 2011 at 12:09 am

Little over three years ago in Coral Gables, Florida, Norman Mineta addressed the North American Port and Intermodal Finance and Investment  Summit.  Six months earlier he took his leave from the George W. Bush cabinet where the Democrat served five years, with some distinction, as Secretary of Transportation. The subject of the speech was, in so many words, the poor state of the U.S. maritime sector and national maritime policy.  The speech didn’t garner much attention.  It is worth going back to take a look.

Norman Mineta’s 2007 remarks to the assembled didn’t amount to your typical boring whatever conference speech.  It ventured into waters not usually discussed by someone of his stature, especially once out of office when one doesn’t have to do the obligatory National Maritime Day luncheon address.  Former Cabinet members don’t usually waste their time talking about marine transportation.  There are much bigger and sexier things to talk about.

The well regarded former Transportation and Commerce Secretary (the latter under President  Clinton) and Chairman of the House Public Works & Transportation Committee knew what he was talking about when he observed that American maritime policy was a poor cousin to aviation and surface transportation policy.  (After all he helped craft major new policy directions for the aviation, highway and mass transit sectors.)  It is “comparatively meager and unfocused.”  The likable former Secretary was too kind.

Secretary Mineta’s speech, with just a bit edited out to reduce text, is provided below and in the next two posts.  One can find things to nitpick in the remarks but don’t let that get in the way of his message that current maritime policy is in need of major attention.

He set up his remarks by noting how then (and present) Defense Secretary Robert Gates made an “extraordinary speech” the week before.  Gates cited the need for the U.S. to place less reliance on American military power in the larger world, “readjust  its capabilities,” and put more resources into the non-military aspects of international engagement.

“I submit we have a similar challenge with respect to the role of maritime issues in our national transportation policy.  Compared to the resources and focus that we have devoted to surface transportation and aviation, I believe we must quickly and dramatically increase our attention, our funding, and our national purpose with respect to maritime issues.  To fail is to become a second rate economic power with a decrease in our quality of life here at home and a reduced ability to effect change in international affairs.

“And for those of you here today looking for private investment opportunities or to learn about trends in the port and intermodal industry, if you and I do not become part of this effort, I believe investment in this sector will be fraught with unmanageable risk and this space will have limited appeal for investors seeking to put their money in U.S. infrastructure.

“Simply put:  the United States must develop a comprehensive maritime policy and implement it through a thoroughly reorganized federal structure.  And to achieve this, state and local governments, port authorities, and other government entities reliant upon maritime trade must work with industry stakeholders to educate American citizens and their decision makers regarding U.S. reliance on a strong national maritime system.

“For the last half a century we have had a strong federal policy for surface transportation and aviation.  In surface transportation we have an interstate highway system; billions in federal aid for mass transit and passenger rail; and policies for interstate commerce that have encouraged strong freight rail and the commercial trucking industry.  The U.S. Department of Transportation is a major funding source, standard setting authority, and safety regulator.

“In aviation, the Federal DOT is essentially the operator for the national aviation system and its authority in running the air traffic control system, setting operational requirements, and safety standards is virtually absolute.

“Now, what about our national maritime policy?”

The text continues in the next post.   Pbea

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