Marine Transportation System

Posts Tagged ‘Channels’

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Holy Grail, PortMan!

In Congress, Efficiency, Federal Government, Infrastructure, Legislation, Ports, Water Resources on May 31, 2016 at 11:20 am

If you polled US port directors as to their major objectives in Washington, DC most would put at or near the top of their lists full funding, every year, from the Harbor Maintenance Trust Fund. They would say, if a dollar is collected through the Harbor Maintenance Tax in a given year, then a dollar should be spent on maintenance dredging in ports large and small. One of the other things many would want to see is predictable, biennial water resource bills (WRDA) — say “wurda” — to advance navigation projects.

Well, this is your day, Mr. and Ms. Port Director!

The House Water Resources Development Act of 2016 (H.R.5303) is the timely followup to the Water Resources Reform and Development Act of 2014 (P.L. 113-121), and a hopeful return to a two-year cycle. It also would make it possible for for ports to realize the long desired full-use of the HMTF and the Corps of Engineers harbor maintenance program to be funded directly — as in do-not-stop-at-the-Appropriations-Committee.

But before you start counting long needed dredging dollars…there’s a catch. (We are talking about the congressional budget process, aren’t we?)  Too good to be true?  No….but there is a caveat to this good news. Let’s give it a name….call it “Delayed Port Director Gratification.”

Here’s the story.

Peter DeFazio (D-OR), the ranking Democrat on the Transportation & Infrastructure Committee, made it a priority to include in the new WRDA bill a provision that would shift the spending of HMTF resources from being in the discretionary category and subject to appropriations to being mandatory. It would mean less constrained budgeting by the Office of Management & Budget and more funding for channel and anchorage maintenance. Overtime, the underwater infrastructure would be more fully maintained to design dimensions. Around five years ago the Corps of Engineers estimated that sustained annual funding of $1,500,000,000 would keep American harbors adequately maintained.

Today even those Federal channels in major ports are not kept at their originally constructed depths and widths. Small harbors often get the short end of the spending stick and the resulting deferred maintenance means a decreasing ability to accommodate commercial and sometimes even recreation vessels. A few years ago the Corps of Engineers reported that almost 30 percent of commercial vessel calls at US ports are constrained due to inadequate channel depths. (Note: Peter DeFazio also included a provision for the small, “emerging” harbors.)

Congress has come to understand that while Harbor Maintenance Trust Fund monies are authorized for spending only for certain port navigation and administrative purposes, the low level of appropriations has resulted in an accumulating, unobligated balance approaching $9,000,000,000. The HMTF has been a convenient pot used by budgeteers to make the Federal deficit look smaller, not to make port channels more efficient. To their credit, House and Senate appropriators have gradually increased O&M funding to the point where the FY 2017 funding bills include $1,300,000,000. Still hundreds of millions of dollars short of meeting the navigation needs in US ports and full use of HMT revenue.

Such mandatory or “direct” spending as the DeFazio provision would make possible could put the trust back in the trust fund…eventually.

When “eventually?”

Eleven years from now….and for good reason.

The Budget Enforcement Act of 1990 requires that if Federal revenue is reduced, or spending is increased, it must be offset by a savings elsewhere or by new revenue. This was given the Monopoly game sounding name of PAYGO. A budget “score” indicates a proposal’s projected cost and that analysis has a ten-year horizon. If Congress were inclined to provide an immediate change in the HMTF statute to dedicate the full collection of the Harbor Maintenance Tax each year to be spent fully on navigation dredging projects each year the House and Senate would have to come up with ten years of replacement revenue for the Treasury.

However, if a change in revenue, such as the fencing of HMT receipts so they no longer would be blended with other Federal tax revenue, would become effective eleven years from now, that proposed change in the law would not require an offset under PAYGO. The House WRDA 2016 bill says it sweetly and simply:

Section 108(a). … [T]here shall be available to the Secretary [of the Army, who heads the Corps of Engineers], out of the Harbor Maintenance Trust Fund, without further appropriation, for fiscal year 2027 and each fiscal year thereafter, such sums as may be necessary…”

The need for an offset is what has discouraged committee action to fix the HMTF in the past. Bill sponsors have largely left unspecified how to cover that multi-billion dollar cost…as a detail to be addressed at another time.

Washington Senators Patty Murray and Maria Cantwell, both Democrats, introduced the Harbor Maintenance Trust Fund Reform Act (S.2729) last March. Their bill takes the immediate gratification route, both to address the “full use” issue and to address complaints among some of the large ports that have benefited little by current law.

The senators’ Seattle and Tacoma ports require little harbor maintenance funding and much the same is true in the San Pedro Bay ports of Long Beach and Los Angeles. S.2729 would redirect some trust fund resources to certain needs in those ports.

I will go into the Murray-Cantwell bill in greater detail in another post. Suffice it to say that by not waiting patiently for eleven years to roll around the bill likely would require an offset of 10 x $1,600,000,000, to use current year revenue as an example. The odds against finding consensus in Congress on how to raise/save $16,000,000,000 is enough to eventually discourage most any optimistic lawmaker.

The provision in the recently adopted WRDA 2016 bill is credited to Peter DeFazio, who has the support and cooperation of Committee Chairman Bill Shuster (R-PA), but a little history is worth noting. The objective of direct or mandatory spending from the HMTF and other infrastructure trust funds was an objective of this committee back when Bill Shuster’s late father, Bud Shuster (R-PA), was chairman of the committee and introduced the Truth in Budgeting Act.

What are the chances of the provision staying in the bill and becoming law? It’s hard to say. Even the delayed gratification strategy will run up against opposition in Congress and the Executive Branch. I expect it will hear objections from the Appropriations and Budget Committees. The former would likely would lose jurisdiction and the latter just doesn’t like mandatory spending even if it is secured by a dedicated tax or user fee. The White House Office of Management & Budget thinks similarly. Long considered the fiscal and policy nemesis of the civil works program, OMB will have a hard time dealing with the idea of the Corps getting its hands on more money. (Legislative Trivia: the House Budget Committee that in a separate report made its arguments against Bud Shuster’s Truth in Budgeting bill was chaired by John Kasich (R-OH)).

To be clear, there are legitimate arguments to be made against making spending from the HMTF mandatory, but if one is looking for a solution to the long-standing problem of under investment in the maintenance of the nation’s navigation system one finds no other practical options.

Okay, so the DeFazio provision will encounter opposition, perhaps debilitating opposition, in the next months. For the moment let’s focus on who will like the policy change represented by the DeFazio provision. Those are the port directors. Also port authority commissioners, maybe some elected municipal officials, governors, and of course, the industries and other stakeholders who depend on reliable harbor maintenance. They will have to make themselves heard on the issue if it has a chance of staying in the bill.

And if it succeeds in becoming law, they will just have to wait until 2027, knowing that the wait will be worth it.  Pbea

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WRDA Words

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

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

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

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

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

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

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

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

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

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

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

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

 

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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

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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

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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

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HMTF: A Bump and RAMP Strategy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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HMTF: RAMP Gets Its Chance

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

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

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

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

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

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

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

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

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

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

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

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

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HMTF: The Seven Billion Dollar Clue

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Mapping the “Hidden Highway”

In Infrastructure, Marine Highway, New York Harbor on November 13, 2009 at 8:04 pm
NOS

Click for Audio

When someone talks about “keeping ships from turning into shipwrecks” we all probably could agree that’s a worthwhile use of tax dollars.

The fellow whose job it has been to map the coastal waters where ships ply the “hidden highway” is Captain Steve Barnum, who retired this year NOAA after 29 years.  He most recently headed NOAA’s Coast Survey, part of the National Ocean Service (NOS).

If you click the image above, you’ll hear him talk about the valuable service provided by the folks at NOS:

  • the country has “95,000 linear nautical miles of shoreline…3.4 square nautical miles of underwater territory” half of which was last mapped using “lead line soundings”…
  • mapping of the coastline is “a continual process”…many parts of the coastal regions remain uncharted…some data is as old as the Russian survey from when that country controlled Alaska
  • coastal surveys are also important for national security…military operations need accurate nautical charts…having a baseline makes it easier to reopen waterways after a national emergency
  • the MTS is the “hidden highway”…“hidden transportation system”
  • nautical charts are essential to the growth of the “efficient”  marine highway…making use of the “underutilized waterways” to get trucks off the road

The captain mistakenly refers to the Verrazano Bridge as an impediment for the increasingly larger ships–it’s the Bayonne Bridge, both being in the Port of New York-New Jersey–but he is right to highlight that commercial shipping is no different than other modes in needing adequate infrastructure and mapping.  In the case of  bridges, another NOS navigation system–PORTS–enables ship pilots to know the air draft under bridges in addition to better understanding available channel depth.  It’s just that when the highway is “hidden,” as the water routes are, it doesn’t get the attention–and the resources–that the dryways get.   Pbea

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Let’s Hear It For Congress

In Federal Government on October 2, 2009 at 11:51 am

At risk of speaking too soon and jinxing the whole thing…  A toast to Congress!

This time next week Congress should complete action on the Energy & Water Development Appropriations for FY 2010 (HR 3183).   With any luck the funding bill for the Federal water resources and energy programs will be approved by the Senate next week and become law just a couple weeks past the start of the fiscal year.  (We may even hear popping corks from within Capitol Hill locker rooms.)

Well, yes, nowadays we do set low the bar for achievement in Washington.  But that is not to diminish the significance of a job completed.

Just a few decades ago our Federal government started the fiscal year with enacted appropriations measures–one produced by each of the appropriations subcommittees.  But that is a distant memory.  Instead Continuing Resolutions (CR) by which Congress gives itself more time to finish bills and ensure government doesn’t grind to a halt now are predictable fixtures in appropriations sausage-making.  Same for “omnibus” spending measures into which congresses loads all incomplete funding bills as a last, exhausted effort to get the job done.

What’s the big deal about meeting the fiscal deadline?  Well, besides clearing the legislative calendar for other pressing issues, there is the matter of how well government functions and the ripple effect on lower levels of government and the entities whose programs,  projects, and budgets depend on that Federal money and its timing.

In the case of the E&W bill, Corps of Engineers commercial navigation, flood control and other projects involve public agency partners and private contractors.  If the Corps doesn’t have a clear funding signal from Congress contracts  and other work are delayed.   If it is a dredging project, factor in whether the project is in a region where the construction season is limited by weather, and if there are additional calendar restrictions based on aquatic critters mating habits, etc.  There are many more practical considerations, of course.  The end results are heightened costs and delayed benefits for all involved.

In the past seven years the E&W bill was completed by the October 1st deadline zero times.  It was delayed anywhere from one to six months.  In  FY 2007 Congress just gave up and adopted a full year CR, with all its attending disruptions to projects and programs.

So, let’s acknowledge Congress for getting the E&W bill done.    A toast!    Pbea