Marine Transportation System

Posts Tagged ‘USACE’

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

Advertisements

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

 

Next WRDA a Policy Bill?

In Infrastructure, Water Resources on November 3, 2009 at 3:29 pm

WRDAlite2

WRDA (say “wurr-da”) sometimes is an elusive, even mythical, thing.  When it appears out of the Capitol Hill mist–like Brigadoon–it’s not with the reliable–albeit once-in-a-hundred years–clockwork of that fabled village.   It is usually defined as a biennial water resources authorization bill but it rarely takes such predictable, finished form as a president might come to expect on his desk every two years…assuming he wants it there.

Part of WRDA lore (and lure) is that it is tailor made for end-of-congress action on the eve of congressional elections.  Before returning home Members would wrap up the bill and their press releases touting what WRDA holds for their districts.  For, above all, a Water Resources Development Act is a projects bill.  Indeed part of the legend–not without  good reason–is that for WRDA to get through Congress it must be laden with projects.  No projects, no critical mass.  No critical mass, not enough aye votes.

WRDA 2007, the most recent version made law, was propelled in part by the huge Everglades project.  It was not without controversy but as an environmental restoration project the Everglades project gave the bill essential critical mass and acceptability among many in the environmental community which often is critical of project bills.

Legislators submit their wish lists.  Even many Members who disdain the practice of earmarking.  Port channels.  Beach replenishment.  Flood control.  Environmental projects…these ever more so.  They include wastewater treatment, water supply and the like.

The foundation of any WRDA is projects that move “through the pipeline,” much as the Everglades restoration project did.  They are subjected to Federal feasibility and environmental studies and then Secretarial and White House review.  An interminable process to some.  Projects exit the pipeline, usually, as recommendations for formal authorization,  WRDA being the next step in a civil works project’s journey through government.

When it comes to critical mass, it looks as if WRDA 2010 could end up WRDA Lite.  Fewer projects and lower cost.  So far only a couple of projects have emerged from the pipeline.  Some folks suggest we may have more of a WRDA policy bill than a projects bill.  That’s possible.

As one example, ports have wanted the law changed to secure the Harbor Maintenance Trust Fund.   Harbor Maintenance Tax revenues go into the general treasury and only around 60 percent of the proceeds actually are spent on channel maintenance.   There’s meat for a WRDA.

We will have to see whether there will be sufficient oomph of any sort to power this next WRDA.  We may get a clue later this month.  The House Water Resources & Environment Subcommittee will hold its first WRDA hearing  on November 18th. Pbea

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

Walking the Dock and Talking the Talk

In Federal Government on August 16, 2009 at 9:19 pm

CMTS group

This week Federal agency folks caught the bus to Baltimore to see a port.   It was organized by Helen Brohl and staff of  the Committee on the Marine Transportation System (CMTS) and facilitated by Frank Hamons and colleagues of the Maryland Port Administration.  The civil servants from NTSB, ITA, OMB, MARAD, NOAA, USACE, USCG, EPA and  perhaps other offices and agencies left Washington to see elments of the MTS first hand.

Terminal operations, a NOAA survey vessel, a Ready Reserve Force ship, an intermodal yard, and a tugboat tour of the cargo and quiche sides of the waterfront.   They met with public and private sector people who keep the working port working.

From time to time one reads complaints about taxpayer money spent on public employee field trips and conference-going…as if it’s always a pleasure jaunt and never of professional value.  I’m sure that this same-day hop, just an hour up the parkway, will spark no such carping.  But that’s beside the point.  It’s a fact that trips like this one  to  the Maryland port instill more understanding than does the reading of a report.  Even one with lots of pictures.   When one is in the field the senses absorb.  The mind muses.   The discussion flows.

Washington is paying much more attention than ever to ports, shipping, and our system of logistics.   EPA regulates ballast water.   The Corps maintains channels.  TSA checks dock worker backgrounds.  NOAA decides when the dredges can work.  OSHA sets new container lift standards.   The Senate ratifies standards to lower ship emissions.  CBP scans cargo for radiation.   OMB reviews regs and budgets.  Fees are collected and new fee proposals abound.

Taking one day to take in the context for all of the above is a day and money well spent.  Kudos to CMTS and the folks in the picture.   Pbea