[There are extracts from 2 hearings below. Alice Friedemann. www.energyskeptic.com]
U.S. SENATE. Jan 31, 2013. Harbor maintenance trust fund & the need to invest in the nation’s ports. S. HRG. 113-578. Hearing before the Committee on Environment & public works. U.S. Senate 113th congress. 93 pages.
SENATOR BARBARA BOXER (CALIFORNIA)
Today’s hearing will examine the role of the Harbor Maintenance Trust Fund in supporting commerce at our Nation’s ports. The Harbor Maintenance Trust Fund is the primary source of Federal investment to maintain America’s ports. The Trust Fund is financed through a fee on the value of cargo imported through coastal and Great Lakes ports. According to the American Society of Civil Engineers, if funding continues at current levels, by 2040 the United States will face a shortfall of nearly $28 billion to meet the dredging needs of the Nation’s ports. As we will hear from our witnesses today, this funding gap can have significant economic consequences. Increasing investment in ports and reforming the Harbor Maintenance Trust Fund will be critical components of the next Water Resources Development Act, known as WRDA. Senator Vitter and I have already begun working together on this vital legislation, which supports water resources infrastructure nationwide. WRDA authorizes the projects and programs of the U.S. Army Corps of Engineers and provides many benefits to the American people, including expanding and maintaining navigation routes for commerce.
Continued maintenance of port facilities is critical for the commerce and jobs that rely on these hubs, and that is why we must increase investment from the Harbor Maintenance Trust Fund. Currently, the Trust Fund collects more revenues than are annually spent for maintaining our ports. In fact, the Fiscal Year 2013 budget, the Obama administration estimated that the Trust Fund would receive $1.8 billion, but the Corps budget request was only $848 million. This leaves a growing surplus at a time when many of the Nation’s ports are not maintained to their authorized depths and widths.
This is something that has gone on with every administration. They do not spend the funds in the Trust Fund the way they are meant to be spent. Significant challenges remain in working to ensure the revenues collected in the Harbor Maintenance Trust Fund are fully expended.
SENATOR DAVID VITTER (LOUISIANA)
I certainly want to underscore your comments about how our Nation’s ports and waterways are grossly underfunded for routine operation and maintenance, and one big reason is the misallocation of Harbor Maintenance Trust Fund revenues. It is a pretty simple story. Revenue into the Harbor Maintenance Trust Fund has increased steadily over the past decade, minus a one-time decrease in Fiscal Year 2009. The Fund currently collects about $1.8 billion a year in revenue. However, even though all of that money clearly, under law, is supposed to be used only for designated purposes with regard to harbor maintenance, even though that is clearly true, the Administration only spends roughly half that amount for harbor maintenance. What does that mean? Well, some people say that means we have an unspent balance of $8 billion. It really doesn’t mean that; it is really worse than that, because that money isn’t sitting anywhere. There is no pile of cash; that money is gone. What it really means is that the other money is stolen and spent on other completely unrelated purposes, directly contrary to the statute setting up the Harbor Maintenance Trust Fund and the revenue to go into it. Meanwhile, what is going on with our infrastructure? You know, if all of our needs were being met, if we were fully dredging our crucial waterways and harbors, that might be understandable. But, of course, that is not the case. According to a recent analysis from the Corps itself, fully authorized channel dimensions are available less than an average of 35 percent of the time at the 59 highest use, harbors and waterways, and those are the harbors and waterways that basically get the best treatment. So there that fully authorized dimension and depth is available only 35 percent of the time. Every time a vessel’s draft is decreased by one foot on the lower Mississippi because of under-maintained waterways, this costs shippers about $1 million against the value of their cargo. So that is a tax on shippers; that is a tax on commerce, and it slows down the economy and holds us back from job creation and economic growth.
Senator Inhofe (OKLAHOMA)
Harbors and inland waterways are vital to the economic health of our country. In my home State of Oklahoma, over 90 percent of the grain that is shipped on barges eventually finds its way to New Orleans to be exported. If the harbor in New Orleans is not properly maintained, shipping from Oklahoma will suffer. And vice versa—for harbors to gain the economic benefit of shipping from places like Oklahoma, our inland waterways must also be properly maintained. As everyone here knows, only about half of the annual revenue in the Harbor Maintenance Trust Fund is spent as intended—on critical maintenance dredging. But because of the current structure of budgetary allocations, we simply cannot afford to allow funding for our inland waterways and ports to be redirected—it, too, needs a source of stable revenue. The only reasonable solution is increased funding for the system as a whole. The Inland Waterways Trust Fund helps fund the 18 locks and dams on the McClellan-Kerr Arkansas River Navigation System, but it is woefully underfunded. In 2012, over 2.7 million tons of cargo shipped from the Port of Catoosa, with over 12 million tons being shipped on MKARNS, but the system could function much more efficiently and productively if it was deepened from its current 9-foot depth to the authorized 12 feet, and if hours of service on the locks are not further reduced.
SENATOR MIKE CRAPO (IDAHO)
The Port of Lewiston, is located at the confluence of the Snake and Clearwater Rivers in the city of Lewiston. For farmers and other businesses in the west, the Port of Lewiston provides a critical link through the Snake and Columbia Rivers to the Port of Portland and ultimately to the Pacific Ocean. However, the Port of Lewiston, like other ports, faces considerable challenges with meeting shipping needs. Despite a large surplus in the Harbor Maintenance Trust Fund, which has already been discussed, harbors across the United States are presently under-maintained. Again, the statistics that have already been presented show that the U.S. Army Corps of Engineers estimates that the full channel dimensions of the Nation’s busiest 59 ports are available less than 35 percent of the time. We too, in Idaho, are very interested and concerned with the management of the Harbor Maintenance Trust Fund. We have seen, just as an example from Idaho, that the draft restrictions in 2011 and 2012, due to the Corps’ inability to maintain the deep draft portion of the Columbia River, have been significant impacts on our economy. For every inch of draft that is lost due to the silted-in channel, vessels are unable to load 358,000 pounds of wheat. This is just one example of how important it is that we properly utilize the funds in the Harbor Maintenance Trust Fund. Second, Idaho is also very interested in the Inland Waterways Trust Fund concerns. There are eight locks between the Pacific Ocean and the Port of Lewiston, and we need to have the adequate support for the maintenance of these locks and the facilities to allow for the traffic to reach the port and to return back to the Pacific Ocean.
Each day the condition of our water infrastructure results in significant losses and damages from broken water and sewer mains, sewage overflows and other symptoms of water infrastructure that is reaching the end of its useful life; and with these challenges and the others I have already mentioned in mind, as this Committee is well aware, a national investment in water infrastructure projects would create jobs, repair crumbling infrastructure, and provide significant protection for public health and the environment. A strong focus on improving the financing structure of our Nation’s water infrastructure is greatly needed.
SENATOR JEFF MERKLEY (OREGON)
I think you are hearing the general story of the significant challenges in maintaining levees and jetties and harbor dredging and locks, and how frustrating it is that we have funds that are raised specifically for maintenance, and in this case harbor maintenance, and they are not being spent in that fashion. Now, Oregon is a coastal State, so I go to town after town after town where industry depends upon the success of those harbors and the maintenance of the jetties; and not only is it important to commerce moving back and forth, it is important to our fishing vessels, it is important to our recreational coastal industry, and it imposes not just an issue of commerce, but an issue of safety, because when the dredging is not maintained and the jetties are not maintained, you can have very dangerous entries from the ocean. So how can I possibly justify that we have funds that have been raised for a specific purpose, commerce is at stake, safety is at stake, and we are not spending it in this fashion? I can’t justify it. I want to see this policy changed. I so much applaud the Chair and Ranking Member for bringing this bill forward and I, like my colleague from New Mexico, apologize because I have a conflict to attend to, but I certainly look forward to your comments. I will be following up and hope that we can get to the point that we are spending these funds in the appropriate place.
SENATOR JOHN BOOZMAN (ARIZONA)
the Harbor Maintenance Trust Fund should be fully used, but I also agree with our witnesses who emphasize that the Trust Fund should be used to boost funding for the Corps of Engineers.
Appropriations should not be taken from other Corps of Engineers programs due to the potential increased funding from the Harbor Maintenance Trust Fund.
Another concern I have is how we move forward on equitable return of HMT dollars. Arkansas is an inland State, but we have significant water infrastructure. Our State, as many other States like it, receives just a tiny portion of the Trust Fund dollars, but these funds are critical. While I understand the importance of equitable return, we need to ensure that Arkansas’s infrastructure and similar States, that that infrastructure is maintained. Expanding the potential uses of Trust Fund dollars may be a balanced approach, but we must avoid an inflexible framework, such as a rigid formula, which would abandon infrastructure States like Arkansas.
JO-ELLEN DARCY, ASSISTANT SECRETARY of the ARMY, CIVIL WORKS
The Army Corps of Engineers provides support for safe, reliable, highly cost-effective and environmentally sustainable waterborne transportation systems, investing over $1.7 billion annually, more than one-third of the total budget of the Civil Works program, to study, construct, replace, rehabilitate, operate, and maintain commercial navigation infrastructure across this Country. The Nation’s ports handle over 2 billion tons of commerce annually, including over 70% of the imported oil and more than 48 percent of goods purchased by American consumers. The Administration understands that our ports are an important part of the Nation’s infrastructure and has formed an Interagency Task Force on Ports to develop a strategy for investment in our ports and related infrastructure. Maintaining these ports and making targeted investments in their improvement can lower shipping costs for U.S. exports and imports. The work of the task force will reflect a strategic, multi-modal view of the Nation’s investment priorities for the infrastructure that supports the movement of freight through our ports, including the protections for life, safety, and property during transport, as well as protections for affected communities and for sustaining our ecosystem. The Harbor Maintenance Tax and the Harbor Maintenance Trust Fund were established by the Water Resources Development Act of 1986. The harbor maintenance tax is an ad valorem fee on the value of commercial cargo loaded or unloaded on vessels using federally maintained harbors. An amount equivalent to the revenue collected is deposited in the Harbor Maintenance Trust Fund and is then available to finance certain costs, subject to the congressional appropriations process. For the Civil Works Program, the Harbor Maintenance Trust Fund is authorized to be used to finance up to 100 percent of the Corps’ eligible operation and maintenance expenditures for commercial navigation at all Federal coastal and inland harbors within the United States. Expenditures from the Harbor Maintenance Trust Fund are also authorized to be used to recover the Federal share of construction costs for dredged material placement facilities, including beneficial uses associated with the operation and maintenance of Federal commercial navigation projects. The Harbor Maintenance Trust Fund is also authorized to be used to finance operation and maintenance costs of the U.S. portion of the St. Lawrence Seaway.
Harbor Maintenance Tax receipts in Fiscal Year 2012 were $1.54 billion, and the interest earned was $47.3 million. The balance in the Harbor Maintenance Trust Fund at the end of Fiscal Year 2012 was $6.95 billion. An increasing portion of Civil Works funding in recent years has been devoted to harbor maintenance. The President’s 2013 budget request for the Corps included $848 million for the Harbor Maintenance Trust Fund to support the maintenance of coastal harbors and their channels and related works, the most ever requested by any president. This is a significant increase over the level in the Fiscal Year 2012 budget, which was $758 million; this all at a time when many programs government-wide are being reduced in order to put the Nation on a sustainable fiscal path. Our investments in coastal port maintenance are directed primarily at providing operational capabilities and efficiencies. To make the best use of these funds, the Corps evaluates and establishes priorities using objective criteria. These criteria include transportation cost savings, risk reduction, and improved reliability, all relative to the cost. Consequently, maintenance work generally is focused more on the most heavily used commercial channels, those with 10 million tons of cargo a year or more, which together carry about 90 percent of the total commercial cargo by tonnage traveling through our coastal ports. The amount proposed in the Fiscal Year 2013 budget is an appropriate level, considering the other responsibilities of the Corps for inland navigation, flood risk management, aquatic ecosystem restoration, hydropower, and other Civil Works Program areas. The Corps is working to develop better analytical tools to help determine whether additional spending in this area is warranted based on the economic and safety return. Dredging costs continue to rise due to increases in the cost of fuel, steel, labor, and changes in methods of disposal of dredge material. We recognize that this presents challenges in maintaining commercial navigation projects. The pending improvements to the Panama Canal will increase the draft of vessels transiting the Canal to 50 feet. On our Atlantic Coast we now have two 50-foot deep ports capable of receiving these ships, Norfolk and Baltimore. The Corps expects to complete the dredging work for deepening the Port of New York-New Jersey to 50 feet in fiscal year 2015. The Corps is also working with the Port of Miami, which is financing a project, to deepen the Federal channel to 50 feet. On the West Coast, the Ports of L.A., Long Beach, Oakland, Seattle, and Tacoma all have channel depths of 50 feet or greater. In addition to the ongoing work, the Corps is also working with seven ports on the Atlantic and Gulf Coasts to evaluate proposals to deepen or widen those channels.
Senator BOXER. You know, you stay away from the bigger notion, bigger issue here, which is is it right to collect fees and then not spend them on this purpose that they are supposed to be used for, and I don’t blame you for staying away from that because, in essence, you don’t really have control over that; the Administration does and prior administrations did, and we do, and we intend to fix it to the greatest extent that we can. Now, the Corps has estimated that the Nation’s 59 busiest ports have access to their full channel dimensions only 35 percent of the time. These ports are critical for commerce and international trade. Restrictions on commerce as a result of inadequate port maintenance can have significant consequences. In fact, a recent report by the American Society of Civil Engineers, which we will hear about on our second panel, indicates that failure to adequately maintain our ports could result in a variety of economic impacts.
Do you agree that failure to invest in port maintenance could have economic consequences that we must seek to avoid?
Ms. DARCY. the receipts go directly into the Harbor Maintenance Trust Fund through the Treasury and then the Bureau of Public Debt, which manages 18 different trust funds across the Government, then is the dispenser of those funds when our agency says we have been appropriated this much money and that is what comes out of the Fund. The balance of the funds are invested and accumulate interest, and it is up to the Bureau of Public Debt as to how those funds then are used.
Senator VITTER. If there is this balance of $6.95 billion, what vault can I go to and look at it? That is what I am asking. Because it doesn’t exist. So where can I look at that balance of almost $7 billion?
Ms. DARCY. Again, those are the Federal investments in securities, for the most part, I understand, and then the interest that accrues on that is what gets you to that balance. Senator VITTER. Well, again, this is a big fiction, and I think the first important part of this conversation is to get beyond the fiction. It is the same fiction as the Social Security Trust Fund, because when you go and look at that balance, basically this is what you find, IOU $6.95 billion. It is gone, it is spent for unrelated purposes, and that is wrong when it is authorized for specific uses under the law. In looking at the overall budget for the Corps of Engineers, we have to manage for all of the missions within the Corps, we operate under a cap, and we know that if you increase one mission, there must be a decrease somewhere else within the program. As I said in my statement, over one-third of our budget, $1.7 billion, is spent on navigation, and that additional money that does not come out of the Harbor Maintenance Trust Fund is spent on other studies or construction, because the Harbor Maintenance Trust Fund does not fund construction.
Senator BOOZMAN. So you mention the cap, which is a concern, and you also mention that we are going to be increasing the money spent from the Harbor Maintenance Trust Fund. So where is that coming from, is that new money or is that money that you are essentially shuffling around, so that something else under the cap is going to suffer?
Ms. DARCY. The 2013 budget request which includes $848 million is $90 million more than Fiscal Year 2012. Within our program we had to make a decision as to how to balance programs, because we are still under the $4.7 billion program. We did put more money on activities reimbursed from the Harbor Maintenance Trust Fund, so some of the other programs like some of our other operation and maintenance activities were reduced. Although operation and maintenance has also increased in our overall budget over the last couple of years. We would have to take decreases in some other programs, including some of our CAP programs, which are our small project programs. Again, the overall program has to be balanced across all the business lines within our budget.
Senator BOOZMAN. So I guess that is really the real problem. It doesn’t matter how much we put into the Harbor Maintenance Trust Fund; the reality is it really wouldn’t be any additional new money.
Ms. DARCY. No. But also within the budget process, when the appropriations committees get their 302(b) allocations, there is a cap in there, and there is Army Corps of Engineers within that 302(b), there is the Nuclear Program, there is the Energy Program. So the balance within that allocation would have to either be increased in order to accommodate increases across all the programs.
MICHAEL R. CHRISTENSEN, Deputy Executive Director of Development, Port of Los Angeles; Chair, California Marine Affairs & Navigation Conference
The Port of Los Angeles, in conjunction with our neighbor, the Port of Long Beach, handles over 40 percent of all the containerized goods that come into the United States, worth approximately $311 billion. This cargo supports about 900,000 regional jobs, nearly $40 billion in annual wages and tax revenues, and nationally the goods that come through the port complex of Southern California support also about 3.5 million jobs throughout the United States. We are not tax supported; instead, our revenues are all derived from fees and from other shipping service revenue.
The maintenance that is funded by HMT supports a well-functioning navigation system that includes the ports and harbors that accommodate a wide variety of commodities: containers, bulk goods, agriculture products, automobiles, fisheries, and also serve these facilities of service critical harbors of refuge. The system not only supports jobs in operation and maintenance, but facilitates trade that supports jobs throughout the supply chain throughout the United States, reduces the transportation costs for American businesses, and ultimately keeps the prices lower for American consumers. For this reason, the California ports support the following: No. 1, full utilization of HMT revenues for operations and maintenance purposes; No. 2, the prioritization of HMT funds for use on traditional O&M purposes, including maintenance of Federal navigation channels, disposal sites, selected in-water projects such as breakwaters and jetties, and studies; No. 3, more equitable return of HMT funds to the systems of ports of California; and, No. 4, a cost- share formula for maintenance that reflects the current cargo fleet. First, we believe HMT should be fully used for O&M purposes. Appropriations from the HMTF have lagged behind receipts for several years, leaving a surplus and deferring maintenance on our Nation’s system of ports and harbors. Achievement of full use of the HMT should be additive in nature. That is, in a given fiscal year, the guarantee of full utilization should not be achieved by taking funds from other U.S. Army Corps priorities.
We support a more equitable allocation framework within WRDA. Even if HMT funds are fully utilized for O&M, we believe efforts should be made to increase the funding return to systems that contribute large amounts to the Harbor Maintenance Trust Fund. One of the reasons we believe in this approach is because the users, not the ports, pay into the harbor maintenance tax. The users of the California port systems, for example, have reasonable expectation that the money they pay would be returned to the systems that they use.
JAMES K. LYONS, Director & CEO, Alabama State Port Authority
Mobile is amongst the 90% of the Nation’s top 50 ports in foreign trade commerce that require regular maintenance dredging. In total, dredged ports move nearly 93 percent of all waterborne commerce by weight annually. The 35% availability is a very real figure, something that we can attest to from Mobile, and in talking to my fellow port directors in other ports, I believe this is a very real number. As an example, between 2006, after we finished the dredging cycle that included supplemental funding that came as a result of Hurricane Katrina, and 2011, Mobile had only half of our authorized width in much of our 30-mile-long channel. These conditions caused numerous groundings, forced restrictions in vessel traffic, and, in short, cost the shippers using our port a great deal of time and money. The budget versus the appropriation in Mobile is, again, very real, just as it is. We saw the figures in the chart that Senator Sessions put up. Mobile’s 2012 budget was $22.6 million, but we really need $28 million to fully maintain our authorized width and depth. So enough money is not being appropriated in the Mobile harbor project, and the same applies to many of our other projects that require dredging. These poorly maintained harbors increase the cost for all port users, reduce U.S. global competitiveness, and exacerbate the maintenance dredging backlog, all of which adversely impact the U.S. tax base and the job market. Aside from dredging backlogs and funding shortfalls, we are deeply concerned with how the Nation’s ports will be expanded, funded, and maintained in the current fiscal climate. As Congress considers requests for use of the Trust Fund to resolve the dredging conundrum, we ask Congress to consider the long-term relevance and economic impact of ports within the context of re-examining the base of all major Federal spending and tax programs. There is legitimate need for port investment to serve larger vessels transiting most trade lanes. Any Federal project investments will ultimately draw on the trust as deepened and widened channels are brought online. We recognize the link between fee collections and expenditures is complicated. Increased maintenance spending on harbors will impact the Federal deficit unless spending in other areas is decreased or other collections are increased. We also understand guaranteed funding for dredging, and the budget protects dredging obligations from competing interests with revenue sources of type.
MIKE LORINO, President, Associated Branch Pilots
The Harbor Maintenance Trust Fund is not a Louisiana issue, it is a Nation issue. It is an ad valorem tax for dredging jetties, breakwaters, and it is being abused. Seven million dollars is just being moved somewhere else.
The Mississippi River touches 31 States and two Canadian provinces. We have five deepwater ports, the largest complex in the world. Not in the United States; in the world. Last year, my association that I represent, we did 12,000 ships in the Mississippi River. There was 40,000 movements of vessels from the mouth of the river to Baton Rouge, 40,000 in 1 year. It is unbelievable. Thirty percent of the Nation’s oil, 60 percent of the Nation’s grain is shipped out of the Mississippi River system. If we would shut down the Mississippi River, and that has happened a few times, it is $295 million a day for the Country, and grows exponentially after the fourth day. A hundred percent of the channel helps us maintain cost effectiveness in the world market, $0.13 per bushel saving over highways or rail when dimensions are 100 percent. Narrow channels hinder our ability to compete globally. What happens there, a ship will come in to load cargo and he can’t get it all on that ship. So one would think, well, we will send it to the West Coast. That works for 1 year. After that we cannot compete with Brazil and Argentina. Now our prices are gone. Our farmers in the heartland lose that business. It is not acceptable when we have this money coming in. A closed Mississippi River system would dramatically affect gas prices, grain prices, all exports and imports. After our Hurricane Katrina, gas prices went up overnight because we had the refineries on the river. We couldn’t get fuel oil out; we couldn’t get aviation oil out. It is unbelievable. We need this. Someone mentioned about environmental. That is gigantic. We had an oil spill down there with BP. We have tankers coming in the Mississippi River system with 600,000 barrels of oil on one ship. If that ship runs ground and puts a hole, we have another BP in the Mississippi River system. But the travesty for that is very simple: that ship is paying. It is importing here, paying that tax, and here he could run aground and have another problem after he is paying money to come into the United States. That is unacceptable, ladies and gentlemen. Current draft at the present time is 45 by 700 feet. Channel width is crucial. Last year we were down to 100 feet from 750. We had to have one-way traffic.
The cost for the Mississippi River for the last 5 years, we have been underfunded by approximately $50 million a year. Fifty million a year. You know what I have to look for, and it is a shame in our great Country? I have to look for a catastrophe to put a supplemental on there to get funding.
Safety is a huge, huge factor. Chairman, you had an incident out there in California a few years ago. You know what happens when oil is dropped in the water: everybody is concerned; especially a pilot, especially the owners. We can’t have that. It happens sometimes with human error. It happens sometimes with mechanical. But it is not acceptable to have it happen when we have money coming in to keep our channels and ports open to project dimensions. The Administration said they would like to double exports. How can we double exports when I can’t load what we have today? It is impossible. I am just a pilot.
This is a problem that can be fixed with no new taxes. The money is being collected.
ANDREW H. CAIRNS, AMERICAN SOCIETY OF CIVIL ENGINEERS’ COASTS, OCEANS, PORTS AND RIVERS INSTITUTE; PORTS & MARINE—NORTHEAST LEAD, AECOM
The United States has approximately 300 commercial ports, 12,000 miles of inland and intercoastal waterways, and 240 lock chambers which carry more than 70 percent of the U.S. imports.
For this system to remain competitive, U.S. marine ports and inland waterways will require investment in the coming decades beyond the $14 billion currently expected to be spent. According to the ASCE’s Failure to Act Economic Study, aging infrastructure for marine ports and inland waterways threatens more than 1 million U.S. jobs. Additionally, between now and 2020, investment needs in the marine ports and inland waterways sector will total $30 billion nationwide. With planned expenditures only expected to be about $14 billion, a total Federal investment gap of nearly $16 billion remains. Meanwhile, the costs attributed to delays in the Nation’s inland waterways system were $33 billion in 2010, the cost is expected to increase to nearly $49 billion by 2020.
Fiscal Year 2013, the Obama administration requested $839 million to be appropriated from the Harbor Maintenance Trust Fund. This amount equals only 50 percent of the total estimated revenues in the Trust Fund, and nowhere near the estimated needs, which, according to the Army Corps of Engineers, is between $1.3 billion and $1.6 billion annually.
This troubling trend toward reduced investments has led to ever- greater balances in the Trust Fund, with the unexpended balance growing to more than $6 billion by September 2013, according to the Office of Management and Budget. Therefore, the Committee should include a provision in the Water Resources Development Act requiring the total of all appropriations from the Harbor Maintenance Trust Fund be equal to all revenues received by the Trust Fund that same year.
SENATOR SHELDON WHITEHOUSE (RHODE ISLAND)
I come at this issue with a particular history and a particular context, and particularly when I hear Mr. Lorino and his wonderful voice and the message that he brings from the Mississippi and the Gulf Coast about the urgency of their problems, and that is that not too long ago in Congress we passed a piece of legislation that conferred an enormous multibillion dollar benefit along the Gulf Coast, and we did so as the result of an agreement that was reached that the bulk of the benefit was going to flow to the Gulf Coast, but that there would be a small portion that would accrue to the benefit of all coastal and Great Lakes States. After the agreement that allowed that to go forward was reached, the part that went to the benefit of all coastal and Great Lakes States was stripped out. An agreement was made and an agreement was broken. I am inclined to, and I want to, support enhanced traffic on the Mississippi River. I want to support the protection and growth of the port in Louisiana and, frankly, in Los Angeles and Alaska, and everywhere else. But the past bargain has to be honored for me to be very enthusiastic about going forward with further benefit that goes to the Gulf and to the Mississippi, and I just want to make that point.
Senator BOXER. Well, we are going to make another effort. There may be a way we can do something for the smaller ports here that really gives them an opportunity, because when you listen to Senator Whitehouse talk about his State, his State is in jeopardy right now, we know that, because of what is happening with the rising sea levels. He just needs to have some attention paid. In the last WRDA bill he was knew, I remember it. We really didn’t do what we should do. By the way, just saying to colleagues who are here, we had a really hard time drafting this bill because there are no more earmarks, and we have to take care of our States. So the way we did it here is to make sure that any project that had a complete Corps report which was sent down from the Corps would get funded without naming any projects or getting into all that. This could be very well the last WRDA bill that we can figure out how to do without naming projects after this one it is going to get increasingly more difficult.
Senator BOOZMAN. We need to establish some integrity before we protect it and go forward, much like the Highway Trust Fund and the Aviation Trust Fund. It is difficult to get done, but we can at least reach agreement. The more difficult thing is, once you have the trust fund, how do you divvy it up, realizing that it is system-wide? Los Angeles is remarkable in the sense that you have all this high- value stuff coming in there. You are creating about, I think, over 13% of the revenue that comes in, and because of the nature of your port you need more than what you are getting, but you are not getting very much of that 13% out. Some of our other ports through no fault of their own, are in situations where there is a lot more silting; there is just a lot more need for dredging and things, and that is the difference in the East Coast and the South. It is just the way it is. Then the other thing my ports that lead into the Mississippi River that ultimately come out and create some of this traffic, how do you do all that?
Mr. CHRISTENSEN. Even the Port of Stockton is suffering because of lack of maintenance funding. They have shoaling that means that iron ore ships loaded in Stockton cannot leave full, they have to leave light-loaded; they go to Oakland and then they get topped off. That is extremely inefficient.
Senator BOXER. I wanted to ask you about beneficial uses of dredge material. In your testimony you raised the possibility that increased spending from the Harbor Maintenance Trust Fund could create additional opportunities for beneficial use of dredge materials, such as wetlands restoration, and it was mentioned by Senator Cardin. Could you elaborate on some of the beneficial uses of dredge material that might be realized if we increased investment in dredging navigation channels?
Mr. LORINO. Beneficial use in the State of Louisiana is a very tough issue because of money. As I discussed a few minutes ago, we have $83 million to spend, and that is picking up sediment that comes down every year. The State would love us to use that for beneficial use. We would love to use that for beneficial use. But we are barely keeping our channel open. To use it for beneficial use, we have to transport it further. That would take time. There is not enough dredges to do that at the present time. So we have this conflict that is going back and forth. What I would like to see, if we could, and we are looking at a 50-foot channel also on the Mississippi River. Someone mentioned on the East Coast about the port study to get the 50 feet. They left out the bulk port, and that is very important. The Mississippi River is a bulk port. But if we could dredge, we could use a cutter head dredge and build the coast down in Plaquemines Parish that was devastated by Katrina.
June 10, 2008. S. HRG. 110–1165 Keeping America Moving: A review of national strategies for efficient freight movement. 74 pages.
HEARING BEFORE THE SUBCOMMITTEE ON SURFACE TRANSPORTATION & MERCHANT MARINE INFRASTRUCTURE, SAFETY, AND SECURITY OF THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE 110th CONGRESS SECOND SESSION
SENATOR FRANK R. LAUTENBERG (NEW JERSEY)
Today we’re going to take a closer look at how our Nation moves its freight by ship, truck, train, and barge, and the challenges that we must overcome to keep that freight and our economy moving in the future. Our country has one of the best freight transportation systems in the world. It’s the backbone of our economy. It carries the products that Americans rely on, such as food, clothing, toys, things that go on store shelves. Raw materials like coal, lumber, fuel and iron required to manufacture all kinds of goods are also moved as freight. Just-in-time delivery and real-time tracking of shipments have greatly reduced the need for companies to hold huge inventories because we can count on goods being there when needed.
But our economy is threatened by the current state of the transportation infrastructure and its inability to meet future demands. 25% of our Nation’s bridges are functionally deficient. Even when these bridges are repaired, our highways along with our ports and railroads will be overwhelmed. Congestion on our roads already costs our country nearly $80 billion a year. On the rails, some trains take a day to just cross the City of Chicago.
To keep getting the goods we need in the future, we’ve got to invest in our transportation infrastructure right now. Building roads will not solve all of our problems and in some places it’s not even possible.
Trains and barges can reduce highway congestion and wear and tear on our roads and bridges. They’re also more energy efficient than trucks, which will aid our fight against global warming, and help us become more energy independent. We need to encourage these efficiencies to the maximum extent possible. The Federal Government has to step up and play a leadership role in planning our future transportation network, one which takes these benefits into account.
One gallon of diesel can carry a ton of freight if it goes by truck 155 miles, by rail 413 miles, and by barge 576 miles. This tells you about the significant part of what we’ve got to do and the problem that we have if we don’t take advantage of these time-saving and value-saving changes.
SENATOR AMY KLOBUCHAR (MINNESOTA)
I’ve seen the tremendous potential for biofuels in our state, but then see that we have a transportation system that’s actually worn down from the increase in biofuels and from the weight of these new products, and yet we aren’t keeping up.
GLENN VANSELOW, EXECUTIVE DIRECTOR, PACIFIC NORTHWEST WATERWAYS ASSOCIATION
The Northwest ports ship 90 million tons of cargo worth $60 billion. The Columbia River is the Nation’s number one gateway for the export of wheat and barley. Seattle and Tacoma form the country’s third largest gateway for containerized cargo. A typical barge can carry 1,500 tons on the Mississippi and 3,500 tons on the Columbia and Snake Rivers. That compares with 100 tons by rail car or 29 tons per truck. For the Columbia River, loading a typical grain ship with 55,000 tons of wheat for export requires four barge tows or 550 rail cars or 1,900 trucks.
Since 1789, the Federal Government has exerted control over navigation channels and channel improvements. In 1824, Congress delegated authority over the Nation’s navigation system to the U.S. Army Corps of Engineers.
Operations and maintenance and new construction of navigation projects are funded annually in the Energy and Water Development Appropriations bill. Since 1978 there has been a user fee on the Nation’s inland waterways, the Inland Waterways User Fee. In 1986, Congress established a user fee for deep draft coastal ports and harbors, the Harbor Maintenance Tax.
Money collected every year
- $1.5 billion inland and deep draft user fees put into the Harbor Maintenance Trust fund. But only $900 million is expended. The surplus of collections over expenditures is over $4 billion. The GAO reports that the surplus is expected to grow to $8 billion by 2011. Rather than being used for their intended purpose, at least $500 million of these user fees is instead used to balance the Federal budget. The Harbor Maintenance Tax was established to collect fees to provide 100% of the cost of operations and maintenance, primarily dredging, of the Nation’s deep draft and coastal ports and harbors.
- $21 billion Customs duties
- $80 million Inland Waterways Fuel Tax to provide for 50% of the cost of new construction and rehabilitation of locks on the Nation’s inland waterways. It collects 20 cents per gallon of fuel used by towboats on the inland waterways.
Despite the collection of these fees, navigation needs are not being met. There is a significant backlog of maintenance and new construction.
The Inland Waterways Trust Fund had a surplus for many years, but now, expenditures are projected to surpass collections in 2009. The Administration has proposed instituting a new inland waterway tax which would replace the fuel tax with a lockage fee for each barge. The proposal would increase the user tax approximately 4-fold for barging on the Columbia and Snake Rivers. PNWA opposes this new tax.
Despite collections far exceeding expenditures, the Administration does not propose sufficient funding to maintain the existing navigation system or to meet future needs. For decades, during both Republican and Democratic administrations, we have had to look to Congress for increases over and above the inadequate Administration budget proposals.
Unfortunately, having money in a Federal trust fund does not mean that the money is actually available to be spent for its designated purpose. That is wrong. User fees were instituted to meet a specific funding need. The funds collected from navigation user fees must be spent to meet navigation needs. Congress has the authority to make this happen. We urge Congress to exercise that authority.
We encourage Congress to reinvigorate our Nation’s navigation infrastructure by funding navigation at levels that match the overall collection of user taxes. That is what is necessary to meet our Nation’s vital economic needs. That would equate to an annual increase of $500 million nationally.
Pacific Northwest examples
As an example of how this affects the Pacific Northwest, I have attached a copy of PNWA’s appropriations request for FY 2009. We track 32 navigation projects from Humboldt Bay in California, up the Oregon Coast, along the entire length of the Columbia Snake River System in Oregon, Washington and Idaho, to the Ports of Seattle and Tacoma and the northern reaches of the Puget Sound in Washington. Of those 32 navigation projects, 29 are in need of additional funding. In other words, the Administration’s budget proposal provides adequate funding for only three of our region’s 32 navigation projects. Additional funding is needed in all categories . . . general investigations, new construction and routine operations and maintenance. Here are a few examples.
On the Columbia Snake River System, Congressional adds are needed to maintain authorized channel depth throughout the Columbia and Lower Willamette project. Two of our eight locks need Congressional adds for routine operations and maintenance. Five need adds for major maintenance and repairs. One needs additional funding for dredging to maintain authorized channel depth. Oregon’s coastal ports need funds added for routine dredging to maintain their navigation channels and for jetty repairs. In Puget Sound, the Lake Washington Ship Canal needs a Congressional add to meet Endangered Species Act requirements. More funding is needed for the Elliott Bay Seawall study in Seattle. In California, Humboldt Bay needs funding to complete a long term sediment management feasibility study. Congress has responded in past years. Those hard fought increases have been important, and very much appreciated, but they have not been sufficient to prevent navigation infrastructure from further deteriorating.
PNWA supports full funding for these critical projects. These ports, home to fishing fleets, marinas and significant commercial and recreational facilities, are critical to the economic survival of their communities. Many have small populations, and the ports provide employment for a significant proportion of community.
Mr. VANSELOW. For both Republican and Democratic administrations we’ve had the problem that the Administration in the President’s budget underfunds those collections dramatically. Again, we’re at $4 billion-plus today. It will be growing by approximately a billion dollars a year over the next few years.
Senator SMITH. Well, my friend the Chairman—it’s easy to pick on the Bush Administration. We had the same problem with the Clinton Administration. This isn’t a Republican or Democratic problem.
Senator LAUTENBERG. He said that and I heard it. I was disappointed to hear it.
Senator SMITH. This is money that we are taking. We’re already collecting enough taxes and we’re just simply spending it on other general fund issues. But the point is the inefficiencies that flow from this, the energy waste that comes from this, is a bipartisan shame and I think we ought to fix it. my take-home to this is that we have not a Republican problem, not a Democratic problem, not a tax collection problem. We have a tax allocation problem.
Senator LAUTENBERG. I wanted to ask this question generally. Some have suggested that we could reduce truck traffic on our highways by using barges and ships to move freight between two U.S. ports on marine highways. But a shipment from overseas that then travels between these two U.S. ports faces double taxation because it pays the Federal Harbor Maintenance Tax twice. Now, might removing this tax for the domestic portion of this shipment provide incentive for these so-called short-sea shipping moves to get more trucks off the road?
Mr. VANSELOW. If you don’t mind, Mr. Chairman, I’m going to use your question to speak a little more broadly about the Harbor Maintenance Tax. First, industry does not object to a tax. We do believe that it is necessary to fund navigation. These are all Federal channels. They are all maintained by the U.S. Army Corps of Engineers. They are all appropriated by Congress, and it is the user fee that should be paying for that. The user fee does have some issues. One we’ve talked about, the surplus. Others, we have had an issue at our north and south borders, where Seattle and Tacoma, for example, are competing with Vancouver, B.C., and they are advertising no Harbor Maintenance Tax here, trying to woo cargo away from U.S. ports. This is cargo destined to U.S. importers, but moving through a foreign country to get there. So there are other issues. We do believe that we do need to take care of those kinds of movements. If a cargo is taxed once coming into the United States, that ought to be all that it is taxed.
One of the issues that we have is it is the largest ports in the country that need the ability to exercise short-sea shipping because of their capacity constraints. We have a problem through OMB and administration priorities, it is the largest ports in the country that are the top priority for getting funding for expenditure out of that Harbor Maintenance Tax. The smaller ports, which could be the feeder ports, are the ones that Senator Smith just remarked are zero in the Administration’s budget proposal. We have to come to Congress to ask for more. So if we could more broadly spend that—it’s not just L.A. and Long Beach that needs money. Their overflow opportunities go to Oxnard and Port Hueneme and elsewhere on the California coast. We have the same issues in the Pacific Northwest.