Water Resources Bill: What It Means for US Ports

Water Resources Bill: What It Means for US Ports

WASHINGTON — It’s finally happened. Senate and House leaders have reached an agreement on long-delayed legislation that would authorize major port and inland waterway projects, speed up port deepening work and reform the Harbor Maintenance Trust Fund. In other words, Congress is addressing some of shippers and transportation provider’s major concerns, including a lack of equity for donor ports and the diversion of Harbor Maintenance Tax dollars from ports.

The House will vote on the final version of the Water Resources Reform Development Act on May 20, with the Senate taking up its own vote later that week. Both chambers are expected to pass the bill, potentially sending it to President Barack Obama by the end of the month. Although the Obama administration has raised some concerns with the Senate and House bills — namely the streamlining of environmental reviews and the extent of HMTF reform — it’s unlikely the president won’t sign the final bill into law.

In the meantime, here’s a rundown on what WRRDA will do for the port and inland waterway industry — and what Congress still needs to tackle, hopefully in two years, not another seven.

Q. How would WRDA help ports complete their dredging projects faster so they can handle larger ships able to pass through expanded Panama Canal in 2016 sooner?

A. A couple of ways. Most notably, ports will be able to begin dredging work and other major navigational construction once the U.S. Army Corps of Engineers gives them the OK via a chief’s report. Currently, ports have to wait for congressional authorization before they can begin major projects, leaving work stalled until legislators pass another water resources development bill. Under the new WRRDA bill, there is no guarantee that ports will get reimbursed by Congress for the construction through the next bill.

WRRDA would also help the corps complete reviews of work faster by setting hard deadlines for time and costs of its studies. The bill also would consolidate duplicative and unnecessary corps studies. Importantly, the bill would streamline the environmental reviews of projects so they could be undertaken concurrently with other reviews.

Q. How would WRRDA ensure that U.S. ports get back all the HMT revenue — the 0.125 percent levy on the value of imported cargo — they send to Washington?

A. The bill would require Uncle Sam to send all collected HMT revenue to the ports by fiscal 2025. Currently, about half of the $1.8 billion in HMT dollars goes back to the ports, with the rest being used to plug holes in the general fund. Unfortunately, the more than $7 billion surplus, or money used to fill those general budget holes, will keep plugging those gaps in federal coffers.

The amount going back will hit 67 percent in fiscal 2015, 69 percent in fiscal 2016, 71 percent in fiscal 2017, 74 percent in fiscal 2018, 77 percent in fiscal 2019, 80 percent in fiscal 2020, 83 percent in fiscal 2021, 87 percent in fiscal 2022, 91 percent in fiscal 2023, and 95 percent in fiscal 2024.

Q. How would WRRDA address the complaints of donor ports, or ports that collect far more in HMT than they receive back?

A. First, ports would be able to use HMT not just for dredging and jetty maintenance but also for berth dredging and dealing with dredged materials. The process for naturally deep donor ports getting the money, though, is a bit convoluted. Between fiscal 2015 and 2022, no less than 10 percent of the first $800 million of HMT collected would go to small ports, which have been historically short-changed, according to House Republican aides, for dredging and jetty maintenance. Ninety percent, or $720 million, would go to moderate and high-use ports.

When more than $800 million is appropriated — a result of import growth and HMTF reform — the surplus will be divvied up, with 90 percent going to midsize and large ports and 10 percent to small ports. At least 10 percent of any money appropriated over the first $800 million has to go to Great Lakes ports, and 5 percent to underserved ports. Finally, at least 10 percent of the surplus will go to donor ports for berths and dealing with dredged materials.

Donor ports are defined as those that have collected at least $15 million in HMT dollars annually, received less than 25 percent of their collected HMT back in the last five fiscal years and handled more than 2 million TEUs in fiscal 2012. Donor ports can tap into $50 million annually for berth and dredged materials, along with environmental reviews and payments to importers equaling what they pay in HMT for their shipments.

Prioritization would be based on the ratio of ports’ collected HMT and what they receive back from Uncle Sam. The move is an effort to provide more “equity” to the likes of Los Angeles, Long Beach, Seattle and Tacoma, which give far more HMT dollars than they get back.

Q. Port channels keep getting deeper to handle larger container ships. How would WRRDA address this in term of local versus federal cost share for dredging?

A. The bill would put the federal government on the hook for 50 percent of the cost of maintaining ports up to 50 feet deep. Currently, the federal cost-share is limited to 45-foot-deep channels.

Q. What port projects would WRRDA authorize?

The WRRDA would authorize the following projects:

  • The Port of Jacksonville’s nearly $37 million project to fix a tidal issue that prevents large, fully loaded container ships from calling on the port nearly two-thirds of the day.
  • Jacksonville’s $684 million project to deepen its channel from 40 feet to 47 feet.
  • Boston’s $311 million project to deepen its main ship channel to 45 feet and widen the same waterway, connecting to Massport Marine Terminal, by 600 feet. The project would also deepen the Mystic River Channel at Medford Street Terminal and deepen and widen the Chelsea River Channel.
  • Port of Savannah’s $652 million project to deepen its channel to 47 feet from 42 feet. Congress authorized the project back in 2007, but environmental mitigation has pushed the price tag up, requiring reauthorization.
  • The Port of Corpus Christi’s $393.9 million project to extend the La Quinta channel, deepen and widen the Corpus Christi Ship Channel and complete environmental mitigation work. This is another reauthorization.

Q. How would WRRDA help barges and inland waterways shippers?

A. Aside from speeding up corps review, the bill would require the federal government to take a larger share in paying for grossly over-budget Olmsted lock and dam project. By shifting 10 percent more of the cost share to the federal government, the Inland Waterway Trust Fund would have about $105 million annually for other lock projects, said Debra Colbert, senior vice president of the Waterways Council, a group dedicated to inland waterway freight infrastructure improvement. Currently, the IWTF pays for about 25 percent of the Olmsted project, which has ballooned in cost from $775 million to nearly $3.1 billion, and the federal government funds the rest. The Olmsted project is slated to be completed by 2024. The bill would also prioritize inland waterway projects and increase the eligibility for major rehabilitation projects using the IWTF from $14 million to $20 million.

Q. What won’t WRRDA do or address?

A. Donor ports do get a bit more “equity,” but don’t expect them to be satisfied, said J. Stanley Payne, a principal at Summit Strategic Partners. The bill doesn’t address Pacific Northwest ports’ complaints that the HMT spurs shippers to divert U.S.-bound cargo through Canadian ports, either. Donor ports’ ability to reimburse shippers for the HMT via the $50 million annual set-aside could help them alleviate that factor. WRRDA doesn’t take on short sea shippers’ complaints that the HMT is one of the obstacles preventing domestic shipping from taking off, Payne noted. On the inland waterway side, barge operators and shippers are still waiting to see whether Congress will hear their plea to raise the 20-cent-per-gallon fuels tax by six to nine cents in order to boost IWTF coffers.

Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter:@szakonyi_joc.

Comments

Good article from JOC

This legislation still does not deal with the problems created by the HMT. Only complete abolition would solve all of the problems created by this law.

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