US ports, freight network get federal funding boost

US ports, freight network get federal funding boost

US Capitol.

The US Capitol in Washington, DC. Photo credit: Shutterstock.com.

Amid a renewed focus from the Trump administration to pass an infrastructure bill, there are encouraging signs elsewhere that Congress will increase spending on the nation's freight network.

Congress tripled the amount going to a popular grant program, and the money — which is headed to US ports for maintenance dredging and jetty work — is a record $1.4 billion, through the fiscal 2018 appropriations bills signed by President Donald Trump on March 23. The uptick in funding and legislators’ determination to pass the next water resources bill by the end of this year is encouraging for ports, who are hungry for a greater share back of the harbor maintenance taxes (HMT) they collect on cargo imports.

The omnibus budget for this fiscal year includes $6.83 billion for the US Army Corps of Engineers, $789 million more than last fiscal year. It provides $1.4 billion in HMT spending, up from $1.3 billion in fiscal 2017 and increases the navigation construction funding.

Trump also began his pitch to pass a 10-year infrastructure plan at an event in Ohio on March 29. The president’s plan calls for $200 billion in federal spending that he argues will spur the private sector, as well as state and local governments, to invest $1.5 trillion over the next decade.

Together, this amount is supposed to fund projects to eliminate delays and fix the US transportation network. These problems are impediments to the flow of freight across the country — delays that increase costs to shippers and receivers waiting to distribute goods. Fixing these bottlenecks can eliminate costs.

However, although Trump's top advisers are pushing public-private partnerships, Trump has expressed skepticism about whether those will work.

Meanwhile, Senate and House transportation committees are also working on the Water Resources Development Act (WRDA), a two-year authorization of projects recommended by the corps. The Senate Committee on Environment and Public Works finished accepting requests at the end of February and began drafting the legislation, according to the American Association of Port Authorities (AAPA). The House Transportation and Infrastructure Commission met on March 15 to discuss the recommendations.

TIGER program

Congress also appropriated $1.5 billion in the budget for the Transportation Investment Generating Economic Recovery (TIGER) program. These federal grants go toward projects that can be critical to a seamless freight network, incluidng projects that eliminate congestion that slow rail and truck traffic. Last year, Congress appropriated $500 million for TIGER, and appropriation levels were $500 million to $600 million in prior years, so the boost is substantial.

The US Department of Transportation (DOT) in mid-March announced 41 projects would receive TIGER grants from last year’s appropriation, 22 of which were freight-related. TIGER grants serve as an alternate funding source to formula funds or Infrastructure for Rebuilding America (INFRA) dollars.

Elaine Nessle, executive director of the Coalition for America’s Gateways and Trade Corridors (CAGTC), said these projects are often overlooked because they may involve multiple agencies, encompass multiple modes of transportation, or do not have a direct nexus to highway projects.

“INFRA is really a program for megaprojects. In order to qualify, your project costs must be at least $100 million. And only $500 million over the five-year period can be flexed to non-highway modes of transportation,” she said. “Formula grants are given to state DOTs and so there are issues with the projects that cross multiple jurisdictions lines and there are also restrictions on the type of infrastructure eligible to receive funding — formula funding is highway-focused.”

Among the fiscal 2017 TIGER grants were $25 million apiece to three projects. First, to create a flyover ramp to separate commuter traffic from commercial trucks hauling freight on State Road 189 in Arizona. Second, construction of the Lincoln South Beltway in Nebraska to divert truck traffic off Nebraska Highway 2 and bypass downtown traffic. Third, money to complete a project connecting US Route 50 into Loudoun County near Dulles International Airport in northern Virginia.

Also, Maryland was awarded a $20 million grant to build cargo handling facilities at Sparrows Point, near the Port of Baltimore. And North Carolina received $19.9 million to lower the Blue Ridge Road to separate it from the existing North Carolina Railroad tracks.

“Often these projects are friction points in the freight system slowing the flow of goods. It’s frequently where modes come together and cause choke points. They might not be the big, sexy projects, but nonetheless, they maximize the investment of our dollar,” Nessle said. “Eventually, we hope this adds up to a savings for the shipper and consumer because we are certainly paying for the costs of dysfunction right now.”

Infusion of $1.5 billion 

With the infusion of $1.5 billion, projects that came up short in the fiscal 2017 round will once again compete to receive money. In the fiscal 2017 awards, there were $12.50 in requested dollars for every $1 in grants actually issued. The CAGTC has published a 93-page document of projects still awaiting money.

The wish list includes projects to modernize Pier 4 at the Port of Tacoma, Washington, expand the Port Newark Container Terminal in New Jersey, and replace the Gerald Desmond Bridge near the ports of Los Angeles and Long Beach.

Republicans on Capitol Hill are also optimistic that WRDA legislation will pass this year, a win for port authorities that only saw two authorizations from Congress between 2000 and 2014.

Senate Majority Whip John Cornyn, R-Texas, told thehill.com on March 28 that WRDA will get the bill out of the committee this year. US Rep. Bill Shuster, R-Penn., chairman of the House Transportation and Infrastructure Committee, said in the March 15 hearing that he wants to pass a WRDA bill before he retires from Congress; Shuster has announced that he will not run for re-election this November.

Among the AAPA’s priorities is a change to how the HMT — a tax of 0.125 percent of the value of import cargo — gets appropriated by Congress. Currently, the money goes to the US Treasury’s general fund and then Congress appropriates an amount to the corps. The AAPA wants future tax revenue — about $1.58 billion annually — to be directly appropriated to the corps.

Since 1986, the Harbor Maintenance Trust Fund has accumulated more than a $9 billion surplus because Congress has not appropriated the full amount of tax revenue in a year. The taxes collected but not given to the corps sit in an account and accrue interest.

Under the Water Resources Reform Development Act, passed in 2014, Congress gave appropriators direction on how much of collected HMT should go back to the ports. Under the bill, 71 percent would go to port work 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.

“We want to make it so that the full tax revenues will automatically be appropriated. When the appropriators take up their annual spending bill, they will say ‘Alright, this money is already spent. We collected $1.5 billion, therefore $1.5 billion will go to the Corps of Engineers’,” said Jim Walker, AAPA’s director of navigation policy and legislation.

If Congress authorized the measure, then the AAPA's reccommendation is that at least 10 percent of the funds to be awarded to the six US port regions and emerging harbors that handle less than 1 million tons of cargo each year.

As for the existing surplus, the AAPA plans to lobby lawmakers for the funds to be paid out when they tackle an infrastructure bill. The WRDA legislation will also give an approval stamp on a number of channel-deepening projects that would become eligible to receive federal dollars.

Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @ariashe_joc.