Watch Now

Congressional milestone may lead to billions for port funding

Image: Port of Savannah

Government funding used to keep U.S. port channels dredged at depths needed to accommodate deep-draft ships could increase significantly if a milestone reached by lawmakers this week gains momentum.

For the first time after years of attempting to pass similar legislation, the Full Utilization of the Harbor Maintenance Trust Fund Act — which ensures that money collected to maintain channels isn’t diverted for other purposes — passed the House of Representatives on Oct. 28. The Senate plans to take up the legislation in the coming weeks.

“This is a win, years in the making, for our nation’s coastal communities and members of the maritime workforce,” said Peter DeFazio, D-Oregon, Chairman of the House Transportation and Infrastructure Committee.

“I’ve heard from countless fishermen, ship, tug and barge operators about the critical need for safe and well-maintained ports and harbors that allow them to do their jobs and keep our economy moving. I encourage a swift passage through the Senate and look forward to the President signing it into law.”

The Harbor Maintenance Tax (HMT), enacted by Congress in 1986, charges shippers a 0.125% tax on the value of their import cargo, with the revenues deposited into the Harbor Maintenance Trust Fund (HMTF) within the U.S. Treasury. But over the years, money in the fund has been diverted — typically to reduce the federal deficit.

The current legislation would end the diversion of HMTF payments, allowing Congress to spend down the existing $9 billion balance in the trust fund, and $24.5 billion in new revenues estimated to be collected over the next 10 years.

“There wasn’t as much attention placed on maintenance dredging funding before the Panama and Suez canals were expanded,” William Doyle, CEO of the Dredging Contractors of America, told FreightWaves.

“But now that ports are dredging their channels deeper and wider to accommodate these larger ships moving through the canals, it’s critical that we get the funding intended to maintain those wider, deeper dimensions.”

American Association of Port Authorities (AAPA) President Chris Connor called the passage of the legislation “a critical first step to solve the problems with the HMT.” In addition to fully funding the HMT, AAPA wants to change the way money is distributed to make it more equitable for “donor” ports — those that collect more money from shippers than they receive back.

Shippers at the ports of Los Angeles and Long Beach, for example, pay $260 million into the HMT annually, but the ports get back $10 million. According to Port of Los Angeles Executive Director Gene Seroka, the top six U.S. donor ports account for half of the HMT revenue but receive just 2% of the proceeds.

John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.