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American ShipperInfrastructure

Witnesses say harbor maintenance funding ‘crucial’

The House Water Resources and Environment Subcommittee also received requests Wednesday for the same cost share for inland waterways that was set up for deep draft ports.

   Witnesses on Wednesday urged Congress to fully utilize the Harbor Maintenance Trust Fund (HMTF) and asked for the same cost share for inland waterways that was set up for deep draft ports in the Water Resources Development Act (WRDA) of 2016.
   The HMTF has a balance of about $10 billion, said Rep. Bruce Westerman, R-Ark., ranking member of the Water Resources and Environment Subcommittee, which he said is enough to address the country’s currently authorized maintenance needs if spent down.
   “That Congress has allowed this to persist as our needs only continue to grow represents a problem in dire need of a solution,” said Westerman in his opening statement during the subcommittee hearing “The Cost of Doing Nothing: Why Full Utilization of the Harbor Maintenance Trust Fund and Investment in our Nation’s Waterways Matter.”
   The Harbor Maintenance Tax (HMT), enacted by Congress in 1986, has shippers pay .125 percent of the value of imported cargo. HMT receipts are deposited into the HMTF to help pay for dredging and upkeep of waterways by the U.S. Army Corps of Engineers, but money from the fund has been used to reduce the size of the federal deficit.
   Westerman said the House Transportation and Infrastructure Committee has twice passed measures in recent years to dedicate the tax for its intended purpose. The provisions in the WRDA bills, however, were removed by former Congressman Paul Ryan, said committee Chairman Paul DeFazio, D-Ore.
   “Still having trouble with White House,” DeFazio said. “This year they’re not proposing to reduce the tax, but they are proposing to underspend the revenues by almost a billion dollars. I’m determined, and I’m certain this committee will be determined, to see that that doesn’t happen.”
   The lack of full utilization of the HMTF impacts ports both large and small, said Rick Goche, commissioner of Oregon’s Port of Bandon. He said full spend would result in his port — which he said requires maintenance dredging “virtually every year” with a backlog of deferred maintenance on its jetties — not having to fight for funds.
   “Time and time again the maintenance dredging we have received, though greatly appreciated, did not do the job necessary because it was not on a consistent three-year cycle,” said Bonnie Brady, the executive director of the Long Island Commercial Fishing Association. “Having to wait six or seven years for maintenance dredging or scramble for emergency dredging funding is just not the way to support the people or ports that harvest and feed this nation and beyond.”
   Eugene Seroka, executive director of the Port of Los Angeles, requested fair and equitable allocation of funds, which he said should have limited but expanded capabilities.
   Subcommittee Chairwoman Grace Napolitano, D-Calif., said shippers at the ports of Los Angeles and Long Beach pay $260 million in HMT annually but receive $10 million in funds. The top six donor ports account for half of the HMT revenue and receive just 2 percent of the proceeds, Seroka said.
   “Our look at what we should receive, the 50 versus 2 percent in return, as outlined in our framework, we believe that donor ports should receive between 8 and 10 percent,” Seroka said. “That’s a real good program that allows us to get after other uses that we mentioned.”
   The expanded use includes in-water infrastructure needs that are not currently HMT-eligible expenditures to help ports handle larger containerships. Seroka said the Port of Los Angeles has nearly $260 million in container terminal wharf maintenance for in-water structures, including decks, beams, mooring bitts and piles.
   “These expanded uses of funds will assist donor ports in applying funds towards projects that provide our customers world-class infrastructure and keep us competitive against international competition,” Seroka said in his written testimony.    
   Not all subcommittee members supported the full utilization of the HMTF, however. Rep. Rob Woodall, R-Ga., said he was concerned about a 100 percent spend rate in the case “that a rainy day is in the future.”
   Peter Stepchaich, chairman of the Campbell Transportation Company,  responded, “I would so argue that the rainy day is today for us.”
   Stepchaich, who was testifying on behalf of the Waterways Council Inc., said, “We’re in a critical situation where we’re facing catastrophic failures with our infrastructure.”
   More than half of inland waterway structures are more than 50 years old and nearly 40 percent are more than 70 years old, Westerman said, and the amount of goods traveling on the systems are expected to grow by more than 20 percent by 2050.
   Stepchaich and Phyllis Harden of Pine Bluff Sands and Gravel Co. both requested a cost share of 25 percent from the Inland Waterway Trust Fund (IWTF) and 75 percent from general revenue to help fund inland waterway infrastructure projects.
   The inland navigation capital program has operated at about $400 million annually since a 45 percent increase in the diesel tax and policy changes in the Water Resources Reform and Development Act of 2014 were enacted that included a cost share revision for the Olmsted Locks, he said.
   Due to the cost share, the Olmsted Locks, located on the Ohio River, finished four years ahead of schedule and cost $330 million less than the U.S. Army Corps of Engineers projected. But if the cost share returns to a 50/50 split, funds available for inland waterway project modernization would fall to about $230 million annually, Stepchaich said. 
   With that level of funding, completion of 15 inland waterway projects would take nearly 40 years, Harden said, but they potentially could be completed in 20 years if the 75/25 split was enacted.
   “By doing the same thing with the inland waterways trust fund, adjusting the cost share to 25 percent trust fund and 75 percent general funds, the inland navigation capital program can remain operating around the $400 million per year that has been achieved since the cost share change at Olmsted,” Stepchaich said. “As you move forward with infrastructure legislation, I encourage you to consider this proposal to adjust the cost share for construction of inland waterways projects.”
   Stepchaich also said the annual funding system “doesn’t make any sense” for long-term projects in response to a question from Westerman about the benefit of funding on a project-by-project basis.
   “It’s extremely difficult for a major construction job to plan for this one year at a time, from hiring the contractors to actually executing the contracts,” Stepchaich said. “It’s completely inefficient. I don’t know what the percentage of reduction would be, but it’s significant for the Corps if they had steady funding for these projects.” 
   Kevin Ross, first vice president of the National Corn Growers Association (NCGA), said 78 percent of commercial navigation locks will have outlived their designated 50-year lifespan by the end of 2020. The NCGA has identified 25 locks and dams that are in need of upgrades and repairs, he said.
   Ross also urged Congress to pay special attention to the Navigation and Ecosystem Sustainability Program, which was authorized in the 2007 WRDA bill for the U.S. Army Corps of Engineers to increase capacity at seven Mississippi River locations. 
   “Modernizing these seven locks will increase the efficiency of the inland waterways transportation system, which means that the cost of transportation will decrease and keep farmers like myself competitive in foreign markets,” he said in his written testimony.

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