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Testimony of Barry Holliday Water Resources and Environment Subcommittee of the House Transportation and Infrastructure Committee Regarding Proposals for a Water Resources Development Act of 2010, Part II

Testimony of Barry Holliday
Water Resources and Environment Subcommittee of the House Transportation and Infrastructure Committee Regarding Proposals for a Water Resources Development Act of 2010, Part II on April 15, 2010

I would like to take this opportunity to acknowledge the outstanding cooperation and leadership by the Corps of Engineers in managing the execution of the additional dredging work funded by the American Recovery and Reinvestment Act (ARRA). The Corps and the Dredging Contractors of America initially coordinated a series of regional conference calls with the districts and dredging industry that ensured a comprehensive understanding of the work to be done and the specific dredge plant that would be needed. As a result of these discussions, the dredging industry was able to effectively ensure equipment and resources were available to get the job done.

In my written testimony, I have included a full listing of all the new equipment and new dredges that were acquired as a result of the ARRA. To synopsize, two large pipeline dredges were brought back from the Middle East, several new dredges were built, and substantial investments were made in discharge pipeline, barges, tugs, floating cranes and derricks, and other dredging support equipment for this additional dredging workload.

The Corps and the dredging industry have effectively demonstrated that they can execute and on rather short notice. During Fiscal Year 2009, the dredging industry accomplished an additional $117 million of dredging work as a result of ARRA, and an additional $212 million as a result of hurricane supplemental and other emergency dredging work in the Gulf of Mexico. But this additional work is only a short-term band-aid against larger long-term dredging needs. There continues to be a major shortfall of funds appropriated to adequately maintain our ports and harbors.

For this purpose, I speak not only for the Dredging Contractors of America, but also as Chairman of the Harbor Maintenance Trust Fund Fairness Coalition. In that capacity, I’d like to address the current situation regarding the Harbor Maintenance Trust Fund and our nation’s ports and harbors. The Coalition, many of you also know us as RAMP – Realize America’s Maritime Promise, formed in March 2008. RAMP represents a broad spectrum of maritime interests, including maritime labor unions, shippers, vessel operators, customs brokers, ports, and other users of ports and harbors.

RAMP represents jobs and seeks to protect and expand these family wage positions. RAMP represents keeping our ports and harbors viable and ensuring that we can efficiently export the products and commodities that we produce, and import the commodities and cargo that we need to keep this Nation strong and growing. RAMP represents a focused effort seeking full access for our ports to the annual revenues generated by the ad valorem Harbor Maintenance Tax deposited into the Harbor Maintenance Trust Fund for operations and maintenance dredging in the United States.

$1.3 BILLION COLLECTED; $808 MILLION USED
In 2009, the Harbor Maintenance Tax collected approximately $1.3 billion from shippers for the purpose of funding dredging projects. However, only $808 million of dredging and related maintenance costs were reimbursed from the fund through regular appropriations. At this funding level, most ports and harbors were unable to be dredged to their authorized project dimensions.

U.S. ports and harbors handle more than 2.5 billion tons of domestic and international trade annually. These ports are responsible for moving more than 99 percent of the country’s overseas cargo, and that volume is projected to double within the next 15 years. With the expansion of the Panama Canal in 2015, many of our ports will realize substantial volume growth and it will be essential to ensure consistent maintenance of the navigation channels.

In 2007, there were 13.3 million port-related jobs – nine percent of all jobs in the US that account for $649 billion in personal income. A $1 billion increase in exports creates an estimated 15,000 new jobs.

The U.S. military depends on numerous ports that have agreements with the federal government to serve as bases of operation to deploy troops and equipment during national emergencies and this role is more evident and important than ever.

As modern vessels increase in size, navigation channel depths must increase accordingly if we are to continue to play a major role in the international marketplace. A recent U.S. Army Corps of Engineers study reports that almost 30 percent of the 95,550 vessel calls at U.S. ports are constrained due to inadequate channel depths. At current funding levels, our navigation channels and harbors are becoming shallower and narrower each year as nature deposits more sediment than is removed.

PORT'S VIABILITY THREATENED WITHOUT DREDGING
Without a navigation channel dredged to its authorized width and depth, a port’s economic viability is threatened. The United States will lose existing business and potential new business to foreign ports - and once lost, history shows it is rarely regained.

An example of the need for increased funding through the Harbor Maintenance Trust Fund can be found on the Mississippi River. According to the Army Corps of Engineers, the Baton Rouge to the Gulf of Mexico project regular appropriations process provides approximately $100 million less than what is needed each year for adequate dredging. The annual shortfall in the Great Lakes region is approximately double that amount.

There are many other examples of dredging problems in ports and harbors across the nation. In many cases, vessels must “light load” because of dredging shortfalls. The economic implications of light loading are enormous, especially to our exports. A ship that is light-loaded reduces its efficiencies and can reduce its economic edge to a point where it is no longer able to compete in the world marketplace.

America’s deep-draft navigation system is at a crossroads. The ability of our ports and harbors to support the nation’s continuing growth in trade and in the defense of our nation, hinges on much-needed federal attention to unresolved funding needs that are derailing critical channel maintenance and deep-draft construction projects of the water highways to our ports.

FUNDING WOULD ALLOW GOOD MANAGEMENT
During this time of economic stress on our Nation, we cannot afford to threaten these water highways that are so important to our nation’s commerce. Today, the Harbor Maintenance Trust Fund has a balance of approximately $5.1 billion. Each year, hundreds of millions of dollars collected for this purpose are not being used to address the backlog of necessary maintenance dredging needed to sustain this vital infrastructure. A fully funded dredging program would ensure that the Corps could properly plan and manage dredged material for potential beneficial uses and environmental restoration applications.

Similar problems with Highway Trust Fund and Airports and Airways Trust Fund were addressed by past Congresses by enacting legislation to more closely tie trust fund expenditures and revenues through a guarantee and a point of order. The RAMP Coalition is extremely pleased that Congressman Charles Boustany and Congressman Bart Stupak have introduced H.R.4844 to do the same for the Harbor Maintenance Trust Fund. Since this bill addresses program-wide funding, not specific projects, it is not considered earmark legislation. Also, as with the AIR-21 provision after which it is modeled, H.R.4844 should not score as violating “pay go” rules.

This bill is supported by a large coalition of ports, shippers, manufacturers, exporters, maritime businesses, and labor organizations (including the Maritime Trades Department of the AFL-CIO). All of the members of the Harbor Maintenance Trust Fund Fairness Coalition respectfully request that this subcommittee use this unique opportunity to enact legislation that is needed now– so that future port navigation channel capacity affecting trade, jobs and our national defense will not be compromised. We urge you to pass a Water Resources Development Act this year with the H.R. 4844 language included and restore the TRUST to the Harbor Maintenance Trust Fund.

CAPITAL INVESTMENTS IN DREDGING EQUIPMENT
The Dredging Contractors of America (DCA) reports, that by all accounts, the recent uptick in Corps of Engineers funding for dredging projects as a result of the American Recovery and Reinvestment Act of 2009 (ARRA) and supplemental appropriations spending is resulting in additional dredge capacity being deployed in the US market.

• Great Lakes Dredge & Dock Company recently brought back two of its large cutter dredges (the dredge Texas and the dredge California) from the Middle East to projects in Florida and Louisiana;

• Manson Construction Company has invested more than $6 million in equipment improvements and additions;

• Weeks Marine, Incorporated anticipates investments in excess of $25 million for repowering three of their workhorse dredges, $3.5 million for a new idler barge, and they have recently invested in additional scows, and repowering other dredges and boosters;

• Cottrell Contracting Corporation has invested approximately $4 million to totally overhaul one of their 16” dredges, build 2 new twin-screw 40 ft dredge tenders, build a new 25 ton derrick and a 2000 hp 20” floating booster;

• Mike Hooks Incorporated has recently purchased two Amphibious Excavator Marsh Buggies, 14,000 feet of plastic 30” pipe, two CAT dozers, and a Manitowoc 3900 Viacon barge mounted crane;

• Orion Marine Group has invested $35 million to expand its operations on the East Coast, and has invested $13 million in capital expenditures to enhance and upgrade their dredging equipment and capacity;

• Marine Tech, LLC has invested over $200,000 in upgrades and certifications to a crane barge, and they anticipate purchase of an additional hydraulic dredge this winter;

• Luedtke Engineering Company has purchased/chartered a 14” hydraulic dredge Sue Lyon, discharge pipe and ancillary equipment, an 8 CY clamshell crane for the dredge Wellston, 1,800 CY hopper scows, a 2,000 HP tug boat, and a 6 CY clamshell crane for their Dredge #12 to perform dredging projects in 2009;

• L.W. Matteson Incorporated has purchased 15,000 feet of additional pipeline, two 600 hp tugs, pontoons for pipeline, and constructed additional support barges;

• Dredge America has recently made an investment of just over $2 million in new plant and support equipment in anticipation of future dredging work. This includes a 16” x18” cutter suction dredge, booster pump, 10,000 feet of 20” HDPE discharge line, a tugboat and other support equipment;

• Ellicott reports they have delivered five new dredges this year to four dredging contractors, and are discussing construction of two more dredges to two other contractors. Support equipment such as booster pumps, power barges, and pipeline stockpiles have also seen recent heavy investment.

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