International Dredging Review

International Dredging Review

“Use the Harbor Maintenance Trust Fund for its intended purpose”

It is ironic that though the U.S. is facing a severe dredging crisis with most needed channel maintenance un-funded or under-funded there already exists a revenue mechanism (tax) intended to pay for the nation’s maintenance dredging needs. This tax actually generates a surplus of income over its uses. So at a time when our nation’s maintenance dredging needs have reached epic proportions due to lack of funding the money is already being collected to solve the problem. It is simply not being used for its intended purpose.

With greater than a $4 billion surplus the tax generates $1.3 billion per year although only $750 million is used for the purpose the tax was collected. The balance of the money goes into the U.S. treasury where it is used for other purposes.

This situation is not acceptable for funding maintenance dredging of our ports and harbors.
Every project is affected these days by lack of funding leading to under-dredged channels that are not maintained to anywhere close to their authorized dimensions. This impacts everybody from the Corps and ports who manage the channels to the shippers who have to use the channel to the tugs and service companies whose livelihood depends on the channels.

Congressional funding for these projects continues to decline and with rising costs and a general lack of attention on infrastructure each port competes for a share of the budget pie that is in real numbers getting smaller and smaller. The entire situation is deteriorating with no change in sight.

Rather than continue to stand by and watch our maritime infrastructure completely crumble maritime interests including ports port users support companies and dredgers have formed an industry coalition called RAMP (Realize America’s Maritime Promise) whose sole focus is to change the status quo legislatively so that Congress will be able to supply the necessary funding to restore our nation’s shipping channels to safe and efficient dimensions.

The short term goal of the coalition is education so that all potential supporters have a chance to participate and that congressional interests understand the impact of the crisis on the nation and its regional economies. The goal and theme is simple “Use the Harbor Maintenance Trust Fund for its intended purpose”. No changes to the fund are required or suggested just simply – you collect the tax for a purpose use it for that purpose.

On April 30 Jim Weakley president of the (Great Lakes) Lake Carriers’ Association an officer of the Great Lakes Maritime Task force and a member of the RAMP Coalition advised the Water Resources and Environment Subcommittee of the House Transportation and Infrastructure Committee on the dredging crisis in U.S. ports and waterways and advocated legislation that would ensure that the Fund would be used for its intended purpose – maintaining navigational depth in navigable waterways.

Weakley explained that the Harbor Maintenance Tax and the Harbor Maintenance Trust Fund were established in the Water Resources Development Act (WRDA) of 1986.

“The Trust Fund (HMTF) applies a 0.125 percent ad valorem tax on the value of commercial cargo loaded or unloaded on vessels that use federally-maintained channels. Because it was ruled an unconstitutional assessment on exports in a 1998 Supreme Court ruling the tax is only assessed on imports and domestic cargo. This fund was authorized to be used to recover 100 percent of the U.S. Army Corps of Engineers eligible Operations and Maintenance (O&M) expenditures for commercial navigation 100 percent of the O&M cost of the St. Lawrence Seaway certain costs of NOAA and the costs to Customs to collect the tax.

“Today” he said “HMTF revenues exceed transfers for authorized activities by an increasing margin but our federal channels are not being maintained at authorized depths. The Fund is being held hostage to paper balance the budget – not one of its legal uses.

“In 2007 the HMTF began with a $3.3 billion surplus and collected an additional $1.4 billion resulting in a $4.7 billion surplus. But only $751 million was used for maintenance dredging. That is incredible.

“I would ask that you consider this analogy offered by my colleague in a Gulf Coast port: ‘What would you say to a toll booth operator who took your money to use the toll road only to then tell you that the road was unusable?’

“That is what is happening to shippers who pay this tax every day. We must solve this problem. We must draft legislation that mandates that the Fund be utilized for its intended purpose – the maintenance dredging of federal ports and harbors.

“There are a number of ways to address this problem. As you know other modes of transportation – surface transportation and aviation – have faced similar problems in the past decade. Although we are in the early stages of addressing this problem our Coalition believes Congress should consider an approach similar to that taken with the Highway Trust Fund in 1998 and with the Airport and Airway Trust Fund in 2000. In those cases Congress legislatively enacted “firewalls” around the Trust Funds – essentially guaranteeing minimum levels of spending that could only be used to support eligible projects. Although there are some variations between the Highway Aviation and Harbor Maintenance Trust the point of a firewall in each case is the same – ensuring that monies from a tax would be used for their intended purpose and not merely for deficit reduction.

“My message is simple – use the Harbor Maintenance Tax for its intended purpose to address our nation’s dredging crisis. It’s time to put the ‘TRUST’ back in this trust fund.”

After presenting figures and examples of the importance of ports to the national economy Weakley went on to describe the dredging crisis.

“A recent U.S. Army Corps of Engineers study reports that almost 30 percent of the 95550 vessel calls at U.S. ports are constrained due to inadequate channel depths.

“Without a channel dredged to its authorized depth nothing else comes into play. Attracting new customers dealing with labor issues environmental concerns and the public all go away because without a properly-dredged channel business goes away. Public ports are at a critical state in keeping their channels open for business. We are losing existing business and potential new business to ports outside of the United States – and once lost it is rarely regained.

“Dredging can literally make or break our industry and a lack of dredging is an issue throughout the United States and in many parts of the United States we face a dredging crisis.

“On the Great Lakes decades of inadequate funding for dredging have left a backlog of 18 million cubic yards of sediment. The U.S. Army Corps of Engineers estimates that removing the backlog will cost more than $230 million on the Great Lakes alone. In some cases ports on the Great Lakes have actually shut down due to inadequate dredging. There are similar examples of dredging problems in ports and harbors on all our coasts.

“In many cases vessels must ‘load light’ because of dredging shortfalls with serious economic implications. On the Great Lakes for example vessels lose between 50 and 270 tons of cargo for each inch they must reduce their draft and in some areas the lost draft is measured in feet not inches. A ship that is light-loaded reduces its efficiencies in the same way that a commercial airplane that is required to set aside seats with no passengers would quickly lose its efficiencies” said Weakley.