With the expansion of the Panama Canal, U.S. ports are scrambling to make much-needed upgrades in preparation for bigger ships. A key piece of newly introduced legislation may offer some relief.
Last week, the Senate Environment and Public Works (EPW) Committee introduced and approved the Water Resources Development Act. The legislation addresses a bevy of issues, including flood protection, inland waterways and environmental restoration. But ports may be among the biggest winners.
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For years, port officials and shipping companies have complained that the Harbor Maintenance Trust Fund is being underutilized. The fund gets its money from a tax on cargo, but it's been allowed to build up a big balance even though it was designed to pay for maintenance and needed improvements. Lawmakers -- especially those from coastal states -- are angry that the money is allowed to accumulate in order to offset congressional spending and reduce the deficit.
Brian Pallasch, a lobbyist for the American Society of Civil Engineers, says the trust fund typically collects about $1.6 billon to $1.8 billion in revenue per year, with only about $800 million actually spent on harbor maintenance. A 2011 study by the Joint Committee on Taxation projected the fund's end-of-year balance to be $6.4 billion and estimated it would rise to more than $22 billion by the end of 2021. Senate EPW Committee leaders, like Republican Ranking Member David Vitter of Louisiana, say the bill for the new Water Resources Development Act (WRDA) contains provisions to ensure "the money industry pays for dredging is actually used for dredging." The bill was approved unanimously by the committee, and Democratic Chairman Barbara Boxer of California says Senate Majority Leader Harry Reid has agreed to have the full Senate take up WRDA in April or May.
Infrastructure advocates and the Government Accountability Office say that despite big, growing balances in the fund, there's a backlog of harbor maintenance projects that could mean costly delays and dangerous conditions if they're not addressed. Mainly, if a harbor isn't dredged to its proper depth shipping can be slowed because vessels may have to wait for high tide in order to access the port without scraping the sea floor. In other cases, ships may skip a port altogether if conditions are poor and it's faster to just continue on. Shipping companies also may load a vessel at less than full capacity in order to keep it from floating too deep in a channel that hasn't been adequately dredged; that raises shipping costs since it requires more vessels to move each batch of goods. In the worst case scenario, if a channel isn't properly maintained, ships can run aground.
With the widening of the Panama Canal, the issue is all the more salient: U.S. ports will have to take steps to accommodate the larger "post-Panamax" if they want to put themselves in the best strategic position.
The House Transportation and Infrastructure Committee hasn't revealed it own WRDA bill yet, but Republican Chairman Bill Shuster of Pennsylvania says WRDA will be one of the committee's first tasks. Since Congress hasn't passed a WRDA bill since 2007, new members won't be familiar with the legislation. Educating them about it, Shuster said, will be key to ensuring its success.
The fund was created with the passing of the 1986 Water Resources Development Act (WRDA).