Despite increasingly loud warnings from state governments and federal agencies, the nation’s shipping waterway infrastructure – which handles the bulk of the United States’ agricultural products -- continues to erode. A Wednesday morning (Feb. 1) hearing by the House Ways and Means Subcommittee on Oversight looked into the deteriorating situation.
“Our nation’s harbors are a life-blood of commerce,” said Louisiana Rep. Charles Boustany, chairman of the subcommittee, in the hearing run-up. “Years of chronic underfunding have severely limited ship traffic, prevented valuable cargo from moving efficiently, and adversely affected national, regional, and local economies. Funds collected by the Harbor Maintenance Trust Fund (HMTF) should be utilized promptly and exclusively to keep our harbors open for business.”
The U.S. Army Corps of Engineers uses HMTF funds to maintain harbors and dredge waterways. Those funds are collected from shippers through the Harbor Maintenance Tax (HMT) that is based on the value of the goods being shipped through ports.
According to the subcommittee, the tax “was intended to provide a sufficient, stable, long-term source of funding to pay for harbor dredging to maintain authorized depths and widths. In recent years, HMTF expenditures have remained flat while HMT collections have increased with rising imports, creating a large surplus in the trust fund. The HMTF’s uncommitted balance continues to grow and reached an estimated $6.1 billion at the beginning of fiscal year 2012. In fiscal year 2010 alone, $1.2 billion in Harbor Maintenance Taxes were collected, while only $793 million was spent on dredging and related maintenance. Despite the accumulating balances in the HMTF, many U.S. harbors are under-maintained, resulting in the full channel dimensions of America’s busiest ports available less than 35 percent of the time. Reduced channel dimensions could increase both the cost of shipping and the risk of grounding or collision.”
To ensure that HMTF appropriations and funds are linked, Boustany and Connecticut Rep. Joe Courtney introduced the bipartisan HR 104, which would tie the shipping assessments to actual harbor and waterway maintenance. The Senate companion bill is S 104.
Following the hearing, Boustany said HR 104 “guarantees the Calcasieu River remains an avenue providing the rest of the world with south Louisiana products such as Crowley rice and St. Landry Parish soybeans. American exports cannot afford to lose competitiveness due to Congress’s inability to responsibly allocate dedicated funding.”
Among those who testified at the hearing about the need for proper river maintenance was Louisiana Agriculture Commissioner Mike Strain. Shortly after his testimony, Strain spoke with Delta Farm Press from Washington, D.C. Among his comments:
On the pending legislation…
“Less than 35 percent of nation’s 59 major ports are being adequately dredged. At issue here is the ability of America to move goods and products and put them into commerce.
“What happened is around 1986 a bill was passed that puts an assessment of $1.50 per $1,000 worth of cargo handled. That is supposed to pay for the dredging and maintenance of our harbors and waterways – inland, as well.
“That assessment generates about $1.3 billion to $1.6 billion every year. Historically, though, only $750 million, or less, has been spent on dredging and harbor maintenance. The rest is being utilized elsewhere.
“So, there’s a positive balance of over $6 billion in the trust fund” set up to handle the assessments.
Consequences of poor management
On the consequences of poor waterway management…
“If you look at just the lower Mississippi River Valley, almost 60 percent of the nation’s agriculture products flow through the ports from Baton Rouge to the mouth of the (Mississippi) River.
“In the last 25 days, we’ve had five ships that have grounded. More than 40 have grounded in the last four years.
“In Lake Charles Parish, the channel is getting down to about 150 feet wide and 40 feet deep. The port there is the nation’s eleventh busiest in the country.
“The port in south Louisiana is one of the busiest in the hemisphere. We have to” keep the channels open.
Failure to do so leads to “short-loading” ships, which costs “about $1 million per foot.
“Currently, we have ships being grounded at 42 feet. (The channel) is supposed to be maintained at a width of 750 feet – now, around 300 feet -- and 45 feet deep.
“There are also 13 crossings, or low areas, on the Mississippi from Baton Rouge to the Port of New Orleans. These are supposed to be maintained at 60 feet. Currently, they’re at 45 feet, or less.”
On the burden passed to farmers…
“Look at all the nation’s ports and the (assessments) are being paid by the owner of the merchandise being shipped. The money is (available) to do the dredging but it isn’t being done. Again, that has led to short-loading ships and increased costs to ship the products.”
Those increased costs “are borne by the farmer. Failure to address this will result in a loss of at least 10 cents, or more, per bushel for farmers.
“When you start looking at export initiatives, our exports grew by 18 percent last year to reach $147 billion. We expect a $42 billion to $45 billion positive balance of trade with ag goods alone in the next year. But all this hinges on our ability to efficiently and properly goods and services.”
On inland waterways…
“Many of the locks and dam structures -- along the Ohio River, the Missouri River, the Mississippi and other waterways -- are reaching, or have passed, their 50-year life span. They must be maintained.”
This is a basic issue of economics, says Strain. Secondarily, there are safety factors to consider.
“Homeland security comes into play with the grounding of vessels. And what would happen if one of the vessels breached and the contents of which – from petrochemicals to all other sorts of products – spill into our rivers and estuaries?
On barges, “we’re moving coal, iron ore, oil, chemicals, all types of ag and forestry products. Basically, the industrial and agricultural might combined depends on the efficient use of waterways.”
On efficiencies and savings…
Using waterways, “we can move a ton of material 576 miles on a gallon of diesel. That’s efficiency we can’t get anywhere else. One 15 tow barge is the equivalent of 1,050 trucks or more than 260 railcars.
“What we’re saying is ‘take the money being collected – the sufficient money – from users of the ships and pay for the maintenance of harbors and dredging. … We’ll have more than enough money, as was promised in the original Harbor Maintenance and Trust Fund, to pay for all necessary projects and then some.”
Why won’t they use the trust fund monies to dredge? What’s the hold up?
“That money is being used elsewhere in the government. This bill says the dollars collected must be used for the dedicated purposes for which it was collected.”
Any pushback at the hearing?
“The only pushback regarded a portion of the tax. Basically, if you have a ship that offloads and reloads on another ship to go on inland waterways, you have to pay the tax twice. That’s a $2 million inequity but it can be corrected very simply.
“Another issue is some ports pay into the fund but don’t receive any money. That’s because they don’t have to dredge because they have a stone base.
“Other areas receive more (from the fund) than they pay in. However, that has to be looked at in terms of the entire nation’s economy. All ships rise together. Collectively, this is still the United State of America – one country – and the money should be utilized where needed. If we use this money properly, there’s enough for all projects.”
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