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Eno Transportation Weekly

House Hearing Pushes Case For Unlocking Harbor Maintenance Trust Fund

April 12, 2019

An April 10 hearing before the House Water Resources and Environment Subcommittee discussed waterborne transportation and appeared designed to make the case for legislation unlocking $9.3 billion in past collections for the Harbor Maintenance Trust Fund – legislation that seems very likely to be included in the forthcoming infrastructure initiative from House Democrats.

Testimony was then heard from a variety of water transportation stakeholders:

  • Rick Goche, Commissioner, Port of Bandon, Bandon, Oregon (written testimony here)
  • Eugene Seroka, Executive Director, Port of Los Angeles, San Pedro, California (written testimony here)
  • Bonnie Brady, Executive Director, Long Island Commercial Fishing Association, Montauk, New York (written testimony here)
  • Kevin Ross, First Vice President, The National Corn Growers Association, Minden, Iowa (written testimony here)
  • Phyllis Harden, Legislative and Special Projects, Pine Bluff Sand and Gravel Co., Pine Bluff, Arkansas (written testimony here)
  • Peter H. Stephaich, Chairman, Campbell Transportation Company, Houston, Pennsylvania, on behalf of the Waterways Council Inc. (written testimony here)
  • Kirsten Wallace, Executive Director, Upper Mississippi River Basin Association, St. Paul, Minnesota (written testimony here)

Port testimony. Subcommittee chairman Grace Napolitano (D-CA) and full Transportation and Infrastructure chairman Peter DeFazio (D-OR) each had a port interest from their region testify. In Napolitano’s case, it was the biggest U.S. mega-port, Los Angeles (which, together with the adjoining Port of Long Beach, handles 40 percent of all cargo containers incoming to the U.S. and supports one in nine jobs in Southern California. In DeFazio’s case, it was a fisherman (who is also port commissioner) from the Port of Bandon, Oregon (population 3,112). Rick Goche (Bandon) stressed how the $500 thousand per year that the Corps of Engineers spends on dredging the port was economic life and death for much of the town.

Eugene Seroka (Los Angeles) stressed that it’s not just about how much Harbor Maintenance Trust Fund (HMTF) money is spent, it’s how that money is distributed. He noted that the six biggest ports collectively bring in over 60 percent of the ad valorem taxes to the HMTF but those six ports only receive about 2 percent of HMTF spending. For Los Angeles in particular, he said the FY 2017 totals were $225 million in HMTF tax collections versus $5.5 million in HMTF spending.

Shipper testimony. Subcommittee ranking member Bruce Westerman (R-AR) brought a local sand and gravel company to testify, and the National Corn Growers Association was also there. Both focused on the inland waterways system and the Inland Waterways Trust Fund (IWTF). Both spoke in support of the existing 29 cent per gallon diesel fuel tax on barge tow vessels that currently funds the IWTF. (Ed. Note: See the December 2014 TW story “How to Get a Transportation User Tax Increase Through the House of Representatives” for the amazing story of how the IWTF diesel tax was increased by 45 percent that year.)

Kevin Ross (corn growers) also spoke in opposition to the recurring provision in the Obama and Trump budgets that would increase IWTF receipts by $178 million per year by charging a system of user fees for lock usage: “Unlike the highway program, where suers thave the choice to use a tolled or un-tolled facility, waterway users would be faced with no choice. The result would be moving product by other modes.”

Operator testimony. The panel heard from the CEO of a shipping company that operates 5o towboats and 1100 barges (on behalf of the Waterways Council), who stressed the need for larger locks, saying that many locks on the inland waterways system are still only 600 feet long, whereas the standard length of today’s barge tow groups is 1,200 feet, which leads to a lot of wasted time and potential danger from breaking the tow group in half, taking the first half through, then going back to bring the second half through, then rejoining them.

Along with the shippers, the operator also testified in support of a change pushed through Congress by Sen. Lamar Alexander (R-TN) a few years ago that changed the cost share formula for the Olmsted Locks and Dam megaproject on the Ohio River from the standard 50-50 IWTF/General Fund to 15% IWTF/85% GF, which has allowed that project to be completed four years ahead of schedule. They all supported maintaining the 15/85 formula for the next few major projects on the IWTF timetable (Lower Monongahela 2,3,4, Kentucky Lock, and Chickamauga Lock).

Commercial fishing testimony. The head of the Long Island Commercial Fishing Association in Montauk (Ed. Note: Now I can’t get the Billy Joel song “Downeaster Alexa” out of my mind) pointed out that inadequate dredging leads to lost time and income – the operator of a boat with a 12-foot draft must, if a storm has built up silt and taken channel depth down to 10 feet, wait for high tide to go in and out of the port, which could lead to missing the good fishing spots in the morning or missing the truck to take your catch when you get back to port.

Environmental testimony. The head of the Upper Mississippi River Basin Association testified in support of the NESP (Navigation and Ecosystem Sustainability Program), a balanced plan for lock and dam upgrades in the area that are balanced with environmental protections that was negotiated between business interests and environmental groups.

Q&A – Unlocking HMTF money. DeFazio  made a point to put all seven panelists on record en masse on two questions. First, he asked if they agreed that Congress should spend all newly collected HMTF taxes each year as the money comes in (which would be allowed by a provision in the pending disaster appropriations bill being pushed by Senate Appropriations chairman Richard Shelby (R-AL)). All panelists agreed.

DeFazio then asked if they all supported spending down the $9.3 billion HMTF balance that has been collected but not appropriated over the last 30 years “in a programmed way to meet maintenance needs in both large ports and small ports” and also got unanimous agreement. DeFzio had earlier noted that he has pushed legislation unlocking the $9.3 billion in the past: “Twice I’ve gotten that provision into water bills, and twice Paul Ryan personally removed it in the Rules Committee or had it removed in the Rules Committee. Paul is now retired. I hope he is enjoying it. And I hope for better treatment by the Rules Committee this year when we move similar legislation.” (Ed. Note: See the September 2016 ETW article “What to Do About the Harbor Maintenance Trust Fund” for more background on the issue and the DeFazio legislation.)

By coincidence, the day after the House hearing, the Treasury Department issued its annual five-year forecast for the HMTF showing that the Trump Administration’s plan to cut Corps of Engineers HMTF spending by almost 40 percent (never really explained in the budget), combined with rising tax receipts, would cause that end-of-year balance to balloon from $9.3 billion last year to $12.9 billion at the end of fiscal 2023:

Harbor Maintenance Trust Fund Five-Year Outlook

Millions of dollars. Source: March 2019 Treasury Bulletin p. 91.
FY18 FY19 FY20 FY21 FY22 FY23
Actual Estimate President President President President
Beginning-of-FY Balance 9,100.1 9,321.6 9,415.6 10,198.7 11,035.6 11,928.6
New Tax Receipts +1,513.2 +1,566.1 +1,620.9 +1,677.7 +1,736.4 +1,797.2
Interest on Balances +144.5 +143.3 +158.9 +175.4 +192.9 +211.4
Outlays (Corps of Engineers) -1,392.9 -1,571.7 -952.4 -971.4 -991.0 -1,010.7
Outlays (St. Lawrence Seaway) -40.0 -40.5 -41.0 -41.5 -42.0 -42.5
Outlays (Customs) -3.3 -3.3 -3.3 -3.3 -3.3 -3.3
End-of-FY Balance 9,321.6 9,415.6 10,198.7 11,035.6 11,928.6 12,880.7

Q&A – How HMTF money is distributed. DeFazio’s first question was whether or not the current 10 percent set-aside for small and emerging ports was adequate (Goche and Bready indicated probably not). He then addressed Seroka’s contention on behalf of the mega-ports that “donor ports” should receive a significantly larger share of total HMTF spending, saying he had “some concerns” with that plan, and urged the big ports to help unlock the $9 billion in balances and “then we will come up with a fair distribution.”

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