The U.S. House of Representatives is expected to vote Tuesday on a major piece of water infrastructure legislation that potentially could lead to $12 billion worth of maintenance and modernization for ports and inland waterways, as well as flood protection and coastal restoration. The spending blueprint provides a big increase in resources for dredging ports, greenlights several deepening projects and is heavily laden with policy reforms aimed at getting critical projects completed more quickly and minimizing waste.
The Senate could vote on the measure as early as Wednesday and send it to President Barack Obama for his signature.
Passage of the Water Resources Reform and Development Act (WRRDA) would be one of the signature achievements of the 113th Congress, which has been mired in political gridlock and advanced relatively little significant legislation the past two years. It also ends a seven-year stretch without a reauthorization bill for programs that Congress has historically renewed every couple of years.
WRRDA has a focus on bolstering the commercial maritime sector, but essentially is an economic development bill because navigation improvements to harbors and rivers will enable transportation companies to operate more efficiently and reduce costs for their customers.
"Legislation to improve the nation’s marine transportation system is long overdue and will grow jobs, boost international trade, protect lives and property from natural disasters, and strengthen America’s competitive edge," Janet Kavinoky, executive director of transportation and infrastructure at the U.S. Chamber of Commerce, said in a statement.
The House and Senate passed versions of the bill by wide margins last year, raising expectations for a quick resolution of any differences and enactment of the law. But, a conference committee took until last week to reach agreement on a joint bill.
The WRRDA conference report
represents a major victory for the port sector. A top issue for port authorities and businesses that rely on water transportation has been the backlog of dredging work just to maintain harbor channels at their authorized depth and width, and to repair jetties. As channels silt up, there is less draft for larger vessels to safely navigate in and out of ports. Funds generated by a tax on the cargo value of imports and coastal moves are deposited in the HMT Fund, but for many years, Congress has only directed half the funds to the Army Corps of Engineers for such work while the rest goes for unrelated expenditures to tamp down the budget deficit.
Last year, the HMT Fund took in more than $1.7 billion in revenues, but Congress only appropriated about $850 million for channel maintenance. Over time, the HMT Fund has built up a surplus of more than $8 billion.
WRRDA instructs congressional appropriators to utilize 100 percent of the Harbor Maintenance Trust Fund by 2025 for maintenance dredging and establishes a new prioritization schedule for ports.
Under the bill, the amount of money applied from the HMT Fund for its intended purpose would gradually increase over the next 10 years. The first $800 million or so, which represents the fiscal year 2012 baseline spending, would be budgeted by the Army Corps as it always has, with the exception that small ports -- typically short-changed in the process -- would get 10 percent set aside. Money appropriated above that amount would go out according to the new priority allocation: 90 percent for high and moderate-use harbors and 10 percent for small harbors; and within that pot, 10 percent is dedicated to Great Lakes harbors, 10 percent for expanded uses and 5 percent for under-served ports -- defined as ports that haven't been dredged to their authorized dimensions in six years.
West Coast ports in particular, have complained that their constituents pay the HMT and see little in return because many of them have naturally deep harbors, or ones that don't silt, and require limited, if any, dredging. Lawmakers from California and other states tried to claw back as much as half the funds collected in their port districts for alternative uses, including landside improvements, but the conference report stuck with the Senate version of the bill, which allows ports that have paid in more than they received the previous three years to use money for dredging of berths and contaminated sediments. A separate section would give appropriators the discretion to provide payments to “donor ports” for those uses, as well as environmental remediation and rebates to importers or shippers transporting cargo through the port. The section authorizes $50 million for each fiscal year between 2015 and 2018, with the amount doubling the following three years if targets for appropriations are met.
In a $1-billion appropriation for harbor maintenance, for example, the $200 million above the baseline level would be divided according to the new prioritization.
WRRDA authorizes 34 projects that have completed technical review by the Army Corps, including deepening the access channels to the ports of Savannah, Ga., and Jacksonville, Fla.
Among the bill's goals is streamlining the project review process. It sets hard deadlines and cost limits for completing feasibility studies, formally adopting the Army Corps new internal guidance of finishing reports within three years and for no more than $3 million. It also calls for consolidating and eliminating some types of studies and requires concurrent reviews by agencies, such as the Environmental Protection Agency, along with improved inter-agency coordination.
The legislation also directs the Army Corps to examine alternative financing approaches that may result in better project execution, including the use of bonding and public-private partnerships.
The bill maintains Congress authority for managing the authorization process instead of allowing the Army Corps to be the final arbiter, a principle fiercely fought for by House Transportation and Infrastructure Committee Chairman Bill Shuster. The Army Corps will send an annual list of qualifying projects, based on local requests, to Congress, which will decide which ones to pursue.
House Republicans were able to achieve their goal of fiscal responsibility by deauthorizing about $18 billion worth of old projects on the books to offset the new authorizations in the bill. And to prevent backlogs of unfunded projects in the future, the bill has a seven-year sunset period for all Chief's Reports and authorized projects that haven't moved forward.
Other provisions create pilot programs to provide flexibility for non-federal interests, such as states and port authorities, to contribute local and private dollars toward feasibility studies, pre-construction, engineering, permitting and design work if a project receives a Chief's Report after passage of an authorization bill. Local sponsors that don't want to wait for the normal process would take the risk of not getting reimbursed or receiving credit for their share of an expansion project above the 50-50 federal match. If a local sponsor picked up 65 percent of the tab to keep the project on pace, it would be eligible for a 15-percent credit, depending on whether Congress felt the expenditure was justified in a future authorization bill.
Local entities could even help cover the Corps' operations and maintenance, John Doyle, legal counsel for the Waterways Council at Jones Walker, said on a conference call with reporters Friday. The local community on the Alleghany River System, for example, is prepared to contribute funds to keep locks open that the Corps previously scheduled for reduced hours of operation in order to husband resources, he said.
The bill also adopts a 50-foot threshold for cost-sharing on deepening projects, which was sought after by port authorities as the 50-foot depth becomes the norm in an era of larger vessels. The current formula requires local authorities to cover 60 percent of the cost for expanding beyond a 45-foot depth and 35 percent for channels up to 45 feet.
WRRDA also addresses many problems with funding for the inland waterway system, incorporating many recommendations from the Inland Waterways User Board's 2010 capital development plan.
The bill would federalize the Olmstead lock-and-dam project, which has run up $3 billion in cost overruns and bled funding from the inland waterways trust fund for other authorized projects. Trust fund receipts come from a 20-cent-per-gallon fuel fee paid for by towboat operators. Under current law, trust fund pays 50 percent of the construction cost for locks and dams such as Olmstead.
Under the new formula, 85 percent of work to complete the project in 10 years (WRRDA recommends annual funding of at least $150 million per year for Olmstead) would be paid for by the Treasury from the General Fund and 15 percent would be covered by the trust fund. That would free up $105 million per year for other projects -- $52.5 million from the trust fund, plus an equal match from the General Fund, according to Michael Toohey, president and CEO of the Waterways Council.
The legislation also revises the definition of what constitutes major rehabilitation, raising the threshold to $20 million from $14 million to prevent the Army Corps from saving up regulator operation and maintenance work orders until they become a capital expenditure, rather than a maintenance one. Lock and dam projects will now be prioritized based on a score that weighs their risk of failure and their economic benefit to the nation.
There is no mention in the bill about raising additional revenues to support further modernization. The Waterways Council, which represents barge and towing companies, agricultural and other shippers, port authorities, and labor organizations, and the U.S. Chamber of Commerce are advocating for a 6-cent to 9-cent per gallon increase in the user fee. Ultimately, any tax increase would have to be approved by House and Senate tax writing committees, but industry stakeholders had hoped the WRRDA would have included support for a fee increase.
Every penny in diesel tax yields $4.2 million for the trust fund, so a 9-cent increase would add about $40 million per year for needed infrastructure upgrades along the rivers, Toohey said. The federal match would bring that amount to $80 million, which, when combined with the reallocation from Olmstead project, would potentially increase funding for priority lock and dam projects by $185 million per year, he said.
Toohey said congressional supporters of raising the fee are looking for any relevant tax legislation that involves revenue enhancement as a possible vehicle to carry an amendment. House Ways & Means Committee Chairman Dave Camp earlier this year included a 6-cent per-gallon increase in the inland waterways user fee as part of his comprehensive tax reform package, but political observers don't expect Congress to take action on that this year. One near-term option is the surface transportation reauthorization bill, Toohey said. The bill expires in September and the Highway Trust Fund is scheduled to run out of user fee money this summer. Congress is under pressure to plug the shortfall in the Highway Trust Fund before states start pulling back on construction projects, but there is little appetite in Congress for raising the motor fuel tax. A short-term extension of some kind to get through the election is now considered the most likely option, with money coming from the General Fund. But Toohey said Congress must also reauthorize an extension of the motor fuels tax -- a fairly routine matter that could provide an opportunity to attach the inland waterways fee.
"There are 300 taxpayers of the user fee and their customers who all support it. There is absolutely no controversy around this issue. So when there is a viable tax bill that includes revenue issues, this bill will be part of that," Toohey said.
Industry groups applauded the news that a robust water resources bill was nearing the finish line.
"This is a huge step forward to ensure the continued success of the soybean supply chain, and leaders in both the House and Senate deserve a great deal of credit for shepherding this bill through a challenging policymaking climate,” said American Soybean Association President Ray Gaesse.
“In order to strengthen the U.S. economy, we must ensure these goods can move efficiently in and out of America’s ports, without avoidable and costly delays caused by inadequate or poorly maintained infrastructure. The WRRDA authorization bill helps some of the critical waterside needs facing this nation," Kurt Nagle, president and chief executive officer of the American Association of Port Authorities, said in a statement.
The Great Lakes shipping industry urged Congress to approve WRRDA as fast as possible. Vessels have not been able to carry full loads since 1997 because of a huge dredging backlog of more than 18 million cubic yards of sediment.
James Weakly, president of the Great Lakes Maritime Task Force and the Lake Carriers' Association, noted in a statement that need for dredging has taken on added urgency following last winter.
"Only a fraction of the cargo that needed to move in March and April was shipped because the ice was so thick. We need to cram every ton we can into the cargo holds if we are to stand any chance of rebuilding stockpiles at steel mills and power plants to necessary levels. The Corps must do everything in its power to restore the Great Lakes Navigation System as quickly as possible.”
John Baker, first vice president of the GLMTF, emphasized that dredging will always be an annual need.
“The natural rate of siltation into the Lakes is more than 3 million cubic yards per year. Under the current scheme of things, most years, the Corps doesn't get enough money to keep pace with the normal influx of sediment, let alone reduce the backlog. That’s why it is so important that this WRRDA pass and America finally has a dredging program that properly maintains the Lakes and connecting waterways.”
House GOP aides who briefed reporters said the bill paves the way for Congress to get back on a two-year reauthorization cycle for water resource funding because it clearly defines Congress' role in authorizing projects, and creates a process that includes local communities and the Army Corps. Shuster intends to keep to that schedule as long as he remains in office, although there are no legal mechanisms requiring Congress to do so.
One staff member, speaking under agreed-upon rules not to be identified, said reaching consensus between both chambers on a joint bill was difficult because there are no earmarks for lawmakers to trade to get projects funded in their districts, "so we had to roll up our sleeves and work through policy issues" on which many held strong feelings.