Study warns economic damage if sufficient river channel depths aren’t reached.
By Chris Dupin
executive director, Agriculture Transportation Coalition
|“It’s a travesty that Congress enacts a user fee and the executive branch — actually starting back in the 90s — started withholding some
of that moneys just
to pay for general government functions.”
Shipping industry advocates plan to push the issue of harbor maintenance into the spotlight in February.
Rep. Charles Boustany, R-La., told a meeting in New Orleans last month that he hopes provisions in a bill that he introduced last year, H.R. 104, or the Realize America’s Maritime Promise (RAMP), will be incorporated in a comprehensive surface transportation bill.
Boustany said his bill has 149 co-sponsors in the House and 30 Senate co-sponsors. It would require funds collected under the Harbor Maintenance Tax to be used for their intended purpose, and not be used to reduce the overall federal deficit.
Today, only half of the $1.3 billion to $1.6 billion collected by the tax is used for dredging or other harbor maintenance, said Sean Duffy, executive director of the Big River Coalition, a group that advocates for businesses using the Mississippi River.
Port advocates say funds collected by the tax would be adequate to maintain the country’s harbors if they were used for their intended purpose. There is already a surplus of about $6 billion in the Harbor Maintenance Trust Fund.
“If we are going to double trade over the next five years as the president wants to do, if we are going to have an American economy that competes with China, India, Brazil and Russia, a key to this is our waterways,” Boustany said. He also said the lack of channel maintenance will harm the ability of U.S. businesses to take advantage of the expanded Panama Canal.
“It’s a travesty that Congress enacts a user fee and the executive branch — actually starting back in the 90s — started withholding some of that moneys just to pay for general government functions,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition, which represents exporters.
He said the lack of funding for dredging affects not only the Lower Mississippi, but also other ports around the country, from the Columbia River to the U.S. Southeast.
“Every other port in the country besides Seattle, Tacoma, Los Angeles and Long Beach needs millions in maintenance dredging,” he said. AgTC strongly endorses the RAMP Act and Friedmann believes it has a good chance to pass this year.
Boustany made his remarks as the Big River Coalition unveiled a study that detailed the economic damage that could be caused to the nation if silting further reduces the channel drafts on the Mississippi.
The study, prepared by economist Timothy Ryan, found that if channel depths were reduced by silting from 45 to 38 feet, exports through the river could be reduced by 12.4 percent and imports 5.5 percent.
Ryan said over 20 percent of U.S. waterborne commerce passes through the Lower Mississippi River, and his study said “much of this is threatened by the decision of the Corps of Engineers to reduce dredging activity on the Lower Mississippi River (LMR), specifically at the three areas that require maintenance dredging: the Crossings, the New Orleans Harbor, and Southwest Pass.”
Historically, the Corps has maintained the river to depths that allow ships drawing 45 feet of water to navigate in and out of the river, but the Louisiana congressional delegation says the budget has been cut by $45 million.
|“Current discussions call for a dredging program that may only be able to maintain depths of 38 feet in certain areas of the LMR (Lower Mississippi River).”
“Current discussions call for a dredging program that may only be able to maintain depths of 38 feet in certain areas of the LMR,” Ryan said in his report.
Drafts at some places on the river were already restricted to 44 feet in early January, said Duffy, who is concerned that conditions could rapidly deteriorate and 40-foot limitations might be put in place.
He said it was only through cooperation by river pilots that traffic was moving normally despite reduced channel widths at river crossings.
Rachel Rodi, a spokeswoman for the Army Corps of Engineers’ office in New Orleans, said the agency has received an acceptable bid for a hopper dredge in the Southwest Pass in early January and hoped to have it begin dredging by the end of this month.
But Duffy said when he met with Corps officials they agreed with him “that if funding were not an issue that the channel would require 3-4 hopper dredges” to restore to fully authorized dimensions, a channel 750 feet wide by 45 feet deep.
The Corps New Orleans District’s current Mississippi River dredging budget totals $72.6 million, which Rodi said was more than the $63 million the agency had to work with the prior year. But that is far below the $110 million the Corps had provided for river maintenance in prior years.
“As we did in 2011, the Corps will operate within the budget and will manage dredging based on historical peak shoaling periods to minimize adverse impacts to industry. Maintaining the deep draft of the Mississippi River is a priority for the New Orleans District because of its national implications,” Rodi said.
But a Jan. 6 letter sent to the Corps and Office of Management and Budget by Louisiana’s two senators and seven congressmen said “to prevent any disruption to commerce, $70 million is needed for dredging activities.”
Duffy said additional funds are available through both flood disaster relief and the “megabus” appropriations laws signed by the president.
Rodi said “if additional dredging funds are received at any point in fiscal year 2012, the Corps will supplement current plans to provide the best available channel.”
Ryan said if draft is reduced, on the export side the most affected commodities would be soybeans and other agricultural products and, on the import side, most of the impact or loss would be on crude oil shipments destined to refineries along the Mississippi River.
In addition to hurting the Louisiana economy, he said there would be massive losses to the rest of the country because of increased costs of exports and higher gasoline prices. The United States would be left with two options — either reducing the quantities of goods shipped or higher transportation costs.
Ryan estimated an additional 224 ships would be needed to transport cargo if only smaller ships can use the river - up to 50 more for coal, 17 for corn, 83 for crude oil, and 73 for soybeans. The cost of an additional bulk ship with a 55,000-ton capacity for a trip from New Orleans to China would be nearly $2 million, he said.
In 2012, the first year in which the reduced dredging expenditures will have full impact, Ryan said the losses in direct spending and related “ripple effects” could be $13.8 billion, if production was reduced; $6.35 billion if higher transport costs are absorbed.
He said even the federal government would lose money, anywhere from $47 million to $219 million in tax revenue.
“In all the 35 years that I have been doing economic analysis there is no clearer case that I have seen for increase in funding,” he said.