What Shippers Need To Know About New US Port Bill

US shippers using the ports of Charleston and Everglades in the coming years should be able to ship their goods via larger ships and avoid navigational hurdles after Congress passed a major port bill late last week.

More broadly, US ports seeking to deepen their channels to handle larger ships could also get additional help from the government through the recently passed water infrastructure bill President Barack Obama is expected to sign. After diving into the 728-page bill, covering water infrastructure from irrigation to drinking water projects, here’s what shippers, marine terminals, port authorities, and container lines need to know about the Water Infrastructure Improvements for the Nation, or WIIN, bill.

How does the bill help Charleton and Everglades?

WIIN authorizes funding for new US Army Corps of Engineers navigation projects, including projects to deepen harbors at the Port of Charleston in South Carolina and Port Everglades on Florida’s Atlantic coast: roughly $231.2 million for Charleston and $229.8 million for Everglades.

The inclusion of Charleston and Everglades in the bill will open the door for both projects to receive federal funds and begin construction, but — in a unique instance — the Charleston project was actually already cleared months ago by the Senate to begin construction with or without the WIIN bill.

Charleston is set to deepen its existing entrance channel from 47 feet to 54 feet and deepen the inner harbor from 45 feet to 52 feet, effectively making it the deepest harbor on the US East Coast. The state of South Carolina has already secured roughly $300 million for the $502.7 million project, and has been waiting on Congress to authorize and appropriate the remaining dollars and cents through a new WIIN bill before starting construction.

Farther south, however, Port Everglades will have to continue waiting for Congress to pass the WIIN bill before it can begin dredging. The $337 million Port Everglades project included in the WIIN bill is set to deepen the main navigational channel there from 42 feet to 48 feet, as well as deepen and widen the port’s entrance channel and parts of the Intracoastal Waterway so that cargo ships can pass safely by docked cruise ships.

Despite their differences, both harbor projects aim to prepare their respective ports for the arrival of mega-ships traversing a recently expanded Panama Canal, whose new locks can now handle ships with capacities of up to 14,000 twenty-foot-equivalent units, nearly triple the size of the ships that historically have transited the canal’s century-old waterway.

How will WIIN help future channel-deepening projects?

WIIN includes language from the Senate version of the Water Resources Development Act, or WRDA, which takes steps to modernize the cost-sharing formula for future channel-deepening projects — something that hasn’t been updated in 30 years.

WIIN increases the minimum depth required for a 50-50 federal-state funding split from 45 feet to 50 feet. The 45-foot depth was established in 1986, when vessels were smaller. Congress updated the cost-sharing formula for maintenance projects in 2014 to reflect the need for deeper 50-foot waterways. WIIN extends the same criteria to the initial dredging.

Will WIIN prevent money meant for harbor maintenance being used for other purposes?

No such luck. The latest waterway bill will not address the longstanding efforts to stop the siphoning of funding meant for ports in the Harbor Maintenance Trust Fund to other projects. WIIN, however, will protect ports from unexpected drops in annual dredging funds generated by the tax — a 0.125 percent levy on the value of imported cargo — that contributes to the fund. WIIN does this by ensuring that the harbor maintenance funding target will increase 3 percent every year, even if HMT revenue estimates decrease.

US port interests called the language guaranteeing the annual 3-percent hikes a “backstop” to continue progress toward eventual use of all HMT funds for their intended purpose.

“This fits with the intent of Congress in the 2014 bill,” Kurt Nagle, president and CEO of the Association of American Port Authorities, said at a Gulf Ports Association conference in Lake Charles, Louisiana earlier this year. “When the 2014 bill was passed, nobody was thinking about the possibility that the appropriation might go down.”

That guarantee received a warm welcome from ports, which were surprised to learn earlier in 2016 that during the next fiscal year dredging appropriations from the HMT are expected to decline by $82 million, even though the percentage of HMT collections allocated for dredging will rise from 69 percent to 71 percent.

The forecast decline is due to an expected drop in fiscal 2017 collections from the HMT, which is levied at the rate of 0.125 percent of the value of waterborne imports and domestic cargoes. That decline has been blamed mainly on the recent drop in the price of oil and other commodities.

How could future bills prevent that money from going elsewhere?

Although the latest waterway bill will not stop the siphoning of port funding from the Harbor Maintenance Trust Fund, a House version of WRDA this year did include language that would have taken the trust off budget. That law would have changed HMT spending from discretionary to mandatory in 11 years. That would mean the trust would not be subject to the appropriations process and would ensure every year that HMT revenues would be directed toward projects at the nation’s ports. The industry loses about $20 billion from raids on the Harbor Maintenance Trust Fund.

“Finally taking the Harbor Maintenance Trust Fund off budget guarantees that every year billions of dollars will go to keeping our nation’s ports efficient and globally competitive,” former Congresswoman Janice Hahn, D-Calif., said in a statement.

Hahn, who represented the constituency that is home to the Los Angeles-Long Beach port complex but now serves as a Los Angeles County supervisor, is an outspoken advocate for US ports. While Hahn was still in Washington, she refused to support the House WRDA bill, which she called “botched.” Hahn has expressed hope that language similar to the House version will reappear in future waterway bills.

When can another water infrastructure bill be expected?

WIIN’s passage returns Congress to the routine of passing a water infrastructure bill every two years. It’s something that lawmakers only briefly managed to accomplish in the late ‘80s and early ’90s.

The Water Resources Reform and Development Act passed in 2014 was the first water infrastructure bill passed in nearly seven years.

“WIIN now enables the much-needed return to biennial legislation in order to authorize twenty-first century navigation channel improvements in a timely manner,” AAPA’s Nagle said in a statement.

It’s not a sure thing, though. WIIN is a testament to renewed support for trade and transportation infrastructure among Washington elites — who are floating such grandiose ideas as a $1 trillion revenue neutral infrastructure investment plan. Nevertheless, it has faced considerable challenges in the current Congress and more than once was threatened by short deadlines and gridlock over debates unrelated to water infrastructure.

 

Source: JOC