Senate EPW Committee signs off on WRDA legislation

The United State Senate’s Environment and Public Works (EPW) Committee this week signed off on S. 601, the Water Resources Development Act (WRDA) of 2013. 

The EPW Committee said that the bill provides critical flood protection for communities across the country, maintains the flow of commerce, and will create up to 500,000 new jobs.

One of the main components of the bill has to do with the Harbor Maintenance Tax (HMT), referred to in the bill as the Harbor Maintenance Trust Fund Act of 2013. The bill has language that addresses the growing surplus of funds in the Harbor Maintenance Trust Fund by ensuring all revenues will be spent for port maintenance without impacting other important Corps of Engineers projects. Capital for the trust fund is collected annually from importers and domestic shippers for deep-draft navigation maintenance dredging.

The key objectives of the Harbor Maintenance Act of 2013 as outlined in the WRDA bill include:
-ensuring that revenues collected into the Harbor Maintenance Trust Fund are used for the intended purpose of those revenues;
-to increase investment in the operation and maintenance of U.S. ports, which are critical for the economic competitiveness of the country;
-promote equity among ports nationwide; and
-to ensure U.S. ports are prepared to meet modern shipping needs, including the capability to receive large ships that require deeper drafts

Since the Harbor Maintenance Tax’s inception in 1986, the American Association of Port Authorities (AAPA) has advocated for full use of its collections for their intended purpose of dredging America’s deep-draft navigation channels to their authorized and required depths and widths. And importers and domestic shippers pay approximately double the annual amount that is drawn from the HMTF for maintenance dredging, leaving a surplus that exceeds $7 billion today. 

In a resource paper issued by the AAPA, it is noted that “most ports need regular maintenance of the federal channels leading into their harbors in order to maintain their constructed depths and widths and continue to move waterborne commerce efficiently,” with the U.S. Army Corps of Engineers overseeing Federal maintenance. The maintenance portion, according to the AAPA, is paid for through a tax on channel use, with the Harbor Maintenance Tax serving as an ad valorum tax of 0.125 percent on imports and domestic waterfront shipments and cruise passengers.

And even with more than $1.5 billion in annual Harbor Maintenance Tax revenues, the AAPA pointed out that Congress has only appropriated slightly more than half of that amount for channel maintenance, which has in turn resulted in a more than $7 billion surplus in the Harbor Maintenance Trust Fund and federal navigation channels in the U.S. being poorly maintained.

“AAPA believes a permanent solution to the HMT spending issue is needed,” it stated in the resource paper. “AAPA urges Congress to pass legislation that guarantees full utilization of the Harbor Maintenance Tax, such as providing an offset to collections or causing the use of collected revenues to be mandatory. HMT funds should be first used for historical intended purposes, and we support providing more equity for HMT donors.”

The AAPA is also calling for: U.S. tax policy not to put U.S. ports and maritime cargo at a disadvantage, the U.S. to have a process to efficiently study and construct deep draft navigation projects, and that the cost-share formula for maintenance and deepening to be reflective of the current cargo fleet.

AAPA Vice President of Government Relations Susan Monteverde told LM that the WRDA legislation has some of these components.

“We are excited WRDA is moving,” she said. “It has been seven years since WRDA was first passed. It has always been a little difficult to get through Congress. It is supposed to be passed every two years instead of seven years. It is great to see Senator Barbara Boxer (D-CA and Senate EPW Chair) so committed to WRDA.”

Shippers have been paying into the Harbor Maintenance Trust Fund since 1986 and was originally applied to all import cargo moving through U.S. ports and certain domestic cargo. But Monteverde said a U.S. Supreme Court prohibited the fund from collecting taxes for exports as per language in the U.S. Constitution.

When shippers’ cargo passes through the U.S. Customs and Border Protection to be allowed into the U.S., they pay a tax directly to Customs, with Customs then depositing it into the Harbor Maintenance Trust Fund, with Congress appropriating money to the trust fund.

“The problem is there is not a linkage between what comes in and what is appropriated,” explained Monteverde. “What the bill is trying to do is resolve that in a way that does not have a Congressional score. They are using a point of order to do this rather than take it off budget and have the funds that come in go directly to corps as other fee-based programs do. Congress decided not to do that because the score was too high; it is estimated to be anywhere from $20 billion to $22 billion to fix it that way. So instead Congress is using a point of order to try to allow a member of Congress to go on the floor and block an appropriations bill…if it does not appropriate for maintenance dredging the the amount that was collected the year before along with the interest.”