February 9, 2012

Bureaucracy Bottles Up Harbor Maintenance

Marc Comtois

While we continue to hear about money we don't have being spent on bad loans to green economy darlings like Solyndra and Fisker, it turns out that there is cash sitting there waiting to be spent on good old fashioned things like our waterfronts and waterways. In the latest Federal Transportation bill (h/t), which is currently making its way through the House, is contained the following "Sense of Congress on Harbor Maintenance" (page 822 of PDF) regarding one trust fund that has money:

(a) Findings- Congress finds the following:

(1) There are 926 ports served by federally maintained channels which handle more than 2.2 billion tons of cargo annually, and this figure is expected to increase.
(2) More than $1.1 trillion in foreign commerce enters the United States through the Nation's ports annually, and this figure is expected to increase.
(3) Expansion of the Panama Canal system in Central America will likely be completed in 2014, and this will present opportunities and challenges for the Nation's economic well-being.
(4) Insufficient maintenance dredging of the Nation's navigation channels results in inefficient water transportation and harmful economic consequences.
(5) In 1986, Congress created the Harbor Maintenance Trust Fund to provide funds for the operation and maintenance of the Nation's navigation channels.
(6) The fiscal year 2011, Harbor Maintenance Trust Fund equity grew by 13.7 percent from fiscal year 2010 (to $6.42 billion) and total annual receipts increased 17.3 percent (to $1.6 billion).
(7) Despite growth of the Harbor Maintenance Trust Fund, expenditures from the Harbor Maintenance Trust Fund continue to decline.
(8) Despite growth of the Harbor Maintenance Trust Fund, federally maintained channels are only at their authorized widths or depths 35 percent of the time, thereby restricting access to the Nation's ports for both imports and exports.

(b) Sense of Congress- It is the sense of Congress that--

(1) the Harbor Maintenance Trust Fund is not being used for its intended purpose and charging maritime commerce a harbor maintenance tax while failing to provide the service for which it was established is unfair and places the Nation at economic risk;
(2) the Administration should request full use of the Harbor Maintenance Trust Fund for operating and maintaining the Nation's navigation system; and
(3) Congress should fully expend the amounts in the Harbor Maintenance Trust Fund to operate and maintain the Nation's navigation system.

The fees have already been assessed and collected from the stakeholders (the damage is done, in other words). So why is it just sitting there? My guess is that the OCEAN state could benefit from that money being spent as it was intended.

More broadly, this is a clear example of government inefficiency. I wonder how many other special programs are in place that assess the private sector fees for a purported "beneficial" reason and then fail to follow up. Meanwhile, the money piles up because of typical bureaucratic malaise. In the mean time, that money could have gone towards other, more immediate and beneficial things that those in the industry could have identified for themselves. At this point, maybe a better solution would be to offer them a refund!

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"My guess is that the OCEAN state could benefit from that money being spent as it was intended."

Be careful what you wish for. Based on recent RI history, the state would just use the money to plug its budget and pension shortfalls and go on vacation for another year while the problem continued to grow. If there had been fewer windfalls, grants, and bailouts over the past few years, the state would now be far more advanced in its long and painful journey toward fiscal sustainability.

Posted by: Dan at February 9, 2012 4:44 PM

Not mentioned here is that the Panama Canal has been deepened and widened. Starting in 2014, it will allow traverse by ships that cannot enter East Coast ports. I believe only New York will be able to accept them.

Charleston, which I think is the 3rd busiest port on the East Coast, is a fine example of bureaucracy run Amok.

The Army Corp finished its plans to allow the port to accept the larger ships that everyone knew were coming in 1999. We are still waiting for the EPA. Assuming the ships have been built, they will begin passage in 2014. Perhaps EPA subscribes to the Mayan calendar.

Charleston is only one port among many suffering delays.

Posted by: Warrington Faust at February 9, 2012 5:49 PM

Dan - Oh, I know. I'm wary too. But I'm pretty sure it wouldn't be "block" granted to the states so much as direct funding to specific items. Yeah, another can of worms, but....
Warrington - it's alluded to in (a)(3), but thanks for the further illumination!

Posted by: Marc at February 9, 2012 7:48 PM

Any well managed fund would have turned double digit numbers in 2010. I'm not sure blowing the trust fund on dredging would be wise, maybe that money SHOULD sit there and ride the economic recovery.

Posted by: mangeek at February 9, 2012 9:58 PM


So long as a very large portion of our economy is dependant on the purchase at retail of goods from the Orient, we cannot ignore the importance of dredging. New York, Savannah, Ga., and Miami have already begun dredging. The economics of "carriage by sea" and the completion of Panamax (an enlargement of the Panama Canal) are likely to result in container ships 2, to 3, times larger than current freighters. It will also alleviate some of the problems of a "two ocean navy" by permitting more warships to traverse the canal. As always, the inability to manuver in attack will deter some use.

"Capitalism" might say that New York Savannah and Miami should succeed at the expense of Baltimore and Charleston, because they have prepared themselves by dredging. This ignores the bureaucratic boondoggle. It has all been done with federal dollars, the EPA has given its blessing to some ports while withholding it from others.

Posted by: Warrington Faust at February 10, 2012 7:52 AM

"we cannot ignore the importance of dredging"

I agree wholeheartedly. Just pointing out that a few billion in a fund like this might not be a few billion too much.

I'm actually a BIG supporter of keeping ports 'shipshape'. I'd like to see Quonset developed to be to Port Elizabeth what T.F. Green is to Logan... A smaller, more up-to-date alternative.

Posted by: mangeek at February 10, 2012 4:04 PM

"I'd like to see Quonset developed to be to Port Elizabeth what T.F. Green is to Logan... A smaller, more up-to-date alternative."

Not as unrealistic as it might seem. Quonset is quite a few steaming hours closer to Europe. Coastwise it is not many steaming hours past New Jersey.

Posted by: Warrington Faust at February 10, 2012 8:48 PM
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