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Congress Begins Work on WRDA Reauthorization

24 Feb 2016, Posted in All Posts, Analysis, Blog Posts

Written by Shane Skelton, Aii Executive Director

On February 24, the U.S. House of Representatives Committee on Transportation & Infrastructure held a hearing titled, “A Review of United States Army Corps of Engineers Reports to Congress on Future Water Resources Development and Chief’s Reports.” The hearing was held in anticipation of a Water Resources Development Act (WRDA) reauthorization bill later this year. The Senate Committee on Environment and Public Works held a similar hearing on February 10.

The hearings were primarily focused on the Army Corps’ implementation of the Water Resources Reform and Development Act (WRRDA) of 2014, specifically the Annual Report process, including recommendations of which projects are most needed and deserving of federal funding. As Congress works to improve upon the great work done on WRRDA, the Harbor Maintenance Trust Fund (HMTF), which was modified as part of the bill, should also be revisited.

The HMTF derives revenue from a .125 percent Harbor Maintenance Tax (HMT) assessed at certain ports on the value of commercial cargo shipped (excluding exported product), or cruise tickets sold. The taxes collected under this provision (and interest accrued by the account) are intended to fund qualified HMTF activities, including dredging channels, maintaining jetties and breakwaters, and operating locks along the coasts and in the Great Lakes.

Of the nearly $1.8 billion collected under the HMT annually, only about half is spent despite the fact that our harbors are in dire need of help. In its most recent infrastructure report card, the American Society of Civil Engineers gave our ports and harbors a “C” grade. This is more than problematic considering the importance of waterborne commerce to our economy and to global trade.

According to a report issued by Martin Associates, waterborne commerce generated an estimated $4.6 trillion of economic activity in 2014, accounting for 26 percent of U.S. gross domestic product (GDP) in that year, which totaled $17.4 trillion. Additionally, seaport activities accounted for $41 billion in federal state and local tax revenue according to the American Association of Port Authorities (AAPA). These statistics are not surprising when you consider the fact that 95 percent of overseas trade produced or consumed by the U.S. moves through our ports.

Furthermore, port depth and maintenance will become even more critical in light of the Panama Canal expansion project scheduled for completion in April. This nine-year, $5.2 billion infrastructure project will allow vessels up to 14,000 TEUs to pass through the Canal – nearly triple the current 5,000 TEU maximum. These larger vessels increase trade opportunities, but they also require deeper harbors.

As Congress looks toward a scaled down WRDA reauthorization effort, ensuring HMT funds collected for the purpose of improving and maintaining our harbors are used for that very purpose should be a top priority. Our nation’s ability to maximize the domestic benefits of global trade may depend on it.