Dredging: Funding Holdup
(Article originally published in Sept/Oct 2015 edition.)
Why won’t Congress release Harbor Maintenance Tax revenues? The need is great. The money is there. But the purse strings are tight.
Whether it’s deepening navigation channels or keeping them at current depths, port authorities on all three U.S. coasts are finding the purse strings, especially in Washington, increasingly tight.
And as the 2016 elections approach, they would like nothing better than to get the politicians’ attention. But port issues, unfortunately, are seldom of the hot-button variety nationally.
“Ports believe our nation needs to build and maintain a 21st century port infrastructure for the benefit of U.S. jobs and our nation’s economic growth,” said Jim Walker, Director of Navigation Policy & Legislation at the American Association of Port Authorities.
Dredging needs are least acute on the West Coast, which is blessed with naturally deep harbors and where navigation channels are deep enough – in most cases, at least 45 feet – to accommodate the larger ship sizes. It is on the East and Gulf Coasts, where only two ports – Baltimore and Norfolk – can accommodate the biggest ships, that the need is greatest.
A Sequential Approach
An apparently sequential approach is the reason that release of funds for channel improvements is slow, and the Obama Administration is allocating only about half of the Harbor Maintenance Tax revenue that, under law, may go only for maintenance dredging, the AAPA’s Walker said.
The Water Resources and Reform Development Act of 2014 (WRRDA) authorized eight new channel improvement projects that would have a federal benefit-to-cost ratio ranging from 7.2-1 to 1.3-1 with 50-50 cost-sharing by non-federal sponsors, but the Administration’s fiscal year 2015 budget request, $96 million, covered dredging only at New York/New Jersey and the Delaware River. The fiscal 2016 request is for only $81 million.
“This is the lowest amount of funding in at least 10 years,” notes Walker, “It does not support timely completion of these projects. At this rate it would take over 25 years to build the eight projects authorized in WRRDA, and that’s with zero inflation over that period. This funding level will only result in U.S. ports falling further behind other countries. While WRRDA authorized eight new projects, it appears the Administration is taking a sequential approach: Finish NY/NJ, start Savannah. Finish Savannah, start the next one.”
The Georgia Ports Authority (GPA) is advancing its 50 percent share, more than $300 million, to accelerate U.S. Army Corps of Engineers (USACE) dredging work, but that project received just $21 million from Congress this fiscal year. The Administration’s budget request for fiscal 2016 is a measly $1.5 million. The final FY 2016 congressional appropriation won’t be known until later this year, Walker said.
GPA Executive Director Curtis Foltz said the Georgia government has set aside $266 million toward its share of the $706 million cost of deepening the Savannah River inner channel to 47 feet and an 18-mile outer-harbor channel to 49 feet. The project has received all required state and federal permits.
Pay More, Get Less
The Port Authority of New York & New Jersey expects dredging to be completed by early 2016, spokeswoman Lenis Rodrigues said. “Except for a small section of Anchorage Channel over two water pipelines, the port’s channels are at 50 feet,” she added. “This area will be taken to 50 feet after a new water pipeline is installed and the two older pipelines abandoned, scheduled for early 2016.”
According to Rodrigues, the $1.254 billion that WRRDA authorized for harbor maintenance programs in FY 2016 represents 69 percent of the Harbor Maintenance Tax revenue collected nationally. NY/NJ is one of six donor ports, “meaning that substantially more HMT tax is collected than received back in the form of operations and maintenance (O&M) funding,” she stated.
“In 2013, the last year of available records, this port collected $181 million in HMT tax, and yet the Corps received less than 10 percent of this amount for harbor O&M that year,” Rodrigues explained. “New distribution criteria in WRRDA, we believe, will increase the NY District Corps’ FY 2016 O&M budget to between $50 million and $70 million, up from $35 million in FY 2015. While the Corps’s O&M budget supports several operating functions, approximately $30 million to $50 million of this increase would be for channel maintenance dredging. This level of funding would go a long way toward maintaining the port’s channels at their designed depth.”
She added that “It is now up to Congress to pass the FY 2016 Energy and Water Appropriations bill that will ‘hit the target’ based on WRRDA authorizations. It is also up to the Corps’s headquarters and the Office of Management and Budget to place these funds in the Corps’s work plan for distribution to the districts.”
For deepening of Philadelphia’s main channel on the Delaware River, 75 percent of the money for initial construction is coming from the federal government, and Pennsylvania is sponsoring the rest through the Philadelphia Regional Port Authority, said Ed Voigt, Philadelphia District spokesman for the Corps. The project, moving forward in phases since 2010, involves “dredging as needed” from 40 feet to 45 feet along 102.5 miles of waterway from Philadelphia Harbor, Pennsylvania and Beckett Street Terminal in Camden, New Jersey to deep water in Delaware Bay, with completion targeted for 2017.
About $32 million is needed to finish the work, but the funding source will not be known until next February or March because of the budgeting process.
The Port of Baltimore has a fully accessible, 50-foot-deep channel and can host vessels up to 14,000 TEUs, spokesman Richard Scher said. There are no plans to deepen the main channels, but USACE is investigating options for bringing the channels to authorized widths. Without discussing funding issues in detail, Scher said that “ensuring the Corps receives full appropriations for continued maintenance dredging of federal channels is extremely important.”
Jacksonville port officials see an opportunity to secure between one million and 1.95 million TEUs of additional cargo traffic over a 20-year span. But without sufficient dredging, estimated to cost between $500 million and $600 million, that business is likely to go north to Savannah, CEO Brian Taylor said. “We’re looking for support from the state,” he added, which earlier gave $11.6 million for the engineering and design phase that the USACE put together under a Project Partnership Agreement.
Jaxport and the Corps “have two projects under way to improve the commercial viability and economic competitiveness of the St. Johns River harbor,” port spokeswoman Julie Watson stated. “They are Mile Point, to remove a navigational restriction, and the Jacksonville Harbor Deepening Project, to take the federal channel to 47 feet and enable Jaxport to become a first/last port of call for larger ships.”
At PortMiami, spokeswoman Andria Muniz-Amador said the anticipated completion in September of dredging work is increasing depths to 50 feet along the southeast section of Lummus Island and the South Shipping Channel, to 36 feet at the northeast section along the Main Ship Channel, and to 32 feet along the southwest section of the port.
The project is costing about $225 million, including environmental mitigation and post-construction monitoring. The Florida government is funding approximately $113 million. About $5 million in HMT funds are being used, and the port is funding the rest through revenue bonds.
While industries along the Houston Ship Channel generate over $100 million in annual HMT revenues, only about $30-$35 million is available annually for dredging and dredge material management, port Executive Director Roger Guenther said. “This amount is not sufficient to meet the ongoing annual need of $50 million for dredging and placement area work,” he explained. “As a result of insufficient funding over the years, the backlog of necessary work has grown to over $80 million. This situation is not sustainable over the long-term.”
As a result, the port authority is using operating income to foot the entire $70 million bill for the current Bayport and Barbours Cut channel improvement projects.
Business as Usual
On the West Coast, the Port of Los Angeles has completed channel dredging and is “doing maintenance and capital dredging at berthing sites,” spokesman Phillip Sanfield said. The channel dredging took place between 2003 and 2013, and the port self-funded $308 million of the $370 million cost. Fortunately, there is no upstream riverbed depositing sediment into the port area.
Maintenance dredging at neighboring Long Beach has a budget of about $2 million per fiscal year, and planned deepening work in the West Basin is “moving forward with a budget of approximately $30 million,” port spokesman Art Wong stated. A study being undertaken with USACE includes, among other projects, a proposed deepening at Pier J, expected to cost between $35 million and $65 million. “Obtaining federal funding is a challenge,” noted Wong, “and we continue to lobby for a fair share of the Harbor Maintenance Tax.” – MarEx
Veteran journalist Richard Knee is based in San Francisco.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.