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July 8, 2011 - ASCE support - enactment of H.R. 104, Realize America's Maritime Promise-Harbor Maintenance Trust Fund (HMTF)

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JULY 8, 2011

Mr. Chairman and Members of the Subcommittee:

The American Society of Civil Engineers (ASCE) is pleased to submit this statement for the hearing record of July 8, 2011, on H.R. 104, Realize America’s Maritime Promise Act. ASCE supports enactment of this important legislation to strengthen the federal investment in the dredging of the nation’s ports and harbors through the Harbor Maintenance Trust Fund (HMTF).

A. U.S. Waterways Suffer from Long-Term Disinvestment in Infrastructure

The U.S. inland waterway system consists of 12,000 miles of navigable waterways in four systems—the Mississippi River, the Ohio River Basin, the Gulf Intercoastal Waterway, and the Pacific Coast systems—that connect with most states in the U.S. The system comprises 257 locks, which raise and lower river traffic between stretches of water of different levels.

Forty-seven percent of all locks maintained by the U.S. Army Corps of Engineers were classified as functionally obsolete in 2006. Assuming that no new locks are built within the next 20 years, by 2020, another 93 existing locks will be obsolete—rendering more than 8 out of every 10 locks now in service outdated. In 2009, ASCE gave the nation’s waterways infrastructure an overall grade of D – due to the age of many facilities and the fact that the current system of inland waterways lacks resilience. Waterway usage is increasing, and recovery from damage of any significance would be retarded by the age and deteriorating condition of the system, posing a direct threat to the American economy. 

The Corps of Engineers continues to suffer from many years of under funding for essential infrastructure systems. If allowed to continue, this trend likely will result in ever greater system failures and the consequent expenditure of tens of billions of dollars to rebuild what could have been built more economically in the first instance.

One example of the lack of investment has shown up on the Mississippi River, where budget cuts have reduced funds available for dredging existing channels and constricting traffic on the river, a situation that damages the U.S. economy.1

In the face of the Corps’ aging infrastructure needs, the president's budget for the Civil Works Program in FY 2012 reduces federal investments in essential national civil works systems. Moreover, the negative budgeting trend is not likely to improve in future years. The Corps estimates that its budget proposals will continue to decline through FY 2015, with a low estimate of $4.5 billion for FY 2013. The Corps expects that inflation will reduce actual spending on key infrastructure programs by a further $3 billion over the next five years. ASCE believes that these levels of spending are inadequate to meet the nation’s security, economic and environmental demands in the 21st century.

B. Congress Needs to Strengthen the Harbor Maintenance Trust Fund

The most striking example of our continuing disinvestment in critical waterways infrastructure occurs in our ports and harbors. In 1986, Congress enacted the Harbor Maintenance Trust Fund (HMTF) to provide federal funding for the operation and maintenance (O&M) costs at U.S. coastal and Great Lakes harbors from maritime shippers. O&M costs involve mostly the dredging of harbor channels to their authorized depths and widths. The HMTF is financed by a tax on importers and domestic shippers using coastal or Great Lakes ports. The tax is assessed at a rate of 0.125 percent of cargo value ($1.25 per $1,000 in cargo value).

In FY 2012, the HMTF balance will be an estimated at $6.1 billion. The administration is requesting $732 million in FY 2012 for the O&M of channels and harbors—equal to 45 percent of the anticipated FY 2012 revenues of nearly $1.6 billion and to about eight percent of the fund’s anticipated year-end balance.

The House Appropriations Committee recently found this situation to be unacceptable.

The [administration’s] proposed reduction in funding for maintenance of deepdraft navigation is particularly perplexing since the Harbor Maintenance Trust Fund (HMTF), which is intended to fund 100 percent of the maintenance dredging requirements of coastal and Great Lakes ports, will have an estimated balance of more than $6.1 billion at the beginning of fiscal year 2012. The budget request does not propose drawing down the balance to address unmet dredging needs, and, in fact, proposes to use less than one-half the estimated receipts for fiscal year 2012 for maintenance dredging. Also included in the budget request is a proposal to expand the activities eligible for reimbursement from the HMTF, although no specific details have been provided to date. The Committee strongly opposes any attempt to divert this revenue from the purposes for which it was collected, namely maintenance dredging. Also, in general, for the top 59 ports, the Corps is only able to maintain authorized depths, only within the middle half of the channel, 33 percent of the time. The fiscal year 2012 budget request is unlikely to improve that statistic. It is clear, therefore, that this proposal to expand HMTF uses is not based on a lack of need for funds for existing eligible dredging activities.

Energy and Water Development Appropriations Bill, 2012: Report of the House Comm. on Appropriations, 112th Cong. 13 (2011).

Despite this large and growing surplus in the trust fund, the busiest U.S. harbors are presently under maintained. As the House Approriations Committee noted, the Corps of Engineers estimates that full channel dimensions at the nation's busiest 59 ports are available less than 35 percent of the time. This situation can increase the cost of shipping as vessels carry less cargo in order to reduce their draft or wait for high tide before transiting a harbor. It could also increase the risk of a ship grounding or collision.

ASCE strongly supports enactment of H.R. 104, which would require that all revenues flowing into the HMTF (plus any interest earned) in any fiscal year would be appropriated for O&M expenses at harbors and channels. If enacted, H.R. 104 would support the appropriation of $1.597 billion—more than twice the administration’s proposal—from the HMTF for operations and maintenance of harbors in FY 2012, an amount equal to the total revenues (taxes and interest) now estimated to be received into the trust fund that year.

We urge this subcommittee to begin the long overdue process of reinvestment in America’s waterways by passing H.R. 104 with a large bipartisan majority.