Federal reforms for port upgrade are long overdue
BY RON BRINSON
President Barack Obama now promises a “White House task force to develop a federal strategy for future navigation investments.”
Congressional leaders — especially Sen. Lindsey Graham, R-S.C. — are advocating a system of rationalizing federal dollars to ports that create the biggest bang for federal bucks spent on navigation channels.
And throughout South Carolina, State Ports Authority President Jim Newsome is preaching a message political and business leaders are buying — the Port of Charleston’s commercial future depends in large measure upon the federal government’s performance in deepening Charleston’s federal channels from 45 feet to 50 feet.
Finally, it seems, federal dredging policies are getting some urgent attention. But we’re in Yogi Berra territory, folks. This is definitely deja vu all over again.
Back in 1981, coal exports formed the “Post Panamax” opportunity of the day. The U.S. had more coal than Saudi Arabia had oil, and President Ronald Reagan declared that America would maximize coal exports. But international standards for coal colliers required 50-foot navigation channels — and no East Coast port could accommodate the huge ships.
Mr. Reagan ordered high-level policy reviews, and Congress scrambled. Industry surveys at the time profiled a federal “system” that required 28 to 32 years to complete a major channel deepening project. This “urgency” lasted five long years and provoked divisive controversies in the public port authority industry. But finally, in 1986, there was “reform.”
The new federal policies were largely pegged to “cost sharing” as an economic test to cull marginal or non-paying projects, and to have a “prioritization” effect, very much like the purported objective of Sen. Graham’s current conceptual initiative.
And in 1986, the new “Harbor Maintenance Tax” imposed on international waterborne cargo would insure adequate maintenance funding for federal channels.
So how did these “reforms” work out?
In 2012, as many U.S. ports plan anxiously for the Panama Canal expansion, the federal performance in development and maintenance of the federal channel system is as unpredictable and as unreliable as ever. Today, local port authorities pay as much as 60 per cent of the cost of federal channel deepening.
With its Harbor Maintenance Tax, the government has collected nearly $6 billion more than it has spent on channel maintenance since 1986. Last year, the Congressional Budget Office concluded, “Full channel dimensions are, on average, available less than about a third of the time at the 59 highest use U.S. harbors.”
Despite the promises of the 1986 “reforms” and the well-documented needs for wider and deeper federal channels, there has been one new work authorization bill in the last decade — one!
Of the $2.4 billion authorized for deeper channels over the last 12 years, 75 percent was designated for New York Harbor.
And by the way, an estimated $15 billion is collected each year at U.S. seaports as Customs duties.
Like most major U.S. ports, the Port of Charleston is a “cash cow” for the federal government. Two dollars are collected for every one spent on harbor maintenance with application of the harbor maintenance tax. Customs duties on port cargo at Charleston are estimated to be just under $800 million annually.
The simple sorry point is the federal government has done a better job of taxing and collecting at ports than it has in providing the navigation channel capacities our nation so clearly needs.
The SPA celebrates its 70th anniversary this year, and never before have its Port of Charleston operations been better recognized and supported throughout the state. Newsome and his team have done a good job of profiling the reward and risk propositions of Charleston’s 50-foot channel plan.
And understanding those risks, South Carolina leaders are sending bold signals to the post-Panamax marketplace — and a message to the feds. Last year, Hugh Leatherman of Florence, chairman of the S.C. Senate Finance Committee, stood by Newsome’s side at a press conference and assured the market that $180 million, the state’s 60 percent share of the $300 million 50-foot project in Charleston Harbor, would be provided promptly.
Now with the clock ticking on decisions related to the Panama Canal expansion, Sen. Leatherman and his colleagues are quietly raising the ante. Sen. Leatherman confirmed last week that South Carolina is prepared to advance the full $300 million expenditure needed for the Charleston deepening project.
“The Port of Charleston is vital to economic strength in all parts of our state,” the senator said. “We don’t know what the federal response will be, but we intend to do all we can to assure that funds are available to make sure this project is not delayed because the federal government can’t fund it in a timely way.”
That’s a strong and reassuring message to the market, and one Jim Newsome and his colleagues can readily use. But it should also be a declaration to the federal government, from the White House to Capitol Hill, that now is the time for the feds to match the initiative and commitments of public port authorities all over the United States in assuring our nation has the seaport system it requires for national security and economic progress.
Ron Brinson, a former associate editor of this newspaper, served as president/CEO of the American Association of Ports Authorities from 1979-86 and president/CEO of the Port of New Orleans from 1986-2003. He can be reached at firstname.lastname@example.org.