News Column

Port of Long Beach Seeks 'Fair Share' of Shipping

August 23, 2013

The Port of Long Beach has a lot riding on a water infrastructure funding bill that will be considered by Congress when it returns in September.

The bill could fix a long-running peeve of California ports, especially Long Beach and Los Angeles: For every dollar the Ports of Long Beach and Los Angeles collect from shippers for the Harbor Maintenance Tax, they get less than a penny back from the federal government.

"We believe an equitable return should be part of any (Harbor Maintenance Tax) reform effort," said Dominica Smith, government affairs officer for the Port of Long Beach.

The Senate version of the water bill, which passed 83-14 in May, likely would significantly incre-ase the federal funding the Port of Long Beach receives each year. The legislation was sponsored by California Sen. Barbara Boxer, chairwoman of the Senate's Environment and Public Works committee.

Rep. Bud Shuster, R-Pa., chairman of the House Transportation and Infrastructure committee, said earlier this month he would introduce a water bill in the fall, with a vote likely in October.

U.S. ports collect the Harbor Maintenance Tax from shippers based on the value of the cargo on board. Proceeds go to the Harbor Maintenance Trust Fund to pay for maintenance dredging of ports.

In fiscal 2011, California ports generated nearly one-third, or $431 million, of $1.35 billion of Harbor Maintenance Tax funds collected nationally, yet the state only received 8 percent, or $54 million, of the amount disbursed by the federal government, Smith said.

Many California ports, which are naturally deep, don't have the specific dredging needs that the Harbor Trust Fund was designed to support; so the money goes to ports that do need it.

Jock O'Connell, Beacon Economics' International Trade Adviser, based in Los Angeles, said that California ports have long argued they deserve their "fair share" of the Harbor Trust Fund.

Smith said the Senate bill would alleviate some of the difficulties the ports have faced in getting Harbor Trust Fund money.

The Senate bill would help ports like Long Beach, Smith said, because it allows for "expanded use" of the trust fund. The Army Corps of Engineers would give priority to operations and maintenance projects, as it does now, and to its backlog of approved harbor projects. Once those were complete, however, at-berth dredging and contaminate sediment disposal projects would receive funding. The addition of those two categories would allow more money collected in California to come back into California.

The bill also would increase the amount of money spent each year on harbor maintenance. The trust fund has about $8 billion of funds collected but not spent for harbor upkeep since the tax was established in 1986. The bill attempts to solve this problem by instituting annual minimum spending levels with the goal of spending the entire amount collected each year by 2020.

For Jim Haussener, executive director of the California Marine Affairs and Navigation Conference, this is an integral part of the bill. Without it, he said, "You'd have more projects fighting over the same amount of money."

Rep. Janice Hahn, D-San Pedro, a member of the House Transportation and Infrastructure committee, is promoting three changes to the Harbor Maintenance Tax. First, she wants to spend the entire trust fund as soon as possible. "No tax collected helps anyone if we don't spend it," she said.

Second, she wants more equitable disbursement, suggesting a minimum guarantee -- the Ports of Long Beach and Los Angeles would receive 20 percent of what they contribute each year to the Harbor Maintenance Trust Fund.

Finally, she wants to dramatically expand the kinds of projects the trust fund can be used for, such as land transportation improvements at the harbors. Hahn said she would like to see the funds used for other sorts of good movement needs. The biggest issue at the Long Beach and Los Angeles ports she said is congestion on the land side. Using the trust fund to invest in land transportation improvements at the harbors could make a big difference.

Republicans in the House have expressed concern about portions of the Senate bill that shift power for authorizing projects to the administration, specifically, the Army Corps of Engineers.

Even as a water infrastructure bill moves through Congress, a separate effort is underway to replace the Harbor Maintenance Tax with a tax on all overseas cargo entering the country. Rep. Alan Lowenthal, D-Long Beach, called it a "good start."

Two Democratic senators from Washington, Patty Murray and Maria Cantwell, last week laid out the plan that would go after shippers who currently send goods to ports in Canada or Mexico to avoid paying the federal tax on items shipped to U.S. ports.

Up to one-half of containers bound for U.S. markets go by way of Canada to avoid the tax, according to a 2012 Federal Maritime Commission study. While the Port of Long Beach isn't affected by diversion, said the port's government affairs officer Dominica Smith, the issue affects all ports as it lessens the available money in the Harbor Maintenance Trust Fund.

Under the proposal, containers that arrive in Mexico and Canada and then travel by road or rail to the U.S would be subject to a fee. The proposal also would require all the money collected annually to be spent on harbor maintenance.

The senators plan on introducing a bill in September. Lowenthal said he hopes a version of the proposal is worked into the House water infrastructure funding bill.

"It's a great step forward," he said, "of course we should support it."

Contact the writer: eheld@ocregister.com.

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Source: Copyright Orange County Register (CA) 2013