WRRDA One Year Later

The MSC Judith at berth at Boston Harbor.

The MSC Judith at berth at Boston Harbor.

The legislation, passed in May 2014, opened the door to new infrastructure projects and job growth

By Nina Rao

When the Water Resources Reform and Development Act (WRRDA) was signed in May 2014, members of Congress from both sides of the aisle and organizations from AAPA to the Business Roundtable to the Seafarers International Union applauded its passage and lauded it almost more as a jobs engine than as an infrastructure boon.

But WRRDA 2014 actually creates no jobs at all; it only opens the door to job creation – provided federal funds appear.

“There is a lot of opportunity for job creation in WRRDA,” said Whit Remer, senior manager of federal government relations for the American Society of Civil Engineers. “It’s now up to Congress to appropriate for it. It’s easy to authorize; it’s hard to appropriate.”

In fact, for many projects, appropriations stall or never come through at all, making it difficult to plan, and that’s where some ports have forged ahead on their own, increasing their own competitiveness and creating jobs in the process.

“What you really have to realize is the amount of (non-federal) investment going on in getting ready for post-Panamax,” Remer said. “The ports invest and then keep their fingers crossed” that they’ll get some of the money back from the federal government.

WRRDA 2014 authorizes 34 projects and $12.3 billion in spending across the Corps’ business lines. Nine of these projects are in navigation, but only four of the projects (Port of Savannah, Jacksonville Harbor, Boston Harbor and Freeport Harbor) have funds appropriated in the federal budget for fiscal year 2015. So far, two (Port of Savannah and Boston Harbor) have funds included in the administration’s budget request for fiscal year 2016.

“There are far more needs than we have funds for,” said Jeff McKee, chief of the navigation branch of the Army Corps of Engineers.

But there is a cost – in both dollars and jobs – to not investing.

In its 2012 report, Failure to Act: The Economic Impact of Current Investment Trends in Airports, Inland Waterways, and Marine Ports Infrastructure, the American Society of Civil Engineers estimated that 738,000 jobs would be lost by 2020 if the U.S. continued at current levels of investment in its marine and inland waterways. By 2040, the estimate is for 1.4 million jobs lost.

The loss of jobs would be both direct and indirect, caused, for example, by the increasing cost of imports due to inefficiencies at ports.

Boston Harbor got a taste of this type of inefficiency in November 2014 when the MSC Judith, a 1,065-foot, 8,000-TEU ship, docked at Conley Container Terminal. The MSC Judith is the biggest container ship ever to call on Boston Harbor, and since Boston Harbor is not yet big-ship ready, accepting the Judith was a logistical challenge.

The containers had to be loaded in such a way that the harbor’s low-profile cranes could unload them. The ship itself had to ride the 9-foot tide to move in and out of the harbor.

But the Massachusetts Port Authority is working hard to get Conley Terminal big-ship ready, and it is one of the lucky few in WRRDA 2014 to be on track for federal funds. This is thanks in large part to a high benefit-to-cost ratio for the deepening of its channel from 40 feet to 51 feet.

“The project definitely has a really high net economic benefit,” said Chris Morris, senior project manager for maritime at the Massachusetts Port Authority.

In both fiscal years 2015 and 2016, Boston Harbor is slated to receive money for pre-construction engineering and design. The Massachusetts Port Authority is also pushing to have funds for construction in the 2016 budget.

In the meantime, the port is building a dedicated freight corridor out of Conley Terminal to streamline the movement of cargo, which is expected to double from 205,000 TEU-equivalents in 2014 to 434,000 in 2034. It plans to expand the container terminal and construct new berths and bulkheads.

All of this means jobs – temporary jobs in construction, design, and engineering, but also long-term jobs at the port.

“We expect jobs to grow with container volume,” Morris said. “I don’t want to say we expect them to double, but we expect them to grow. … And these are good-paying, blue-collar jobs.”

Boston Harbor is moving through the WRRDA process in the traditional way – waiting for federal funds to be appropriated before proceeding – but other ports are choosing not to wait for federal funds. They are funding their own projects and creating jobs at the same time.

The deepening of the Port of Savannah, for example, is moving into the construction phase thanks to money appropriated by the state and frontloaded into the process. The Corps is using the 40 percent that Georgia is contributing, a total of $266 million, to start construction as it waits for the 60 percent federal share to be appropriated.

“We can do a lot of construction with all that money. It’s definitely a benefit to proceed as quickly as possible to construction so that you can start accruing the benefits,” the Corps’ McKee said. “But obviously that’s an incredible investment to make, and there’s no guarantee of when the federal government can provide its share.”

The project is expected to allow for an additional 3,600 cargo containers in each transit, an increase of 78 percent, which will, again, lead to more jobs.

In another example, the deepening of the Port of Miami was authorized in WRRDA 2007, but because of a low benefit-to-cost ratio, it has received no federal funding as yet.

Miami didn’t let that stop them. The port provided both its share of the needed money and the federal government’s share and contracted with the Corps to manage the project. Though Miami is eligible for reimbursement of the federal share, there is no guarantee that it ever will be.

“They went ahead and built it themselves,” McKee said. “Obviously they felt it was important to get started and have 50 feet (of depth) by the time the Panama Canal opened.”

And Miami will be ready in time.

The deep dredge is scheduled to be completed in July, and the overall project has already provided more jobs that just from the channel deepening. In preparation for post-Panamax ships, the Port of Miami has dug the PortMiami Tunnel, which created 970 direct jobs and more than 6,700 indirect jobs. It has reintroduced on-port rail service, a $50 million investment. It has purchased four additional post-Panamax gantry cranes, and to support these new cranes, it is strengthening its bulkheads, a $65 million investment.

There are no specific job numbers attached to these deepening projects, but the projects affect jobs.

“There is clearly an impact on those doing the construction. The dredging contractors are obviously going to have more work,” McKee said. “But if you’re moving more containers each year, more people will have to operate the cranes, more trucks will need to haul the containers. There is certainly forecast to be some increase in commercial activity.”

The Harbor Maintenance Trust Fund

In addition to authorizing new project starts, WRRDA 2014 makes substantive changes to how the Harbor Maintenance Trust Fund should be spent, changes that could impact jobs.

“If you can get more money out of the Harbor Maintenance Trust Fund, then you can get more guys out there dredging, and that’s more jobs,” said Whit Remer, senior manager of federal government relations for the American Society of Civil Engineers.

WRRDA 2014 demands that Congress appropriate 69 percent of collected HMTF funds in fiscal year 2016, scaling up to 100 percent by 2025. But Congress still has to appropriate those funds, and there’s the rub.

The Harbor Maintenance Trust Fund was established in 1986 to fund the maintenance of the nation’s inland and coastal waterways based on an import tax, but year after year, the collected funds have not been spent on their intended purpose, leading to a surplus of more than $7 billion in the fund. In 2014, for example, more than $1.6 billion was collected, and only $979 million was spent.

In the meantime, the “59 busiest commercial shipping channels functioned at their authorized widths and depths only 30 percent of the time in 2008, the most recent year for which data are available,” according to a 2013 Congressional Research Service report about the HMTF.

Using the collected HMTF funds each year for needed dredging and maintenance projects could lead to thousands of jobs, estimates the Harbor Maintenance Trust Fund Fairness Coalition, a coalition of maritime companies and ports.

Not using the money on waterways and channels does the opposite.

Not maintaining authorized channel depths “prevents those channels from being properly used. It contributes to delays if ships have to, for example, be in the center of the channel rather than having two-way traffic,” Remer said. “Talk about lost jobs.”

But despite overwhelming Congressional approval of WRRDA 2014, the HMTF looks like it will be underappropriated again. The 2016 Energy and Water appropriations bill that is under consideration provides funding for $76 million below the 2016 WRRDA target level.

“Failing to hit the WRRDA target this year establishes a dangerous precedent. If we do not hit the target this year, it is likely we never will,” wrote Reps. Janice Hahn (D-Calif.) and Bill Huizenga (R-Mich.) in a joint opinion piece posted in April 2015. “We will veer off the sensible path laid out to reach 100 percent usage of the Harbor Maintenance Trust Fund in 10 years, and America’s ports and economy will suffer.”