Port still waiting on federal funds for dredging

In September 2009, after a hard battle to secure federal funds, Port of Oakland officials and local politicians celebrated completion of a 10-year, $432 million project to deepen the port channels to 50 feet. The dredging project was meant to allow the port to host massive cargo ships and usher in an era of booming business.

Less than three years later, those business dreams have run aground over funding delays that hamper maintenance dredging. As of a few months ago, up to four feet of silt and sediment still clogged the channel floor, forcing the port to limit the weight of entering vessels and cramping its business.

The Port of Oakland is the heart of Oakland’s economy, generating $6.8 billion in revenue and $462.7 million in taxes in a year, and generating around 73,600 jobs in the area. But ports are subject to the constant effects of time and tide, with bay waters constantly threatening to remodel channel floors with sand and silt deposits.

The Port of Oakland was allocated $18 million in FY 2011 and $17.2 million in FY 2012 by the federal government for a dredging project that would clear the channels by the end of April. Currently, the US Army Corps of Engineers is evaluating the work the contractors have done to gauge whether it has been successful. But if the port is to run at full capacity throughout the year, the regular build-up along the channels’ floors needs to be addressed as soon as it occurs.

The federal government has been collecting the Harbor Maintenance Tax from port customers for years with the specific purpose of port maintenance and dredging. When the government increased the tax in 1990, it did so with the explicit promise that all dredging needs would be met with funds collected from the tax, according to Port of Oakland’s spokesperson Marilyn Sandifur. Today, in the long, drawn-out battle over port funds, Port of Oakland officials claim the government has not released sufficient funds for maintenance over the years, and the proof is in the channels’ depths.

The funds for dredging all federal channels or waterways come directly from the Harbor Maintenance Trust Fund (HMTF), and releasing these funds requires convincing government officials that a port needs them. The Army Corps of Engineers makes the initial budget request through its headquarters, based on its in-house labor expenses and project costs. The Federal Office of Management and Budget then develops the president’s budget. “Their proposal is often not the full amount that we are capable of executing in a given year,” says Jessica Burton Evans, the Navigation Program Manager for the US Army Corps of Engineers in San Francisco. “But they have to consider other federal expenses.”

The final allocation is made based on the president’s request to Congress. Once Congress approves the request, the money is released by the Federal Office of Management and Budget to the U.S. Army Corps of Engineers, and the Corps in turn prioritizes project-level funding, such as the need for dredging in Oakland.

“Just because the president has made the request doesn’t mean that is what Congress is going to fund,” says Jim Haussener, Executive Director of the California Marine Affairs and Navigation Conference.

“We had a continuing resolution for FY 2011 which allowed the Corps of Engineers to move the money around,” Haussener says. The continuing resolution allows the Corps to fund projects at a previous level, if a bill dictating the distribution has not been enacted that year. “The President’s budget request for 2011 was $7.5 million. Because there was a continuing resolution, the allocation that finally came out for the Corps was $18 million,”says Haussener.

Because the amount of money a port receives to clear the mud and silt from its channels can change, that leaves port authorities dependent on each year’s allocation process and on yearly surveys by the Corps to gauge the depth of all federal navigation channels.

These survey results are also used by the San Francisco Bar Pilots to determine the weight limit for a container ship entering ports in the Bay Area. These are the pilots who meet the container ships in little tugboats, sometimes as far as 11 miles offshore, climb aboard the foreign vessels and help navigate them into the waters of the port.  The higher the humps of silt deposited in the channel, the lighter a ship has to be. So far, no accidents have occurred in the channel’s murky depths, according to John Coleman, executive Director of the Bay Planning Coalition.. But the incessant lowering of the weight limit for container ships is still bad for business, port officials say.

Advances in nautical technologies have allowed ever-larger ships to traverse the oceans, and history has favored Oakland over its neighboring city to the West in terms of increasing traffic. Two hundred years ago, Oakland was a marshland lying east of the main port city of San Francisco. When the transcontinental railroad was laid out, channels were deepened in the East Bay to allow boats to take small cargo and passengers to the big city. But with the advent of container ships, Oakland eclipsed San Francisco, which had neither the capacity to dock the ships, nor the rail connections to transfer goods inland.  From 1960 to today, channel depth has increased from 35 to 50 feet to accommodate larger and heftier modern cargo vessels.

The expense of keeping channels clear and open presages a constant battle for funds. “Your expectation is that tax is there essentially to make sure that that depth is maintained. Now we’re looking at a channel that’s 46 feet deep,” said Mike Jacob, Vice President of the Pacific Merchant Shipping Association. The channel is supposed to be 50 feet deep. “Even though money is there to maintain it, it isn’t being spent.”

“We do not specifically earmark funding – we work off of the President’s budget request,” a congressional staffer said, adding there’s concern about any underfunding of the Corps of Engineers.

Coleman says part of the problem is that Congress has been late in approving budgets, which has an impact on the Corps’ operations. Despite this, he says the Port of Oakland has fared well compared to other local ports. Ports like those in Redwood City and Stockton have received far fewer resources for dredging, and have channels that are deeply clogged. “Ships are being light-loaded, and that’s driving up the cost of moving commodities in and out of these ports,” Coleman said. “Businesses are going to see which port is the most competitive, and competitiveness is derived from being able to fill all the containers on a ship.”

In September, California State Senators Mark De Saulnier and Jean Fuller jointly authored Senate Joint Resolution 15, asking that the government release the $5.6 billion sitting in the HMTF for ports across the country.  Oakland port officials and stakeholders allege the federal government has an incentive for maintaining the surplus – it allows it to decrease the deficit in its annual budget.

Meanwhile U.S. Rep. Charles Boustany [the Republican representative from Louisiana]  sponsored H.R. 104, also known as the RAMP Act (Realize America’s Maritime Potential), which also seeks to ensure that the funds are used for port maintenance by tying future HMTF appropriations to HMTF revenues. It would not address the current balance of already-collected tax money in the fund. The bill has 174 co-sponsors and has been referred to committee. However, neither one of these bills has been passed yet. Meanwhile ports like Oakland across the country will continue to have to limit the cargo coming in through their channels at the risk of losing business to Canadian ports.

On April 17, the House Appropriations Committee released the Energy and Water Appropriations Bill, allocating around $4.8 billion to the Corps of Engineers. Of this, almost $1 billion comes from the HMTF, an increase of $102 million from $898 million last year. But groups such as the Harbor Maintenance Trust Fund Fairness Coalition maintain the government still needs to pass the RAMP Act, in order to ensure that future revenues and appropriations are tied together, and funds released immediately for port maintenance.

“Right now $5 billion has been collected, and is earning interest to the tune of millions of dollars a year, and is not being redirected to the Corps of Engineers,” Coleman said. “H.R. 104 and the Senate Bill would require that that money be allocated back to the Corps to do the job that they are supposed to be doing.”