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Moves to unlock billions in stranded US Harbor Maintenance Tax

Imagine if vessels calling at US ports contributed billions of dollars that were supposed to be spent by the Federal government on dredging and maintaining channels, but instead, was diverted to the general treasury and held there.

That picture describes the situation with the US Harbor Maintenance Tax (HMT), which is assessed at a rate of 0.125% of the value of cargo shipped (or tickets sold on cruise ships), or, doing the math, representing $1.25 per $1,000 of cargo value.

For many years, the port industry has been seeking to unlock some of these stranded moneys and enable it to be spent on projects that will benefit the ports. A major step forward occurred in  late October, with the US House of Representatives passing H.R. 2440, the “Full Utilization of the Harbor Maintenance Trust Fund Act”.

Diversion of payments

According to the American Association of Port Authorities (AAPA), “The legislation would enable Congress to appropriate $34bn over the next decade to restore America’s federal navigation channels to their originally-constructed widths and depths.”  The AAPA’s new president and ceo, Chris Connor, said: “The legislation will stop the diversion of HMTF payments [referring to a trust fund for HMT receipts] and provide a means for Congress to spend down the more than $9bn that has been diverted in previous years.”

The $9bn is the balance presently held in the Harbor Maintenance Trust Fund. In future years, more than $2bn of HMT is expected to be collected annually.

The American Great Lakes Port Association (ALGPA), a trade group which has also enthusiastically supported removal of the shackles presently on HMTF spending, said: “The legislation (H.R. 2440) passed the House by an overwhelming majority of 296-109 (with 26 members not voting)…. The net effect is to automatically ‘make room’ in the federal budget for full harbor maintenance spending, without squeezing other programmes.”

Historic opposition

The next step in the tortuous process of moving towards actual legislation will be in the US Senate, which must pass its version of the bill. Initially, the language will be developed by the Senate’s  Environment and Public Works Committee. The ALGPA notes further that the, “action in the House is significant in that it overcame historic opposition in that chamber”.

The AAPA asserts that it: “… looks forward to working with Congressional leaders to ensure that, prior to implementation of this bill, Congress enacts legislation to address the needs of donor and energy transfer ports and provides funding certainty for emerging harbors and the Great Lakes navigation system.” In Washington, DC speak, “Donor ports”, located on the US West Coast, are those which contribute significant HMT payments but don’t require significant dredging. Also in the “inside the Beltway” vernacular, “Energy transfer ports”, which do required dredging, are situated in the US Gulf and include Mobile, Alabama.

Looking ahead to the prospects for the Senates analogue of H.R. 2440, the ALGPA says that: "Similar legislation has been attempted several times in the U.S. Senate under the leadership of Senate Appropriations Committee chairman, Richard Shelby (Republican-from Alabama). Should Shelby eventually succeed, it is a very real possibility that full use of the Harbor Maintenance Tax will become a reality.”

Of course, the hoped for activity may not happen so quickly, with both the House and the Senate becoming increasingly distracted by potential actions to impeach President Donald Trump.