Bush underfunds security grants, ports charge
U.S. port owners Tuesday criticized the Bush administration’s fiscal 2007 budget for inadequately funding harbor dredging and a grant program to help cover port security measures, but a were told to cool their rhetoric on security matters by a coalition of shipper and carrier organizations.
Repeating a refrain from the past four years, the American Association of Port Authorities expressed concern about the Department of Homeland Security’s Port Security Grant program. The AAPA said ports have had to forego or postpone needed expansion projects in part because of security spending to comply with a 2002 maritime security law, and that the government should do more to meet its national security obligations in this area.
The Port of Charleston is diverting about 15 percent of its capital budget to security, said Bernard Groseclose, chief executive officer of the South Carolina State Ports Authority, at a press conference.
“Multiplied many times over across the country, this tradeoff could impact the ability of ports to handle increasing cargo volumes, which could cut efficiency and cause prices to rise,” Groseclose said.
The port group has complained since 2002 that port security grants only cover a fraction of the $5.4 billion in upgrades the Coast Guard estimates are needed to secure ports from potential terrorist attack. DHS has doled out about $708 million in five previous rounds of grants, and Congress appropriated $175 million for the program in 2006.
AAPA again called for the government to provide an annual minimum of $400 million for port security grants, as called for in sweeping cargo security legislation introduced last November by Sens. Patty Murray, D-Wash., and Susan Collins, R-Maine.
Ports are likely to get short-changed again because DHS wants to reincarnate its plan to lump port security grants into a catchall infrastructure protection program that requires ports to compete with trucking, railroads, public transit, utilities and other sectors for limited security grants, AAPA said.
DHS initially proposed creating a general pot of money for critical infrastructure grants in last year’s budget, but Congress declined to approve the idea and DHS continues to separately administer the port grants. To sweeten it’s bid this time, DHS has increased the total amount of money in the Targeted Infrastructure Protection program by $214 million to $600 million.
“The federal share of the seaport facility security funding partnership needs to be increased, not reprogrammed and diluted,” said Kurt Nagle, AAPA’s chief executive officer, in a statement.
According to Groseclose, the South Carolina State Ports Authority has spent about $12.4 million on security since Sept. 11, 2001, none of which was reimbursed through the Port Security Grant program. He estimated that it will cost the state’s ports more than $33 million to meet federal requirements and improve security. The state ports authority has received $11.5 million from the Port Security Grant program, leaving a $26.6 million unfunded balance, he said.
Nagle listed several ports besides Charleston that plan to postpone infrastructure projects within the next two years if they do not receive security grants:
* Port of Baltimore to delay terminal infrastructure maintenance.
* Port of Portland, Ore., to delay upgrades to automated truck entry gates and closed-circuit security television systems.
* Port of Palm Beach to delay replacing an obsolete dock representing one-third of its available dock space and severely impacting its operations and revenue.
* Port of Anchorage to stop work on a planned security command center.
* The Massachusetts Port Authority to delay container terminal expansion.
* Port of Wilmington, N.C., to delay dock rehabilitation and installation of a container crane.
Nagle said that AAPA will heavily lobby Congress to block the change to the port security grant program.
Five trade and transportation-related organizations — the American Association of Exporters and Importers, the National Industrial Transportation League, the Retail Industry Leaders Association, the Waterfront Coalition and the World Shipping Council — said AAPA’s charges about port security funding were unfair and contributed to the politicization of the maritime security issue.
In a joint letter to AAPA the day before the press conference and obtained by Shipper’s NewsWire, the trade associations said a key concern was that Congress or states might impose user fees for each container moving through a port to help pay for grants. Organizations such as the NIT League successfully opposed efforts by former Sen. Ernest Hollings, D-S.C., in 2003 and 2004 to impose a user fee to help pay for security evaluations, surveillance equipment, fencing, lighting and other upgrades mandated by the Maritime Transportation Security Act.
The ports shouldn’t feel entitled to federal compensation because the Coast Guard estimates were for the costs that industry would have to spend to comply with the law, “not the amount of money the government needed to provide the nation’s public ports,” the group said.
“We are aware of no clear justification for demanding $400 million a year in port security grants from the federal government, nor is there any identification of how such monies should be distributed to or allocated amongst the various ports,” the group said. “AAPA has not identified with any specificity what such federal port security grant money is needed for, or why it is the responsibility of federal taxpayers to provide it.
“We are not aware of any instances where a vital port development or environmental project has been sacrificed because of the level of federal port security grants,” the letter added.
The trade associations say that their members, including terminals, are paying for initiatives to strengthen their supply chain operations without federal assistance.
Furthermore, port authorities have the ability to, and in many cases, are collecting security surcharges from port users.
The South Carolina State Ports Authority was the first to implement a user fee in July 2004 against shipping lines. South Carolina ports assess the tax on a per-container basis for containership lines and on the length of the keel for bulk vessels. The fee is about $1 per container, Groseclose said. He said the carriers then pass that charge to their customers at rates ranging from $5 to $10 per container.
“The very fact that the port customers ' are paying these fees belies the notion that extensive federal assistance is warranted,” the trade associations said.
Groseclose said the AAPA is opposed to establishing a trust fund or the implementation of any new tax or fee for maritime security. A Governmental Accountability Office report several years ago found that the federal government already collects about 120 fees on maritime commerce, or about $16 billion a year. AAPA officials said they support a proposal to cover some port security costs through customs duties.
The five trade associations also said they objected to AAPA’s statement in a news advisory promoting the press conference that the lack of funding “is below what public ports need to defend their facilities, and the people and cargo at those facilities” because it leaves the impression that the government is not doing anything to protect the nation from a waterborne terrorist attack.
Congress and the administration have substantially increased federal spending since 2002 on equipment, systems and programs to help the Coast Guard and Customs and Border Protection improve maritime and cargo security, the joint letter said.
World Shipping Council President Christopher Koch said the trade groups don’t want to fight AAPA, but rather make sure the debate is balanced because “this isn’t the only way you measure maritime security.”
Port authorities also said the U.S. Army Corps of Engineers needs more money to maintain the required depth of channels to the nation’s deepwater ports through which billions of dollars worth of trade flow. The Bush administration wants to withdraw $707 million from the Harbor Maintenance Trust Fund to maintain navigation channels. That is $33 million more than last year’s request but short of the $750 million the AAPA said is needed for dredging. The AAPA officials said the tax collected from port users, now at a $3 billion surplus and growing, should be used for its intended purpose.
“When navigation channels aren’t maintained, you might as well have orange construction cones and blinking “Lane Closed — Merge Left” signs floating on the water,” Groseclose said. “Imagine the increased traffic jams and commute times that would occur if a major highway, like I-95, had to be closed because there’s no money to keep the highway clear of debris. That’s essentially what happens when navigation channels silt up and they aren’t regularly dredged.”
The AAEI, NIT League, RILA, the World Shipping Council and the Waterfront Coalition said they supported the AAPA’s position on harbor dredging projects.
Meanwhile, the barge and towing industry applauded the administration for recommending the highest level of funding for inland waterways projects since 1986. The budget calls for $394 million to repair river locks and dams, of which $197 million will come from the dedicated Inland Waterways Trust Fund. However, the Waterways Council said it was unhappy that several other lock projects were not approved for initial engineering and design work.