Business and Finance

Congress Passes Water Resources Reform and Development Act of 2014

On May 15 the conference report to H.R. 3080 the Water Resources Reform and Development Act of 2014 (WRRDA 2014) was filed. The House approved the measure 412 to 4 on May 20 and the Senate approved it 91 to 7 on May 22 ending in success a five-year effort to allocate for waterways maintenance all funds collected through the Harbor Maintenance Tax which was enacted by the Water Resources Development Act of 1986.

Following the Senate vote the measure went to President Obama who has said that he will sign it.

“A great day again thanks to all for your support and hard work!” Barry Holliday wrote to supporters. Holliday is executive director of the Dredging Contractors of America and a founder and director of RAMP – Realize America’s Maritime Promise which was established in 2009 to advocate for and pass this legislation.

“Now RAMP is more needed than ever” Holliday said. “WRRDA authorizes a phase-in of HMTF funds but it is now up to the appropriators to increase the Corps appropriations levels. All of the great organizations that have worked so hard to get the message out will have to continue reaching out to their respective members and encouraging them to support a Corps of Engineers budget that reflects the WRRDA intent” he said.

The Dredging Contractors of America have planned a celebration of the passage at their annual Congressional Reception on June 24.

WRRDA 2014 is the first water resources legislation to be passed since 2007. It authorizes more than 30 Corps of Engineers projects streamlines the permitting process and institutes other reforms and changes in how water projects are funded.

In May 2013 the Senate passed S.601 the Water Resources Development Act of 2013; H.R. 3080. The Water Resources Reform and Development Act of 2013 passed the House on October 23 2013 and since then the two had been crafting a bill combining the two – lead by Senator Barbara Boxer (D-CA) chairman of the Senate Environment and Public Works (EPW) Committee Rep. Bill Shuster (R-PA) chairman of the House Transportation and Infrastructure Committee (T&I) Senator David Vitter (R-LA) EPW Committee Ranking Member and Rep. Nick Rahall (D-WV) Transportation Committee Ranking Member.

The T&I Committee said the conference report “represents the bipartisan bicameral agreement between the House and Senate conferees responsible for negotiating a final measure between the House and Senate-passed versions of the bill.”

In her floor speech May 21 Senator Boxer said ”The bill will allow construction of vital port projects across the country. These include a project in Texas to widen and deepen the Sabine – Neches waterway which will have more than $115 million in annual benefits. This critical waterway transports more than 100000 tons of goods every year is the nation’s top port for movement of commercial military goods and is vital to the nation’s energy security.”

She also mentioned Corps projects at the Port of Jacksonville Florida to address dangerous cross currents that create safety concerns for ships entering and exiting this port and to deepen the overall port. The Boston Harbor deepening project to 50 feet will prevent heavier traffic in the busy Northeastern corridor by allowing larger vessels coming through the new Panama Canal to transport cargo all the way north to Boston.

In addition to project authorizations the bill makes efforts to streamline the delivery process for infrastructure projects and boost participation from non-federal sponsors. The following summarizes many of the important sections from WRRDA 2014 relevant to the dredging industry.

Studies and Permitting

The WRRDA legislation takes measures to streamline the study permitting and authorization process. Final feasibility reports must be completed in three years from initiation and for $3 million. (Sec. 1001). In addition it creates an accelerated process in which the Corps no longer has to conduct a reconnaissance study prior to a feasibility study (Sec. 1002).

The permit process will also be accelerated allowing the Corps to accept funds from nonfederal public interests for a period of seven years and will not slow down the permitting process for applicants not in the program (Sec. 1006).

Non-Federal Sponsors

WRRDA also increased the flexibility for non-federal interests and private sector investments to fund water resource projects themselves (Sec. 1015) and the Corps can assume operation and maintenance responsibilities for certain navigation project that were built by nonfederal partners (Sec. 1016).

In the past different interpretations of the WRDA 2007 led to a lack of execution for authorized credits on individual projects. The new legislation requested technical assistance from the Corps to draft a credit provision that could be applied to all Corps projects ensuring that non-federal project sponsors receive credit for in-kind contributions to federal water resources development projects (Sec. 1018).

To help incorporate non-federal assistance the Corps must implement a pilot program to evaluate the cost-effectiveness and project delivery efficiency of allowing non-federal sponsors to carrying out studies and projects (Sec. 1042 and 5014). The latter section designates at least 15 authorized projects to be financed in partnership with non-federal sponsors.

Harbors and Funding

Historically the Harbor Maintenance Trust Fund (HMTF) which is collected from the Harbor Maintenance Tax (HMT) has been underutilized for water resources infrastructure. Now WRRDA targets expenditures from HMTF for port projects to increase each year until 2025 where 100 percent of the funds collected will go to operation and maintenance (O&M) activities (Sec. 2101).

The Corps must also review O&M needs annually and submit them in the President’s annual budget to Congress (Sec. 2102). This section also establishes a new prioritization for future annual expenditures for eligible harbors.

From 2015 to 2022 the Corps must allocate no less than 10 percent of O&M funds (equal to the appropriated value in fiscal year 2012) to address the needs of emerging harbors. The remaining 90 percent within that 2012 baseline will address other harbor needs on an equitable basis. For funds above the baseline from 2015 to 2024 the Corps must direct 90 percent of such funds to high-use and modern-use harbor projects and 10 percent to emerging harbors.

After WRRDA’s passage Gary Moore interim executive director for the Port of Los Angeles the largest container port in the U.S. said “The Water Resources Reform Development Act makes an important advancement toward a more equitable allocation of harbor maintenance dollars.” Under former HMTF levels large ports like the Port of Los Angeles that contribute huge amounts of the money to the fund only saw a fraction of that returned in project funding.

Underserved harbors will also get no less than five percent of the funds from 2015 to 2024 and no less than 10 percent will go to fund projects within the Great Lakes Navigation System. The Alaska District also got a boost in budget consideration by its inclusion in the existing remote and subsistence harbors program (Sec. 2104).

WRRDA also establishes the Water Infrastructure Finance and Innovation Act of 2014 to promote innovative financing measures for flood damage reduction ecosystem restoration and navigation projects (Sec. 5021 and 5026). Funding appropriations will start at $20 million for 2015 and increase each year to $50 million for 2019.

Deauthorization and Backlogs

Because of the lack of water resources legislation and insufficient continuing resolutions for funding many authorized projects in recent years have stalled or been left behind. The new WRRDA legislation de-authorizes many inactive projects. Projects eligible for de-authorization include those authorized prior to WRDA 2007 that have not begun construction and those that have begun construction but have not received funds in the past six years. The Corps must list no less than $18 billion in federal projects to deauthorize (Sec. 6001).

To prevent future backlogs the authorization for any project will sunset after seven years unless construction has started (Sec. 6003).

Authorizations and Accountability

The de-authorizations in the WRRDA legislation more than cover those projects authorized by the new legislation estimated at $6 billion. Thirty-four water resources projects that have completed review were authorized (Sec. 7002). For a list of authorized projects the initial date of the Chief of Engineers’ recommendation and the estimated costs see the accompanying chart.

To determine priorities on authorizations for the future Congress will consider the Report to Congress on Future Water Resources Development which the Corps must put together annually to recommend necessary projects and request proposals from non-federal interests for project authorizations studies and modifications to existing projects (Sec. 7001).

Many ports legislators and the dredging industry have championed the new WRRDA legislation including the American Association of Port Authorities (AAPA). At its annual spring conference in March AAPA jointly bestowed its “Port Person of the Year” award on Sen. Boxer and Rep. Shuster although both postponed accepting their awards until after Congress passed the final water resources bill.

“Now these two highly respected congressional committee leaders can accept the awards that are very much their due” Kurt Nagle AAPA president and CEO said.

With big project authorizations in Jacksonville ready to turn into active projects Brian Taylor Jacksonville Port Authority CEO called WRRDA “a huge win for our region and our state.”

WRRDA cleared the way for construction to begin on the Savannah Harbor Expansion Project and Georgia Ports Authority Executive Director Curtis Foltz called the bill’s passage “a critical milestone.”

“Today’s action is an important step toward better accommodating the larger vessels that are the new standard in global shipping” Foltz said. The port said the bill officially lifts the spending limit set when legislators first authorized the project in 1999.

“With the understanding that we’ll have a federal-state split on funding Georgia has lived up to its promises. We’ve now put aside $266 million — the total state share” Foltz said.

Once the president signs WRRDA into law Georgia will enter into a Project Partnership Agreement (PPA) with the Corps. The PPA defines how the costs of the project will be shared between the state and federal government.

Foltz said he expects to have a binding PPA within 90 days allowing accelerated use of Georgia’s portion of the funding. These funds will be credited against the state’s ultimate cost share at the end of construction.

In Maryland Governor O’Malley said WRRDA will enable the Port of Baltimore to continue key dredging projects and environmental initiatives.

“Two projects crucial to the Port of Baltimore and our efforts to protect jobs and the environment will now be able to move forward: the continued development and expansion of Poplar Island as well as future development of mid-Chesapeake Bay Islands” O’Malley said. “This legislation strengthens Maryland’s ongoing environmental protection efforts by continuing to fund and expand our nationally-recognized program to rebuild long-eroded islands and create wetlands that serve as wildlife sanctuaries. After decades of erosion Poplar Island has been restored to its original capacity of 1100 acres using dredged material” he continued. The Poplar Island restoration is dedicated to the memory of dredging industry mentor William R. Murden.

The Corps Galveston District received authorization for deepening of the Freeport Ship Channel to 55 feet deepening of the Sabine-Neches Waterway to 48 feet and will reauthorize the Corpus Christi Ship Channel for widening and deepening to 52 feet.

Chief of the Project Management Branch Galveston District Bill Wise said that WRRDA authorization for the projects will allow federal funding to flow to the project but because of the long-term scale and expense federal funding will need to be appropriated each year on a ongoing basis. Local and state governments share in the total costs which are approximately $1.825 billion with 58 percent or $1.06 billion paid by the federal government.

The Congressional Budget Office (CBO) prepared a cost estimate for the 2014 conference report agreement in May. Based on information from the Corps and the Environmental Protection Agency CBO estimated that implementing the legislation would cost $5.4 billion over the 2015 to 2019 period. For the next 20 years CBO estimated that spending over the 2020 to 2024 period would total $6.9 billion with additional spending continuing for many years after 2024.

Specifically for water resources infrastructure the estimated authorization level for 2015 is $628 million; $722 million for 2016; $915 million for 2017; $1.034 billion for 2018; and $1.135 billion for 2019 totaling $4.433 billion for the next five years.