Recent Improvements To The Port Infrastructure Development Program For Small Ports
By Lance M. Sannino, James Kearns and Aimee Andres
The “Report Card” recently issued by the American Society of Civil Engineers has added to the renewed attention directed to the state of America’s infrastructure. Although the nation’s ports were given a grade of B-minus, better than the grade of C-minus given to the country’s infrastructure overall, the report card noted, “Smaller and inland ports are especially challenged to maintain their infrastructure and have difficulty in competing for federal grants.”
A small but significant step was made to address this challenge when, in the National Defense Authorization Act for 2021, Congress amended, in several ways, the Port Infrastructure Development Program that is administered by the U.S. Maritime Administration (MarAd). Prior to this amendment, 25 percent of the amounts appropriated for grants under this program were reserved for “small” projects. However, the underlying statute authorizing the program defined a small project as one that requested the lesser of $10 million or 10 percent of the total amount appropriated by Congress for the program for a fiscal year. For FY 2021, Congress appropriated $230 million for the program, which effectively meant that the grant for a small project would need to be at least $10 million.
The infrastructure projects of many smaller inland and coastal ports often do not rise to this level, so the amount required to meet those ports’ particular needs might not be enough to get help from the program. The FY 2021 Appropriations Act provided some relief by reducing the minimum grant size to $1 million for FY 2021, as did the previous year’s appropriations act. But the underlying statute remained the same, leaving smaller inland and coastal ports not knowing whether the minimum threshold would be reduced from year to year.
This predicament has been a frequent topic of discussion in the networking meetings that Inland Rivers, Ports & Terminals Inc. (IRPT) organizes for its members and other stakeholders according to the various river basins. Although it was considered a long shot, IRPT and its members undertook an effort to have the set-aside amount in the program changed from a size-of-project test to a size-of-port test. Specifically, a request was made to the responsible committees of Congress to have 25 percent of each fiscal year’s appropriations for the program reserved for infrastructure projects of ports that handle less than 8 million tons of cargo annually, with no minimum dollar amount for grant requests.
IRPT’s executive director, Aimee Andres, spearheaded this effort on behalf of IRPT, and she experienced firsthand how much bipartisan support the inland waterways enjoy in Congress, in contrast to the political divisiveness that is typically portrayed in the headlines. In Andres’ words, “The elected officials we met with, on both sides of the aisle, in many differing geographical areas—river states, coastal states, Great Lakes states—and with diverse interests ranging from transportation, agriculture and energy to foreign affairs, commerce and federal agency development—they all care so deeply about their constituents and the jobs that they were sent to do.”
With strong support from the inland waterways stakeholders, including public ports and private terminals, several helpful changes in the program made their way into the law as finally enacted. First and foremost, although the set-aside percentage was ultimately set by the conference committee at 18 percent rather than the requested 25 percent, the size-of-project test was replaced with a size-of-port test, and the minimum dollar amount was removed for grant requests for eligible ports.
To be eligible for a grant from the reserved funding, a project must be at a port that has handled an average of less than 8 million tons of cargo over the three calendar years immediately preceding the application’s submission. Tonnage is determined from data gathered by the Army Corps of Engineers, or an applicant can ask MarAd to accept data from an independent audit.
A project proposed by an eligible port also no longer needs to meet the cost-benefit analysis that had been required previously. Although it seems reasonable that a project supported by taxpayer dollars should be subject to such an analysis, in practice it was placing smaller ports at a relative disadvantage to their larger counterparts. By definition, a port eligible for the reserved funds handles less cargo than a larger port; therefore, a particular infrastructure improvement would likely have less utilization than it would have at the larger port, resulting in a lower cost-benefit ratio for the smaller port. Instead, an eligible port can now make its case for a project on the basis of broader criteria, such as the “economic advantage and the contribution to freight transportation at a port” and the “degree to which a project would promote the enhancement and efficiencies of a port.”
As with other grants made under the program, at least 20 percent of a project’s cost must be provided by the recipient of the grant, but greater flexibility is now allowed for the use of loan and lease financing and other methods for providing that cost share.
On March 29, MarAd announced a Notice of Funding Opportunity encouraging applications for $230 million in discretionary grant funding for port and intermodal infrastructure-related projects through the program. It includes provisions for grants of at least $41.4 million for projects at small ports and terminals meeting the requirements described in the notice.
The deadline to submit an application under the program is July 30. To provide technical assistance, MarAd will host a series of webinars during the application process, with information about these webinars to be made available on the MarAd website.
It will be important for applicants to keep in mind the following guidance in the press release announcing the notice: “In keeping with the priorities of the Biden-Harris administration, the department’s review process will also consider how proposed projects address climate change and environmental justice impacts and advance racial equity, reduce barriers to opportunity and meet challenges faced by rural areas.”
Lance M. Sannino and James A. Kearns are partners in the Maritime Practice Group at Jones Walker LLP in New Orleans. Aimee Andres is executive director for the Inland Rivers, Ports and Terminals, a trade association for the nation’s inland waterway, port and terminal professionals.