Funding Port-Related Infrastructure and Development: The Current Debate and Proposed Reform

Article excerpt

Introduction
  I. Constitutional and Statutory Restrictions on Port Operations
        A. The Tonnage Clause
        B. The Shipping Act
        C. Plaquemines. Courts' Exacting Standard Under the
           Shipping Act
II. Addressing the Funding Problem
        A. Congressional Proposals
           1. H.R. 526: ON TIME Act
           2. H.R. 2355: MOVEMENT Act of 2009
           3. H.R. 2707: National Freight Mobility Infrastructure
              Fund
           4. Congressional Analysis
        B. National Infrastructure Bank
        C. Structured User Fees
           1. PierPASS
           2. Security-Related Fees
           3. Clean Truck Program
        D. Port Authority Cargo-Based Fees
           1. Ports of Los Angeles/Long Beach--Infrastructure
              Fee
           2. Port Authority of New York & New Jersey--Cargo
              Facility Charge
           3. Analysis of Cargo-Based Fee Validity
III. Proposed Reform
Conclusion

INTRODUCTION

"[W]e can put Americans to work today building the infrastructure of tomorrow. From the first railroads to the interstate highway system, our nation has always been built to compete." (1)

"Our infrastructure used to be the best, but our lead has slipped.... [W]hen our own engineers graded our nation's infrastructure, they gave us a D.'" (2)

President Barack Obama's State of the Union Addresses in 2010 and 2011 focused on the need to rebuild trade-related infrastructure as an aspect of revitalizing the United States' economic condition. (3) American seaports are a central component of the President's discussion. (4) Port (5)-related activities contribute more than $649 billion annually to the U.S. Gross Domestic Product, sustain more than thirteen million jobs, and contribute over $212 billion annually in federal, state, and local taxes. (6) United States seaports--much like the rest of the United States' infrastructure--are in desperate need of improvement. (7) Federal, state, and industry actors agree that freight rail and roadways servicing seaports require significant repair and expansion. (8) What they cannot agree upon, however, is how to generate the funds necessary to meet current and future capacity needs. (9)

Modern container ports (10) have witnessed a sea change in how global trade is conducted. (11) From 1990 to 2007, trade in containerized cargo--i.e., cargo transported in a truck trailer body that can be detached from the frame of the truck for loading into a vessel or rail car (12)--in the United States' four largest container ports increased as follows: Ports of New York and New Jersey (279%), Port of Los Angeles (395%), Port of Long Beach (456%), and Port of Savannah (621%). (13) Driven by the surging market in containerized trade, the size of ships calling on U.S. ports has grown from 4500 twenty-foot equivalent units ("TEUs") (14) to 12,000 TEUs, (15) which has increased the number of trucks and miles of freight rail necessary to transport cargo from seaports to interior manufacturing and distribution points. (16) Consequently, many roadways have become inadequate, (17) resulting in roadway congestion, (18) increased fuel emissions, (19) and related environmental and public health concerns. (20)

Additionally, East Coast ports are uniquely concerned with port-related capacity and infrastructure issues. (21) Historically, the largest ships transporting containerized cargo have been unable to pass through the Panama Canal in calling on East Coast ports. (22) This is about to change. The Panama Canal is currently being expanded to accommodate ships carrying up to 12,000 TEUs. (23) The anticipated completion of the Panama Canal Expansion Project in 2014 has forced ports on the eastern seaboard to dredge channels deeper to accommodate the larger ships (24) and expand intermodal facilities (25) to transport containerized cargo quicker and more efficiently. (26)

Containerized cargo is here to stay, but what is less certain is how the United States will fund new infrastructure and development to accommodate its proliferation within the shipping industry. …