Harbor User Fee Debate Centers on Funding Source

A Clinton administration proposal to charge maritime vessel operators a fee to cover the cost of harbor and navigational channel dredging is under fire from ports and maritime interests, but a powerful lawmaker warned that some sort of fee is likely.

The proposed nearly $1 billion annual charge on commercial ships using U.S. ports would replace the Harbor Maintenance Tax, which was ruled unconstitutional by the Supreme Court in March 1998. Shippers paid that tax based on the value of the imported or exported cargo. But the high court declared the tax unconstitutional as an unfair tax on exports. The government still collects taxes on imports and domestic cargo.

The administration’s replacement — the Harbor Services User Fee — would require carriers using U.S. ports to pay a charge at a single port, rather each one, based on the volume of freight or number of passengers the ship can carry. In addition to creating a new funding mechanism for federal maintenance dredging, the proposal also would provide revenue for new harbor development projects.

If money to keep shipping channels free of silt dries up, cargo vessels would divert to ports with deeper channels that might not have the intermodal facilities to handle the increased traffic, said Tom Malloy, executive director of the Intermodal Conference of American Trucking Associations.

“Containers would sit longer, terminals and highways would not be able to handle the large surges of freight when large vessels come in and the need for drivers would increase,” he said.

The Army Corps of Engineers, which oversee the nation’s waterways, defended the proposal at a May 26 hearing before the House Water Resources and Environment Subcommittee.

“The assessment is a user fee, not a tax. The fee is based on the harbor benefits and services users receive,” said Joseph Westphal, assistant Army secretary for civil works.

Not so, said witnesses representing maritime carriers and ports.

The proposal is little more than a “crippling and inequitable tax,” Kurt Nagle, president of the American Association of Port Authorities, said at the hearing.

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