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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � 3 Federal Roles in Marine Transportation The major roles and responsibilities of the federal government related to the nation’s marine transportation system (MTS) are reviewed in this chapter. The federal government’s influence on the MTS is multifaceted and far-reaching. Federal policies and programs concerning international trade, agricultural production, and many other areas affect the demand for and supply of marine transportation services, the structure of the maritime industry, and the efficiency with which it operates. The federal government has a direct role in the provision of much of the infrastructure and support services needed for the MTS to accommodate the nation’s commerce. It also has a lead role in ensuring that the system functions safely,

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � in a manner that minimizes environmental impacts, and in support of the nation’s military and security needs. These varied federal responsibilities and functions are carried out by several agencies. Each is described in this chapter in relation to the national interests listed above. Consideration is given to how these federal agencies coordinate their MTS-related policies and programs in pursuit of these interests. ENSURING MARINE SAFETY The U.S. Coast Guard is the principal federal agency responsible for the safety of marine operations. It shares some safety-related functions with other agencies, including the National Oceanic and Atmospheric Administration (NOAA) and the U.S. Army Corps of Engineers, but the Coast Guard has overarching responsibility for ensuring that the navigation environment and operations are safe for vessel operators, crew, and passengers. It pursues this safety mandate through numerous programs and activities, as described in the following subsections. Aids to Navigation As part of its traffic management responsibilities, the Coast Guard places and maintains the aids to navigation that mark the nation’s channels. This service can be traced back to creation of the U.S. Treasury’s Lighthouse Service by Congress in 1789, which preempted state authority over navigable waters. In addition to providing lighthouses, the Lighthouse Service was charged with installing, operating, and maintaining beacons, buoys, and public piers. In 1939 the Coast Guard assumed these responsibilities (USCG 2000). The Coast Guard’s Aids to Navigation Program’s main purpose is to prevent groundings and collisions with other vessels and structures (USCG 2003). After World War II, the agency aggressively pursued many new navigation technologies to achieve these goals more efficiently and effectively. For instance, most lighthouses were automated, and short-

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � range navigation aids and radio services were introduced. Today, the Coast Guard maintains nearly 50,000 fixed and floating aids (e.g., buoys, day marks, fog signals, beacons, radio towers) for short-range navigation (USCG 2000). It also maintains aids used for longer-range navigation, including LORAN and DGPS (Differential Global Positioning System). Search and Rescue Services In 2002, the Coast Guard responded to nearly 40,000 calls for assistance from mariners in distress. Most of these calls were for incidents involving pleasure craft and commercial fishing vessels (USCG 2003, 16). Nevertheless, when larger merchant and passenger transport vessels are in distress, the response can be costly and complex, and the Coast Guard must prepare for such events. A major component of the Coast Guard’s rescue program is its role in the Automated Mutual Assistance Vessel Rescue System (AMVER). Vessels participating in this mutual aid network transmit information via satellite about their location, intended course, communication links, and rescue capabilities to a database at the U.S. Coast Guard Operations Systems Center. This information allows rescue coordination centers worldwide to locate vessels near a ship in distress, in order to divert them to render aid. More than 12,000 ships from over 140 nations, representing about 40 percent of the world’s merchant fleet, participate in AMVER.1 Many of the Coast Guard’s provisions and procedures for search and rescue conform with long-standing international agreements, such as the International Convention for the Safety of Life at Sea and the International Convention on Search and Rescue. These conventions were developed with Coast Guard participation through the International Maritime Organization (IMO), which is a specialized United Nations agency. Commercial Vessel and Crew Standards A forerunner agency to the Coast Guard was the Department of Treasury’s Steamboat Inspection Service. Established in 1851 in response to 1 seas.amverseas.noaa.gov.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � repeated, and sometimes spectacular, steamboat accidents, the service was given the responsibility to develop and enforce federal rules governing the safe construction, operation, and equipage of merchant vessels ( Johnson 1987). It was also responsible for investigating marine accidents, and its authority was eventually broadened to include oversight of crew and passenger safety, including crew licensing. A sister agency in the Department of Treasury, the Bureau of Navigation, had responsibility for administering navigation laws. These two federal agencies were later merged to form the Bureau of Marine Inspection and Navigation. The Coast Guard assumed all of the safety regulation and inspection responsibilities of the Bureau of Marine Inspection and Navigation on a temporary basis during World War II and permanently after the war. Today, the Coast Guard promulgates and enforces a variety of regulations governing vessel construction and equipment, seaworthiness, pilotage, fire protection, life-saving appliances, and crew member qualifications. Standards apply to small passenger vessels used for charter and for-hire passenger services, as well as larger merchant ships. The Coast Guard enforces the standards through various means, including technical plan review and periodic vessel inspections. Because most oceangoing commercial vessels that call at U.S. ports are registered in other countries, the Coast Guard must work in concert with IMO and other international bodies to ensure the safety of these vessels. The agency exercises port-state control of foreign-flag vessels operating in U.S. waters, which sometimes involves inspections to ensure that all U.S. and internationally agreed-upon standards for vessel safety, security, and environmental protection are met. The U.S. Maritime Administration (MARAD) contributes to the training of qualified mariners through its support of the U.S. Merchant Marine Academy and by administering federal aid to six state maritime academies. The academies seek to raise the skills and competency of merchant mariners as well as to provide a sufficient merchant marine capability to serve U.S. commercial interests and the U.S. armed forces in the event of a military deployment.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Navigation Advisories and Nautical Information Although the Coast Guard has overarching federal responsibility for marine safety, several safety-related responsibilities and supporting functions are carried out by other federal agencies. NOAA, in particular, has several such functions. For instance, it is responsible for providing marine weather forecasts and advisories through its Marine Services Program. Much of the information provided through this program and relayed to mariners by the Coast Guard is derived from NOAA’s National Data Buoy Center maintained by the agency’s National Weather Service (NWS). Mariners can access the information in the form of marine advisories and forecasts through Coast Guard and NWS radio broadcasts, telephone services, and Internet postings. On inland waterways, NWS tracks river levels and icing conditions. It operates river forecast centers, which provide flood warnings for hundreds of river locations. NOAA is also responsible for surveying and charting U.S. coastal waters and the Great Lakes (the Corps of Engineers surveys and charts the inland rivers). In fact, the U.S. Coast and Geodetic Survey was one of several federal agencies brought together to form NOAA more than 30 years ago. These services are now provided by NOAA’s National Ocean Service (NOS). NOS is responsible for providing mariners with nautical charts, shoreline maps, and real-time water level and current data. NOS’s Office of Coast Survey supplies mariners with nautical charts and hydrographic information. The charts, which are provided in both paper and digitized formats, contain information about the nature and form of the coast, the rise and fall of tides, the depth of water, the general configuration of the sea bottom, and the locations of hazards and navigation aids. NOS monitors sea level variations and currents through measurement stations linked by its National Water Level Observation Program. It also manages the National Spatial Reference System, which ensures the integrity and accuracy of geospatial coordinates—critical to navigators in all modes. Safety Monitoring and Assessment In support of its safety mission and programs, the Coast Guard collects and analyzes information on marine incidents. The kinds of safety data collected

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � by the Coast Guard, which are discussed in more detail in Chapter 5, include marine casualty reports and oil spill and pollution data. The Coast Guard uses this information in support of its regulatory development and enforcement programs and for setting performance goals and reporting to Congress on program accomplishments. Another federal agency with responsibility for monitoring marine safety performance and needs is the National Transportation Safety Board (NTSB). While NTSB investigates only a handful of marine transportation incidents each year, its investigations focus on major events that resulted in or could have resulted in major loss of life or environmental damage, or that involved other modes of transportation. Examples of events that NTSB investigates are ferry and cruise ship fires, tanker groundings, and barge collisions with rail and highway bridges. NTSB often makes recommendations for corrective actions that are directed to the Coast Guard for further evaluation and implementation. ENSURING MARINE ENVIRONMENTAL PROTECTION Marine safety and environmental protection are, in many respects, inseparable goals. Actions that prevent or mitigate the severity of vessel collisions, groundings, and other kinds of distress can protect human life as well as the environment. For instance, well-designed tankers that operate safely are less likely to have accidents that harm crew or to become involved in oil and chemical spills that damage the environment. In this regard, the Coast Guard’s extensive regulatory, programmatic, and operating responsibilities to provide for safe marine transportation also have environmental benefits. The Coast Guard has many responsibilities and functions that are aimed specifically at marine environmental protection, and it has the lead federal role in ensuring that navigation activity is environmentally compatible. It promulgates and enforces federal and international rules intended to prevent marine pollution. It operates the National Response Center, which receives reports of pollution incidents and directs the Coast Guard’s on-scene coordinators in response operations. The agency’s National Strike Force, which specializes in pollution response, is part of

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � a multiagency federal response capability known as the National Response System. The Coast Guard receives a significant amount of support from other federal agencies in carrying out its environmental responsibilities. Marine Pollution Prevention and Response Oil and chemical spills into inland and coastal waters and at sea are major environmental threats associated with marine transportation. Ever since the Oil Pollution Act of 1924, the Coast Guard has had a prominent role in regulating and responding to the release of oil in U.S. waters. In the aftermath of several large-scale spills from the 1960s through the 1980s, Congress expanded and strengthened the Coast Guard’s role in preventing and mitigating marine pollution. The Coast Guard has authority to establish regulations governing the design, maintenance, and operation of vessels not only to ensure passenger and crew safety but also to protect the marine environment. In addition, it is responsible for establishing spill cleanup and liability regulations, investigating spill origins, and ensuring that the responsible parties pay for cleanup and restoration. The Coast Guard’s environmental responsibilities have grown over time, commensurate with growing public interest in environmental quality. In landmark legislation following the 1989 Exxon Valdez oil spill, Congress passed the Oil Pollution Act of 1990 (OPA 1990), which set new requirements for vessel construction, crew licensing and manning, and contingency planning. The act enhanced the federal response capability and enforcement authority and included stiffer penalties for parties responsible for spills. Congress gave the Coast Guard responsibility for administering the Oil Spill Liability Trust Fund (generated from taxes on crude oil) and for establishing the National Pollution Funds Center to administer funds for damage assessments and restoration from oil spills. OPA 1990 gave the Coast Guard a number of new responsibilities for safety and environmental protection. The Coast Guard must take a more concerted and systematic approach to meet these responsibilities through regulation, planning, and industry incentives affecting vessel design and operations, manning, and incident response and mitigation.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � NOAA provides the Coast Guard with technical information and scientific expertise for oil and chemical spill response and restoration. Its information on tides, currents, weather, and waves is important for guiding spill containment actions. NOAA scientists, who are experts in oceanography, biology, chemistry, and geology, can predict where a spill will go and its possible effects, which is essential for planning mitigations. Moreover, NOAA’s surveying and charting programs, as well as its weather advisories, are intended to help prevent environmental accidents in the first place. Stewardship and Monitoring of the Marine Environment NOAA has an important role in protecting the coast and ocean environment by collecting scientific information, protecting national marine sanctuaries, and administering the National Marine Fisheries Service. This stewardship role is relevant to the MTS in a number of ways. One of NOAA’s functions is to provide environmental guidance to ports. The nation’s coasts are managed by the individual states with financing assistance from the federal government administered through NOAA’s Coastal Zone Management Program, a federal–state partnership that encourages the preservation and restoration of the nation’s coastal communities and resources. Through this program, NOAA provides states, local governments, and port authorities with technical guidance and information on coastal management. Finally, NOAA is responsible for protecting marine fisheries, habitats, and endangered species through a number of programs and services, including the National Marine Fisheries Service. By law, the agency must be consulted when actions—especially federal actions—can disrupt coastal wetlands and benthic habitats. Examples of such actions are dredging, filling, disposing of dredged material, and placing structures in marshes. The possible impacts on marine life and habitats from such planned actions must be assessed by NOAA and its National Marine Fisheries Service in advance. Under provisions of the Sustainable Fisheries Act, federal agencies are required to consult with the National Marine Fisheries Service when they take actions, such as dredging, that may affect

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � protected fish habitat. To further protect fisheries, endangered species, and marine habitats, NOAA works with the Coast Guard in developing and enforcing ballast water management programs that are intended to prevent the harmful spread of invasive species. Other Environmental Protection Responsibilities Like all federal agencies, the Corps of Engineers must examine the environmental impacts of its projects and actions, including dredging activities and water development projects. The corps has extensive environmental science and engineering expertise for performing such evaluations. Moreover, it is called upon by other government agencies to review proposed projects that can have environmental impacts on wetlands. The corps’ role in wetlands permitting is one of its most significant civilian responsibilities and requires extensive interaction with the ports, terminal operators, and other parts of the MTS. The U.S. Environmental Protection Agency (EPA) is the national agency responsible for administering and enforcing most of the country’s major environmental statutes. Navigable waters are covered explicitly by the Clean Water Act, which regulates the discharge of pollutants into waters and provides for the protection of watersheds and wetlands for safe drinking water, seafood, and recreational activity. EPA shares or has sole implementing authority for many other acts that affect marine transportation, such as the Clean Water Act and the Endangered Species Act. Even its implementation of the Clean Air Act can have important implications for marine transportation, because the operation of vessels and motor vehicles in urban port complexes is subject to EPA pollution monitoring and air quality attainment standards. EPA is also responsible for administering the National Environmental Policy Act (NEPA), which is intended to ensure that all federal agencies give proper consideration to the environment before undertaking major projects. It coordinates the NEPA environmental impact assessments that other federal agencies such as the Corps of Engineers and the Coast Guard must complete for major projects they undertake, approve, or help fund.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � FACILITATING COMMERCE The federal government has long had a central role, rooted in the Constitutional provisions giving Congress authority to regulate interstate commerce, in developing and maintaining the nation’s navigable waterways. In fulfilling this role, the federal government has taken the lead in building, maintaining, and operating the nation’s navigation channels and supplying various other related infrastructure and services, as described below. Navigable Channels The U.S. Army Corps of Engineers is the chief federal agency responsible for ensuring that inland, coastal, and harbor channels support the nation’s navigation needs. It has held this responsibility for more than 175 years. The corps was the country’s only formally trained body of engineers for much of the 19th century, and Congress and the president turned to it frequently to provide engineering expertise for both military and civil works. As early as 1824, when Congress passed the General Survey Act, the president charged the corps with surveying all of the nation’s transportation routes and recommending options for improving them for national defense and commerce (Ferejohn 1974). Two years later, Congress passed the first Rivers and Harbors Act and appropriated funds to the corps for making specific navigation improvements to the Ohio, Mississippi, and Missouri Rivers. This marked the beginning of the corps’ navigation and water development programs. As discussed in more detail later in this chapter, it also marked the beginning of Congress appropriating funds for specific navigation projects and the corps’ dual role in assessing needed projects and undertaking them—a pattern of responsibility that remains to this day. The Civil Works Director of the corps is responsible for planning, building, maintaining, and operating 137 locks sites on the inland rivers, 70 on the Atlantic, Gulf, and Pacific Coasts, and 26 on the Great Lakes. These federally owned sites contain 270 lock chambers, many of which are accompanied by dams that are used to control the river flows and depths and for other purposes such as supplying hydroelectric power, drinking

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � water, and waters for recreational boating and fishing (USACE 1997, 53). About half of these locks and dams are 50 or more years old; hence, maintenance is a major responsibility of the corps. Altogether, the corps is responsible for the navigation infrastructure on about 12,000 miles of active commercial waterways, most with a constant minimum water depth of 9 feet or more. The infrastructure is operated from eight divisions (also called Regional Business Centers) and more than three dozen district offices, each of which has responsibility for operating and maintaining the channels, locks, and dams within its boundaries. In addition to operating the lock and dam infrastructure, the corps is responsible for dredging the river, lake, and intracoastal ways. Dredging activity is particularly important along the Lower Mississippi River and the Gulf Coast. Most of this dredging is referred to as “maintenance” activity because it is intended to maintain existing channel dimensions. The corps is responsible for keeping the inland waterways free of hazards and pollution, mapping the waterways, and supplying and maintaining channel navigation markers and aids. Its roles in planning, building, regulating, maintaining, and operating the inland waterways give the corps one of the most comprehensive sets of responsibilities for civil infrastructure management in the federal government—perhaps surpassed only by the Federal Aviation Administration’s (FAA’s) responsibility for the nation’s airspace. In addition to having such a prominent role on the inland and intracoastal waterways, the corps is responsible for the navigation channels and major infrastructure (e.g., breakwaters, jetties) in the nation’s ocean and lake harbors. Almost all of these channels exceed 12 feet in depth and are defined as deep-draft waterways. For the most part, the deep-draft channels do not require the corps to take an active operational role, as is required for the functioning of lock chambers and other control structures on the inland and intracoastal waterways. Instead, the corps’ main responsibility is to ensure that the navigable channels have sufficient depth and width to accommodate vessel traffic. Channel dimensions differ from place to place and require varying amounts of construction and maintenance activity.

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � tecting the environment, and promoting national security. Moreover, in the performance of its functions, one agency often depends on others, as illustrated by the Coast Guard’s reliance on NOAA for weather and hydrographic information to support its traffic management and safety activities. This interdependence requires coordination among the agencies, although mostly at the project and procedural levels rather than in the executive and legislative domains, where funding and policy-level coordination can take place. Coordination Within Areas of Federal Responsibility As might be expected, most interagency coordination, to the extent that it takes place, occurs where agencies have closely linked responsibilities. Agencies responsible for particular aspects of marine safety, for instance, seek to coordinate their activities. However, they are less likely to coordinate closely with agencies having different, though still relevant, responsibilities, such as navigation capacity. Perhaps more than in any other area of federal responsibility, means have emerged for agencies to coordinate marine security. By bringing the Coast Guard, TSA, the Bureau of Customs and Border Protection, and several other agencies with security-related missions into DHS, Congress expressly sought to integrate the programs of federal agencies with transportation and homeland security missions. Only a few months have passed since the creation of DHS, and it is too early to know the results of this effort. Nevertheless, these agencies are collaborating, as demonstrated by the aforementioned C-TPAT, which is managed by an Interagency Container Working Group of DHS. In the case of marine environmental protection, Congress has created a number of organizational means and statutory requirements for the federal agencies to work together. An example of the former is the National Response Team (NRT). Cochaired by the Coast Guard and EPA, NRT provides multiagency coordination to set national policies and priorities on marine pollution prevention, preparedness, and response. Among the most far-reaching of the statutory requirements for interagency coordination are those set forth in NEPA, which mandates

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � that federal agencies consult with one another on actions having environmental significance. In general, EPA ensures that NEPA requirements are fulfilled by each responsible federal agency. It works with the Corps of Engineers, NOAA, and other federal agencies with relevant information, expertise, and authority in implementing the act for the marine environment. Despite these coordinating efforts, environmental responsibilities remain highly dispersed. Numerous federal agencies have environmental protection responsibilities that impinge on the MTS, in part because environmental concerns often transcend traditional economic and organizational divisions. The protection of wetlands and their ecosystems, for instance, can affect the port and marine transportation community, but wetlands protection is a broader federal goal that requires the involvement of interests and federal entities outside the marine and transportation domains. The same is true of federal efforts to protect metropolitan air quality, which must encompass urban port complexes but are much broader in scope. With regard to marine safety, the Coast Guard has much of the federal responsibility within its purview. Yet to fulfill many safety functions, the Coast Guard depends on data, technical expertise, and resources from other federal agencies, especially NOAA. The necessary coordination occurs (as evidenced by the aforementioned PORTS initiative), but it is complicated by the fact that the agencies are housed in separate departments. The most dispersed federal efforts are in the provision of navigation infrastructure and services to facilitate commerce. Both the Corps of Engineers and the Coast Guard have major operational and infrastructure roles in this regard. However, several other federal agencies, including MARAD, NOAA, and FHWA, have important roles. These agencies are housed in multiple departments under the jurisdiction of numerous committees of Congress. They have different organizational cultures, decision-making processes, legislative obligations, and resource limits. Coordination Across Areas of Federal Responsibility Whereas the coordination of federal activities within specific areas of responsibility takes place to varying degrees, the challenge of coordi-

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � nating decisions and activities across areas of responsibility is far greater. The federal government certainly has an interest in ensuring that its many decisions and actions related to the MTS are working together in the public good. However, such system-level perspectives have proved extremely challenging to adopt. Within the U.S. Department of Transportation (DOT), MARAD sometimes serves as a clearinghouse for federal agencies to coordinate their marine-related activities. Moreover, DOT’s Office of Intermodalism (housed within the Office of the Assistant Secretary for Transportation Policy) is expressly charged with coordinating projects, programs, and policies involving more than one mode of transportation. Both organizations offer a potential link between the federal maritime and other surface transportation programs; however, both are relatively small and committed to fulfilling other responsibilities. The Coast Guard is in a position to coordinate the federal government’s marine safety, capacity, security, and environmental protection functions. Having major programs in each of these areas, it has a strong interest in such coordination. At the same time, it has many other responsibilities to balance (such as combating illicit drug traffic, ensuring compliance with recreational boating regulations, and regulating commercial fisheries), as well as limited jurisdiction. The Coast Guard’s influence on the MTS is far more limited than, say, FAA’s influence on the aviation sector. The federal Interagency Committee for the Marine Transportation System (ICMTS), which meets two or three times per year, draws members from at least 18 federal agencies with responsibilities related to the MTS. It provides a regular venue for officials from various federal agencies to exchange information and resolve problems that cut across their respective programs, for instance, through the formation of security, safety, and environmental subcommittees. However, ICMTS is not a congressionally authorized body, nor does it have a White House–level mandate to engage in more substantive program budgetary and policy planning. The difficulties inherent in coordinating agency decisions and activities are not unique to the MTS. Congress and the executive branch have established special coordinating mechanisms for some high-profile federal responsibilities spread among agencies. One example is the Office

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � of National Drug Control Policy, which was established to set overall policies, priorities, and goals for the country’s multiagency drug control efforts. Likewise, Congress created the White House Office of Science and Technology Policy to ensure the implementation of sound science and technology policies and research budgets across federal agencies. For the most part, however, the White House Office of Management and Budget (OMB) is charged with coordinating and rationalizing budgets and policies across executive branch agencies. As a practical matter, it faces a considerable challenge in linking the actions and resources of so many federal agencies with overlapping and related responsibilities for the MTS. In the end, federal priorities and policies must be rationalized through the political process. Informing Congress about the implications of its decisions—for instance, how federal investments in waterway infrastructure will affect marine safety and environmental protection—is a starting point in promoting a more rational and integrated federal marine transportation program. Other federal transportation programs routinely report information to Congress on system performance and conditions. FUNDING FEDERAL MARINE TRANSPORTATION PROGRAMS Because so many federal agencies have responsibilities related to marine transportation, a complete picture of how federal programming and budgetary priorities are established is not possible. Individual agencies and departments, in concert with OMB, prepare the annual budget requests for most programs. Through its assigned committees, Congress reviews and modifies these budgets and appropriates funds accordingly. Most programs do not draw from a dedicated source of funds, but must compete for money from the general fund. To a large extent, this process is followed for the funding of the major marine-related programs of the Coast Guard, NOAA, MARAD, and most other federal agencies. The funding of the navigation projects and programs of the Corps of Engineers follows a different, and in many respects unique, process that requires additional explanation. In some ways, the process resembles that

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � of the other major federal transportation programs in the aviation and surface modes. In other ways, it is fundamentally different. The process is described below, and it is contrasted with these other modes in the next chapter. Advent of User Financing and Trust Funds for Navigation Projects The Corps of Engineers has had a prominent role in the country’s navigation and water development projects for more than 175 years. During the 1970s and 1980s, this role came under increased political scrutiny for a variety of reasons, including concerns that projects were becoming too expensive and were intruding on state and local decision making (Hershman and Kory 1988). For nearly a decade, the Carter and Reagan administrations declined to propose any new navigation construction starts in the corps’ budget. That moratorium eventually gave rise to a series of changes in the way federal navigation projects are conceived and funded. The first major change in this process came in 1978 when Congress passed the Inland Waterways Revenue Act, which assessed a 10-cents-per-gallon tax on motor fuel used by barge operators. The revenues from this tax were to be credited to an Inland Waterways Trust Fund (IWTF), and half of all federal expenditures on the construction and major rehabilitation of locks, dams, and other inland waterway infrastructure were supposed to be drawn against this account. Funds for project operations and maintenance (O&M) were to be derived, as in the past, from general revenues. The establishment of user fees for inland waterway projects followed the creation of similar fees and trust funds for the federal highway and aviation programs during the 1950s and early 1970s, respectively. In both prior instances, however, the laws establishing the trust funds also created formulae for spending the funds, as described in Chapter 4. In contrast, the legislation creating the IWTF did not contain similar spending commitments; hence, it offered less assurance that revenues generated from users would be reinvested in the inland waterways system. In its 1982 budget message, the Reagan administration, drawing on the experience in the highway and aviation modes, advocated extending

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � the concept of “user pays” throughout the maritime sector. It proposed a nationally uniform set of user charges that would cover all federal outlays for waterway construction, operations, and maintenance. The proposal did not gain congressional support, partly because of worries that a uniform fee would divert revenues derived from the users of large, commercially important ports to support federal investments in the infrastructure of competing ports and harbors. Nonetheless, to end the decade-long impasse on new navigation projects, all the interested parties began to accept the idea of more federal user charges and other forms of cost-sharing. This process culminated in passage of the omnibus Water Resources Development Act of 1986 (WRDA-86). WRDA-86 authorized scores of new navigation projects, but in doing so it changed the rules by which projects would receive federal funding. Specifically, it called for nonfederal interests (state, local, and private entities) to bear more of the financial burden of project construction, operations, and maintenance. It did so through several major provisions for user financing and cost-sharing. First, the act raised the fuel tax paid by barge operators from 10 cents to 20 cents per gallon by 1996. However, Congress consented to the wishes of users by establishing an Inland Waterways Users Board consisting of shippers and carriers to advise the Corps of Engineers on inland waterway construction, replacement, and rehabilitation projects. The act also established a 0.125 percent tax on the value of cargo shipped into and out of U.S. ports, with revenues credited to a newly created Harbor Maintenance Trust Fund (HMTF). All federal harbor O&M expenditures were to be debited against this account. Like the IWTF, the HMTF was not accompanied by legislation ensuring that revenues paid into the trust fund would be reinvested in U.S. harbors. And unlike the IWTF, the HMTF was not accompanied by a user board to advise on funding priorities. The second major change brought about by WRDA-86 was the imposition of cost-sharing requirements for federal dredging projects to deepen and widen harbor channels. The act required nonfederal (state, local, and private) interests to contribute money and other resources (e.g., land) to help cover project expenses; a schedule of cost-share requirements

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � based on dredged channel depth was outlined in the act. It authorized the use of federal funds to pay for 80 percent of the cost of dredging channels to a depth of 20 feet or less, 65 percent of the added cost of dredging depths between 21 and 45 feet, and 40 percent of the added cost of dredging to depths of more than 45 feet. Federal money would continue to pay for dredging to maintain channel dimensions in most instances. The act allowed nonfederal sponsors to collect port and harbor dues as a way to recover local cost-shares. These allowances were accompanied by restrictions on how such user fees could be levied. In particular, shallow-draft vessels could not be assessed fees intended to recoup costs associated with deep dredging. Even after the introduction of user fees for inland waterway and harbor infrastructure during the 1970s and 1980s, Congress retained a significant role for general revenues in its funding. This infrastructure, especially the locks and dams on the inland waterways, is used for other activities besides commercial transportation, including recreational boating, flood control, water supply, and the generation of electricity. Indeed, the Corps of Engineers is required to examine these other uses and their benefits in the planning of infrastructure projects and their operations. Recent Developments in User Financing of Navigation Projects Acceptance of user financing by MTS users has been mixed. In FY 2003, the fuel tax on inland waterways is expected to generate nearly $90 million in revenues, which is equivalent to half the Corps of Engineers’ $185 million budget for inland lock and dam construction. Over the years, the IWTF surplus has grown, as fuel tax revenues have tended to exceed half the total federal funds appropriated to inland waterway construction. The surplus, which is estimated to exceed more than $400 million by the end of FY 2003, has been a long-standing matter of contention among inland waterway users. The harbor maintenance tax is expected to raise about $730 million in FY 2003. This tax has been challenged repeatedly in federal court and in Congress since its inception in 1986. Because the tax is assessed on the value of cargo, it has been criticized as not representing the true costs of

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � federal services used by different categories of shippers and carriers. For instance, users of vessels transporting high-value shipments generally pay higher taxes than users of vessels transporting lower-value goods. Moreover, because the tax is uniform across the country, it does not reflect the variation in federal maintenance costs associated with different harbors. Users of harbors that require little or no federal dredging to maintain channels, for instance, must still pay the tax. In 1998, the U.S. Supreme Court nullified portions of the harbor maintenance tax, ruling that taxes on exports are prohibited by the U.S. Constitution. Hence, the collection of the ad valorem tax on exports ceased in April 1998, although it remains in effect on cargo imported through U.S. ports and harbors. (The long-term prospects of this tax on imported goods remain unclear because foreign governments have repeatedly protested that it conflicts with the tariff rules of the World Trade Organization.) In its 2000 budget request, the Clinton administration proposed a repeal of the harbor maintenance tax and the introduction of a “harbor services fee” to be assessed on the basis of vessel characteristics that are most associated with harbor maintenance services utilized, such as tonnage capacity and draft. The proposal called for the fee to be used to cover federal costs for all harbor services, including infrastructure construction. The proposal failed to gain requisite support in Congress. The misgivings of MTS users concerning the introduction of user fees 15 years earlier were reiterated in the debate over the harbor services fee. Many users—even those standing to benefit from a restructured fee— worried that receipts from the user fees would not be fully reinvested in the system as desired. Trust Funds and Coordination of Federal Marine Transportation Programs Both the IWTF and HMTF, which were created from tax receipts from waterway users, are intended for specific Corps of Engineers navigation projects. The former is intended to be used by the corps for construction and major rehabilitation of locks and dams on the federally controlled inland and intracoastal waterways. The latter is intended to be used by the

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � corps to maintain channels and associated waterway infrastructure in harbors. In neither case are the revenues intended to be used for other federal programs related to the MTS, such as Coast Guard aids to navigation and traffic management services and NOAA surveying and charting activity. Although Congress has not appropriated to the corps all of the revenues in these trust funds, it has refused to expand the scope of expenditures authorized from the trust funds to other federal programs, as proposed by the executive branch. In the next chapter, the broader-based trust funds created by Congress for the federal aviation and highway programs are reviewed. These trust funds cover a much larger portion of program expenses than the portion of the federal marine program that is covered by the Inland Waterways and Harbor Maintenance Trust Funds. Unlike the marine program, the federal aviation and highway programs are administered almost entirely by single federal agencies (FHWA and FAA), and they are under the jurisdiction of a limited number of congressional committees. The concentration of administrative and legislative responsibilities has, in effect, permitted the creation of broad-based trust funds that can be used to cover nearly all federal expenditures in each program area. SUMMARY ASSESSMENT The federal government has long had a major role in the development and functioning of the MTS. Its influence on the system is extensive. The focus of this chapter has been on the federal government’s direct roles in the provision of navigation infrastructure and services to further the national interest in ensuring marine safety, environmental protection, the facilitation of commerce, and security. These responsibilities are held by multiple federal agencies providing infrastructure and services, such as search and rescue, oil spill prevention, the operation of locks and dams, and the development and distribution of nautical charts and hydrographic data. The federal government pursues these responsibilities through a number of programs spread across several agencies and cabinet-level departments. To a large extent, these agencies have found ways to work with

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � one another to fulfill their shared responsibilities, despite an absence of budgetary integration. The greatest challenge is in coordinating agency decisions and activities across areas of responsibility—for instance, in ensuring that the federal marine safety, environmental protection, and navigation infrastructure programs are complementary and aimed at meeting the highest-priority needs. There is no overarching national policy or institutional framework for setting national marine transportation priorities or for guiding federal program actions and resource allocations in accordance with these interests. Interagency bodies have been formed to coordinate processes, but their substantive effects have been limited by the absence of coordinated budgeting and legislative authorities. Funding levels for each of the many programs and agencies are determined separately by a commensurate number of congressional oversight and appropriating committees. The dispersion of federal MTS-related responsibilities among many agencies operating under the jurisdiction of multiple congressional committees has led to no single entity having responsibility for viewing the MTS as a whole. Consequently, no one is routinely demanding comprehensive, national-level information on system performance—information that could be used to assess progress being made in meeting national priorities and to identify opportunities for furthering progress. Whether the gathering and evaluation of such information would prompt more integrated federal decision making is unclear. Performance information at the system level is collected for other federal transportation programs. As discussed in the next chapter, these programs have more concentrated sources of funding, administration, and congressional guidance and oversight. REFERENCES Abbreviations TRB Transportation Research Board USACE U.S. Army Corps of Engineers USCG U.S. Coast Guard

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The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement - Special Report 279 � � � � � � Federal Register. 2003. Vol. 6, No. 126, July 1, p. 39,272. Ferejohn, J. A. 1974. Pork Barrel Politics: Rivers and Harbor Legislation, 1947 to 1968. Stanford University Press, Stanford, Calif. Hershman, M. J., and M. Kory. 1988. Federal Port Policy: Retrenchment in the 1980s. In Urban Ports and Harbor Management (M. J. Hershman, ed.), Taylor and Francis, New York. Johnson, R. E. 1987. Guardians of the Sea: History of the United States Coast Guard, 1915 to Present. Naval Institute Press, Annapolis, Md. TRB. 1992. Special Report 236: Intermodal Marine Container Transportation: Impediments and Opportunities. National Research Council, Washington, D.C. USACE. 1997. The 1997 Inland Waterway Review: Executive Summary.Institute of Water Resources, Alexandria, Va. USCG. 2000. America’s Coast Guard: Safeguarding U.S. Maritime Safety and Security in the 21st Century. Washington, D.C., Jan. USCG. 2003. 2003 Report: FY 2002 Performance Report, FY 2004 Budget in Brief. Washington, D.C.