For the first time in many years, Congress actually enacted 12 appropriation bills to fund the Federal Government through September 30, 2014. This was done in the Consolidated Appropriations Act, 2014 (Pub.L. 113-76). As a result, the federal maritime and transportation agencies have the budgets they need to get some important work done. The following is a summary of the key provisions of the FY2014 budget. A forecast of where Congress is going this year in regards to major maritime legislation will be included in the conclusion of this article.
Highlights of the FY2014 Budget Agreement
Congress enabled the passage of the Consolidated Appropriations Act by first passing the Bipartisan Budget Act (Pub.L. 113-67). The Bipartisan Budget Act established the overall funding limits for the federal government for 2014-2015. The Budget Act also represents the first time in four years that Congress has actually passed a budget agreement. The budget was negotiated between Senator Patty Murray (D-WA) and Cong. Paul Ryan (R-WI), the respective chairs of the Senate and House Budget Committees. As the two leaders have publicly stated, they worked off the art of the possible, not what they knew they couldn’t reach agreement on.
From the levels set in the budget agreement, the appropriation committees could perform their jobs—funding the federal government at least for FY2014. Below are some of the highlights of the Consolidated Appropriations Act.
THE DEPARTMENT OF TRANSPORTATiON
- $600M for capital investments in surface transportation infrastructure—the so-called TIGER grants—to fund infrastructure projects of regional and national significance, including a set-aside of $35M for planning grants.
U.S. MARITIME ADMINISTRATiON:
- $186M for the Maritime Security Program to preserve the U.S. flag merchant fleet;
- $38.5M for the subsidy cost of title XI loan guarantees for shipbuilding; and
- $16M for the U.S. Merchant Marine Academy and $11.3M for the state maritime academies.
Infrastructure projects at ports are eligible for the TIGER program and, on average, have received about 10 percent of the funding to date. Setting aside money for planning grants is a new allocation for the TIGER program. Finally, funding the title XI program represents a new infusion of cash for the shipbuilding loan guarantee program. With a subsidy amount of 10 percent, this will enable the Maritime Administration to fund close to $400M in new shipbuilding loans. With a new (Acting) Administrator at the helm of the Maritime Administration, one hopes that the title XI program is resuscitated and the cumbersome review procedures streamlined.
THE DEPARTMENT OF HOMELAND SECURITY
- A total of $1.5B for grants, contracts, and cooperative agreements, including $466.3M for the State Homeland Security (“HLS”) Grant Program, $600M for the Urban Area Security Initiative, and $100M for port security grants.Ports, with the support of the American Association of Port Authorities (“AAPA”), successfully fought back against the Administration’s proposal to consolidate all HLS grants into one block grant to states, fearing they might not get their fair share from state agencies. Although $100M is considerably less than the $400M authorized for these grants in the Maritime Transportation Security Act of 2002, at least it gives ports a separate bucket to shoot at.
U.S. Coast Guard:
- A total of $1.375B for acquisition, construction, and improvements, including the cost of production of the 7th National Security Cutter (“NSC”) and the contract for long-lead time materials for the 8th NSC. (Huntington Ingalls has the contract for long-lead time materials for the 7th NSC.)
Admiral Papp, Commandant of the Coast Guard, has hinted that he is looking to fund the 8th (and final) NSC in the FY2015 budget, continue work on the Offshore Patrol Cutter, and perhaps start work on a new icebreaker in the FY2015 budget. (As reported in Seapower Magazine on January 24, 2014.) With the Coast Guard’s newly released Arctic Strategy, it makes sense to look at its icebreaking capabilities. (For a copy of the Strategy, see: www.uscg.mil/seniorleadership/DOCS/CG_Arctic_Strategy.pdf.)
Customs and Border Protection (“CBP”):
- A total of $10.6B for security, enforcement, and investigations, including $351M for border security fencing and $805M for air and marine operations. This budget will enable CBP to add 2,000 more agents at U.S. ports of entry. (And they say we don’t spend enough on border security!)
THE DEPARTMENT OF DEFENSE
- A total of $15B for shipbuilding and conversion of naval vessels, to remain available until obligated until September 30, 2018, provided no funds for construction are spent in a foreign yard.
U.S. Army Corps of Engineers:
- A total of $1.656T (from the Harbor Maintenance Trust Fund) to remain available until expended for the construction of river and harbor, flood and storm damage reduction, shore protection, and restoration. The Secretary of the Army may initiate up to four new construction starts (three for navigation, one for environmental restoration), provided the Secretary sends Congress a report on out-year funding for the new starts.
THE ENVIRONMENTAL PROTECTiON AGENCY
- $20M in clean diesel engine or Diesel Emissions Reduction Act (“DERA”) grants.
These grants can be used by private companies and public transit agencies to purchase new diesel engines or to upgrade existing ones and are funded through a coalition of regional and nonprofit entities. (For more information on the DERA Program, see www.epa.gov/diesel/grantfund.htm.)
THE DEPARTMENT OF THE INTERiOR
- For the Bureau of Ocean Energy Management: $166.8M for leases for oil and gas, other minerals, and energy on the Outer Continental Shelf (“OCS”).
- For the Bureau of Safety and Environmental Enforcement: $122.7M for regulation of activities on the OCS.
SUMMARY OF THE FY14 BUDGET AGREEMENT AND OUTLOOK FOR FY2015
Now that agencies have budgets that last through FY2014, they can begin to plan, issue contracts, and begin to award grants. The Department of Transportation (“DOT”), Department of Homeland Security (“DHS”)/Federal Emergency Management Agency (“FEMA”), and Environmental Protection Agency (“EPA”) all have grant-making authority. The White House will submit its FY2015 budget request to Congress the first week of March 2014. In the meantime, Congress sent the President a clean bill raising the debt limit ceiling until March.
Outlook for Other 2014 Congressional Actions
The House-Senate Conference on the Water Resources Development Act (“WRDA”), which funds port dredging and maintenance, is still underway despite this author’s predictions it would be wrapped up by now. Cong. Bud Shuster, Chairman of the House Transportation and Infrastructure (“T&I”) Committee, admitted (at a recent Bloomberg Government conference) that it’s been “slow going.” The passage of funding for the Army Corps of Engineers, above, may have taken some pressure off this Conference.
On February 11, 2014, the House T&I Committee ordered reported H.R. 4005, the “Coast Guard and Marine Transportation Act of 2014,” with a manager’s amendment. The amendment included new cargo preference requirements. We will address these amendments in detail in a separate advisory. Any urgent maritime problem that needs a legislative fix should be addressed in this major maritime legislation, which Congress usually passes every two years.
Chairman Shuster and the Administration have both begun work on principles for the next surface transportation bill. The current law—Moving Ahead for Progress in the 21st Century Act, commonly referred to as MAP-21—expires this coming September. The main issue for reauthorization is how to fund the Highway Trust Fund. Congress balked last time and is very reluctant to get near an increased gas tax, especially in an election year. In fact, both Chairman Shuster and Chairman Barbara Boxer (of the Senate Environment and Public Works Committee) have written off the gas tax increase as a funding solution for “MAP-22.” Other options include use of repatriated overseas revenues and a user fee based on vehicle miles travelled (or “VMT”). It will be up to the Ways and Means Committee in the House and the Senate Finance Committee to determine how to fund the next round of surface transportation projects.
While the surface transportation bill is largely focused on roads and bridges, there is an increasing focus on a national freight network. The current freight network, which is under review at the DOT, is limited to highways and needs to be expanded to include ports. Even the President in his State of the Union Address identified the need to upgrade our ports. After all, how do goods come into and out of the U.S., except through our ports?
This year is an election year, so it remains to be seen how many difficult issues the 113th Congress will address before the election. Hope is higher for actions on controversial issues, such as taxes and tax reform, during the lame duck session—both post-election and before the new Congress is sworn in. This may provide the window needed to pass a Coast Guard authorization bill, a new surface transportation bill, and even perhaps some type of immigration reform bill.
Finally, the Bipartisan Budget Agreement, with its cap on FY2015 spending, will facilitate Congressional passage of FY2015 appropriation bills. We may see a return to the passage of 12 appropriation bills as we did in FY2014.