TESTIMONY OF KURT J. NAGLE, PRESIDENT
AMERICAN ASSOCIATION OF PORT AUTHORITIES
BEFORE THE SENATE ENVIRONMENT AND PUBLIC WORKS
SUBCOMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JUNE 23, 1998

Introduction

Good morning. I am Kurt Nagle, President of the American Association of Port Authorities (AAPA). Founded in 1912, AAPA represents virtually every U.S. public port agency, as well as the major port agencies in Canada, Latin America and the Caribbean. Our Association members are public entities mandated by law to serve public purposes primarily the facilitation of waterborne commerce and the generation of local and regional economic growth. My testimony today reflects the views of the AAPA's United States delegation.

Mr. Chairman, AAPA commends you for convening this hearing on the Water Resources Development Act of 1998. We are very grateful to this Committee for its hard work that led to enactment of the Water Resources Development Act of 1996. Passage of WRDA '96 was a great relief for public ports in gaining project authorizations and significant policy improvements after the Senate was unable to join the House in passing a WRDA bill in 1994. Again, we appreciate the strong leadership this Subcommittee has shown in supporting sound water resources policy and investment.

If I leave one message with you today, it is that ports, and all who benefit from the services we provide, depend on regular biennial passage of the Water Resources Development Act, as well as continued adequate annual appropriations levels. Navigation projects are our nation's highways to the international marketplace. Since WRDA '86, the Federal investment in improvements to our nation's navigation infrastructure is matched by a local share that varies depending on the depth of the project.There is also a very substantial additional local investment in landside terminal facilities. These investments generate significant economic returns at the local, regional and national levels. All of the benefits that justify inclusion of navigation projects in the water resources bill are national economic development benefits.

Our water highways are national assets that serve a broad range of economic and strategic interests˙. Ports' activities link every community in our nation to the world marketplace enabling us to create export opportunities and to deliver imported goods more inexpensively to consumers across the nation. The deep-draft commercial ports of the U.S. handle over 95 percent of the volume and 75 percent of the value of cargo moving in and out of the Nation. Port activities create substantial economic and trade benefits for the nation, as well as for the local port community and regional economies. The following statistics highlight how critical ports are in facilitating national economic activity: **1

**1Source: U.S. Maritime Administration.

U.S. Customs duty revenues totaling approximately $15.6 billion were paid into the general treasury in fiscal year 1996 on cargo moved through ports.

Our nation's commercial deep draft ports annually handle in excess of $600 billion in international trade.

Foreign trade is an increasingly important part of the U.S. economy, currently accounting for over 30 percent of our Gross Domestic Product. U.S. exports and imports are projected to increase in value from $454 billion in 1990 to $1.6 trillion in 2010. The volume of cargo is projected to increase from 875 million to 1.5 billion metric tons in 2010.

The overall national economic impact of port activities in 1994 generated:

-- 16 million jobs;

-- $783.3 billion to the Gross Domestic Product; and

-- $210.1 billion in taxes at all levels of government.

As I have indicated, these national economic benefits are generated as the result of the local investment by ports in modern marine terminal facilities and related infrastructure in combination with federal investments in the navigation channels˙. In 1996, the cumulative local investment in port facilities was $1.3 billion; a similar level of non-federal investment is expected each year from 1997 to 20012**

**2United States Port Development Expenditure Report, U.S. Maritime Administration, October 1997.

We should also not lose sight of the fact that the ports continue to play a very critical role in our nation's defense. That role has never been more apparent than during the loadouts of military cargo and personnel during Operation Desert Shield/Desert Storm. The huge buildup of U.S. forces in and around the Persian Gulf would have been impossible without the modern facilities and strong support provided by America's ports. According to the U.S. Military Traffic Management Command (MTMC), between August of 1990 and March of 1991, MTMC loaded 312 vessels and more than 4.2 million measurement tons of cargo in 18 U.S. ports for delivery to the Persian Gulf in support of Desert Shield/Desert Storm. More than 50 ports have agreements with the Federal Government to provide ready access for national emergency purposes.

In my testimony today, in addition to stressing the importance of passing a water resources bill this year, I want to stress four points:

-- The need to continue to review and improve the partnership between the Corps of Engineers and the ports forged in WRDA 86;

-- The port industry's alarm at the President's FY 99 budget request as it relates to investment in our nation's deep-draft harbors;

--The need to ensure continued funding for maintenance dredging in light of the Supreme Court decision that the Harbor Maintenance Tax is unconstitutional as it is applied to exports; and,

-- The need to continue to review and improve dredged material management policies and practices to avoid costly delays in dredging projects, ensure protection of the environment, and gain additional benefits to the nation.

Project Partnership

There has been a federal/port partnership in the development of our nation's port system virtually since our country's birth. U.S. public ports are varied, but generally act as semi-autonomous authorities. Local, state-wide or regional ports are responsible for investment, development and operation of marine terminal facilities. Ports are also responsible for dredging of berthing areas and access channels connecting the port facilities to federal navigation channels. While it had historically funded 100% of navigation channel improvement and maintenance, since 1986 the Federal role of the partnership has been limited to cost-sharing capital improvements to federal navigation channels.

Ports have made substantial investments of local funds in landside port facilities which will be jeopardized if the federal government fails to live up to its part of the federal/port partnership. Local public ports have spent more than $16.8 billion since World War II to develop landside facilities. Local ports make commitments to our private sector customers to provide state-of-the-art facilities and equipment to serve the demand of the marketplace. Public port and private investment in marine terminal facilities will be wasted if access to ports via navigation channels is constrained.

The task of meeting the present and expected future demands on our navigation system has never been so complex, and never as much in the public spotlight as it is today. I have outlined below some of the key changes which, if implemented, will help us to meet those demands.

Need to Authorize Navigation Projects. The enactment of the Water Resources Development Act and federal investment in navigation is of critical importance to the nation's economy. There are fewer navigation projects today, but they are equally important, if not more critical, in today's rapidly changing world for ports big and small˙. If projects are not authorized, the national benefits, as well as regional economic diversification and job creation opportunities, will be delayed.

Important projects are finishing the planning process and will require authorization for construction, including but not limited to improvements at ports in Baltimore Harbor, MD; Brunswick and Savannah, GA; Jacksonville and Tampa, FL; Oakland, CA; and, the Columbia River, OR and WA. Other projects, including those in New York/New Jersey will require modifications. This list is not intended to be exclusive, but only illustrative of the importance of a water resources bill to a broad cross-section of ports across the country.

Need to Accommodate Larger Vessels. A recent report prepared by the U.S. Maritime Administration documents the status and trends of general cargo ship design and its impact on transportation infrastructure**3. The report finds that the rate of growth in containerized cargo in the U.S. is at 6% per year, and predicts that by 2010 nearly 90% of general cargo will be shipped in containers and that nearly 33% of those containers will be transported on vessels carrying more than 4,000 twenty-foot equivalent container units (TEUs). Such vessels, commonly referred to as "megaships" are a key element in the strategies of the world's leading steamship carriers as they seek to optimize operations through global alliances. These large vessels obviously pose major challenges to ports because of their size and the potentially large number of containers they could discharge or load during any one port call. Key requirements obviously will include suitable terminal facilities, as well as deeper channels, berths, container yards, and rail and highway access.

**3The Impacts of Changes in Ship Design on Transportation Infrastructure and Operations, U˙.S˙. Maritime Administration, February 1998.

Prior to 1986, a channel depth of 45 feet would accommodate almost all of the container ships in the world's fleets. The Clarkson Containership Register indicates that most of the container ships in 1986 had maximum capacities of less than 3,000 TEUs of containerized cargo with average drafts of about 38 feet. There were only a few larger container vessels with capacities over 3,000 TEUs which were built to the maximum size that could be handled by the Panama Canal. Most of these panamax vessels had drafts of 41.6 feet or greater. Vessels with these drafts cannot use a 45 foot deep channel when fully loaded.

In the years since 1986, the containership fleet has undergone a major evolution. The world's major ocean carriers have greatly increased the size of the ships and the number of large ships they use. In 1988, a new class of post-panamax ships was introduced into the world's container shipping fleet. Today there are about 60 of these large ships with an equal number more on order. The post-panamax ships have a capacity of 6,000 or more TEUs with even larger ships being designed and built. These vessels are generally wider than can be handled in the Panama Canal They also have deeper drafts. The average draft of the current post-panamax ships is 42.9 feet. The largest ships have drafts of about 45.5 feet, which require channels that are at least 50 feet deep. An analysis contained in the Maritime Administration report cited earlier suggests naval architecture constraints on ships as large as 15,000 TEUs would not result in drafts much greater than 46 feet. Thus, with allowances for under-keel clearance, vertical ship movement (squat), and uncertainty in predictions of future ship design, AAPA believes the norm for general cargo navigation channels will be as great as 53 feet.

In WRDA '86, Congress created a cost-sharing formula for navigation improvement projects based on the needs of the general cargo fleet at that time. Specifically, a cost-sharing transition was set at 45 feet, above which (i.e., shallower) local sponsors would pay a 35 percent (25% plus 10% over 30 years) cost-share and below which (i.e., deeper) would be cost shared at 60 percent (50% plus 10% over 30 years) local. According to the legislative history for WRDA '86, the rationale for setting 45 feet as the transition to significantly greater local participation was that,

The bill, as reported, applies this experience by reconciling national investment policy toward future port development with prevailing international practice. This is accomplished through the establishment of 45 feet as the maximum standard depth for ports not designed to accommodate deep draft vessels, and the declaration of channel depths in excess of 45 feet as "deep draft ports." A graduated scale for the local contribution to the cost of project construction depending upon depth culminates in a 50:50 Federal/local cost-sharing formula for deep-draft navigation projects.

AAPA believes the Congress should revise the cost-sharing formula to adjust the upper cost-sharing threshold to reflect the changes that have occurred in the general cargo fleet.

Cost Sharing for Maintenance Dredging. WRDA '86 requires that local sponsors cost-share the increased cost of maintenance dredging for the increment over 45 feet. In practice, calculating the increased cost is highly uncertain. As described below, when passed in 1986 the Harbor Maintenance Trust Fund (HMTF) paid only 40% of maintenance dredging costs; since 1990 the HMTF has paid 100% of such costs.

AAPA recommends that Congress remove the requirement to cost-share the cost of maintenance dredging in projects greater than 45 feet because: 1) the increased cost is difficult to calculate; 2) it generates very little money; and 3) the HMF currently covers 100% of maintenance dredging costs.

Port/Corps Partnership. Since the enactment of WRDA '86, the ports share the cost of construction of navigation projects and have embarked on a "partnership" with the Corps in development of the federal navigation system˙. Although some significant progress has been made on that partnership, there remain impediments to efficient execution of project planning, design and construction˙.

While WRDA '86 allows local sponsors to receive a credit for in-kind services up to 50% of their share of feasibility study costs, there is no such provision for crediting in-kind services during preliminary engineering and design (PED) or during construction. However, under current practice, and especially with more feasibility studies being led by a local sponsor under Section 203 of WRDA '86, ports have certain expertise that can help projects move forward more efficiently. This efficiency can only be realized if the port can receive credit for such services against the contribution to project construction. Thus, AAPA recommends that Congress amend the cost-sharing provisions to allow local sponsors to credit in-kind PED and construction services against their share of construction costs.

Cost Recovery. Another issue that deserves the attention of the Committee is the limits under Section 208 of WRDA '86 that are placed on the ability of local sponsors to recover their non-federal share of the project costs. This provision so narrowly defines the potential eligible channel users that may be subject to cost recovery so as to effectively make it impossible for local sponsors to use the authority. Ports need a broad-based capacity to collect cost recovery for the non-federal share. AAPA recommends that Congress revise Section 208 to provide ports greater flexibility in recovering the cost of navigation improvement projects.

Fiscal Year 1999 Appropriations

Although today the Committee is focusing on water resource project authorizations, it is equally important to ensure that adequate appropriations are provided for improvement and maintenance of the nation's water transportation infrastructure. Ports and their customers in the carrier, shipper, labor and commercial communities must be able to rely on the continued involvement of the Federal government in building and maintaining a safe and efficient navigation system. AAPA and its member ports around the country are deeply concerned that the President's proposed budget for fiscal year 1999 did not provide for sufficient investment in our commercial navigation system, and that funds are being diverted from navigation projects to pay for other Administration priorities, including new programs. We are pleased that the Senate and the House have increased the funding levels from the Administration proposal, but it is still not enough.

The Administration budget requested FY 99 appropriations of $3.215 billion for the Corps of Engineers Civil Works Program. This level represents a 21% cut from FY 98 appropriated levels, and only 70% of what is needed to maintain project schedules and begin additional new projects. While we are also concerned about the level of proposed funding for operation and maintenance and for conducting studies, we are most concerned about the proposed Corps budget for the Construction, General account, which received the largest cuts. The Construction, General account, which provides the funding for investment in our nation's water resources, was subject to a 47 percent cut compared to fiscal 1998 appropriated levels ($784 million v. $1.47 billion). This level represents only 43 percent of the necessary funding requirement, which would be $1.82 billion, to maintain project schedules and begin additional new construction. Only 2 of 50 Congressionally added projects in the FY 98 appropriation were picked up in the Administration's FY 99 budget. The proposal seeks eight new starts, as opposed to the 24 new starts recommended by the Corps, totaling $16.1 million, none of which are navigation projects.

In terms of deep-draft harbors, which provide the gateways for more than 95 percent of our nation's growing import and export trade, this budget seeks only $40 million in FY 99. This amount is less than half of what the Administration sought for deep-draft harbor construction in FY 98 ($108 million); it's less than one-third of what Congress appropriated in FY 98 ($132 million); and, it's only one-tenth of what is needed to fund ongoing and authorized new projects ($328 million).

On June 4, the Senate Appropriations Committee marked up the Corps of Engineers FY 99 budget. The total funding level of $3.8 billion is disappointing, considering the Senate Budget resolution specifically indicated that Corps programs should be level-funded at last year's levels ($4.1 billion). The Senate levels are 17% greater than the President's FY 99 request, 17% less than the FY 99 requirement, and 7% less than FY 98 appropriated levels.

Under the Senate bill, deep-draft harbor projects would receive $180.3 million compared to the $39 million requested by the President and the $132 million appropriated in FY 98˙. Unfortunately, this level is still approximately half of what is needed in FY 99 to keep projects on schedule and to start necessary new projects.

Without additional funding, next year a number of ongoing projects will not be able to maintain contractual obligations. This will force work to come to a halt and increase project costs by having contractors demobilize their equipment. In recent testimony at a Senate Appropriations Subcommittee hearing, the Corps of Engineers estimated that the Administration's proposed cuts in the Construction, General account will result in an additional $400 million in increased costs over the life of the projects and $3.6 billion in lost economic benefits. Several navigation projects that have substantial environmental features, including the creation of thousands of acres of wildlife habitat using dredged material, would not proceed under the proposed funding levels.

Since the enactment of WRDA '86, our experience indicates that we have made significant progress in advancing real partnerships between the Corps and local sponsors on navigation projects. Existing mechanisms in WRDA '86 provided by Sections 203, 204, and 205 were intended to expedite federal navigation projects by permitting the sponsor to formulate and construct the project and subsequently seek reimbursement from Congress. While these provisions were not widely used, recent progress in the dialogue between the Corps and the port community has clarified a number of concerns related to the roles and responsibilities of the Corps and the local sponsor and, so, the number of projects using these authorities is growing. Use of these authorities has saved both money and time. Unfortunately, the Office of Management and Budget has announced several policy changes that raise great concern as to whether there is a commitment to seeking reimbursement for work undertaken by the local sponsor. These policy changes include prohibitions against multi-year contracting for all FY 98 new starts and against Section 11 funding agreements. There is also uncertainty about whether OMB will permit local sponsors to provide more of their cost share earlier in the project to make up for any Federal funding shortfall. These policies will have a chilling effect on the further use of innovative partnership tools like Sections 11, 203, 204 and 205 which were created by Congress to facilitate the program.

We understand the Congress is faced with difficult budget decisions, but this country can not afford to make the mistake of shortchanging our nation's economic competitiveness and opportunity by failing to provide for continued improvement and maintenance of our federal navigation system. Ports and navigation channels are critical links in the intermodal transportation chain. Failure to continue to invest in all aspects of this transportation system will have serious long-term economic consequences. Clearly, the proposed Administration budget for federal involvement in the nation's water transportation system is seriously flawed and must be corrected by this Congress. We ask this Committee's support in making that happen.

Harbor Maintenance Trust Fund

Of all the issues facing most public port authorities, few are more critical than funding for Federal navigation channels, whether for maintenance of existing channel depths or funding new construction dredging projects. That is why the follow-up to the Supreme Court decision on the Harbor Maintenance Tax (HMT) and the passage of the Water Resources Development Act (WRDA) of 1998 are so important to U.S. ports.

Although the Federal Government traditionally funded both maintenance dredging and improvements to Federal navigation channels from General Treasury revenues, in 1986 Congress created the Harbor Maintenance Trust Fund to pay for a portion of channel maintenance dredging. Congress instituted the HMT and cost-sharing reforms after a lengthy impasse over water resources development policy. The HMT was enacted in an effort to recover the cost of maintenance dredging from navigation channel users.

The Supreme Court decision has set the stage for a new solution. AAPA members believe that, as was the case before 1986, maintenance dredging should be funded from general revenues There is no user-fee system that can equitably raise revenues from the users of navigation channels in reasonable relation to the distribution of benefits to the nation.

Many options were considered in developing the ad valorem HMT funding mechanism for maintenance dredging. Unfortunately, the only option to survive the debates from 1981 to 1986, the HMT, was found unconstitutional by the Supreme Court. It does not appear that there are significant new or old options that would work better today.

The assessment of a tonnage fee on cargo or vessels would severely affect bulk commodities, such as grain or coal, which compete in international markets where pennies a ton can make or break a sale. These shipments, which are amongst our Nation's leading export products, now use the most cost-effective route typically moving by barges down rivers to coastal harbors. Those harbors, in turn, tend to require significant maintenance dredging because of the river sediment˙. In general, dredging demands related to the shipping of these types of export products are greater than those related to import products.

Another alternative considered would have required local ports to raise their own funding for maintenance dredging. Such a change could pit U.S. ports against each other, the result of which could impact commerce and national security. Like a tonnage tax, local funding, if passed on to port users, could increase transportation costs, pricing bulk commodities out of international markets either through increased charges at the currently utilized port(s) or by increasing inland transportation costs due to diversion from the inland waterway system.

The concept also alters the fundamental Federal role in maintaining the national navigation system. As noted earlier, relying in good faith on this long-standing partnership, local ports have invested, and continue to invest, significant amounts to contruct and maintain landside facilities. These local investments have created the system of ports the Nation depends on to meet the needs of its national defense and growing international trade.

Recognizing that these options could be injurious to the nation's trading position, and to individual ports, Congress in 1986 chose to enact a uniform ad valorem tax on cargo in an attempt not to affect the competitive position of any port. Congress intended to minimize the potential negative effect on export competitiveness, and minimize the diversion problem by setting the fee fairly low, at a level to collect 40 percent of the dredging costs. However, in the 1990 budget agreement, Congress tripled the fee, and a $1.2 billion surplus has accumulated in the trust fund. Prior to the Supreme Court decision, the surplus had been expected to reach nearly $2 billion by the end of fiscal 1999.

The HMT ultimately added hundreds of dollars to the cost of shipping a single container of high value cargo, and has caused traffic to be diverted to non-U.S. ports to avoid payment.

Other options for raising revenue from direct users of the navigation channels are not likely to produce sufficient funds. In addition, direct navigation users are already significantly taxed. A 1993 General Accounting Office study found that 12 Federal agencies levy 117 assessments on waterborne trade. In 1996, receipts from these fees were 154 percent of the level raised only ten years earlier, making our exports more expensive and less competitive in international markets.

Customs revenues in FY 1996 totaled $22.3 billion, of which roughly 70 percent (or $15.6 billion) is attributable to cargo moving through seaports. These funds, currently collected from users of navigation channels, are more than 31 times greater than the cost of maintenance dredging (approximately $500 million). Expected increases in customs collections due to increased trade would likely be enough to pay for maintenance dredging.

The benefits of safe and efficient trade provided by our nation's system of navigation channels are spread throughout the country. In addition, the benefits to the nation resulting from national defense, commercial fishing, and recreational users are immeasurable; assessing fees on these users, however, was not part of the 1986 HMT funding mechanism. Both economically and strategically, there are no greater assets than our ports and Federal navigation channels our water connections to the global marketplace and means of national defense˙. The costs for dredging should be spread across the whole nation because all our citizens benefit.

AAPA members look forward to working with the Administration and Congress to come up with equitable solutions to the funding challenges which we face.

Dredged Material Management

In 1993, the maritime, port, labor, and business communities called for the adoption of a National Dredging Policy to facilitate the timely and cost-effective dredging of our nation's navigation channels. Dredging the nation's navigation channels to keep them open for trade is too often frustrated by inconsistent, complex and duplicative laws and regulations. In the time that we have been working with the Congress and the Administration to establish a National Dredging Policy, great strides have been made to clarify, streamline and simplify the navigation dredging process.

Probably the most significant accomplishment in advancing the goals of a National Dredging Policy occurred with the passage of provisions in the WRDA '96 to provide for federal participation in the establishment and operation of confined disposal facilities. AAPA and the port community recognize the hard work provided by the Subcommittee in moving a WRDA bill last Congress, and especially the provision on cost sharing for confined disposal. AAPA supported this provision because previous policy tended to provide an economic incentive for open water disposal over confined or upland disposal options. While AAPA believes that open water disposal must continue to be a viable option, this change allows the Corps to consider all alternatives on an equal basis. However, AAPA is concerned that much work still needs to be done to improve the dredging process. Impediments still exist with the regulatory review process, contaminated sediment, and beneficial uses of dredged material.

Regulatory Review Process. In December 1994, the Administration released the Interagency Report on Improving the Dredging Process. The agencies involved in preparing that report continue to work through the National Dredging Team to improve coordination and cooperation in the planning and regulation of dredging projects. AAPA fully supports this effort and is working closely with the National Dredging Team to ensure that port industry concerns are provided to the agencies for their consideration.

AAPA is very concerned about regulations recently issued by the National Marine Fisheries Service (NMFS), under 1996 amendments to the Magnuson-Stevens Fisheries Act, regarding the protection of essential fish habitat (EFH). Federal activities, including issuing permits, that may impact essential fish habitat must be reviewed by NMFS. Under the regulations, it is very likely that broad expanses of the aquatic environment will be designated EFH. (The draft EFH for salmon would designate the entire North Pacific coast of the U.S. from the shore out 46 miles.) Any proposed activity that may impact EFH would be required to prepare an EFH assessment. We are very concerned that this new requirement to prepare EFH assessments will increase project costs and cause additional delays. We have urged the NMFS to work with the Corps and the port industry to develop streamlined review procedures for activities already regulated under the Clean Water Act or the Marine Protection, Research and Sanctuaries Act such as dredging projects with disposal at designated disposal sites.

One remaining legislative goal of the proposed National Dredging Policy is to amend the Clean Water Act (CWA) and the Marine Protection, Research and Sanctuaries Act to provide for consistent and expedited review of all dredging and disposal alternatives, separate from the 404 wetlands provisions of the CWA, and for consideration of relative costs, risks and benefits of each alternative. Additional changes should be considered to emphasize prevention of pollution that contaminates sediments, and to require full consideration of the use and value of the waters and channels to navigation in establishing appropriate criteria and standards. AAPA appreciates the efforts by the Subcommittee to address some of these issues in the last Congress, and looks forward to working with this committee as it considers changes to the CWA and other environmental laws.

Contaminated Sediments and Beneficial Uses. Contaminated sediments are a problem that requires strong partnerships if we are to effectively meet the needs of maintaining an efficient navigation system and a healthy environment˙. Recently, the pendulum has moved toward greater regulation of dredging projects. In 1991, the U˙.S˙. Environmental Protection Agency (EPA) tightened its standards for the ocean disposal of dredged material; the result was a significantly greater amount of material being found unsuitable for disposal in the ocean. Last summer, EPA closed the ocean disposal site outside of New York Harbor for the disposal of most dredged material from the harbor˙. In addition, states are more aggressively using their CWA water quality certification and Coastal Zone Management consistency authorities to make extensive demands for only marginal or speculative environmental benefits. We agree it is important to ensure the protection of the state prerogative, but we must ensure that the limited federal and local resources available for dredging projects achieve the greatest benefits and minimize real environmental risk.

As part of the plan to close the NY Harbor ocean disposal site, the Administration announced its intention to establish a process to review the ocean dumping testing requirements in a manner that includes all stakeholders. AAPA and its member ports have cooperated with the contractor hired by the EPA to scope out this process. While AAPA believes it is necessary to periodically review the adequacy of dredged material regulation, we do not believe that this review should be an opportunity to further restrict ocean disposal. AAPA is committed to the development of a dredged material regulatory framework that equally considers all disposal alternatives using decision tools that consider risks, benefits and costs of each alternative. The public port industry will participate in whatever process the EPA arrives at, with all stakeholders, to ensure that the testing program is fair, efficient, and scientifically sound.

However, we believe the focus of the federal and state governments should be first and foremost on pollution prevention, the control of polluted runoff into our nation's waterways, and the cleanup of historically contaminated sediments. Contaminants in polluted runoff and historically contaminated areas are often transported into our ports and harbors. AAPA supports the efforts of this Subcommittee in trying to focus attention in the Clean Water Act on the control of nonpoint polluted runoff and hotspots. We simply must control these sources of pollution in order to ever have hope to be able to clean up sediments in navigation channels.

We recognize that the subcommittee has sought to address the problem of historically contaminated sediment by providing the Corps with authority to dredge outside a navigation channel to remove and remediate contaminated sediment that contributes to contamination of the navigation project. However, this provision has not been used in cleaning up historically contaminated areas. AAPA is working with its member ports and the Corps and other federal agencies to explore the whole range of authorities and regulations that bear on cleaning up historically contaminated sediment. It appears a combination of administrative and legislative changes may be needed to achieve the goal of cleaning up contaminated sediment sites in an economical and equitable way. Under the right circumstances, ports have been partners in the cleanup of contaminated sediment and brownfield sites while spurring economic development. Such formulas for win-win situations need to be found and replicated in the future. AAPA supports the work of this Subcommittee to move Superfund reform legislation that provides greater flexibility in revitalizing brownfield sites.

A recent National Research Council report entitled "Contaminated Sediments in Ports and Waterways, Cleanup Strategies and Technologies" may provide a road map for such administrative and legislative changes. For example, the report recommends the increased use of risk-based decision making and full consideration of all sediment contamination remediation options including containment. In addition, the report suggests that cleanup dredging projects may not be occurring because of concerns that future liability for contaminants in sediment may transfer to the port or the Corps if contaminated sediment from a cleanup project is placed in a confined disposal facility constructed for navigational dredged material. AAPA encourages the Subcommittee to consider holding a hearing on the findings of the NRC report to determine if there are any regulatory or institutional barriers to the efficient identification and management of contaminated sediments.

The WRDA '96 contained a provision, Section 217, that allows for private interests to construct disposal facilities for dredged material and to charge the Corps a tipping fee for placement of disposal in such facilities. AAPA believes that this provision could provide the private sector an incentive to develop innovative disposal strategies, such as the creation of wetlands using dredged material for mitigation banks. Another innovative strategy, which may be realized soon because of research conducted by the Corps, is the processing of dredged material into useful products such as manufactured soil, road-bed aggregate, or even bricks. If a market were developed for these products, the private sector could build processing facilities and take dredged material from the Corps under Section 217. AAPA is reviewing this approach with the Corps of Engineers to see if there are any regulatory or institutional barriers inhibiting the private sector from acting in this area. AAPA would like to work with the Administration and the Congress to refine any policies that may be inhibiting economically viable beneficial uses of dredged material. We must continue development of more efficient and effective approaches to provide for our mutual goals of economic development and environmental protection.

Conclusion

Thank you for the opportunity to testify today. To ensure our nation's continued international competitiveness, it is now more important than ever to continue to invest in an improved and efficient water transportation system. We are extremely grateful to the Subcommittee for the important work it did on WRDA '86 and the subsequent biennial authorization bills. Again, I cannot emphasize strongly enough AAPA's support for action this year on a water resources bill and a continued regular authorization cycle. We look forward to working closely with the Committee as you draft and enact the Water Resources Development Act of 1998.