MARAD Issues Final Rule on Marine Highway Initiative for Cargo

Final Rule Clarifies Interim Final Rule Which Has Been in Effect Since Nov 2008

The final rule makes certain clarifications to the interim final rule, which has been in effect since November 10, 2008.

Under this program, marine highway corridors will be designated and short sea transportation projects will be identified to (i) expand domestic water transportation services as an alternative means of moving containerized and wheeled freight cargoes; (ii) mitigate the economic, environmental and energy costs of landside congestion; (iii) integrate the marine highway into the transportation planning process; and (iv) research improvements in efficiencies and environmental sustainability.

Marine Highway Program Will be Funded with Grants

In early 2010, the Secretary of Transportation announced $58 million in grants for projects to support the start-up or expansion of Marine Highways services, awarded through the Department’s TIGER grants program. Congress has also set aside an additional $7 million in grants that MARAD will award later in 2010.

Highlights of MARAD’s Responses to Comments

MARAD received 95 comments on its October 2008 interim final rule. Highlights of MARAD’s responses to those comments include:

Waiving HMT for domestic moves. The greatest number of comments (13) identified the Harbor Maintenance Tax as an impediment to the program and recommended waiving the HMT for domestic waterborne shipments (and passengers). MARAD notes that under the HMT, the same cargo is subjected to the tax a second time if it moves from the port of arrival to another U.S. destination by water. The tax is not charged if this second movement of the cargo is by landside modes.

MARAD states that no statutory authority currently exists to implement these recommendations; however, it will forward them to the appropriate Energy Act advisory board.

Mexico and Canada not included. Although MARAD was requested to include Mexico and the Maritime Provinces of Canada in the definition of marine highway, it did not change the definition.

MARAD notes that in May 2006, DOT entered into a tri-lateral agreement with Canada and Mexico to seek opportunities to work together and expand short sea shipping services where practicable, and that this initiative will continue to receive DOT support.

Bulk, break-bulk are not eligible cargo. MARAD did not adopt the suggestion that the types of cargo eligible for the Marine Highway program be expanded to include bulk, break-bulk, and heavy lift cargo because the Energy Independence and Security Act of 2007 (P.L. 110-140) defines short sea transportation as “carriage by a vessel of cargo that is contained in intermodal cargo containers and loaded by crane on the vessel or loaded on the vessel by means of wheeled technology.”

RO/RO includes car floats. In response to suggestions that car floats or rail ferries (vessels equipped with railroad track sections to accommodate wheeled rail cars) be added to the Marine Highway program, MARAD expanded the definition of Roll-on/Roll-off vessel in the final rule to include car floats.

Highlights of the Final Rule

The following are highlights of the final rule, which addresses Marine Highway Corridors (and continues to solicit recommendations for Marine Highway Corridor recommendations), and establishes eligibility requirements, criteria and information necessary to apply for designation as a Marine Highway Project by the Secretary of Transportation.

Incentives for use of marine highway services. MARAD will develop proposed short-term incentives to encourage the use, initiation, or expansion of Marine Highway services in consultation with shippers and other participants in transportation logistics, and government entities, as appropriate.

Definition of Maritime Highway Corridor. The final rule defines a Marine Highway Corridor as a water transportation route that serves as an extension of the surface transportation system that can help mitigate congestion-related impacts along a specified land transportation route. According to the final rule, routes that cannot relieve landside congestion (i.e.; those to/from islands) are not eligible for designation under this program.

Transportation Secretary to designate specific corridors, projects. In its final rule, MARAD provides information regarding the designation of specific routes as Marine Highway Corridors (including Connectors and Crossings). Corridors will be designated by the Secretary of Transportation. The goal of this designation process is to accelerate the development of multi-State and multi-jurisdictional Marine Highway Corridors to relieve landside congestion.

Although MARAD has not yet identified the Marine Highway Initiative’s Marine Highway Corridors, it expects to do so in the near future.

The Transportation Secretary will also designate Marine Highway Projects (within the Marine Highway Corridors) that would reduce external costs and provide the greatest benefit to the public (e.g., congestion relief, reduced emissions, improved safety, etc.).

MARAD Issues Separate Notice Soliciting Project Applications by June 11

MARAD has published a separate notice soliciting applications for Marine Highway projects. The application period begins April 15, 2010 and runs through June 11, 2010.

¹While the Marine Highway Initiative is also applicable to passengers, this ITT summary focuses on its cargo ramifications.

(See ITT’s Online Archives or 04/08/10 news, (Ref: 10040805), for previous BP summary of the Marine Highway Initiative for cargo.)

MARAD contact -- Michael Gordon (202) 366-5468

MARAD final rule (D/N MARAD-2010-0035, FR Pub 04/09/10) available at http://edocket.access.gpo.gov/2010/pdf/2010-7899.pdf.

MARAD stay of interim final rule until 01/05/09 (D/N MARAD-2008-0096, FR Pub 12/30/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-30992.pdf

MARAD interim final rule (D/N Marad-2008-0096, FR Pub 10/09/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-23834.pdf

MARAD notice soliciting applications for projects (FR Pub 04/15/10) available at http://edocket.access.gpo.gov/2010/pdf/2010-8619.pdf