MTSNAC MEETING SUMMARY

MTSNAC MEETING SUMMARY

MAY 3-4, 2004

RADISSON HOTEL AND SUITES

CHICAGO, IL

ATTENDEES

Organization Name

American Association of Port Authorities Jean Godwin

American Great Lakes Ports Association Steve Pfeiffer

American Maritime Congress John Gaughan

American Trucking Associations Bill Wanamaker

Association of Metropolitan Planning Organization Mark Griffin

Boat Owners Assoc. of the U.S. Bob Nelson

Coastwise Coalition Paul Bea

Gulf of Mexico States Partnership, Inc. Dave McDonald

I-95 Corridor Coalition John Baniak

Intermodal Association of North America Tom Malloy

International Longshore and Warehouse Union Peter Peyton

International Longshoreman's Association John Baker

Lake Carriers' Association Matt Baker

Maritime Information Services of North America Liz Wainwright

Maritime Security Council N/A

National Association of Counties Will Smith

National Association of Waterfront Employers Pat Hall

National Governor's Association N/A

National Industrial Transportation League Looman Stingo

National Waterways Conference Worth Hager

Pacific Maritime Association Joe Miniace

Propeller Club of the United States Bill Sheffield

Shipbuilders Council of America Bruce Croushore

Society of Naval Architects and Marine Engineers John Daidola

The Ocean Conservancy Roger Rufe

The Waterfront Coalition Rick Gabrielson

U.S. Chamber of Commerce Ed Mortimer

U.S. Exporters Competitive Maritime Council Jim Cook

United States Maritime Alliance, Ltd. Carol Lambos

World Shipping Council Chris Koch

MONDAY, MAY 3, 2004

Raymond Barberesi, Executive Director of the Council, welcomed everyone to the meeting on behalf of the Maritime Administration. Mr. Barberesi noted that there were ten new members at this meeting and asked that all members introduce themselves. The ten new members were Mr. John Baniak, representing the I-95 Corridor Coalition, Mr. John Daidola for the Society of Naval Architects and Marine Engineers (SNAME), Mr. David McDonald, representing the Gulf of Mexico States Partnership, Inc. (GOMAS), Mr. Matt Baker for the Lake Carriers' Association, Mr. Paul Bea, representing the Coastwise Coalition, Mr. Rick Gabrielson, for the Waterfront Coalition, Mr. Will Smith for the National Association of Counties (NACO), Ms. Elizabeth Wainwright for the Maritime Information Services of North America (MISNA), and Governor Bill Sheffield for the Propeller Club of the United States. After the self-introduction, Mr. Barberesi turned the floor over to Joe Miniace who was the acting Chair during John Gaughan's absence. Mr. Miniace thanked John Gaughan for his service in Iraq on behalf of the United States. John Gaughan then announced that there would be a slight change to the agenda due to the fact that Mr. John Jamian, Deputy Maritime Administrator, had not yet arrived to deliver the Sponsor's remarks. He also thanked the sponsors for this evening’s reception: American Association of Port Authorities, American Maritime Congress, International Longshoreman's Association, Target Stores, Inc., United States Maritime Alliance, and the World Shipping Council.

Mr. Gaughan thanked all the members for the great work they had done to date, but reminded the Council that there was still much to do. He added that it was his decision to delay this meeting from the original April date to May because he was waiting for the outcome of deliberations on SEA-21 at DOT, but nothing yet has been announced. He hoped that John Jamian could provide the Council with some insights later today. Mr. Gaughan gave the Council a roadmap for the next two days: explore MTS funding sources and receive MTS regional reports. He added that this would be an opportunity for the Council to be ready when the Administration presents its MTS/SEA-21 proposals. Mr. Gaughan had collected several articles related to congestion and Short Sea Shipping. He also recognized the ILA's willingness to establish stevedoring services at a rate different from their international cargo agreements. This is a significant step in helping Short Sea Shipping get off the ground. Bill Wanamaker added that he had recently addressed the issue of Short Sea Shipping at the Journal of Commerce Short Sea Shipping Conference in Hilton Head, S.C. and said that raiding the Highway Trust Fund was not a funding option. John Gaughan said that never before has the general press devoted so much space to maritime issues, other than to report catastrophes. He added that SEA-21 was not the only initiative or issue out there and that the Council needed to learn about others as well.

Mr. Gaughan explained that he would like to have a discussion later with the leaders of existing Council teams about their teams' relevance and that he planned to make team assignments for all members. He added that the Council's charter calls for at least two meetings per year, so the next meeting will probably be in October, unless the Administration announces its SEA-21 proposal prior to that, in which case the Council would meet prior to October.

Mr. Gaughan then asked if there were any opening comments or statements from the members. Will Smith said that funding for small waterways infrastructure was an important issue to NACO. He added that NACO's transportation committee was also addressing security issues. Worth Hager announced that the University of New Orleans had just recently produced a new study on European inland waterway funding. John Gaughan announced that a presentation on possible funding issues would be made later in the day by SAIC. Jean Godwin pointed out that as the Council moves forward on SEA-21 and Short Sea Shipping, it should not lose sight of other important issues, such as TEA-21 and security enhancements. John Gaughan then asked for the approval of the draft minutes from the September 2003 meeting. A move to approve the draft minutes was made and seconded. The draft minutes were approved without any discussion.

Raymond Barberesi presented the draft minutes from the August 27, 2003 Security Team meeting to the Council for approval. A motion to approve the draft minutes was made and seconded. The draft minutes were then approved unanimously by the Council. Raymond Barberesi then proceeded to address the following action items from the last meeting:

1. ICMTS MOU Status - At the last ICMTS meeting on Sept. 15, 2003, a revised MOU was circulated among the members for review and comment. MARAD is currently reviewing those comments for further action.

2. SEA-21 Report Status - The Council's SEA-21 report was delivered to

The Secretary and his response have been very positive.

3. ICMTS Needs Assessment Report - The TRB Marine Board Needs

Assessment Report has been completed and Mortimer Downey of PB Consult, Inc. will brief the Council on the report's finds later this afternoon.

4. SAFETEA Update - There will be an update later this afternoon.

Jim Cook asked if the chronological list of Council resolutions was available for distribution. Raymond Barberesi responded that the list was still being compiled and should be available shortly. John Gaughan asked Jean Godwin if she would brief the Council on the U.S. Commission on Oceans Policy Report tomorrow and she agreed. In the absence of John Jamian the Chair then requested that the MTS Regional Reports begin.

MTS Regional Reports

Doris Bautch, Director of MARAD's Great Lakes Region, addressed the group on the Heartland Intermodal Partnership (HIP), which was developed in partnership with the Great Lakes and the Central MARAD Regions. The vision of HIP is to expedite safe and secure freight movements, reduce congestion and advocate increased use of the Heartland's intermodal and water resources as strategies for coping with demands on the region's transportation system. The region encompasses 24 states, including private industries, port authorities, MPOs, state DOTs, water, rail, and truck interests; and Federal agencies. The group has had two meetings, one in St. Louis and one in New Orleans. The next meeting is scheduled for Chicago on June 17-18, 2004. Ms. Bautch added that a new ferry service between Rochester, NY and Toronto, Canada, would begin service later this month, using a new vessel, the Spirit of Ontario. John Gaughan asked if the Spirit of Ontario would carry passengers only, vehicles only, or a combination. Ms. Bautch replied that it would carry both. Rick Gabrielson inquired whether there were any shippers in the HIP membership. Ms. Bautch said that there not any at this time, but the group certainly welcomed them. Mr. Gabrielson then asked if the group's focus was on bulk cargo or all types. The reply was both. Mr. Gabrielson then asked if there had been discussions with the beneficial cargo owners and was told that such discussions were ongoing. John Gaughan asked about the composition of the executive committee. Ms. Bautch replied that there were representatives from all 24 states as well as rail and trucking representatives. Ed Mortimer offered the assistance from the U.S. Chamber of Commerce in recruiting local Chamber of Commerce participation in the initiative. John Gaughan added that the U.S. Chamber of Commerce had published an excellent study on U.S. international trade. Joe Miniace asked about the primary mission/outcome for cargo in HIP and Ms. Bautch replied that although there was no specific cargo focus, HIP was studying the benefits of Container on Barge. In addition, Ms. Bautch sits on the State of Minnesota council for Container on Barge. Its major goal is to educate state DOTs and MPOs. Rick Gabrielson encouraged HIP to include a cross-representation of bulk and finished products shippers and that these shippers can assist in the education effort.

John Gaughan then asked if there were any public comments on this presentation, to which Mr. Rajiv Khandpur of the U.S. Coast Guard responded that the Spirit of Ontario was a 700 passenger ferry and would initially make two roundtrips each day. It will not carry any freight. When asked if the vessel was U.S.-flag Bruce Croushore replied that it was not. It was built by a member company in Australia. The second vessel, the Lake Express, however, will be U.S.-built and will serve the route between Milwaukee, Wisconsin and Muskegon, Michigan.

Mr. Norman Fassler-Katz next addressed the group on the work of the California Marine and Intermodal Transportation System Advisory Council (CALMITSAC). CALMITSAC is composed of over 20 local, state and Federal agencies and private sector groups, including the California Department of Transportation, U.S. Coast Guard, and the Maritime Administration. CALMITSAC has been a functioning unit since September of 2001. The mission of CALMITSAC is to foster development of a Marine Transportation System in California that is safe, secure, efficient, environmentally sound, and capable of expanding to meet the needs of the global economy. Among CALMITSAC's accomplishments is the November 2003 publication, California Marine Transportation System Infrastructure Needs, which addresses the needs of the various components of California's Marine Transportation System. Mr. Fassler-Katz passed out copies of California’s Global Gateways: Trends and Issues, a report co-authored by Dr. Jon Haveman, under the auspices of the Public Policy Institute of California.

He also thanked the Maritime Administration for its support of CALMITSAC's efforts. This has made their task somewhat easier. John Gaughan responded that MTSNAC supports the concept of providing support to regional MTS groups and asked if CALMITSAC had an estimate for California’s MTS needs. Mr. Fassler-Katz replied that the generation of new funding sources, the carving out of a portion of Customs duties, and SEA-21 were critical to California’s MTS. He stressed the need for a funding source. The estimate for infrastructure needs in California is approximately $14 billion. A public-private partnership is a necessity, with the Alameda Corridor as a good example. Bill Wanamaker asked if the membership of CALMITSAC included MPOs. Mr. Fassler-Katz replied that the MPOs are represented in the regional sub-councils. There are also representatives from the California DOT. He emphasized that there is no geographical representation on CALMITSAC. Joe Miniace asked for CALMITSAC’s top two or three priorities, to which Mr. Fassler-Katz responded: extended gate hours, infrastructure spending for roads, etc., and the integration of Short Sea Shipping. Mark Griffin added that there has been a high degree of participation between CALMITSAC and the Southern California MPOs. Peter Peyton pointed that even with funding there will be many years before the infrastructure can be in place. Mr. Fassler-Katz said that although this was a problem, there was a need to look at short-term issues. A statewide plan should deal with these problems. Peter Peyton said that there was a need to explore innovative and creative solutions. Will Smith said that counties were stretched thin for funds. Counties need to partner with private entities and the Federal government. Mr. Fassler-Katz replied that 27 counties along the I-710 Corridor were members of the I-710 Corridor Gateway Coalition.

John Gaughan then introduced John Jamian, the Deputy Maritime Administrator. Mr. Jamian had previously served as the Executive Director of the Port of Detroit and prior to that as a member of the Michigan legislature. Mr. Jamian said that on his first day as Deputy Maritime Administrator he attended the MTSNAC meeting in Washington. DOT is supercharged by the recommendations of MTSNAC. MARAD and Secretary Mineta acknowledge MTSNAC’s hard work to prepare and deliver its SEA-21 Report to the Secretary of Transportation. His admonition to the members of the Council is to come together to move a “mountain” and create something new for the entire Marine Transportation System, without regard for the members’ individual preferences. Secretary Mineta has asked the Council to put something together and to move SEA-21 forward. If MTSNAC is not interested in major changes it needs to convey that to the Secretary. Mr. Jamian added that there were rumors that DOT was looking at the Highway Trust Fund (HWTF) for possible funding for MTS needs. He emphasized that DOT was not considering that but was instead looking at a “small” percentage of Customs Duties to help develop programs and infrastructure for MTS. If one percent of Customs duties were used, the leverage would be tremendous. That one percent (approximately $157 M) could be taken from DOT’s budget or from Customs duties. DOT is also looking at a Maritime Economic Development Program (MEDP), including Short Sea Shipping and landside infrastructure improvements. DOT is also looking at an elevated ICMTS structure which has also been recommended by the U.S. Commission on Oceans Policy Report. Mr. Jamian also said that DOT supported an accelerated spend-down of the Inland Waterway Trust Fund and that the Harbor Maintenance Tax receipts should be spent where they are needed. He added that DOT's SEA-21 proposal should be public by mid-summer at which time he can share it with the Council. Mr. Jamian would like to debut it before the Council.

The Council then took a 15- minute break.

After the break John Gaughan announced that all were invited to the evening reception in the Duet Room.

MTS Regional Reports (cont'd)

He then asked that Mr. Glenn Vanselow of the Pacific Northwest Waterways Association (PNWA) address the Council on that region's MTS efforts. Mr. Vanselow gave a brief history of PNWA. It was founded in 1934 to enhance water transportation throughout Puget Sound and the Columbia/Snake River systems. He pointed out that the Columbia/Snake River System is primarily an export system. It is a feeder system to deep draft vessels along the lower Columbia River. This system is the #1 gateway in the nation for wheat exports, #1 for barley and #2 for corn. One of the programs sponsored by PNWA is CEDER - the Center for Economic Development, Education and Research. CEDER has proposed a study to identify the Marine Transportation System (MTS) needs for the region. MTSNAC endorsement of this study proposal would be very helpful. Mr. Vanselow added that PNWA was also seeking the support of MARAD. John Gaughan asked what the study cost estimate was. Mr. Vanselow replied that it was between $100,000 - $150,000. He added that the State of Oregon is willing to support the study. John Gaughan suggested that Mr. Vanselow work with the MTSNAC staff to draft a formal resolution for MTSNAC support of the study. ADM. Rufe asked about the environmental impact of any infrastructure improvements to the system. Mr. Vanselow replied that PNWA has always followed normal environmental procedures in its projects, but there have been many injunctions and protests, so much of the proposed infrastructure work has not been done. This in turn has had a negative impact on navigation along the Columbia/Snake River system. Looman Stingo suggested that PNWA submit its proposals to the Inland Waterways User Board or try to include them in the Water Resources Development Act (WRDA). Mr. Vanselow replied that PNWA had already submitted some of their issues to the Inland Waterways User Board for consideration. Will Smith noted that there was no mention of security issues. Rick Gabrielson asked if the forecast will also look at shipper demand and cargo type to which Mr. Vanselow replied that the Washington Public Ports Commission does forecasting as well as the Port of Portland. Phase I of the proposed study will look at cargo types currently moving through the system, but with difficulty. Rick Gabrielson suggested that PNWA query current shippers on those products not moving due to problems.

Mr. Jeff Keever of the Hampton Roads Maritime Association then addressed the group on the activities of the South Atlantic Marine Transportation System Organization (SAMTSO). Mr. Keever remarked that the state of Virginia was not on the Heartland Intermodal Program (HIP) map which was presented earlier, but hoped that Virginia could soon become the 25^th state to participate in HIP. He said that SAMTSO had reorganized its committee structure and was planning a South Atlantic needs assessment. SAMTSO will provide comments on the U.S. Commission on Oceans Policy Report and will forward its comments to MTSNAC. John Gaughan remarked that in the past SAMTSO had recommended the use of Customs duties to help fund MTS needs and asked if this was still SAMTSO's position. Mr. Keever replied that it was. Mr. Gaughan thanked Mr. Keever for his presentation.

MTS Funding Sources Presentation

John Gaughan then introduced Mr. Michael Smith of SAIC and explained that he had specifically requested SAIC to summarize the universe of possible MTS Funding Sources and provide the Council with a "scorecard."

Mr. Smith led the group through an overview of MTS Federal Funding and Collections, funds collected by the U.S. Customs Service, the allocation of funds collected by Customs, and a summary of MTS Funding sources and strategies. After his presentation ADM Nelson noted that although MTS includes boating, boating revenue sources were not included in the presentation. Mr. Smith agreed to add this to the list. Ed Mortimer pointed out the need to also address the issue of private capital in the funding mix.

Chris Koch pointed out that the single largest contribution of capital to the MTS is the private sector. He cited the planned Maersk terminal in Hampton Roads, which will involve almost $500 Million in private funds. Jean Godwin suggested that Economic Development Administration (EDA) grants from the Department of Commerce be added to the list of possible Federal funding sources. Worth Hager asked for a breakdown of the actual funds allocation. Steve Pfeifer asked if these were new, recent funding sources and Mr. Smith replied that they were not. John Jamian added that one of the funds, the Reforestation Trust Fund, was added when they were still building wooden hulls. Mr. John McGowan of Sandler & Travis Trade Advisory Services, a member of the audience, added that Congress saw a nexus between sources of collections and actual allocation. MTSNAC needs to more clearly state that there should be a more direct link between who pays and who benefits. Mr. Lee Hutchins, also from the audience, representing ETP, Ltd., pointed out that the various funding sources were developed as a result of identified programs. There is now a need for a maritime program. Paul Bea offered a contrarian’s view. Much of the Customs collected revenue is not MTS revenue but merely general revenue. These are not necessarily funds for MTS to claim. John Gaughan replied that hopefully DOT/MARAD will do an economic analysis of the impact of a dollar collected from Customs on the nation's economy. Worth Hager noted that $1 of O & M on the inland waterways system returns $14 to the public according to OMB. John Jamian added that the Transportation Infrastructure Finance and Innovation Act (TIFIA) program can leverage up to 20 times what is spent. The private sector is critically important and when added to Federal seed money, it can be very positive.

John Gaughan then introduced Mr. Mortimer Downey, former Deputy Secretary of the U.S. Department of Transportation, and now President of PB Consult Inc. Mr. Downey chaired the Marine Board committee which developed the recently released report The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement (TRB Special Report 279). The sponsors of the report were DOT, MARAD, U.S. Army Corps of Engineers, U.S. Customs, U.S. Coast Guard, National Oceanic and Atmospheric Administration (NOAA), and the Department of Agriculture. The committee's charge was to develop an analytic framework for federal agencies and decision makers to better coordinate policies, programs, and investments in MTS. There were 14 committee members with varied expertise and the entire effort spanned 9 months. The report found that Federal roles in the MTS are fragmented and spread across many agencies and committees of Congress. Key Recommendations in the report include the U.S. Department of Transportation assuming leadership in furthering national interests in the MTS, producing biennial Conditions and Performance (C&P) Reports on the MTS, modeled after the Surface Transportation C & P Reports, and that this C&P report be mandated by Congress. Mr. Downey noted that there were additional views articulated by the committee members, but the committee could not reach a consensus, so they were not included in the report. Mr. Downey's presentation elicited a great deal of discussion among the Council members. ADM Nelson commented on the recommendation that the C & P Report be mandated by Congress and noted that it was important to bring consistency among the transportation modes. Jean Godwin remarked that just as TEA-21 mandated data for the intermodal connectors, MTS should do the same. Paul Bea asked if DOT has the capacity to provide data. Mr. Downey replied that DOT's capacity to provide this data is better than in the past. One example is the Federal Highway Administration's recent analysis of freight movements. He added that a C & P Report should analyze how increased investment benefits the public users of the system and that this would not require a great deal of money.

Bill Wanamaker noted that he was the only one at the table whose stakeholders contribute to the highway fund. Highway users pay proportionately to their use of the system. But up to 25 percent of those funds are currently diverted to non-highway uses, such as public transit. This diversion of funds diminishes the system's overall performance. He asked why the maritime community allows such a large diversion of Customs duties funds from the Marine Transportation System. There were several challenges to his statement regarding stakeholders' contributions to a dedicated fund. Mr. Downey asked if those revenues collected by Customs are actually designated for the maritime community. Is the government using those funds effectively? The Surface Transportation's C & P Report looks at the 25 percent of highway funds used for public transit to determine if there is a public benefit generated from that use. Worth Hager asked what the U.S. Army Corps of Engineers would do if DOT assumes the leadership for the entire MTS. Mr. Downey replied that the Corps should continue to do what it has been doing. The report does not recommend a dismantling of Federal agency activities, but rather better coordination among them with DOT assuming that leadership role. John Gaughan thanked Mr. Downey for his presentation and reminded everyone that the public comment was scheduled for tomorrow morning from 8:30 - 9:00 a.m. and that anyone who wished to speak should sign up before they leave today.

Paul Bea next briefed the Council on the status of the Surface Transportation reauthorization bill, SAFETEA. He said that currently no progress was being made. The White House has proposed no more than $256 billion over the next six years, while the Senate has proposed $318 billion and the House $284 billion over the same period. Both the Senate and House bills contain freight proposals of interest to those around the table. Among them is a 2 percent set-aside for intermodal connectors and private activity bonds. John Gaughan announced that a short term extension of the current TEA-21 had been granted through June 30 and that there probably would be a one year extension later. Ed Mortimer said that this is probably the last extension. ADM Nelson noted that the White House version continues the current funding levels, which the House bill provides for no direct subsidy for ethanol and the Senate version provides for a crackdown of fuel tax evasion. Worth Hager noted that if the President doesn't veto this bill he will most certainly veto the Water Resources Development Act (WRDA).

After this discussion there was a motion to adjourn. The motion was seconded and the Council voted unanimously to adjourn at 5:05 p.m. The meeting will commence again tomorrow morning at 8:30 a.m.

Tuesday, May 4, 2004

The meeting was called to order by John Gaughan at 8:30 a.m. Pat Hall expressed his thanks to Joe Miniace for his work on the SEA-21 report while John Gaughan was away in Iraq. Chris Koch observed that there was no overall MTS contingency plan to keep trade going and commerce flowing. He suggested that Secretary Mineta explore this idea. John Gaughan agreed and hoped that this would come up again later today under the new issues discussion. Raymond Barberesi then addressed two pending action items from the last meeting:

1. Recommendation in the SEA-21 report to move all ferry activities to MARAD - DOT is currently reviewing its reorganization and has not yet reached a final decision on this matter.

2. Discussion of a permanent MTSNAC - This will be discussed during the

update on the U.S. Commission on Ocean Policy report.

Public Comment Period

The only public comment presentation was made by Mr. John McGowan, V.P., Border Security, Sandler & Travis Trade Advisory Services. Mr. McGowan commended the Council on the good attendance at this meeting and the excellent discussion of issues. He also noted that there is now a greater focus on seaports due to enhanced security concerns. Mr. McGowan reminded the Council that the "silly season" in Washington was upon us. It is very important to put forward to Congress a unanimous position on SEA-21. OMB wants to know the true cost of maintaining the system. According to Fitch Ratings approximately $15 billion is needed for U.S. port improvements. AAPA says that $5.4 billion will be needed over the next 10 years for port security enhancements mandated by the Maritime Transportation Security Act of 2002. MTSNAC needs to make the case for stronger funding of the system.

Jean Godwin then raised the issue of whether the Council should be made a permanent body. The Council's SEA-21 report to the Secretary seems to suggest that the Council be continued in a permanent form. Raymond Barberesi explained that the report actually recommends that certain groups should be made permanent members of the Council.

John Gaughan asked Jean Godwin to brief the group on the U.S. Commission on Ocean Policy report. Ms. Godwin pointed out that the document was quite long, encompassing over 400 pages. Comments on the recommendations in the report will be accepted until May 21, 2004. Among the recommendations of particular interest to the Council members and DOT/MARAD are the establishment of a National Oceans Council (NOC), strengthening of NOAA, watershed management, and the establishment of an ocean policy trust fund. Chapter 13 specifically focuses on trade and commerce. The key recommendations include designating DOT as the leading agency for MTS matters, moving ICMTS from its present location within DOT to the National Oceans Council (NOC), and conducting research into Short Sea Shipping. ADM Rufe advised the group that he had served on the private Pew Oceans Commission and that both commissions arrived at similar conclusions. This is the first review of oceans policy since 1969. The governors of both California and Florida are becoming involved in this issue as well. John Gaughan asked if the Council could comment on this report and Carol Lambos replied that it could, but must send its comments to the Secretary of Transportation.

The timing of comments was discussed and Chris Koch noted that the Commission is now looking for comments from the governors in order to send a draft to the President by July 23^rd. Jean Godwin suggested that the Council could provide comments after the final draft and after the members had reviewed all of the recommendations contained in Chapter 13 rather than just the key ones which they had before them today. Jim Cook remarked that it may be awkward for the Secretary of Transportation to agree with the recommendations pertaining to DOT in the report. Jean Godwin pointed out that the Secretary can simply state that his advisory council supports the recommendations pertaining to DOT with the exception of the recommendation for ICMTS to report to NOC and not DOT. Carol Lambos then suggested that the Council should agree to draft a sample letter for the members to individually send to their governors in support of the report. Carol Lambos and ADM Rufe volunteered to draft a model letter for the members. ADM Nelson felt that the document was too long for the Council to reach a decision today. Instead he proposed a motion that it should be referred to the Infrastructure Team to draft a response. The motion was seconded. A lengthy discussion ensued over whether this should be left to the Infrastructure Team only without any input from the Security Team on the contingency issue recommendations in 13.6. John Gaughan suggested that the Security Team could deal with 13.6 (contingency issues) and the Infrastructure Team could deal with the rest of the recommendations in Chapter 13. Carol Lambos then proposed a motion to amend the original motion. It was seconded and during the discussion the Council agreed to direct the Infrastructure Team to take the lead in reviewing Chapter 13 and to prepare comments for distribution to the members within the next week for forwarding to the Secretary by May 21, 2004. All other teams were to review the report as appropriate. The Council then voted on the motion and it was approved unanimously. John Gaughan then agreed to move forward with a model letter for the governors and asked Carol Lambos and ADM Rufe to send him their draft as soon as possible.

John Gaughan then introduced Mr. Chris Brescia of the Mid West Area River Coalition (MARC) 2000 who addressed the Council on the current status of the Upper Mississippi River system and the need to address the aging inland waterway infrastructure.

After Mr. Brescia's presentation Bill Wanamaker proposed the following resolution:

Be it resolved, that the MTSNAC supports the concept of, and urges the Administration to propose legislation to Congress that establishes support for critical maritime infrastructure and related programs. Such legislation may be called SEA-21, and shall include, but not be limited to:

· A port infrastructure program,

· A basic National Security Program, which also establishes contingency plans,

· Incorporation of U.S. Army Corps of Engineers Programs, and

· A dedicated funding mechanism

The motion was seconded. Will Smith suggested that education should be added to the resolution and it was, so that the resolution then read as follows:

· A port infrastructure program,

· A basic National Security Program, which also establishes contingency plans,

· Incorporation of U.S. Army Corps of Engineers Programs,

· Education and Labor Training, and

· A dedicated funding mechanism

Governor Sheffield voiced support for the motion. Carol Lambos responded that the motion appears to out of order at this time and duplicative of the Council's recently issued SEA-21 Report. When Bruce Croushore asked if this was similar to Mr. Wanamaker's motion in San Francisco at the last meeting Bill Wanamaker responded that it was and that he felt that the Maritime Administrator could use some support as he pursues SEA-21 and other MTS initiatives such as Short Sea Shipping. Jean Godwin felt that this resolution might cause confusion with the pending TEA-21 reauthorization debate on Capitol Hill. John Gaughan then called for a 15-minute break.

After the break John Gaughan announced that the Chair would not consider Bill Wanamaker's motion and resolution at this time or the other two which had been brought to the Chair's attention (one dealt with the Council's support of the PNWA's regional MTS study and the other with a recommendation that DOT study port contingency plans in the event of massive port closure(s) due to a terrorist attack or management or labor dispute such as the West Coast port closure in late 2002).

John Gaughan then opened the floor to a discussion of SEA-21 and MTS funding sources. Jim Cook thanked Mr. Smith and his staff for yesterday's MTS Funding Sources presentation. He also noted that security issues seem to be the domain of the Department of Homeland Security (DHS). MARAD has done much in the way of planning for Short Sea Shipping. What would the funds allocated for MTS be used for? Mr. Cook felt that the Council needed more assistance and education in this area. Paul Bea remarked that it would be helpful to see the Secretary's draft SEA-21 proposal. In order to better understand this we need to show how a one percent set-aside of Customs duties can affect the economy. He added that Short Sea Shipping would not be a costly proposition. But we are missing some key information. He then presented the Council with a paper on Short Sea Shipping prepared by the Coastwise Coalition.

John Gaughan advised the group that DOT and MARAD are currently discussing the use of one percent of Customs duties (approximately $157 million) for Short Sea Shipping. In his discussions with coastal senators John Gaughan has used a figure between $3 million and $5 million for start-up costs. These funds would be appropriated to DOT for Bureau of Transportation Statistics (BTS) research into Short Sea Shipping funding needs.

Joe Miniace suggested a fee of $50 for every container that moves inland to help raise funds for intermodal development or Short Sea Shipping as the Secretary of Transportation sees fit. This fee would be paid by the shipper. Looman Stingo warned that this could add cost to the system users and the consumer. It also sounds like a trust fund, but there is no longer any "trust" in trust funds. Ed Mortimer said that shippers/users of the system are willing to pay more if they can see tangible benefits. Joe Miniace replied that although everyone says that 2020 is looming, nothing is being done to alleviate the congestion problem. Jim Cook added that there are in reality two payers - the taxpayer and the consumer. He felt that the free market is the best way to fund the system but that some government is important. He suggested that we should be cautious so as not to upset the system as it is since shippers are always looking for a competitive advantage. Joe Miniace then suggested that we could take just the amount above a designated baseline. Paul Bea said that we should discuss a range of options and not automatically preclude any option. Bill Wanamaker said that truckers sympathize with the maritime community. A large portion of the money collected on container in ports is being diverted to other uses. Customs duties are a fair and equitable way to help fund the MTS. Joe Miniace's suggestion would help bolster receipts if Customs duties begin to wane. Peter Peyton observed that we are already at the 2020 congestion level. We're in a crisis state. Bill Wanamaker added that ATA supports the use of highway trust funds to connect the seaport terminals with the National Highway System (NHS).

Council Teams

John Gaughan then advised the Council that four of the nine Council teams currently have no chair - Human Resources, Information Technology and R & D, Inland Waterways, and Safety and Environmental Protection. He explained that these vacancies were due to Council member rotation off the Council and added that although he is currently chair of the Shipbuilding team, he feels that this is not a good fit. John Gaughan then designated the following members as new chairs:

Information Technology and R & D: John Daidola (SNAME)

Inland Waterways: Worth Hager (National Waterways Conference)

Shipbuilding: Bruce Croushore (Shipbuilders Council of America)

That still left Human Resources and Safety and Environmental Protection without chairs. Joe Miniace asked if the Council really had a need for a Human Resources team. Peter Peyton agreed and added that the Council has more important areas to address. Carol Lambos disagreed and said that the Human Resources Team has some very important issues for both labor and management. John Gaughan asked that if someone is interested in chairing either of these two teams to please let him know. He added that each Council member should be on at least one team.

New Issues

Rick Gabrielson said that the Council should review rail movement issues since they affect MTS in a very direct way. Chris Koch asked if DOT had a biennial Conditions and Performance report for the rail system. No one felt that it did. John Baniak thought that the American Association of State Highway and Transportation Officials (AASHTO) has put out something on railroads. Jean Godwin added that it is on AASHTO's website. Peter Peyton had heard that the average rail speed has been reduced by 2 MPH. Ed Mortimer replied that the Association of American Railroads (AAR) has published information on this. In discussions with the railroads Jim Cook has learned that the railroads are experiencing a crew shortage. Chris Koch said that it is more than just crewing. Perhaps the Sponsor can arrange a briefing on this issue for the Council. Peter Peyton said that there is a shortage of locomotives due to the Chinese factories buying up all the steel they can. Jim Cook cautioned that any briefing should determine which types of cargo move by rail.

John Gaughan then turned to the three resolutions which had been forwarded to him for discussion. The first one deals with the Council's support for the PNWA study. Worth Hager presented the following resolution and moved that it be accepted:

Whereas, an integrated intermodal transportation policy is in the best economic interest of the United States in order to address freight congestion projections, and

Whereas the U.S. waterway system, coastal and inland is not now a fully integrated intermodal transportation partner, and

Whereas the U.S. waterway system has been shown to provide economical transport with safety, security and environmental benefits, and

Whereas, a full analysis of the needs, opportunities, cost and benefits is needed to direct resources to those projects and alternatives which maximize social, economic, security and environmental benefits within an intermodal framework;

Therefore Be It Resolved,

MTSNAC supports and encourages funding of the Center for Economic Development Education and Research (CEDER) proposal, as presented by the Pacific Northwest Waterways Association, to undertake a MTS study of the navigation and surface transportation needs of the Columbia Snake River System And Oregon Coastal Ports,

Furthermore, MTSNAC recommends that the Secretary of Transportation provide seed money, and

Be It Further Resolved, MTSNAC recommends that this study, and other like studies, be designed with duplicative methodology so that regional analyses may be quantified nationally for inclusion within a national intermodal transport policy.

The motion was seconded and discussion followed. Bill Wanamker asked what was meant by "seed money." Glenn Vanselow of PNWA replied that some funding sources require input by other entities, e.g., the State of Oregon. He was also asked if all the money would go for the study, to which he replied yes. Jim Cook suggested that the phrase "seed money" be changed to "matching funds" to encourage regional participation "in the study." The motion was amended to incorporate these two changes, seconded and the Council approved it unanimously. The approved resolution is as follows:

Whereas, an integrated intermodal transportation policy is in the best economic interest of the United States in order to address freight congestion projections, and

Whereas the U.S. waterway system, coastal and inland is not now a fully integrated intermodal transportation partner, and

Whereas the U.S. waterway system has been shown to provide economical transport with safety, security and environmental benefits, and

Therefore Be It Resolved,

Furthermore, MTSNAC recommends that the Secretary of Transportation provide matching funds to encourage regional participation in the study, and

The second resolution concerning a study of port contingency planning was presented by Paul Bea:

Whereas, the Marine Transportation System constitutes a vital part of the National Transportation System,

Whereas, international commerce through waterborne transportation represents 95 percent of world trade,

Whereas, the United States economy is increasingly reliant on just-in-time delivery of goods and commodities,

Whereas, the 2002 West Coast port shut-down lasted approximately 10 days and resulted in a severe disruption of international shipping and commerce with effects on much of the United States,

Whereas, while the closure of the Port of New York and New Jersey after the terrorist attacks on the World Trade Center lasted only 2 days Northeast petroleum supplies, for example, came within two days of being exhausted,

Whereas, terrorist attacks and other catastrophic and intentional events can shut down maritime commerce and lead to severe power outages, food shortages and other damaging effects to life, health and the economy,

Whereas, as the full effects of the stoppage of international commerce in one or more ports of the United States on the nation and other trading partners are not fully understood,

Whereas, government and the business community will be challenged to re-establish business continuity and restart maritime commerce,

Whereas the nation has little experience with the stoppage of international commerce and with the issues pertaining to restarting the machinery of commerce such as goods and commodity shipping,

Now therefore be it resolved that --

The U.S. Department of Transportation, working with Department of Homeland Security and other Federal agencies and public and private entities, as appropriate, should immediately undertake a project to--

· Assess the economic consequences of port, inland and ocean commerce stoppages at the national and regional levels;

· Identify mitigation strategies for enhancing information technologies and procedures to allow decision makers to recover the system of commerce;

· Produce models for action that can be applied in the event of real incidents.

Worth Hager requested that the resolution be amended to include inland waterways. John Gaughan suggested that this resolution be referred to the Security Team for review and circulation. Peter Peyton said that this resolution really bridges both the Security and Infrastructure teams and suggested that it go to both teams for review. Chris Koch wondered how business would react and how rates would be affected. Jim Cook pointed out that this resolution refers to an event, but doesn’t cover threats. Will Smith added that we need to expand the national and regional levels to address this issue. The resolution was then referred to both the Security and Infrastructure teams for further work.

John Gaughan then returned to the resolution proposed by Bill Wanamaker and asked what the purpose of the resolution was. Hasn’t the Council already done what the resolution asks for? Bill Wanamker replied that the purpose of the resolution to support the report already submitted and to focus on the legislative aspect. There is no clear legislative platform for the maritime community and this will provide more support from the industry. Jean Godwin stated that she did not agree with all of the resolution. John Gaughan then announced that he could not vote for this as currently drafted, especially the incorporation of the U.S. Army Corps of Engineers programs. The resolution seems to ratify what the Council has already been doing. Bill Wanamker then said that he was willing to drop the U.S. Army Corps of Engineers section for an up or down vote. Chris Koch agreed with Jean Godwin and felt that the resolution adds no value, but does cause some confusion. Jim Cook said that he could not support the resolution. John Gaughan asked Bill Wanamaker if he was willing to withdraw the motion and Bill Wanamaker suggested that the resolution be sent to one of the Council teams for further work. All agreed.

Jim Cook asked if the Sponsor could circulate this meeting’s minutes quickly since the next schedule Council meeting is not until October. This would give the group an opportunity to review the proceedings while they are still relatively fresh in their minds. Mr. Barberesi agreed to do that.

There being no further business, John Gaughan moved that the meeting be adjourned. The motion was seconded and the Council voted unanimously to adjourn at 12:05 pm.