Commercial Maritime Industry: Updated Information on Federal Assessments
(Letter Report, 09/16/1999, GAO/RCED-99-260).

Pursuant to a congressional request, GAO provided information on the
assessments levied on the commercial maritime industry.

GAO noted that: (1) eleven different federal agencies levy assessments
on the commercial maritime industry; (2) in fiscal year (FY) 1998, the
agencies collected almost $22 billion; (3) the Customs Service collected
by far the largest portion, almost $21 billion; (4) the 10 other
agencies each collected an average of $90 million in FY 1998; (5) total
collections have increased from $18.2 billion in FY 1991 to $21.8,
$21.9, and $21.9 billion in fiscal 1996, 1997, and 1998, respectively,
though the amounts for some individual assessments increased or
decreased; (6) in all, federal agencies levy 124 different assessments;
(7) in FY 1998, shippers paid about $20 billion of the total, vessel
owners and operators paid about $1 billion, and various other parties
paid the rest; (8) about $20 billion of the total generated in FY 1998
was not earmarked for specific purposes and was deposited in the General
Fund of the U.S. Treasury; (9) another $995 million was credited to
agency accounts as reimbursement for services provided and the remaining
+$762 million was deposited into three trust funds to be appropriated in
future years to agencies for designated services; (10) two new
assessments are being proposed; (11) the proposed Harbor Services User
Fee legislation, the largest of the two, is being proposed by the
administration as a replacement for the existing Harbor Maintenance Tax;
(12) the administration believes that the replacement fee, estimated to
generate $980 million annually, is needed to fund federal channel and
harbor projects; (13) unlike the Harbor Maintenance Tax, which is paid
by either the shippers, foreign trade zone users, or operators of the
vessel, the proposed fee would be paid only by vessel operators; (14)
the remaining proposed assessment is being proposed by the National
Oceanic and Atmospheric Administration; and (15) data provided by the
Army Corps of Engineers show that at projected future revenue and
expenditure levels, the surplus in the Harbor Maintenance Trust Fund
will continue to grow well into the next decade.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-99-260
     TITLE:  Commercial Maritime Industry: Updated Information on
             Federal Assessments
      DATE:  09/16/1999
   SUBJECT:  Shipping industry
             Government collections
             Marine transportation operations
             Maritime law
             International trade
             Taxes
             Fees
             Harbors
             Reimbursements to government
IDENTIFIER:  GATT
             General Agreement on Tariffs and Trade
             Harbor Maintenance Trust Fund
             Customs Service Harbor Maintenance Tax Program
             Customs Service Harbor Services User Fee Program

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Cover
================================================================ COVER

Report to the Chairman, and Ranking Democratic Member, Committee on
Transportation and Infrastructure, House of Representatives

September 1999

COMMERCIAL MARITIME INDUSTRY -
UPDATED INFORMATION ON FEDERAL
ASSESSMENTS

GAO/RCED-99-260

Federal Assessments on Maritime Industry

(348162)

Abbreviations
=============================================================== ABBREV

  APHIS - Animal, Plant, and Health Inspection Service
  ATFI - Automated Tariff Filing Information
  DOT - Department of Transportation
  CDC - Centers for Disease Control and Prevention
  COFR - Certificate of Financial Responsibility
  FCC - Federal Communication Commission
  FMC - Federal Maritime Commission
  GIPSA - Grain Inspection, Packers, and Stockyards Administration
  GAO - General Accounting Office
  GATT - General Agreement on Tariffs and Trade
  HHS - Department of Health and Human Services
  ICC - Interstate Commerce Commission
  IRS - Internal Revenue Service
  LUST - Leaking Underground Storage Tank
  MARAD - Maritime Administration
  NMFS - National Marine Fisheries Service
  NOAA - National Oceanic and Atmospheric Administration
  NVOCC - Non-Vessel-Operating Common Carrier
  PCC - Panama Canal Commission
  SLSDC - Saint Lawrence Seaway Development Corporation
  STB - Surface Transportation Board
  USPHS - U.S.  Public Health Service

Letter
=============================================================== LETTER

B-282489

September 16, 1999

The Honorable Bud Shuster
Chairman
The Honorable James L.  Oberstar
Ranking Democratic Member
Committee on Transportation and Infrastructure
House of Representatives

One of the means by which the federal government generates revenue to
support America's maritime infrastructure is to enable federal
agencies to levy assessmentsï¿½user fees, taxes, and other charges--
upon the commercial maritime industry.  We define the commercial
maritime industry to include vessel owners, operators, importers, and
exporters that move commodities by vessels engaged in domestic and
international commerce.  Currently, there are 124 assessments imposed
on the commercial maritime industry.  One of the assessments is the
Harbor Maintenance Tax.  In March 1998, the U.S.  Supreme Court ruled
that the export-related portion of the Harbor Maintenance Tax--the
fee that funds virtually all maintenance dredging of U.S.
portsï¿½violated the constitutional provision on taxes imposed on
exports.  The import-related portion of this fee is also being
challenged by the European Union.  The administration has proposed an
alternative funding mechanism to replace this fee called the Harbor
Services User Feeï¿½a cost-based user fee that would be assessed on
commercial vessel operators.  This proposed alternative has been
controversial, especially with the commercial maritime industry,
which contends that it is already burdened with heavy fees and taxes.

To help the Congress as it considers a possible replacement for the
Harbor Maintenance Tax, you asked us to provide a comprehensive
summary of the assessments currently levied on the commercial
maritime industry.  As agreed with your offices, we are updating
information from our evaluation of federal assessments levied on the
commercial maritime industry that we completed in 1993,\1 which
included information on the assessments levied in fiscal years 1989
through 1991 and an estimate for fiscal year 1992.  More
specifically, we are providing the following information in this
report:

  -- Which federal agencies currently levy assessments on the
     commercial maritime industry, how much did they collect in
     fiscal years 1996 through 1998, what are the estimated
     collections for fiscal 1999, and how much was collected in
     fiscal 1998 compared with fiscal 1991?

  -- How many assessments are levied by federal agencies, who pays
     for them, where are they deposited, and how do these assessments
     compare with those levied in fiscal year 1992?

  -- How many new federal assessments have been formally proposed and
     are under consideration?

In addition, we are providing information on the current status of
the Harbor Maintenance Trust Fund and the projected annual balances
of the fund.

Detailed updated information on current and proposed assessments
levied on the commercial maritime industry by federal agencies are
reported at http://www.gao.gov/RCED-99-260.  This information
includes the name and description of the assessment, the payor, and
collection amounts.

--------------------
\1 Maritime Industry:  Federal Assessments Levied on Commercial
Vessels (GAO/RCED-93-65FS, Mar.  5, 1993.)

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Eleven different federal agencies currently levy assessments on the
commercial maritime industry.  In fiscal year 1998, the agencies
collected almost $22 billion.  The Customs Service collected by far
the largest portionï¿½almost $21 billion.  The 10 other agencies each
collected an average of $90 million in fiscal year 1998.\2 Total
collections have increased from $18.2 billion in fiscal year 1991 to
$21.8, $21.9, and $21.9 billion in fiscal 1996, 1997, and 1998,
respectively, though the amounts for some individual assessments
increased or decreased.

In all, federal agencies levy 124 different assessments, ranging from
various fees such as customs duties, ship registry fees, commercial
fishing fees, and inspection charges.  Since fiscal year 1992, 50
assessments have been added, and 45 have been deleted.  In fiscal
year 1998, shippers (importers and exporters) paid about $20 billion
of the total, vessel owners and operators paid about $1 billion, and
various other parties paid the rest.\3 From fiscal year 1991 through
fiscal 1998, the amounts paid by shippers increased by 17 percent, or
about $2.9 billion; during the same period, the amounts paid by
owners and operators increased by 46 percent, or about $309 million.
About $20 billion of the total revenues generated in fiscal 1998 was
not earmarked for specific purposes and was deposited in the General
Fund of the U.S.  Treasury.  Another $995 million was credited to
agency accounts as reimbursement for the services they provided
(issuing permits, conducting inspections, physical services, and
other related activities).  The remaining $762 million was deposited
into three trust funds\4 to be appropriated in future years to
agencies for designated services.

Two new assessments are currently being proposed.  The proposed
Harbor Services User Fee legislation, the largest of the two, is
being proposed by the administration as a replacement for the
existing Harbor Maintenance Tax.  The administration believes that
the replacement fee, estimated to generate $980 million annually, is
needed to fund federal channel and harbor projects.  Unlike the
Harbor Maintenance Tax, which is paid by either the shippers, foreign
trade zone users, or operators of the vessel, the proposed fee would
be paid only by vessel operators.  The remaining proposed assessment
is being proposed by the National Oceanic and Atmospheric
Administration.

Data provided by the U.S.  Army Corps of Engineers show that at
projected future revenue and expenditure levels, the surplus in the
Harbor Maintenance Trust Fund will continue to grow well into the
next decade.  At the end of fiscal year 1998, there was a $1.3
billion surplus in the Harbor Maintenance Trust Fund.  The surplus is
projected to increase to $2.5 billion in fiscal year 2004.  The U.S.
Army Corps of Engineers' projections assume that the import portion
of the fee will remain intact.

--------------------
\2 The 10 agencies are the Animal, Plant, and Health Inspection
Service, Department of Agriculture; Centers for Disease Control and
Prevention, Department of Health and Human Services; Coast Guard,
Department of Transportation; Federal Communications Commission;
Federal Maritime Commission; Grain Inspection and Packers Stockyards
Administration, Department of Agriculture; Internal Revenue Service,
Department of the Treasury; Maritime Administration, Department of
Transportation; National Marine Fisheries Association, and National
Oceanic and Atmospheric Administration, Department of Commerce; and
the Panama Canal Commission.

\3 ï¿½Other partiesï¿½ includes such individuals as borrowers, brokers,
and individual passengers.

\4 The three assessments that generate revenue deposited in trust
funds are the Inland Waterways Fuel Tax, which funds inland waterway
projects of the U.S.  Army Corps of Engineers; the Leaking
Underground Storage Tank Tax, used to carry out leaking underground
storage tank cleanup activities by the Environmental Protection
Agency; and the Harbor Maintenance Tax collected by the Customs
Service, which funds the U.S.  Army Corps of Engineers' and the St.
Lawrence Seaway Development Corporation's operation and maintenance
costs.

   BACKGROUND
------------------------------------------------------------ Letter :2

A successful and efficient maritime infrastructure and industry is an
important asset to the United States.  America has long depended on
importing as well as exporting manufactured goods, agricultural
products, and other commodities; access to world markets is important
to America and its economy.  The maritime infrastructure is also
important to America's national security; it is responsible for
supporting America's military services during national emergencies by
transporting personnel and supplies.

One of the means by which the federal government generates revenue to
support America's maritime infrastructure is to enable federal
agencies to levy assessments on the commercial maritime industry.
Assessments levied can be, but are not always, specific to the
commercial maritime industry and range from duties on cargoes, fees
for various services provided, and permits for specific types of
fishing.  Payments made by maritime users are usually deposited into
the General Fund of the U.S.  Treasury or directly or indirectly
reimburse a federal agency for services provided.

One of the assessments levied is the Harbor Maintenance Tax.  The
Harbor Maintenance Tax was established in 1986 by the Water Resources
Development Act.  The assessment, which is specific to the commercial
maritime industry, is imposed on passenger and nonpassenger vessels,
domestic and international commerce, and U.S.- and foreign-flagged
vessels.  The fee is levied and collected by the Customs Service.
The fee is paid by either the shipper, foreign trade zone user, or
operator of the vessel.  Collections from this assessment are
deposited directly into the Harbor Maintenance Trust Fund and are
used by the U.S.  Army Corps of Engineers to maintain and operate
U.S.  ports.  Prior to 1998, the fee was imposed on all cargo (i.e.,
imports and exports).  Currently, the fee applies to domestic and
imported cargo because on March 31, 1998, the U.S.  Supreme Court
ruled that the export portion of the fee was unconstitutional.\5
Since this ruling, the fee has not been assessed on export cargo.
The remaining fee assessed on imported goods is also being
challenged.  A claim has been made by the European Union that the fee
violates the General Agreement on Tariffs and Trade.  Although the
United States is currently engaged in consultations under the World
Trade Organization Agreement regarding this claim, a dispute
resolution panel has--so far--not been requested by any of the
claimants.  When this dispute will be resolved is uncertain.  The
administration, however, submitted a proposal in May of 1998 to
replace the Harbor Maintenance Tax with a Harbor Services User Fee.
Table 1 summarizes the revenues from the Harbor Maintenance Tax for
fiscal years 1997 through 1999.

                                Table 1

                Harbor Maintenance Tax Revenues by Type
                   in Fiscal Years 1997 and 1998 and
                    Expected Revenues in Fiscal 1999

                         (Dollars in thousands)

Revenue type                              1997        1998      1999\b
----------------------------------  ----------  ----------  ----------
Imports                               $434,037    $458,193    $490,000
Exports                                214,017      90,682           0
======================================================================
Total\a                               $648,054    $548,875    $490,000
----------------------------------------------------------------------
\a These totals only include revenues from imports and exports from
the Harbor Maintenance Tax.  These totals do not include all revenue
sources for the Harbor Maintenance Trust Fund, such as revenue from
other sources as well as interest generated, and therefore cannot be
substituted for ï¿½totalï¿½ revenues for the Harbor Maintenance Trust
Fund.

\b These figures are estimates.

Source:  U.S.  Army Corps of Engineers.

--------------------
\5 In United States v.  United States Shoe Corporation, 523 U.S.  360
(1998), the Supreme Court ruled that the Harbor Maintenance Tax, as
it was applied to exports, violated the U.S.  Constitution's export
clause.  The Export Clause, Art.  I, sec.  9, cl.  5, provides that
no tax or duty can be assessed on articles exported from any state.
The Supreme Court found that the Harbor Maintenance Tax did not
correlate with the services used by the exporter and therefore the
Harbor Maintenance Tax did not qualify as a permissible user fee.

   FEDERAL ASSESSMENTS ON THE
   COMMERCIAL MARITIME INDUSTRY
   TOTALED NEARLY $22 BILLION IN
   FISCAL YEAR 1998
------------------------------------------------------------ Letter :3

Eleven federal agencies collected nearly $22 billion in assessments
on the commercial maritime industry in fiscal year 1998.  The Customs
Service collected 96 percent of the total amount.  Table 2 shows
these 11 agencies in addition to 2 other agencies that no longer
collect assessments, and their collections for the 3-year period we
examined (fiscal years 1996-98), together with a comparison of the
amount they collected in fiscal year 1991--the last year included in
our previous report--and the amount they expect to collect in fiscal
1999.  Overall, the collections for fiscal year 1998 were about $3.7
billion above the fiscal 1991 levels and were relatively constant for
the 3 year period we examined.  Table 2 also shows a substantial
change in collections by some agencies.  For example, collections by
the Coast Guard and the Animal and Plant Health Inspection Service
rose almost sevenfold and fivefold, respectively, from fiscal year
1991 to fiscal 1998, while collections by the Internal Revenue
Service and the Federal Communications Commission fell by 61 and 63
percent, respectively, during the same period.  These changes
occurred for various reasons, such as the addition or deletion of
assessments or substantive changes made to the assessments levied.

                                         Table 2

                           Amounts of Assessments Collected by
                            Federal Agency in Fiscal Year 1991
                         Compared With Fiscal Years 1996 Through
                                           1999

                                  (Dollars in thousands)

Federal agency             1991\a          1996          1997          1998        1999\b
-------------------  ------------  ------------  ------------  ------------  ------------
Animal, Plant, and         $5,368       $23,448       $26,743       $31,681       $32,000
 Health Inspection
 Service; U.S.
 Department of
 Agriculture
Centers for Disease         N/A\c         1,123         1,074         1,180         1,300
 Control and
 Prevention;
 Department of
 Health and Human
 Services\c
Coast Guard;                1,884        17,304        14,891        14,866        14,972
 Department of
 Transportation
Customs Service;     17,358,534\d    20,908,243    21,098,517    20,990,854    19,887,083
 Department of the
 Treasury
Federal                     5,906         3,782         1,792         2,159         1,380
 Communication
 Commission
Federal Maritime               51         1,041         1,086         2,431           620
 Commission
Grain Inspection,             672           725         1,173         1,159         1,175
 Packers, and
 Stockyards
 Administration;
 U.S. Department of
 Agriculture
Internal Revenue          348,996       142,980       140,587       135,582       138,543
 Service;
 Department of the
 Treasury
Interstate Commerce           8\e         N/A\e         N/A\e         N/A\e         N/A\e
 Commission\e
Maritime                   15,687        11,032        13,718        27,047       100,814
 Administration;
 Department of
 Transportation
National Marine             4,423        40,744        19,596        12,994         9,234
 Fisheries
 Association;
 National Oceanic
 and Atmospheric
 Administration;
 Department of
 Commerce
Panama Canal              466,228       600,248       611,200       675,711       702,766
 Commission
Saint Lawrence                  0           N/A           N/A           N/A           N/A
 Seaway Development
 Corporation;
 Department of
 Transportation\f
=========================================================================================
Total                 $18,207,757   $21,751,030   $21,930,377   $21,895,664   $20,889,887
-----------------------------------------------------------------------------------------
Legend

N/A = not applicable

Note:  Figures are nominal and have not been adjusted for inflation.

\a Information in fiscal year 1991 column is drawn from our 1993
report.

\b These figures are estimates.

\c Agency levied an assessment in fiscal year 1991; however, the
assessment was not included in our 1993 report.

\d This amount differs from the figure presented in our 1993 report
by almost $6 billion.  While conducting our current research, the
Customs Service submitted corrected numbers for fiscal year 1991.

\e Agency no longer exists; however, many of its responsibilities
have been transferred to the Surface Transportation Board and the
Federal Highway Administration.  None of the assessments levied by
the Interstate Commerce Commission included in the 1993 report are
currently levied by any federal agency.

\f The agency did not levy any assessments from fiscal years 1996
through 1999.

Source:  Data were provided by these agencies and were drawn from our
1993 report.

   NUMBER OF ASSESSMENTS HAVE
   CHANGED, BUT WHO PAYS AND HOW
   COLLECTIONS ARE USED REMAIN
   GENERALLY THE SAME
------------------------------------------------------------ Letter :4

Federal agencies currently levy 124 assessments, up slightly from the
119 levied in fiscal year 1992.\6 While these overall numbers are
similar, the intervening years saw considerable change in the
specific assessments.  More specifically, since fiscal year 1992, 50
new assessments were levied, 45 assessments were deleted, and 44 were
substantively changed.\7 Appendix I shows the extent to which
assessments changed within each agency and appendix II lists all
assessments that have been deleted.  Although the specific
assessments levied on the commercial maritime industry are different
from those levied in fiscal year 1992, the distribution of who pays
the assessments and what specific funds receive the collections from
the assessments remainï¿½with some exceptionsï¿½much the same as we
reported in 1993.  The following sections discuss these patterns in
more detail.

--------------------
\6 We found that 2 assessments that should have been included in the
previous report were not included; therefore, the total number of
assessments levied in fiscal year 1992 was 119--not 117.

\7 Of the 50 new assessments levied since our previous report, 12
have since been deleted.  In addition, seven assessments levied in
fiscal year 1992 have since been consolidated into three, and two
were divided into six.  Finally, to determine the number of
assessments that had changed, the following definition for ï¿½changeï¿½
was used.  Any change to the following components of an assessment
determined ï¿½change:ï¿½ (1) definition of the assessment; (2) payor of
the assessment; (3) commerce, flag, or vessel type(s) that the
assessment is levied upon; (4) exemption(s) to the assessment; and
(5) formula or frequency of the assessment.  If the name of the
assessment changed or if the statutory citation underwent technical
changes, this is not considered a ï¿½change.ï¿½

      SHIPPERS PAY THE LARGEST
      PORTION OF THE ASSESSMENTS
---------------------------------------------------------- Letter :4.1

Although vessel owners and operators pay the majority of the 124
individual assessments, the total payments for these assessments are
small relative to the total payments made by shippers.  Vessel owners
or operators are exclusively responsible for 85 of the 124
assessments.\8 By contrast, importers and exporters who ship their
goods on vessels have exclusive responsibility for only four
assessments.  The revenues collected, however, from these four
assessments totaled more than $20 billion in fiscal year 1998.  (See
fig.  1.) Customs duties--which are not specific to just the
commercial maritime industry--accounted for nearly the entire amount.

   Figure 1:  Collections From All
   Identified Federal Assessments
   by Payor in Fiscal Year 1998

   (See figure in printed
   edition.)

Legend

NVOCC = non-vessel-operating common carrier

Source:  Compiled from data submitted by the 11 federal agencies.

If the analysis is narrowed to the $2.8 billion that is generated
from assessments other than Customs duties, the picture changes
somewhat.  Shippers were responsible for paying about $1.5 billion,
while vessel owners and operators were responsible for about $1
billion.  Payments made by ï¿½others,ï¿½\9 while still a relatively small
portion of the total, increased from almost $1.3 million in fiscal
year 1991 to almost $200 million in fiscal 1996 and increased by
about $43 million from fiscal years 1996 through 1998.

--------------------
\8 For almost half of the assessments, various individuals can be
responsible for paying the assessment; in other words, who pays the
assessment is not specifically determined.  The data, however, have
been organized into three ï¿½payorï¿½ categories.  The first grouping is
ï¿½importer, exporter, or other.ï¿½ In this categorization, ï¿½otherï¿½ is
defined as broker, foreign trade zone user, or operator.  The second
grouping is ï¿½operator, owner, or other.ï¿½ In this categorization,
ï¿½otherï¿½ is defined as charterer, mortgagee, NVOCC
(non-vessel-operating common carrier), marine terminal operator,
other interested party, representative of the foreign fishing nation,
or filing agent.  The third grouping is strictly ï¿½other.ï¿½ In this
last grouping, ï¿½otherï¿½ is defined as borrower, broker, individual
passenger, requesting entity, or lien claimant.

\9 ï¿½Othersï¿½ in this instance includes borrowers, brokers, and
individual passengers.

      MOST MONEY COLLECTED IS NOT
      EARMARKED FOR SPECIFIC USES
---------------------------------------------------------- Letter :4.2

As shown in table 3, most assessments (i.e., 74)--and the vast
majority of the amounts collected (i.e., over $20 billion)---are
deposited in the U.S.  Treasury's General Fund and are appropriated
for the general support of federal activities.  Another 46
assessments generate about $995 million to reimburse agencies or
private service providers for expenses incurred in providing a
service.  Services range from physical services, such as tug service
through the Panama Canal, to administrative services, such as the
Customs Service's processing of documents for vessels desiring entry
into the United States directly from a foreign port.  Three other
assessments generate $762 million for trust funds, and one assessment
generates revenues for a revolving fund.\10

                                         Table 3

                         Total Collections Summarized by the Type
                          of Fund That Received the Collections
                          and Their Use for Fiscal Year 1991 and
                              Fiscal Years 1996 Through 1999

                                  (Dollars in thousands)

Fund type and use            1991          1996          1997          1998        1999\a
-------------------  ------------  ------------  ------------  ------------  ------------
The General Fund of   $16,977,864   $20,093,867   $20,186,277   $20,137,622   $19,063,970
 the U.S. Treasury
 (use: unspecified)
Agency specific,          512,916       853,970       890,254       995,381     1,106,886
 general or special
 accounts, or
 private service
 provider (use:
 reimbursement for
 services provided)
Trust funds (use:         716,977       802,393       853,446       762,336       718,231
 specified in law)
Revolving fund                  0           800           400           325           800
 (use: maritime war
 risk insurance)
=========================================================================================
Total                 $18,207,757   $21,751,030   $21,930,377   $21,895,664   $20,889,887
-----------------------------------------------------------------------------------------
Note:  Figures are nominal and have not been adjusted for inflation.

\a Estimates.

Source:  Data were provided by these agencies and were drawn from our
1993 report.

To provide an additional perspective on the uses for which the
collected funds from assessments are applied, we analyzed the type of
service or activity for which each assessment was directed.  We used
the four categories developed for our 1993 report:  administrative
processing and associated services (e.g., processing documentation or
issuing permits), physical services (e.g., inspections and tug
service), taxes, and miscellaneous services and Customs duties.  As
table 4 shows, the amounts collected in fiscal year 1996 for
administrative processing and associated services and for physical
services were considerably above fiscal 1991 levels; from fiscal 1996
through fiscal 1998, the collections for these two activities
continued to rise.  The amounts collected in fiscal year 1996 for
taxes were about half of what they had been in fiscal 1991 but
remained constant from fiscal 1996 through fiscal 1998.  The amounts
in the final categoryï¿½miscellaneous services and Customs
duties--increased from fiscal year 1991, reflecting increased
collections from Customs duties.

                                         Table 4

                         Assessment Collection Amounts Summarized
                           by Taxes, Duties, or Type of Service
                         Provided for Fiscal Year 1991 and Fiscal
                                 Years 1996 Through 1999

                                  (Dollars in thousands)

Tax, duty, or type
of service provided          1991          1996          1997          1998        1999\a
-------------------  ------------  ------------  ------------  ------------  ------------
Administrative           $520,287      $821,637      $883,716      $959,144      $972,031
 processing and
 associated
 services
Physical services         480,687       829,251       856,298       941,835       980,325
Taxes                     405,497       206,443       205,468       202,764       206,532
Miscellaneous          16,801,286    19,893,699    19,984,895    19,791,921    18,730,999
 services and
 Customs duties on
 commodities
 entering the
 United States
=========================================================================================
Total                 $18,207,757   $21,751,029   $21,930,377   $21,895,664   $20,889,887
-----------------------------------------------------------------------------------------
Note:  Figures are nominal and have not been adjusted for inflation.

\a Estimates.

Source:  Data were provided by these agencies and were drawn from our
1993 report.

--------------------
\10 The War Risk Revolving Fund is specifically used for enabling
vessels to continue to trade in a national emergency.

   TWO NEW FEDERAL ASSESSMENTS
   HAVE BEEN PROPOSED
------------------------------------------------------------ Letter :5

Two federal assessments on the commercial maritime industry have been
proposed.  The administration submitted a proposal in May of 1998 for
the President's Fiscal Year 2000 budget to replace the Harbor
Maintenance Tax with a Harbor Services User Fee.  The administration
believes that an alternative funding mechanism is needed to replace
the Harbor Maintenance Tax and the Harbor Maintenance Trust Fund for
maintaining federal channel and harbor projects.  The administration
characterizes the proposed Harbor Services User Fee as a ï¿½cost-based
user feeï¿½ that would be assessed on commercial vessel operators on
the basis of the type, capacity, movement, and operational
characteristics of the vessel.  Collections would be deposited in a
Harbor Services Fund.

In the President's Fiscal Year 2000 budget, the implementation of
this new fee is estimated to raise, on average, $980 million annually
through fiscal 2004.  If enacted, the proposal is expected to reduce
general fund appropriations to the U.S.  Army Corps of Engineers for
ï¿½Construction Generalï¿½ by $258 million and ï¿½Operation and
Maintenance, Generalï¿½ by $693 million in fiscal year 2000.  The
balances currently in the Harbor Maintenance Trust Fund would be
transferred to the Harbor Services Fund.  The Harbor Services Fund
also will provide the Saint Lawrence Seaway Development Corporation
with $12 million in fiscal year 2000.  In addition, funds formally
transferred from the Harbor Maintenance Trust Fund to the Customs
Service for the administrative expenses of fee collection will be
derived from the Harbor Services Fund instead.

The National Oceanic and Atmospheric Administration has proposed the
other assessment, the Central Registry for Limited Access Permits
Fee, which has been introduced in the Federal Register.  The agency's
general fund account for expenses incurred in providing a service
would receive any revenues.

   STATUS AND PROJECTED ANNUAL
   BALANCES OF THE HARBOR
   MAINTENANCE TRUST FUND
------------------------------------------------------------ Letter :6

With the recent Supreme Court ruling that the export portion of the
Harbor Maintenance Tax is unconstitutional, concern has been
expressed that funds supplied only from a fee on imports would be
insufficient for the maintenance and operations of U.S.  ports.
However, if the import portion of the fee remains intact, and if
revenue projections from the U.S.  Army Corps of Engineers prove to
be correct, the balance in the Harbor Maintenance Trust Fund should
be sufficient to sustain these operations.  As table 5 shows, figures
prepared by Corps staff place the fiscal year 1998 surplus in the
trust fund at $1.3 billion.  And, from fiscal years 1999 through
fiscal 2004, projected revenues from import fees are expected to rise
to about $920 million, while projected expenditures are expected to
rise to about $750 million.  If these projections prove correct, the
resulting fund balance will be about $2.5 billion in fiscal year
2004.

                                Table 5

                   Summary of Harbor Maintenance Tax
                    Revenues, Total Funds Available,
                         Outlays, and Surpluses

                         (Dollars in thousands)

                                                   Outlays
                                                  from the
                                                    Harbor
                                         Total  Maintenanc
                               Net       funds     e Trust    Surplus/
Fiscal year              revenue\a   available        Fund   (Deficit)
----------------------  ----------  ----------  ----------  ----------
1989                    $183,149\b  $192,864\b  $180,552\b   $12,312\b
1990                     197,623\b   209,935\b   179,681\b    30,254\b
1991                     395,501\b   425,755\b   352,960\b    72,795\b
1992                     531,062\b   603,571\b   482,944\b   120,627\b
1993                     650,722\b   771,653\b   468,376\b   303,277\b
1994                     646,191\b   949,468\b   497,376\b   452,362\b
1995                     700,891\b  1,152,276\   531,082\b   621,194\b
                                             b
1996                     739,137\b  1,360,331\   494,834\b   865,497\b
                                             b
1997                     789,167\c  1,655,230\   549,502\c  1,105,728\
                                             c                       c
1998                     687,870\c  1,800,111\   511,093\c  1,289,018\
                                             c                       c
1999                     655,000\c  1,944,000\  19,700\c,d  1,924,300\
                                             c                       c
2000\e                   701,000\c  2,625,000\   635,000\c  1,990,000\
                                             c                       c
2001\e                   748,000\c  2,738,000\   643,000\c  2,095,000\
                                             c                       c
2002\e                   801,000\c  2,896,000\   678,000\c  2,218,000\
                                             c                       c
2003\e                   860,000\c  3,078,000\   714,000\c  2,364,000\
                                             c                       c
2004\e                   920,000\c  3,284,000\   750,000\c  2,534,000\
                                             c                       c
----------------------------------------------------------------------
Notes:  In 1998 the U.S.  Supreme Court ruled the export portion of
the Harbor Maintenance Tax to be unconstitutional.  Therefore, from
fiscal year 1998 on, the figures reflect revenues from imports and
other categories only.

Figures are nominal and have not been adjusted for inflation.

\a Revenues include revenues collected from the Harbor Maintenance
Tax, other revenue sources, and interest generated.

\b Source:  Annual Report to Congress on the Status of the Harbor
Maintenance Trust Fund for FY 1997.

\c Source:  U.S.  Army Corps of Engineers (figures are actual for
fiscal years 1997 and 1998 and are estimates for fiscal years 1999
through 2004).

\d The Fiscal Year 1999 Energy and Water Development Appropriations
Act does not provide for the U.S.  Army Corps of Engineers' eligible
operation and maintenance costs to be reimbursed from the Harbor
Maintenance Trust Fund.  Subsequent years assume that the U.S.  Army
Corps of Engineers' operation and maintenance costs will be recovered
from the Harbor Maintenance Trust Fund.

\e All figures for this year are estimates.

   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We validated the data in our report on current and proposed
assessments with officials from the 11 federal agencies currently
levying the assessments and the U.S.  Army Corps of Engineers.  The
officials generally agreed with the facts presented in this report.
We made several technical changes to the report, as appropriate.  A
detailed description of our scope and methodology appears in appendix
III.

---------------------------------------------------------- Letter :7.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 10 days after the date of this letter.  At that time, we will
send copies of the report to the Honorable Rodney E.  Slater,
Secretary of Transportation; Admiral James M.  Loy, Commandant of the
Coast Guard; the Honorable Clyde J.  Hart, Jr., Administrator,
Maritime Administration; the Honorable Albert S.  Jacquez,
Administrator, Saint Lawrence Seaway Development Corporation; the
Honorable John A.  Mills, Secretary, Panama Canal Commission; the
Honorable William E.  Kennard, Chairman, Federal Communications
Commission; the Honorable William S.  Cohen, Secretary of Defense;
Robert M.  Walker, Acting Secretary of the Army; the Honorable Harold
J.  Creel, Jr., Chairman, Federal Maritime Commission; the Honorable
William M.  Daley, Secretary of Commerce; the Honorable Lawrence H.
Summers, Secretary of the Treasury; Samuel Banks, Acting Commissioner
of Customs; the Honorable Charles O.  Rossotti, Commissioner of
Internal Revenue; the Honorable Daniel R.  Glickman, Secretary of
Agriculture; the Honorable Donna E.  Shalala, Secretary of Health and
Human Services; Claire V.  Broome, Acting Director, Centers for
Disease Control and Prevention; and the Honorable Jacob J.  Lew,
Director, Office of Management and Budget.  Copies will be made
available to others upon request.

If you or your staff have any questions about this report, please
contact me at (202) 512-2834.  Appendix IV lists key contacts and
contributors to this report.

Sincerely yours,

John H.  Anderson, Jr.
Director, Transportation Issues

HIGHLIGHTED CHANGES REGARDING THE
NUMBER OF FEDERAL ASSESSMENTS
LEVIED ON COMMERCIAL MARITIME
INDUSTRY BY AGENCY, FISCAL YEAR
1992 VERSUS FISCAL 1999
=========================================================== Appendix I

                                     Number of assessments     Assessments that remained,
                                    deleted and imposed from     number of assessments
                         1992          1992 through 1999                changed                1999
                     ------------  --------------------------  --------------------------  ------------
Agency                      Total           New       Deleted     No Change        Change         Total
-------------------  ------------  ------------  ------------  ------------  ------------  ------------
Animal, Plant, and              3             0             0             0             3             3
 Health Inspection
 Service; U.S.
 Department of
 Agriculture
Centers for Disease           1\a             0             0             0             0             1
 Control and
 Prevention;
 Department of
 Health and Human
 Services
Coast Guard;                 11\a          19\b           5\c             2             3            25
 Department of
 Transportation
Customs Service;               14             0           1\d             9             4            13
 Department of the
 Treasury
Federal                         7             2             1             0             6             8
 Communication
 Commission
Federal Maritime               13          27\e          18\f             0             7            22
 Commission
Grain Inspection,               1             0             0             0             1             1
 Packers, and
 Stockyards
 Administration;
 U.S. Department of
 Agriculture
Internal Revenue                5             0             2             2             1             3
 Service;
 Department of the
 Treasury
Interstate Commerce            18             0            18             0             0             0
 Commission\g
Maritime                       10             1             3             3             4             8
 Administration;
 Department of
 Transportation
National Marine                18          10\h           5\i             0            13            23
 Fisheries Service;
 National Oceanic
 and Atmospheric
 Administration;
 Department of
 Commerce
Panama Canal                   17             0             0            15             2            17
 Commission
Saint Lawrence                  1             0             1             0             0             0
 Seaway Development
 Corporation;
 Department of
 Transportation\j
-------------------------------------------------------------------------------------------------------
\a One assessment was not included in previous report.  Changes
cannot be detected, since assessment was not included in previous
report.

\b Sixteen new assessments, 1 new assessment resulting from
consolidation, 2 new assessments resulting from dividing.

\c One assessment deleted, three assessments deleted because of
consolidation, and one assessment deleted because of dividing.

\d Assessment consolidated into existing assessment.

\e Twenty-two new assessments, 4 new assessments resulting from
dividing, and 1 new assessment resulting from consolidation.

\f Fifteen assessments deleted, 2 assessments deleted resulting from
consolidation, and 1 assessment deleted because of dividing.

\g Agency no longer exists.\

\h Nine new assessments and one new assessment resulting from
consolidation.

Three assessments deleted and two assessments deleted because of
consolidation.

\j Agency no longer levies assessment.

DELETED ASSESSMENTS, FISCAL YEARS
1992-99
========================================================== Appendix II

                                        Table II.1

                         Assessments That Existed in Fiscal Year
                             1992 and That Have Been Deleted

Levied by                                Assessment
---------------------------------------  ------------------------------------------------
Coast Guard; Department of               Change of documented vessel name application fee
Transportation

Customs Service; Department of the       Tariff for foreign vessel repairs to U.S.
Treasury                                 vessels

Federal Communications Commission        Temporary waiver of a radio inspection
                                         application fee

Federal Maritime Commission              ATFI certification of batch filing capability
                                         fee

                                         ATFI user manual fee

                                         ATFI user registration fee

Internal Revenue Service; Department of  Tax on Petroleum: Hazardous substance superfund
the Treasury                             tax

                                         Tax on Petroleum: Oil spill liability tax

Interstate Commerce Commission           Approval of a transfer of operating or exemption
                                         authority application fee

                                         Approval of a water carrier rate association
                                         agreement application fee

                                         Approval of an amendment to a water carrier rate
                                         association agreement application fee

                                         Approval of the purchase, lease, consolidation,
                                         merger, or acquisition of control of a water
                                         carrier or carriers application fee

                                         Authority to establish a released value rate
                                         application fee

                                         Interstate Commerce Commission: Special docket
                                         application fee

                                         Interstate Commerce Commission: Special
                                         permission application fee

                                         Informal opinion about a rate application filing
                                         fee

                                         Joint petition to substitute an applicant in a
                                         pending operating rights proceeding filing fee

                                         Notice or petition to discontinue ferry service
                                         filing fee

                                         Petition for declaratory order filing fee

                                         Petition to interpret or clarify an operating
                                         authority filing fee

                                         Request for minor modifications of an operating
                                         authority filing fee

                                         Request for water carrier name change filing fee

                                         Tariff filing fee

                                         Temporary authority to operate a water carrier
                                         application fee

                                         Water carrier operating or exemption authority
                                         application fee

                                         Water carrier temporary authority application
                                         fee

Maritime Administration; Department of   Approval as trustee application fee
Transportation

                                         Sale of subsidized vessels application fee

                                         Trustee's supplemental certification fee

National Marine Fisheries Services,      Allowable octocoral permit application fee
National Oceanic and Atmospheric
Administration; Department of Commerce

                                         Fishing vessel and gear damage compensation fund
                                         application fee

                                         Fishing vessel and gear damage compensation fund
                                         approval fee

Saint Lawrence Seaway Development        St. Lawrence Seaway tariff of tolls
Corporation; Department of
Transportation
-----------------------------------------------------------------------------------------
Legend

ATFI = Automated Tariff Filing Information

                               Table II.2

                Assessments That Were Implemented After
                  Fiscal Year 1992 but Have Since Been
                                Deleted

Levied by                                 Assessment
----------------------------------------  ----------------------------
Federal Maritime Commission               ATFI Guide A: Fundamental
                                          guide and systems
                                          handbookï¿½package A

                                          ATFI Guide B: Tariff
                                          retrieval guideï¿½package B

                                          ATFI Guide C: Tariff filing
                                          guideï¿½package C

                                          ATFI Guide D: Tariff filing
                                          guidesï¿½package D (includes
                                          A, B, and C)

                                          Conditions unfavorable to
                                          shipping in the U.S./Japan
                                          trade

                                          Daily subscriber data
                                          updates (on-tape) fee

                                          Daily subscriber data
                                          updates (on-line) fee

                                          Filing essential terms

                                          Miscellaneous tapes fee

                                          Regulated persons index

                                          Tariff filing fee

                                          Tariff retrieval fee
----------------------------------------------------------------------
Legend

ATFI = Automated Tariff Filing and Information System

OBJECTIVES, SCOPE, AND METHODOLOGY
========================================================= Appendix III

We determined which federal agencies levy assessments on the
commercial maritime industry by interviewing officials from the
Office of Management and Budget, Congressional Budget Office,
Congressional Research Service, U.S.  Army Corps of Engineers, and
various industry representatives.  On the basis of this
determination, we contacted 11 federal agencies to update the
information in our 1993 report, which covered fiscal years 1989-91
and estimates for fiscal 1992.  We provided each of these agencies
with a copy of our 1993 report and asked them to provide information
on the (1) assessments that are no longer in effect, (2) assessments
with no changes, (3) changes to the information on the assessments
included in our 1993 report, (4) new assessments, and (5) proposed
assessments.  We also asked for updated information on collection
amounts for fiscal years 1996-98 and an estimate for fiscal 1999.  We
verified the accuracy of the rules and legislation of each
assessment; however, we did not verify the accuracy of the rest of
the information provided by agencies.  Other federal agencies, such
as the U.S.  Army Corps of Engineers, were contacted to provide
supplemental information regarding federal assessments levied on the
commercial maritime industry.

For a federal agency and its assessments to be included in this
report, the federal agency must currently levy at least one
assessment that is specific to the commercial maritime industry.  We
considered an assessment to be specific to the commercial maritime
industry if the assessment is levied only on vessels and not on other
modes of transportation.  Once these agencies were identified, we
collected information on all the assessments levied by that agency
whether specific to the commercial maritime industry or not.  We
excluded assessments levied on recreational vessels and assessments
levied by other countries, state and local municipalities, and port
authorities.  We also excluded indirect assessments, such as fines,
penalties, and insurance premiums.  Finally, we excluded incidental
fees, such as photocopying.

To obtain information on the Harbor Maintenance Trust Fund, we
gathered historical, current, and forecasted information regarding
the Harbor Maintenance Tax and the Harbor Maintenance Trust Fund.
For historical information, we used data provided in the report
entitled Annual Report to Congress on the Status of the Harbor
Maintenance Trust Fund for FY 1997.  For current and forecasted
information, we spoke with officials from the U.S.  Army Corps of
Engineers and used information from the Budget of the United States
Government, FY 2000 regarding user fees.  The U.S.  Army Corps of
Engineers also provided us with estimates of forecasted revenues
regarding the Harbor Maintenance Tax and the Harbor Maintenance Trust
Fund, from fiscal year 1999 through fiscal 2004.

GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix IV

GAO CONTACTS

John H.  Anderson, Jr.  (202) 512-2834
Randall B.  Williamson (206) 287-4860

ACKNOWLEDGMENTS

In addition to those named above, Anne A.  Cangi, Steven R.  Gazda,
David K.  Hooper, and Stanley G.  Stenerson made key contributions to
this report.

*** End of document. ***