Bloomberg News

Barge Lines Want U.S. to Pay Costs of River Improvements

December 10, 2012

Barge Lines Want Taxpayers to Assume Costs of River Improvements

A barge makes its way down the Mississippi River in St. Louis, Missouri, Nov. 30, 2012. Photographer: Whitney Curtis/Bloomberg

The threat to barge traffic posed by low water levels on the Mississippi River portends more disruptions if the U.S. government doesn’t pay a bigger share of the cost of lock and dam projects, according to a lobbying group.

“This is just a foretaste of what would happen on a regular basis if we don’t find a way to fund our infrastructure,” said Debra Colbert, senior vice president of the Waterways Council Inc., based in Arlington, Virginia.

“It’s always roads, rails and runways, but never rivers,” she said. “We always get left out of the equation. We need to be at the table with the big boys.”

The council is backing legislation that, while authorizing a 6-cent-per-gallon increase in the 20-cent fuel tax paid by commercial river-boat operators, would have the U.S. Army Corps of Engineers pay the full cost of construction projects of less than $100 million on inland waterways. The legislation would also make the corps fully responsible for cost overruns and all construction projects on dams, regardless of cost.

Barges carrying grain, soybeans, coal, oil and other commodities on the Mississippi River have started to reduce their loads to navigate waters shrunk by the worst drought in 50 years. By the end of this month, rock structures in the river near southern Illinois threaten to curtail traffic as the river recedes, according to a Dec. 5 forecast from the National Weather Service.

Locks, Dams

Most costs of inland waterways improvements, including overruns, are now split between the corps and the Inland Waterways Trust Fund, which is financed by the barge-operator fuel tax.

The corps covers all costs of the inland system’s operations and maintenance, which have averaged more than $500 million annually in recent years, according to an analysis by the nonpartisan Congressional Research Service.

The legislation was introduced by Republican Representative Ed Whitfield, of Kentucky, a subcommittee chairman of the Energy and Commerce Committee. Co-sponsors include Democratic Representative Jerry Costello, of Illinois, a senior member of the Transportation and Infrastructure Committee, and 25 other lawmakers.

Senator Lamar Alexander, a Tennessee Republican, has announced plans to include similar measures in a broader waterworks bill that will include ocean port projects.

“This act will ensure safe, dependable, cost-effective, and environmentally sustainable navigation on our nation’s inland waterway system,” Corry Schiermeyer, Whitfield’s spokesman, said in an e-mailed statement.

Changes like those proposed by Whitfield would leave the corps responsible for 70 percent of the cost of construction projects over the next 25 years, the CRS report shows.

Trust Fund

The proposed fuel-tax increase is intended to bolster the depleted Inland Waterways Trust Fund, which helps pay for construction projects. The tax hasn’t been increased since 1995 and isn’t indexed for inflation.

The tax generated $79 million in the year that ended Sept. 30, compared with $106 million in 1998, as barge traffic declined, according to the nonpartisan Joint Committee on Taxation. Revenue into the trust fund is matched by federal funds.

Increasing the tax by 6 cents per gallon would raise about $25 million annually.

The fuel tax falls mostly on barge companies including Ingram Barge Co., of Nashville, Tennessee; Canal Barge Co., of New Orleans; and AEP River Operations LLC, of St. Louis.

Opposite Approaches

Whitfield’s approach runs counter to separate proposals by the administrations of George W. Bush and Barack Obama, as well as a recommendation by Obama’s debt-reduction commission.

Obama and Bush both proposed raising more revenue from commercial users by charging lock-usage fees. Congress declined to impose such charges.

The National Commission on Fiscal Responsibility and Reform, known as the Simpson-Bowles Commission, proposed making the inland-waterways system fully self-funding through an unspecified increase in the fuel tax.

The Congressional Budget Office in 2011 said revenue could be raised through a fuel-tax increase or user fees to cover the cost of operations, maintenance and construction, saving taxpayers an estimated $4 billion over 10 years.

Olmsted Project

The industry contends that, under the current funding formulas, repair and replacement of many ailing locks and dams have been put off while most of the trust fund’s budget goes to a single project -- the $3.1 billion construction of new locks and a dam on the Ohio River near Olmsted, Illinois.

Pressing unmet needs include the repair of locks on the Monongahela River near Pittsburgh and on the Tennessee River near Grand Rivers, Kentucky, and Chattanooga, Tennessee, Colbert said.

Shifting more construction costs to taxpayers is justified because commercial users are singled out for the fuel tax, even though projects benefit recreational boaters and farmers who tap rivers for irrigation, Colbert said.

“There are multiple beneficiaries, yet we are the only ones who pay,” Colbert said in a telephone interview.

Taxpayers for Common Sense, a Washington-based spending watchdog group, in April gave Whitfield its Golden Fleece award for wasteful use of taxpayer dollars, popularized by the late Senator William Proxmire in the 1970s. The group called Whitfield’s legislation a “riverboat ripoff” and “preposterous” given the size of the U.S. budget deficit.

“It’s the inland users trolling for a bailout,” Joshua Sewell, a senior policy analyst for the group, said in a telephone interview. “If the barge industry doesn’t want to pay more, then it doesn’t make sense for taxpayers to pay for it.”

Shipping Decline

U.S. inland waterways carried 553 million tons of cargo in 2011, compared with 623 million tons in 1990, data compiled by the Transportation Department show.

Reasons for the decline include improved efficiency of railroads, making their shipping costs more competitive with barges; increased grain exports to Asia through West Coast ports; and demand for corn by Midwest ethanol producers.

A shift by businesses to just-in-time manufacturing makes barge transportation’s slower pace less competitive with railroads and trucks, said Donald Sweeney, a former Army Corps economist who is associate director of the Center for Transportation Studies at the University of Missouri-St. Louis.

Melissa Samet, senior water resources counsel at the National Wildlife Federation, an environmental lobby group in Merrifield, Virginia, said the legislation is obsolete because it doesn’t account for rapid changes in river conditions caused by climate change.

“It’s like operating as a company today with a business plan that was written in 1976,” Samet said in a telephone interview. “No company would be in business. This legislation doesn’t touch that. This is just ’give us more money.’”

The bill is H.R.4342.

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus