[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE ECONOMIC IMPORTANCE AND FINANCIAL
CHALLENGES OF RECAPITALIZING THE NATION'S
INLAND WATERWAYS TRANSPORTATION SYSTEM
=======================================================================
(112-51)
HEARING
BEFORE THE
SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 21, 2011
__________
Printed for the use of the
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committee.action?chamber=house&committee=transportation
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JOHN L. MICA, Florida, Chairman
DON YOUNG, Alaska NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of
FRANK A. LoBIONDO, New Jersey Columbia
GARY G. MILLER, California JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois CORRINE BROWN, Florida
SAM GRAVES, Missouri BOB FILNER, California
BILL SHUSTER, Pennsylvania EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California RICK LARSEN, Washington
ANDY HARRIS, Maryland MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri HEATH SHULER, North Carolina
BOB GIBBS, Ohio STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania LAURA RICHARDSON, California
RICHARD L. HANNA, New York ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
(ii)
Subcommittee on Water Resources and Environment
BOB GIBBS, Ohio, Chairman
DON YOUNG, Alaska TIMOTHY H. BISHOP, New York
JOHN J. DUNCAN, Jr., Tennessee JERRY F. COSTELLO, Illinois
GARY G. MILLER, California ELEANOR HOLMES NORTON, District of
TIMOTHY V. JOHNSON, Illinois Columbia
BILL SHUSTER, Pennsylvania RUSS CARNAHAN, Missouri
SHELLEY MOORE CAPITO, West Virginia DONNA F. EDWARDS, Maryland
CANDICE S. MILLER, Michigan CORRINE BROWN, Florida
DUNCAN HUNTER, California BOB FILNER, California
ANDY HARRIS, Maryland EDDIE BERNICE JOHNSON, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHAEL E. CAPUANO, Massachusetts
JAIME HERRERA BEUTLER, Washington, GRACE F. NAPOLITANO, California
Vice Chair JASON ALTMIRE, Pennsylvania
CHIP CRAVAACK, Minnesota STEVE COHEN, Tennessee
LARRY BUCSHON, Indiana LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana MAZIE K. HIRONO, Hawaii
JEFF DENHAM, California NICK J. RAHALL II, West Virginia
JAMES LANKFORD, Oklahoma (Ex Officio)
REID J. RIBBLE, Wisconsin
JOHN L. MICA, Florida (Ex Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Bray, Larry G., Ph.D., Research Professor and Faculty Member,
Center for Transportation Research, University of Tennessee--
Knoxville...................................................... 15
Darcy, Hon. Jo-Ellen, Assistant Secretary of the Army (Civil
Works), United States Department of the Army................... 15
Ebke, Steve, Chairman, Production and Stewardship Action Team,
National Corn Growers Association.............................. 15
Ellis, Steve, Vice President, Taxpayers for Common Sense......... 15
Little, Stephen D., Former Chairman, Inland Waterways Users Board 15
Toohey, Michael J., President and CEO, Waterways Council, Inc.... 15
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Costello, Hon. Jerry F., of Illinois............................. 59
Johnson, Hon. Eddie Bernice, of Texas............................ 61
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Bray, Larry G., Ph.D.:
Oral testimony............................................... 63
Prepared remarks............................................. 67
Darcy, Hon. Jo-Ellen............................................. 79
Ebke, Steve...................................................... 82
Ellis, Steve..................................................... 87
Little, Stephen D................................................ 93
Toohey, Michael J................................................ 141
SUBMISSIONS FOR THE RECORD
Gibbs, Hon. Bob, a Representative in Congress from the State of
Ohio, request to submit the following into the record:
Statement of the American Society of Civil Engineers......... 10
Letter from members of the Inland Waterways Users Board to
Hon. Jo-Ellen Darcy, Assistant Secretary of the Army (Civil
Works), United States Department of the Army, January 18,
2011....................................................... 47
Napolitano, Hon. Grace F., a Representative in Congress from the
State of California, request to submit letter from Hon. Jo-
Ellen Darcy, Assistant Secretary of the Army (Civil Works),
United States Department of the Army, to Hon. James L.
Oberstar, Chairman, Committee on Transportation and
Infrastructure, December 21, 2010.............................. 34
THE ECONOMIC IMPORTANCE AND
FINANCIAL CHALLENGES OF
RECAPITALIZING THE NATION'S INLAND
WATERWAYS TRANSPORTATION SYSTEM
----------
WEDNESDAY, SEPTEMBER 21, 2011
House of Representatives,
Subcommittee on Water Resources
and Environment,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:06 a.m. in
Room 2167, Rayburn House Office Building, Hon. Bob Gibbs
(Chairman of the subcommittee) presiding.
Mr. Gibbs. Good morning. We will commence with the hearing
here of the Water Resources and Environment Subcommittee of
Transportation and Infrastructure. Welcome.
Today we are going to have a hearing on the economic
importance and financial challenges of recapitalization of the
Nation's inland waterways transportation system. Transportation
savings are a key factor in economic growth. As fuel prices
continue to escalate, waterway transportation becomes an even
more viable alternative for shippers. But an inefficient
transportation system will make U.S. products uncompetitive in
world markets.
The inland water transportation system provides freight
mobility that otherwise would be costly or even impossible to
address. Some products are simply too large to move by any
mode, other than water. Some products are too hazardous for
other modes, and those modes cannot charge rates high enough to
make it feasible to move the product.
One of our witnesses today, Dr. Larry Bray, will testify
that completely diverting cargo from water to rail would
require hundreds of thousands of additional rail cars, and an
additional 2,500 locomotives. If the cargo that currently moves
by waterway had to move by truck, it would require an
additional 58 million truckloads moving on an already congested
highway system, annually. Yet the Nation's infrastructure,
especially its water resources infrastructure, is falling
apart, faster than we can fix it.
After Hurricane Katrina, it became obvious that the warning
signs were there all along, and that many experts had been
telling us for years that conditions were ripe in the New
Orleans area for disaster. Today we are getting a similar
warning about the Nation's inland waterway system of
transportation.
We have been investing too slowly for too long. Fifty-seven
percent of our inland system is more than 50 years old, and 37
percent of the system is more than 70 years old. It is
literally falling apart. Navigation outages along the system
are increasing. For instance, the Ohio River outages have
increased from 25,000 hours in 2000 to 80,000 hours today. This
trend of increasing outages is expected to continue.
While it affects the reliability of the system, it also
foretells the likelihood of a major physical failure in one of
the structures. At the current rate of investment, the inner
harbor navigation canal lock in New Orleans, the southernmost
navigation feature on the system, is scheduled to begin
reconstruction in 2029. This will mean a current lock will be
well over 100 years old when it is scheduled to be replaced.
In addition, because of the age, the existing locks and
dams are not sized for the modern tow of 15 barges. As a
result, delays occur at some times of the year, as tow boats
have to break up their loads and move them through locks in two
or three separate passes. Efficiencies could be found at many
locations by expanding existing locks to handle the larger
tows.
To add to the problem, the Coast Guard inland water
navigation program has also no plan to replace the inland and
river buoy tender fleet. These cutters mark navigation channels
along the inland waterways, and play a crucial role in keeping
these waterways operating. Almost all have exceeded their
service life, and many are over 60 years old. Yet no design or
construction funding has been made available to replace these
vessels, and none is proposed for the next 5 years.
Conditions are so bad in so many places, it may be
impossible to avoid a major shut-down of a few months or a few
years somewhere in the system. Finding alternative ways to move
cargo would be expensive, if not impossible. And if
transportation costs are to go up, competitiveness of American
products in the world market goes down.
So addressing the infrastructure needs of the inland water
system is not about economic benefit to a few barge companies,
it is about keeping American farms and businesses competitive,
and growing American jobs. Letting the inland water system
decline further would be an economic disaster to add to the
Nation's already significant fiscal problems.
Movement of goods is going to increase in the future, and
we can expect more demands on our inland waterway
transportation system. Having an inland water system that is a
viable alternative will keep costs down among all modes of
transport. If you take inland waterways out of the mix, in
terms of transportation options, costs go up, and American
products become less competitive in the global market place,
and that means lost jobs. That is why I can say I am a fiscal
conservative, and I support investing in America where those
expenditures stoke the fires of our economic engines, and
create jobs throughout our economy.
Sadly, other than the Inland Waterways Users Board, few
realize the state of our infrastructure. And while I do not
agree with all parts of their plan, at least the users board
has delivered a recapitalization plan to the Nation that calls
for reinvestment in the system. For a tiny percentage of the $1
trillion failed stimulus program of 2009, or the $450 billion
job program recently suggested by the administration, we could
spend the $8 billion necessary to recapitalize the inland water
system. That is, to finish the products under construction and
begin to finish the slate of authorized projects.
I think we need to make investments in inland waterway
infrastructure, and other investments that will multiply jobs
throughout the economy. Many of the recent suggestions that
come from the administration and elsewhere call for
expenditures on projects that simply create short-term
construction jobs with little or no economic benefit coming
from the project being built.
I welcome our witnesses today to our hearing today, and
look forward to hearing from each of you. At this time I will
now yield to my ranking member, Mr. Bishop, for remarks that he
may have.
Mr. Bishop. Thank you very much, Mr. Chairman, and I thank
you for holding another hearing to highlight the growing water
infrastructure needs and challenges facing this Nation.
Earlier this summer, this subcommittee held a hearing on
the adverse impacts that reduced Federal expenditures for
maintenance dredging can have on our national and local
economies on the businesses and industries that depend on the
efficient movement of goods and services, and on jobs that are
integrally linked to our ports and our small boat harbors.
I recall how, in hearing after hearing, this committee has
reviewed the declining condition of our water transportation
corridors, our Nation's network of levees and other flood-
damage reduction projects, and our Nation's wastewater
infrastructure. Countless witnesses have come before this
subcommittee to tell us what we should already realize, that
our water-related infrastructure is on the brink of failure, an
event which can only result in adverse impacts to health,
safety, prosperity, and quality of life, should one of these
systems fail.
Today we will focus on another mode of our water-related
infrastructure that is in serious need of repair, our Nation's
inland waterway system. As noted by the Inland Waterways Users
Board, the estimated cost of repairing and modernizing the
assets of the inland system is approximately $8 billion. Yet
expenditures from the Inland Waterways Trust Fund, which was
specifically established to pay half the cost of construction
and most rehabilitation projects on the inland system have been
declining over the past few years, to a point where there are
insufficient revenues in the fund to cover the cost of ongoing
projects.
Mr. Chairman, the evidence is clear that our Nation is
facing an infrastructure crisis. However, rather than take this
challenge head on, as we have traditionally done in a
bipartisan manner, the running theme of the current majority is
that Federal agencies and the American people should simply do
more with less. When it comes to constructing, operating, and
maintaining the critical navigation, flood damage reduction,
power supply, and water supply programs that our Nation relies
upon, the bottom line is that, with reduced funding, Federal
agencies will be forced to do less with less.
At a time when this Nation is facing critical issues,
including historic flooding in almost every region of the
country, as well as trying to kick-start our sluggish economy,
now is exactly the wrong time to withhold vital funding for the
Nation's systems of water infrastructure projects. And yet this
is exactly the path being pursued by the Republican majority in
the House.
For example, in the first months of the 112th Congress, the
Republican majority pushed to cut over $500 million, or
approximately 10 percent, in the current fiscal year from an
already strained Corps budget. Included with this overall cut,
H.R. 1 proposed to reduce the Corps' construction account by
over 16.8 percent over the previous fiscal year's level, and to
reduce funding for the Corps' work on the Mississippi River
system by an unbelievable 30 percent.
Unfortunately, the new majority is not yet done with the
Corps. The House-passed fiscal year 2012 funding bill for the
Corps further reduces the level of funding for the Corps by
11.5 percent, when compared to fiscal year 2010 levels,
including a remarkable cut of 20.5 percent to the Corps'
construction account, and an additional 38.2 percent reduction
for the Corps' work along the Mississippi River.
Contrast this with the recent jobs proposal of President
Obama, which calls for an increase in investment for our
Nation's infrastructure, including its wastewater and drinking
water infrastructure, as well as commercial ports, levees, and
projects on the inland waterway system.
So, as we listen to the testimony of industries that rely
on the efficient movement of goods and services on our Nation's
infrastructure networks, we must be mindful that these
efficiencies can only come from a well-funded and adequately
maintained infrastructure system. In other words, you get what
you pay for.
We must also be mindful of the concerns identified by many
regarding the financing prioritization, and sustainability of
projects along the inland system. It seems to me that the
current mechanisms are not working, as is evidenced by the fact
that there are insufficient funds in the Inland Waterways Trust
Fund to move projects along in a cost-effective manner. As a
result, these projects take longer to construct, which often
leads to a total cost of the project increasing.
However, I remain skeptical of the logic of shifting even
greater portions of these costs on to the American taxpayer. To
me, when paired with the Republican majority's push to further
reduce the Corps budget, adding additional responsibility to
the general fund can only further strain our ability to meet
the growing water-related infrastructure needs of our
communities.
For example, if the Corps' already constrained construction
account had to take on several hundred million dollars in costs
currently covered by the Inland Waterways Trust Fund, which
communities will be told that funds are now no longer available
to meet their needs, whether it be navigation, flood damage
reduction, or environmental restoration?
Mr. Chairman, again I thank you for holding this hearing. I
look forward to today's testimony. I yield back the balance of
my time.
Mr. Gibbs. Mr. Duncan, you've got an opening statement?
Mr. Duncan. Well, thank you, Mr. Chairman. And I too want
to thank you for calling this hearing. Part of the title of the
hearing says the economic importance of our Nation's inland
waterway transportation system. And it is unfortunate that most
of our people do not know how vital and how important our
inland waterway system is to the economic well-being of this
Nation.
But I primarily want to welcome one of our key witnesses
here today. I want to welcome Dr. Larry Bray. Dr. Bray is a
professor at the University of Tennessee Center for
Transportation Research. Prior to joining the University of
Tennessee, he spent 30 years as an economist for the Tennessee
Valley Authority. He received the commander's award for public
service from the Corps of Engineers, one of the highest public
service awards that a private citizen can receive in this
country. And he also served as the chairman of the inland
waterway transportation committee of the Transportation
Research Board. So he certainly is an expert in this area.
The statistics vary a little bit from year to year, but for
this hearing the staff--I will just mention three or four
things the staff has given me. One 15-barge tow on a river can
carry as much cargo as 216 rail cars or 1,050 large trucks. A
gallon of fuel can move 1 ton of cargo 155 miles by truck, 413
miles by train, 576 miles by barge. Waterways allow for $9.2
billion in annual transportation savings.
But taking the system as a whole, these structures have
been deteriorating faster than we have been replacing or
rehabilitating them. And because of this, projects since 1986
have taken an average of 20 years to complete, far longer than
they ever should have, and far longer than almost any other
developed nation has taken. And that doubles and triples the
cost of these projects. And because of that, we have seen a
decline in the trust fund, the Inland Waterways Trust Fund
balance, from $412 million in 2003 to only $57 million now. A
really rapid decline.
And I and many members of this committee are concerned
about the fact that this administration has not appointed
anyone. They have let the terms expire of the entire Inland
Waterways Users Board, a very important board, and we need to
see that board reappointed.
I have told this story in here a couple of times before,
but it is worth retelling again. Many years ago--and I had the
privilege of--you know, we have a 6-year limit on
chairmanships, but I had the privilege of chairing this
subcommittee for 6 years, and I learned a lot about it. But
even before I chaired it, I received a call from a businessman
in Knoxville one day who was concerned about the Chickamauga
Lock. Dr. Bray will mention the Chickamauga Lock and Dam in his
testimony.
But he wanted to have lunch with me. And so that call came
on a Thursday. I said, ``Well, I'm flying back to Washington on
a plane at 1:50 on Monday''. I don't know why I remember the
time, but I do. But I said, ``I will meet you at a restaurant
near the airport for lunch.'' And I thought it was going to be
this man, I wouldn't have been surprised if he brought one or
two others with him. I walked into that restaurant. There was
almost 100 people at that restaurant. And I didn't get to eat
any lunch, because, one after another--they were from all these
businesses in east Tennessee.
And the Chickamauga Lock is not in my district. But it is--
it affects all that transportation that comes up the river from
the Chattanooga area and other--many other places. And the
Tennessee River, of course, runs right through the center of my
home town in Knoxville. But, boy, that meeting really brought
home to me the importance of these inland waterway locks and
dams.
And we've got to do a lot of work. And so I appreciate your
calling this hearing, and I appreciate your inviting Dr. Bray
here to testify. Thank you very much.
Mr. Gibbs. I recognize Mr. Rahall, the ranking member of
the full T&I committee.
Mr. Rahall. Thank you, Mr. Chairman. And thank you for
having today's hearings, which highlights the importance of
robust investment in our Nation's infrastructure to the health
and sustainability of our economy and our overall quality of
life.
I share the concerns expressed by several of the witnesses
here this morning on the need to renew the Federal commitment
to modernize our Nation's inland waterway system. The inland
waterway system is critical for the efficient and economically
viable movement of bulk commodities such as coal mined in my
home State of West Virginia to the market.
For example, in 2008, 74 million tons of bulk commodities
such as coal, petroleum, aggregates, and chemicals were moved
through the State of West Virginia, the majority of which was
shipped along its river systems. Of this amount, over 57
million tons of coal moved along the river system in 2008, with
an estimated value of over $2.1 million.
Unscheduled delays and inefficiencies in moving cargo along
the inland system only serve to increase the cost of goods and
services that either move on the inland system, or increase the
cost to industry and companies that rely on these goods and
services. Unfortunately, these increased costs are often passed
along to American families at the grocery store, or in other
means. In my view, wise investments in ensuring the efficiency
and reliability of our inland system can only benefit the
bottom line of many American families.
Similarly, prudent investments in our Nation's
infrastructure in general make these wise economic sense. The
Nation's system of roads, bridges, and water-related
infrastructure, including the inland waterway system, are needs
that even Americans of vastly different political leanings
agree deserve greater Federal investment, not less. After all,
the jobs created by such investment are not Republican jobs or
Democratic jobs. They are American jobs, and benefit the Nation
as a whole.
Over the past year, I have often expressed concern about
the impacts of the proposed cuts to vital transportation and
infrastructure spending programs advocated by the Republican
leadership. In my view, these cuts are penny wise and pound
foolish, in terms of impacts to American families and our
overall quality of life.
This is true as well for the cuts proposed by our
Republican colleagues to the budget of the U.S. Army Corps of
Engineers, which has weathered a drastic cut of almost 20
percent in the current fiscal year, and is expected to reduce
even further for the upcoming fiscal year. These dramatic cuts
to the Nation's premier water resources agency will have
consequences, forcing the Corps to walk away from or delay the
construction or maintenance of vital navigation, flood control,
and environmental restoration projects that benefit the Nation,
as a whole.
On the inland waterway system, these cuts will result in
fewer critical construction and rehab projects being funded at
their capability, drawing out construction schedules and
inevitably increasing the total cost of project delivery. This
is unsustainable and, in my view, the wrong way to go. I look
forward to continued debate on the issue here today.
In conclusion, I take this opportunity to especially
welcome Mr. Michael Toohey, the president and CEO of the
Waterways Council here this morning. Mike has been in my office
a number of times, sharing his expertise and that of his
council on these and other vitally important infrastructure
issues. And I look forward to the testimony of the rest of the
witnesses, as well. Thank you.
Mr. Gibbs. Representative Napolitano, you have an opening
statement?
Mrs. Napolitano. Yes, Mr. Chair, I do. And thank you very
much for holding this hearing. I do support the jobs, and I
support our country getting on a sound financial track. I am
also a firm believer that when someone makes an investment in a
program or project, they should have a say in how the funds for
the project are spent.
The inland waterways program historically has supported
commerce and development in our country. From the Columbia
River in the West to the Mississippi and the Missouri Rivers in
the Midwest to the Atlantic Intracoastal Waterway in the East,
the waterway system has supported moving commodities.
Today we find ourselves in a different financial and
political environment. First off, financially we cannot afford
subsidies in excess of 90 percent for the inland waterways
program. Secondly, we all want more transparency in how our
dollars are being spent, and who is benefitting from the
taxpayer support. Thirdly, we have an infrastructure system
that is aging and falling apart. Replacement costs for locks,
dams, levees, and other river channel features have escalated
to a level where user fees cannot meet the replacement cost.
And lastly, the logic of maintaining a subsidized waterway for
a small group of users does not make economic or logic sense.
We must discuss how to maintain our inland waterway system,
and how to identify and prioritize those projects that can be
supported, and those who do not warrant continued investment.
For those that are not economically justified, the user
industry cannot or will not support. We need to help them
transition to other forms of meeting the transportation needs.
In 1986 the Water Resources Development Act established the
Inland Waterways Users Board, a Federal advisory committee to
provide the commercial users a voice in the investment
decisionmaking of how their fuel tax cost share was applied.
The users board made the argument, ``User pay, user say.'' The
board, in its present form, is composed exclusively of members
from the barge and commodity industry, and does not include--
and does include input from other groups.
Today we will hear how the waterway users have to--the
users want to have the taxpayer pick up more of the cost
associated with the construction, maintenance, and operation of
the inland waterways system. And, interestingly, they also want
more say on how the money is spent and prioritized.
Something seems wrong in this picture. If we indeed are to
support their proposal, then it seems logical under the User
Pay User Say approach that the current composition of the users
board has outlived its purpose, and should either be eliminated
or the participation on the board should be significantly
shifted to include other user groups in the decisionmaking
process, groups like citizen taxpayers, conservationists--oh,
excuse me, tribes, recreations, et cetera.
If you're asking the taxpayer to pick up more of the cost,
you have to be willing to allow the taxpayer to be more
involved in the decisions on how the money--the taxpayer
money--is to be spent. I am for balance and fair
representation, it is just on whose back the balancing takes
place that I get concerned about. And I really do want some
fairness here.
I yield back the balance of my time.
Mr. Gibbs. Thank you. Representative Johnson, do you have
an opening statement?
Ms. Johnson. Thank you very much. I would like to thank
you, Chairman Gibbs, and Ranking Member Bishop, for holding
this hearing today regarding the economic importance of
financial challenges of recapitalizing our Nation's inland
waterways transportation system.
Considering that the Nation's inland waterways
transportation system is comprised of 25,000 miles of navigable
water with nearly half of that managed by the Corps of
Engineers, and the nearly 630 tons of annual cargo is moved on
the fuel tax inland waterway system, it is important that
Congress and our committee review what improvements can be made
and what challenges lie ahead.
Like most of the United States transportation
infrastructure, the navigational infrastructure of inland
waterways system is aging, and in need of modernization. Today
54 percent of the inland waterway system structures are more
than 54 years old, 36 percent are over 70 years old. In
addition to the outdated structures of harbors, locks, and
dams, there are only--there are also the operational challenges
of maintaining channel depths, flood control, water management,
and water supply that have fallen woefully behind the times.
And my area is a good example.
The Inland Waterways Trust Fund which supports these
structures and operations is funded by 20 cents per gallon of
fuel tax on commercial operators, and is in serious need of
modernization.
I appreciate all that are here today who are committed to
working toward that goal. The future of our inland waterway
transportation system is too important for our economic future
to be sunk by partisanship. As former chair of this
subcommittee, I am hopeful that we can approach this issue in a
bipartisan and responsible manner.
Thank you, and I yield back.
Mr. Gibbs. And I think we have one more opening statement.
Mr. Landry, do you have an opening statement?
Mr. Landry. Thank you, Mr. Chairman, Ranking Member Bishop,
for calling this hearing today.
Navigation, be it inland, coastwise, or international, is
very important to me. One of my first acts as a congressman was
to send a Dear Colleague letter to my new colleagues, alerting
them to a Wall Street Journal article highlighting the need to
increase investment in our inland waterway system.
My district is uniquely situated at a crossroads between
our inland navigational system and our international customers.
Put another way, waterborne cargo rarely originates or
terminates in my district. However, more than 500 million tons
of cargo is moved on the Mississippi River and the Gulf Coast
Intracoastal Waterway, which also follows through my district,
and adds millions more to the--million more tons to this total.
As such, I am greatly concerned with moving our Nation's
inland waterways and our ocean ports forward together, because
the system doesn't work if we concentrate only on the dredging
needs of our ports, or only on the infrastructure needs of our
inland navigational system. I realize that this system is
broken. The harbor maintenance trust fund has significant
problems with this operation, and our inland waterways are
constrained by infrastructure designed for Mark Twain
steamboats, rather than the modern vessels that operate it
today.
But to address these problems, we need to have a willing
partner. When the Corps of Engineers was first created, it was
created with two important tasks: navigation and flood control.
We need to get back to those priorities.
To address--Assistant Secretary Darcy says in her written
testimony that the Army's commitment to inland waterways
navigation is evident by the fact that, under the stimulus
bill, the Corps allocated $420 million to ongoing inland
waterway capital projects.
But I find it interesting that the administration's fiscal
year 2012 budget only allocates 12 percent of the construction
dollars to navigation projects as another--you know, when you
compare the 12 percent in the fiscal year 2012 budget to her
comments, it seems as though we could allocate more money
towards navigation and less to environmental projects. Again,
it is a balance between what our priorities are.
I would suggest that we need an entire re-evaluation of the
Corps' priorities, with more emphasis on the projects which
grow our economy, increase our job creation, and help our
constituents' products compete on an international market.
I look forward to your testimony to see how we can move in
such a direction, keeping in mind that the way we allocate our
resources in the Federal Government to make the American people
more productive and to create jobs is by dividing--is by
deciding which are our priorities, which are our needs, and
which are our wants, and make sure that we fund our needs, and
then if we have anything left over, we can fund our wants.
Thank you, Mr. Chairman.
Mr. Gibbs. I thank you. At this time I ask unanimous
consent that the following written statement be included in the
record from the American Society of Civil Engineers.
[No response.]
Mr. Gibbs. So ordered.
[The information follows:]
Mr. Gibbs. At this time I want to introduce our witnesses.
We've got a distinguished panel, I'm looking forward to hearing
from all of you.
We have Assistant Secretary of the Army, Ms. Jo-Ellen
Darcy. We also have Mr. Stephen Little, former chairman of the
Inland Waterways Users Board; Mike Toohey, president and CEO of
Waterways Council; Dr. Larry Bray, Center of Transportation
Research, University of Tennessee at Knoxville; Mr. Steve Ebke,
chairman of the Production and Stewardship Action Team of the
National Corn Growers Association; and Mr. Steve Ellis, vice
president, Taxpayers for Common Sense.
At this time, Secretary Darcy, the floor is yours. Welcome.
TESTIMONY OF HON. JO-ELLEN DARCY, ASSISTANT SECRETARY OF THE
ARMY (CIVIL WORKS), UNITED STATES DEPARTMENT OF THE ARMY;
STEPHEN D. LITTLE, FORMER CHAIRMAN, INLAND WATERWAYS USERS
BOARD; LARRY G. BRAY, PH.D., RESEARCH PROFESSOR AND FACULTY
MEMBER, CENTER FOR TRANSPORTATION RESEARCH, UNIVERSITY OF
TENNESSEE--KNOXVILLE; MICHAEL J. TOOHEY, PRESIDENT AND CEO,
WATERWAYS COUNCIL, INC.; STEVE EBKE, CHAIRMAN, PRODUCTION AND
STEWARDSHIP ACTION TEAM, NATIONAL CORN GROWERS ASSOCIATION; AND
STEVE ELLIS, VICE PRESIDENT, TAXPAYERS FOR COMMON SENSE
Ms. Darcy. Thank you, Mr. Chairman and distinguished
members of the subcommittee. I thank you for the opportunity to
testify on the economic importance and the financial challenges
of recapitalizing the Nation's inland waterways.
The Army Corps of Engineers is committed to facilitating
commercial navigation by providing support for safe, reliable,
highly cost effective and environmentally sustainable inland
waterborne transportation systems. To this end, the Corps
constructs and rehabilitates the locks, dams, channels, and
other project features that enable vessels to transport
commercial cargo along about 12,000 miles of inland waterways,
including 238 lock chambers and 192 sites.
The Corps also operates and maintains these 12,000 miles of
developed waterways using methods such as maintenance dredging
of navigation channels and some harbors, and regulating water
levels in some cases.
Inland navigation contributes to our Nation's economy, and
is a factor in some State and local government economic
development and job creation efforts. Inland waterways directly
serve 38 States in the Nation's heartland, the Atlantic
seaboard, the Gulf Coast, and the Pacific Northwest. Shippers
in these States use the inland waterways to move more than 600
million tons of cargo annually. Some of the inland waterways,
such as the Mississippi and Ohio rivers and the Illinois
Waterway, support high levels of commercial traffic.
In accordance with the Water Resources Development Act of
1986, capital investment on 27 fuel-taxed waterways is financed
50 percent from the General Fund of the Treasury and 50 percent
from revenues paid by the inland waterways users into the
Inland Waterways Trust Fund.
A balance of funding built up in the Inland Waterways Trust
Fund in the years after its authorization in 1978. However, due
to significant capital investment in the inland waterways in
recent years, reaching a high of $175 million in outlays from
the Inland Waterways Trust Fund in fiscal year 2006 and $171
million in fiscal year 2008, coupled with declining fuel tax
receipts, the balance in the Inland Waterways Trust Fund was at
risk of being depleted by fiscal year 2009.
Generally, since fiscal year 2010, construction and
rehabilitation work has been constrained by the level of
anticipated incoming fuel tax revenues of approximately $75
million to $85 million annually. As these revenues fund the
user-financed 50 percent share of capital costs, this has
limited the total annual construction program for cost-shared
projects to $150 million to $170 million a year.
A notable exception to the 50-50 cost sharing was provided
by Congress under the American Recovery and Reinvestment Act of
2009, whereby there was no Inland Waterways Trust Fund matching
requirement. The Army's commitment to inland waterways
navigation is evidenced by the fact that under this ARRA bill,
despite the lack of cost sharing, the Army allocated $420.5
million to ongoing inland waterways capital projects.
In addition to construction, the Army spends almost $600
million a year on maintaining the inland waterways
infrastructure. Under the ARRA bill, the Army allocated an
additional $394 million to operation and maintenance of inland
waterway projects.
The President's recent plan for economic growth and deficit
reduction, which he sent to the Congress earlier this week
shows how we can reduce the deficit, pay down our debt, and pay
for the American Jobs Act in the process. The plan includes a
proposal for a new user financing structure for the inland
waterways to supplement the existing diesel fuel tax. A new
user fee would generate about $1.1 billion of additional
revenue into the Inland Waterways Trust Fund over the next 10
years to supplement about $1 billion that we anticipate from
the existing fuel tax. The additional revenue would enable a
more robust level of funding for safe, reliable, highly cost
effective and environmentally sustainable waterways, and
contribute to deficit reduction and economic growth.
I expect the administration to submit the specifics of this
legislative proposal to the Congress very shortly. The
administration initiated discussions with the inland navigation
stakeholders and will continue the dialogue with them on this
very important matter. I hope that the submission to the
Congress of a specific proposal will facilitate these
discussions by identifying areas of common ground and workable
solutions on a path forward to address the revenue shortfall.
The Army is committed to improving its project planning,
design, construction, and operation and maintenance processes
in order to more efficiently use available funds to achieve
inland waterways navigation benefits. As part of this effort,
the Army has initiated discussions with the Department of
Transportation to coordinate infrastructure investment planning
between the two agencies.
The administration plans to work with Congress and
stakeholders to explore ways to provide a framework across all
of the Civil Works mission areas for decisions on the
recapitalization of aging Corps infrastructure, which could
include modification of Corps operations, or deauthorization of
projects, consistent with the modern-day water resources
principles, and today's, as well as tomorrow's water resources
priorities and challenges.
For example, under these principles, which were spelled out
in the President's fiscal year 2012 budget, direct
beneficiaries would be asked to pay a significant share of the
costs to extend, expand, rehabilitate, or replace projects, as
they would for a new project, commensurate with the benefits
that they receive. Options such as direct financing will be
considered as part of this effort, where appropriate, and in
accordance with the Federal Government's budgetary standards
for such arrangements.
In summary, the administration will work with Congress and
stakeholders to revise the laws that govern the Inland
Waterways Trust Fund to ensure that the revenue paid by
commercial navigation users on the inland waterways to meet
their share of the cost of fund-financed activities is
sufficient to allow needed inland waterways capital investment
to go forward.
Mr. Chairman and members of the subcommittee, I look
forward to working with this subcommittee to achieve that
objective. Thank you.
Mr. Gibbs. Thank you.
Mr. Little, the floor is yours. Welcome.
Mr. Little. Thank you, Chairman Gibbs and Ranking Minority
Member Bishop. I appreciate the invitation to testify today,
and I also appreciate the subcommittee holding this hearing. I
am Stephen Little, president and CEO of Crounse Corporation. I
also have the distinct honor and privilege of having been the
most recent chairman of the Inland Waterways Users Board.
The users board is a Federal advisory committee established
by Congress in the Water Resources Development Act of 1986, one
of this committee's many significant legislative achievements.
Congress created the users board to give commercial users a
strong voice in the investment decisions that those users are
supporting with their diesel fuel tax payments. At full
strength, the users board is comprised of 11 voting members who
are appointed to represent the various regions of the country,
as well as a spectrum of commercial users and shippers.
I am pleased to appear before this subcommittee this
morning to testify in strong support of the recommendations
developed by the Inland Marine Transportation Systems Capital
Investment Strategy Team, or, as I will refer to it, the CIS
Team, a 50-member Corps and industry team on which I was a
participating team member. Those recommendations have been
approved unanimously by the users board, and are supported by
more than 200 other associations and companies throughout the
Nation.
The CIS Team produced a comprehensive, consensus-based,
joint industry/Corps set of proposals to address the capital
investment needs that need to be made over the next 20 years in
order to preserve and enhance the performance of our Nation's
inland waterways transportation system.
In summary, those recommendations present a proposed plan
to identify ways to improve the Corps' project delivery system,
implement a capital investment strategy that balances
reliability and affordability, prioritize specific capital
investments needed over the next 20 years, and also defines
revenue and cost-sharing approaches that can be met with
reasonable certainty and efficiency.
The current business model for modernizing the Nation's
locks and dams is seriously broken, and must be reformed. As a
Nation, we seem to have lost the ability we once had to plan
and construct individual inland waterways capital projects in a
timely fashion. In my prepared statement that will appear in
the record, I contain many examples of this failed system, most
notably the Olmsted Lock and Dam.
We have a project funding and delivery system that is
terribly inefficient, resulting in enormous waste of taxpayers'
dollars. In an effort to fix this broken business model, for
about a year-and-a-half, roughly 50 key Corps of Engineers and
industry representatives worked diligently to develop a
comprehensive solution to the challenges facing our waterways
infrastructure, a solution that improves the project delivery
system, that dimensions the most critical physical needs of the
system, figures out what it will cost to address those needs,
and how to pay for it.
Representing the Corps side of that team were senior
leaders and technical experts from virtually every level of the
Corps hierarchy. This effort required an enormous commitment
from everyone involved, Corps and industry. But it was a most
important endeavor, and a completely worthwhile commitment. At
the end of the day, the CIS Team was able to meet the challenge
it was given to develop the consensus recommendations I am now
honored to testify in support of today.
The CIS Team's plan envisions a $7.6 billion/20-year inland
waterway capital investment program. The program anticipates an
average annual investment level of $380 million.
Mr. Chairman, I see that my time is nearing an end, so I
will conclude my statement by simply pointing out that the CIS
Team concludes its report with these words: ``While unlikely
that any set of recommended improvements could completely
eliminate cost increases and scheduled delays, these
recommended improvements, in combination with the development
of the capital investment strategy, with the underlying premise
that the funding will be provided in an efficient manner, will
achieve the goal of an improved capital projects business
model.''
I believe that to be a true statement, and I urge the
committee to implement this full inland waterways modernization
plan at the first opportunity. Thank you.
Mr. Gibbs. Thank you.
Dr. Bray, welcome, and the floor is yours.
Mr. Bray. Thank you. I too would like to thank the
subcommittee for inviting me to speak here today. It is quite
an honor for me to do this. Much of what I intended to say has
already been covered, so I don't want to cover old ground. But
I want to make three basic points.
The navigation system is a valuable component of the
national transportation system. It has been mentioned you have
about 589 million tons on the inland system, 8.6 percent of the
total tonnage shipped in the Nation is by barge, 11 percent is
measured by ton-miles. And one number I haven't heard is the
value of barge cargo can be conservatively estimated at about
$124 billion.
Not only do you have these tons, but even on the
tributaries, where you don't have a lot of traffic, you have
the ability to move overweight, oversized commodities that
probably could move on the overland system--maybe not--but they
can be moved cheaply on the river system. You have shipments to
utilities and environmental projects. Even down in north
Alabama you have the Boeing common booster core rockets that
locate inland to stay away from the effects of hurricanes on
those big buildings and expensive equipment.
I want to say secondly that the system is old, and funding
for maintenance and modernization has not been adequate. This
point has already been made, but I want to give a couple of
examples. Lock and Dam 18 on the Mississippi River has
aggregate silica reaction which causes the concrete to spall.
The dam is in such bad shape the rail tracks and hand rails are
warping. The personnel platforms have been relocated from the
side of the dam, for the fear that they will detach from the
dam, and spill the workers into the river. It is that bad.
And at Chickamauga Lock, Representative Duncan mentioned
the problem with the lock is aggregate alkali reaction, and TVA
engineers, when I was there, projected a finite life. It will
eventually need to be closed. This will probably happen before
there is any further large work done. So you're going to put
the people who rely on the river in competition with each
other. How should the river be operated without navigation? It
is unprecedented.
And lastly, I want to talk a little bit about the
beneficiaries of the system of navigation locks and dams, which
this problem at Chickamauga will probably manifest itself.
Representative Duncan said most people don't know that they--
what benefits they received from the navigation channel, and
that is what we found at TVA when we were doing surveys in
early 2000. I'm just going to go over just a few of these--
about 2 minutes left.
Shipper savings. Shippers can ship cheaper by barge. On the
Ohio River system, we estimated that to be in the neighborhood
of $3 billion a year. Nationally, that is probably $7 billion a
year. Now, when you ship cheaper, you can increase employment.
On the Ohio River system we found the present value was $497
billion in sales, and 80,000 annual jobs on the Ohio River
system you can attribute directly to navigation. This yields an
annual impact of about $20.5 billion in sales. The service area
of these utilities encompasses about 829 counties. All of these
people potentially benefit from shipper savings to the
utilities that ship coal on the Ohio River and its system.
Cooling power plants. If all of the power plants had to
convert to cooling towers, it would cost about $22 billion over
50 years. Of course you have hydropower benefits and one thing
that people don't realize: property value benefits. On one
reservoir on the Tennessee River alone, $1.12 billion--property
values, that is about 34 percent of the value of the property.
You also have congestion and safety impacts. They've been
mentioned. And, of course, there are additional large benefits
due to recreation.
I am out of time. I thank you for the opportunity to speak
here today.
Mr. Gibbs. Thank you.
Mr. Toohey, welcome, and the floor is yours.
Mr. Toohey. Thank you, Mr. Chairman and Ranking Member
Bishop. It is an honor to be here today. Mr. Chairman, I am
Mike Toohey, the president and CEO of the Waterways Council,
the Nation's public policy organization advocating a modern and
well-maintained system of ports and inland waterways. Our
membership consists of over 250 waterway carriers, shippers,
port authorities, shipping associations, and waterway groups
from all regions of the country.
The inland waterway system is one of this country's
greatest assets. The waterways have been recognized as an area
of fundamental Federal responsibility since the earliest days
of our United States.
For over 200 years, our river system has facilitated the
reliable and environmentally friendly transportation of the
building blocks of our economy. A vibrant economy funds our
national defense, our national security, our social benefits,
our place in the world. And with the underpinning that the
foundation of transportation provides, we enjoy a tremendous
quality of life because of it. And thank you for this
committee's recognition of that value.
Congressman Duncan and others have testified to the
efficiency of the inland waterway system. It is the most
efficient fuel-efficient system in the transportation modes. It
is also the most environmentally friendly, because it has the
fewest emissions of carbon dioxide.
Our inland waterway system is 12,000 miles and it impacts
38 States, thus the need for a Federal system. Because without
it, we would not have the interconnectivity to get our grains
to the export market, our coal to the export market, our
petroleum to the domestic market, and our construction
materials to our building markets.
Despite all these advantages, our inland waterway system
infrastructure is suffering, and in need of immediate
modernization. As many have noted--thank you, Congresswoman
Johnson--we have many aged facilities that are in critical
condition. And today we could plant a forest and yield--realize
the yielding of that timber before we could get a lock and dam
modernized in this country. That is ridiculous.
So, to fully understand this crisis, let me talk 1 minute
about how this system is financed. The inland waterway system--
this committee, in 1986, established or modified the
established waterway trust fund to support a more viable,
energetic program. They authorized seven new lock and dam
projects, and doubled the fuel tax on the inland waterway
system user--commercial users. Not on all the beneficiaries,
but on the commercial users of the system.
And that tax now generates between $70 million and $90
million a year. That is matched by a 50-50 contribution from
the Federal Government, which recognizes some of the national
defense, municipal water supply, flood damage prevention,
electrical generation from hydropower, and other beneficiaries
that Dr. Bray has identified.
As a result of that, 50 percent of the cost of construction
are paid by the users, the commercial users, but not all the
beneficiaries, and 50 percent by the Federal Government,
recognizing that the general fund contribution is the mechanism
to recognize the other beneficiaries' contribution to the
construction of these facilities, and the maintenance of these
facilities.
Now, the most glaring example of the deficiencies of the
current system is the Olmsted Lock and Dam project on the Ohio
River, originally authorized in 1988 at $775 million, located
on the Ohio River, as I stated. It replaces two aged locks, one
of which was constructed with a 15-year expectation of life. It
is now 80 years old.
That project has escalated in cost to $2.1 billion, $1.3
billion in sunk costs, to build the two 1,200-foot locks, which
are in place. And now the Corps is placing the dam. We have
recently been notified of a significant change in the project
cost. We don't know what that is. We are informed that we may
know that by December.
But a lot of our membership is vitally concerned about this
cost escalation, because it is a blank check for us. We just
get to pay 50 percent, we don't get to say anything about how
it is to be constructed.
Originally this project was to be constructed through the
use of coffer dams. Then it was changed, because the thought of
cost savings through the construction of--or in place--I'm
sorry, build in-the-wet, and that experimental engineering
technology has not worked out.
Mr. Chairman, I would conclude my statement by saying, as
Mr. Little emphasized, we have a business-Government proposal,
jointly worked on, jointly recommended to you to develop a
capital investment plan for this program. We think it is
reasonable. It has a prioritization component. It has a cost-
sharing component. It has a project reform component, and it
has a revenue component, where the users recommend additional
user fees be paid by the commercial sector.
I commend that to you, and I also commend the President for
recognizing--the first time ever a President has recognized
that inland waterways are vital, job-creating opportunities.
And the President's jobs act, he included specifically inland
waterways.
And I would like to thank Secretary Darcy for the
recognition of the President of the vital nature of our
program.
Mr. Chairman, I look forward to questions, and thank you
for your generosity in having me here today.
Mr. Gibbs. Thank you.
Mr. Ebke, the floor is yours. Welcome.
Mr. Ebke. Chairman Gibbs, Ranking Member Bishop, and
distinguished members of the subcommittee, thank you for the
opportunity to testify today on behalf of the National Corn
Growers Association as part of this hearing on the importance
of our Nation's inland waterways transportation system. My name
is Steve Ebke, and I am chairman of NCGA's production and
production and stewardship action team, which handles
transportation policy for our national organization. I am a
third-generation farmer from Daykin, Nebraska, where I grow
corn, soybeans, and wheat.
The U.S. agricultural sector is the largest user of the
freight transportation network, accounting for nearly one-third
of all freight transportation services utilized across the
country. With the primary agricultural production in the
interior of the country, far from the ports that link to
international trade, transportation is critical to the
competitiveness of U.S. agriculture in world markets.
U.S. Department of Agriculture research shows the cost of
transportation from the farm gate to the consumer accounts for
nearly half the cost of U.S. grain at its final destination.
Farmers move their crops and receive their inputs by barge,
rail, and truck. The competition among these modes of
transportation helps farmers receive the best price for their
crops, meet their customers' demand for timely delivery of
products, and successfully compete with foreign producers.
Even though not all corn growers ship to the Mississippi
River, all growers are impacted by it. While my home State of
Nebraska is not adjacent to the Mississippi River system,
farmers in my area understand the importance of our inland
waterway transportation system. Every day the price of grain a
farmer receives at his home market is impacted by the price of
grain that moves on the Mississippi River to export markets.
Each year, more than 1 billion bushels of grain--about 60
percent of all grain exports--are shipped on the Mississippi
River.
Modernization of the Panama Canal, expected to be completed
in 2014, will lead to expanded agricultural export
opportunities within the next few years. Currently, 57 percent
of U.S. grain leaving gulf ports makes its way through the
Panama Canal. The expansion is good news for corn farmers, as
it will lessen transport time, and should reduce ocean freight
costs. This is particularly important for containerized dried
distillers grains bound for Asian markets.
However, if domestic infrastructure is inadequate, the
canal expansion project will be a missed opportunity. The truth
is that many locks currently in use within the U.S. inland
waterways system are too small for today's larger tows,
susceptible to closures and long delays for repairs, and unable
to deal effectively with the lines and wait times that result
from their obsolescence.
The American Society of Civil Engineers, in their 2005
Report Card for American Infrastructure, assigned a grade of D
- to the condition of our river infrastructure. As we heard
from the chairman, on the Upper Mississippi River many lock
chambers are 600 feet in length. However, the average length of
a modern tow, which is 15 barges pushed by a tow boat, is 1,200
feet. Consequently, for a modern tow to navigate through these
antiquated locks, it must split in half and transit the lock
one section at a time, resulting in costly delays.
The good news is that the construction--that construction
has been planned for five new locks along the Upper Mississippi
River, and two new locks along the Illinois River. The planning
was completed by the U.S. Army Corps of Engineers, and approved
by the chief of engineers in December of 2004.
In the 2007 Water Resources Development Act, Congress
authorized construction on these seven projects. Unfortunately,
in the 4 years since the passage of WRDA, little or no funding
has been allocated.
Of course we all realize that in this time of severe budget
constraints we must be more responsible and efficient with our
Federal spending. That is why, in 2009, the U.S. Army Corps of
Engineers collaborated with the Inland Waterways Users Board
and other stakeholders to draft the inland waterways capital
development plan, which recommends major improvements to
project funding and delivery.
In March of 2010, NCGA officially endorsed the inland
waterways capital development plan, and we have advocated for
its inclusion in any future WRDA bill or infrastructure
development proposals. We recognize that any increase in the
fuel tax will ultimately be passed on to corn farmers. But NCGA
strongly believes that a strategic investment in our Nation's
waterways will provide long-term benefits to the agriculture
industry. Without a restructured capital development plan, the
seven locks authorized in WRDA in 2007 could be waiting decades
to begin construction.
In closing, NCGA believes that improving transportation
capacity should be a national priority that deserves urgent
attention. It is time to provide necessary and long overdue
improvements to our Nation's waterways.
Thank you for considering our comments on this important
issue.
Mr. Gibbs. Thank you.
Mr. Ellis, the floor is yours. Welcome.
Mr. Ellis. Thank you, Mr. Chairman. Good morning, Chairman
Gibbs, Ranking Member Bishop, members of the subcommittee. I am
Steve Ellis, vice president of Taxpayers for Common Sense, a
national non-partisan budget watchdog. Thank you for inviting
me here today to testify. I have developed a deep knowledge and
experience on the inland waterway system through my time in the
Coast Guard, and as an advocate.
We have heard about the locks, dams, and engineering, also
that the inland waterways system is an important part of our
Nation's transportation network. It is, carrying nearly 5
percent of the total freight in 2007, according to the
Congressional Research Service, the vast majority on the
Mississippi and Ohio river systems.
While others have extolled the efficiencies, the system
also has limitations. Barges have to follow the river, while
trucks and rail go virtually anywhere in the country. All of
the segments require some engineering to be navigable. Many
have a series of dams to maintain adequate depth, with locks to
provide passage through the dam.
Beginning in 1986, users contributed to the construction
and major rehabilitation costs, half from a fuel tax-financed
Inland Waterways Trust Fund, half from the treasury. Since
1996, that tax has been 20 cents per gallon. The administration
estimated $87 million in revenue from the tax in fiscal year
2012.
Unlike the highways, railways, ports, and other Corps
programs under this committee's jurisdiction, inland waterway
users pay nothing for maintenance. There is no market mechanism
to separate the waterway wheat from the chaff, yielding a
system where 17 segments had 2.3 percent of the total traffic,
yet reaped 30 percent of the operations and maintenance
funding. By the Corps' own analysis, over the last 3 years
users have recovered only about 8 percent--8 percent--of inland
navigation costs. In contrast, coastal ports users cover nearly
80 percent of the costs.
The taxpayer-funded Inland Waterways Users Board developed
a proposal, with significant Corps assistance, to dramatically
increase the subsidy for the inland waterway system. In light
of a $1.3 trillion budget deficit, and our Nation's more than
$14 trillion debt, I thought about how to charitably
characterize the proposal, but all I could come up with was
``greedy.''
The draft proposal that has been circulating jettisons the
modest increase of the gas tax included in the original.
Everything else is the same, including shifting major lock
rehabilitation projects costing less than $100 million to the
taxpayer. That would represent all major lock rehabilitations
to date. It also illogically makes taxpayers solely responsible
for navigation, dam construction, or major rehabilitation. The
dams were built to facilitate navigation. You can have a dam
without a lock, but a lock without a dam is worthless. This
would also violate Federal cost-sharing rules for dam projects.
Lastly, all cost overruns would be charged to taxpayers.
Look, I think the Corps' motto should be, ``We may take twice
as long, but we cost twice as much.'' The Corps noted cost
overruns are, in part, because optimal funding is assumed,
while also noting, ``This is never the case.'' This calculation
skews the benefit cost ratio in favor of approving all Corps
projects. The proposal would put inland waterway construction
projects in an exalted status that exists for no other Federal
project.
Any lawmaker with Corps projects in their district should
take note. There will be real and serious impacts from the
Inland Waterways Users Board proposal. They want $380 million
for construction annually, more than doubling present spending
levels.
Congress is supposed to adopt at least $1.2 trillion in
deficit reduction by year's end. It is unrealistic to think the
Corps' budget is going to increase in the foreseeable future.
That means it is a zero sum gain. Any increase for inland
waterway projects will come at the expense of harbor
deepenings, beach replenishment, flood control, and
environmental restoration projects.
I am not aware of an entity similar to the Inland Waterways
Users Board. There is no port or highway or airport users board
made up entirely of industry officials and staffed by
Government employees, empowered to make spending
recommendations from a trust fund. The Inland Waterways Users
Board should be abolished.
One of the main drivers of cost in an inland waterway
system, both construction and operations and maintenance, is
the navigation locks. A new financing structure must
incorporate some sort of lockage fee, be it flat or sliding, to
help combat congestion delays. Rather than increasing the
current 90 percent subsidy, the inland waterway industry needs
to bear at least some of the cost of operations and
maintenance.
Finally, we sorely need a prioritization mechanism.
Earmarks detracted from a rational budget process. The earmark
moratorium, which we strongly supported, but one of the
problems of it is that it enables the administration to select
the winners and losers, using black box decisionmaking.
Congress should work with the administration to develop
transparent and realistic criteria and metrics to evaluate and
prioritize projects. We cannot afford to spend, based on
political muscle.
Our Nation's debt dictates hard choices and shared
sacrifice. Instead of another taxpayer handout, we need a
thorough re-evaluation that shuts down the deadbeat waterways,
and prioritizes our investment Corps-wide. It cannot simply be
about spending more, it has to be about spending wisely.
Thank you for the opportunity to testify, and I look
forward to answering any questions you might have.
Mr. Gibbs. Thank you. We will begin questions. I will start
off.
Secretary Darcy, in your testimony you talk about the $420
million in the stimulus bill to go for capital projects for our
inland water system, and another $394 million for operation and
maintenance. Since I've been in this job just a little more
than a half a year, I'm trying to figure out where the spending
is happening on the projects, and trying to prioritize.
Can you describe, on the capital side, the $420 million,
what projects those went to? Or, if you can't, can you provide
us with a specific list of the expenditures?
Ms. Darcy. I can provide the specific list of the
expenditures, but the $420 million, that number was for the
inland system.
Mr. Gibbs. OK, yes, but I just would like to see a
specific----
Ms. Darcy. And that was--again, that was the construction
side, because we didn't have to take--the Congress waived the
match from the trust fund.
Mr. Gibbs. OK. I would like--I would be interested to see
the specific list of----
Ms. Darcy. Be happy to.
Mr. Gibbs [continuing]. Dollar to dollar expenditure. Also,
on the Inland Waterways Users Board, it is my understanding
that the board is not functioning right now, because the
administration hasn't re-appointed, or appointed, so that
everybody's terms have expired. What's the status on those
appointments?
Ms. Darcy. The appointments are pending. What has happened
is within the larger Department of Defense, all boards and
commissions are being evaluated as to their current status. And
what we have done in the past, because of the requirement in
statute about the membership on the board, it says that those
members should be representing their industry. We have had to
get a waiver from the Department in order to have that
requirement met.
So, we have asked for that waiver again, because currently,
if you are on a board, you have to serve as a consultant to the
Army, and that would fly in the face of why these people are
actually representing their industries on this board. So we
have always asked for a waiver. This year we've asked for a
waiver again, but that is currently under consideration at the
Department of Defense.
Mr. Gibbs. OK. So the--even though the WRDA--I think it was
the 86----
Ms. Darcy. 1986, right.
Mr. Gibbs. Yes, specified, set the board up. But you're
saying you have to have a waiver, because the Defense policy--
is that administration policy, or is that a conflict with
another law?
Ms. Darcy. It is--I think I can cite the regulation for
you, if you give me a second here. Hold on 1 second.
[Pause.]
Ms. Darcy. I don't have the exact--in my notes I don't have
the exact regulation.
Mr. Gibbs. OK, can you get back to the committee?
Ms. Darcy. Yes.
Mr. Gibbs. Answer that question, because I've looked at the
law, and it seems to me the law is clear that the industry
should be represented.
Ms. Darcy. Right.
Mr. Gibbs. After all, they are paying the diesel fuel tax
going--that was how it was set up.
Ms. Darcy. Right. And I agree, and that is why we have
asked for the waiver in the past, so that we could comply with
the statute.
Mr. Gibbs. But I just want to know why we have to have a
waiver.
Ms. Darcy. Right.
Mr. Gibbs. OK?
Ms. Darcy. Yes sir.
Mr. Gibbs. Also, any specific recommendations from the
board, inland waterways board, has the Corps carried out to
speed up project delivery? Can you cite anything that the users
board has specifically recommended that the Corps has adopted
to help speed up project delivery?
Ms. Darcy. They had several recommendations, some
administrative recommendations in their plan, and some of them
we have undertaken. One was the call for independent external
peer review, which we have been doing. One was increased
training for our project managers, which we have been doing.
Another is to use risk-based cost analysis, which we have been
doing.
And we also are considering some of the other
administrative recommendations that they have recommended, and
we're considering those at headquarters now.
Mr. Gibbs. I want to open it up, question to all the
panelists who want to respond. And we talked about Panama,
widening and deepening, and 2 or 3 years away. And I don't
think it is been that many years they've been working on it.
I know in some of your testimony there was a lock and dam
around Louisville, Kentucky, that was built in the late 1950s,
early 1960s, and then one right next to it, took 10-plus years,
or whatever it was. I'm really concerned about project
delivery.
Can anybody respond to what is happening? Because back in
the 1950s and 1960s, when the projects were carried out, they
seemed to be carried out in a pretty efficient manner, and
within budget. And now we're seeing delays, delays, and
expenditures--of course the Olmsted really sticks out.
What's happening here? Is it--and Mr. Little, I will let
you respond.
Mr. Little. Yes, thank you, Mr. Chairman. If--I could begin
to try to answer that question, because we had the same
question. Why is it taking so long? Because we used to see
these projects completed in a much more timely fashion.
The example you referred to, McAlpine Lock at Louisville,
Kentucky, there is a 1,200-foot lock chamber at McAlpine that
was built in 3 years, from 1959 to 1962. Next to it, a
virtually identical lock chamber, 1,200 feet, took at least 10
years to build. And it was dedicated in 2009. There are example
after example like that.
We went to the Corps of Engineers a few years ago--I may
have referred to the year in my testimony, so I'm relying on my
memory right now, which may not be exactly right, but it was
around the 2006 timeframe--with the exact same question. Why is
it taking so long? And we asked the Corps at that time to
consider undertaking a study to examine projects that are
lagging behind, versus better projects.
The Corps did that study, and after about a year they
reported their findings to us. It is called the selective case
studies. Those of us in the industry refer to it as the good,
the bad, and the ugly, because they looked at different
projects, some better than others. They began to identify some
factors that explained why projects were taking so much longer.
They briefed the users board at a users board meeting a
year after they started the study. And to their credit, the
Corps at that time said there were some improvements that
needed to be made. About a third of these costs have to do with
inefficient funding, because it is kind of like when you build
a house. When you start to build a house, you want the money,
you want to get it in, get it done. And the other two-thirds of
the cost increases were due to changed conditions with the
Corps' estimate and conditions at the site, and various other
things. About two-thirds was within the Corps' purview, about a
third was inefficient funding.
Based on that study, and those findings, the Corps then
asked the industry to join with them and to try to develop a
better way of scoping these projects, of funding these
projects, of prosecuting this plan. It was that effort that led
us to the report.
Mr. Gibbs. OK, I'm going to interrupt you, because my time
is up.
Mr. Little. OK, I'm sorry.
Mr. Gibbs. We will get back to that, because I've got some
follow-up questions.
Mr. Little. Yes, sir.
Mr. Gibbs. Mr. Bishop?
Mr. Bishop. Thank you, Mr. Chairman. Let me start.
Secretary Darcy, a few moments ago you were--the chairman asked
you about the waiver and the policy. Just to be clear, the
policy of the Department of Defense from which you are
requesting a waiver represents longstanding policy of the
Department of Defense. Is that correct?
Ms. Darcy. That is correct.
Mr. Bishop. It is not new policy implemented by the Obama
administration. Is that correct?
Ms. Darcy. That is correct----
Mr. Bishop. Thank you.
Ms. Darcy [continuing]. It is not new, and it is not just
targeted toward this.
Mr. Bishop. Thank you, I appreciate the clarification. Mr.
Little, I want to sort of focus in on the funding piece of
this. I think we all recognize that the inland waterway
infrastructure is in need of upgrade, need of ongoing
maintenance, need of modernization, et cetera. I don't think
anyone argues with that. I think the challenge is how do we
fund it.
And the proposal that the board has made represents, I
think it is reasonable to say, a significant proposal to cost-
shift away from users to general revenue. And let me be
specific. For lock rehabilitation, for between--for projects
that cost between $8 million and $99 million, current law, 50
percent trust fund, 50 percent general revenue. The proposal is
it would be 100 percent general revenue. For dams, current law,
50 percent trust fund, 50 percent general revenue. The proposal
is 100 percent general revenue. For all cost overruns, 50-50
split current law, 100 percent proposed for general revenue.
So, there is a significant movement away from dependence on
the trust fund to dependence on general revenue. I think Mr.
Ellis, in his testimony, quite correctly pointed out that in
the environment in which we find ourselves, it is simply
unreasonable to think that the top lines for the Army Corps of
Engineers budget are going to increase. Construction budget
isn't going to increase, operation and maintenance budget isn't
going to increase in any meaningful way, and most likely it is
going to decrease in the environment we're currently in.
So, my question to you is, if, in fact, we are going to
undertake these projects, and if, in fact, a significant share
of the burden for undertaking these projects is going to move
away from the trust fund onto general fund revenue, what is
your construct? How do you see the Corps going forward? How do
you see--I mean, in other words, whose ox gets gored? If we're
going to spend more than we're spending now on infrastructure
projects related to the inland waterway system, who is going to
lose? I mean what's your notion of who loses?
Mr. Little. I appreciate----
Mr. Bishop. Someone's going to lose.
Mr. Little. And I appreciate the question, and the nature
of the question. If I could, let me try to address some of the
points you made, and maybe elaborate a little bit on what our
thinking was, as we worked through this.
Mr. Bishop. OK, I'd ask you to do it as quickly as you can,
because I've got 1 minute and 51 seconds.
Mr. Little. All right, I will go as quickly----
Mr. Bishop. And I have one other question.
Mr. Little. All right. $100 million on rehab. What we have
seen in our review was some O&M money--or O&M work was being
deferred, we thought, so we thought we saw some migration of
some work that should have been O&M migrating over into the
rehab sector. So that is why we thought a bright line test on
the rehab was appropriate. $100 million was where we pegged it.
There is no magic in that number, maybe it needs to be a
different number, but that made sense to us to keep work from
migrating from O&M into rehab.
Regarding the 100 percent cost share on dams, we recognize,
as Dr. Bray has identified, there are many beneficiaries to the
system. We are not proposing----
Mr. Bishop. Mr. Little?
Mr. Little. OK.
Mr. Bishop. I want you to focus in on----
Mr. Little. OK.
Mr. Bishop. I mean I understand you represent a subset of
our transportation infrastructure, and I understand you have an
obligation to advocate for it. We have an obligation to make
judgments that are balanced.
Mr. Little. Right.
Mr. Bishop. So, guide us. If we're going to provide more
general fund revenue to the inland waterways system, who should
we take it away from?
Mr. Little. I can't answer that question for you, but I can
tell you that the service that we provide to the Nation--and we
are just working for the electric utilities, the farmers, the
petroleum product producers--is of great value to the Nation--
--
Mr. Bishop. So, if I may, it sounds to me like what you're
arguing for is a higher top line for the Army Corps of
Engineers, because I think most reasonable people would say
that what the Army Corps of Engineers does, in general, has a
benefit to either the Nation, as a whole, or to a subset of the
Nation. Correct?
Mr. Little. Yes. And I believe this does have a benefit----
Mr. Bishop. So----
Mr. Little [continuing]. To the Nation, as a whole.
Mr. Bishop. So you would suggest higher Federal
expenditures from general fund revenues for the Army Corps of
Engineers.
Mr. Little. And, with our business model, we are saying we
are willing to pay more fuel tax. We're looking at a 30 to 45
percent increase of tax on our----
Mr. Bishop. Chairman, I thank you for indulging me on that
issue. And either Mr. Little or Mr. Toohey, my understanding is
that there are proposals circulating now that do not yet have a
legislative vehicle, but are--that would eliminate the proposed
increase in the diesel fuel tax, and that--but we would still
go forward with the cost share as proposed in your business
model.
Mr. Little. Right.
Mr. Bishop. And my question to you is, how serious are you
about the increase in the diesel fuel tax? Will you reject a
proposal that doesn't include both?
Mr. Toohey. It is a package, Mr. Bishop. Yes, sir.
Mr. Little. Yes.
Mr. Toohey. We want a package.
Mr. Bishop. So----
Mr. Toohey. We're not--we don't want just the tax increase,
and we don't want just the cost sharing. It is a package. Yes,
sir.
And the other thing I'd suggest to you is, if you're
looking for areas, this is investment spending. It returns
value to the Nation, it creates economic opportunity, it funds
our place in the world, versus consumption spending, which is
taken and spent and returns nothing.
Mr. Bishop. Sir, I would like you to join us as we argue
other pieces of what has been proposed. You heard earlier the
stimulus referred to as the failed stimulus. That was
investment spending. A great deal of it in the main was
investment spending. So if you want to help me make that
argument----
Mr. Toohey. But a small percentage went to infrastructure,
versus consumption spending. And I'm not arguing what's right
or wrong. I mean those are all legitimate appropriations by the
Congress. You make the decisions----
Mr. Bishop. Right. My time has expired, I appreciate the
indulgence of the chairman.
Mr. Gibbs. OK, thank you. Representative Bucshon, do you
have a question?
Dr. Bucshon. Thank you, Chairman Gibbs. Chairman Gibbs and
I had the pleasure of touring the Olmsted Lock, and good to see
you again, Mr. Little.
A couple of things, being a new Member of Congress, are
clear to me, that all of us are really charged, I think, when
it comes to the understanding of the American people, the
importance of our inland waterway system.
I mean I consider myself a fairly well informed citizen.
And to be honest with you, before I became a Member of Congress
and a member of this subcommittee, I really had no idea about
this system, or the significance, and what it means to our
country, economically. And so, I would just like to say that
all of us are charged to inform the American people about the
importance, and get the American people on our side.
That said, we have significant challenges when it comes to
funding not only our inland waterway infrastructure, but our
highways and other infrastructure projects around the country.
And I guess my question--I will just ask Mr. Little--under
the current system, how many authorized projects will we be
able to complete, do you think, in the next 20 years? And under
the capital development plan, how will that improve?
Mr. Little. Our estimate is, if we don't fix the broken
business model, we can expect to finish about 6 projects over
the next 20 years, versus our plan, based on the information we
had at the time we developed the plan, it looks like we could
finish 25 projects.
Dr. Bucshon. That is a tremendous difference. And again,
reiterate that your plan does propose an increase in,
essentially, the user fees as a balanced type proposal to fund
the infrastructure, going forward.
Mr. Little. Yes, sir. That is correct.
Dr. Bucshon. And Mr. Chairman, I don't have any other
specific questions, so I will yield back my time.
Mr. Gibbs. OK, thank you. Representative Ribble, do you
have any questions? Go ahead.
Mr. Ribble. First of all, thank you, Mr. Chairman. Thanks
to the panel for being here.
I spent my entire lifetime in construction, and so I guess
my first question is going to go to Ms. Darcy.
In your testimony, you advocate for additional revenue that
would enable a more robust level of funding for safe, reliable,
cost-effective, and environmentally sustainable waterways, and
contribute to deficit reduction and economic growth. Do you
think that the Olmsted project that now is costing the taxpayer
three times as much and taking twice as long meets this
criteria?
Ms. Darcy. Congressman, as you know, we are confronted
right now at Olmsted with increased costs. We are currently
evaluating those increased costs, and will come up with a
determination as to whether those increased costs would meet
the criteria you just outlined.
Mr. Ribble. But typically, ma'am, when demand is down--
which it is, down in the U.S. construction industry, by about
20 percent--costs go down. And efficiency goes up, as
contractors want to compete for this type of work. Why do you
suppose that is not happening? What is lacking in your controls
that are causing this debacle on the taxpayer?
Ms. Darcy. That is the point of what we're trying to
undertake in the next couple of months, is to see what went
wrong. These costs have escalated. Part of it is due to some of
the conditions in the river. Some of it is because we, this
year, had five 3,500-ton shells that we put in the water that
actually are going to cost us more. And so we're learning from
what we did there.
And we have an outside independent review of the costs that
we hope to have by the end of the year, so we can make a
determination on what we should be spending, going forward.
Mr. Ribble. You heard Mr. Ellis testify. And his--at least
implied--or implication was that the problems are systemic. Are
they systemic?
Ms. Darcy. I don't think they're systemic, but Olmsted is
indicative to us that there is a problem that we need to
address. And some of the recommendations made by the earlier
report are some that I think we need to take into
consideration, especially in going forward. And this is--it is
a huge capital investment, and that is one of the reasons we
need to take a closer look at it.
Mr. Ribble. I'm concerned, as a Member of Congress being
responsible for taxpayer dollars, giving the department any
money right now, until the problem is fixed. And I know that
might slow things down, but at the end of the day it should
speed things up.
Mr. Ellis, did I summarize your testimony accurately? Do
you believe the problem is systemic?
Mr. Ellis. Certainly some of the problems with cost
overruns with the Corps program are systemic. And so, yes, sir.
You know, you look at the way the cost estimation is being
done--and some of this came out in the study that was referred
to as the good, bad, and the ugly study, that essentially you
had instances where they estimated there would be optimal
funding. And the Corps recognizes there is never optimal
funding. Congress has got 535 mouths to feed, and likes to
spread the Corps funding over a lot of different projects, it
is part of the reason why things are delayed.
Also, the fact that they've gone for technological advances
and assumed savings that aren't reality right now, and that is
a problem also in other lock projects, as well. And so I think
that there are lessons to be learned. Unfortunately, for
taxpayers, sad lessons to be learned, but lessons to be learned
that could try to improve the Corps program.
I would also note that one of the recommendations was
independent peer review, which was something that wasn't in the
Water Resources Development Act of 2007, and we broadly
supported and think should be increased and empowered greater.
Mr. Ribble. As a commercial roofing contractor, maybe I
need to get into locks construction. It is kind of the job that
keeps on giving.
I would like to refer to Mr. Toohey. First of all, thank
you for your testimony, particularly the written testimony. It
is rare that I get to read a document that refers to the
Federalist Papers. I appreciate how thorough your testimony was
today.
In your recommendations, you suggested on the revenue side,
``to provide additional revenues to the IWTF in a reasonable
and supportable fashion, possibly through user fees assessed in
a fair and equitable manner.'' I only have a few seconds left;
what is fair and equitable?
Mr. Toohey. We recommend a 6 cents to 9 cents increase in
the fuel tax paid by the commercial users of the system.
Mr. Ribble. And that would be the net sum total of the
users----
Mr. Toohey. Of the commercial contribution. Now, recognize
there are many beneficiaries of the system, as Dr. Bray
testified to. And their contribution is manifest through
general fund appropriations.
Mr. Ribble. How do we protect commercial users from
unreasonable project cost escalation and delay?
Mr. Toohey. Our suggestion is to fundamentally change the
formula by which we are assessed the burden of paying for the
system, and that is that we cap the cost at Olmsted at the--
and--at our current contribution, and any further cost overruns
be borne by the general revenue, the general beneficiaries, the
other beneficiaries of the system.
We cannot provide a commercially viable system, we cannot
get a return on investment, we cannot stay in business, if we
are constantly faced with a blank check, where one entity tells
us, ``This is the amount you're going to pay,'' and we don't
have anything to say about it. You know?
And we are terrified about the number that the Corps is
going to impose at Olmsted on us, and it prevents 24 job-
creating projects on the Upper Mississippi from going forward,
and $3 billion in environmental restoration funds for that
system to be expended by the Corps. The Upper Mississippi
program is $5 billion: $2 billion goes to navigation
improvement and $3 billion goes to environmental restoration.
None of that is going to go forward until we figure out
Olmsted.
Mr. Ribble. Thank you very much for your testimony. Mr.
Chairman, I apologize for going over my time. Thank you, and I
yield back.
Mr. Gibbs. Representative Napolitano?
Mrs. Napolitano. Thank you, Mr. Chairman, and Ms. Darcy, I
would like to start off with asking you the--in December of
2010 you sent a letter to the former chairman of the committee,
expressing the administration's views on the Inland Waterways
Users Board capital development proposal. Does this letter
still represent the view of the administration?
Ms. Darcy. Yes, it does.
Mrs. Napolitano. Thank you. And I will ask, Mr. Chair,
unanimous consent to include this letter for the hearing.
Mr. Gibbs. So ordered.
[The information follows:]
Ms. Darcy. Thank you, ma'am.
Mrs. Napolitano. Question. Just following up on some of the
dialogue just previously had, a key proposal of the capital
projects business model is the project-by-project cost sharing
cap. Under this proposal, if the cost of that project increases
over time, all of the costs associated by this increase are the
responsibility of the Federal Government and the taxpayer,
through general revenues.
The question, then, is are you aware of any analogy in any
other Federal construction program where the Federal Government
assumes any and all cost increases for the total construction
of the project? Mr. Little, Mr. Bray?
Mr. Little. Thank you for the question. I am certainly not
an expert on other practices within the Federal Government. I
can't sit here today and tell you I'm aware of a practice
elsewhere.
What we were trying to address was obviously a very
important part of the program that we think has failed, and
that is the continuously escalating cost of these projects,
well beyond their original estimated cost. So we were trying to
develop an incentive to hold those costs down, so we could save
taxpayers dollars.
Mrs. Napolitano. Thank you. Mr. Ellis?
Mr. Ellis. We reviewed other infrastructure investments
done by the Federal Government. We were not able to find a
similar proposal, or similar policy, where the Federal taxpayer
picks up the entire tab of any cost overruns. No, ma'am.
Mr. Toohey. May I comment?
Mrs. Napolitano. Yes, sir, Mr. Toohey.
Mr. Toohey. Recognize that this is a different Federal
program. The highway program, the aviation programs are
federally assisted programs. The States run the highway
program. You know, the local sponsors at the airport
authorities run the aviation programs. This is the only
Federal, direct Federal interest that we have. And so, the cost
sharing is necessarily different, recognizing that.
And remember, Congress once declared that the waterways
shall be forever free, the Land Ordinance of 1789.
Mrs. Napolitano. Yes.
Mr. Toohey. And now, today, we are confronted with a system
that was constructed in the 1920s and 1930s by the WPA----
Mrs. Napolitano. And I understand. I'm sorry, my time is
running out. But I understand, because I am also on water, and
we have infrastructure that is decaying, and not--we had no
infrastructure--way of dealing with the infrastructure repair.
Mr. Toohey. But the bar to entry for people on the highway
program is you got to buy gasoline, and it is a fuel tax. So
100 percent of the beneficiaries pay the tax. You don't get on
an airplane without paying the passenger facility tax, 100
percent of the beneficiaries pay for the system. This system--
--
Mrs. Napolitano. Thank you.
Mr. Toohey [continuing]. One hundred percent don't pay.
Mrs. Napolitano. Thank you. Yes. There are some differences
of opinion in some of the areas.
Mr. Little, costs vary substantially from one river segment
to another. The current systemwide fees offer limited
incentives for efficient use of the resource. Is there any
value, in your mind, of setting different fees for different
segments, effectively allowing the market to dictate who should
pay to maintain or increase efficiency?
Mr. Little. Yes. We view the waterway system as a system.
Mississippi River Basin, the Ohio River Basin, there is a
tremendous amount of cargo that comes off the Kanawha River.
Mrs. Napolitano. There is 27 segments, right?
Mr. Little. Right. But the cargo that moves off many of
those segments go through the Gulf Coast. So that may be a busy
segment, but certainly the cargo and importance to the Nation
reaches to all those other segments as well. This is a system
that serves the Nation very well in moving cargo to export and
to consumers.
Mrs. Napolitano. Thank you. Mr. Ellis?
Mr. Ellis. It is less of a system, in the fact that there
are certain trunks. I mean the vast majority of the traffic
goes on the Upper--well, the Mississippi River and the Ohio.
Also on the Illinois.
But what you really find is the Lower Mississippi, and
particularly even going up the Middle Miss from St. Louis to
the Gulf of Mexico, there are no locks. You know, people talked
about 15-barge tows? They push 30-barge tows down on that part
of the Lower Mississippi River.
And so, generally, you can bring your cargo directly to the
Mississippi, rather than going to the McClellan-Kerr, the
Arkansas River, and going through a series of locks. So,
essentially, there are differences here that you could try to
cost out and have cost sharing.
And the other thing I would just point out is that so a lot
of the money, the construction money, ends up going to lock
construction. As I pointed out, the major workhorse, the Lower
Mississippi River, there are no locks. So they pay a huge
amount of the gas tax, but actually get not nearly as much of
the benefit.
Mrs. Napolitano. Thank you, sir. Dr. Bray, investing in
reconstruction and rehabilitation of the IWTF is based on an
assumption that total domestic freight traffic will increase.
And, to your knowledge, has an assessment been made of that 27
individual river segment to see whether the anticipated future
freight use traffic can be balanced against the cost of
operations and maintenance, and of course, the rehabilitation
of existing structures?
Mr. Bray. Well, the projections you're talking about are
made by the Army Corps of Engineers when they do these studies.
And in 2004, the National Academy of Sciences set a peer review
process in place. And one would have to believe that some
really good people now review those studies, and you would have
to believe that any forecast is, you know, a guess, that they
are doing probably as well as could be expected, if I get your
question correctly.
Mrs. Napolitano. Well, these were assumptions. And given
our current economy, it is not really something that we have--
and I'm not sure how long ago these reviews were made, as to
whether they apply to the current condition of our state of
affairs----
Mr. Bray. Generally speaking, I know the Huntington
District--excuse me for interrupting, I know you're short of
time--the Huntington District, with which I'm most familiar,
will go back every few years and revisit those forecasts. So a
forecast that might have been made--it takes 19 years now from
the time somebody puts a pencil down to actually a gate
closes--would be revisited.
So, to answer, to address the issue you're referring to,
they are pretty careful about that. And every few years they do
go back and revisit these forecasts.
Mrs. Napolitano. Thank you, Mr. Chair, for your indulgence.
Thank you, gentlemen, ma'am.
Mr. Gibbs. Mr. Cravaack?
Mr. Cravaack. Thank you, Mr. Chair, and thank you to our
panel members. Mr. Toohey, you've been in the business for,
what, 40 years?
Mr. Toohey. Yes, sir.
Mr. Cravaack. Obviously, you've seen a lot through your
experience. You're very familiar, I'm assuming, with the work
of Dr. Bray. Can you kind of compare and contrast what the
capital development plan would be, in regards to his program?
Mr. Toohey. Well, I think it builds--you know, we build
upon Dr. Bray's research, and our recommendations are based on
a lot of the findings of what he says. I don't have his
statement in front of me, but he makes many points that we
agree with about the need for a Federal interest. So, you know,
the identification of beneficiaries, which is a cornerstone of
our cost sharing recommendation, those are two of the areas we
fundamentally agree with him.
And I think, you know, that his scholarly research is the
whole justification for our program, and this committee's
Federal interest in navigation.
Mr. Cravaack. OK. I was kind of concerned. Right now there
is supposed to be a board that is supposed to identify
projects. Is that correct?
Mr. Toohey. Yes, sir.
Mr. Cravaack. OK. Ms. Darcy, can you tell me--I'm sorry I
came in late, you might have already mentioned it--what is the
status of this board?
Ms. Darcy. Congressman, I did talk about it earlier, but
the current status of the board is that the nominations to the
board are pending review from the Department of Defense to a
waiver request that we have asked from them. And that is where
it is at the moment.
And unfortunately, we need a waiver to exempt Inland
Waterways Users Board members from being special Government
employees, so we're just waiting for a decision from the
Department of Defense in order to make that--hopefully make the
board operational again.
Mr. Cravaack. OK. Any idea when that is going to occur?
Ms. Darcy. I don't.
Mr. Cravaack. OK. So right now we're kind of like in limbo
status with this board that is supposed to be identifying
projects?
Ms. Darcy. Correct.
Mr. Cravaack. Well----
Ms. Darcy. However, we have been in communication with the
board on a number of issues, including how we can--or members
of the board and stakeholders, as to how we can move forward on
trying to find a revenue source for the fund.
Mr. Cravaack. OK. Speaking of revenue source, you said gas
receipts are down. Is that correct?
Ms. Darcy. I did not say that.
Mr. Cravaack. I think in your written testimony, or
someone--well, I read in testimony somewhere that gas receipts
are down. Could you tell why do you think the gas receipts are
down? Or can't you comment on that?
Ms. Darcy. I don't--it was not in my testimony, and I'm--if
it wasn't someone's here, I would defer to them. But I don't
know why gas receipts are down, other than the fact that people
aren't driving as much.
Mr. Cravaack. OK.
Ms. Darcy. But that is just my uneducated guess.
Mr. Cravaack. OK. Well, Mr. Ebke, you said, coming up from
the northern part of the Mississippi area up in Minnesota, you
said that the increase in fees are going to be passed to your
members. So does that mean you endorse the increase of fees?
Would that be correct?
Mr. Ebke. That is correct. In March of 2010 the delegates
to our policy-setting session agreed that we would accept--in
fact, we're probably a little higher than what they're
suggesting. We would go up to 20 cents.
Mr. Cravaack. OK, 20 cents. And do you think this is
sustainable within the system without, you know, eliminating
jobs? Mr. Toohey, what do you think?
Mr. Toohey. What do I think about a 20 cents per gallon gas
tax?
Mr. Cravaack. Yes.
Mr. Toohey. I think it is too much.
Mr. Cravaack. Yes?
Mr. Toohey. And it will stifle economic opportunity.
Mr. Cravaack. OK. Mr. Ellis, you made a good comment, you
have 535 mouths to feed as part of the systemic problem of, you
know, which Army Corps project is going to be utilized, which I
think is--probably going back to the board, shouldn't a board
be identifying which projects should be--for the right projects
for the right reasons at the right time? I mean----
Mr. Ellis. Well, I think that the Corps has to work with
all of its constituencies. It is not just the inland waterways,
as far as projects. I mean there are projects all over the
country that are beach replenishment or flood control or
environmental restoration or other navigation projects.
And so, clearly, the Corps has to work with the
stakeholders. And they do, generally, in the development of
these projects. But also, Congress needs to work with the
administration to develop a prioritization system. And that is
really what I'm getting at, is the program has been spread too
far and too thin, which is how a lot of these cost increases
happen, Congressman Cravaack.
And so, I think that it actually would serve the
beneficiaries, the Congress, and the administration, and the
taxpayer better if we actually prioritized our funding,
finished a project, moved on to the next project, finish that
one, move on to the next project.
Mr. Cravaack. And do you think that method, there would
be--like, what is there, 25 outstanding projects right now?
That would be a way to conquer this?
Mr. Ellis. Well, I think that you would start tackling, you
know, the top of the list, wherever it is in the Corps'
program, and you'd knock those out, and you'd move on to the
next projects. And the problem with that is, of course, it
doesn't go very well with politics, because some people, some
of those 535 members, both the House and the Senate, are going
to go home empty handed. And Congress doesn't like doing that,
normally.
Mr. Cravaack. Just--indulgence for just a second. Ms.
Darcy, in this board are politics part of this? Or is it
prioritizing which projects need to be done?
Ms. Darcy. No, it is prioritizing which projects need to be
done.
Mr. Cravaack. OK. Then I strongly suggest we get this board
rolling.
Ms. Darcy. OK. Could I----
Mr. Cravaack. So----
Ms. Darcy. Could I also correct--when you asked me about
the gas tax, I was thinking gasoline tax, as opposed to the
diesel tax that is on the----
Mr. Cravaack. Diesel? Oh.
Ms. Darcy. Right. And----
Mr. Cravaack. My fault.
Ms. Darcy. No, it is not your--I just had a different tax
in my head. But in answer to your question, I think some of the
reasons that the receipts are down is there has been lower
traffic because of the slowed economy, in addition to the fact
that we have also had some more efficient engines on our tugs.
So, you know, that can be another contributor.
Mr. Gibbs. Mr. Little, I think you wanted to respond, and I
will give you a chance.
Mr. Little. Yes, Chairman Gibbs, and thank you. I just want
to make sure that the record is clear on a couple of things.
As this board--and I served as chairman on the users board
for 2 years--my term has expired. So there are no current users
board members right now.
Mr. Cravaack. Right.
Mr. Little. There are no members to talk to. There is not
even one member to talk to.
But part of the process we went through in developing this
capital development plan was to look at all the work out there
for inland waterways projects, and we went through a
prioritization process, very elaborate, established objective
criteria, basically looking at the condition of the project and
the economic benefit. And so, we did a ranking. It is not
perfect, we've never said it was perfect, but it was our good
faith attempt to develop some kind of rational objective
prioritization, so that we could start to complete these
projects, one after one.
As you may well know, we do pay--the commercial users do
now pay a 20 cents a gallon fuel tax. We pay that now, it goes
into the trust fund. We have fixes, we think, to the broken
model. And we believe in it enough that we have said we are
willing to see that tax increase from 20 cents to about
26 cents or 29 cents a gallon if we fix all these other things
that need to be fixed. This plan was developed with the Corps
of Engineers professional staff and the industry, and it is a
good plan.
One final thing is--I think Secretary Darcy touched on it--
during the recession we saw revenues into the trust fund
diminish, as you would expect. We are seeing the revenues
increase a little bit now, not so much because of the domestic
economy, which still has a tepid recovery going on, but we're
seeing some increase in traffic due to exports: grain exports
and coal exports. That is the thing that is starting to kind of
tip this thing in the positive direction a little bit more.
Mr. Cravaack. Thank you, Mr. Little. Appreciate that. And
with that, sir, I yield back the remainder----
Mr. Gibbs. Thank you.
Mr. Cravaack [continuing]. Negative part of my time.
Mr. Gibbs. Mr. Lankford?
Mr. Lankford. Thank you, Mr. Chairman. Let me just kind of
jump in the conversation on a couple things.
Ms. Darcy, what is your best guess--I know you all have
been studying it, looking at some of the cost overruns and the
expectations, the estimates coming in. You've got to have
something in the back of your mind when an estimate comes in at
one level, it comes up much higher. As you're beginning the
process of studying it, what are the big rocks that are in that
that you would see?
Ms. Darcy. Are you referring to Olmsted?
Mr. Lankford. Yes.
Ms. Darcy. Yes.
Mr. Lankford. Or just take any one of the projects.
Ms. Darcy. Oh.
Mr. Lankford. So--but if you want to take that one in
particular----
Ms. Darcy. Well, Olmsted, I earlier said that we are
reviewing the increased cost estimates, and it would just be a
guess to give you a number, and I don't want to do that.
Mr. Lankford. Not a guess of the number, a guess of why.
Ms. Darcy. I think probably a number of things. One was
some of the conditions in the river were different than what we
had initially thought would be there. Again, some of the shell
casings that we have put in have been more expensive than we
had originally thought, as far as not only the time it takes to
process--to produce them, but also the time it takes to install
them. Those are two of the many reasons I think that we're
going to----
Mr. Lankford. Does the Corps currently--with some of the
projects that are ongoing, does the Corps currently work with--
I know--let me back up and say this. I know you work with the
people that it affects. Obviously, all the different ports, all
the different folks, and the people that are affected on that.
How are they engaged in setting priorities through the
board on these different individual--and I'm from Oklahoma, to
give you some clarity there, and so we have a great interest
there in the Port of Muskogee, Port of Catoosa, and others. How
are those priorities set?
And then, are they allowed to engage? Because obviously,
those--that port has great interest in seeing the projects
done. The dredging the locks, they can cry out and they can
complain, they can say, ``Move us higher on the list.'' How can
they get engaged in the process?
Ms. Darcy. Well, I guess, from the--we have been engaged
with the users board, and that is one way. I'm not sure if--
from Oklahoma, what region--who would have been appointed to
the board----
Mr. Lankford. Right.
Ms. Darcy [continuing]. To represent those interests. But
that is what the board was established to do, was to be able to
represent the interests of the----
Mr. Lankford. But now, with the board not functioning at
that point, now how do they do that?
Ms. Darcy. At the moment there is no official board input.
However, we have sought to continue the dialogue that the
industry has provided for us, in trying to establish a new
revenue source.
Mr. Lankford. OK. Is there a way for the Corps to be able
to look at some of these projects--and let me give you--I'm
going to run a couple questions at a time around it.
One of them is--I have an impression, and it is only my
guess based on construction background and some things--if you
run 1 project and do it fast and get it done, it seems to be
cheaper than running 20 projects, each of them taking 20 years
apiece. Would you say that is right or wrong on that? Just in a
general sense.
Ms. Darcy. I think generally that is correct.
Mr. Lankford. See, it goes back to Mr. Ellis's comment that
every congressional district wants the work done in their
district. And so, to show progress, that we are working in your
district, we're going to start this year and we will end some
time before the sun burns out. And so it is this ongoing--it
never seems to get done, because there is not enough funding to
complete projects. There is enough funding to start projects
and to be able to keep them going.
Is there any interest in saying, ``We're going to set this
priority, we're going to run these priorities. But for you in
this location, here is the year your project is going to start,
here is the year it is going to stop and be complete''?
Ms. Darcy. One of the things we're looking at doing in
developing our budgets in the years ahead is to look for
project completions. I mean as you say, you know, funding
something to completion is more efficient. And that is,
hopefully, the way we are going to be able to--you know, you
can't complete everything, but that is part of the priority in
setting our budget goals.
Mr. Lankford. Right. But there has got to be some way to be
able to say, ``We are doing fewer projects, but those projects
we are doing we are going to get finished, and yours is next in
line,'' and as soon as this one is finishing, this one starts,
here is the year this one is going to be complete, and this is
the year this is going to take up, just to be cheaper in the
process of doing that.
Mr. Toohey?
Mr. Toohey. The capital development plan that we developed
in cooperation with the Corps of Engineers lays out a schedule
for every project that we are aware of, when it will start,
when it will end, if our recommendations are adopted by this
committee. And it is available. We have it available for the
committee. You can look right in there and find those things
that are of interest to the members of the committee. But that
is our recommendation to this committee.
Mr. Lankford. Right. Because if I could say only one thing,
it would be it is not a matter of I want to see some dirt
turning in my district, it is I want to know when that is going
to get solved. Even if I can tell some people, ``It is 3 years
away, but here is the day it is going to start, and here is the
day it is going to be done,'' is dramatically different than
saying, ``You see that tractor out there, parked? That is going
to be doing something at some point.''
Mr. Toohey. Yes, and this is our best thinking between the
Corps of Engineers and the commercial users of the system on
when we can accomplish those projects, and in what order, with
a funding level of $380 million a year. You know, we love the
highway program, but we love it with envy, because they're
worried about a $42 billion program versus $35 billion. We're
looking for $170 million.
Mr. Lankford. Right. Mr. Ellis, were you going to say
something?
Mr. Ellis. Just really briefly, Congressman. I was just
going to add that it has to be looked at in the overall context
of the Corps portfolio. And so, just simply looking at the
inland waterway system and not looking at the overall Corps
construction budget isn't going to be solving the problem, it
is going to kind of pick one set of winners. And so we
certainly don't support that.
The other thing I would just point out is that even though
the Inland Waterways Users Board, it is expired right now, it
is not the only body--I mean the Waterways Council exists to
advise the Corps and talk to them, just like the American
Association of Port Authorities does the same thing on the
harbor program. There is no harbor maintenance trust fund users
board. And so I think that there are certainly groups that can
try to represent their views to the Corps and to the Congress,
absent the Inland Waterways Users Board.
Mr. Lankford. OK, thank you. Thank you.
Mr. Toohey. But the users board, the intent of Congress
laid out in statute in 1986 is that there will be a consultive,
consultative process, and it is not happening, because we don't
have a board any more.
Mr. Gibbs. And, Representative, that is my point. The law
was clear, there will be a water user inland board, and that is
why I asked Secretary Darcy earlier to give us the
documentation, because my feeling is that the law is clear, and
this is the Department of Defense policy decision at the
administration level, and I have major concerns about that. And
so I want that rectified.
I want to quickly just follow up on my line of questioning
earlier, and I want to start with Dr. Bray. We talked about
project--streamlining project delivery and I mentioned earlier
how many years it has been to do things now. And I understand
the Upper Mississippi is an example. They did a 15-year study,
spent $75 million. How long do we have to keep studying things?
And, you know, is that part of the problem?
Mr. Bray. It is part of the problem. And it is not just the
Upper Mississippi. They spent about $70 million on the
Missouri. I think that--I think the Missouri River master water
manual control project has been looked at, I don't know, three
times, maybe four. And they're looking at it again.
And I talked to a guy yesterday in the Corps of Engineers.
And in 2004 the National Academy of Sciences made their
proposal. And one of the things that came out of all that was
small-scale improvements, small-scale improvements like switch
boats, mooring cells, which make the lockages go faster. They
don't give you any redundancy, but they make everything better,
in terms of time. They haven't even done that. I mean there has
been no money for that. So it is just been languishing for a
period of time.
And I think maybe--there may be some movement now, but from
the best I can determine, you're right.
Mr. Gibbs. So we have a big bureaucracy doing a lot of
studies, different agencies--I assume the EPA and I don't know
who else, but----
Mr. Bray. I would assume so.
Mr. Gibbs. OK. Does anybody else want to follow up on--yes,
Mr. Ellis?
Mr. Ellis. Chairman Gibbs, I would just point out, though,
on the Upper Mississippi River, part of the reason why the
study took so long and costed so much was because in 2000 the
Corps was found to be cooking the books, that they had actually
manipulated the--a formula to justify the project. And the Army
inspector general went in, investigated that, and there was two
generals and a colonel that were reprimanded for their actions
there, and certainly delayed the process----
Mr. Gibbs. I will just interrupt you. I don't know if they
cooked the books in 2000, I'm not going to go back to 2000.
Mr. Ellis. But an Army inspector general did say that. I
mean it is----
Mr. Gibbs. That is not my concern. My concern is now I want
to see project delivery be reasonable and in budget. And----
Mr. Ellis. Agreed, sir. Yes, sir.
Mr. Gibbs. And I know we have some issues at Olmsted, and
that is why I went out there. And obviously, it is a major
engineering challenge, and there is discussion. But I do know
that we need to get that project done, because it is taking
most of the resources, and we're not getting other projects
done that need to get done.
And we are--my fear is, and I think the Corps' fear--
interpreted to me--that we are setting ourselves up for a major
catastrophe, failure that is going to--the American people will
notice it when it happens, and it is serious.
One last question I want to follow up a little bit. Mr.
Little, the users board--I think it was an 18-month study, you
put your capital development plan together--and before I do
that, before I forget, I also want to ask unanimous consent for
the record to put in the letter to Secretary Darcy from the
Inland Waterways Users Board, the response that you had. So no
objections, we will order that in.
[The information follows:]
Mr. Gibbs. Mr. Little, can you give us a little synopsis of
what the feedback was from the administration, their disregard
or not supportive of the industry's recommendations for the----
Mr. Little. Right. Chairman Gibbs, after we had worked at
the Corps' invitation for 18 months in developing this capital
development plan, we read the letter from Secretary Darcy to
Congressman Oberstar, soon to be leaving Congress, Congressman
Oberstar, in which she laid out the administration's views at
that time.
We were disappointed that we had made this effort and
worked so hard in developing this plan at the Corps' invitation
to hear a response like that, read a response like that. And it
was contrary to some of the positive things we were hearing
from the Corps and the administration about how what we were
developing, they thought, could be a model for how other
programs could be reformed and made more efficient. So we were
very shocked and disappointed in it.
Mr. Gibbs. Ms. Darcy, I suppose you want to respond. Why
weren't you and the administration supportive of the plan?
Ms. Darcy. I think a lot of the reasons are explained in
the letter to Chairman Oberstar. But overall, there was a great
deal of change in the cost sharing, a great deal of the payment
would be put back on the Federal taxpayer.
Mr. Gibbs. I'm curious. Why didn't you respond directly to
the inland waters board? You responded to former Chairman
Oberstar, but you didn't respond directly to the board, is that
correct?
Ms. Darcy. Not in a letter, sir, no.
Mr. Gibbs. OK. So there was no written response from you to
the users board?
Ms. Darcy. No, sir.
Mr. Gibbs. OK. I've got one last question I will open up to
the panel. I think there was a lot of discussion today about
the infrastructure and that, but what's the--anybody want to
respond to what the likelihood of a failure is, and what would
be economic--or just consequences, in general?
I don't think you can answer the likelihood of a failure,
but if there is a failure what would be the consequences to the
grain industry?
Mr. Ebke. Well, I think what we look at is the effect that
Katrina had on the system. And I think we had--at one point
were looking at doing some studies, and I don't have those. If
we have those, I could certainly pass them forward. But I think
Katrina showed us that things, as far as the grain impact,
significant bottleneck, the railroads had to try to take the
slack up, you know, find a place for the grain to go, keep the
system functioning. So it was pretty dramatic.
Mr. Gibbs. I would like to follow up, I'm going to follow
up to the panel again with my question, to put a little bit
more to it.
I know the President--I think it was in a State of the
Union--wants to double exports, I think, in 5 years. Couple
with that failure. Do we have the capacity to be able to do
that? So you can put all that together in one whole question.
Mr. Little?
Mr. Toohey. Well, one thing to be aware of, you know, all
of the fuel that goes into western Pennsylvania comes by
waterway. It is manufactured at Catlettsburg, Kentucky, shipped
on the waterways, 300,000 barrels of petroleum product a day.
All of the fuel that goes into the UPS package service system
at Louisville, where they take cargo and then move it on,
totally dependent on the waterways.
So, a failure of any of the locks between Catlettsburg,
Kentucky, and Louisville, or any of the locks between
Catlettsburg, Kentucky, and Pittsburgh will eliminate the
opportunity to have petroleum products in that region, because
that is such a critical asset, such a critical asset that in--
during World War II, the Federal Government came to Ashland Oil
and said, ``We want to build a secure aviation facility if you
will run it.'' They did.
All of the fuel use in the aviation--the air campaign in
Europe was manufactured at Catlettsburg, Kentucky, and shipped
down the inland waterways. All of the classified programs, one
of which now you can talk about, SR-71, fuel manufactured at
Catlettsburg, Kentucky. Why? It was a secure, national defense
facility. That is why we recognize our national defense
component of the waterways. There is no cost-sharing for that.
That is a 100 percent Federal responsibility. That is not Mr.
Little's responsibility, or any other carrier's. Vital to the
national defense.
But we don't know that. We forget that. It is invisible
today, some of it for strategic reasons. But it is there for a
purpose.
Mr. Gibbs. Mr. Little.
Mr. Little. And, Chairman Gibbs, also to your first
question, I believe that the administration is looking at some
of the impact to perhaps catastrophic failure in certain
places. We talked about Olmsted.
There is another big project out there that is not getting
funding, and that is the Lower Monongahela project. It is 100
years old. And I believe, based on what I have heard, that the
administration is looking at just the energy impact if there is
a catastrophic failure there, which will be a tremendous
impact. So that is one area that needs to be looked at, and we
need to learn more about what they're finding there.
As to your question as to capacity, yes. If we can put more
cargo on the waterways, we have the infrastructure capacity out
there to move more products. And, of course, that is the most
environmentally friendly, safest mode of transportation, so we
should be looking to do that.
Mr. Gibbs. Mr. Ellis.
Mr. Ellis. Yes, Chairman Gibbs, just replying to your
initial question about the impact. And obviously, a lot of it
depends on where it is. So, you know, if you look at Katrina,
which impacted New Orleans, which is basically the exit for all
of our international commerce coming down the Mississippi, it
is going to have a huge impact everywhere, all the way through
the system.
If it is at the Monongahela, near the end of the Ohio
system, it is going to have a different impact. And certainly
Mr. Toohey pointed out that there were the impacts, in that
stretch--on the Ohio River. So a lot of it is going to depend
on where this actually happens.
I would also point out, though, on the Ohio, the vast
majority of the projects that are going on there are about--
there already is a 1,200-foot lock, and there is a second lock,
a 600-foot lock, that they are trying to make 1,200 feet. So it
is 100 percent redundancy that they're trying to have there. So
it is not like you still couldn't get through in many of these
places, you know, unless there is a catastrophic failure across
there.
And then, the only other thing I would point out about the
cost sharing and the Federal Government, you know, national
security, the Federal Government--by far, the biggest expense
in the inland waterway system is operations and maintenance.
Right now, that is 100 percent Federal. That isn't cost-shared
at all. And so, the Federal Government is certainly well
represented in providing its cost share. And also, 50 percent
of any of these projects are being paid for by the Federal
taxpayer.
So, I mean certainly there is other uses and other
beneficiaries, but that is being picked up through the
taxpayer.
Mr. Gibbs. Mr. Bray.
Mr. Bray. It is the Mississippi River that has no
redundancy.
Mr. Gibbs. Pardon? Say again.
Mr. Bray. It is the Mississippi River who has no
redundancy. And failures of any of those projects, within
certain driving distance of St. Louis--of course, the option is
trucking. Many of those farmer in that area don't get rail
service now because of the rail Staggers Act. And the roads up
there aren't good, really, the secondary roads.
And so, that is one big impact you're going to see, is this
shift to more and more trucking. And that was one thing I was
talking to them about Lock and Dam 18. What did they think
would happen if Lock and Dam 18 closed, because there are three
big grain shippers in that pool, and what would the farmers do?
They'd probably truck on to St. Louis.
Mr. Gibbs. Yes.
Mr. Bray. Go ahead.
Mr. Gibbs. Mr. Little.
Mr. Little. I just wanted to address the redundancy comment
on the Ohio River, because there are twin locks at many
locations on the Ohio River. In many places, that is a 1,200-
foot chamber and a 600-foot chamber. So at Markland Lock, which
is in between Cincinnati and Louisville on the Ohio River--in
fact I just drove across that lock on Monday and looked at it--
there is work being done now on the 1,200-foot chamber. So that
chamber is closed. All the traffic is going through the 600-
foot chamber.
Annually, that passes about 58 million tons a year. The
delays there are averaging 33 hours. That work began in July
and is not scheduled to be completed until November. So, by my
estimates, kind of the back-of-the-envelope estimate, which I
think is pretty close, just to the industry I expect that cost
to be over $40 million in delay costs, which will eventually,
one way or the other, get passed on to the consumers.
Mr. Gibbs. I just want to, Secretary Darcy, follow up
quick. It is sad, just coming on in the Congress and seeing the
$800 billion or so stimulus spent, and you say $400 million of
it was for the infrastructure, you're going to supply me with a
specific list of the projects, so we know what's going on--and
then the President just talked about--I think you said in your
testimony he is going to come in a week or so with more
specifics, and--but he didn't outline any major investment
expenditures into the inland water system until just,
basically, when we called this hearing, I believe.
So, could--you have any specifics you could tell us how--
where the money is going to come from, or do you have any idea
what the plan is?
Ms. Darcy. The plan that the President announced on Monday
is to have a user fee, in addition to the current diesel fuel
tax. And, as I said, the specifics are forthcoming, but it
would be a users fee that we hope would generate about $1
billion over 10 years.
Mr. Gibbs. OK. Is there any more? Go ahead, Representative.
Mrs. Napolitano. Thank you, Mr. Chair. Ms. Darcy, can you
tell me--this is a little bit different, because I look at all
things--the annual cost to the taxpayer of the Inland Waterways
Users Board, and from which account does it come from?
Ms. Darcy. It comes from our account. I would have to get
back to you. It is something like--$60,000 sticks in my head,
but that is just a guess. I would have to get you----
Mrs. Napolitano. For the board?
Ms. Darcy. For the board, correct.
Mrs. Napolitano. My figure is $895,000.
Ms. Darcy. That--I would----
Mrs. Napolitano. A little different.
Ms. Darcy. It is a little different, and I just don't know.
Mrs. Napolitano. Right, I know. But that may be one of the
things we may want to look at----
Ms. Darcy. OK.
Mrs. Napolitano [continuing]. To see which expenses can be
reduced to be able to save the taxpayers some money.
Ms. Darcy. OK.
Mrs. Napolitano. Mr. Ellis?
Mr. Ellis. I was just asking, because we had looked at
this. And I believe in the Federal--in the fiscal year 2012
budget there was $850,000 set aside, requested in the budget
request for fiscal year 2012 for the Inland Waterways Users
Board.
Mrs. Napolitano. So it is quite a chunk of money.
Now, the other thing that is just really a comment, more
than anything, in many of the areas that I have served here in
Congress, we look at our--ignoring the basic tenements of
infrastructure repair and maintenance, the O&M. Sometimes we
put it on the user, sometimes we put it on the private owners,
whether it is dams in other areas. But I believe that there is
some discussion and dialogue ongoing--and hopefully the
President--I believe he also mentioned it, to develop an
infrastructure bank to be able to assist those entities that
are not able to fund their own, to be able to borrow it,
whether it is a low-interest rate, or whatever.
But I can tell you in my subcommittee the--in dams, rivers,
in canals and everything else that we have, I think we need to
begin to look at it. When you have water leaks, they use up
more than 50 percent of the water, potable water. And we are
running into drought cycles throughout the United States. It is
imperative we begin to look at how do we help the communities
face these things. So, that is something else.
And, Mr. Chair, I have other questions that I will submit
for the record. Thank you very much.
Mr. Gibbs. Thank you. I want to thank all the panelists for
coming. And I think it is quite evident we have a lot of work
to do. And make sure we enhance our inland water system, and I
think my personal prerogatives are really focused on projects
that are specifically important to moving commerce and growing
our economy and creating jobs. And so I look forward to working
with the administration and the private sector to accomplish
that. So that concludes this hearing today. Thank you.
[Whereupon, at 12:12 p.m., the subcommittee was adjourned.]