[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
             Committee on Transportation and Infrastructure








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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.]
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