Source: National Waterways Conference compilation and preliminary estimates based on Office of Management and Budget and Army Corps of Engineers documents.

02/03/03

High-Priority Allocations

Except for one environmental restoration project (gas abatement at Chief Joseph Dam and Powerhouse on the Columbia River to comply with a U.S. Fish and Wildlife Service biological opinion), there were no new construction starts in the budget request. There were two new starts for general investigations - $2 million to conduct an "ex post facto" national study to analyze the benefits accruing from completed projects and $3 million for a national study of independent review.

In addition, the budget allocated $1 million to assess long-term options for low-use navigation channels and harbors. The 10-year-old Upper Mississippi and Illinois Waterway Navigation Study received $3.2 million to hopefully conclude its work. And the Great Lakes navigation study, on which the St. Lawrence Seaway Development Corporation, an agency of the U.S. Department of Transportation, is the lead agency, got $740,000 to get started.

R. L. (Les) Brownlee, Acting Assistant Secretary of the Army (Civil Works), said the President's budget request provided "substantial funding for eight projects that are the highest priorities in the Nation." The high-priority list includes Olmsted L&D near the mouth of Ohio River, which received $73 million; Columbia River fish mitigation, $95 million; Upper Mississippi environmental management program, $33.3 million, and Missouri River fish and wildlife mitigation, $22 million.

Other high-priority projects in the budget: New York and New Jersey Harbor deepening, $115 million; Florida Everglades restoration, $245 million; and two projects to provide flood damage reduction in urban areas --- Sims Bayou in Houston, $12 million, and West Bank and vicinity at New Orleans, $35 million.

Overall, the President's budget requests $100 million for general investigations (as compared to $154 million appropriated in FY 2002 - FY 2003 appropriations have still not been enacted); construction $1.350 billion ($1.716 billion); O&M $1.939 billion ($1.875 billion); regulatory $144 million ($127 million); MR&T $280 million ($346 million); formerly utilized sites $140 million ($140 million) and general expenses $171 million ($153 million).

Trust Fund-Financed Projects

The President's budget earmarks approximately $222.6 million to continue construction of eight inland waterways projects plus three major rehabilitations costing $14.9 million, with one-half of the total (approximately $237.5 million) to come from the Inland Waterways Trust Fund - or about $118.8 million. However, the budget states that only $110 million will come from the trust fund for construction (perhaps taking construction delays and slippage into account).

In the fiscal year which ended last September 30 (FY 2002), the Inland Waterways Trust Fund transferred $106.2 million to the Corps of Engineers to pay one-half of construction and major rehabilitation expenditures.

Here is a listing of the budget requests for major inland construction and rehabilitation projects:

Olmsted L&D $73 million, Kentucky Lock Addition at the mouth of the Tennessee River $24.9 million, McAlpine L&D at Louisville $26.1 million, Winfield L&D on the Kanawha $2 million, Marmet on the same river $52.2 million, Robert C. Byrd (Gallipolis) L&D on the Ohio River $2.5 million, Monongahela L&D 2, 3 and 4 $35 million, and Industrial Lock on the Gulf Intracoastal Waterway at New Orleans $7 million.

Three major rehabilitation projects on the Mississippi River were included in the budget request - L&D 3 $0.6 million, L&D 11 $1.3 million, and L&D 24 $13 million. Greenup L&D onthe Ohio River received an allocation of $2.9 million for pre-construction engineering and design.

In addition, Montgomery Point L&D near the mouth of the McClellan-Kerr Arkansas River navigation system received $20 million to continue its construction, but this project is not subject to cost sharing since it was included in the waterway’s original authorization. The on-going replacement of the deep-draft Industrial Lock is a combination shallow-/deep-draft project, but deep-draft interests will be liable only for the incremental costs of providing deep-draft navigation.

Budget's Deep-Draft Implications

The idea has been advanced previously, but the FY 2004 budget request promises to try again to use the Harbor Maintenance Trust Fund (HMTF) to finance the Federal share of the cost of deepening and/or widening deep-draft harbor access channels. Since passage of the 1986 WRDA, ports have paid 35 percent of the cost of dredging (or otherwise constructing) access channels up to 45 feet and 60 percent of the construction costs of channels deeper than 45 feet.

In FY 2002, the HMTF transferred $656.2 million to the Corps of Engineers to pay for 100 percent of the maintenance dredging costs for deep-draft access channels plus maintenance of non-fuel-taxed shallow-draft waterways and harbors. The President's budget request anticipates paying $600 million from the HMTF for O&M and another $212 million from the HMTF for the Federal share of new construction.

Budget documents said legislation will be submitted to Congress shortly to authorize such expenditures. If enacted, this would mean that ports, and particularly their customers (shippers of waterborne commerce), would be paying 100 percent of the cost of constructing and maintaining Federal access channels.

Reaction to O&M Cost Sharing

Waterways leaders were quick to condemn the President's recommendation for shallow-draft O&M cost recovery, which emanated from the White House's Office of Management and Budget (OMB).

"This proposal is eerily reminiscent of the $1-per-gallon fuel tax increase which the Clinton Administration submitted to the Congress almost exactly 10 years ago," said Harry N. Cook, president of the National Waterways Conference. "It took all the political muscle the waterways community was able to muster over a six-month period to shoot it down."

Since 1995, shallow-draft waterways users have paid a fuel tax of 20 cents per gallon, which goes into the Inland Waterways Trust Fund.

Donald G. Waldon of Columbus, Miss., administrator of the Tennessee-Tombigbee Waterway Development Authority, criticized OMB for considering only ton-miles moved on each waterway segment rather than "system ton-miles" in compiling its list of low-use waterways. "Tenn-Tom is only 234 miles long, and it was supposed to be the 'connecting link' between the Tennessee River and Gulf Coast waterways," Mr. Waldon said, "so counting only the traffic moving on our segment and not its entire origin-to-destination journey comes as a major disadvantage to us."

The Tennessee-Tombigbee link moved only 1.46 billion ton-miles a year over the last five years, but its system ton-miles amounted to 4.96 billion a year.

Richard F. Brontoli of Shreveport, executive director of the Red River Valley Association, said original benefit/cost calculations for the Red River-now known as the J. Bennett Johnston Waterway- were based on "the tonnage which either originated or terminated on the river and moved over the entire inland waterway system-not just the mileage on the waterway itself." He added, "It's not fair to change the calculation at this late date."

The waterway, now in its eighth year, moved an average of only 0.27 billion ton-miles over the last five years but its average system ton-miles was 2.13 billion. Navigation was opened to Shreveport in January 1995.

"It's now up to those of us who know first-hand of the importance of waterborne commerce to America's economic stability to make our case before the Congress," said Robert W. Portiss, port director of the Tulsa Port of Catoosa, which is at the head of navigation on the McClellan-Kerr Arkansas River Navigation System. "I am confident that the Congress will see the folly in this proposal and reaffirm the full Federal funding agreement which was made in 1986."

As more developments unfold, particularly at budget briefings around town later today, we will try to keep you fully posted.

Sincerely,


Harry N. Cook
Editor, National Waterways Conference’s E-Mail Alerts


Harry N. Cook
President
National Waterways Conference
1130 17th Street, NW
Washington, DC 20036-4676
(202) 296-4415 / phone
(202) 835-3861 / fax
hcook@waterways.org