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Wednesday, April 25, 2012

Inland Waterways: Recent Proposals and Issues for Congress

Charles V. Stern
Analyst in Natural Resources Policy

Inland waterways are a significant part of the nation’s transportation system. Because of the national economic benefits of maritime transport, the federal government has invested in navigation infrastructure for two centuries. As a result, barge shipping has received significant support through federal funding for operational costs, capital expenditures, and major rehabilitation on inland waterways. Since the Water Resources Development Act of 1986, expenditures for construction and major rehabilitation projects on inland waterways have been cost-shared on a 50/50 basis between the federal government and users through the Inland Waterways Trust Fund (IWTF). Operations and maintenance costs for inland waterways typically exceed these construction costs, and are a 100% federal responsibility pursuant to WRDA 1986.

Future financing for the inland waterway system is uncertain. The IWTF is currently supported by a $0.20 per gallon tax on barge fuel, but its balance has declined significantly due to a combination of increased appropriations, cost overruns, and decreased revenues in previous years. Without changes to the financing system, IWTF spending is likely to be extremely limited.

Previously the Bush and Obama administrations have recommended replacing the fuel tax with one or more user fees that would increase revenues beyond their current baseline. However, Congress and industry interests have rejected these proposals. In 2010, the Inland Waterways Users Board (IWUB), a federal advisory committee advising the U.S. Army Corps of Engineers on inland waterways, endorsed an alternative proposal that is supported by many barge industry interests. The proposal would increase the fuel tax by $0.06-$0.08 per gallon, but would also require that the federal government handle the full cost for some projects that are currently costshared. The Obama Administration generally opposes this approach, and has previously submitted multiple proposals to increase trust fund revenues with new user fees, in addition to the fuel tax. Most recently, the Administration submitted, in its plan to the Joint Committee on Deficit Reduction, a proposal for new waterway user fees in 2011, and included new revenues from an unspecified new inland waterways fee in its FY2013 budget request. To date, none of these changes have been enacted.

The user industry (including the barge industry and agricultural groups) argues that changes are necessary to shore up the trust fund, improve deteriorating inland waterway infrastructure, and distribute costs more equitably among those who benefit from the system (e.g., more funding by federal taxpayers for dams). They also note that waterways support jobs and are a vital component of the nation’s transportation mix. The Obama Administration generally agrees that major changes are needed to meet infrastructure needs, but argues against increased costs for the federal government. Some groups also argue that an increased share of waterway costs should be borne by users (i.e., a decreased share for the federal government), and have suggested that operations and maintenance costs (currently a 100% federal cost) should also be a user responsibility.

Legislation currently before the House (H.R. 4342) would authorize the primary components of the aforementioned IWUB proposal. Separately, the Obama Administration’s FY2013 budget proposed $80 million in new revenues for FY2013 from a new, unspecified inland waterway user fee. In considering these and other inland waterways proposals, Congress may consider whether to increase the overall level of inland waterway funding in the future (and by what amount); the appropriate type of user fee to fund the nonfederal share of these costs (fuel taxes, lockage fees, etc.); and the appropriate cost share between the federal government and commercial users.

Date of Report: April 12, 2012
Number of Pages: 29
Order Number: R41430
Price: $29.95

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