Obama administration proposes lockage fees

Obama administration proposes lockage fees

The Obama administration has offered once again the controversial lockage fee as a major source of revenue to help pay for the civil works program of the U.S. Army Corps of Engineers in fiscal year 2011.

A request for congressional consideration of the fee was included in the administration’s proposed $3.8 trillion for the fiscal year beginning Oct. 1. The total budget proposal included $4.9 billion for the Corps’ civil works program, down from $5.4 billion appropriated for the current fiscal year. 

The Corps’ proposed budget itself made no mention of the lockage fee, noting only that the administration was “proposing the adoption of a new funding mechanism, which would replace the fuel tax.†But it was included under “General Explanations of the Administration’s Fiscal Year 2011 Revenue Proposals†within the budget proposals of the Treasury Department.

The “explanations†showed that the current 20-cents-per-gallon diesel fuel tax deposited in the Inland Waterways Trust Fund “does not raise enough revenue to pay for the users’ 50 percent share of the capital costs of the locks and dams that make barge transportation possible on inland and intracoastal waterways.

“Moreover, the tax is not the most efficient method for financing expenditures on those waterways. Adequate funding for inland and intracoastal waterways can be provided through a more efficient user fee system that is based on lock usage and is tied to the level of spending for inland waterways construction, replacement, expansion, and rehabilitation work.â€

The administration said that under its proposal, the same one offered unsuccessfully in previous years, the fuel tax “would be phased out and replaced by a fee system based on lock usage. The tax rate would be reduced to 10 cents per gallon beginning January 1, 2013, and repealed some time after December 31, 2014. The fee system based on lock usage would be phased in beginning on October 1, 2011. For calendar year 2015 and each subsequent calendar year, the fee schedule would be adjusted as necessary to maintain an appropriate level of net assets in the Inland Waterways Trust Fund.â€

After delivering opening remarks at a budget press conference Feb. 1, Jo-Ellen Darcy, recently confirmed as assistant secretary of the Army (civil works), told a questioner that the Corps wants to consider “a funding mechanism that we can get not only support from, but agreement among our stakeholders; that it’s a mechanism that we can agree to and that can move this program forward for the next 20 years. I think a funding mechanism that we can all agree to is what we’re looking forward to.â€

Leading the industry’s opposition to the proposed lockage fee was Cornel Martin, president and CEO of Waterways Council Inc. (WCI), who said recently that a fuel tax increase would be “absolutely better†than the lockage fee favored by the White House. Martin urged Congress to adopt industry Corps of Engineers recommendations that would preserve the existing 50-50 cost-sharing formula (50 percent industry/50 percent federal) for new lock construction and major rehabilitation projects above $100 million. Other recommendations would place a cost-share cap on all new lock construction projects, and would fund the navigation system by increasing the current fuel tax paid by the barge and towing industry instead of trying to go forward with the proposed lockage fee opposed by WCI and members of Congress.

Turning to another question, Darcy gave the industry little hope that the Corps would support efforts for a new Water Resources Development Act this year.

“We’re discussing within the administration whether this is a year for a water bill,†she said. “It’s not included in the budget, but we are talking about possible principles for going forward. But we don’t have a proposal at this time.â€

The administration’s FY 2011 budget for the Corps asks $1.7 billion for construction, down from $2 billion this fiscal year; $2.4 billion for operation and maintenance, about the same as this fiscal year; $104 million for investigations, down from $160 million this year; $240 million for Mississippi River and Tributaries, down from $340 million this year, and $193 million for the regulatory program, up from $190 million this year.

Under the administration’s proposal, the Corps would get its $4 billion from the general fund, $764 million from the Harbor Maintenance Trust Fund, $82 million from the Inland Waterways Trust Fund, and $41 million from the special recreation user fees.

Darcy, who referred to the proposed budget as “frugal,†said that the operations and maintenance program gives priority to harbors and waterway segments that support high volumes of commercial traffic.†Darcy also said that the budget funds 95 construction projects and that those funds will be allocated toward “the highest performing economic and environmental construction projects.†The two “high priority†new starts, Darcy said, are the Louisiana Coastal Area program ($19 million, aquatic ecosystem restoration), and Onion Creek, Lower Colorado River Basin in Texas ($10 million, non-structural flood damage reduction).

“The focus of the greatest percentage of this civil works budget goes toward projects that will provide the highest returns to the nation, and that’s why we call it a performance-based budget,†said Lt. Gen. Robert L. Van Antwerp, chief of engineers and commanding general of the Corps.

Asked about dredging on the Great Lakes, Gary A. Loew, chief of the Corps’ Programs Integration Division, said the budget does include “some funding for Great Lakes ports.†Van Antwerp added that the Corps continues to look at the Great Lakes “as a system, because there are a lot of ports there, and they’re interactive. And so we continually try to put our money in the right places to keep the system open and working.â€

Van Antwerp also assured another questioner that the 100-year levee program in the New Orleans area, which is not in the proposed FY 2011 budget, is “fully funded†and that the Corps continues on its June 2011 deadline to make the 100-year storm damage reduction in that area.

USCG, FMC budgets increased for FY 2011; MarAd’s reduced

The proposed $56 billion budget for the U.S. Department of Homeland Security includes $10 billion to fund such Coast Guard missions as search and rescue, marine safety, aids to navigation; ice operations, and ports, water and coastal security. The budget request for this fiscal year was $9.5 billion.

Another agency, the Maritime Administration (MarAd) within the Department of Transportation, would be appropriated $352 million, including $174 million for its Maritime Security Program. MarAd’s appropriation for this fiscal year was $363 million.

The Federal Maritime Commission, among the independent regulatory agencies, would receive $25.5 million in FY 2011, up from $24.1 million this fiscal year.

Missouri River study subject of two more meetings

Two more focus group and tribal meetings in support of the Missouri River Authorized Purposes Study have been scheduled for this month. The meetings are set for Feb. 23 in New Orleans and Feb. 25 in Memphis, Tenn.

The study is intended to determine if there should be any change in the eight authorized purposes — flood control, hydropower, water supply, irrigation, navigation, recreation, water quality, and fish and wildlife.

For more information, contact Paul Johnston at (402) 995-2416.

Oil spill liability limits increased

Effective Feb. 5, the Coast Guard has adopted an interim rule that increases the limits of liability that apply under the Oil Pollution Act of 1990 (OPA 90) to vessels and to deepwater ports subject to the Deepwater Port Act of 1974. The Coast Guard said that the higher limits reflect significant increases in the Consumer Price Index.

The interim rule, which was published July 1, 2009, also established the methodology the Coast Guard uses to adjust the OPA 90 limits of liability for inflation, and made minor regulatory amendments to clarify applicability of the OPA 90 single-hull tank vessel limits of liability.

Details of the Coast Guard’s decision are published in the Jan. 6 issue of the Federal Register.

For more information, contact Benjamin White at (202) 493-6863.

Seaway ends 50th year with low cargo volume 

The Saint Lawrence Seaway concluded its 50th anniversary navigation season Dec. 28 with a total cargo volume of an estimated 30.5 million metric tons in 2009, the lowest volume witnessed since the early 1960s, U.S. and Canada Seaway administrators reported.

The drop in cargo volume, 25 percent below that of 2008, was attributed to the depth of the recession, which sharply curtailed movements of iron ore and steel on the waterway.

The Montreal/Lake Ontario section of the Seaway handled 20.6 million metric tons of cargo in the 2009 navigation season, down from 29.3 million tons in 2008. Grain topped the list of commodities handled by the section: 7.8 million tons in 2009, up from 7.3 million tons in 2008. Iron ore was down from 9 million metric tons in 2008 to 3.7 million tons last year. 

Court rejects petition to close Chicago-area locks

On Jan. 19, the U.S. Supreme Court rejected a petition brought by the state of Michigan and other Great Lakes states against the state of Illinois to close the Chicago-area locks to prevent Asian carp from entering Lake Michigan. U.S. Solicitor General Elena Kagan had argued that closing the locks was not justified by available science and would not provide a solution to the Asian carp issue, since there are other outlets through which the fish can gain access to the Great Lakes.

The American Waterways Operators (AWO) claimed in an affidavit that closing the locks would have a devastating impact on the barge industry and the Midwest economy, environment, jobs, public safety and quality of life by preventing millions of tons of commodities from being shipped by barge to and from Great Lakes ports.

AWO President and CEO Thomas Allegretti said that the barge and towing industry “will continue the work we have done for over the past six years with the U.S. Army Corps of Engineers, EPA, U.S. Coast Guard and other officials to ensure a balance between preventing the spread of Asian carp while ensuring the free flow of commerce essential to our nation.â€

The AWO and Waterways Council Inc. also urged Congress to reject two proposed bills to shut down the Chicago-area locks to prevent the invasive Asian carp from reaching the Great Lakes.

The two bills referred to by the AWO and WCI were H.R. 4472, which was introduced Jan. 20 by Rep. Dave Camp (R-Mich.), and S. 2946, introduced Jan. 21 by Sen. Debbie Stabenow (D-Mich.).

“It’s time to stop the Asian carp hysteria and craft an effective anti-carp plan that fights the fish without killing American jobs,†the two waterway groups said. “The administration is working with state and other stakeholders to develop a coordinated approach to prevent the spread of Asian carp and invasive species nationwide.â€

MarAd to award small-shipyard grants by April 15

The Maritime Administration plans to award grants by April 15 to successful applicants filing under a program intended to help small shipyards fund improvements that would foster efficiency, competitive operations and quality ship construction, repair and reconfiguration.

MarAd has advised potential applicants that based on the past, applications will far exceed the $15 million provided by the Consolidated Appropriations Act of 2010 and that only a small percentage of applications will be funded. It is anticipated, MarAd said, that between 10 and 15 applications will be selected for funding with an average grant amount of $1 million to $1.5 million. The period for submitting grant applications ended Feb. 16.

Matsuda awaits confirmation as maritime administrator

David T. Matsuda, who has been deputy maritime administrator since July 30, 2009, testified Jan. 26 before the Senate Commerce, Science and Transportation Committee at a hearing expected to lead to his confirmation as maritime administrator.

In opening remarks, Matsuda, who noted that the maritime industry “is struggling with many tough challenges,†said that his experience working within the federal government and in the Senate, “has allowed me a broad understanding of how these challenges can be approached successfully: by working with all stakeholders in good faith and with transparency in decision-making.â€

Matsuda served as acting assistant secretary for transportation policy from March 2009 until his appointment as deputy. He also served as senior counsel and primary transportation advisor to Sen. Frank R. Lautenberg (D-N.J.), who conducted the committee’s confirmation hearing.

Greenup Lock to remain closed through late March

Waterways Council Inc. reports that the Jan. 27 failure of the miter gate at the main lock chamber at Greenup Locks and Dam on the Ohio River near Huntington, W.Va., means that the main chamber will remain closed at least through late March. The auxiliary lock is back in operation, but that lock may undergo additional closures as repairs progress on the main chamber.

This latest incident is one of seven major closures at Greenup over the last 13 years. According to data compiled by the Army Corps of Engineers, an eight-week main chamber closure in 2003 resulted in $13.2 million in transportation delay costs.

FMC chairman reorganizes regulatory agency

Richard A. Lidinsky Jr., chairman of the Federal Maritime Commission (FMC), has announced a reorganization that restores the position of managing director. Ronald D. Murphy, who will assume the post, will manage and coordinate the commission’s operating bureaus.

Also established was the Office of Consumer Affairs and Dispute Resolution Services as an independent office reporting directly to the FMC chairman, with its director, Vern W. Hill, serving as the commission’s ombudsman.

Other key appointments announced by Lidinsky in his reorganization included Florence A. Carr, deputy managing director; Karen V. Gregory, secretary of the FMC; Sandra L. Kusumoto, director of the Bureau of Certification and Licensing; Peter J. King, director of the Bureau of Enforcement; Austin L. Schmitt, director of the Bureau of Trade Analysis; and Rebecca A. Fenneman, deputy general counsel.

Coast Guard ends Loran-C broadcasting

The Coast Guard stopped broadcasting the North American Long Range Navigation-C signal at 1500 on Feb. 8.

Loran began as a radio-based navigation system during World War II to provide the military with a reliable means of navigation at sea in any weather. The system was expanded at the end of the war for merchant and military use.

As a result of technological advancements, Loran is no longer required. Notice of the scheduled termination of the signal was published in the Federal Register Jan. 7. All Loran stations are expected to cease transmitting the Loran-C signal by Oct. 1.

For more information, contact Lt. Cmdr. Robert Manning at (202) 372-1560 or Mike Sollosi at (202) 372-1545.

About the Author:

Carlo Salzano has been in journalism since graduating from La Salle University in 1948 as a chemistry major. That’s right, chemistry. He began his career as a copy boy at the Philadelphia Inquirer, before moving on to United Press International in Philadelphia, Charleston, West Virgina, Baltimore and Washington. After 14 years, Carlo joined Traffic World magazine and stayed on for 23 years, retiring as editor in 1990. A majority of Carlo’s time at Traffic World was spent covering the maritime community and he continued on in the maritime field while freelancing throughout his “retirement.” He is married and has three children and eight grandchildren.

Categories: Maritime News