Towing industry officials are concerned that President Trump’s 2019 budget and waterways infrastructure proposal will fragment the national system, complicate capital funding and provide no clear method to accomplish one of the White House’s major goals: privatization of transportation infrastructure projects. Ultimately it will drive traffic away from the inland waterways, they said.
Trump’s plan, announced Feb. 12, would move toward eliminating the role of the federal government to construct, operate and maintain the nation’s waterways by shifting that authority to private entities or non-federal agencies, according to the Waterways Council Inc. (WCI). The U.S. government would still play a role in funding construction, but at a significantly reduced amount — 80 percent of the cost would be paid for by private entities and local and state governments.
The inland system includes 240 locks and 12,000 miles of commercially navigable waterways, with 600 million tons of freight carried on them annually. Currently, the federal government pays 50 percent of capital costs for construction and major rehabilitation projects. The other 50 percent is paid for by a 29-cent-per-gallon diesel fuel tax that goes to the Inland Waterways Trust Fund.
Trump’s fiscal 2019 budget would cut spending by 22 percent for the Civil Works program of the U.S. Army Corps of Engineers, the agency that operates and maintains the inland waterway system. The proposed budget also includes a new user fee to help finance capital projects and 10 percent of operations and maintenance costs.
“We believe there is a big disconnect between what we were expecting” and Trump’s proposal, said Peter Stephaich, chairman and chief executive officer at Campbell Transportation Co. of Houston, Pa. “We expected something positive.”
On June 17 last year, the president delivered a speech on the Ohio River in Cincinnati stressing the need to fix the country’s dilapidated locks and dams. “We cannot accept these conditions any longer,” he said, a statement contradicted by the proposal that took commercial users of the inland waterways by surprise.
“Our employees and customers up and down the Ohio River are a strong base for (President Trump),” Stephaich said. “I don’t know what (happens) between what goes on in the president’s mind and what comes out in the other end of the process.”
Another concern is that switching control of the inland waterways to private and non-federal entities would fragment oversight and funding, leading to confusion and inconsistent operations and maintenance.
“The waterways are a system, they are not a bridge or short section,” said Rodney Weinzierl, executive director of the Illinois Corn Marketing Board and Illinois Corn Growers Association. “It takes the revenue base of the entire system to make improvements to parts of the system.”
“To split it up into different areas I think would be a tremendous mistake, because then you would lose the value of it as a system,” Stephaich said.
The president’s infrastructure proposal also includes block grants for states to fund capital projects. Since different states are often on either side of a given waterway, this could complicate improvements.
“We don’t understand how the block grant system would work,” Weinzierl said. “Do you have to get both states to say this is the priority project?”
Private entities, or “third-party service providers,” would have the power to impose tolls or lockage fees for operating and maintaining their section of a waterway, and also to make a profit on their investment.
“If you significantly drive the costs up for moving commodities on the river system, what is going to happen is you will lose tonnage,” Stephaich said, because customers will shift freight to highways or railroads. “It would cause the cost of remaining tons to go up to support the system.”
“The nation’s shippers will be put at the mercy of private enterprise to tell them what to pay to use that lock,” said Mike Toohey, president of the WCI. “As long as this tax will be imposed on commercial operators and their customers, it will make the inland waterway system no longer viable for America’s shippers.”
Moving tonnage away from inland waterways would have a major impact on other forms of transportation, Stephaich said.
“It’s a capacity issue,” he said. “There’s a cost to that — there are congestion issues, (there are) emission issues. It’s a huge ripple effect.” According to the WCI, one 15-barge tow equals 1,071 trucks or 216 rail cars.
Toohey also noted that the private investment for U.S. waterways could come from foreign sources. “It could come from China, who would own and operate our navigation system,” he said.
The slow pace of accomplishing business in Washington, however, likely will help the towing industry as it works with allies in Congress to make changes to the infrastructure plan and the fiscal 2019 budget.
“The timeline on this is going to carry (through) at least 2018, if not through a lot of 2019,” Weinzierl said.
