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Inland Crisis: on the Water, at the Locks and – in Washington, too…

Posted to Global Maritime Analysis with Joseph Keefe (by on February 15, 2012

WCI Meetings in Washington highlight shortfalls in waterways infrastructure funding while red tape prevents critical industry input through Inland Waterways User Board.

Washington, DC: Yesterday’s Waterways Council (WCI) 2012 Washington Seminar shed new light on the challenges faced by inland waterways users and their customers, especially as new transportation funding legislation inches forward on Capitol Hill. Attendee frustration was evident on many issues but the proposed U.S. Army Corps of Engineer’s budget and roadblocks that prevent the Inland Waterways User Board – the federal advisory committee established back in 1986 – from operating as usual, were among the key issues discussed at length on Tuesday.




Maj. General Michael Walsh, Deputy Commanding General for Civil and Emergency Operations, U.S. Army Corps of Engineers (USACE) first addressed the gathered members by giving a short overview of USACE efforts, funding and plans for the future. The good news included the completion of USACE efforts in New Orleans to protect the city against what he characterized as “the 100 year flood.” This and other successes were tempered against the news that the Corps continues to operate on a continuing resolution, with funding at just 9 percent of 2010 levels. Beyond this, the proposed $4.7 billion federal budget specifies a 5 percent reduction in the USACE budget from the previous fiscal year.


Walsh also touched upon the controversial $800 million cost over-run on the Olmsted Lock and Dam project. Originally authorized under the Water Resources Development Act (WRDA) in 1988 at a cost of $775 million, with a 7-year construction period, the project has seen multiple, significant cost over-runs. This week, when it was clear that Olmsted’s price tag had ballooned to a whopping $2.9 billion, WCI officials said in reaction, “Today’s re-statement may be low; it apparently does not contain an escalator for inflation, which all other Corps' project estimates do contain.”


For his part, Walsh promised the gather WCI board members that the Corps would (a.) improve management oversight on this and other projects, (b.) perform additional cost reviews and (c.) change construction methods as necessary in order to achieve better efficiencies. Unspoken was the fact that the newest price tag increase represents $800 million that cannot be spent elsewhere on critical locks and dam renewals. With regard to the current budget proposal on the table in Washington, Walsh said, “We operate in a time of constrained resources in challenging times.”


Walsh outlined a USACE plan to expedite feasibility studies for prospective infrastructure projects and to discontinue the practice of “trying to fund too many individual projects,” while identifying locations where commercial traffic did not warrant continuous 24/7 service, something he said would save money that could be better spent elsewhere. At the working luncheon that followed, Rep. Bob Gibbs (OH) instead focused on the unresolved ballast water technology mess that threatens commerce in his state and many others. Perhaps underscoring the abject neglect of the U.S. waterfront within recent ARRA distributions, he also called for the movement of infrastructure funds to waterways from other modes. And, he bemoaned transportation legislation that was top heavy on environmental spending but not so much on infrastructure.


Obama Administration: 2 + 2 = 5?


Following Gibbs was Seth Harris, Deputy Secretary at the U.S. Department of Labor, who gave a largely political speech outlining how the President had increased funding for waterways infrastructure projects. Painting a rosier view of the picture and administration policy, he portrayed a 2 percent increase in proposed transportation expenditures. But the numbers didn’t add up, especially based upon the looming 5 percent cut that the USACE is facing amidst a growing list of critical replacement projects of locks and dams that are rapidly approaching or have surpassed their intended 50-year working life. During the break, at least two seminar attendees explained to this reporter the real inequities facing inland waterways.


HMTF – the money is there


The Harbor Maintenance Trust Fund was a hot topic this week. With industry fully aware that it pockets $1.5 billion in receipts from users every year and yet only gives back $850 million to infrastructure, inland waterways stakeholders want the full value of that fund disbursed for its original purpose. Beyond this, however and more importantly is the largely unrecognized value that the USACE delivers to the U.S. Treasury, while receiving a poor return in mutual funding for its efforts. But, in an organization that once saw its leader fired for complaining about the paucity of dredging funds, USACE employees are loath to speak publicly about the inequities. And, the USACE budget has shrunk from about $7.5 billion in 1970 to the newly proposed level of $4.7 billion.


Privately, one USACE advocate told me, “About $1.5 billion of the proposed budget goes towards paying 20,000 employees. $3.0 billion is simply not enough to fund 1600 critical infrastructure projects. As the nation’s locks and dams reach and exceed their intended working lifespan, a catastrophic failure is almost upon us.” Another individual, speaking on background, went on to explain that the unrecognized $1.5 billion being realized in the Treasury’s coffers as a direct function of USACE efforts needs to be returned to the Corps so that the cycle can continue. Intangible benefits realized from USACE efforts go far beyond the obvious transportation metrics and extend to federal hydropower revenues and enhancement of recreational and environmental concerns. Predictably, there was no one at the Mandarin Oriental Hotel on Tuesday who disagreed.


Inland Waterways User Board: USACE Operates in ‘Vacuum’ without it


Exacerbating an already bad situation, said WCI Seminar attendees, was the discontinuation of the Inland Waterways User Board, which because of red tape and heightened membership nomination issues has been inactive since August. Effectively, this leaves the USACE operating in a vacuum as they go about the analysis that will eventually yield the infrastructure projects that will go forward, as funding allows.


Originally organized to make recommendations to the Congress and the Secretary of the Army on the priorities and spending from the Inland Waterways Trust Fund for construction and rehabilitation projects on the fuel-taxed system, the board would typically meet three times annually and issue an annual report made to the Secretary of the Army and the Congress. The meetings are open to the public. The system, according to WCI seminar attendees, worked quite well for the past 24 years – but, not since August. As the nominal proponent for the board, USACE folks at the meeting were grilled by seminar attendees as to the prospect seeing its resurrection. They left on Tuesday evening largely unsatisfied by what they heard.


The Bottom Line: Impending Catastrophe


The obvious take-away from Tuesday’s seminar was that inland water transportation – the cleanest and most efficient mode for America’s bulk cargoes – finds itself in a tenuous position in the face of continued underfunding of waterways infrastructure projects. That said; WCI this week also characterized the recent news of failures on the Olmsted Lock and Dam project as “disappointing.”


Underscoring that point, WCI President/CEO Michael Toohey said in a prepared statement on Monday, “Let us be clear about the implications of today’s announcement to the national economy, to jobs and to exports. No other meaningful investment in modernization of our aging inland waterways infrastructure will be made for a decade, or more, if the Olmsted project continues down its current path. Nothing for the authorized projects on the Upper Mississippi River, no investment for the Illinois, the Ohio, the Tennessee, the Cumberland, the Monongahela, or any other construction on any other part of the system. And that means no new/additional jobs, no chance to grow exports, and no transportation cost-savings returned to consumers from these shelved projects.”


What Toohey didn’t need to say out loud was that much of the nation’s inland waterways infrastructure has reached its expected working lifespan. Failures can and should be expected in the near future, without significant attention, care and funding of these efforts. Unlike this administration’s fuzzy math on infrastructure spending in the proposed transportation budget, that’s a fact. – MarPro.

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Joseph Keefe is the lead commentator of MaritimeProfessional.com. Additionally, he is Editor of both Maritime Professional and MarineNews print magazines. He can be reached at jkeefe@maritimeprofessional.com or at Keefe@marinelink.com. MaritimeProfessional.com is the largest business networking site devoted to the marine industry. Each day thousands of industry professionals around the world log on to network, connect, and communicate.