OMAHA (DTN) -- Shippers who rely on the nation's dilapidated river transport systems want to reform the way lock-and-dam projects are funded and built. In addition, they want commitments for more funding and increased efficiency from Congress and the Corps of Engineers.

Members of a House Transportation and Infrastructure Subcommittee highlighted problems with the aging locks and dams at a hearing Wednesday in Washington to consider possible funding solutions.

"Fifty seven percent of our inland system is more than 50 years old and 37% of the system is more than 70 years old," said Rep. Bob Gibbs, R-Ohio, who chairs the subcommittee. "It is literally falling apart."

The waterways now move roughly $70 billion a year in freight. Testimony noted that it would take hundreds of railcars and more than 2,500 locomotives to haul the freight currently moved through the river system. But the infrastructure is falling apart faster than it can be fixed.

Even when projects are considered a priority, they take decades for the Corps of Engineers to complete. Comparable projects that took three years in the 1950s are now taking a decade or more to complete. Significant changes in engineering construction can explode in terms of both time delays and costs.

The current business model for modernizing the nations' locks and dams is seriously broken, testified Steve Little, president and CEO of the barge company Crounse Corp., and the most recent chairman of the Inland Water Users Board.

"It must be reformed," Little said. "As a nation, we seem to have lost the ability we once had to plan and construct individual inland waterways capital projects in a timely fashion."

The poster child for delayed Corps projects is the Olmsted Lock and Dam along the Ohio River, straddling Illinois and Kentucky. Approved in 1988, construction began in 1992. Originally pegged to cost $775 million, construction has ballooned to $2.1 billion, and users have been told that "a significant change" is coming later this year, said Michael Toohey, president and CEO of the Waterways Council.

"So, even before we know the exact magnitude of the latest change, which we understand to mean 'increase,' the cost of this project has tripped with the completion date nowhere in sight," Toohey said.

The cost overruns have gotten so out of hand that the Corps has commissioned a study to examine just what has gone wrong at Olmsted. The project has become so complicated that Toohey said it may be necessary to re-evaluate it entirely and consider alternatives.

All the while, President Barack Obama has championed doubling the nation's exports, and that requires upgrading ports and the avenues that lead to those ports.

Steve Ebke, a farmer from Daykin, Neb., testified for the National Corn Growers Association and noted that more than 57% of all grain exports are shipped down the Mississippi River and through the Panama Canal. He noted the canal is adding a new lock that should lessen transport time and freight costs.

"However, if domestic infrastructure is inadequate, the canal expansion project will be a missed opportunity," Ebke said.

Locks and dams on the northern Mississippi can only handle 600-feet barge tows, while in the southern portion of the river tows are twice as long. Five lock projects on the Upper Mississippi and two on the Illinois River were approved by the Corps in 2004, and authorized by Congress in 2007. Still, little or no funding has been allocated for the projects.

Little, president and CEO of Crounse Corp., chaired the users board, a group created by Congress to ensure the shipping industry had a voice in how capital projects were prioritized. The Obama administration has let the terms for the entire board expire and not reappointed new members. Jo Ellen Darcy, assistant secretary of the Army, said the Corps has asked the Department of Defense for approval to make the appointments but has not received a response.

The Waterways Council and members of the Inland Users Board have worked with Corps officials over the last couple of years to improve project delivery for building locks and dams, and prioritize projects over the next two decades. The industry groups propose a 6-to-9-cent-a-gallon increase on the 20-cent a gallon diesel tax shippers already pay for the waterways trust fund. Right now, the trust fund generates $70 million to $90 million a year.

In exchange for raising their diesel taxes, the industry groups want larger federal spending as well. The shippers are proposing a $7.6 billion funding plan over 20 years that would balance out at about $380 million a year. Of that, about $110 million would come from the waterways trust fund while taxpayers would pay about $270 million a year through general funds.

Part of the industry groups' plans would also require that federal funding pay for all project-cost overruns.

Ebke said in his testimony that NCGA realizes any increase in the diesel tax would be passed on to shippers, but spending on upgrading the locks and dams would have long-term benefits for farmers.

The president's job proposal goes a different route, and calls for a new user fee on the rivers to generate about $1.1 billion over 10 years from the barge industry. More details are expected on that when the president provides actual bill language within the next week or so.

The business groups argue that right now they are the only private funding source, even though a broad array of other people benefit from tourism, commerce, waterway restoration and lakefront property values around Corps projects, particularly dams. Taxpayers should pick up higher construction and rehabilitation costs as their investment in the system.

Steve Ellis, a vice president of Taxpayers for Common Sense, criticized the funding of inland waterways in his testimony. The industry proposal would shift more funding for barge infrastructure on to general taxpayers.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(CZ/SK)

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