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Obama Administration Proposes Lockage Fees by Carlo Salzano Professional Mariner, February 18, 2010

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."

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 The tax rate would be reduced to 10 cents per gallon beginning January 1, 2013, and repealed some time after December 31, 2014.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."

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."

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." 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."

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.

Related Pages:
Shippers Balk at Proposed Lockage Fees by Dave Wilkins, Capital Press, 7/4/8
Waterway Groups Blast Lock User Fees by R.G. Edmonson, Journal of Commerce, 5/18/10