Waterway Funding Bill May Pass This Year

October 3, 2013 11:43 PM

The legislation would be a shot in the arm for U.S. grain exports

Despite the current debt-limit imbroglio on Capitol Hill, proponents of legislation authorizing new waterway projects, and repair and maintenance on the existing lock and dam system, believe they have a good chance of getting a bill passed this year.

After the dispute concludes, Congress will be looking for ways to demonstrate that it can do business in a bi-partisan fashion. That makes the waterways bill, which passed the Senate on an 83-14 vote, and came out of a House committee on a voice vote, a prime candidate.

"The water bill could become a success story," said Jim Wiesemeyer, senior vice president of Informa Economics, speaking at the Waterways Symposium in Memphis. "Congress will need one."

Farmers have a lot at stake in passage of the bill. The American Farm Bureau Federation, which supports the bill, estimates that more than 60% of U.S. grain exports travel over the inland waterway.

Former Senator Blanche Lincoln (D-Ark.), who is working with the industry to get the Water Resources Reform and Development Act of 2013 passed, congratulated attendees for agreeing to pay higher diesel taxes to support project funding in the bill. Few industry groups, she said, offer concessions to get legislation passed.

Conference speakers highlighted the importance of the nation’s inland waterway and ports as critical to U.S. grain exports. Last year’s worries over low water levels due to the drought and rock formations that impeded barge traffic created concern among foreign importers of U.S. grain, said Ken Eriksen, senior vice president, Informa Economics. Foreign buyers questioned whether the situation could be permanent.

"People around the world wondered whether they could get their grain," said Eriksen. "They went elsewhere for their corn. When something like this happens, [demand] never returns to where it was before. We have to assure customers that our infrastructure is adequate."

The nation’s inland waterways and ports, an inexpensive mode of transportation, create an international advantage for U.S. grain exporters. But problems with an aging water infrastructure -- especially old locks that break down—raise costs unexpectedly.

"When you have consistent [waterway] failures happening across the country, that’s not good for the economy," said Nick Akins, president and CEO of American Electric Power, which ships coal over inland waterways to generate electricity. "The lower Algiers lock has been out for a few days. We are losing more than $1 million due to that."

Akins rattled off several other closures in recent months that add unexpectedly to shipping costs and create delivery uncertainties. Earlier this year, the U.S. Army Corps of Engineers shut down a series of locks along the Mississippi when flood waters breached lock gates.

Slowdowns could be a major problem this year, because of late planting, which has compressed the schedule for shipping corn and soybeans to foreign buyers. This comes at a time when the U.S. faces increased competition from foreign grain sources, said Chris Stringer, a senior merchant for CHS, Inc., a major grain exporter.

High corn prices in the U.S., he said, have "encouraged the rest of the world to grow corn," resulting in lost market share. "The U.S. can get its share back. We still have the best, most competitive export system. But it will take some time."

The waterways bill would help by shortening the time required to study and fund new projects. It deauthorizes $12 billion in old, inactive projects, and offsets them with the authorization of new projects. The House bill authorizes specific projects, whereas the Senate bill leaves project designation up to the Secretary of the Army.

Barge operators have proposed an increase (6 to 9 cents) in the tax they pay on diesel fuel to Inland Waterways Trust Fund , which helps funds projects. The House bill doesn’t include the provision, which House leaders say needs to originate in the Ways and Means Committee. The industry fears that without the tax increase many projects will be delayed by decades.

The bills would reduce the Inland Waterways Trust Fund’s share of the Olmsted Lock and Dam project to 25%, instead of the current 50%. The project has been beset by delays and cost overruns. And both bills require that a higher percentage of expenditures from the Harbor Maintenance Trust Fund actually go to operate and maintain the facilities.


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