Firms Plead for Lock, Dam Upgrades

Companies that depend on the region's waterways take an unusual position on paying for improvements: Tax us, they say

Pittsburgh Post-Gazette
7 September 2010
By Timothy McNulty,

Tax us, please.

That's the surprising plea from local energy companies and barge operators who depend upon the area's rivers for their business, and are desperate for federal upgrades to the waterways' crumbling locks and dams.

Funding is running dry for essential upgrades around the upper Ohio, Monongahela and Allegheny, where one long-delayed project with a $1.2 billion price tag -- Lower Mon 2 (Elizabeth), 3 (Braddock) and 4 (Charleroi) -- is supposed to be finished by 2023, but is slated for only $2 million in federal funding next fiscal year, basically mothballing the project. The new industry tax plan would leverage fixes to that project and 24 others over 20 years at a total cost of $7.6 billion.

The region's old locks lead to backups and logistical nightmares for river-borne industry. Better and bigger ones would mean longer tows of barges and more efficient hauling of coal and other resources. A U.S. Army Corps of Engineers cost-benefit study claimed if the Lower Mon project had been completed when it was supposed to be in 2004, it would have saved the local economy $1.2 billion per year in efficiencies.

"The economic stability of the region depends on having reliable infrastructure," said Jim McCarville, executive director of the Port of Pittsburgh Commission, "and we don't have reliable infrastructure."

Thus the tax increase offer. For a year, industry groups and the Corps of Engineers studied ways to improve the nation's waterways infrastructure funding and struck a deal (which needs Congressional approval) to increase the taxes paid by the towing and barge industry by up to 45 percent. They currently pay a 20-cent tax on diesel fuel -- which goes into a trust fund that pays for waterways upgrades -- but would increase that by 6 to 9 cents per gallon.

There is a catch. Currently, industry and the federal government each share 50 percent of the costs of lock construction and rehabilitation. That would continue on large projects costing $100 million or more, but in the new proposal the government would handle all cost-overruns as well as take over all the costs for smaller lock-and-dam projects. Industry also would help prioritize which large projects nationwide are targeted.

The proposal has drawn the ire of the National Wildlife Federation, the Sierra Club and other groups, which complained that the industry already is over-subsidized by the federal government and the plan would put taxpayers on the hook for $200 million in increased spending.

"At a time when the federal government's financial resources are stretched to the limit, seeking an increase in an already excessive subsidy is clearly unwarranted and irresponsible," said a letter those two groups and seven others sent to Congress in June.

Industries that use the waterways -- such as Consol Energy of Upper St. Clair, which would need the yearly equivalent of 1 million trucks to haul its 24 million tons of coal to area energy plants -- are quick to point out their environmental benefits. One barge holds the equivalent load of about 70 trucks, and typically every tow has some 15 barges locked together.

"For environmental groups like these two to decry an industry that takes 1,050 trucks off our roadways in just one barge movement, has the lowest carbon footprint of the modes (rail and truck), boasts the best safety record, and lobbies hard for ecosystem restoration funding, is, well, puzzling to say the least," said Debra Colbert, communications director for the industry group Waterways Council Inc.

The council hopes to get Congress to approve the new plan when it returns to session later this month but it will be a tough sell, particularly in this political environment. Republicans have heavily criticized President Barack Obama's stimulus bill (which kept the Lower Mon project on life support with a one-time $84 million line-item in fiscal 2009) and Democrats worried about re-election may want to keep any tax increase, whether supported by industry or not, at arm's reach.

Proponents say there is no other way to feasibly fund the needed improvements, noting the only other revenue plan forwarded -- a "lockage" usage toll -- would cause outsized pain in lock-heavy areas like the Pittsburgh region, which has 23 locks and dams, more than any other region nationwide.

With the offer of a tax increase, industry leaders, along with others supporting the plan, say they have a pretty good sales pitch.

"As an industry we have shippers, producers, end users, you have the union, you have environmental groups, all of us coming together and unanimously [saying] 'Raise our tax.' But spend it wisely," James C. Grech, senior vice president of marketing for Consol, told the Pittsburgh Post-Gazette editorial board. "Whether it's Republican or Democrat, everybody is represented here."

Tim McNulty: tmcnulty@post-gazette.com or 412-263-1581.