The Waterways Journal
23 September 2002
By Bill Evans
Russ Crabtree's piece of real estate is rather small. Executive director of what he calls the "postage stamp-sized" Port of Brookings Harbor, Ore., Crabtree views the federal budget process from a perspective only Rodney Dangerfield could enjoy: He gets no respect, or at least his port finds itself in that unenviable position.
"We're accustomed to facing the prospect of getting zeroed out in the federal budget process" for maintenance-dredging the port's 14-foot-deep entrance channel, Crabtree told a National Waterways Conference (NWC) audience in New Orleans September 5.
Located 25 miles north of the California border, Brookings Harbor is "a rural harbor in a rural area," said Crabtree. Surrounding Curry County has a population of 23,000 people.
But that doesn't tell the entire Brookings Harbor story, and Crabtree sees his port as "a model example" of why tonnage should not be the sole criteria for federal project funding.
Brookings Harbor's 400-square-mile market area includes 350,000 people and boasts an assessed valuation of $958 million. "In a county with a population of only 23,000 people, the port directly provides 562 jobs from its waterway activities and indirectly (creates) over 3,500 jobs," he said.
The port serves four markets: property management, tourism, recreational boating and commercial fishing.
The Port of Brookings Harbor is "the busiest recreational port on the northern Pacific coast; over 23,000 recreational vessels transit our bar annually," said Crabtree. "We get over 5,000 commercial fishing vessel calls a year."
Under current federal budget criteria, "you can move a bargeload of rock across your bar or at the same time you can move a bargeload of high-value fish products and based on tonnage (criteria) it receives less consideration."
Acknowledging that tonnage should be a "primary" test, it should not be the only test for federal waterway appropriations, said Crabtree. "Consideration should be given to all benefits," he said.
Ton-Miles
Crabtree gets no argument from Richard F. Brontoli, executive director of the Red River Valley Association, Shreveport, La. "In fiscal year 2003, OMB (the federal Office of Management and Budget) decided to eliminate maintenance dredging for any waterway that had less than 1 billion ton-miles," eliminating 14 waterways, Brontoli told NWC delegates. "This makes no sense since they used average ton-miles, which is only for miles moved on the length of your waterway." For the Red River/J. Bennett Johnston Waterway, that was .3 billion ton-miles, he said.
"All our projects were justified in feasibility studies using system ton-miles, which for the Red was 2.1 billion ton-miles, quite a difference. However, I'm convinced that-whatever system they use, whatever criteria OMB comes up with-if they go to system ton-miles they'll just raise it to 5 billion (ton-miles). They'll do whatever they need to do to knock out systems (on which) they need to cut back on maintenance funding.
"Every administration has done this, they play the same game," said Brontoli. "They cut the programs they know Congress will fund. When Congress puts the money back, they blame Congress for busting the budget."
Donald G. Waldon, administrator of the Tennessee-Tombigbee Waterway Development Authority, Columbus, Miss., couldn't agree more. "Those of us who have been involved in the federal budget process for any length of time have come to the conclusion it makes little difference which party resides in the White House," said Waldon. "The result is always the same, water transportation funding always gets low-balled.ŠEach new administration learns very quickly that the federal budget process offers great opportunities to make significant changes to government at a very minimal, if any, cost in political capital."
By manipulating the president's budget proposals, administrations "can not only shape federal priorities, they can also execute reforms including diminution of the federal role or responsibility for certain programs or projects," said Waldon. "They can do this by just tweaking the budget. Most of those so-called 'reforms' are decisions that wind up being implemented unless the Congress reacts and in essence kills them."
The Bush administration has been "especially adept" at using the budget process to institute or try to institute program reforms and budget priorities, Waldon said. "If anybody gets in their way, Heaven forbid. Probably the best person who can tell you that is Mike Parker." Parker, a Mississippian and former U.S. representative, was forced to resign as assistant secretary of the Army for civil works in March after some administration officials complained he had not adequately supported the president's proposed Corps budget.
Much of the Capitol Hill controversy swirling about the Corps of Engineers, its funding and proposed reforms "has very little to do about budget priorities," said Waldon. "It's really more of a perverse ploy to eliminate the federal involvement in these programs and projects."
Washington's fiscal finagling hinders efforts to recruit new industry and maintain existing waterway users, thereby crimping developing waterways' ability to generate tonnage sufficient to meet federal criteria, said Brontoli. "Companies have people looking at the federal budgets and they're seeing the administration does not support your waterway," he told the NWC audience.
The impact on ports and marketing is significant, he said. "What company is going to put in a multi-million dollar investment if they're unsure you're going to have year-round navigation due to dredging problems? Perception is reality. They do not want to hear 'Don't worry, it's going to get added back in by our congressman.'
"We get in a vicious cycle, trying to attract industry so we can increase our tonnage, yet we are given these burdens to overcome."
Rail Comparison
Saying ton-miles should not be the sole "measure of success" for determining waterway funding, Brontoli said, "We all know that waterways provide competition for railroads. Many companies are not using the Red (River) because their rail rates have come down to match the waterborne rates. Companies have told us this and we don't blame them. Why would a company change the way it operates if it's getting the same rate? The key is we brought their transportation rates down, a national benefit, yet we get no credit."
Prior to completion of the navigation project to Shreveport/Bossier City, La., in 1995, stone coming out of Arkansas was railed for $14/ton, said Brontoli. "Now it's railed for $4.95/ton. Again, we get no credit for that value, for that decreased transportation rate. We know what's going to happen to that rail rate for stone coming in for construction if the waterway gets shut down."
Like the Tennessee-Tombigbee Waterway, where rocket boosters valued at $38 million to $100 million but weighing only about 33 tons are moving by water, the Red is being used to move high-value pressure vessels fabricated in Shreveport, said Brontoli. Without the waterway, the vessels could not be manufactured in Shreveport and shipped due to their large size, he said.
But like the rocket boosters, the Louisiana-produced pressure vessels are counted according to their weight, not their value, he said. "If you looked at a $38 million value (rocket booster), this is equivalent to 1.2 million tons of coal."
Environmental Benefits
Turning to environmental organizations' criticism of waterway spending, Brontoli said, "We get no credit for the benefit when we enhance the environment." The Red River Waterway Commission is partnering with the U.S. Fish & Wildlife Service for development of a new wildlife refuge on the Red River, he said. "The only reason that refuge can exist is the waterway brought back the migratory birds, formed the pools and brought back the fishery which is bringing the migratory birds back to the Red River which we have not had for the past 50 to 100 years.
"There are environmental benefits to our waterways," he said.
Referencing the removal of trucks from highways when goods move by water and the boon in recreational boating and fishing, including scheduling "six or seven" national bass tournaments following development of the Red and its fishery, Brontoli asked, "Where's the credit?"
Waterway interests must quantify these benefits and make the results known to Congress, he said. "We must develop measured criteria, we must create a credible evaluation we can all live with, to include the administration and industry."
Brontoli said his group has offered the J. Bennett Johnston Waterway as a "test case" for developing meaningful criteria for funding evaluation. The proposal got a "positive response" from Corps officials, he said. Hopefully, the Corps will "develop the criteria we need to show the true value (of the waterway) so we don't have to go through this cycle every year of uncertainty with our users and potential users of the waterway," he said.
Public Perceptions
As important as demonstration of waterway project values may be to the federal budget process, the need to "do a much better job of explaining to the general public and the taxpayers the value of these projects" is equally vital, said Waldon, citing a recent Tennessee Valley Authority (TVA) poll of residents in its service area. The survey asked for recommendations on prioritization in TVA reservoir operations.
"This was not a poll taken of soccer moms in the Northeast, this is an area of the country where TVA has spent hundreds of millions of dollars on water resources development to help improve the economic well-being and quality of life of the people in that region," said Waldon.
The Tennessee River is one of the nation's busiest waterways, moving close to 40 million tons of cargo a year, he said.
Of those surveyed, 32 percent ranked environmental protection as the top priority, said Waldon. Power production was tops in the minds of 28 percent of the respondents. Commercial navigation was the top priority of 2 percent of survey participants. "That is actually lower than the 3 percent who (said they) don't know or don't care" and vividly illustrates the need for public education regarding the role of waterways in the nation today, he said.
Corps civil works projects are not the only waterway projects fighting for federal dollars. N. E. "Nick" Mpras, chief of the Coast Guard's Office of Bridge Administration, Washington, D.C., said the Truman-Hobbs Act bridge program is awaiting word on its FY '03 budget.
Congress appropriated $15.47 million in FY '02 for Truman-Hobbs bridge projects, he said. Presently, the program includes 14 bridges in various stages of alteration, with another five awaiting initial funding by Congress. The Coast Guard has a backlog list of 28 bridges nationwide awaiting preliminary investigation to determine Truman-Hobbs funding eligibility, Mpras said.
Budget Status
Meanwhile, with an October 4 pre-election recess fast approaching, Congress has no budget agreement, said Michael J. Toohey, director, federal government relations, Ashland Inc., Washington, D.C. While both the House and Senate jockey for political position, President Bush finds himself in an undesirable position. The Congressional Budget Office recently revised its deficit estimate to $147 billion, he said.
Dealing with a budget deficit chafes Bush, who Toohey said, "does not like that, obviously. He is going to use the theme of reining in discretionary spending as a way to control deficits."
Robert F. Vining, chief of the Corps' Programs Management Division, evoked laughter from the NWC audience when, opening his presentation on Corps funding, he alluded to Waldon's remark about Parker's departure, saying emphatically, "I work for the administration and I'm darned proud of it!"
Corps Priorities
If anyone questions the Corps' view of navigation among its responsibilities today, Vining set the record straight: "From the Corps standpoint," he said, "navigation was our first mission and it is still one of our very fundamental missions. Federal responsibility for navigation is rooted in the Commerce Clause of the United States Constitution. It's a fundamental basis of this country."
The Corps faces a monumental challenge in trying to maintain the nation's aging waterway system, he said. Covering nearly 11,000 miles of nine-foot or deeper channel, the inland waterway system includes 171 locks with 215 lock chambers and a replacement value estimated to exceed $125 billion.
Two years ago, 52 Corps or TVA navigation locks were 31-40 years old, 58 are 61-70 years old, and 101 were at least 50 years old, said Vining. "Right now, 47 percent of the (lock) inventory exceeds that 50-year design life," he said. "By the year 2020, that number will be close to 60 percent. We are exceeding the physical life of many of these properties and that is posing some challenges for us."
About 627 million tons of cargo moved over 305 billion ton-miles on the nation's inland waterways in the year 2000, including 55 percent of US coal as well as 50 percent of grain exports, including 62 percent of the nation's corn crop and 72 percent of soybeans. Over $73 billion in cargo was moved, shipped from 31 states at an average savings of $10.67/ton, based on 1997 data developed by TVA and the Corps, he said.
Unscheduled lock outages at locks for unscheduled maintenance are "quickly growing across the system," said Vining. "In 1999, we had 120,000 hours of system-wide unscheduled outages across the system. As the system ages, that will only grow.
"Adding to that, commerce on the waterways is growing. Depending on what sort of projection you want to look at, the projected movement of commerce on our waterway systemŠcould grow as much as 33 percent by the year 2020," he said.
Lock delays are a "major, major challenge" to both U.S. domestic trade and the nation's standing in the global market, Vining said.
The Corps' "viable construction backlog" for all projects, including navigation, totals about $44 billion, including $25 billion to complete ongoing construction projects and $19 billion for projects previously authorized but not yet started. The $44 billion figure does not include $6 billion for authorized projects unlikely to be started, said Vining.
Navigation projects account for $10 billion of the $44 billion backlog; flood control, 17 percent.
The Corps projects an $884 million "critical" operations & maintenance (O&M) backlog in fiscal 03, up $49 million from the previous year. Another $1 billion in less "time-sensitive" O&M work has been identified, he said. Deferred O&M will accelerate breakdown repairs and degrade project performance, said Vining.
"That's something we're going to have to come to grips with," he said.
"Some major investment decisions will be forthcoming," said Vining, citing studies underway on the Ohio River, the Gulf Intracoastal Waterway and elsewhere.
"Having a viable, functioning inland navigation system is critical to our way of life, not only to our economy but to the environmental system we also cherish and want to maintain," he said. "We are seeing growing delays and deterioration of service throughout this system. This is not something that's going to be able to be turned around quickly."
The Inland Waterways Trust Fund balance is about $500 billion and growing, since Congress has not balanced trust fund income with appropriations, he said.
The Corps estimates that about $165 million a year from the Trust Fund would provide "full, efficient" funding for projects approved by the Inland Waterways Users Board and currently underway, said Daniel P. Mecklenborg, senior vice president and general counsel, Ingram Barge Company, Nashville, Tenn., and chairman of the Users Board.
Appropriations from the Trust Fund totaled about $144 million in FY '91, but have "never been to that level since," said Mecklenborg. Appropriations in 1993 and 1998 fell to below $80 million, he said.
"When you have over $100 million a year in tax going into the Trust Fund, plus it's earning interest, you can see over time the result is a significant rise in the Trust Fund surplus," he said. "Operators are paying in and we're expecting that our dollars are going to be used for the intended purpose. Instead, what has happened is there has been a significant increase in the Trust Fund balance."
"Trust funds like this are scored against the deficit, (and are) used to help demonstrate that the deficit is not as large as elsewhere, so there is a built-in desire not to draw funds out of these trust funds," said Vining.
"More importantly," he said, "the Corps civil works program and particularly the inland navigation system is not deemed to be a national priority. It's deemed to primarily be a regional and local issue. We have not gotten it established as a national priority in this country."
Civil works funding "suffers the consequences, which means you fund your national priorities first," he said. "When we are given a ceiling to work within and we have to make very hard decisions as to how to allocate that situation, the result has been that we the federal government haven't been able to put the dollars against the capital improvement of the inland navigation system to match the income that is being generated through the Trust Fund."
Mecklenborg said he expects about $130 million will be appropriated from the Trust Fund in '03, "the highest level in years."
Yet another trust fund, the SEA-21 Trust Fund, has been recommended by the Maritime Transportation System National Advisory Council, said Raymond Barberesi, Advisory Council executive director and a Maritime Administration employee.
If approved, the SEA-21 Trust Fund would be jointly managed by the U.S. Department of Transportation through MarAd and the Coast Guard, the Department of Commerce (National Oceanic and Atmospheric Administration) and other federal agencies, Barberesi said. Funded by a portion of existing Customs revenue collections at seaports, proceeds of the fund would be used to "expand port throughput capacity on waterside and landside, improve port security, relieve highway congestion by accommodating some long distance goods movement via inland waterways and coastwise shipping and accommodate projected growth in demand for intermodal goods movement," he said.
The SEA-21 Trust Fund would involve "No new taxes or fees, read my lips!" said Barberesi.
The "Washington Waves" column in this Waterways Journal edition states that the Corps of Engineers draft CIVIL WORKS STRATEGIC PLAN is available at
http://www.iwr.usace.army.mil/iwr/strategic-plan/strategicplan.pdf
And, comments on plan can be mailed to Corps at cwstratplan@usace.army.mil .