TRVA-TCWC Board of Directors Unanimously Endorse Recommendations for IWTF

During a meeting of the Board of Directors in Nashville, Tennessee on Friday April 30, 2010, The Tennessee River Valley Association and Tennessee-Cumberland Waterways Council Board of Directors voted to Unanimously Endorse the Recommendations of the Inland Marine Transportation System Capital Investment Strategy Team for the Inland Waterways Trust Fund (IWTF).

Background:

The Bush and Obama Administrations have repeatedly proposed a lockage fee to replace the diesel fuel tax paid by commercial users of the nations’ inland waterways. The waterways industry, related trade associations, and the U.S. Congress have opposed this new tax citing the inequities of levying such fees on only waterways that rely on locking segments of their systems. Revenues of the Inland Waterways Trust Fund derived from the current fuel tax of 20 cents per gallon are not sufficient to pay the 50 percent of construction costs for planned improvements and rehabilitation of navigation structures.

The U.S. Army Corps of Engineers, working with representatives of the towing industry for more than one year, have completed an “Inland Marine Transportation System Capital Investment Strategy” (IMTS-CIS). That effort explored a more comprehensive solution to not only address cost sharing revenue generation, but to establish investment priorities and to improve project delivery that will shorten completion schedules and control escalation of project costs. The Inland Waterways Users Board (IWUB) unanimously approved the following recommendations of IMTS-CIS during a meeting on April 13, 2010 in Washington DC.

Key Recommendations:

The IWUB proposes an investment strategy of $380 million annually over a 20-year period of which $320 million would be for new construction and $60 million for major rehabilitation of locks. Included is a management reserve of $30 million. This recommended investment plan compares to unconstrained program needs of $900 million annually over the same time period. The proposed plan emphasizes completion of on-going projects, including the Chickamauga Lock Replacement and the Kentucky Lock Addition, and reflects a prioritization of competing project needs based on economic return and risk and reliability factors, including dam safety. This funding strategy maintains the 50/50 cost sharing formula, but includes significant changes in other current policies including:

-New lock construction and major rehabs costing less than $100 million would be 100% federally funded.

-Costs related to dam improvements would also be 100% federally funded since these structures serve many beneficiaries.

-Additional trust fund revenues would be raised to support this plan by increasing the current diesel fuel tax by 30% to 45% (6 to 9 cents per gallon) as needed.

-Based on these changes, the $380 million annual program would result in $270 million in federal funds and $110 million in tax revenues.

-Caps would be placed on project costs, beyond which users (trust fund revenues) would not be responsible for overruns; and,

-Lessons learned, where appropriate, would be applied from the Corps’ military construction program as well as other means to improve project delivery.

A major component of the IWUB strategy is to initiate measures that would facilitate more cost-effective uses of available funding by minimizing protracted construction delays that result in unnecessary added costs and benefits foregone.

Fundamental to the success of this investment strategy is the premise that those projects under construction would be fully funded based on need capabilities and those funds be efficiently utilized by the Army Corps’ of Engineers.

Tennessee River Valley Association and Tennessee-Cumberland Waterways Council Position:

The Tennessee River Valley Association and Tennessee-Cumberland Waterways Council endorses the concepts of the Inland Waterways Users Board Capital Investment Strategy Team’s new program that completes on-going projects, including the Chickamauga Lock Replacement and the Kentucky Lock Addition, and provides a reliable funding source for future waterway development and improvements. The TRVA recommends the Congress enact legislation that will immediately implement these needed changes in policy.

Adopted April 30, 2010