1. Corps of Engineers Funding for Navigation Infrastructure David V. Grier Institute for Water Resources Presented at Financing Freight Transportation Improvements U.S. Dept. of Transportation Seminar April 29, 2001 St. Louis, MO US Army Corps of Engineers ®

2.  Civil Works Missions Navigation Navigation Flood Control Flood Control Hydropower Hydropower Environmental Stewardship Environmental Stewardship Emergency Response & Recovery Emergency Response & Recovery Shore & Hurricane Protection Shore & Hurricane Protection Water Supply Water Supply Recreation Recreation Regulatory Programs Regulatory Programs Corps of Engineers Activities

3. Million Tons Over 100 50 - 100 25 - 50 10 - 25 Principal U.S. Ports Handling Over 10 Million Tons in 1997 Houston Corpus Christi S. Louisiana New Orleans Baton Rouge Texas City Lake Charles Plaquemines Tampa Mobile Pascagoula Pittsburgh New York/NJ Valdez Long Beach Beaumont Norfolk Philadelphia Duluth/Superior Los Angeles Baltimore Port Arthur St. Louis Portland Seattle Freeport Huntington Chicago Paulsboro Marcus Hook Richmond Oakland Tacoma Boston Newport News Port Everglades Jacksonville Memphis Detroit Cleveland Savannah Charleston Indiana Hbr Toledo Lorain Cincinnati Portland Two Harbors Anacortes Honolulu Ashtabula Calcite Gary Burns WW Hbr Galveston Presque Isle

5. National Challenge: Aging Water Resources Infrastructure  Investments in water resources Infrastructure have declined  Aging infrastructure will cause performance and customer satisfaction problems  Corps infrastructure: 49% of lock chambers; 29% of dams at least 50 years old49% of lock chambers; 29% of dams at least 50 years old O&M backlog of $450M doesn’t provide needed maintenance to prolong life of infrastructureO&M backlog of $450M doesn’t provide needed maintenance to prolong life of infrastructure National Need A High-Performance, Environmentally Sustainable Infrastructure

6. National Challenge: Water Transportation System  Contributes 8% of GDP  System nearing capacity  Commerce to double by 2020  Already a generation behind in channel design  Capacity constraints increase transportation costs, pollution, congestion National Need A strong environmentally sustainable maritime transportation system Investment Required: $14.7 B

7. U.S. Waterborne Commerce 1960 - 1999 1.9% 3.3% Annual Growth 0.8%

8. Key Deep-Draft Harbor Improvement Projects in FY01 Budget Boston New York/NJ Delaware R. Baltimore Norfolk/Craney I. Wilmington Charleston Savannah Pt. Everglades Miami Manatee Pascagoula Houston/ Galveston Sabine-Neches Corpus Christi Los Angeles Oakland Santa Barbara Columbia R. L. Washington Ship Canal Under Study (17) Under Construction (14) San Diego C&D Canal Brunswick James R. Great Lakes Navigation System Waukegan Hbr Port Jersey Arthur Kill Kill Van Kull Stockton Redwood City

9. Top 25 U.S. Container Ports Houston New Orleans Gulfport New York/NJ Anchorage Long Beach Hampton Roads Philadelphia Los Angeles Baltimore Portland Seattle Oakland Tacoma Boston Port Everglades Jacksonville Savannah Charleston Honolulu Wilmington, DE Wilmington, NC Miami Palm Beach Container TEUs (Millions) Over 2.0 1.0 - 2.0.25 - 1.0 Under.25 San Juan

10. Forecasted Growth in TEU Throughput at U.S. Deep Draft Ports: 2000-2020 (thousands of TEUs) 0 10,000 20,000 30,000 40,000 50,000 60,000 Year 2000 Year 2010 Year 2020 TEUs (thousands) Imports Exports Total

11. 19901995200020052010 0 100 200 300 400 500 Million Tons Panamax Post- Panamax Containership Sizes

12. Constrained Containership Calls by Coastal Region with and without Planned Corps Projects: Year 2000 and 2020 0 4 8 12 16 20 constrained calls (thousands) Atlantic Coast Pacific Coast Gulf Coast Great Lakes Year 2000 Year 2020 with planned projects Year 2020 without planned projects

13. Total U.S. Inland Waterway Traffic Historic and Forecast: 1975-2020 7580859095200005101520 400 500 600 700 800 900 1,000 Year Million Tons 630 836 722 950

14. Average Queue Delays at Locks Locks Over 1.5 Hours, 1998 Inner Harbor Bayou Sorrel Miss 25 Miss 24 Kentucky Algiers Miss 22 Marmet Miss 14 Ohio 52 Port Allen Miss 17 LaGrange Miss 15 Lockport Greenup Harvey Miss 20 Chickamauga Miss 21 Miss 27 Miss 16 Marseilles 02468101214 Hours

15. Queues at old L&D 26 on the Mississippi could last hours or even days. Multiple lockages to pass a tow result in long queues that are costly and inefficient. A new 1200-foot main chamber allows tows of 15 barges to pass in a single lockage, eliminating most of the delay. The new lock handles 70 million tons annually -- mostly export grain. Why delays at locks?

16. Inland Navigation Construction Program L&D 3 Rehab Olmsted McAlpineInnerHarbor Kentucky Lower Mon 2-4 Marmet London Rehab L&D 12 Rehab L&D 14 Rehab L&D 24 Rehab New Construction Major Rehabilitation Operational While Construction Continues Byrd WinfieldMontgomeryPoint  Ongoing construction: 9 lock & dam construction projects 9 lock & dam construction projects 5 major rehabs 5 major rehabs Cost: $4.4 billion Cost: $4.4 billion

17. Major Inland Navigation Studies Upper Miss & Illinois (37 Locks) LA Intracoastal Waterway Locks GIWW Texas Coast (Multiple Studies) Black Warrior - Tombigbee Ohio River Mainstem (19 Locks) Calcasieu Greenup Myers L&D 11 Rehab Red R. to Index Chickamauga Ala. R. Arkansas R. Bayou Sorrel White R.  Several major studies of inland navigation needs to 2020 and beyond Upper Miss & Illinois - 7 locks authorized for PED if justified Upper Miss & Illinois - 7 locks authorized for PED if justified Ohio River – 600’ lock extensions at Greenup and Myers auth WRDA 2000 Ohio River – 600’ lock extensions at Greenup and Myers auth WRDA 2000 Other candidate locks on GIWW and BWT Other candidate locks on GIWW and BWT

18. Corps Civil Works Appropriation by Business Program, FY 2001 Navigation$1,887.5M42% Water Supply: $7.2M 0.2% Flood & Coastal Storm Damage Prevention$1,358.4M30% Environment & Regulatory $808.0M 18% Hydropower $196.5M 4% Recreation $280.1M 6% Emergency Management: $7.3 M 0.1% Total: $4.5 billion

19. FY01 Appropriation: Navigation Business Program O&M $1,179.9 million Const. Gen. $571.6 million MR&T $32.9 million GI $40 million TOTAL: $1,887.5 million

20. Navigation Operations & Maintenance Expenditures 1977-99 Current $ and 1996 Constant $ 778085909599 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Year ($000) Current $ Constant 1996 $

21. Navigation Construction Expenditures 1990-2000 Current $ and 1996 Constant $ 90929496982000 200 250 300 350 400 450 500 550 Year Million Current $ Constant 1996 $

22. Navigational Activities FY 2001 Civil Works Budget ($ Millions) Navigation Studies$14 Preconstruction Eng. & Design*14 R&D, etc.13 Inland Construction*175 Coastal Harbor Construction*285 Other Construction11 Inland Waterway Operation & Maint.475 Coastal Harbor O&M* 665 Gen. Expenses64 Total in Civil Works Appropriation$1,716 *Cost-Shared Activities (sponsor contributions not included except IWTF)

23. Funding Sources for Corps Navigation Expenditures Harbors O&MFederal Government0% Harbor Maintenance TF100% ConstructionFederal Government40-80% Project Sponsors20-60% Inland Waterways O&MFederal Government100% ConstructionFederal Government50% Inland Waterways TF50%

24. Harbor Maintenance Trust Fund  Established in WRDA 1986  Ad valorem tax of.125% on cargo value  Reimburses Treasury for 100% of harbor O&M since 1990  Issues: Tax on exports ruled unconstitutional by U.S. Supreme Court in 1998 and no longer collectedTax on exports ruled unconstitutional by U.S. Supreme Court in 1998 and no longer collected Tax on imports may be challenged at WTOTax on imports may be challenged at WTO Alternative Harbor Services Fee rejected by CongressAlternative Harbor Services Fee rejected by Congress Increasing balanceIncreasing balance

25. Harbor Maintenance Trust Fund Revenues, Transfers and Balance 1988 - 2000 and Projected 2001-04 889095200004 0 500 1,000 1,500 2,000 Year Million Balance Revenues & Interest Transfers Projected

26. Harbor Improvement Cost Sharing Requirements Non-Federal sponsors pay a share of project cost based on deepening increment: Non-Federal sponsors pay a share of project cost based on deepening increment:  20’ or less: 10% up front10% up front 10% over time10% over time  20-45’ 25% up front25% up front 10% over time10% over time  +45’ 50% up front50% up front 10% over time10% over time 20 45

27. Inland Waterways Trust Fund Legislative Background  Inland Waterways Revenue Act of 1978 Created fuel tax at 4 cents per gallon Created fuel tax at 4 cents per gallon Designated 26 shallow draft waterways on which the tax would apply Designated 26 shallow draft waterways on which the tax would apply  Water Resources Development Act of 1986 Established Users Board Established Users Board Authorized expenditures from fund for 8 lock & dam projects Authorized expenditures from fund for 8 lock & dam projects Precedent for 50/50 cost-sharing Precedent for 50/50 cost-sharing Increase tax to 20 cents by 1995 Increase tax to 20 cents by 1995  WRDAs 88, 90, 92, 96, 99, 2000 Criteria for “major rehab” and “modernization” Criteria for “major rehab” and “modernization” Added 7 new locks, 9 major rehabs, 1 protective coastal barrier Added 7 new locks, 9 major rehabs, 1 protective coastal barrier PED for 1200-ft chambers at 5 Upper Miss and 2 Illinois locks PED for 1200-ft chambers at 5 Upper Miss and 2 Illinois locks

28. Inland Waterways Trust Fund Current Status: End FY 00  Starting Balance: $370.6 Million  Revenues: $99.6 Million  Interest: $20 Million  Outlays: $102.4 Million  Ending Balance: $387.8 Million $$$

29. Funding for Lock & Dam Construction Cost-Shared with IWTF: 1987 - 2007 8890929496982000020406 0 100 200 300 400 500 600 Year $ Million Historic Ceilings Capability Historic Potential Outlays

30. IWTF Balance Based on Historic and Potential Outlays: 1987 - 2002 8890929496982000020406 (100) 0 100 200 300 400 500 600 700 Year $ Million Historic Ceilings Capability Income Historic With Potential Outlays

31. SummarySummary  Navigation infrastructure will need major investments through 2020 to meet traffic growth – nearly $15bn est.  Funding has been and continues to be constrained  Mix of funding sources and policies complicates situation and adds to uncertainty  Trust fund balances continue to grow and are treated as part of Corps’ budget ceiling