River Industry Worried ‘Current Administration Doesn't Understand Our Business'

Mar 26, 2018

River industry leaders meet in Paducah for Inland Waterways Infrastructure Panel
Credit Nicole Erwin, WKMS

  Three U.S. Congressmen spent Monday morning with more than 40 river industry representatives in Paducah to discuss the nation’s Infrastructure Bill.

Local industry leaders say the government needs to learn more about the way their businesses operate.

A better understanding of the river system’s inner workings is why Kentucky 1st District Congressman James Comer said he wanted to join the panel discussion, flanked by Congressman David Kustoff from Tennessee and Jason Smith of Missouri.

“We are here to listen and learn,” said Comer.  

The three congressmen represent districts that border major inland waterway systems in the region.

They fielded questions and comments largely about a push toward public-private partnerships (P3s) to pay for the inland waterway system infrastructure projects.

No Successful Path for P3s on Waterways  
 

John Eckstein with Marquette Transportation Company said he could see how someone unfamiliar with the industry might suggest P3s.

“You know, let somebody else invest some money in a lock and dam, we will charge a toll on X thousands of barges that come through here a month, we will set the toll up like that, everything is fine.” But the reality, Eckstein explained, is that freight trades differently.  

Eckstein said instead, “What will happen is less barges will go through as the freight market adjusts. And as fewer barges go through then they will have to raise the tariffs on the barges that are still going through.”

He said the barges coming through those locks will then diminish and “pretty soon, whoever invested in that lock will come back to the government and say ‘I can’t make it, here is your lock back or you need to subsidize me’ and it will be an absolute train wreck.”

“It’s the farmers that will be hit the hardest," Eckstein said. As the ag industry heavily utilizes the waterways to move grain commodities.

Eckstein said there isn’t a path for a P3 to work in the river industry.

Dan Mecklenborg with Ingram Barge Company said the P3 system would move business off the water and to the rail.

“I don’t think we would survive in a system that is privately run and charging tolls and lockage fees.” Mecklenborg said the P3 system would be an “existential threat” to the river industry.

Tracy Zea is with the Waterways Council, Inc., and said if you compare the rivers and roads with the suggested toll system, options are significantly limited on the river.

“If you look at highway toll you give the user the option not to take the toll road, we only have one river, you have no option but to divert traffic off the waterway,” Zea said.

Hydropower Funds Could Fuel Projects

Currently, a 29 cent a gallon tax on diesel fuel, burned by towboats, goes into the inland waterways trust fund at a rate of about $115 million a year. Mecklenborg said to fund capital projects the industry needs at least twice that amount.

He suggests the government use funds from hydropower generation at the 21 locks within the inland navigation system to help fund projects. He said if ten percent of earnings from hydropower generation were placed in the trust as well that would be an additional $110 million a year.

In addition, Mecklenborg said that “hydropower generation is a beneficiary of our inland navigation system and the dam structures that have been built. But in the event of a dam failure, right now under existing law, we would be the only party to contribute to the repair of the dam.”

Mecklenborg said it makes sense that the inland navigation system would receive a certain percentage of funding as their system maintains that power generation.

‘Herky-Jerky’ Funding

Requests that projects receive funding up front was also suggested within the discussion.  According to Mecklenborg the Army Corps of Engineers only gets small chunks of money each year through the appropriation process.

“Instead of doing what you or I would do and fund the project up front and have a price and then go through an efficient way to construct it, they have to go hat-in-hand each year to the appropriators and the office of management and budget and try to get additional funding.”

Mecklenborg said that elongates the time and creates a “herky-jerky” approach.

Congressman Comer said a proposal to have earmarks for just the Army Corps of Engineer projects was presented at the beginning of the 115th Congress; however, he said money funneled through the Corp doesn’t always end up where initially promised.

“That is something I think we will continue to discuss if things don’t get better with the Corp,” said Comer, explaining earmarks should go where initially appropriated.
 

As the window for passing legislation closes for this Congressional session, Comer said he along with other representatives have to explain why more hasn’t been done.

 

“One of the biggest problems we have in Congress [...] is just about everything is a party-line vote,” said Comer.
 

“In moving forward with the infrastructure bill we will try and break it up into pieces,” rather than pushing the proposed infrastructure bill as a whole, Comer said.  

Tennessee Congressman David Kustoff said when you think about all the things that need to be done, like the Farm Bill and the FAA, getting the infrastructure bill passed will be difficult.

A transportation industry leader responded, “ with what I saw in the President’s infrastructure plan, I’m fine with that.”