Corps of Engineers Funding Corps of Engineers Funding for Navigation Infrastructurefor Navigation InfrastructureCorps of Engineers Funding Corps of Engineers Funding for Navigation Infrastructurefor Navigation Infrastructure

David V. GrierDavid V. Grier

Institute for Water ResourcesInstitute for Water Resources

Presented atPresented at

Financing Freight Transportation ImprovementsFinancing Freight Transportation Improvements

U.S. Dept. of Transportation SeminarU.S. Dept. of Transportation SeminarApril 29, 2001 St. Louis, MOApril 29, 2001 St. Louis, MO

US Army Corpsof Engineers ®

Civil Works MissionsCivil Works Missions• NavigationNavigation• Flood ControlFlood Control• HydropowerHydropower• Environmental Environmental

StewardshipStewardship• Emergency Response & Emergency Response &

RecoveryRecovery• Shore & Hurricane Shore & Hurricane

ProtectionProtection• Water SupplyWater Supply• RecreationRecreation• Regulatory ProgramsRegulatory Programs

Corps of Engineers ActivitiesCorps of Engineers ActivitiesCorps of Engineers ActivitiesCorps of Engineers Activities

Million Tons

Over 100

50 - 100

25 - 50

10 - 25

Principal U.S. PortsPrincipal U.S. PortsHandling Over 10 Million Tons in 1997Handling Over 10 Million Tons in 1997

HoustonHouston

Corpus ChristiCorpus Christi

S. LouisianaS. LouisianaNew OrleansNew Orleans

Baton RougeBaton Rouge

Texas CityTexas City

Lake CharlesLake Charles

PlaqueminesPlaqueminesTampaTampa

MobileMobile

PascagoulaPascagoula

PittsburghPittsburgh New York/NJNew York/NJ

ValdezValdez

Long BeachLong Beach

BeaumontBeaumont

NorfolkNorfolk

PhiladelphiaPhiladelphia

Duluth/SuperiorDuluth/Superior

Los AngelesLos Angeles

BaltimoreBaltimore

Port ArthurPort Arthur

St. LouisSt. Louis

PortlandPortland

SeattleSeattle

FreeportFreeport

HuntingtonHuntington

ChicagoChicago

PaulsboroPaulsboroMarcus HookMarcus Hook

RichmondRichmond

OaklandOakland

TacomaTacoma

BostonBoston

Newport NewsNewport News

Port EvergladesPort Everglades

JacksonvilleJacksonville

MemphisMemphis

DetroitDetroit

ClevelandCleveland

SavannahSavannah

CharlestonCharleston

Indiana HbrIndiana Hbr

ToledoToledo

LorainLorain

CincinnatiCincinnati

PortlandPortland

Two HarborsTwo Harbors

AnacortesAnacortes

HonoluluHonolulu

AshtabulaAshtabula

CalciteCalcite

GaryGary

Burns WW HbrBurns WW Hbr

GalvestonGalveston

Presque IslePresque Isle

U.S. Inland & Intracoastal Waterways

Columbia

Snake

Mississippi

Illin

ois

Missouri

Arkansas

White

OuachitaRed

Low

er

Mis

siss

ippi

Tenn-Tom

Blk Warrio

r

Alaba

ma

ACF

Tenne

sseeCumberland

Ohio Kanawha

Allegheny

Monongahela

Atla

ntic

Intra

coas

tal

Wat

erw

ay

Intracoastal

Gulf

Waterway

Upper

Over 11,000 Miles 9-Ft. & Over

226 Lock Sites / 268 Chambers

Replacement Value $125+ Bn

National Challenge:National Challenge:

Aging Water Resources InfrastructureAging Water Resources Infrastructure National Challenge:National Challenge:

Aging Water Resources InfrastructureAging Water Resources Infrastructure Investments in water resources Investments in water resources

Infrastructure have declined Infrastructure have declined Aging infrastructure will cause Aging infrastructure will cause

performance and customer performance and customer satisfaction problemssatisfaction problems

Corps infrastructure:Corps infrastructure:• 49% of lock chambers; 29% 49% of lock chambers; 29%

of dams at least 50 years oldof dams at least 50 years old• O&M backlog of $450M O&M backlog of $450M

doesn’t provide needed doesn’t provide needed maintenance to prolong life maintenance to prolong life of infrastructureof infrastructure

National Need

A High-Performance, Environmentally Sustainable

Infrastructure

National Challenge:National Challenge:Water Transportation SystemWater Transportation System

National Challenge:National Challenge:Water Transportation SystemWater Transportation System

Contributes 8% of GDPContributes 8% of GDPSystem nearing capacitySystem nearing capacityCommerce to double by Commerce to double by

20202020Already a generation Already a generation

behind in channel designbehind in channel designCapacity constraints Capacity constraints

increase transportation increase transportation costs, pollution, costs, pollution, congestion congestion

National Need

A strong environmentally sustainable maritime transportation system

Investment Required: $14.7 B

U.S. Waterborne CommerceU.S. Waterborne Commerce1960 - 19991960 - 1999

U.S. Waterborne CommerceU.S. Waterborne Commerce1960 - 19991960 - 1999

1.9%

3.3%

Annual Growth

0.8%

Key Deep-Draft Harbor Improvement Key Deep-Draft Harbor Improvement Projects in FY01 BudgetProjects in FY01 Budget

Key Deep-Draft Harbor Improvement Key Deep-Draft Harbor Improvement Projects in FY01 BudgetProjects in FY01 Budget

BostonBoston

New York/NJNew York/NJDelaware R.Delaware R.

BaltimoreBaltimore

Norfolk/Craney I.Norfolk/Craney I.

WilmingtonWilmington

CharlestonCharlestonSavannahSavannah

Pt. EvergladesPt. Everglades

MiamiMiamiManateeManatee

PascagoulaPascagoulaHouston/Houston/GalvestonGalveston Sabine-NechesSabine-Neches

Corpus Corpus ChristiChristi

Los AngelesLos Angeles

OaklandOakland

Santa BarbaraSanta Barbara

Columbia R.Columbia R.

L. Washington L. Washington Ship CanalShip Canal

Under Study Under Study (17)(17)

Under Under Construction Construction (14)(14)

San DiegoSan Diego

C&D CanalC&D Canal

BrunswickBrunswick

James R.James R.

Great Lakes Great Lakes Navigation SystemNavigation System

Waukegan HbrWaukegan HbrPort Jersey Port Jersey

Arthur KillArthur Kill

Kill Van KullKill Van KullStocktonStockton

Redwood CityRedwood City

Top 25 U.S. Container PortsTop 25 U.S. Container Ports

HoustonHouston

New OrleansNew OrleansGulfportGulfport

New York/NJNew York/NJ

AnchorageAnchorage

Long BeachLong Beach

Hampton RoadsHampton Roads

PhiladelphiaPhiladelphia

Los AngelesLos Angeles

BaltimoreBaltimore

PortlandPortland

SeattleSeattle

OaklandOakland

TacomaTacoma

BostonBoston

Port EvergladesPort Everglades

JacksonvilleJacksonvilleSavannahSavannah

CharlestonCharleston

HonoluluHonolulu

Wilmington, DEWilmington, DE

Wilmington, NCWilmington, NC

MiamiMiami

PalmPalmBeachBeach

Container TEUs

(Millions)

Over 2.0

1.0 - 2.0

.25 - 1.0

Under .25 San JuanSan Juan

Forecasted Growth in TEU Throughput Forecasted Growth in TEU Throughput at U.S. Deep Draft Ports: 2000-2020at U.S. Deep Draft Ports: 2000-2020

(thousands of TEUs)(thousands of TEUs)

Forecasted Growth in TEU Throughput Forecasted Growth in TEU Throughput at U.S. Deep Draft Ports: 2000-2020at U.S. Deep Draft Ports: 2000-2020

(thousands of TEUs)(thousands of TEUs)

00

10,00010,000

20,00020,000

30,00030,000

40,00040,000

50,00050,000

60,00060,000

Year 2000Year 2000 Year 2010Year 2010 Year 2020Year 2020

TE

Us

(th

ou

san

ds)

TE

Us

(th

ou

san

ds)

ImportsImports

ExportsExports

TotalTotal

19901990 19951995 20002000 20052005 2010201000

100100

200200

300300

400400

500500

Million TonsMillion Tons

PanamaxPanamax Post-Post-PanamaxPanamax

Containership SizesContainership SizesContainership SizesContainership Sizes

Constrained Containership Calls by Constrained Containership Calls by Coastal Region with and without Planned Coastal Region with and without Planned

Corps Projects: Year 2000 and 2020Corps Projects: Year 2000 and 2020

Constrained Containership Calls by Constrained Containership Calls by Coastal Region with and without Planned Coastal Region with and without Planned

Corps Projects: Year 2000 and 2020Corps Projects: Year 2000 and 2020

00

44

88

1212

1616

2020

con

stra

ined

ca

lls

(th

ou

san

ds)

con

stra

ined

ca

lls

(th

ou

san

ds)

Atlantic CoastAtlantic Coast Pacific CoastPacific Coast Gulf CoastGulf Coast Great LakesGreat Lakes

Year 2000Year 2000

Year 2020 with planned projectsYear 2020 with planned projects

Year 2020 without planned projectsYear 2020 without planned projects

Total U.S. Inland Waterway TrafficTotal U.S. Inland Waterway TrafficHistoric and Forecast: 1975-2020Historic and Forecast: 1975-2020

7575 8080 8585 9090 9595 20002000 0505 1010 1515 2020400400

500500

600600

700700

800800

900900

1,0001,000

YearYear

Million TonsMillion Tons

630630

836836

722722

950950

Average Queue Delays at LocksAverage Queue Delays at LocksLocks Over 1.5 Hours, 1998Locks Over 1.5 Hours, 1998

Inner HarborInner HarborBayou SorrelBayou Sorrel

Miss 25Miss 25Miss 24Miss 24

KentuckyKentuckyAlgiersAlgiersMiss 22Miss 22MarmetMarmetMiss 14Miss 14Ohio 52Ohio 52

Port AllenPort AllenMiss 17Miss 17

LaGrangeLaGrangeMiss 15Miss 15

LockportLockportGreenupGreenup

HarveyHarveyMiss 20Miss 20

ChickamaugaChickamaugaMiss 21Miss 21Miss 27Miss 27Miss 16Miss 16

MarseillesMarseilles

00 22 44 66 88 1010 1212 1414HoursHours

Queues at old L&D 26 on Queues at old L&D 26 on the Mississippi could last the Mississippi could last hours or even days.hours or even days.

Multiple lockages to pass a tow Multiple lockages to pass a tow result in long queues that are result in long queues that are costly and inefficient.costly and inefficient.

A new 1200-foot main chamber A new 1200-foot main chamber allows tows of 15 barges to pass in allows tows of 15 barges to pass in a single lockage, eliminating most a single lockage, eliminating most of the delay.of the delay.

The new lock handles 70 million The new lock handles 70 million tons annually -- mostly export tons annually -- mostly export grain.grain.

Why delays at locks?Why delays at locks?Why delays at locks?Why delays at locks?

Inland NavigationInland NavigationConstruction ProgramConstruction Program

Inland NavigationInland NavigationConstruction ProgramConstruction Program

L&D 3 RehabL&D 3 Rehab

OlmstedOlmsted McAlpineMcAlpine

InnerInnerHarborHarbor

KentuckyKentucky

Lower Mon 2-4Lower Mon 2-4

MarmetMarmetLondon RehabLondon Rehab

L&D 12 RehabL&D 12 RehabL&D 14 RehabL&D 14 Rehab

L&D 24 RehabL&D 24 Rehab

New ConstructionNew Construction

Major RehabilitationMajor Rehabilitation

Operational While Operational While Construction ContinuesConstruction Continues

ByrdByrdWinfieldWinfield

Montgomery Montgomery PointPoint

Ongoing Ongoing construction:construction:• 9 lock & dam 9 lock & dam

construction construction projectsprojects

• 5 major rehabs5 major rehabs• Cost: $4.4 billionCost: $4.4 billion

Major Inland Navigation StudiesMajor Inland Navigation StudiesMajor Inland Navigation StudiesMajor Inland Navigation Studies

Upper MissUpper Miss& Illinois& Illinois

(37 Locks)(37 Locks)

LA IntracoastalLA IntracoastalWaterway LocksWaterway Locks

GIWW Texas Coast GIWW Texas Coast (Multiple Studies)(Multiple Studies)

Black Warrior - Black Warrior - TombigbeeTombigbee

Ohio River MainstemOhio River Mainstem(19 Locks)(19 Locks)

CalcasieuCalcasieu

GreenupGreenupMyersMyers

L&D 11 RehabL&D 11 Rehab

Red R. to IndexRed R. to Index

ChickamaugaChickamauga

Ala. R.Ala. R.

Arkansas R.Arkansas R.

Bayou SorrelBayou Sorrel

White R.White R.

Several major Several major studies of inland studies of inland navigation needs to navigation needs to 2020 and beyond2020 and beyond• Upper Miss & Illinois Upper Miss & Illinois

- 7 locks authorized - 7 locks authorized for PED if justifiedfor PED if justified

• Ohio River – 600’ lock Ohio River – 600’ lock extensions at Greenup extensions at Greenup and Myers auth and Myers auth WRDA 2000WRDA 2000

• Other candidate locks Other candidate locks on GIWW and BWTon GIWW and BWT

Corps Civil Works AppropriationCorps Civil Works Appropriationby Business Program, FY 2001by Business Program, FY 2001

Corps Civil Works AppropriationCorps Civil Works Appropriationby Business Program, FY 2001by Business Program, FY 2001

NavigationNavigation$1,887.5M$1,887.5M

42%42%

Water Supply: $7.2M 0.2%Water Supply: $7.2M 0.2%

Flood & Coastal Flood & Coastal Storm Damage Storm Damage

Prevention Prevention $1,358.4M $1,358.4M

30%30%

EnvironmentEnvironment& Regulatory& Regulatory$808.0M 18%$808.0M 18%

Hydropow

er

$196.5M 4%

Recreatio

nR

ecreation

$280.1M 6%

$280.1M 6%

Emergency Management:Emergency Management:$7.3 M 0.1%$7.3 M 0.1%

Total:Total:$4.5 billion$4.5 billion

FY01 Appropriation:FY01 Appropriation:Navigation Business ProgramNavigation Business Program

FY01 Appropriation:FY01 Appropriation:Navigation Business ProgramNavigation Business Program

O&MO&M$1,179.9 million$1,179.9 million

Const. Gen.Const. Gen.$571.6 million$571.6 million

MR&TMR&T$32.9 million$32.9 million

GI $40 millionGI $40 million

TOTAL:TOTAL:$1,887.5 million$1,887.5 million

Navigation Operations & Maintenance Navigation Operations & Maintenance Expenditures 1977-99Expenditures 1977-99Current $ and 1996 Constant $Current $ and 1996 Constant $

Navigation Operations & Maintenance Navigation Operations & Maintenance Expenditures 1977-99Expenditures 1977-99Current $ and 1996 Constant $Current $ and 1996 Constant $

7777 8080 8585 9090 9595 9999200,000200,000

400,000400,000

600,000600,000

800,000800,000

1,000,0001,000,000

1,200,0001,200,000

1,400,0001,400,000

YearYear

($000)($000)

CurrentCurrent$$

ConstantConstant1996 $1996 $

Navigation Construction ExpendituresNavigation Construction Expenditures1990-20001990-2000

Current $ and 1996 Constant $Current $ and 1996 Constant $

Navigation Construction ExpendituresNavigation Construction Expenditures1990-20001990-2000

Current $ and 1996 Constant $Current $ and 1996 Constant $

9090 9292 9494 9696 9898 20002000200200

250250

300300

350350

400400

450450

500500

550550

YearYear

MillionMillion

CurrentCurrent$$

ConstantConstant1996 $1996 $

Navigational ActivitiesNavigational ActivitiesFY 2001 Civil Works Budget ($ Millions)FY 2001 Civil Works Budget ($ Millions)

Navigational ActivitiesNavigational ActivitiesFY 2001 Civil Works Budget ($ Millions)FY 2001 Civil Works Budget ($ Millions)

Navigation StudiesNavigation Studies $14$14Preconstruction Eng. & Design*Preconstruction Eng. & Design* 1414R&D, etc.R&D, etc. 1313Inland Construction*Inland Construction* 175175Coastal Harbor Construction*Coastal Harbor Construction* 285285Other ConstructionOther Construction 1111Inland Waterway Operation & Maint.Inland Waterway Operation & Maint. 475475Coastal Harbor O&M* Coastal Harbor O&M* 665665Gen. ExpensesGen. Expenses 6464Total in Civil Works AppropriationTotal in Civil Works Appropriation $1,716$1,716

*Cost-Shared Activities*Cost-Shared Activities(sponsor contributions not included except IWTF)(sponsor contributions not included except IWTF)

Funding Sources forFunding Sources forCorps Navigation ExpendituresCorps Navigation Expenditures

Funding Sources forFunding Sources forCorps Navigation ExpendituresCorps Navigation Expenditures

HarborsHarborsO&MO&M Federal GovernmentFederal Government 0%0%

Harbor Maintenance TFHarbor Maintenance TF 100%100%

ConstructionConstruction Federal GovernmentFederal Government 40-80%40-80%Project SponsorsProject Sponsors 20-60%20-60%

Inland WaterwaysInland WaterwaysO&MO&M Federal GovernmentFederal Government 100%100%

ConstructionConstruction Federal GovernmentFederal Government 50%50%Inland Waterways TFInland Waterways TF 50%50%

Harbor MaintenanceHarbor MaintenanceTrust FundTrust Fund

Harbor MaintenanceHarbor MaintenanceTrust FundTrust Fund

Established in WRDA 1986Established in WRDA 1986 Ad valorem tax of .125% on cargo valueAd valorem tax of .125% on cargo value Reimburses Treasury for 100% of harbor O&M Reimburses Treasury for 100% of harbor O&M

since 1990since 1990 Issues:Issues:

• Tax on exports ruled unconstitutional by U.S. Tax on exports ruled unconstitutional by U.S. Supreme Court in 1998 and no longer collectedSupreme 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

Harbor Maintenance Trust FundHarbor Maintenance Trust FundRevenues, Transfers and BalanceRevenues, Transfers and Balance1988 - 2000 and Projected 2001-041988 - 2000 and Projected 2001-04

Harbor Maintenance Trust FundHarbor Maintenance Trust FundRevenues, Transfers and BalanceRevenues, Transfers and Balance1988 - 2000 and Projected 2001-041988 - 2000 and Projected 2001-04

8888 9090 9595 20002000 040400

500500

1,0001,000

1,5001,500

2,0002,000

YearYear

MillionMillion

BalanceBalance

RevenuesRevenues& Interest& Interest

TransfersTransfers

ProjectedProjected

Harbor ImprovementHarbor ImprovementCost Sharing RequirementsCost Sharing Requirements

Harbor ImprovementHarbor ImprovementCost Sharing RequirementsCost Sharing Requirements

Non-Federal sponsors Non-Federal sponsors pay a share of project pay a share of project cost based on deepening cost based on deepening increment:increment:

20’ or less:20’ or less:• 10% up front10% up front• 10% over time10% over time

20-45’20-45’• 25% up front25% up front• 10% over time10% over time

+45’+45’• 50% up front50% up front• 10% over time10% over time

20

45

Inland Waterways Trust FundInland Waterways Trust FundLegislative BackgroundLegislative Background

Inland Waterways Trust FundInland Waterways Trust FundLegislative BackgroundLegislative Background

Inland Waterways Revenue Act of 1978Inland Waterways Revenue Act of 1978• Created fuel tax at 4 cents per gallonCreated fuel tax at 4 cents per gallon• Designated 26 shallow draft waterways on which the tax would applyDesignated 26 shallow draft waterways on which the tax would apply

Water Resources Development Act of 1986Water Resources Development Act of 1986• Established Users BoardEstablished Users Board• Authorized expenditures from fund for 8 lock & dam projectsAuthorized expenditures from fund for 8 lock & dam projects• Precedent for 50/50 cost-sharingPrecedent for 50/50 cost-sharing• Increase tax to 20 cents by 1995Increase tax to 20 cents by 1995

WRDAs 88, 90, 92, 96, 99, 2000WRDAs 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 barrierAdded 7 new locks, 9 major rehabs, 1 protective coastal barrier• PED for 1200-ft chambers at 5 Upper Miss and 2 Illinois locksPED for 1200-ft chambers at 5 Upper Miss and 2 Illinois locks

Inland Waterways Trust FundInland Waterways Trust FundCurrent Status: End FY 00Current Status: End FY 00

Inland Waterways Trust FundInland Waterways Trust FundCurrent Status: End FY 00Current Status: End FY 00

Starting Balance: $370.6 MillionStarting Balance: $370.6 Million Revenues: $99.6 MillionRevenues: $99.6 Million Interest: $20 MillionInterest: $20 Million Outlays: $102.4 MillionOutlays: $102.4 Million Ending Balance: $387.8 MillionEnding Balance: $387.8 Million

$$$

Funding for Lock & Dam ConstructionFunding for Lock & Dam ConstructionCost-Shared with IWTF: 1987 - 2007Cost-Shared with IWTF: 1987 - 2007

Funding for Lock & Dam ConstructionFunding for Lock & Dam ConstructionCost-Shared with IWTF: 1987 - 2007Cost-Shared with IWTF: 1987 - 2007

8888 9090 9292 9494 9696 9898 20002000 0202 0404 060600

100100

200200

300300

400400

500500

600600

YearYear

$ Million$ Million

HistoricHistoric

CeilingsCeilings

CapabilityCapability

HistoricHistoric Potential OutlaysPotential Outlays

IWTF BalanceIWTF BalanceBased on Historic and Potential Outlays: 1987 - 2002Based on Historic and Potential Outlays: 1987 - 2002

IWTF BalanceIWTF BalanceBased on Historic and Potential Outlays: 1987 - 2002Based on Historic and Potential Outlays: 1987 - 2002

8888 9090 9292 9494 9696 9898 20002000 0202 0404 0606(100)(100)

00

100100

200200

300300

400400

500500

600600

700700

YearYear

$ Million$ Million

HistoricHistoric

CeilingsCeilings

CapabilityCapability

IncomeIncome

HistoricHistoric With Potential OutlaysWith Potential Outlays

SummarySummarySummarySummary

Navigation infrastructure Navigation infrastructure will need major investments will need major investments through 2020 to meet traffic through 2020 to meet traffic growth – growth – nearly $15bn est.nearly $15bn est.

Funding has been and Funding has been and continues to be constrainedcontinues to be constrained

Mix of funding sources and Mix of funding sources and policies complicates situation policies complicates situation and adds to uncertaintyand adds to uncertainty

Trust fund balances continue Trust fund balances continue to grow and are treated as to grow and are treated as part of Corps’ budget ceiling part of Corps’ budget ceiling