Last week, the Illinois General
Assembly tried to hold a subject matter hearing on aging navigation
infrastructure (I say “try” because it was rescheduled for December 2 at
10AM). The hearing was based on this memo provided by the
Illinois Department of Natural Resources. They propose to establish a new Inland Rivers
and Waterways Authority with a scope of work that includes advocacy for lock
expansion via the Navigation and Ecosystem Sustainability Program (NESP). And they propose the General Assembly support
an application for an Illinois and Middle Mississippi River Public Private
Partnership pilot program (IMMR P5). The
Water Resources Reform and Development Act of 2014 established this pilot
program and the Corps of Engineers is accepting applications to designate the
pilot projects. It looks like private
interests are seeking NESP funding through this new program.
American Rivers submitted
testimony, along with several Nicollet Island Coalition partners, opposing both
of the above mentioned proposals. Instead,
we recommended Illinois abandon pursuit of funding for lock expansion and
submit an IMMR P5 designation request for private financing of operations,
maintenance, and rehabilitation only, using river coordinating bodies that
already exist in statute – instead of creating a new authority.
The rationale behind the lock
expansion opposition is detailed in the 2010 report, Big Price – Little Benefit: Why Proposed Locks on the Upper Mississippi
and Illinois Rivers are not Economically Viable.
Our other concerns are more
nuanced. The Inland Waterways System is
the most subsidized mode of freight transport in the nation. More than 90
percent of the infrastructure costs are paid by federal taxpayers. While
Illinois is trying to identify private investments under the IMMR P5 program, it’s
possible much of the federal subsidies will be shifted onto Illinois taxpayers
and will not significantly reduce the overall public subsidy for the private
navigation businesses.
There are also major problems
around the proposed cost recuperation plan outlined in the IMMR P5
Factsheet. Tonnage tariffs and user fees
are the only revenue stream listed from the private sector. However, the barge industry has routinely
fought every effort to incorporate such fees. A May 12, 2009 Press Release from
the American Waterways Operators states:
“Replacing the excise tax on fuel that equitably distributes taxes
on all commercial waterways users with a lock usage tax would impose
disproportionate tax burdens on vessels transiting certain segments of the
inland waterways, while other vessels using the system would pay little or
nothing. This flawed approach would increase the cost of shipping essential
commodities such as grain and petroleum and would undermine the nation’s inland
waterways transportation system…”
Basically, the barge industry is
saying that the fees Illinois plans to rely on to pay for the infrastructure would
eventually drive barge traffic from those segments that have locks. It seems
likely that the costs for major construction projects will not be recuperated.
We also opposed the creation of
any government body or authority established specifically to pursue state or
private funding for the NESP. NESP has
several fundamental flaws, which we detail in Big
Price – Little Benefit. The Corps of Engineers’ own study of the lock
expansion component of the program demonstrates that the program is not
economically justified, and that increasing barge traffic in the region will increase carbon emissions. There also is no evidence that
taxpayer investment by the State of Illinois under the proposed IMMR P5 program
will improve the benefits. Pursuing
funds for lock expansion would likely turn into a state financed boondoggle,
and while it might benefit the navigation industry, it would certainly not
benefit the Illinois taxpayer.
We also pointed out in the
testimony that the work of the new “Inland Rivers and Waterways Authority”
proposed to be created legislatively would significantly overlap with the
already existing Illinois and Mississippi Rivers Coordinating Councils. These Councils have the authority to make
recommendations to the General Assembly and Governor regarding funding and
spending in the Illinois and Mississippi River watersheds. They also have the authority to identify new
funding sources for river management needs and serve as a well-established
public forum for discussions between all stakeholders on the rivers. And these Councils are not mandated to pursue
projects within any particular authority.
Instead of forming a new
authority or submitting a proposal to the Corps of Engineers to expand locks,
we recommend the state pursue IMMR P5 designation for private financing of
operations, maintenance, and rehabilitation only, using river coordinating
bodies that already exist in statute.
Funding under these authorities would remain independent of NESP and its
related controversies. Applications for
operations, maintenance and rehabilitation would stand a greater likelihood for
federal approval and funding.
