Sinking Lock, Dam Fees

WASHINGTON (DTN) -- While there is enthusiasm to rebuild the inland waterways system, farmers who sell grain to river terminals along key waterways could end up losing some value on their grain and oilseed in the funding plan for lock-and-dam projects being proposed by the Trump administration.

"There's no question a lockage fee would come back to hurt the farmer in some way," said Randy Gordon, president of the National Grain and Feed Association. "We are concerned that a lockage fee type of concept would be a negative impact on producer prices."

At issue is the idea of creating a lockage fee or tolls for barges to pay for those lock-and-dam upgrades along major waterways such as the upper Mississippi, Illinois and Ohio river systems.

Deb Calhoun, a senior vice president for the Waterways Council Inc., responded to DTN in an email that the group was thrilled the president highlighted the importance of the river system, but there are no specifics about how funding would work right now.

However, President Donald Trump's administration included a user fee proposal to raise $108 million annually in its fiscal year 2018 budget proposal. Calhoun said such proposals have been included "in every budget, every year, every administration going back to Clinton, although the amount they seek to raise may differ slightly."

The lockage fee has been rejected repeatedly by Congress and groups such as the Waterways Council in favor of collecting diesel taxes.

"That is the more equitable way to collect it across the system. If you look at a user fee or toll structure, there are companies operating on parts of the system where there are few locks and others where there are a great many," Calhoun said.

"This also unfairly disadvantages those parts of the country where consumers could pay more for their goods or electricity, for example, because shippers are paying more for transportation and that gets passed back to consumers ultimately."

In 2014, the tax on barge diesel was raised to 29 cents in 2014, with strong industry support from both barge companies and farm organizations. The user fee helps ensure a 50-50 match between funding from the private sector and federal dollars for lock-and-dam maintenance.

"We think that is a good formula for success and a good example. We would argue that 50-50 match is a pretty aggressive cost share already," Gordon said.

"We're trying to showcase the existing cost-share that already exists between the users of the waterways and the taxpayer is the appropriate model for a public-private partnership."

According to the Corps of Engineers, the inland waterway system has a maintenance and upgrade backlog of $8.7 billion that could take decades to complete. The White House infrastructure proposal, which is light on details so far, doesn't specify if there would be an injection of new money for those repairs.

About 60% of grains and oilseeds moving out of the Gulf of Mexico start from inland waterways on the Ohio, Illinois or upper Mississippi river lock and dam systems. Upstream movements of fertilizers and other chemicals also rely heavily on the waterways system.

"What we have seen is this administration expressly recognizes the inland waterways is the most efficient, most environmentally friendly way to move cargo," Gordon said.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said the White House push on locks and dams is an encouraging move, but that a lot needs to happen to pivot toward crafting legislation.

"I was really pleased agriculture was incorporated into the president's remarks," Steenhoek said. "It was really a good opportunity, but I think it is still quite long on ambition and short on specifics."

Steenhoek said the costs of upgrading locks and dams is expensive and revenue is tight. So he believes the shipping industries should be open to studying other funding sources.

"When you talk about lockage fees and some kind of public-private partnership, that's going to come down to a couple of things: you giving up something and you getting something," Steenhoek said.

The benefits could translate into a more-efficient system, but a lot more due diligence is needed to understand cost and benefit, Steenhoek said.

One problem Gordon and Steenhoek raised is the issue of Corps of Engineers projects being funded piecemeal through annual appropriations from Congress, rather than an entire project funded at one time.

That creates a lot of complications and delays, especially when Congress is so bad about approving its annual appropriation bills. Gordon and Steenhoek both suggested lock-and-dam maintenance or replacement projects would move along a lot smoother if they were funded entirely through one bill.

"We get into these cycles of appropriations where the funding is off-and-on, off-and-on and there are cost savings that could accrue if you just had a consistent method of funding, and a predictable method," Gordon said.

Steenhoek said, "We have got these big, expensive locks and the funding for them is unpredictable and it comes in increments."

Part of the Trump administration's logic could be to put more of a funding onus on lockage fees to assure a constant funding stream for projects.

While inland waterway users are concerned about more costs shifting from the federal government to them, Gordon said he has been pleased with the level of attention paid to rural infrastructure issues so far by the president's staff and economic advisors.

"This White House has reached out more than any White House in my 39 years here," Gordon said. "They recognize the importance of rural America in his election, and the importance of food and agriculture is to the country and the impact on the balance of trade."

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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