Inland Waterways Trust Fund

Transcription

1 Inland Waterways Trust Fund Presented at the 78th Annual PNWA Mission to Washington, DC March 6 th, 2012 Jorge Romero Copyright 2012 by K&L Gates LLP. All rights reserved.

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3 K&L Gates Maritime Group One of the largest maritime law and policy practices in Washington, D.C. Represent all major sectors of the maritime industry before Congress, Executive Branch agencies, and in the courts. Assist clients in complex transactions, drafting legislation and supporting advocacy documents, developing comprehensive strategies to affect public policy, and advocating their interests before federal and state governments. 2

4 Jorge Romero Background: General corporate and financing practice Focus on vessel construction, financing, documentation, and transactions Clients in the blue water and brown water industries, non-profits and associations 3

5 Agenda: High-level look at the Inland Waterways Trust Fund: Economic Basics Brief History Where we are today What s ahead? 4

6 History: Pre-1980, all waterway funding came from general revenue ( GR ). This was justified by the argument that low-cost water transportation benefited the whole economy. In the Northwest Ordinance of 1787, Congress declared that certain inland waterways shall be common highways and forever free... without any tax, impost, or duty therefore. 5

7 Basics: The Inland Waterways Trust Fund ( IWTF ) was originally authorized in the Inland Waterways Revenue Act of 1978 for the purpose of making construction and rehabilitation expenditures for navigation on the inland and coastal waterways of the United States as provided in appropriations acts. Funded by a tax on fuel used in commercial transportation on inland waterways. 6

8 Basics, cont.: Collected on statutorily defined 26 specific segments of the inland and intracoastal waterways subject to the tax and eligible for construction and rehabilitation expenditures from the IWTF. (Increased in 1986 to 27 segments.) The fuel tax collection began in 1980 at $0.04/ gallon, increasing to $0.10 in WRDA 1986 authorized further increases, which in 1995 brought the tax to $0.20/gallon where it stands today. 7

9 Basics, cont.: FY 2009: Two Acts, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, PL , and the Omnibus Appropriations Act, 2009, PL 111-8, temporarily exempted lock and dam major rehabilitation projects from cost-sharing, but with the expectation that the ITWF share would be reimbursed at a future date. FY 2009, cont.: The American Recovery and Reinvestment Act of 2009 ( ARRA ) (Public Law 111-5) provided additional relief, permanently exempting IWTF cost-sharing for inland waterways system construction and major rehabilitation work funded under ARRA. 8

10 Basics, cont.: Where does it go? Construction (broadly defined) and major rehabilitation: WRDA 1986 established fixed construction costsharing requirements for eight inland waterways modernization projects specifically authorized in WRDA 1986, providing for those specific projects that one-half of (construction) costs shall be paid only from amounts appropriated from the Inland Waterways Trust Fund, the rest from GR. This 50/50 revenue sharing has been followed in other WRDAs. 9

11 Basics, cont.: Where does it not go? Operation and Maintenance: Section 102(b) of WRDA 1986 continued the policy that had been in place for almost 200 years and provided that the Federal share of the cost of operation and maintenance of any project for navigation on the inland waterways is 100 percent. 10

12 History: In the late 1980 s and early 1990 s expenditures from the IWTF roughly matched revenue the 1992 surplus was $192 million. Starting in the early 1990 s through the early 2000 s the IWTF built up a large surplus -- $412 million in

13 History, cont.: The surplus and the state of the infrastructure caused dissatisfaction in the industry and fostered a desire for more activism in lobbying Congress for action. This led to the formation in 2001 of a group named Waterways Work! that splintered off from the National Waterways Conference, Inc. In the fall of 2003, this group and DINAMO (the Association for the Development of Inland Navigation in America s Ohio Valley) incorporated Waterways Council, Inc. ( WCI ). 12

14 History, cont.: WCI was very successful in increasing expenditures from the IWTF. However, this success was not accompanied by an increase in the source of IWTF revenue or other mechanism to extend the purchasing power of those funds. 13

15 History, cont.: The latest Inland Waterway User Board report, dated April 1, 2011, indicates the balance of the IWTF stood at an historic low of $58.5 million as of February Out of that amount, only $38.2 million was available for new obligations, the rest having been obligated for prior appropriations. 14

16 History, cont.: In April 2010, the Inland Waterways Users Board ( IWUB ) adopted a report prepared by the Inland Marine Transportation Systems ( IMTS ) Capital Investment Strategy Team, formally called the Capital Projects Business Model, and informally the Capital Development Plan ( CDP ). The Team was a working group of the Army Corps of Engineers and the IWUB, an industry Federal advisory committee established by Section 302 of WRDA

17 History, cont.: A year in the making, the IMTS Report: Made project delivery process recommendations. Produced a prioritized list of new construction and major rehabilitation projects for the next 20 years. Identified target funding levels. Recommended changes to cost sharing and revenue to achieve those levels Some of those recommendations require implementing legislation. 16

18 History, cont.: Cost share recommendation 50%/50% GR/IWTF cost share for new lock construction and major rehabilitation above $100M 100% GR for major rehabilitation of locks less than $100M and dams $270M/Year GR $110M/Year IWTF (requires 30% 45% increase in fuel tax ($0.06 $0.09/gal) Cost sharing cap (not defined) Fuel tax remains the funding mechanism 17

19 History, cont.: Obama Administration reaction to the CDP: Rejected the proposal in December 2010 in a letter from ASA (CW) Darcy to Rep. Oberstar. Hinted industry should also pay for maintenance: discussion should include whether to continue to finance inland waterways O&M costs entirely from general taxpayer revenues. 18

20 History, cont.: Recent Administration proposals: A lock user or lockage fee: Bush Administration in 2008: proposal to Congress to institute a lock usage fee to replace the fuel tax and generate additional revenue for the IWTF. Phased in charges to commercial barges of $50-$80 per lockage through the end of 2012 for lock chambers greater than 600 feet in length, and $30-$48 for chambers less than 600 feet After 2012 lockage fees go up if the IWTF balance falls below $25 million, and go down when the balance rises above $75 million Similar to mechanism proposed in a draft of the Inland Waterways Revenue Act of 1978 (34 years ago) 19

21 History, cont.: In November 2010, the National Commission on Fiscal Responsibility and Reform included a proposal to make the inland waterways selffunding. Didn t say how. The Obama Administration s FY2010 budget included a similar proposal, with the addition of a congestion fee option. The Obama Administration s FY2012 request once again proposed a usage fee to replace the fuel tax. NWC was founded in 1960 to oppose a lockage fee. 20

22 History, cont.: CBO in its 2011 budget options report included a proposal to increase user fees on inland waterways to a level sufficient to cover the costs of construction, operations, and maintenance. 21

23 History, cont.: The Obama Administration s 2011 proposal: the Inland Waterways Capital Investment Act: Would impose [A]n annual user fee on each vessel that transports commercial cargo on the inland waterways of the United States The Secretary of the Army shall determine the amount and structure of this fee for each fiscal year, with the goal of ensuring that the balance of receipts in the Inland Waterways Trust Fund established by 26 U.S.C is sufficient to cover the user-financed share of the costs of inland waterways capital investment. Would be an add-on to the current fuel tax. Adds 40 river segments to the 27 currently subject to the fuel tax. 22

24 History, cont.: Target collection levels per FY: FY 2011, the Secretary of the Army: not less than $35,000,000 in receipts FY 2012, not less than $75,000,000 in receipts FY not less than $900,000,000 in receipts over the course of those eight fiscal years FY 2021 and thereafter, receipts in the IWTF at the end of each fiscal year of not less that $50,000,000 or more than $150,000,000 23

25 History, cont.: The Secretary of the Army may establish a twotiered fee system, under which the fee for vessels that operate during the fiscal year only on those portions of the inland waterways that do not involve passage through a lock would be lower than the fee for vessels that are eligible to use the locks. 24

26 Where we are today: Two years after release of final IMTS Report, a bill to implement it has not been introduced, but is reported to be poised for introduction by Congressman Ed Whitfield (R-KY), who is looking for co-sponsors of the WAVE-4: Waterways are Vital for the Economy, Energy, Efficiency, and Environment. Recent Administration proposals with variations on a user fee. 25

27 Where we are today, cont.: Environmental, conservation and taxpayer groups oppose any government funding of locks and dams. E.g., Izaak Walton League of America calls it a corporate bailout Meanwhile, we are: Waiting for WRDA 26

28 Creative Ideas Department Copyright 2012 by K&L Gates LLP. All rights reserved.

29 Miracle: Loaves and Fishes 28

30 Magic: Harry Potter and the Inland Waterways Trust Fund? 29

31 Discussion Copyright 2012 by K&L Gates LLP. All rights reserved.

32 Personal thoughts: The funding problem is a hard one to solve economically: no clear right answer Any solution is going to be a hard sell politically The CDP has issues Industry may have underestimated the forces against it What is a winning strategy? 31

33 Thanks! 32