Fixing Water Infrastructure

Background:

America’s inland waterway systems are federal channels, and our ports accommodate international trade. Supporting water infrastructure is critical to maintaining our transportation and export economy. The Chamber of Commerce estimates that over $270 billion worth of exports use inland waterways and facilitates numerous industries, generating 738,00 jobs. The American Farm Bureau Federation estimates that 60 percent of America’s grain exports move through the inland waterway system.

Current Situation:

These channels and other forms of water infrastructure have been neglected, despite biennial acts being passed since 1974. Some locks are approaching 80 years of age, and our ports can’t accommodate the higher volume of larger ships. The Chamber estimates that using our waterways saves $14 per ton for producers, shippers, and consumers. By updating old water infrastructure regularly, outdated 1930’s systems can be removed in order to better accommodate the global economy and control spending.

Options for Reform:

Prior to this year, a water resources act hadn’t been passed since 2007. But in 2014, the Water Resources Reform and Development Act passed Congress, creating important reform for the first time in generations.

 

The WRRDA represented decent, bipartisan reform aimed at reviving aging water navigation systems, ports, and locks and dams. New spending is estimated to be $8-$9 billion over ten years, but is offset by a $12 billion deauthorization of older projects. In addition, new procedures were implemented to sunset the 18-23 new projects, reduce the $60-$80 billion project backlog, and incorporate more private sector activity in developing modern water systems.

 

This bill had two major components: establish new water projects and reform the authorization process. CBO scores the House bill to cost roughly $8.3 billion from 2014-2023 for conservation and development of water resources, while deauthorizing $12 billion in projects. The Senate also produced a bill that contains similar provisions but fewer future projects. Major functions include:

 

The bill will streamline accountability across the Army Corps of Engineers and reduce past and future backlog, which overall lowers budgeted costs.

 

  • Construct water projects for mitigating storm and hurricane damage.
  • Restore ecosystems, and improve flood management.
  • Assist states and local governments with levee safety programs.
  • Assist Indian tribes with planning and technical assistance for water resources projects.
  • Implement a pilot program to work with nonfederal partners on certain projects.

 

The new project costs are heavily affected by the six largest projects and would total about $8.8 billion, but the federal share of those costs totals only $5.3 billion. The other 17 projects combined come to $1 billion over the next five years.

 

The WRRDA institutes many new rules on how projects are authorized and when funding can be available, and streamlines transparency and accountability in the Army Corps of Engineers:

 

  1. Improves delivery times and reduces cost overruns of the Inland Waterway system.

 

  1. Evaluates the efficiency of fuel tax collections on the nation’s waterways that finance the Inland Waterways Trust Fund, and looks at alternative funding approaches.

 

  1. Demands that all backlogged projects identified as “inactive” must be published in the Federal Register. After six months of inactive status, the project loses authorization, unless a nonfederal sponsor comes up with funds.

 

  1. New projects listed in this bill will be deauthorized as a federal responsibility if funds have not been appropriated in seven years after authorization.

 

  1. Withdraws the authorization for 13 Corps projects originally authorized before 1964.

 

  1. Directs the Corps to prioritize navigation projects funded from the Harbor Maintenance Trust Fund to be based on regional and national needs.

 

  1. Pilots 15 new projects that use nonfederal actors for construction and financing.

 

  1. Assists state and local governments with levee safety.

 

  1. Caps project study spending at $3 million and the timeline at three years.

 

  1. Institutes a new process where the Corps will annually recommend and report to Congress projects that merit study and construction funding, based on statutory criteria.

 

  1. Ends the beach program by not authorizing any new beach replenishment projects, and requires the sponsors of those projects to compete with other Corps projects for re-authorization and funding.

 

These measures establish caps, controls, and scrutiny of new projects that will put Congress back in authority, lessening the ability of bureaucrats to waste money. While not comprehensive, the reforms above will begin a reasonable process to streamline spending and funding of major waterway systems.

 

No reform attempt will be perfect, and groups like Taxpayers for Common Sense, Heritage Foundation, and others wish the WRRDA accomplished more. In particular, TCS notes that the backlog is $60-80 billion, but the Corps receives only $2 billion annually in construction spending. The bill certainly adds to the backlog with new projects, and it’s unclear when the $12 billion deauthorization will take place. This should be addressed so that the offsets occur immediately or at least upon the same timetable that the new spending occurs. More scheduled deauthorizations should be enacted to reduce costs.

 

There is also growing concern over the increased responsibilities of the Corps, and that these areas of authority should be reduced or prioritized. Its project backlog has grown to over 1,000 projects totaling over $60 billion, while the Corps’s Civil Works Program has only a $7 billion average annual budget. Either the Corps needs more resources (higher operating spending), releases more projects to nonfederal actors, or needs to cancel more projects.

 

The Corps could also look to shift more cost sharing to local and state partners. A 1986 bill that changed cost share requirements in the waterway system reduced overall project costs by one-third and saved taxpayers $3 billion. Responsibility and financing burdens would fall more heavily to state and local governments, who are already cash strapped, and could mean more regular updating of systems.

 

Another improvement to the bill would include increasing the output of the Harbor Maintainence Trust Fund. Established in 1986, it funds port and harbor operation and maintenance, but over the years project capacity has fallen behind the collection of trust fund fees. This has left a $7 billion surplus in the fund.  Project output and scheduling should be boosted to make use of this surplus and reduce costs in the out years.

 

Waterway infrastructure support is a very technical area, yet it is vitally important to the nation’s economy. Overall, the WRRDA is good bill that could be made better by ensuring offsets occur in a timely manner. It creates new accountability measures for the Corps, leverages public-private partnerships to reduce costs, and begins to address the intense project backlog. The spending impacts will be minimal so the key is to continue identifying areas for optimization, and reducing the federal role.