	Introduction to U.S. Inland Waterways

Inland waterways are a significant component of the nation's marine transportation system. Costs for maintenance and construction on inland waterways are funded by the Corps (through appropriations) and the commercial user industry (through user fees paid to the federal government). §9506) and the Water Resources Development Act (WRDA) of 1986, as amended ( P.L. Together, the acts of 1978 and 1986 established a fuel tax on commercial barges, cost-share requirements for inland waterway projects, and a trust fund to hold these revenues and fund investments in construction. On multiple occasions, the executive branch (through the Clinton Administration in 1996 and the Bush Administration in 2004) proposed to further increase fees on the user industry and require the IWTF to also fund some portion of operations and maintenance expenditures (in addition to the construction and major rehabilitation requirements). Concerns with IWTF Planning and Oversight

In addition to problems with the IWTF financing system, other concerns have been raised in recent years. Inland Waterway Financing Proposals

Concerns related to the solvency of the IWTF and the equity of the financing system for fuel-taxed inland waterways have led to a number of recent proposals, first by the Bush Administration in 2008, then by the Obama Administration in 2009 and 2010. To date, none of these proposals have been enacted. Inland Waterways Users Board Proposal

In 2010, the Inland Waterways Users Board (IWUB) adopted and transmitted to Congress a proposal of its own. Increase Overall Spending on Inland Waterways . Increase User Fees

The most prominent component of the IWUB report is a proposed increase to the inland waterway fuel tax rate (currently $0.20 per gallon) of between $0.06-$0.09 per gallon. Increase the Federal Share of Inland Waterway Costs

The IWUB report also proposes to shift more of the cost for inland waterway projects toward the federal government by increasing the number of investments on inland waterways that are funded solely by the federal government and decreasing the projects that are subject to 50/50 cost-sharing. Changes to inland waterways financing have been enacted in the 113th Congress. Specifically, the Water Resources Reform and Development Act of 2014 ( P.L. 113-121 ) made limited changes to inland waterways. It authorized the project delivery recommendations of the IWUB proposal, made the federal government responsible for paying all rehabilitation costs less than $20 million out of the General Revenue fund (previously the General Fund only covered costs less than $8 million), and reduced the cost-sharing requirement for the Olmsted Locks and Dam Project from 50% from the IWTF to 15% from the IWTF (thereby increasing the proportion of project funding from the General Fund, and theoretically freeing up IWTF monies for other projects). It did not alter the inland waterways fuel tax. Most observers agree that the changes enacted in WRRDA will be insufficient to finance all of the needed waterway upgrades in the long-term. Other groups argue against significant new investments for inland waterway projects. The user industry has not indicated whether it would accept increases to the fuel tax without the proposed changes to cost-sharing arrangements. Additionally, the report proposes to make all cost overruns for IWTF construction projects a 100% federal responsibility. As noted above, the Obama Administration's proposals have all recommended alteration of the type and amount of user fees levied but not the overall cost-share between the federal and nonfederal expenditures. These groups, including some of the aforementioned environmental and taxpayer interest groups, have argued that waterway users should not only pay for 50% of construction and major rehabilitation costs, but also pay for some or all operations and maintenance costs, which are currently fully funded by the general treasury revenues.
Inland waterways are a significant part of the nation's transportation system. Because of the national economic benefits of maritime transport, the federal government has invested in navigation infrastructure for two centuries. Commercial barge shippers and other waterway users receive significant support through federal funding for operational costs, capital expenditures, and major rehabilitation on inland waterways. Since the Water Resources Development Act of 1986, expenditures for construction and major rehabilitation projects on inland waterways have been cost-shared on a 50/50 basis between the federal government and commercial users through the Inland Waterways Trust Fund (IWTF). Operations and maintenance costs for inland waterways (which typically exceed construction and major rehabilitation costs) are a 100% federal responsibility.
Future financing for the inland waterway system is uncertain. The IWTF is supported by a $0.20 per gallon tax on commercial barge fuel, but its balance has declined significantly since 2005 due to a combination of increased appropriations, cost overruns, and decreased revenues. Without changes to the current financing system, IWTF spending is likely to be limited.
The Obama Administration recommends replacing the fuel tax with user fees that would increase revenues and potentially allow for more spending on inland waterways projects. Similar to prior administrations, the Obama Administration has regularly submitted proposals to Congress to raise inland waterways user fees. Congress and industry interests have rejected these proposals. In 2010, the Inland Waterways Users Board (IWUB), a federal advisory committee advising the U.S. Army Corps of Engineers on inland waterways, endorsed an alternative proposal that is supported by many barge industry interests. The proposal would increase the fuel tax by $0.06-$0.09 per gallon, but would require the federal government to cover all project costs for dams and rehabilitation that are currently shared with the IWTF. To date, no major changes to the inland waterway financing system have been enacted.
The user industry (including the barge industry and agricultural groups) argues that its recommended changes are necessary to shore up the trust fund, improve deteriorating infrastructure, and distribute costs equitably among beneficiaries (e.g., more funding for dams by federal taxpayer beneficiaries). The Obama Administration agrees that infrastructure upgrades are needed, but argues against shifting these costs to the federal government and instead proposes higher user fees. Some taxpayer and environmental groups favor increasing nonfederal costs not just for construction, but also for operation and maintenance expenses that are not cost-shared.
Changes to inland waterways financing have been enacted in the 113th Congress. The Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121), enacted in June 2014, authorized changes to the project delivery process, altered cost-sharing requirements for some rehabilitation projects, and partially exempted from IWTF cost-sharing requirements a project (the Olmsted Locks and Dam) that has required the majority of IWTF appropriations in recent years. It did not alter the fuel tax or IWTF requirements for other projects. Two other bills in the 113th Congress, S. 407 and H.R. 1149, would attempt to address long-term issues with the IWTF by enacting much of the user proposal, including fuel tax increases of $0.09 and $0.06 per gallon, respectively. In considering legislation related to inland waterways, Congress may consider the appropriate cost share between the federal government and users, the appropriate type of user fee to fund the nonfederal share, preferred funding levels, and other related questions.