Hon. AL ULLMAN, AMERICAN IRON AND STEEL INSTITUTE, Chairman, House Ways and Meuns Committee, DEAR MR. ULLMAN: As Chairman of the Ways and Means Committee, you will be marking up H.R. 8309, the Navigation Development Act, early next week. This bill would establish user charges on the nation's inland waterway system. Enclosed is a brief position paper on this issue on behalf of the domestic steel industry. It outlines the adverse effects we feel such legislation can have on the costs and competitive posture of the industry. The negative impact of this legislation on energy efficiency and usage is also discussed. This is particularly important as the House currently is working on energy legislation which hopes to increase energy efficiency with as little economic impact as possible. For the reasons cited in the paper, I urge you to reject this bill and any legislation to impose a tax or user charge on the inland waterway system. Thank you for considering our views. Sincerely, Enclosure. F. C. LANGENBERG, President. PROPOSED USER CHARGES FOR INLAND WATERWAYS-H.R. 8309-NAVIGATION DEVELOPMENT ACT American Iron and Steel Institute is a trade asosciation representing the steel industry. Its domestic membership consists of 63 companies which produce 93.5 percent of the steel made in the United States and employ approximately 700,000 people in their steelmaking and non-steel related activities. The Institute is opposed to the establishment of user charges on the inland waterway system. Waterways, both natural and manmade, have historically provided and will continue to provide the most efficient and economic mode of transporting raw materials and finished goods to production sites and market locations for many industries. This premise is certainly applicable to the iron and steel industry where the transportation of large tonnage bulk shipments of incoming raw materials and outgoing finished iron and steel products by water is a critical factor and key consideration in its overall economic viability. The adverse effects of proposed inland waterway user charges on the costs and competitive posture of the domestic steel industry and, consequently, upon its ability to sustain domestic employment are as follows: 1. Competition in the production and sale of steel products today is international in scope. Many foreign nations directly and indirectly subsidize their own steel producers to enhance their ability to compete effectively in international steel markets. The largest single outside market for overseas steel producers and steel manufactured products (such as automobiles) is the United States where direct low cost waterborne delivery from tidewater European, Scandinavian, Japanese and other foreign mills by ocean vessel is frequently possible. The establishment of user charges on the inland waterway system will significantly and adversely affect the costs of domestic steel producers in the assembly of raw materials and the distribution of their finished products. These increased costs will inevitably be reflected in the product prices of the domestic steel industry, thereby even further enhancing the competitive position of overseas producers in U.S. steel markets. As a corollary, U.S. producers will be impeded in their attempts, and impaired in their ability, to successfully export steel products to offshore destinations as a result of increased assembly and distribution costs associated with waterway user charges. 2. Employment in the domestic steel industry is a function of this Industry's ability to compete effectively in domestic and overseas markets. The imposition by government of waterway user charges increases the cost of assembly and production domestically, thereby significantly reducing employment opportunities of American steelworkers. 3. As a result of the additional costs of waterway user charges and subsequent loss of competitive position by the domestic industry, reduced employment and production domestically could reduce tax revenues accruing to federal, state and local taxing bodies, to such an extent that they could more than offset additional revenues that might accrue through the imposition of user charges. 4. Increasing the cost of waterway transportation will divert traffic to other modes of transportation which are not only more costly but considerably less fuel efficient. For example, water transport requires 500 Btu's of energy for every ton-mile, pipelines 1,850 Btu's, trucks 2,400 and air cargo 6,300. Any steps taken towards decreasing waterway usabe as the most energy efficient method of transportation would be entirely inconsistent with our national objective of energy conservation and independence and the realization of improved fuel economy wherever and whenever possible. 5. On at least some traffic, competitive transportation modes will use the imposition of waterway user charges as an opportunity to raise their rates on barge competitive freight. To the extent that this is done, there will be even further adverse effects on the production and distribution costs of domestic iron and steel industry as they effect raw materials and steel products. For the above reasons, the American Iron and Steel Institute strongly recommends against the establishment of user charges on our inland waterway system. AMERICAN ROAD & TRANSPORTATION BUILDERS ASSOCIATION, Hon. AL ULLMAN, Washington, D.C. Washington, D.C., July 19. 1977. DEAR MR. CHAIRMAN: This statement is submitted for the record in connection with the July 18, 1977 hearing by the House Public Works and Transportation Committee Subcon.mittee on Water Resources. It is noted that both waterway user charges and the proposed reconstruction of Locks and Dam 26 at Alton, Illinois are the subjects of this hearing. The American Road & Transportation Builders Association strongly favors both of these proposals. We fully appreciate the sensitivity of the many central issues involved. There is clearly a national interest in developing the full potential of waterway transportation. This interest has become ever greater in view of the inherent energy conservation advantages of water transportation. Transportation on the Mississippi River is seriously impeded by the inadequacy of the facilities at Locks and Dam 26. This is obviously a major bottleneck. This problem should be corrected at the earliest posible date in order to make the Mississippi River a fully effective waterway. The basic principle which we would like to emphasize is that we must fully exploit the capabilities of all modes of transportation. With normal economic growth, we can expect transportation demand to double within a 20-year period. Under these circumstances, it is extremely dangerous to hold back the development of any single mode of transportation in the interest of maintaining a competitive balance. It is important, however, to insure that one mode of transportation is not unduly disadvantaged by inequities in governmental subsidies. The ideal solution to this problem is to reduce subsidies to the very practicable minimum. As a general rule, freight rates should be adequate to cover the costs of moving the freight plus a reasonable profit to the carrier. Freight revenues must cover both capital and operating costs. Waterway shippers should likewise pay rates which reflect the costs of waterway improvement and maintenance. Two fundamental considerations should govern the imposition of waterway user charges. First, the charges should be imposed in a gradual manner. The economic adjustments should not be made so abruptly as to result in major problems to shippers. Second, waterway user charges should be applied on a system-wide rather than a segmented basis. This is generally true of all transportation modes that the branch lines serve as feeders and distributors and are not, in themselves, economically viable. However, they support and do nourish the main trunk lines. This is also the case with respect to the highway ssytem. The "expensive" multi-lane facilities are actually cheaper, on a vehicle-mile basis, than the lightly traveled rural byways. User charges, however, are basically the same in regard to both alternatives. A fuel tax is probably the most equitable tax that can be levied on waterway users. We strongly support the four (4) cents per gallon fuel tax that has been recommended earlier. ARTBA, along with many other transportation-oriented associations and business interests, has delved into these questions in depth in the report of the American Transportation Advisory Council published in May, 1977. A copy of this report, "Transportation Financial Needs During the Next Decade, 19781987" is attached for your review. Your particular attention is directed to pages 27, 28, 29 and 30 which address the waterway user charges issue specifically. In closing, we urge a positive approach to the problem of meeting our national transportation needs. Therefore, we urge you to support both the reconstruction of Locks and Dam 26 at the earliest possible date and the imposition of a four (4) cent fuel tax on all waterway users. Respectfully submitted, Enclosure. DANIEL J. HANSON, Sr., Executive Vice President. nland waterways are publicly owned and maintained as part of a nationwide program of multiple-purpose management of America's water resources. Transportation usage of these rivers, waterways and lakes is compatible with other public usage-including flood protection, water supply and hydropower. Historically, commercial users of domestic waterways for commodity or passenger transportation have not been subjected to tolls or user taxes. The Corps of Engineers has expended more than $8 billion for the development and maintenance of the na- . tion's inland and intracoastal waterways and coastal and Great Lakes ports and harbors since 1824. More than 25,000 miles of commercially navigable waterways are currently in use. The annual maintenance costs are now approaching $350 million. Facilitated by 255 locks and 172 dams at 219 main locations, almost two billion tons of commodities move along these waterways and through associate ports each year. This works out to about eight tons of commodities per capita. Federal waterway investments are normally made only after a determination that the national economic benefits will exceed the costs. In addition, Congress has undertaken water resources programs as a means of achieving certain broad public policy objectives. These include regional development, depressed area rehabilitation, increased agricultural productivity, export expansion and energy conservation. One hundred thirty-one (131) of the nation's one hundred fifty (150) largest urban areas are situated along the commercial navigation system. Ninety-five (95) percent of the U.S. population lives in states served by the 'Tally current as of August 30, 1976 inland waterway system. Approximately one-sixth of the nation's domestic intercity cargo moves on the inland waterways and the Great Lakes. Waterway traffic is expected to at least quadruple within the next fifty years. The location of the nation's major commercial and industrial centers in close proximity to the inland and intracoastal waterways has not been a matter of chance. The rapid growth of New Orleans was due principally to its location at the mouth of the Mississippi River. Traffic moving on the Erie Canal and Hudson River stimulated port development and commercial enterprise at New York City. The construction of the Illinois and Michigan Canal, which linked the Great Lakes and the Mississippi prior to the Civil War, contributed to the rapid growth of Chicago. The growth of these and other centers during the formative period of our national development resulted, in large part, from access to cheap water transportation. Continued availability of water transportation remains as an essential key for their future economic viability. Federal investment in navigation has conferred a wealth of benefits on American society. It has ensured low cost transportation for bulk commodities such as petroleum, petro-chemicals and coal which represents sixty (60) percent of inland waterborne commerce. Agricultural commodities-primarily grains and fertilizer represent sixteen (16) percent and basic raw materials for industrial processing represent twenty-four (24) per cent. The waterways also provide energy-efficient transportation. There is considerable evidence to support the assertion that waterway hauls of bulk commodities two hundred fifty (250) miles or more in duration are very energy-efficient transportation movements. MAY 1977 27 Waterways Continued Waterborn traffic has increased seven-fold over the past 25 years, reaching a current level of more than 350 billion ton-miles. This volume of commerce is equivalent to about 14 million ton-miles for every mile of waterway in the system. In 1971, waterway traffic equalled about eight (8) million ton-miles per mile of commercially navigable waterway. Thus the increase in waterway traffic in the last five (5) years has been a net seventy-five (75) percent. About 1,850 companies are engaged in commercial operations on the waterways. Industry capital investment in barges and towing equipment exceeds $2 billion. More than 80,000 persons are employed in the inland fleet. Public and private port and terminal facilities adjacent to the waterways represent additional waterwaydependent investment of several billion dollars and employment opportunities for thousands of skilled and semi-skilled workers. The nearly 4,000 towboats and tugs and over 25,000 barges in the system today are totally privately financed. A bargeline company started by the Federal government in the early 1920's to stimulate interest in waterway transportation has long since been sold to the private sector. In addition, large-scale non-Federal investments in the waterways system have taken place in the form of docks, wharves, cargo handling and warehousing facilities. Waterway improvements connecting highways and railroad lines, waterside industrial parks, and attendant utilities and services have also been constructed over the years. Waterways are especially well suited to the movement of low-value bulk commodities for which such service characteristics as speed and predictability of arrival time are of lesser importance than transportation cost. The marine mode (inland and Great Lakes) is responsible for more than 15 percent of the total ton-miles of intercity freight moved annually in the United States. However, the marine mode accounts for only 2 percent of the Nation's total freight bill. Due to this cost advantage, waterway transportation has been instrumental in stimulating more efficient operations and technological improvements on the part of competing freight modes. The inflation rate in the transportation industry, for instance, has been substantially below the overall rate in the general economy. The role of the inland waterways has not been widely recognized, despite their vital stimulus to initial commercial development, population transfers, economic growth, and industrial and agricultural employment. The average American is not as familiar with the waterways as he is with the railroads and highways. Despite the ever-increasing utilization of navigation arteries, in tandem with the dramatic post-World War II industrial growth in the river valleys serviced by waterway transportation, there is only limited public awareness and support for water transportation. Barge transportation remains today, as it was during World War II, an essential element in the national defense. In Fiscal Year 1974, the U.S. Water Resources Council determined that Federal expenditures incurred in constructing, operating and maintaining navigation on the Great Lakes, coastal harbors and channels, and shallow-draft waterways totaled $660 million. This inIcluded work by the Army Corps of Engineers, U.S. Coast Guard, Tennessee Valley Authority, St. Lawrence Seaway Development Corporation and the Bureau of Reclamation. Since 1824, approximately $8 billion has been spent on Federal navigation programs. Added to this figure is an unknown amount of state and local investment in both port and terminal development. Along with continuation of existing programs, it is important that future efforts be directed at development of landside facilities needed to provide a more efficient interface with other modes of transportation. With regard to future improvements, attention must be directed toward elimination of bottlenecks and outmoded facilities and toward the provision of a first-class inland navigation system. The matter of financing navigation improvements, as well as on-going operation and maintenance, is a controversial one. Historically, domestic waterways have been toll-free and open to all as a matter of Federal policy since the nation's earliest origins. In recent years, numerous proposals have been advanced to impose fuel taxes, lockage fees, segmented ton-mile charges, congestion tolls and/or other types of waterway user charges. Before Congress considers such charges, however, navigation proponents strongly contend that Federal transportation financing policy affecting all modes should be examined. If present funding policies are found to be inequitable, modal user charge systems should be developed in a manner which is fair and even-handed. In developing waterway user taxes, should such charges be deemed appropriate, the potential economic, social and other effects of the particular fees to be imposed should be assessed. Particular reference should be given to the impact on national policy objectives such as increased employment, restraint of inflation, and energy conserva tion. The inland waterways system is largely in place. Therefore, major future needs involve construction and maintenance of certain individual projects to eliminate bottlenecks and provide more uniform capacity within major segments of the system. These construction costs are estimated at approximately $480 million per year during the next 10-year period. It is also estimated that maintenance and operation costs will average about $420 million per year during the same period of time. These financial needs should be addressed in a timely fashion, relying largely on the existing Federalstate-private sector partnership which has produced the 25,000 mile inland waterways system in use today. 28 94-769 - 77 - 26 ATAC REPORT |