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capital investment has reached nearly $175 million. The growth pattern is continuing. In just the last quarter of 1976, 128 new facilities or major expansions occurred. These expansions created over 25,000 documentable new jobs in private industry.

Navigation is only one of the factors which necessitate the construction of locks and dams. They are a vital part of our overall water resources management effort. I do believe that our environmental management has not been exactly sterling and ecosystem considerations have all too often not been the highest priority of the Corps of Engineers. Water navigation should be our most environmentally sound transportation method.

It is the most energy efficient means of transport, consuming both less gallons per ton-mile and less Btu's than its competitors. The materials, mostly steel, required for construction generate almost 50 percent greater carrying capacity than any similar use. It produces less air pollution than competing modes and it utilizes nature's very own rights-of-way thus not creating urban sprawl, traffic congestion, or the other ills frequently associated with trucks, railroads, or airlines.

Additionally, the locks and dams on the upper Mississippi, which I am most familiar with, have created and maintained important wildlife and wetlands areas. In fact, prior to the construction of the locks and dams, the upper Mississippi was strictly an on-again-offagain river. Oldtimers in my district never tire of telling disaster stories about Mississippi floods, lost grain shipments, and the huge dead fish kills of a dried up riverbed. These same oldtimers can and do point out new recreational parks, wildlife returns, and increased fish catches as a result of the structures. I am not saying that the locks and dams are environmental "godsends.” They clearly are not. But conversely, neither are they the devastators of our environment which is frequently alleged.

Part of the reason that we are discussing this here today is economics. The waterways are cheap to use. They are both cost competitive and cost effective. In an inflation-prone economy this is no minor point. In the 10 years from 1963 to 1973, the Wholesale Price Index rose 43 percent. In that period the cost of waterways traffic rose only 5 percent. This trend continues. In recent years shallow draft vessels have moved almost 8 percent of total freight carried in this Nation for less than 1 percent of the fare. All inland waterways totaled moreover 11 percent of intercity freight for less than 2 percent of the total tab.

Nothing is mentioned in title I about a 12-foot channel. This was, of course, a huge issue in earlier considerations. I would also oppose a 12foot channel authorization but to suggest a prohibition in the bill seems legislatively redundant. Any new construction would require congressional passage anyway. But, prohibiting a study strikes me as unnecessary. Any such study would currently require the express approval of the Public Works Committee. This is their field of expertise. Adding general House approval would not produce any particular benefits of which I am aware.

The Rivers and Harbors Omnibus Act of 1930 set channel depth at 9 feet. Though the corps has internally indicated its desire to go to 12 feet, this has never been more than a case of an executive agency trying to broaden its turf. Deep dredging is sometimes destructive and unsightly. However, retaining the present language may better our position in the conference discussions.

Some concern has also been created by the 18-foot sill depth of the planned lock. This depth is required by the ice flow and frozen debris frequently carried by the barges in winter months. It is also a more efficient engineering technique for facilitating transit speed.

The designation of 26 inland and intracoastal waterways for taxing purposes was very carefully considered by the Public Works Committee on consultation with the corps and other outside organizations. I personally wish that some consideration of deep draft channels and harbor expenditures could have been fully discussed. However, without more information, the international political and economic considerations were mitigating. I believe that they should be more thoroughly reviewed at the first opportunity.

The environmental considerations raised deserve thorough study. In the past, our environmental record in the management of our waterway system has been less than glorious. However, there is nothing in this bill that is antienvironment. The original lawsuit brought on environmental grounds was by 21 railroads and 2 environmental groups.

Title II imposes an excise tax of 4 cents beginning on October 1, 1979, rising to 6 cents in 1981 on diesel fuel used in commercial traffic on the rivers and waterways specified in title I.

Tax revenue estimates, as computed by the committee and the Treasury Department, indicate a revenue gain of $29 million in 1980, $10 million in 1981, $58 million in 1982, $67 million in 1983, and $71 million in 1984. This would be followed by the discussion of further taxes once the study results are available.

An obvious question is raised as to why we should not have total cost recovery on the 100-percent operation and maintenance costs and 50 percent of construction costs as suggested by the administration. The answer is a little bit complicated. Despite the declared policy of the Office of Management and Budget, it is obvious that we do not have cost recovery as the prevailing policy of Government investment. Some of the examples which immediately come to mind are the billions expended in the commercial development of the jet engine, or millions for agricultural research not recovered from either agricultural business or the farmer, or the NIH chemical R. & D. later translated into valuable products for the pharmaceutical industry. The list is endless.

Cost recovery is also not the policy in other commercial transportation fields. In 1975 the total Federal highway tax collected amounted to about $5.6 billion. Of this only $2.35 billion or 42 percent was collected from trucks, trailers, or commercial vehicles. The nontax outla v was over $1 billion and the 58 percent of the tax paid by passenger vehicles was surely not specifically intended to promote "intermodal equality.” The subidies to our railroad system are in the range of double the $5 billion invested in the waterways since 1824. This amount only includes the $6.4 billion rescue of the railroad retirement program and the multimillion-dollar delivery of the Railroad Revitalization and Regulatory Reform Act of 1976. This does not include either our generous actions to provide relief from passenger deficits or our decision to ignore the income generated from the massive land grants originally given railroads.

34-340—78-14

A policy of full Federal cost recovery from commercial waterway users does not make sense for a number of reasons: Distribution of usage, existing collection of revenues, and unbalanced cost figures.

Recovering either the full cost of a fixed percentage of operation and maintenance and construction will place a disproportionately high penalty on commercial use. Noncommercial usage, meaning recreational boating, of our rivers and harbors, is a big time item. I, for one, was surprised at the percentage of use in my area.

The upper Mississippi lockages within the St. Paul district are busy locks. In 1976 there were over 67,000 lockages on these 13 structures. The exact distribution figures were 33,777 pleasure and 33,780 commercial lockages.

Going down stream to the next engineering district, there were again about 67,000 lockages. Of these over 20,000 were by pleasure boaters. In total, over 40 percent were noncommercial boaters.

Are funds to be collected for these pleasure lockages? The answer is "No." Are any funds from these users of the waterways intended to contribute to the upkeep of our expensive waterways systems? Again, No.

The pleasure boaters do pay gasoline taxes which are collected and, on a percentage estimate basis, passed on to the land and water conservation fund. In 1976 the figure was $28 million, in 1977 $31 million, and next year, when the 2-cent rebate is phased out, the transfer will be around $60 million.

However, these Lawcon funds are, in general, not allocated to the rivers. Conversely many nonnavigation items are included in the $211 million 0. & M. figure that we have frequently heard. In Secretary Adams' reply to the Ways and Means Committee, he indicated that there was no way to effectively separate out recreational and other expenses from navigation under the corps' current accounting system. A partial list provided to the committee by the American Waterways Operators includes:

PARTIAL LIST
Water quality management

Water Supply,
Low Flow Augmentation,
Public Use Plan Studies (Great),
Rainfall Gauging,
Water Quality Investigation,

Silt Reduction.
Recreation

Small Boat Channel Dredging and Maintenance,
Dredging to Small Boat Ramps,
Visitor Facilities at Dams & Other Areas,

a. Toilet Facilities & Sewage Treatment
b. Paving Maintenance

c. Clean-up
Safety Shelters for Small Boats,
Use of Locks (Many Not Used by Commercial Craft),
Beach Erosion,
Aquatic Plant Control,
Fish & Wildlife Habitat Enhancement,
Dredging for Ecological Enhancement,
Stable Calm Water Pools.

Agriculture Production

Silt Reduction,
Bank Protection,
Drainage & Run-off Control,
Fishing Enhancement,

a. Commercial

b. Game Stream Flow Reduction Erosion.

Further, the figures for individual river systems vary incredibly from year to year. However, the political situation referred to earlier has determined that some form of compensation is necessary. I believe that we need to know a great deal more about any system's effects before permanent establishment of any use fees. For the present, a dread oil tax is the best idea.

Another reason arguing against full recovery is that you should not fully recover that which you have not fully spent. The Senate plan begins full recovery long before-perhaps 10 years—lock and dam 26 will be complete.

Additional, many of the necessary expenditures on waterways are not federally related. The accepted cost estimate of non-Federal contributions is about 7 percent of total capital and 8 percent of O. & M. On top of that, local bond issues are often used to pay for docks, warehouse, wharves, and port facilities. This may add up to almost 30 percent of localized navigation costs and is often routinely included into our planning for authorization.

To defray some of this cost, the local units—cities, counties, and parishes—frequently levy dockage and use fees on transitory and domiciled water carriers. This brings up the question of whether the commercial users get a "free ride." I cannot speak for the rest of the country but I have some knowledge of the 10 States along the Mississippi. With some limited exemptions for interstate commerce and related items, the list of taxes above and beyond Federal requirements include: All 10 impose corporate income taxes, all 10 have property taxes, 6 impose franchise taxes, all 10 have sales taxes, and 2 along with other States considering pending legislation, impose license fees.

If we are to impose a tax, it is most important that we studiously avoid a "user charge” tax. If a user charge is selectively allocated on a segment basis, the disparity between short and long hauls becomes overwhelming. Its diversionary effect on waterway usage will be phenomenal. My own idea would not be badly damaged with fees estimated to cause about 5-percent diversion of traffic to other modes, but the new or expanding waterways will be devastated. They may be expected to experience a 50- to 90-percent diversion of traffic. It is about 100 years too late to even consider a segment approach if the goal is equity rather than revenge.

If the fee is based on a simple lockage charge, the rate discrimination is also increased over distance. But a fee placed upon value of cargo transported is absolutely absurd. Yet this was the primary method designated by the Senate in the Domenici bill.

The Domenici proposal represents a huge disavowal of legislative responsibility to the executive branch by permitting it to select a method of fee collection. It also imposes charges on the rivers based upon the previous year's expenditures. This will, even with a new bookkeeping system, cause a highly variable rate structure with predictable effects upon those doing business. The expenditures on the upper Mississippi went down a million from 1973 to 1974 and up $4 million from 1974 to 1975. The lower Mississippi saw a 11,2 million drop from 1973 to 1974 and 134 back from 1974 to 1975. This rollercoaster picture is continuing to bounce up and down. The tax's effect, even with the 1-percent cap, could be enormous.

It was helpful for me to look at several examples of the effect of a valuation tax or user fee based on standard barge sizes, carrying capacity, and average competitive rates. For a run of corn from St. Paul to New Orleans, the increase was 12.7 percent. For soybeans, more expensive but no more difficult to transport. The increase was a whopping 43.8 percent. To ship fuel oil from Baton Rouge to Chicago, the increase is 11.7 percent and steel from Pittsburgh to Cincinnati goes 76.5 percent. The difficulty in which the steel industry now finds itself is well known. It does not need any more price increases.

In short, I believe that other possible systems would be far less equitable than a fuel tax. Its other important advantages are administration, enforcement and coherence with national policies. Administrative costs would be minimal because the tax could be collected with a ship's normal fuel bills and accounted for in normal ship's pursers arrangements. The enforcement is simplified by the Coast Guard's existing authority to license and regulate all waterway fuel transfer facilities.

Because of these factors, no new costly monitoring or inspection facilities would be required. It is also consistent with the 4 cents motorboat and 4 cents commercial trucking fuel taxes and coincides with our energy package's philosophy which regards the most energy efficient of users among individual modes.

One of the most important provisions of title II is in its direction that a study of the tax policy be initiated with the passage of this bill. It will be jointly performed by the GAO and the Joint Committee on Internal Revenue. This study is to be completed by 1980 and will discuss the impact of taxes on all types of commercial transportation. It will compute the national effects of various collection systems on the economy, consumer prices and other measures.

In short, title II provides a good start at establishing a base for an equitable system.

Title III of the bill directs the Secretary of Commerce and Transportation to undertake a joint study of the various types and levels of user charges. It will focus on the various impacts of these systems upon carriers, shippers and consumers. This will be submitted to the Congress within 3 years and will be fully coordinated with the activities of the National Transportation Policy Study Commission. The Commission will be required to report its recommendations to the Congress based on the study within 6 months.

We definitely need an examination of these issues but I believe that this must be conducted in cooperation with other existing commissions and units already in the field. Particularly important is coordination with the Great River Resources Management Study funded under section 117 of the Water Resources Development Act.

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