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President Carter gave the user-charge plan the biggest push yet. He was the first President to say he'd veto any rivers and harbors bill which didn't include user fees. He held that veto threat over a measure, dearly desired by waterways people, to authorize construction of replacement locks and dam on the Mississippi River at Alton, Ill. That project, called "Locks and Dam 26," has become a symbolic battleground for the whole struggle over whether new waterways projects are necessary and whether barge lines should help pay.

Meantime, the opposition retreated. Although barge operators had long opposed any user fee, they backed the House bill. “We knew the handwriting was on the wall,” says a House transport expert who's sympathetic to the barge lines.

Actually, pressure for user fees has been building for a long time. During the last 15 years various study commissions have backed such charges. Former Transportation Secretary William Coleman's 1975 transport policy document urged them. So did the U.S. Railway Association, a government corporation which planned the reorganization of bankrupt Northeast railroads.

Railroads argue that they lose about $500 million in annual revenues because they have to charge depressed rates on some commodities to keep freight from being diverted to barge lines—and they actually lose some business to the barges besides. It's true waterway operators often have an inherent low-cost advantage over railroads, but this advantage is compounded by the fact that barges have their rights-of-way built and maintained for free; railroads have to lay their own track, repair it and pay taxes on their lines, user-charge advocates note.

"It is simply not equitable that profit-making businesses should have much of their costs met by the American taxpayer,” says Transportation Secretary Brock Adams.

The government also puts considerable investment into highways and airways, but collects taxes and fees from the truckers and airlines that use them. Indeed, Washington has generally been willing to grant transportation subsidies without imposing user fees only when the beneficiaries can't pay and when there's a clear social purpose for a subsidy.

Lately, that reasoning has been applied to financially strapped railroads, notably Northeastern lines and some Midwestern roads. At other times, of course, healthy railroads have received various kinds of government aid. And the waterways people, seeking to fend off user fees, have made much of federal assistance to railroads over the decade. But the rail industry argues, with considerable accuracy, that most of this aid-land grants in the 1850s and other succor-has been sporadic or has involved compensation to the government by the recipient railroads.

The fees to be paid by the barge lines will ease the railroads' financial burdens and their need for future federal support, the backers of this historic change conclude. And they foresee little damage to the balance sheets of barge lines or their customers.

Two years ago, the National Water Ways Conference, a broad-based water. wars-interest group, told the Senate Public Works Committee that "the freedom (from taxes) of the waterways of the territory was assured (by the 1787 Northeast Ordinance) with the same solemnity as the freedom of its inhabitants from involuntary servitude and their right to trial by jury."

Those other two rights remain, but the barge lines' free ride is ending.

SENATE

[Oct. 26, 1977) WATERWAY USES CHARGES : DOES THE BARGE INDUSTRY WANT IMPROVED

OPERATIONS ?

Mr. DOMENICI. Mr. President, there has been a lot of discussion about the “congestion” at locks and dam 26 on the Mississippi. To its great credit the Army Corps of Engineers has sought to help. A vear ago, the corps instituted various self-help procedures at locks and dam 26. These rules required that barge fleets help each other through the locks.

But that self-help effort has now been challenged in the courts. Was the suit brought by the railroads, hoping to perpetuate delays? Or was it brought by environmentalists? No.

The litigant is a barge company, Inland Oil & Transportation Co. According to the suit, the self-help procedure “constitutes a violation of plaintiff's right to free use of the navigable water of the Mississippi River, as guaranteed by the statutes and laws of the United States."

Invoking such complaints as the lack of an environmental impact statement on the corps' procedure, plus the demand for Federal compensation for any help given to others, the suit has forced the corps to drop the self-help requirements, thus encouraging the barge owners to do nothing to assist one another in improving locking conditions.

While the change in regulations has made part of the lawsuit moot, Inland is still arguing that any corps regulations are invalid, because they lack an environmental assessment.

My question is this: Does the barge industry really want efficiency at locks and dam 26? Or does the barge industry still cling to the notion that it has an inalienable right to do what it wishes on waterways provided by the taxpayers?

SENATE

[Oct. 26, 1977)
WATERWAY USER CHARGES—THEY WILL CUT Costs

Mr. WALLOP. Mr. President, my colleagues are doubtless inundated these days with various assessments of the "cost" of waterway user charges. One description I recently came across referred to them as "criminal."

Realizing that there are legitimate differences of opinion, this is what one economics professor, Dudley E. Pegrun of the University of California, Los Angeles, has to say:

The levying of charges on the commercial users of our national waterway facilities will not increase the freight costs of the country, will not increase the freight costs to the consumer, and will not add to inflationary pressures. On the contrary, the result will be precisely the reverse. Total freight bills will be less because of: a more efficient allocation of economic resources to transporta'tion; a more efficient allocation of freight traffic among the modes; a reduction in the total costs of the infrastructure of freight transport facilities; a reduction in the federal tax burden on taxpayers; and a reduction in total federal spending with a consequent reduction in the pressure on inflation.

SENATE

[Oct. 27, 1977] WATERWAY USER CHARGES: THE VIEWS OF GOVERNOR THOMPSON OF

ILLINOIS AND THE NATIONAL GOVERNORS ASSOCIATION

Mr. DOMENICI. Mr. President, Governor Thompson of Illinois, whose State is one of the most dependent on inland waterway transportation, has announced his support for an effective waterway user charges system, such as the one supported by President Carter and passed by the Senate in June. I have resubmitted that Senate-approved language as amendment No. 1460 to H.R. 8309.

Governor Thompson, in referring to the modest House-passed figure, stated :

I don't think the fees in the bill ... are high enough by any means. They don't go anywhere near far enough in supporting the water transportation system. Governor Thompson said user charges ought to be increased to some fair relationship to the cost of the Federal Government in maintaining the waterway system.

The Governor, in effect, was reiterating the view of the National Governors Association, which recently endorsed waterway user charges. I must note that the association said user charges should not include costs of power generation, recreation, flood control, et cetera. These costs are already recovered by the Federal Government from identifiable beneficiaries. Under the terms of the bill adopted by the Senate and now included in my amendment, No. 1460, non-navigation costs are specifically excluded from waterway user charges. Only navigation-related costs would be recovered.

Mr. President, I ask unanimous consent that the pertinent portions of an article from the Alton, Ill. Telegraph, as well as the copy of a policy statement issued in September by the National Governors Association, be printed in the Record,

There being no objection, the material was ordered to be printed in the Record, as follows:

[From the Alton Telegraph, Oct. 24, 1977)
THOMPSON BACKS CARTER'S STANCE ON DILUTED LOCK BILL

(By Bill Lambrecht) ELSAH.-Gov. James R. Thompson said Saturday he approved of President Carter's threats to veto the Alton lock and dam bill if passed to him from the U.S. Senate without higher barge user fees.

“I think the President was quite right to warn Congress the other day that he would veto the Alton lock and dam project unless water user fees for the barge companies were increased.”

"They ought to be increased some fair relationship to the cost to the federal government in maintaining the waterway system,” the governor said.

Thompson's comments on lock and dam 26 came Saturday during a visit to Principia College at Elsah, in the governor's last speech of a 40-mile, 12-county trip along the west edge of Illinois begun Wednesday night.

The governor repeated support for construction of a new lock and dam facility at Alton, but said he opposed any deepening of the channel by the Army Corps of Engineers from 9 to 12 feet.

“I think also it is time to end the 150 year subsidy of barge owners, most of whom pay no taxes of any consequences to a state like Illinois while railroads are paying thousands in taxes," Thompson said.

“The subsidies of barge lines is almost 100 percent, and I think it onght to stop.”

"I don't think the fees in the bill now before Congress are high enough by any means. They don't go anywhere near far enough in supporting the water transportation system."

POLICY STATEMENT OF THE NATIONAL GOVERNORS ASSOCIATION- SEPTEMBER 1977

“The Association views with interest pending legislative proposals dealing with water transportation related user fees. While an equitable charge or fee shonld be assessed to water transportation users for the operations and maintenance of navigation aids and channels, the Association feels that benefits such as power generation, recreation, flood control, etc., accruing to a state or region should

be considered when determining the amount of charges or fees to be assigned to water transportation users. The Association feels strongly that the States should share equitable in the collected fees for the continued operation or maintenance of said State's water transportation system.”

SENATE

(Oct. 28, 1977)
WATERWAY USER CHARGES—How MUCH DIVERSION?

Mr. HANSEN. Mr. President, following a recent hearing on waterway user charges, our colleague from New Mexico (Mr. Domenici) wrote to Transportation Secretary Adams. His letter sought figures on the level of possible "diversion" of traffic off the waterways that might result from the waterway user charge under the phase-in schedule that is contained in the bill passed in June and in Senator Domenici's amendment No. 1460 to H.R. 8309. Following Senator Domenici's departure from the Senate yesterday, Secretary Adams' reply was received.

The conclusion of Secretary Adams' letter, based on recent, voluminous studies on inland waterway traffic by the Department's Transportation System Center, was:

As a result of our analysis, I can tell you that all of the diversion would come out of future traffic growth, none out of current traffic. Taking the barge traffic growth of the last ten years, we get an annual growth rate of approximately 52 percent. If this rate continues for the next 10 years and there is 15 percent diversion 10 years out, then barge traffic at that time will be 41 percent greater than it is now.

Because of the wide interest in the issue of waterway user charges, I ask unanimous consent that a copy of Senator Domenici's letter and a copy of Secretary Adams' reply be printed in the Record.

There being no objection, the letters were ordered to be printed in the Record, as follows:

U.S. SENATE,
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,

Washington, D.C., October 21, 1977.
Hon. BROCK ADAMS.
Secretary, Department of Transportation,
Washington, D.C.

DEAR MR. SECRETARY: During hearings by the Senate Committee on Finance this afternoon, there was much discussion on the degree to which waterway user charges might cause a “diversion" of traffic from the waterways to other modes of transportation. It was argued that this diversion might reach 20 percent under the language adopted by the Senate last June 22.

It would be most helpful to me to have an evaluation of this assertion by your Department, particularly in view of the phased-in nature of the waterway user charge contained in the Senate-passed bill and in my Amendment No. 1460.

What is the maximum level of diversion that is likely to occur under the phased-in approach, and what are the assumptions in your analysis?

Will any diversion that does occur come from existing traffic or from new traffic?

If such a diversion comes primarily from new traffic, what anticipated annual growth rate in waterway traffic can still be anticipated for the inland barge industry?

Your assistance and cooperation in responding to these questions is most appreciated. Sincerely,

PETE V. DOMENICI.

THE SECRETARY OF TRANSPORTATION,

Washington, D.C., October 27, 1977. Hon. PETE V. DOMENICI, U.S. Senate, Washington, D.O.

DEAR PETE: I am writing in responses to your letter of October 21, 1977. As a result of last Friday's hearings before the Senate Finance Committee, you asked me about the impact on barge traffic of charges sufficient to meet the cost recovery goals set by your bill.

According to our analysis, recovery of 100 percent of operating and maintenance costs plus 50 percent of new construction costs would result in a reduction of 10–15 percent in the ton miles of traffic carried by the barges on the inland waterways after full implementation, in 1990, of your amendment. Ten percent was our maximum estimate of diversion when considering only recovery of operating and maintenance costs. As you are aware, a critical assumption in this analysis is that the railroads do not raise their freight rates on traffic for which they are competing with the waterways.

Bearing in mind the phase-in approach of your bill, this is a level of diversion that would occur 10 years from now. As a result of our analysis, I can tell you that all of the diversion would come out of future traffic growth, none out of current traffic. Taking the barge traffic growth of the last ten years, we get an annual growth rate of approximately 5.2 percent. If this rate continues for the next ten years and there is 15 percent diversion ten years out, then barge traffic at that time will be 41 percent greater than it is now. Even with the maximum diversion, then, barge traffic would still be growing at an annual rate of 3.5 percent.

I am aware that at the hearing some people were suggesting that the rate of diversion might be as high as 20 percent. As I have already indicated, our analysis tells us that this is an unreasonably high figure. Let me state for the record, however, that even if the diversion were as high as 20 percent, it would still all come out of future growth. Diversion of 20 percent would leave the barges ten years from now with 33 percent more traffic than they are carrying today, and this is equivalent to an annual growth rate of 2.4 percent.

For the sake of comparison, let me note that in the last ten years total rail traffic grew by less than one percent per year. Increasing coal traffic may well raise the rail growth rate in the future. For example, a doubling of rail coal tonnage by 1985 would result in an annual growth rate for all rail traffic of 3. percent. I hope this is helpful to you. Sincerely,

BROCK ADAMS.

SENATE

[Oct. 31, 1977]

WATERWAY USER CHARGES: SOME FARMER COMMENTS

Mr. STAFFORD. Mr. President, Senator Domenici, who is in New Mexico today, has asked that I place the following statement in the Record. I ask unanimous consent that Senator Domenici's introductory remarks and the full statement of Mr. Fred McKim before the Senate Finance Committee be printed in the Record.

The PRESIDING OFFICER. Without objection, it is so ordered.

STATEMENT BY MR. DOMENICI The following testimony of Mr. McKim highlights two facts worth noting. First, farmers dependent on rail are having to dip into their own pockets to keep needed rail service alive. While taxpayers pick up the tab for the barge industry, farmers using rail are not so lucky; they must rely on the time-honored American tradition of self-help. Second, even while going bankrupt, the railroads are paying more state and local taxes than the highly profitable barge industry. In Iowa, for example, in 1975 the railroads paid over $7,000,000 in state and local taxes while the 14 largest barge lines paid only $80.

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