Testimony of Christopher J. Brescia
President, Midwest Area River Coalition 2000
On Proposals for a Water Resources Development Act of 2002
Before the
Committee on Environment and
Public Works
United States Senate
June 18, 2002
Chairman Jeffords and members of the Committee, my name is Christopher Brescia, President of the Midwest Area River Coalition 2000. MARC 2000 is composed of leading agricultural producer groups, grain and industrial shippers, cement manufacturers, utilities, waterway transportation companies, labor unions, rail feeder systems, concerned individuals, economic development entities and many more facets of the Midwest community. Our coalition members generate over $125 Billion in economic activity from the Midwest and conservatively employ or self-employ more than 130,000 people in 24 states. These activities principally span the length of the Mississippi, Missouri, and Illinois Rivers. I am pleased to appear today to address proposals for a Water Resources Development Act of 2002, especially as it relates to the Upper Mississippi River Basin.
MARC 2000’s Upper Miss Basin proposal includes support for the authorization and construction of an initial group of seven new 1200-foot locks, five on the Upper Mississippi (locks 20-25) and two on the Illinois River (LaGrange and Peoria), five guidewall extensions (locks 14-18) and appropriate mooring cells. This proposal is limited to the placement of new 1200-foot locks at 7 out of a possible 37 locking locations, clustered at the lower portion of the river system just north of the confluence of the Upper Mississippi and Illinois Rivers. We are not advocating new locks on the entire 1202 miles of the basin system.
We also strongly support an enhanced environmental restoration effort for our basin, beyond those identified as mitigation for navigation impacts, with a reliable and consistent funding mechanism. Our proposal’s third element calls for timely completion of the WRDA’99-authorized Comprehensive Plan, designed to develop an integrated flood-control system for the Upper Basin.
According to the U.S. Department of Transportation, U.S. maritime trade is expected to double in less than 25 years. Freight in the U.S. is expected to clog the nation’s highways and rails. Our waterway system is a logical means by which we can accommodate growth and reduce incidents of spills, air pollution, accidents and deaths to our population. But while our markets experience increased congestion, the world does not stay still. K. Kiplinger, author of “World Boom Ahead,” notes that, “World agriculture trade will blossom in the next two decades. Grain trade will increase two-thirds or more by 2020. Imports and exports of soybeans will double. Livestock trade will triple.” Does any casual observer of these trends believe the Midwest, the center of our productive capability can respond to these developments?
The Upper Mississippi Basin covers a total area of 1202 river miles, which was 10 percent of the inland waterway system, but which provides 48 percent of the ton-miles of the total inland waterway system. In the Upper Midwest, between 100-120 million tons of traffic moves through an antiquated lock and dam system, operating well beyond the 50-year design life. The Upper Miss navigation traffic data connected to likely future scenarios project a 60-70 percent increase in this traffic over the next 50 years. Today, the typical 15-barge tow (1100 feet long) must break in two parts in order to transit locks designed for paddlewheel ships of another era. With the advent of towboat power and stronger engines in the 1940s, the 600-foot lock system built in the Upper Mississippi has rapidly become obsolete. Major rehabilitation efforts have been underway for over 20 years to shore up crumbling concrete, outdated electrical systems and many moving parts. But none of these actions have addressed the issue of increasing the locking capacity of the Upper Miss system.
Our nation relies on this outdated transportation system for the movement of our corn, soybean and wheat exports into the world market. Over 60% of all grain exports move through the Upper Mississippi, en route to New Orleans. Grain exports still account for a trade surplus in our balance of payments account, but at a considerable cost to our producing community. The report issued by the National Corn Growers Association last month on the impact of this outdated system to the nation’s economy is very sobering. The staggering expected loss of farmer income, grain exports and the resulting increase of the Federal deficit by $1.5 Billion dollars per year should be sufficient cost/benefit analysis for Congressional action.
It’s important to view the investment of our navigation infrastructure within the context of a global economy, just as American companies view their competitive position. Over the last 10 years, the U.S. has worked hard to open world markets through World Trade Organization negotiations and other regional multilateral agreements. U.S. agricultural trade policy supports active programs encouraging corn and soybean exports. Our transportation infrastructure, however, is not keeping up with these developments, nor is it positioning U.S. producers to capture future growth. Rather, inaction has fueled foreign competition with increased virgin lands put into production and a juggernaut in the making.
Over the last 10 years, our South American competitors have visited our country, learned from our past investments and are duplicating the vision of our forefathers by creating a state-of-the art transportation infrastructure. While they have invested in their future, we have “studied the problem.” While we determine the best forecasting tool and argue whether exports will grow at 1.5 percent average annual growth or 2 percent average annual growth, they seize on our nation’s indecision by taking away market share growth from our farm community. Brazil has doubled their share of soybean exports over the last five years. U.S. soybean exports have fallen 27 percent.
About 18% of US annual GDP goes to private investment—money spent by individuals and businesses for goods and services, which will endure and produce future value. Foreign trade’s share of total economic activity nearly doubled, from 13.8% in 1986 to 26% in 1996. Looking forward, there is no reason to suggest that the trade share of total economic activity will not continue to grow dramatically.
As our economy becomes more dependent upon exports, our ability to access and compete for world markets will become more critical. Many believe that the world stands on the threshold of a long, strong surge in economic growth and subsequent higher living standards. Those nations who will share in that growth will be those who have the most efficient export-oriented infrastructures in place to compete in the marketplace.
All the major U.S. grain companies agree that 60-65% of future grain exports will travel down the Mississippi River. Ocean freight rates will determine whether, on an annual basis, about 5% of movements might shift from the Mississippi River to the Pacific Northwest or vice versa. Well-established shipping patterns of the last 30 years are expected to be replicated in the next 30 years. Private sector investments in the infrastructure have already been made and now we are waiting for the federal government to make infrastructure investment in the Upper Basin a priority.
Currently, about 10% of world food production enters international trade. Most scenarios have the volume of trade doubling by 2010 and doubling again by 2025. The most environmentally benign transportation system—our inland waterways-- is physically incapable of handling this surge in demand. We don’t rely on 1940s vintage roads and air transportation to meet our needs, neither should we expect modern tows to rely on steamboat era locks.
U.S. investment to reverse the years of neglect and restore our inland waterway system into a world-class transportation system is critical to merely keep pace with other nations and supporting our economy. According to independent studies conducted by Price Waterhouse and Mercer Management Consultants, the Upper Miss provides benefits to a wide range of employment groups. More than 400,000 jobs are supported from traffic that originates and terminates in the Upper Mississippi River Basin. Of those, 90,000 are in the manufacturing sector. Those jobs are estimated to generate $4 Billion in income and between $11-$15 Billion in business revenue.
Equally important to the modernization decision in the Midwest is the fact that an efficient waterway transportation system is integrally connected to the sustainability of agriculture in general. The food and fiber industries are our nation’s largest sector contributing approximately 13.1% of total GDP, 17% of the value-added, 16.0% of the total labor force, and 10% of the total income. It also accounts for about 23 million jobs.
The efficiencies and economies of scale created by agricultural exports are what keep our consumer prices the lowest in the world, about 10.7% of disposable personal income. If exports fall, the production base contracts and consumer food prices rise. If exports rise, further efficiencies are created to keep consumer food cost prices low. Over 30% of U.S. crop acreage can be considered produced for export. As world demand rises, simply maintaining current market share would require an inland waterway system capable of handling twice the tonnage by year 2025.
Mr. Chairman, MARC 2000 has been involved in the Upper Miss navigation study since the inception of the feasibility study in 1993. Ten years later, we are on the edge of our seats as the Corps of Engineers is poised to issue an Interim Report on July 1 of this year. We believe there will be sufficient information in that report for Congress to initiate a balanced modernization program in the Upper Mississippi Basin that includes lock modernization and enhanced environmental restoration programs.
This study has taken many turns and permutations over the last 10 years. One of the most important developments in the past year has been the Chief of Engineers’ decision to restart and restructure this study with the assistance of other federal and state agencies and stakeholder groups in the basin.
This Interim report should provide a fresh look at the risks we take in not modernizing the lock system in the Upper Miss Basin. It should also provide important guidance on the risks we take as a nation if we don’t address pressing environmental declines in the river. Private stakeholder groups have met and continue to meet to find the right balance toward sustaining economic growth and protecting the environment. The discussion has shifted from one of mutual exclusivity in investment to how we manage the future of the river for all uses without jeopardizing the uses of future generations.
The following is clear and irrefutable:
First, this waterway system is critical to the future competitiveness of the Midwest agricultural economy. Without efficient waterway transportation, Midwest grain exports will be lost at considerable expense to producers and the national treasury;
Second, with continued and increased congestion costs on the waterway, shippers will have to find alternatives to ship their goods or lose sales. Every modal shift study concludes considerable economic, environmental and social benefits to keeping freight on the waterway. Creating higher cost structures on the water through investment inaction will lead to lost economic activity, increased air emissions, increased fuel consumption, increased accidents and increased fatalities in our communities.
Third, continuing to show indecisiveness in modernizing the waterway infrastructure in the Midwest will continue to embolden our global competitors to increase placing virgin lands into production and work to capture the growing share of a world food market that will double in the next 10 years. Our inactivity is ensuring that the U.S. may not be in a position to capitalize on these new markets.
Fourth, the environmental benefits of the waterway system, including those initially created with the construction of the lock and dam system, are declining. Without a high priority commitment to redressing that decline, we will continue to lose islands, important backwaters, and other ecosystem elements critical to this recreational Mecca and national flyway.
Strong Basin Support
Equally clear and irrefutable are the thousands of private citizens who have expressed their support for modernization of the lock system over the last ten years, either through direct communications to Congress, at Corps of Engineers- sponsored public meetings and information sessions and most recently through statewide-elected officials.
The MARC 2000 coalition includes a multitude of industries, individuals, labor groups, trade associations and community economic development groups. These constituent groups know that as a region, over 151 million tons of commodities moved on the 2,000 navigable miles of the Upper Mississippi, Illinois, and Missouri River System in 1999. The combined value of these commodities totaled approximately $24 billion. For the same year, 92.5 billion tons of commodities were shipped out of our region – 2/3rds of which consisted of corn, soybeans, wheat and other grains. Louisiana receives 54 million tons of this grain for export to world markets, while 3 million tons went to processing facilities on the Tennessee River.
Our region’s docks received more than 28 million tons from outside the system, most of which were fertilizers and other chemicals. Another 30 million tons moved within the basin in 1999, more than half of which consisted of gravel, sand, and other aggregates.
A 39% majority of the shipments out of our region consisted of grain, but many other commodities travel our river system. The Corps of Engineers figures reveal impressive statistics for total traffic in 1999 on the UMRS: almost 28 million tons of coal ($1.1 B), over 10 million tons of petroleum ($1.6 B) 27 million tons of aggregates ($943 million) over 59 million tons of grain ($8.7 B) over 9 million tons of chemicals ($4.3 B) over 3 million tons of ores and minerals ($453million) over 6 million tons of iron and steel ($4.2 B) and over 8 million tons of other products ($2.3 B) moved on our waterways in 1999.
On a state level, shipments to and from Illinois totaled 92.3 million tons, worth over $15 B. Shipments to and from Missouri totaled 46.1 million tons, worth over $3.8 B. Shipments to and from Minnesota totaled over 20.2 million tons, worth over $3.3 B. Shipments to and from Iowa totaled 18.4 million tons, worth over $2.7 B. Shipments to and from Wisconsin totaled over 4.5 million tons, worth over $340 million. These shipments of goods connected our five states with 17 other states in the nation (TX, OK, KS, NE, MI, IN, OH, KY, WV, PA, AR, MS, AL, TN, LA, FL and GA), not to mention world markets. Copies of our state profiles can be accessed on our web site at www.marc2000.org.
The importance of the waterway to this region has not been lost on witnesses over the years. Our stakeholder groups have spent the last 10 years waiting for the federal study process to produce an assessment of the navigation and environmental needs. While the restructured study may achieve that goal, the economic and environmental imperatives dictate action necessary this year to launch a lock modernization and enhanced restoration initiative.
Last year, the State of Minnesota started a process that has mushroomed in the basin. Acting on its own initiative and encouraged by Rep. Jim Oberstar, the state legislature passed House Resolution 208 and Senate Resolution 551 overwhelmingly, expressing support for lock modernization and environmental restoration. Minnesota rejected suggestions that they could not offer direction just because the Corps study was not completed. Minnesota legislators recognized the economic and environmental value of moving bulk commodities on the inland system—as most Americans do when offered the choice--and chose to forge ahead with their expression of support.
This year, the Iowa, Missouri, Illinois and Wisconsin legislatures went a step further, passing their own resolutions recognizing that:
Mr. Chairman, I would ask that copies of Minnesota House Resolution 208, Illinois Joint Resolution 54, Iowa House Concurrent resolution 109 and Senate Concurrent Resolution 104, Missouri Senate Concurrent Resolution 44 and House Concurrent Resolution 11, and Wisconsin Assembly Resolution 56 be included in the record with my testimony. These resolutions passed with broad bi-partisan support and call on Congress to authorize and fund the construction of 1200-foot locks on the Upper Mississippi and Illinois Rivers.
Testimonies at the most recent round of public meetings made it clear that the labor community joins our industrial, agricultural, and economic development communities in expressing strong support for the authorization and construction of new locks on our inland waterway system. These projects provide a double investment to the economic security of our region and country. First, good family-wage jobs in our nation are supported by the efficient functioning of our transportation system and the construction of modern locks. Second, infrastructure renewal has a proven record of stimulating additional economic activity and more jobs. Historically, navigation water project investments have returned to the national economy benefits many times over the original dollar investment.
Smaller scale investments are certainly part of the study’s area of concentration. Industry representatives have spent countless hours with engineering contractors and the Corps of Engineers reviewing over 100 different proposals. It appears we are revisiting some of the same alternatives, such as industry self-help and now scheduling.
The theoretical underpinnings of scheduling promise to reduce lock congestion, reduce barge rates to shippers, improve equipment utilization for barge operators and reduce operating costs for barge operators. In reality, all it will likely accomplish is another layer of bureaucracy and delay solving the problem with the most efficiently recognized alternative, 1200-foot locks.
Lock delays and resulting high barge rates are symptoms of a seasonal river system that primarily operates 9 months, and inadequate lock infrastructure incapable of meeting shipper demand. Congestion is a function of the timing of market demand with the ability to move carrying capacity to the areas of the system to meet that demand.
Scheduling will not allow the industry to increase barge supply in the spring, will not result in increased barge supply in the fall, will not reduce shipper rates in the spring, nor in the fall. It might minimize some lock delay costs. But, in order to reduce carrier operating costs, equipment that otherwise would be waiting in queues must be productively and economically employed in alternative income producing uses. On the Upper Mississippi River system, equipment either waits in queue or waits at an alternate location until scheduled lockage time is allocated. Mr. Chairman, I would like to introduce into the record a report issued by the Inland Waterway Users Board to the Chief of Engineers outlining these key reasons why scheduling is not the answer to our problems on the inland waterway system.
Finally, some have suggested that small-scale measures, though not the long-term solution to address a 60% growth in traffic, might be a short-term solution. Regrettably, this thinking is what got us behind the eight ball today. History has proven that average annual growth is not how the real world works, but only how models can operate to project future needs. The reality of surges in grain exports means that if we build infrastructure solely to meet average annual growth, rather than capturing peak movements, we will continue to lose growth opportunities.
This Feasibility study has already spent over $26 million reviewing biological impacts of increased traffic and the cumulative impacts of navigation on the Upper Basin system. In addition, we have invested $76 million more creating a monitoring system under the Environmental Management Program (EMP), which has proven invaluable in providing us with better information about the environmental status of the river’s ecology.
In addition, the Upper Mississippi River Conservation Committee has issued a document entitled “A River that Works and a Working River,” chronicling the evolution of the Mississippi River sustaining multiple uses, but one whose environmental values provide a mixed report. Through the EMP, our region has also produced a Habitat Needs Assessment outlining initial ideas on activities to restore lost habitat to the river’s ecosystem. These combined efforts have helped scope a range of opportunities for an enhanced restoration effort in the Upper Mississippi River Basin.
The solutions to site-specific navigation improvements are well documented. Agreement on how best to achieve environmental sustainability is still very much the focus of our collaborative effort. MARC 2000 would urge the Committee to give careful consideration to evaluating WRDA 2002 proposals to address the following concerns:
Mr. Chairman, our Basin is prepared to work with Congress to find a reasonable approach to lock modernization and environmental restoration. In addition to working as part of the collaborative process with the Corps of Engineers and other federal agencies and the Governors’ representatives, we are engaged in dialogues with leading environmental groups in the Basin. We sincerely seek a balanced approach to the Basin’s needs.
Unfortunately, the lack of resource commitment to completing navigation projects of national significance is sapping our nation of vital economic benefits associated with responsible water resource development.
Lock modernization on the Upper Miss and Illinois must begin this year with authorization language and pre-construction and design work if we have any hope of staying competitive in world grain trade. It will take at least two years or more for the PED process to be completed prior to construction. We believe the Interim Report will provide sufficient guidance for Committee action. In order for the benefits of U.S. Trade, Agriculture and Transportation policy to be realized in our part of the country, we must move rapidly to protect our Achilles heel: the aging, antiquated, trade-limiting inland waterway system.
Many different products are transported on our waterway system. However, I would like to close with another agricultural example of why this investment decision should be acted on immediately. In the 1999/2000 farm production year, over 270 million bushels of soybeans and 1.214 Billion bushels of corn were loaded on barges for export from the Upper Miss Basin. Those exports were valued at over $4 Billion. According to USDA multipliers, these exports generated a gross economic output of over $22 Billion, personal income of over $6 Billion and supported gross employment of over 230,000. This activity would have generated $776 million to the U.S. treasury, or almost 60% of the total cost of lock modernization on the Upper Mississippi and Illinois Rivers.
By any other standards, this investment would be a given, especially when half the cost of modernization is paid for out of the Inland Waterway Users Trust Fund, which is currently running a surplus of over $400 million. Modernization helps redress the extensive rehabilitation costs of old structures and reduces the backlog. The economy wins with stronger farm economies, efficient transportation systems and a reinforced jobs base. The environment wins with slower growth of alternative modes that consume more fuel and emit more pollutants, such as hydrocarbons, carbon monoxide, and nitrogen oxides into the air. Societies win with sustained quality of life, fewer accidents and transportation-related fatalities.
It is far more likely that export growth will surge prior to completion of new locks than construction of new locks being built prior to the next wave of export growth. The risk to the nation is greater if we can’t meet that surge of demand than if we’re meeting it head on or waiting for it to develop as food experts predict it inevitably will.
Mr. Chairman, I would like to express a few words about the Corps’ Feasibility study process.
The picture of the Corps painted by certain elements of the press along with the glib commentaries of selected opponents to water resource development are very different from the Corps of Engineers we work with and, yes, argue with over technical analyses and how best to achieve Congressionally-authorized purposes for projects and programs throughout this nation. The Corps is made up of a unique blend of civilians and military personnel who serve their nation well. This agency was recently voted as one of the two best government agencies in value produced for taxpayer dollar received.
The people in our basin worked side-by-side with Corps personnel in 1993, 1995, and 1997 and most recently during the 2002 floods that have resulted in minimum loss of life and in protection of the environment. Before the long-standing policies and procedures of the Corps of Engineers are too quickly attacked, let’s reflect on the fact that we’re dealing with an organization that has an unprecedented record of civil works and emergency response accomplishments. The last thing in the world that we need is change which makes the Corps study process more costly, time-consuming and burdensome.
The Upper Miss study is an example of an extremely open participative process. The public has been involved in this study at every step of the way. There have been over 80 “open” technical meetings at each step of the way. There have been over 41 public meetings between 1993-2000. Some might even argue this has been too much public participation and has perpetuated the problem of paralysis by analysis.
This study is a compilation of countless other smaller studies that have been scoped out, conducted collaboratively with resource managers and economists throughout the basin, and then reviewed by expert elicitations and peer reviews. The direction of the study has evolved over these years. Additional sub-studies have been commissioned. I can’t imagine how many PhDs this study has produced over the last 10 years. There has never been any problem with the public’s access to information. If anything, this open, collaborative process has miscued over one important promise and Congressional desire—to be expeditious, deliberative and conclusive within a six-year time frame.
We agree with the National Academy of Sciences (NAS) that certain expectations placed on this study, such as 50-year projections, are unrealistic. In addition, we believe the process is overwhelmed because there is a crisis of clarity over what this nation’s priorities should be. Any attempts to change technical assumptions without clear policy agreement, at this time, would be premature and likely harm and confuse the Corps’ ability to meet Congressional objectives.
Many of the concerns articulated over project purposes, benefit cost analysis and cost sharing are reflective of a lack of National consensus about water resource development priorities. In our basin, the citizens overwhelmingly would prefer that barge transportation move bulk commodities on the inland waterway system, rather than further overburdening the highways and rails that move through our communities. The national benefits of the waterways have been recognized since the inception of our nation, and need to be re-emphasized. Water resource projects built our basin and now support an economic structure that competes in a global marketplace. Our investment in modernizing navigation lock infrastructure and improving the ecosystem must begin in earnest if we are to continue to provide family-wage jobs in our basin.
Thank you for the opportunity to present MARC 2000’s views on WRDA'02 lock modernization opportunities and the Corps of Engineers study process. I would be pleased to answer any questions.
Attachments:
State Resolutions (5)
Inland Waterway User Board Report (Scheduling)