January 29, 2015Updated February 26, 2018
Inland Waterways Trust Fund
Overview
What Is It?
Figure 1. Federal Fuel-Taxed Inland Waterways
The Inland Waterways Trust Fund (IWTF) is a
fund in the
U.S. Treasury that receives revenues from a tax
(also
known as the inland waterway user fee) on
commercial barge commercialbarge fuel on federally designated waterways
.
Approximately 11,000 miles of the nation’s 36,000 miles of
inland waterways are part of this system and subject to the
fuel tax (see Figure 1). Pursuant to the Water Resources
Development Act of 1986, (WRDA 1986; P.L. 99-662),
IWTF monies are subject to
appropriation and are used to
finance expenditures for
construction and major rehabilitation projects on these
these waterways. TheIWTF funds are matched byused to match federal
appropriations from the General Fund of the Treasury.
Overall, expenditures from the IWTF typically make up
5%-15% of total spending by the Army Corps of Engineers
(Corps) on federal inland waterways. Regular operations
and maintenance costs on inlandthese waterways, including
maintenance dredging and minor lock repairs, are funded
separately as a 100% federal responsibility.
What Is the Status of the Trust Fund? The balance of the
IWTF declined significantly from FY2005 to FY2010 due
to a combination of increased appropriations, cost overruns
at individual projects, and a decline in fuel tax revenues.
The IWTF balance has since stabilized, but spending
through FY2014 was limited to current year fuel tax
receipts, which were widely seen as insufficient to finance
needsdredging and minor lock repairs, are funded entirely from
the General Fund.
The Water Resources Reform and Development Act of
2014 (WRRDA 2014; P.L. 113-121), enacted in June 2014,
authorized changes to
IWTF project planning and delivery,
altered the cost-sharingcostsharing threshold for major rehabilitation
projects, and
partially exempted from IWTF cost-sharing a
one project (Olmsted Locks and Dam
Project, on the Ohio River) from IWTF cost sharing. That
same year, P.L. 113-295 on the Ohio River) that
recently had been requiring the majority of trust fund
balances. Subsequently, another bill (P.L. 113-295)
included among its provisions an
increase to the inland
waterway fuel tax on commercial users. As a result, the fee
will increase from $0.20 to $0.29 per gallon on April 1,
2015.
Although these changes may allow for more spending on
some projects, other alterations to the underlying finance
structure for inland waterways (e.g., increased federal
spending or additional user fees) may be necessary to fund
future project needs.
Background and Statistics
Annual commercial traffic on the federal inland waterways
system accounts for 4%-5% of total commercial tonnage
shipped in the United States. Although inland waterways
are a relatively small part of the nation’s freight
transportation network, they remain an important
transportation route in some regions, especially those that
rely on movement of bulk goods over long distances. In
these areas, the percentage of commercial tonnage shipped
by barge, especially for specific commodities, is high.
Along with freight rail, inland waterways are a primary
means of transport for the nation’s grain and oilseed exports
and for bulk products such as coal, petroleum, chemicals,
processed metals, cement, sand, and gravel.
Figure 1. Fuel-Taxed Inland Waterways (Federal)
Source: Congressional Research Service.
Notes: Alaska and Hawaii have no fuel-taxed federal waterways.
Although previous estimates by the Corps and others
projected that inland waterway traffic would increase,
actual traffic has remained somewhat flat over the last 20
years. At the same time, overall freight tonnage for all
modes of domestic freight shipping has increased. In the
future, inland waterways shipping is expected to increase,
but at a rate less than other modes.
IWTF Financing Trends
Since 1986, the IWTF, financed by the inland waterways
user fee, has been an important part of financing inland
waterways construction and major rehabilitation projects.
IWTF balances since 1986 have varied considerably.
Balances reached their highest levels in 2002. On multiple
occasions, the executive branch proposed to further increase
fees on the user industry, including requiring the IWTF to
fund some portion of operations and maintenance
expenditures (in addition to the construction and major
rehabilitation requirements). These proposals were not
enacted.
Beginning in FY2005, appropriations from the IWTF
increased significantly as the Bush Administration
requested and Congress appropriated greater investments in
IWTF-funded projects. These increasing expenditures
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Inland Waterways Trust Fund
exceeded annual fuel tax collections going into the IWTF.
Additionally, some projects significantly exceeded their
original cost estimates, further stressing the trust fund. One
project in particular, the Olmsted Locks and Dam Project,
has significantly exceeded estimates. As a result of these
issues, balances fell sharply from 2005 to 2010 (see Figure
2).
Figure 2. IWTF Financing Trends, FY1987-FY2013
Source: U.S. Army Corps of Engineers data. Graphic by the
Congressional Research Service.
To reduce pressure on the IWTF and prevent the balance
from falling further, Congress enacted a number of stopgap
measures. For instance, Congress appropriated funding for
inland waterways projects from the General Fund in the
American Reinvestment and Recovery Act (ARRA; P.L.
111-5), exempted major rehabilitation projects from their
usual cost-sharing requirements in FY2009 appropriations,
and limited spending from the IWTF to current year fuel
taxes in recent appropriations bills. These changes
stabilized the IWTF balance, but a lack of fuel tax revenues
relative to needs, coupled with cost overruns at the Olmsted
Project, limited the number of ongoing projects.
Proposals
Administration Proposals. Similar to prior
administrations, the Obama Administration has regularly
submitted proposals to Congress that would raise inland
waterways user fees. Most recently, the Obama
Administration recommended replacing the fuel tax with
other user fees (tolls, licensing fees, etc.) that would
increase revenues and potentially allow for more spending
on inland waterways projects. Congress and industry
interests have rejected these proposals, arguing that they
would impose an undue burden on commercial shippers.
Inland Waterways Users Board Proposal. In 2010, the
Inland Waterways Users Board (IWUB), a federal advisory
committee advising the Corps on inland waterways,
endorsed a proposal of its own that was supported by some
shipping industry interests. The IWUB proposed to increase
the fuel tax by a range of $0.06-$0.09 per gallon (depending
on collections) and require the federal government to cover
all project costs for dam rehabilitations, as well as costs for
other inland waterways rehabilitations that are less than
$100 million (the policy of the federal government had
been to fund such costs when they were less than $8
million). The IWUB also proposed project delivery process
reforms aimed at preventing future cost overruns. Several
bills to authorize the IWUB proposal were introduced in the
112th and 113th Congresses.
Recent Changes
WRRDA 2014 Changes. The Water Resources Reform
and Development Act of 2014 (WRRDA; P.L. 113-121)
made changes to inland waterways financing. It authorized
the project delivery recommendations of the IWUB
proposal, made the federal government responsible for
paying all rehabilitation costs less than $20 million (i.e.,
more than the previous $8 million but less than the $100
million proposed by the IWUB), and reduced the IWTF
portion of the cost-sharing requirement for the Olmsted
Locks and Dam Project from 50% to 15%. These changes
are expected to free up some IWTF monies for other
projects. WRRDA also directed additional study by the
Corps of new user fee and revenue options, including a
study of the efficiency of revenue collection on the inland
waterways system, a study on the potential use of bonds or
new fees to finance the IWTF, and the convening of a
stakeholder roundtable to review and evaluate inland
waterways policy alternatives.
Commercial Barge Fuel Tax Increase. P.L. 113-295,
enacted on December 19, 2014, included among its
provisions an increase of $0.09 per gallon to the inland
waterways fuel tax on commercial barges. The increase had
been requested by users and was generally consistent with
the recommendation of the IWUB proposal. The change
takes effect on April 1, 2015, and will make the overall tax
on barge fuel $0.29 per gallon.
The increase to the fuel tax does not guarantee increased
expenditures on inland waterways, which remain subject to
discretionary appropriations. The higher fuel tax would,
however, increase revenues accruing to the IWTF and thus
increase future IWTF balances available for appropriation.
Issues for Congress
In considering further changes related to the IWTF,
Congress may consider what, if any, level of improvements
(and potential funding increases) is necessary for inland
waterways. Other issues may include the appropriate cost
share between the federal government and users and the
appropriate type and amount of user fees (in the form of the
fuel tax or other vehicles for revenue generation). Issues
such as the sequencing and funding for individual projects,
the efficiency of user fee collections, and the addition or
deauthorization of individual waterways from the federal
system may also be discussed. For more information, see
CRS Report R41430, Inland Waterways: Recent Proposals
and Issues for Congress.
Charles V. Stern, cstern@crs.loc.gov, 7-7786
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IF10020 waterway fuel tax. These changes
have stabilized the IWTF balance and allowed for an
overall increase in IWTF-related expenditures on inland
waterways (see Figure 2). This In Focus discusses the
IWTF, inland waterways, and related issues for Congress.
Inland Waterways Background
Annual commercial traffic on the federal inland waterways
system (i.e., fuel-taxed waterways designated by Congress
and eligible for funding from the IWTF) accounts for 4%5% of total commercial tonnage shipped in the United
States. Although inland waterways are a relatively small
part of the nation’s freight transportation network, they are
an important transportation route in some regions. In some
areas that rely on movement of bulk goods, the percentage
of commercial tonnage shipped by barge, especially for
specific commodities, is high. Along with freight rail,
inland waterways are a means of transport for the nation’s
grain and oilseed exports and for bulk products such as
coal, petroleum, chemicals, processed metals, cement, sand,
and gravel.
Source: CRS, based on Corps data.
Note: Alaska and Hawaii have no fuel-taxed waterways.
Whereas total freight tonnage for all other modes of
domestic shipping has increased in recent years, traffic and
tonnage on the inland waterways system has remained
relatively flat over the last 20 years. Future inland
waterways shipping is expected to increase, albeit at a rate
slower than other modes. A primary concern for many
commercial waterway users is the age of inland waterways
infrastructure and the potential for delays in shipping as this
infrastructure deteriorates. Some are concerned that these
delays could lead users to turn to other modes of freight
transit.
IWTF Financing Trends
Congress established the inland waterways user fee in 1978.
WRDA 1986 formally established the system by which
these fees are utilized, including the IWTF and the current
system of financing inland waterways construction and
major rehabilitation projects. Costs for these projects are
shared equally between the IWTF and the General Fund,
whereas regular waterway operations and maintenance
costs are funded entirely from the General Fund. The IWTF
balance has varied considerably over time, reaching its
highest level in FY2002. Shortly thereafter, IWTF
appropriations increased significantly as the George W.
Bush Administration requested and Congress appropriated
greater investments in IWTF-funded projects. At the same
time, fuel tax receipts declined. As a result, the balance fell
sharply from FY2005 to FY2010 (see Figure 2).
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Inland Waterways Trust Fund
Figure 2. IWTF Financing Trends, FY1990-FY2017
previous threshold of $8 million). WRRDA 2014 also
reduced the IWTF cost-sharing requirement for the Olmsted
Locks and Dam Project from 50% to 15%. WRRDA 2014
directed additional study by the Corps of new user-fee and
revenue options, including studies of the efficiency of
revenue collection on the inland waterways system and the
potential use of bonds or new fees to finance the IWTF.
WRRDA 2014 also authorized a stakeholder roundtable to
review and evaluate inland waterways policy alternatives.
Commercial Barge Fuel-Tax Increase. The Tax Increase
Prevention Act of 2014 (P.L. 113-295) included among its
provisions an increase of $0.09 (from $0.20 to $0.29) per
gallon to the inland waterways fuel tax. This increase was
generally consistent with the user-fee recommendation of
the IWUB proposal and took effect on April 1, 2015. Since
enactment of these changes, new fuel-tax receipts accruing
to the IWTF have been approximately $25 million per year.
Source: U.S. Army Corps of Engineers data. Graphic by CRS.
Notes: FY2009 and FY2010 reflect American Recovery and
Reinvestment Act of 2009 (P.L. 111-5) funding. FY2014 reflects
alterations enacted under WRRDA and related legislation.
To stabilize the IWTF balance, Congress has enacted a
number of stopgap measures in recent years. For instance,
Congress exempted certain projects from IWTF cost
sharing under the American Recovery and Reinvestment
Act (P.L. 111-5). In appropriations bills from FY2009 to
FY2014, Congress limited IWTF spending to the annual
amount received in fuel taxes. These limitations had the
desired effect of stabilizing the IWTF, but, combined with
cost overruns at the Olmsted Project, they also greatly
limited the number of new and ongoing projects. More
recently, the IWTF balance and overall spending have
increased as a result of the changes discussed below.
Proposals and Recent Changes
Inland Waterways Users Board Proposal. In 2010, the
Inland Waterways Users Board (IWUB), a federal advisory
committee advising the Corps on inland waterways,
endorsed a proposal supported by some shipping-industry
interests. The IWUB proposed to increase the fuel tax by a
maximum of $0.09 per gallon, and that the federal
government increase its share of projects funded, to cover
all project costs for dam rehabilitations, as well as other
inland waterways rehabilitation projects less than $100
million (since WRDA 1986, the policy of the federal
government had been to fund such costs from the General
Fund only when they were less than $8 million). The IWUB
also proposed project-delivery changes aimed at preventing
future cost overruns, among other things. Bills to authorize
these changes were introduced but not enacted.
WRRDA 2014 Changes. WRRDA 2014 made changes to
inland waterways financing but did not alter the fuel tax or
add other user fees. It authorized the project-delivery
recommendations of the IWUB proposal and made the
federal government responsible for paying all rehabilitation
costs less than $20 million (i.e., less than the IWUB’s
proposed threshold of $100 million but more than the
Budget Proposals. Similar to prior Administrations, budget
proposals both before and after WRRDA 2014 requested
significant increases to inland waterways user fees to
provide additional revenues and allow increased spending
on inland waterways. These requests have, in most cases,
recommended replacing or supplementing the fuel tax with
other fees (tolls, licensing fees, etc.). Congress and industry
interests have rejected these proposals, concluding that they
would impose an unacceptable burden on shippers.
Issues for Congress
The enactment of WRRDA 2014, coupled with the
increases to the IWTF fuel tax, has made it possible for
Congress to both provide significant appropriations for the
Olmsted Project and make available a greater share of the
IWTF balance for other qualifying inland waterway
projects. Receipt collections have increased marginally, and
the trust fund remains subject to discretionary
appropriations.
After the Olmsted Project is complete, inland waterway
expenditures may decrease, as the unique cost-sharing
arrangement for that project will no longer be in effect.
Furthermore, despite the aforementioned fuel-tax increase,
recent Administration budgets (including the FY2019
budget request) have continued to propose new inland
waterway user fees and reduced expenditures on IWTF
construction. In considering future proposals, Congress may
consider what level of improvements and increased
appropriations are warranted, if any; the appropriate cost
share between the federal government and users; and the
preferred type and amount of user fees. Other topics for
consideration include sequencing and funding of individual
projects, efficiency of user-fee collections, and addition or
deauthorization of the individual waterways system.
Charles V. Stern, Specialist in Natural Resources Policy
Nicole T. Carter, Specialist in Natural Resources Policy
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IF10020
Inland Waterways Trust Fund
Disclaimer
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