January 29, 2015
Inland Waterways Trust Fund
Overview

rely on movement of bulk goods over long distances. In
these areas, the percentage of commercial tonnage shipped
What Is It? The Inland Waterways Trust Fund (IWTF) is a
by barge, especially for specific commodities, is high.
fund in the U.S. Treasury that receives revenues from a tax
Along with freight rail, inland waterways are a primary
(also known as the inland waterway user fee) on
means of transport for the nation’s grain and oilseed exports
commercial barge fuel on federally designated waterways
and for bulk products such as coal, petroleum, chemicals,
(see Figure 1). Pursuant to the Water Resources
processed metals, cement, sand, and gravel.
Development Act of 1986, IWTF monies are subject to
appropriation and are used to finance expenditures for
Figure 1. Fuel-Taxed Inland Waterways (Federal)
construction and major rehabilitation projects on these
waterways. The funds are matched by 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 inland 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

needs.
Source: Congressional Research Service.
Notes: Alaska and Hawaii have no fuel-taxed federal waterways.
The Water Resources Reform and Development Act of
2014 (WRRDA; P.L. 113-121), enacted in June 2014,
Although previous estimates by the Corps and others
authorized changes to IWTF project planning and delivery,
projected that inland waterway traffic would increase,
altered the cost-sharing threshold for major rehabilitation
actual traffic has remained somewhat flat over the last 20
projects, and partially exempted from IWTF cost-sharing a
years. At the same time, overall freight tonnage for all
project (Olmsted Locks and Dam on the Ohio River) that
modes of domestic freight shipping has increased. In the
recently had been requiring the majority of trust fund
future, inland waterways shipping is expected to increase,
balances. Subsequently, another bill (P.L. 113-295)
but at a rate less than other modes.
included among its provisions an increase to the inland
waterway fuel tax on commercial users. As a result, the fee
IWTF Financing Trends
will increase from $0.20 to $0.29 per gallon on April 1,
2015.
Since 1986, the IWTF, financed by the inland waterways
user fee, has been an important part of financing inland
Although these changes may allow for more spending on
waterways construction and major rehabilitation projects.
some projects, other alterations to the underlying finance
IWTF balances since 1986 have varied considerably.
structure for inland waterways (e.g., increased federal
Balances reached their highest levels in 2002. On multiple
spending or additional user fees) may be necessary to fund
occasions, the executive branch proposed to further increase
future project needs.
fees on the user industry, including requiring the IWTF to
fund some portion of operations and maintenance
Background and Statistics
expenditures (in addition to the construction and major
rehabilitation requirements). These proposals were not
Annual commercial traffic on the federal inland waterways
enacted.
system accounts for 4%-5% of total commercial tonnage
shipped in the United States. Although inland waterways
Beginning in FY2005, appropriations from the IWTF
are a relatively small part of the nation’s freight
increased significantly as the Bush Administration
transportation network, they remain an important
requested and Congress appropriated greater investments in
transportation route in some regions, especially those that
IWTF-funded projects. These increasing expenditures
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Inland Waterways Trust Fund
exceeded annual fuel tax collections going into the IWTF.
$100 million (the policy of the federal government had
Additionally, some projects significantly exceeded their
been to fund such costs when they were less than $8
original cost estimates, further stressing the trust fund. One
million). The IWUB also proposed project delivery process
project in particular, the Olmsted Locks and Dam Project,
reforms aimed at preventing future cost overruns. Several
has significantly exceeded estimates. As a result of these
bills to authorize the IWUB proposal were introduced in the
issues, balances fell sharply from 2005 to 2010 (see Figure
112th and 113th Congresses.
2).
Recent Changes
Figure 2. IWTF Financing Trends, FY1987-FY2013
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
Source: U.S. Army Corps of Engineers data. Graphic by the
new fees to finance the IWTF, and the convening of a
Congressional Research Service.
stakeholder roundtable to review and evaluate inland
waterways policy alternatives.
To reduce pressure on the IWTF and prevent the balance
from falling further, Congress enacted a number of stopgap
Commercial Barge Fuel Tax Increase. P.L. 113-295,
measures. For instance, Congress appropriated funding for
enacted on December 19, 2014, included among its
inland waterways projects from the General Fund in the
provisions an increase of $0.09 per gallon to the inland
American Reinvestment and Recovery Act (ARRA; P.L.
waterways fuel tax on commercial barges. The increase had
111-5), exempted major rehabilitation projects from their
been requested by users and was generally consistent with
usual cost-sharing requirements in FY2009 appropriations,
the recommendation of the IWUB proposal. The change
and limited spending from the IWTF to current year fuel
takes effect on April 1, 2015, and will make the overall tax
taxes in recent appropriations bills. These changes
on barge fuel $0.29 per gallon.
stabilized the IWTF balance, but a lack of fuel tax revenues
relative to needs, coupled with cost overruns at the Olmsted
The increase to the fuel tax does not guarantee increased
Project, limited the number of ongoing projects.
expenditures on inland waterways, which remain subject to
discretionary appropriations. The higher fuel tax would,
Proposals
however, increase revenues accruing to the IWTF and thus
increase future IWTF balances available for appropriation.
Administration Proposals. Similar to prior
administrations, the Obama Administration has regularly
Issues for Congress
submitted proposals to Congress that would raise inland
waterways user fees. Most recently, the Obama
In considering further changes related to the IWTF,
Administration recommended replacing the fuel tax with
Congress may consider what, if any, level of improvements
other user fees (tolls, licensing fees, etc.) that would
(and potential funding increases) is necessary for inland
increase revenues and potentially allow for more spending
waterways. Other issues may include the appropriate cost
on inland waterways projects. Congress and industry
share between the federal government and users and the
interests have rejected these proposals, arguing that they
appropriate type and amount of user fees (in the form of the
would impose an undue burden on commercial shippers.
fuel tax or other vehicles for revenue generation). Issues
such as the sequencing and funding for individual projects,
Inland Waterways Users Board Proposal. In 2010, the
the efficiency of user fee collections, and the addition or
Inland Waterways Users Board (IWUB), a federal advisory
deauthorization of individual waterways from the federal
committee advising the Corps on inland waterways,
system may also be discussed. For more information, see
endorsed a proposal of its own that was supported by some
CRS Report R41430, Inland Waterways: Recent Proposals
shipping industry interests. The IWUB proposed to increase
and Issues for Congress.
the fuel tax by a range of $0.06-$0.09 per gallon (depending
on collections) and require the federal government to cover
Charles V. Stern, cstern@crs.loc.gov, 7-7786
all project costs for dam rehabilitations, as well as costs for

other inland waterways rehabilitations that are less than
IF10020
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