last two decades. Coal represents a significant share of shipping on the inland waterways, accounting for approximately 20 percent of total cargo. Barge transportation rates on contract coal shipments are about one-half to two-thirds those of rail haulage on a ton-mile basis, and truck transportation rates are an order of magnitude higher than waterborne transportation rates (EIA, 2006h).

Barge traffic is particularly important in the midwestern and eastern states, with 80 percent of shipments originating in states along the Ohio River. This reflects the large number of coal mines and electricity generation facilities that have barge loading and unloading facilities along the Ohio River and its tributaries. Some coal exports from the United States to Canada also move across the Great Lakes. These exports have decreased in recent years, but lake traffic has remained approximately constant because of increased movement of Powder River Basin (PRB) coal shipped between U.S. ports. Like PRB coal, which is transloaded from rail to lake vessel or barge, much waterborne coal is transloaded before final delivery to the ultimate consumer. Although total domestic waterborne coal cargo is about 200 million tons, only about half of that coal (110 million tons) is finally delivered by water to its final customer (Table 5.1), principally to electricity generating facilities.

Maintenance of the critical infrastructure along the inland waterways and Great Lakes (i.e., locks and dams, dredging of ports) is the responsibility of the U.S. Army Corp of Engineers (USACE). USACE construction and rehabilitation projects are funded on a 50-50 cost-shared basis from appropriations and from the Inland Waterways Trust Fund, established in 1986, which derives its revenue from a 20-cent-per-gallon tax on fuel used for commercial waterway transportation. Between 1992 and 2001, congressional appropriations were less than Inland Waterways Trust Fund income and therefore the fund balance grew, a situation that began to be reversed in 2005 with greater administration requests and congressional appropriations. The USACE also spends about $500 million per year on operation and maintenance (O&M) of the waterway system, of which $135 million is spent in the Ohio River and Great Lakes Division.1 O&M expenditures for the total system have been essentially level (in constant dollars) since the 1970s, below levels that the industry believes are optimum for the aging system.

The use of Inland Waterways Trust Fund money has been a source of considerable concern within the barge and towing industry (Knoy, 2006). Similarly, the operators of commercial shipping on the Great Lakes have warned that inadequate port dredging is hampering the transport of coal from the Powder River Basin (LCA, 2006). The USACE and Congress receive recommendations for the use of the trust fund from the Inland Waterways Users Board (IWUB), an 11-member industry advisory committee, and this body recently warned that

1

Presentation to the committee by John Moran, Waterways Council, Inc., June 2006.



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