WCI REACTS TO $800 MILLION COST OVER-RUN AT OLMSTED LOCK/DAM PROJECT; NEW PRICE TAG TOPS $2.9 BILLION
News Release
Waterways Council, Inc.
February 16, 2012
WATERWAYS COUNCIL,
INC. REACTS TO $800 MILLION COST OVER-RUN AT OLMSTED LOCK AND DAM
PROJECT
NEW PRICE TAG TOPS $2.9 BILLION
Arlington, VA –Waterways Council, Inc. (WCI) President/CEO Michael J.
Toohey issued the following statement regarding the U.S. Army Corps of
Engineers’ revelation in the President’s FY ’13 budget of the cost
over-run amount at the Olmsted Lock and Dam project on the Ohio River:
“Tucked away in the fine print of the Fiscal Year 2013 Budget, the cost
over-run at Olmsted Lock and Dam is finally made public. Alerted in
August 2011 by the U.S. Army Corps of Engineers that there was a
‘significant’ change in the cost of the Olmsted project, the users -
who pay half of the costs of the projects and the overruns - repeatedly
asked for clarification and have, until now, been rebuffed. Today’s
news is hugely disappointing, not only because of the colossal $800
million amount of cost escalation and over-run on the Olmsted Lock and
Dam project, but also the incredible 10-year addition to the
construction schedule. The Olmsted project was originally authorized
under the Water Resources Development Act (WRDA) in 1988 at a cost of
$775 million, with a 7-year construction period. Since authorization,
this project has seen multiple, significant cost over-runs. As recently
as last year, Olmsted’s price tag had ballooned to $2.1 billion since
its authorization. Today’s re-statement may be low; it apparently does
not contain an escalator for inflation, which all other Corps' project
estimates do contain.
Let us be clear about the implications of today’s announcement to the
national economy, to jobs and to exports. No other meaningful
investment in modernization of our aging inland waterways
infrastructure will be made for a decade, or more, if the Olmsted
project continues down its current path. Nothing for the authorized
projects on the Upper Mississippi River, no investment for the
Illinois, the Ohio, the Tennessee, the Cumberland, the Monongahela, or
any other construction on any other part of the system. And that means
no new/additional jobs, no chance to grow exports, and no
transportation cost-savings returned to consumers from these shelved
projects.
The national economy will lose $700 million per year in benefits
foregone by the delay in the Olmsted project alone, as estimated by the
Corps of Engineers’ own economists. Our Nation will be placing a risky
10-year bet in relying on the 'Roaring 20s'-era facilities at locks 52
and 53, which Olmsted was to have already replaced.
This is yet another example that the present business model is broken
and that we do not have an efficient way to construct lock and dam
projects. Recognizing the failings in the current system, the
navigation industry, along with Corps of Engineers experts, developed
the Inland Waterways Capital Development Plan to address these
deficiencies and cap cost over-runs. This plan will deliver 25 projects
in the next two decades instead of the six that will be completed under
the current process. (click here for the
plan:http://www.waterwayscouncil.org/WCIExtras/IMTS_IWUB_Report.pdf )
The navigation industry pays for half of the cost of lock and dam
projects – including one-half of the over-runs – through a 20-
cent-per-gallon fuel tax. The other half is paid for by the General
Treasury. The navigation industry is the only user of the waterways
system to pay a tax, although there are multiple beneficiaries,
including recreational boaters and those who depend on flood control,
municipal and industrial water supplies, and hydro-electric power, to
name just a few.
Ironically, as we are learning of this cost over-run and construction
delay at Olmsted, Panama is proceeding toward completion of six
Olmsted-sized major lock expansions in 2014, below budget and ahead of
schedule. As a nation, we should be extremely concerned by our seeming
inability to complete these much needed projects that are the
foundation for American competitiveness. As President Obama calls for
doubling U.S. exports over the next five years and increasing American
jobs, the nation’s waterways and its infrastructure must be modernized
and made efficient to meet that demand.
The Capital Development Plan applies objective criteria to prioritize
essential construction and major rehabilitation projects, revises
current beneficiaries’ cost-sharing for these projects, reforms the
Corps of Engineers’ internal project delivery process, and suggests a
revenue enhancement – a 30 to 45% increase in the existing diesel fuel
tax – to pay for these vital infrastructure investments that return so
much to the American economy and to consumers.
Waterways Council calls upon Congress to carefully scrutinize the
implications of today’s announcement and the alternatives to completing
this project as proposed. The decision by the Corps of Engineers to
employ an experimental construction process (building a dam in the wet)
has not yielded a timely performance. Congress must decide whether this
experiment will continue or whether traditional construction techniques
should be employed to bring costs under control. At a minimum, Congress
must act to relieve the Inland Waterways Trust Fund from further
obligation to the Olmsted project.
We need to modernize our inland navigation infrastructure on all
waterways of this vital transportation system. The Capital Development
Plan is the means to do so.”
Waterways Council, Inc. is the national public policy organization
advocating a modern and well-maintained national system of ports and
inland waterways. The group is supported by waterways carriers,
shippers, port authorities, shipping associations and waterways
advocacy groups from all regions of the country. Visit
www.waterwayscouncil.org.
INC. REACTS TO $800 MILLION COST OVER-RUN AT OLMSTED LOCK AND DAM
PROJECT
NEW PRICE TAG TOPS $2.9 BILLION
Arlington, VA –Waterways Council, Inc. (WCI) President/CEO Michael J.
Toohey issued the following statement regarding the U.S. Army Corps of
Engineers’ revelation in the President’s FY ’13 budget of the cost
over-run amount at the Olmsted Lock and Dam project on the Ohio River:
“Tucked away in the fine print of the Fiscal Year 2013 Budget, the cost
over-run at Olmsted Lock and Dam is finally made public. Alerted in
August 2011 by the U.S. Army Corps of Engineers that there was a
‘significant’ change in the cost of the Olmsted project, the users -
who pay half of the costs of the projects and the overruns - repeatedly
asked for clarification and have, until now, been rebuffed. Today’s
news is hugely disappointing, not only because of the colossal $800
million amount of cost escalation and over-run on the Olmsted Lock and
Dam project, but also the incredible 10-year addition to the
construction schedule. The Olmsted project was originally authorized
under the Water Resources Development Act (WRDA) in 1988 at a cost of
$775 million, with a 7-year construction period. Since authorization,
this project has seen multiple, significant cost over-runs. As recently
as last year, Olmsted’s price tag had ballooned to $2.1 billion since
its authorization. Today’s re-statement may be low; it apparently does
not contain an escalator for inflation, which all other Corps' project
estimates do contain.
Let us be clear about the implications of today’s announcement to the
national economy, to jobs and to exports. No other meaningful
investment in modernization of our aging inland waterways
infrastructure will be made for a decade, or more, if the Olmsted
project continues down its current path. Nothing for the authorized
projects on the Upper Mississippi River, no investment for the
Illinois, the Ohio, the Tennessee, the Cumberland, the Monongahela, or
any other construction on any other part of the system. And that means
no new/additional jobs, no chance to grow exports, and no
transportation cost-savings returned to consumers from these shelved
projects.
The national economy will lose $700 million per year in benefits
foregone by the delay in the Olmsted project alone, as estimated by the
Corps of Engineers’ own economists. Our Nation will be placing a risky
10-year bet in relying on the 'Roaring 20s'-era facilities at locks 52
and 53, which Olmsted was to have already replaced.
This is yet another example that the present business model is broken
and that we do not have an efficient way to construct lock and dam
projects. Recognizing the failings in the current system, the
navigation industry, along with Corps of Engineers experts, developed
the Inland Waterways Capital Development Plan to address these
deficiencies and cap cost over-runs. This plan will deliver 25 projects
in the next two decades instead of the six that will be completed under
the current process. (click here for the
plan:http://www.waterwayscouncil.org/WCIExtras/IMTS_IWUB_Report.pdf )
The navigation industry pays for half of the cost of lock and dam
projects – including one-half of the over-runs – through a 20-
cent-per-gallon fuel tax. The other half is paid for by the General
Treasury. The navigation industry is the only user of the waterways
system to pay a tax, although there are multiple beneficiaries,
including recreational boaters and those who depend on flood control,
municipal and industrial water supplies, and hydro-electric power, to
name just a few.
Ironically, as we are learning of this cost over-run and construction
delay at Olmsted, Panama is proceeding toward completion of six
Olmsted-sized major lock expansions in 2014, below budget and ahead of
schedule. As a nation, we should be extremely concerned by our seeming
inability to complete these much needed projects that are the
foundation for American competitiveness. As President Obama calls for
doubling U.S. exports over the next five years and increasing American
jobs, the nation’s waterways and its infrastructure must be modernized
and made efficient to meet that demand.
The Capital Development Plan applies objective criteria to prioritize
essential construction and major rehabilitation projects, revises
current beneficiaries’ cost-sharing for these projects, reforms the
Corps of Engineers’ internal project delivery process, and suggests a
revenue enhancement – a 30 to 45% increase in the existing diesel fuel
tax – to pay for these vital infrastructure investments that return so
much to the American economy and to consumers.
Waterways Council calls upon Congress to carefully scrutinize the
implications of today’s announcement and the alternatives to completing
this project as proposed. The decision by the Corps of Engineers to
employ an experimental construction process (building a dam in the wet)
has not yielded a timely performance. Congress must decide whether this
experiment will continue or whether traditional construction techniques
should be employed to bring costs under control. At a minimum, Congress
must act to relieve the Inland Waterways Trust Fund from further
obligation to the Olmsted project.
We need to modernize our inland navigation infrastructure on all
waterways of this vital transportation system. The Capital Development
Plan is the means to do so.”
Waterways Council, Inc. is the national public policy organization
advocating a modern and well-maintained national system of ports and
inland waterways. The group is supported by waterways carriers,
shippers, port authorities, shipping associations and waterways
advocacy groups from all regions of the country. Visit
www.waterwayscouncil.org.