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Chris Clayton DTN Ag Policy Editor

Thursday 10/17/13

Budget Deal Funds Olmsted Locks

A lot is being made this morning about the so-called "Kentucky kickback" involving the Olmsted Lock and Dam project on the Ohio River.

A provision in the Continuing Appropriations Act of 2014 that the House and the Senate passed late Wednesday provides a rare earmark of $2.8 billion to complete the Olmsted Locks and Dam project on the Ohio River. The Olmsted project has been an albatross for the inland waterways industry.

The Olmsted upgrade was authorized in 1988 --- Ronald Reagan's presidency --- and started construction in 1992 at a projected cost of $775 million. The Corps of Engineers' project has yet to be completed and costs have soared to more than $3.1 billion.

Groups such as the Waterways Council have supported increasing financing reforms for lock and dam projects that would keep projects such as Olmsted from draining the fund. Barge operators want more assurances that projects will avoid cost overruns. Effectively, they have wanted to get Olmsted "off the books" because it was bleeding the trust fund used to help build waterway projects.

The vote Wednesday effectively funds the project going forward.

UPDATE: The Waterways Council issued a news release on Thursday.

The passage of last night’s Continuing Resolution to fund the Federal government and raise the debt ceiling contained a provision to raise the 902(b) cap on the amount that can be spent on the Olmsted Project in Illinois to $2.9 billion from the current $1.56 billion. The measure does not appropriate funds, but allows work on the critically important project to continue. The U.S. Army Corps of Engineers informed the Inland Waterways Users Board in August that the Olmsted project would be shuttered in November 2013 and would displace 400 workers if Congress did not act the raise the cap.

In response to the Corps’ announcement, the Senate-passed Water Resources Development Act (WRDA) bill, the House Water Resources Reform Development Act (WRRDA) bill, and the FY 2014 Energy & Water Appropriations bill all contain provisions to raise the 902(b) cap but will not become law before the project would have shut down in November.

If Olmsted were to have shut down, according to the Corps, it would have cost $40 million to restart the project, and of course, needlessly delay its delivery.

“To be clear, no money has been expended in this action by Congress. It simply raises the ceiling on the cost of project that was set in 1986 to allow work to continue in 2013 and beyond,” said Michael J. Toohey, President/CEO, Waterways Council, Inc. (WCI) “This important project in Illinois has a 7.4 to 1 benefit-cost ratio as determined by the Corps of Engineers’ Chief’s Report approved by Congress, and is estimated to return more than $410 million annually in transportation cost savings and benefits when it is completed,” he continued.

Of course, some are crying foul over the earmark, given that Congress has banned earmarks. In particular, the Olmsted funding is being viewed as a political favor for Senate Minority Leader Mitch McConnell, R-Ky., for the work he did to bring an end to the federal shutdown and debt-ceiling crisis over the past week. McConnell is particularly drawing fire from conservatives. The Senate Conservatives Fund, a group tied to Sen. Ted Cruz, R-Texas, ripped into the earmark on Wednesday, calling it a "Kentucky kickback," a reference to former Sen. Ben Nelson's Medicaid deal for Nebraska in return for Nelson's vote for the Affordable Care Act.

"The McConnell-Reid deal not only funds Obamacare and suspends the debt limit, it also includes a provision in Section 123 that increases funding for the Olmsted Locks and Dam in Kentucky from $775 million to $2.9 billion.

"In exchange for funding Obamacare and raising the debt limit, Mitch McConnell secured a $2 billion Kentucky kickback.

"This is an insult to Kentucky families who don't want to pay for Obamacare and who don't want to shoulder any more debt."

For more on the issue, see the Louisville Courier-Journal blog http://blogs.courier-journal.com/…

Army Corps of Engineers website on the Olmsted Locks & Dam project: http://www.lrl.usace.army.mil/…

Follow me on Twitter @ChrisClaytonDTN

Posted at 8:53AM CDT 10/17/13 by Chris Clayton
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