Waterway funding raises questions

Some experts on federal spending question arrangement

Publication: The Press-Register

Sean Reilly
December 19, 2007

WASHINGTON -- When a coalition of Alabama waterway groups secured $1.5 million in federal money, the publicly announced purpose was to pay for a study examining ways to boost commercial traffic on the state's underused rivers.

Less publicly, that money has also been providing revenue for the coalition's member organizations, according to interviews, as well as records obtained under the Freedom of Information Act and other documents provided by the coalition.

Since the study got under way almost three years ago, those organizations have paid themselves more than $250,000 for grant administration, public outreach and for providing information and other assistance to the Nashville consultant who is actually carrying out the two-part study, the records and interviews show.

Because of their familiarity with the state's river network and the industries that use it, those organizations could gather data more quickly than anyone else, said Jerry Sailors, secretary-treasurer to the coalition, formally known as the Coalition of Alabama Waterway Associations, Inc.

The study's second phase is set for completion in July. By that point, the coalition's share of the $1.5 million in grant money could top $365,000, according to a budget provided by Sailors. He stressed, however, that the final total could be lower.

The arrangement seems to have raised no flags for government monitors. When told of it, however, several experts on federal spending questioned how coalition members can impartially decide what their services are worth at the same time they are in charge of dispensing the money.

"How can you oversee your own costs?" asked Ronald Utt, a senior fellow and transportation specialist at the Heritage Foundation, a Washington, D.C.-based think tank.

At the Sunlight Foundation, which promotes more open government, Bill Allison said the real issue is whether coalition members are charging reasonable fees for the work they are putting into the study.

"It at least raises the question about whether the public is getting the most for their money," Allison said.

Sailors acknowledged that there is no set formula for making those decisions, but said coalition members have earned what they received. He declined, however, to release the invoices that members have submitted in order to document their services.

At the Warrior-Tombigbee Waterway Association, a Mobile-based coalition member, President Sheldon Morgan said his organization has received about $43,000, in part to inventory terminals and shippers. The assignment lasted about three months, he said, and "took a lot of work."

"We got the job done and that was the important thing," he said.

The coalition, a private, nonprofit group, was created in September 2004, the same month that U.S. Sen. Richard Shelby, R-Tuscaloosa, announced preliminary approval for $750,000 that eventually would pay for the study's first phase. Besides the Warrior-Tombigbee association, its five full-fledged members include the Coosa-Alabama River Improvement Association, which is headed by Sailors in Montgomery and the Tri Rivers Waterway Development Association in Dothan.

Earlier in 2004, a budget crunch in Alabama had cost all three groups their state funding. Although the study was not conceived of as a backdoor way of getting federal aid to make up the difference, Sailors said, the money received as a result "certainly helps."

After routing the 2004 installment for the study through the U.S. Department of Transportation, Shelby later targeted a second $750,000 "earmark" to the endeavor via the National Oceanic & Atmospheric Administration. Although the legislation did not spell out the money's ultimate destination, records obtained under the Freedom of Information Act show that Shelby's staff made clear to NOAA bureaucrats that the waterway coalition was to be the recipient. As a result, the agency waived competition requirements. A Shelby spokeswoman did not respond to a question on why the senator directed the money to the coalition.

As Sailors noted, coalition members could have elected to do the study on their own, but decided to hire Ron Coles, a Nashville consultant with expertise in the area. Coles, now a vice president with Hanson Professional Services Inc., headquartered in Illinois, will ultimately receive about $857,000, records indicate. The coalition has also paid $48,000 to the Birmingham law firm Balch & Bingham LLP for legal services, while NOAA and the Transportation Department collect a cut for administration.

The study's first part, released in May, urged shippers to consider using barges to move containerized cargo along inland waterways between ports and terminals, particularly since the Choctaw Point container terminal is supposed to open next year on the Mobile River. The follow-up report, due in July, will examine Europe's experience in using barges to move containers, as well as what can be done to encourage shippers in Alabama and neighboring states to take up the practice.

Whether the findings will lead to greater use of the state's rivers is unknown.

While waterway advocates see enormous untapped potential, Utt and other skeptics question whether industries can be coaxed into moving higher-value cargo by barge. Unlike other parts of the country, Utt said, Alabama has little overall problem with highway congestion.

"It's a matter of trying to provide a product that nobody wants at the price you're offering," Utt said.