<DOC>
[107 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:83697.wais]
S. Hrg. 107-1001
WATER RESOURCES DEVELOPMENT ISSUES AND CORPS REFORMS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ON
ISSUES PERTAINING TO WATER RESOURCES DEVELOPMENT PROGRAMS WITH THE U.S.
ARMY CORPS OF ENGINEERS
__________
JUNE 18, 2002
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
one hundred seventh congress
second session
JAMES M. JEFFORDS, Vermont, Chairman
MAX BAUCUS, Montana BOB SMITH, New Hampshire
HARRY REID, Nevada JOHN W. WARNER, Virginia
BOB GRAHAM, Florida JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut CHRISTOPHER S. BOND, Missouri
BARBARA BOXER, California GEORGE V. VOINOVICH, Ohio
RON WYDEN, Oregon MICHAEL D. CRAPO, Idaho
THOMAS R. CARPER, Delaware LINCOLN CHAFEE, Rhode Island
HILLARY RODHAM CLINTON, New York ARLEN SPECTER, Pennsylvania
JON S. CORZINE, New Jersey PETE V. DOMENICI, New Mexico
Ken Connolly, Majority Staff Director
Dave Conover, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
JUNE 18, 2002
OPENING STATEMENTS
Bond, Hon. Christopher S., U.S. Senator from the State of
Missouri....................................................... 5
Letter, Corps of Engineers reforms........................... 6
Chafee, Hon. Lincoln, U.S. Senator from the State of Rhode Island 18
Corzine, Hon. Jon S., U.S. Senator from the State of New Jersey.. 13
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 10
Jeffords, Hon. James M., U.S. Senator from the State of Vermont.. 1
Reid, Hon. Harry, U.S. Senator from the State of Nevada.......... 8
Smith, Hon. Bob, U.S. Senator from the State of New Hampshire.... 2
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 14
Warner, Hon. John W., U.S. Senator from the Commonwealth of
Virginia....................................................... 19
WITNESSES
Brescia, Christopher, president, MARC 2000....................... 47
Prepared statement........................................... 122
Brownlee, Hon. R.L., Acting Assistant Secretary of the Army
(Civil Works), Department of the Army.......................... 22
Prepared statement........................................... 60
Chase, Tom, director of environmental affairs, American
Association of Port Authorities................................ 38
Prepared statement........................................... 63
Responses to additional questions from:
Senator Jeffords......................................... 82
Senator Smith............................................ 84
Dickey, Ph.D., Edward............................................ 44
Prepared statement........................................... 112
Responses to additional questions from:
Senator Jeffords......................................... 118
Senator Smith............................................ 117
Ellis, Steve, director of water resources, Taxpayers for Common
Sense.......................................................... 42
Article, Taxpayers for Common Sense, The Construction Backlog 109
Prepared statement........................................... 100
Report, The Distribution of Shore Protection Benefits, Draft
Army Corps of Engineers, November 2001, Comments of the
Office of Management and Budget............................ 110
Feingold, Hon. Russell D., U.S. Senator from the State of
Wisconsin...................................................... 19
Prepared statement........................................... 58
Fischer, Montgomery, director of water policy, National Wildlife
Federation..................................................... 40
Letter from several organizations to the chair, Council on
Environmental Quality and Director, Office of Management
and Budget................................................. 96
Prepared statement........................................... 85
Responses to additional questions from Senator Smith......... 98
Summary, The State of the Nation's Aquatic Resources......... 94
Flowers, Lieutenant General Robert B., Chief of Engineers, U.S.
Army Corps of Engineers........................................ 23
Prepared statement........................................... 61
(iii)
Holland, Lisa, state coordinator, Flood Mitigation Programs,
South Carolina Department of Natural Resources................. 45
Prepared statement........................................... 119
MacDonald, Tony, executive director, Coastal States Organization. 49
Prepared statement........................................... 128
Robinson, Jr., Jim, Pinhook, MO.................................. 51
Prepared statement........................................... 134
ADDITIONAL MATERIAL
Letters from:
Blehm, Kathleen K., project liaison officer, Yellowstone
River Conservation Forum to Senator Jeffords dated July 28,
2002....................................................... 154
Yoder, Barbara, coordinator, Yellowstone River Conservation
District Council to Senator Jeffords dated July 26, 2002... 153
Statements:
Daschle, Hon. Tom, U.S. Senator from the State of South
Dakota..................................................... 56
Draper, Eric, director of policy, Audubon of Florida......... 136
National Association of Flood and Stormwater Management
Agencies................................................... 150
Perciasepe, Bob, senior vice president for policy, National
Audubon Society............................................ 138
Samet, Melissa, senior director of water resources, American
Rivers..................................................... 141
Sepp, Peter J., vice president for Communications, National
Taxpayer Union............................................. 135
WATER RESOURCES DEVELOPMENT ISSUES AND CORPS REFORMS
----------
TUESDAY, JUNE 18, 2002
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The committee met, pursuant to notice, at 2:30 p.m. in room
406, Senate Dirksen Building, Hon. James Jeffords (chairman of
the committee) presiding.
Present: Senators Jeffords, Bond, Chafee, Corzine, Inhofe,
Reid, Smith, Voinovich, and Warner.
Also present: Senator Feingold.
OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM
THE STATE OF VERMONT
Senator Jeffords. The committee will come to order. Good
afternoon and welcome. I would like to thank our witnesses for
being here. Today, we are going to hear from the Administration
and a panel of witnesses on the Army Corps of Engineers Water
Resource Program.
Since the passage of the Water Resources Development Act of
1986, every Administration has submitted a biennial legislative
proposal to the Congress containing project authorizations and
policy initiatives. I understand a proposal from the Acting
Assistant Secretary is at the Office of Management and Budget.
However, we have not received a proposal yet. There is very
little time remaining in this legislative session, and if we
want to act this year we are going to have to have something to
move on.
Working with Senator Smith and members of this committee, I
hope to introduce a legislative proposal before the July 4 work
period. Many want the legislative proposal that this committee
considers to include what is being referred to as Corps reform.
There have been press reports and GAO reports suggesting that
the Corps needs and overhaul. One of the reasons we are here
today is to get input from other witnesses on possible changes
to the Corps Water Resources Programs--how the Corps could be
more effective and efficient.
Senator Smith and Senator Feingold, who is joining us this
afternoon and is here, have introduced legislation that would
make several changes in the way the Corps does business. I
intend to consider all views and work to develop legislation
that will keep the Corps on its biennial planning schedule and
help the Corps deliver their much-needed services of storm
damage reduction, navigation and environmental restoration.
[The prepared statement of Senator Jeffords follows.]
Statement of Hon. Jim Jeffords, U.S. Senator from the State of Vermont
Today we are going to hear from the Administration and a panel of
witnesses on the Army Corps of Engineers water resources programs.
Since the passage of the Water Resources Development Act of 1986, every
Administration has submitted a biennial legislative proposal to the
Congress, containing project authorizations and policy initiatives. I
understand a proposal from the Acting Assistant Secretary is at the
Office of Management and Budget. However, we have not received a
proposal yet.
There is very little time remaining in this legislative session. If
we want to act this year, we are going to have to move forward.
Working with Senator Smith and members of this committee, I hope to
introduce a legislative proposal before the July 4th work period.
Many want the legislative proposal that this committee considers to
include what is being referred to as Corps reform. There have been
press reports and GAO reports suggesting that the Corps needs an
overhaul.
One of the reasons we are here today is to get input from our
witnesses on possible changes to the Corps' water resources programs--
how the Corps could be more effective and efficient.
Senator Smith and Senator Feingold, who is joining us this
afternoon, have introduced legislation that would make several changes
in the way the Corps does business.
I intend to consider all views and work to develop legislation that
will keep the Corps on its biennial planning schedule and help the
Corps deliver their much needed services of storm damage reduction,
navigation and environmental restoration.
Senator Smith.
OPENING STATEMENT OF HON. BOB SMITH, U.S. SENATOR FROM THE
STATE OF NEW HAMPSHIRE
Senator Smith. Thank you, Mr. Chairman, and thank you for
convening this very important hearing to discuss issues that
pertain to water resources development--the program within the
Corps. Obviously, Corps reform will and should be a very
integral part of WRDA 2002, or the Water Resources Development
Act. I want to make it very clear, I respect the Army Corps. I
have been a supporter of the Army Corps for a number of years
and seen first-hand the work that they have done. I am not
opposed to the Corps. They have an important historical role to
play. They have played it in the past and will play it again in
the future, for national security, for mission areas of
navigation, flood damage and environmental restoration.
So initially in drafting this legislation, which is
really--I have worked on it now for almost 2 years--was to give
the benefit of the doubt to the Corps at every step of the way.
But it seemed to me, as I began to move through this that
incident after incident of flawed analysis and in many cases
overstatement of benefits, flat-out miscalculations, whether
they were accidental or intentional, it still is difficult to
ignore. In some cases, the misinformation, erroneous
information is just outfight intolerable.
Last week's GAO report on the Delaware River deepening
project, which concluded that benefits were overstated by more
than 300 percent demonstrates why independent peer review of
certain project is in fact warranted. Numerous changes have
been given to the Corps to take meaningful checks internally to
address the concerns. I just want to make it very clear to the
Corps, this is does not have to be, this is not meant to be,
nor should it have to be a hostile takeover or in any way a
confrontational matter. I think we can work together to correct
these concerns. But we have had numerous opportunities to do
it, and it still has not happened. The Corps had a chance last
month to redeem itself with the announcement that it was going
to review the economic analysis of more than 170 projects.
Three weeks later, the Corps determined that only eight of
those projects would be subject to new analysis. Folks who had
put faith in the exercise were frankly disappointed. How can
you overlook reports in 1999, 2000, and 2001, and most recently
last week issued by a lot of impartial, nonpartisan
institutions such as the National Academy of Sciences, Army
Inspector General and the GAO? All contained the same message--
something is wrong. It is that simple.
We have a unique opportunity to help the Corps address some
of its internal problems that have resulted in a loss of
confidence, and that is exactly what I want to do--make
everybody look good if we can correct the problems. We will
save taxpayer money and we will I think save a lot of
environmental damage.
In March, I introduced S. 1987, the Corps Modernization
Improvement Act, with my colleagues Senator Feingold and
Senator McCain. This is not a hearing on my legislation. I know
that Senator Jeffords has an open mind on that. It is a hearing
on the Corps and how we might address some of the needed
reforms.
We have a lot of support building on this legislation. The
Administration, though, has not endorsed the bill. It has
endorsed the concept of reform. Senator Daschle announced this
afternoon that he was joining Senator Feingold and Senator
McCain and myself as cosponsors on this particular piece of
legislation, which does get at reforms.
Briefly, S. 1987, and I will not go into the whole thing,
which we have introduced and which Senator Feingold will be
testifying on--he will get into the details--we assess the
cost-benefit ratio, we assess cost-sharing, the inequities
there. As an example, we might want to re-think how the O&M is
funded for inland waterway systems. The Appalachicola-
Chattahoochee-Flint Waterway in Alabama, Georgia and Florida,
for example, consumes 30 percent of the O&M budget, but only
sees 3 percent of the national waterway traffic. That just does
not make sense. Why should the taxpayers pay to maintain a
deadbeat waterway that barely sees any traffic? I know Senator
Graham of Florida has a stake in this issue and supports the
authorization of at least the Florida segment of the waterway.
I would like to work with him on that.
There is also a $52 billion backlog--$52 billion backlog
over the last 25 or 30 years. We have talked about this in this
committee now for a number of years, but we never seem to get
to addressing that backlog. Frankly, the process has grown
ugly, and I think Senator Voinovich when he stood firm with me
on WRDA 2000 deliberations to keep environmental infrastructure
out of the bill and Conference Report, saw first-hand how ugly
it really was. I may need his help again as we look to do some
of these reforms.
But I want to work with the Administration. I want to work
with my colleagues on the committee. I want to work with the
Corps to negotiate something meaningful. That is the spirit
with which I address my criticisms today. I want to thank my
colleague and cosponsor, Senator Feingold, for joining us here
today. He has worked a long time on this issue, and we were
able to join forces and I am pleased that we were able to do
that. I know he will be instrumental in helping us to usher
Corps reform through, whatever the vehicle might be ultimately.
Finally, Mr. Chairman, one theme repeated in the written
testimony of those opposed to Corps reform is that independent
review will delay the study process. I would like to just say
for the record, peer review would apply to every project, only
a handful that merit such review. The review would be conducted
concurrently with headquarters review, not in any other
methodology. It is ridiculous to think that a 180-day
concurrent review is going to add years to a study process.
That is not going to be the case. How is it going to add any
more years than the 30 years we have been sitting watching
projects lay on the books accumulating $52 billion in back
dollars?
Some have said, why haven't you waited for the
recommendations of the National Academy of Science, which is
due to issue its report this summer? I understand enough about
the issue to formulate a meaningful procedure. If NAS comes out
with a dramatically different recommendation, then it will have
my serious consideration. Finally, this issue is important
enough to move forward immediately.
In closing, again, I really feel strongly that there should
be no WRDA bill in 2002 without Corps reform. Let's not add
insult to injury. But I look forward to what the witnesses have
to say, and thank you, Mr. Chairman.
[The prepared statement of Senator Smith follows.]
Statement of Hon. Bob Smith, U.S. Senator from the
State of New Hampshire
Good afternoon. I would like to thank everyone for coming today to
discuss issues pertaining to the water resources development program
within the Corps of Engineers. Specifically, I hope to see this hearing
highlight an issue of great importance to me: Corps Reform. I expect
Corps Reform to be an integral component of the Water Resources
Development Act of 2002.
I would like to take a moment to state for the record: contrary to
what has been said about me, I am not opposed to the Corps of
Engineers. The Corps certainly has an important role to play in both
the national security of our country and in its mission areas of
navigation, flood damage reduction, and environmental restoration.
However, I think we have a unique opportunity to help the Corps address
some of its internal problems that have resulted in a loss of
confidence in this agency. Incident after incident of flawed analyses,
overstatement of benefits, flat out miscalculations whether intentional
or accidental are not only difficult to ignore, but outright
intolerable.
Initially, I wanted to give the benefit of the doubt to the Corps.
I'd like to quote my friend Senator Voinovich, who at a Corps budget
hearing last year said, ``fool me once, shame on you. Fool me twice,
shame on me.'' Enough chances have been given to the Corps to take
meaningful steps internally to address concerns.
One cannot overlook reports in 1999, 2000, 2001, and most recently,
last week, issued by such impartial, non-partisan institutions such as
the National Academy of Sciences, the General Accounting Office, the
Army Inspector General, all of which contain the same message:
something is not right in the Corps. Something is broken. And it needs
fixing.
It is clear to me now that legislation is necessary to help the
Corps fix what's broken. I want to work with the Administration and my
colleagues on the Committee to negotiate something meaningful, yet
effective. I am sure you all know by now that I introduced legislation,
``the Corps Modernization and Improvement Act'' to reform the Corps. In
fact, I would like to thank my colleague and co-sponsor, Senator
Feingold, for joining us here today to give his views on the issue. I
have to credit him with first bringing the issue to my attention 2
years ago when we were on the Senate floor considering the 2000 WRDA
bill. I look forward to working with him to usher Corps Reform through
this committee and the Senate.
One theme repeated in the written testimony of those who are
opposed to reforming the Corps is that the Independent Peer Review
process will unnecessarily delay the study process and will raise
project costs. I would like to quickly address those concerns.
First of all, Peer Review would not apply to each and every project
that the Corps constructs. I view this as only applying to a small
handful of projects that for some reason or another merit further
external review. Also, the way the provision is structured in my bill,
the review would be conducted concurrently with headquarters review. It
is ridiculous to think that a 180-day concurrent review is going to add
years to the study process. Unless of course, that review reveals major
flaws in the project analysis, in which case, the project should not go
forward until the study is revised anyway.
Many have asked me why I am not waiting for recommendations from
the National Academy of Sciences, which is due to issue a report this
summer on Independent Review. For one, I think I understand enough
about the issue to formulate a meaningful procedure. Second, if the
Academy comes out with a recommendation that is dramatically different
than what I have in my bill, I will look at revising my provision as
the WRDA bill moves through the legislative process. Finally, I think
this issue is important enough that it is worth moving forward now.
In closing, let me make my intentions clear: there will be no WRDA
2002 without Corps Reform. In case you didn't hear that, I repeat: NO
WRDA WITHOUT CORPS REFORM. With that said, for those who are opposed,
instead of issuing threats to hold up any WRDA bill that includes
reform, work with me, and work with the community that supports Corps
Reform to resolve our issues so that we can attempt to reach a workable
compromise.
With that said, I look forward to the discourse we are about to
hear.
Senator Jeffords. Senator Bond.
OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, U.S. SENATOR
FROM THE STATE OF MISSOURI
Senator Bond. Thank you very much, Mr. Chairman, for
calling this hearing. Secretary Brownlee, General Flowers,
without taking the matter lightly, the last time I saw you here
we had a good man who had to resign from office. So let me say
from the outset that I think very highly of the Office of
Management and Budget. I am here not to bury them, but to
praise them faintly, and I am sure that no one other than
Senators Reid and Domenici could write a better budget for the
Corps. Having said that, we intend to help Senator Reid and
Senator Domenici.
Mr. Chairman, you and Senator Smith, along with Senators
Inhofe and Reid, received a letter sent to the committee
recently saying that any legislation that would make a costly,
lengthy and bureaucratic process more costly, more lengthy, and
more bureaucratic, we will object to on any water resources
bill that includes those provisions, and we will use whatever
tools are necessary to prevent it from becoming law. That was
signed by myself, Senator Lott, Senator Lincoln, Senator
Carnahan, Senator Warner, Senator Cochran. I would like
unanimous consent to add this to the record of the hearing.
Senator Jeffords. Without objection, it will be entered.
[The referenced document follows:]
U.S. Senate,
Washington, DC, May 13, 2002.
Hon. James M. Jeffords,
Chairman, Committee on Environment and Public Works,
Washington, DC.
Hon. Bob Smith,
Ranking Member, Committee on Environment and Public Works,
Washington, DC.
Dear Chairman Jeffords and Senator Smith: Legislation was
introduced recently for the ``modernization and improvement'' of
critical programs administered by the U.S. Army Corps of Engineers.
While we do not question the intentions of the bill sponsors, we
believe this legislation would make a costly, lengthy, and bureaucratic
process more costly, more lengthy, and more bureaucratic. Our
constituents cannot tolerate this event. As the Subcommittee and
Committee begin to formulate a Water Resources Development Act, we
alert you that we will object to any water resources bill that includes
provisions that make it more difficult for our citizens, particularly
poor citizens, to get flood control, navigation, recreation and
environmental projects approved.
As you know, projects administered by the U.S. Army Corps of
Engineers are critical to the safety, economic health and environmental
protection of many regions of the country. Water transportation is low
cost, safe, relieves highway congestion, requires less fuel, and causes
less air pollution than alternatives. Flood control projects have
prevented nearly $500 billion in flood damage since 1959 returning $6
for every $1 invested which does not factor in the value generated by
economic activity such projects permit. For many rural and urban
communities, flood protection is essential to their safety and economic
opportunity.
As citizens who live in states that rely on Corps projects
understand firsthand, the existing process is immensely cumbersome.
Multi agency review, analysis and consultation takes not days or months
but years and in some cases, decades. There are extensive and repeated
opportunities for review and extended public comment as well as
increasingly difficult environmental and local cost share requirements.
Benefit cost and local cost share requirements, in effect, typically
mean that the Federal Government may help provide flood protection to
wealthy communities but will rarely, if ever, protect poor communities
no matter the personal risk and economic hardship they face. After all
these hurdles are met, there must be specific congressional
authorization and multi-year appropriations and oversight. The effect
of so-called ``reform'' legislation is to make an excruciatingly
difficult process more difficult.
Additionally, Section 216 of the P.L. 106-541 requires the National
Academy of Sciences to make recommendations regarding independent peer
review of feasibility reports and a review of methods of project
analysis. Prior to recommendations from the Administration and
completion of the NAS recommendations, it would be premature to
legislate prescriptive mandates.
We understand that many members of the Senate desire projects in
WRDA, but the cost of raising the bar for the most needy in our regions
compels us to use all the tools of the Senate to prevent it from
becoming law. We believe it is important that you understand the extent
of our opposition at this early opportunity.
Sincerely,
Christopher S. Bond.
Trent Lott.
Blanche L. Lincoln.
Thad Cochran.
John W. Warner.
Jean Carnahan.
Senator Bond. Thank you.
Mr. Chairman, I would agree with the Senator from New
Hampshire that the delays in approving Corps projects are
intolerable. If there is some way we can speed up the process
and make sure we get a judgment one way or the other so they do
not languish for years, as you will hear from one of the
witnesses before us today on the next panel, I think we might
be able to do something. But if my sense is right, if this
political process is going down the line of making it more
bureaucratic and stifling even more the ability to develop
needed flood control and other Corps projects, making it more
expensive and problematic for communities to get flood
protection, then we probably just won't have a WRDA bill this
year. I think I have bipartisan support from many regions to
resolve this on the floor if necessary. I do not intend to pick
this fight, but I respectfully advise that I am ready, anxious
and with energy and enthusiasm will join it.
Secretary Brownlee and General Flowers, we have a
referendum here in the Senate on the Corps. It is called the
Energy and Water Appropriations bill. As you know, on a
bicameral, bipartisan basis, Congress rejects the inadequate
budgets sent up by Democrat and Republican Presidents--oh,
excuse me--I forgot that about OMB. But this year, there are
currently hundreds of adds in that bill. As I looked at the
bill, I saw adds for projects in Nevada, New Hampshire, New
Mexico, Ohio, New York, California, Montana, Delaware,
Pennsylvania, Idaho, Virginia and Missouri--just to name some
random States. I am sure that Chairman Reid could tell us how
many more requests they had than they were able to fund.
Now, we see a strong editorial opposition to the Corps.
Well, Washington, DC. and New York City and St. Louis, MO
filled in their abundant wetlands over the previous century. So
it is no surprise that newspapers in those regions want to pull
up the ladder now that they are protected, and their economies
are prosperous and people protected. But I hope you understand
your job is to bear in mind that some people have been left
behind. Mr. Robinson of Pinhook is just one of those people,
and the people he represents. I hope you will listen to him.
We are at war and experiencing an economic slow-down,
facing more trade competition, looking for more opportunities
to increase family income and improve our communities. I think
that is why Congress authorizes then funds studies, authorizes
then funds design, authorizes then funds construction, and then
funds O&M. Some do not like the way the benefit-cost ratio is
calculated. I don't either, because it is far too stingy, takes
far too much time and it is rigged to protect the haves and
leave behind the have-nots. The day that Congress does not want
water projects is the day that we do not need to do an Energy
and Water bill. If someone would like me to take that
suggestion and share it with Chairman Byrd, I would be happy to
do so.
I thank the Chair.
[The prepared statement of Senator Bond follow.]
Statement of Hon. Christopher S. Bond, U.S. Senator from the
State of Missouri
Mr. Chairman, Secretary Brownlee, General Flowers, without taking
the matter lightly, the last time I saw you we had a good man resign
from office so I say from the outset that I think very highly of the
Office of Management and Budget and I am sure that no one other than
Senator Reid could write a better budget for the Corps.
Mr. Chairman, a letter was sent to the committee several weeks ago
signed by Senators Lott, Cochran, Warner, Lincoln, Carnahan and myself.
Mr. Chairman I ask UC to enter the letter into the Record.
Mr. Chairman, I think I can see where this political process is
going and I predict that if the WRDA bill includes legislation to make
it harder and more expensive and problematic for communities to get
flood protection, then we will not have a WRDA bill this year. I
believe I will have bipartisan support from many regions to resolve
this on the floor, if necessary. I didn't pick this fight but I am
ready, respectfully and enthusiastically, to join it.
Secretary Brownlee and General Flowers, every year there is a
referendum on the Corps and it is reflected in the Energy and Water
Appropriations Bill. There, as you know, on a bicameral and bipartisan
basis, the Congress rejects inadequate budgets sent up by Democrat and
Republican Presidents. This current fiscal year, there are hundreds of
``adds.''
I see adds for projects in Nevada, New Hampshire, New Mexico, Ohio,
New York, California, Montana, Delaware, Pennsylvania, Idaho, Virginia
and Missouri--just to name some random states. Washington, DC and New
York, City and St. Louis, MO filled in their abundant wetlands over the
previous centuries so it is no surprise that their newspapers want to
pull up the ladder now that their regions are developed and their
economies are prosperous and people protected, but your job is to bear
in mind that some people have been left behind such as Mr. Robinson who
we will hear from later.
We are at war and experiencing an economic slow down and facing
more trade competition and looking for more opportunities to increase
family incomes and improve our communities. That is why Congress
authorizes then funds studies; authorizes then funds design; authorizes
then funds construction and then funds O&M. I know that some don't like
the way the Benefit/Cost Ratio is calculated. I don't either because it
is far too stingy and it is rigged to protect the haves and leave the
have-nots behind. The day that Congress doesn't want projects is the
day we don't do an Energy and Water bill and if someone would like me
to take that suggestion to Chairman Byrd, I can do so.
On behalf of mayors and farmers and shippers and communities, I
will continue to press the bipartisan support for modernizing our water
infrastructure.
Senator Jeffords. Senator Reid.
OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE
STATE OF NEVADA
Senator Reid. Thank you very much, Mr. Chairman, Senator
Smith.
I look forward to working with you both and the entire
subcommittee, including Ranking Member Inhofe, as we set about
writing a WRDA bill this year. Traditionally, this committee
works off the Administration's WRDA proposal, putting its
imprint on that proposal. We have not received that proposal as
of yet, and we plan to move forward in writing a bill
regardless. I am happy to know you are going to do that, Mr.
Chairman. The WRDA bill is very important, and especially
important to me and I think the Western Senators generally.
Large Corps projects tend to get attention when we write our
WRDA bill, but some of the relatively small Corps projects can
have a big impact in Nevada and in other places.
I am happy to see Senator Feingold here. I am happy--I am
impressed that he would take the time to come into the
committee about which he does not serve to give us his input. I
think we need to do more of this in the Senate. I have often
felt that if we had more non-agriculture Senators involved in
writing the agriculture bill, we would have a much better
agriculture bill. But the fact is that people attend who tend
to be involved in agriculture on that committee, even though it
affects all the States. The same applies here. We tend to get a
lot of people who are involved in these water projects from
States where it matters more, and we do not get enough input
from other Senators who are not. So anyway, Senator Feingold, I
am glad you are here.
One program we authorized in the last WRDA bill has been
tremendously important to my State. Section 595 of that bill
authorized design and construction systems for water-related
environmental infrastructure and resource protection in rural
communities. We have helped a number of small communities meet
their water resource needs through this program. Another
program of interest to me is the Restoration of Abandoned Mine
Sites Program. It is difficult for people to imagine this, but
in the town where I was born and raised and still have my home,
Searchlight, we have thousands of holes around. Some of them
are very dangerous. This program, the Corps helps address this
with hard-rock mines.
Fortunately, in Southern Nevada where my home is, we have
all these abandoned mines, it is very rare that there is water
in any of them. There is just so little water there. But where
this works so well, this RAMS Program, Restoration of Abandoned
Mine Sites, is where there is water, so that we can help with
areas that the mines have polluted the water.
The hearing today will touch upon measures to ensure that
the Corps engages in its traditional work of navigation flood
control. I am glad to see that they do that and do it so well.
The two programs I mentioned above do not necessarily fall
within the original mission of the Corps, yet the Corps has
provided valuable assistance to Nevada through these programs.
We should be mindful that the so-called mission creep to one
Senator may be a very important, well-run program to another
Senator.
Other measures proposed for consideration include those
that would help ensure that Army Corps projects are
economically and environmentally sound. The Army's own
Inspector General, two National Academy of Science panels, and
the General Accounting Office have offered constructive
criticism on the economic and environmental performance of the
Corps. I think we have to underline and underscore what I have
said. Constructive criticism--it has come from the Army's own
Inspector General, two National Academy of Science panels, and
the General Accounting Office. I think we should take a look at
where this constructive criticism has been offered. One example
is one of the NAS panels recommended that some Corps projects
would benefit from independent review. I think we have to take
a look at that.
So I look forward to hearing testimony on these and related
issues today as we move forward with the WRDA 2002 Program. I
would say, Mr. Chairman, members of the Corps of Engineers are
very proud people. They are proud of the work they do, as they
should be. I have found them to be some of the most patriotic
citizens that I have come in contact with back here, and that
says a lot. So I appreciate the work they do and look forward
to doing even better work in the future.
[The prepared statement of Senator Reid follows.]
Statement of Hon. Harry Reid, U.S. Senator from the State of Nevada
Thank you, Mr. Chairman.
I look forward to working with you and ranking member Smith and the
subcommittee ranking member Inhofe as we set about writing a WRDA bill
this year.
Traditionally, this committee works off of the Administration's
WRDA proposal, putting its imprint on that proposal. We haven't
received that proposal as of yet and we plan to move forward in writing
a bill regardless.
The WRDA bill is important to every member of the Senate. Large
Corps projects tend to get all the attention when we write our WRDA
bill. But some of the relatively small Corps projects can have a big
impact in Nevada.
One program we authorized in the last WRDA bill has been
tremendously important to my state. Section 595 of that bill authorized
design and construction assistance for water related environmental
infrastructure and resource protection in rural communities. We have
helped a number of small communities meet their water resource needs
through this program.
Another program of interest to me is the Restoration of Abandoned
Mine Sites (RAMS) program. Through this program, the Corps helps
address water quality problems associated with hardrock mines.
This hearing will also touch upon measures to ensure that the Corps
engages in its traditional work of navigation and flood control. The
two programs I mentioned above don't necessary fall within the original
mission of the Corps, yet the Corps has provided valuable assistance to
Nevada through those programs. We should be mindful that so-called
``mission creep'' to one Senator may be a very important, well-run
program to another.
Other measures proposed for consideration include those that would
help ensure that Army Corps projects are economically and
environmentally sound. The Army's own Inspector General, two National
Academy of Sciences panels and the General Accounting Office have
offered constructive criticism on the economic and environmental
performance of the Corps. For example, one of those NAS panels
recommended that some Corps projects would benefit from independent
review. (NAS, Inland Navigation System Planning, 2001.)
I look forward to hearing testimony on these and related issues
today as we move forward with WRDA 2002.
Senator Jeffords. Senator Inhofe.
OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM
THE STATE OF OKLAHOMA
Senator Inhofe. Thank you, Mr. Chairman. I appreciate the
opportunity to hear from our witnesses on our country's water
resources needs, as well as comments on Corps reform.
However, I will have to admit some disappointment that
instead of addressing what our water resource development
objectives should be, we are instead discussing how to reform
the Corps of Engineers. I seriously question whether this
effort will yield the results proponents envision because in
truth, much of what the Corps of Engineers does or does not do
is ultimately decided by Congress, and not by the Corps. I find
it also a little bit amusing right now that those very
individuals who are trying to introduce more deliberation, more
reports and more bureaucracy into this are the same ones who
are supporting the Everglades Restoration Act, which was I
guess one of the very largest Acts that we have ever
considered--68 water projects in one Act with not one report
from the Corps of Engineers.
This Nation is involved in a struggle for water resources.
We need to decide what our national priorities are. Do we
continue to use our national waterways for navigation and
economic development? Or do we focus our efforts exclusively on
environmental restoration? It seems to me the latter is the
direction some would have us move. Neither economic development
nor environmental restoration should automatically have a
preference.
I assure you, Mr. Chairman, that the citizens of my State
want both. We in Oklahoma, and you will have to listen to this
because I think maybe even Senator Corzine does not know this,
we are the Nation's most inland port, in my city of Tulsa,
Oklahoma. Did you know that? Yes, yes we are. So we are very
much concerned about it. It means hundreds of millions of
dollars of economic development.
We in Oklahoma were recently reminded of how much economic
activity the waterway in my State generates in terms of
commerce on the Arkansas River. It was shut down for 2 weeks
after this disastrous collapse of the I-40 bridge, and we all
were saddened at the loss of lives. In just that short period
of time, the Port of Catoosa, which is right outside of Tulsa,
lost over $4.2 million. That means $4.2 million that would have
been pumped into the Oklahoma economy--creating jobs, providing
economic opportunity, and for thousands it just did not happen.
I would have to say, Senator Smith, that is no deadbeat
waterway.
Senator Smith. I do not believe I called it a deadbeat
waterway.
[Laughter.]
Senator Inhofe. I know. It is very rarely that I disagree
with my good friend, Senator Smith. I do in this case.
Unfortunately, I get the sense that many see the Corps
reform as an opportunity to shift the Corps' traditional role
of waterway development, enhanced construction, to solely
environmental restoration. Mr. Chairman, I appreciate the need
to achieve balance between these two equally important goals. I
certainly hope that we as we move forward, we still strive for
that balance.
With that in mind, let me just quickly, rather than go over
these projects, I am going to name these projects and then
enter into the record the description that I have, if that is
all right. I make that request.
Senator Jeffords. Without objection.
First, the reconnaissance study of Sand Lake in Oklahoma;
second, the technical change to the land transfer authorized by
WRDA 1999; third, codification of the consent decree between
the Corps of Engineers and the city of Edmond regarding Arcadia
Lake; fourth, technical corrections to the definition of Indian
lands; fifth, the transfer of flow easements on Grand Lake,
Oklahoma to GRDA authority--by the way, that is a very large
lake and is not a Corps lake, never has been a Corps lake; and
last, authorization of the 12-foot depth channel in place of
what is currently a 9-foot channel. It would be very, very
meaningful.
So with that, I thank the Chairman.
[The prepared statement of Senator Inhofe follows.]
Statement of Hon. James M. Inhofe, U.S. Senator from the
State of Oklahoma
Thank you Mr. Chairman. I appreciate the opportunity to hear from
witnesses on the country's water resources needs as well as comments on
the Corps Reform. However, I will admit some disappointment that
instead of addressing what our water resource development objectives
should be, we are instead discussing how to reform the Corps of
Engineers. I seriously question whether this effort will yield the
results proponents envision because in truth much of what the Corps of
Engineers does or does not do is ultimately decided by Congress, not
the Corps.
This Nation is involved in a struggle for water resources. We need
to decide what our national priorities are . . . do we continue to use
our national waterways for navigation and economic development; or do
we focus our efforts exclusively on environmental restoration. It seems
to me, the latter is the direction some would have us move. Neither
economic development nor environmental restoration should automatically
have a preference.
I assure you, Mr. Chairman, that the citizens of my state want
both. Oklahoma has the most inland port which has provided literally
hundreds of millions of economic benefits to the state. We in Oklahoma
were recently reminded how much economic activity the waterway in the
state generates. Commerce on the Arkansas River was shut down for 2
weeks following the collapse of the I-40 bridge. In just that short
time, the Port of Catoosa, outside of Tulsa, lost over $4.2 million.
That means that $4.2 million that would have been pumped into the
Oklahoma economy, creating jobs and providing economic opportunity for
thousands did not happen. Clearly, my state cannot afford to lose the
value of the waterway.
Unfortunately, I get the sense that many see Corps Reform as an
opportunity to shift Corps traditional role of waterway development and
hence construction to solely environmental restoration. Mr. Chairman, I
appreciate the need to achieve balance between these two equally
important goals. I certainly hope that as we move forward we will
strive for balance.
With that in mind, I would to quickly highlight some needs of my
state that I hope to have included in the Water Resources Development
Act of 2002.
RECONNAISSANCE STUDY SAND LAKE IN OKLAHOMA
Sand Lake, OK was studied in 1950's and 1960's and found to be in
the Federal interest. A proposed dam would have been located at the
river mile 19.1 on Sand Creek near Bartlesville, Oklahoma. The project
was authorized by the Flood Control Act of 1962 for flood control,
water supply, water quality control, recreation and fish and wildlife.
However the project was place in deferred status in 1984 pending
resolution of conflict with the Osage Indian Nation regarding mineral
rights subordination. The project was eventually deauthorized in 1999.
Since then, it has become clear that the city of Bartlesville must
find a second water source. Currently the City gets all of its water
out of Lake Hulah which became dangerously low this past spring. The
community is interested in exploring again the feasibility of Sand
Lake. Preliminary discussions with the Osage tribe indicate the tribe
is willing to negotiate on the mineral rights.
TECHNICAL CHANGE TO A LAND TRANSFER AUTHORIZED IN WRDA99
WRDA99 (section 563) authorized the transfer of Corps property in
Marshall County, Oklahoma to the State of Oklahoma. The property
includes Lake Texoma and Denison Dam and is approximately 1.580 acres.
The property has been and continued to be leased to the state for
public park and recreation. As such, the state was made more
improvements, not the least of which is a public golf course.
In determining the ``fair market value'' of the land, the state is
requesting that the value of their improvements not be included in the
fair mark value calculations. The initial cost of the improvements were
borne by the state, the existing authorization to convey the property
would require the state to pay for those improvements again because
they greatly enhanced the value of land.
I do not believe that state should not have to pay twice and will
be requesting that a technical change be made to the WRDA99 language
that would give the state credit for investment already made in the
property.
CODIFICATION OF A CONSENT DECREE BETWEEN CORPS OF ENGINEERS AND THE
CITY OF EDMOND REGARDING ARCADIA LAKE
The city of Edmond became a cost share partner with the Corps in
1979 for recreational development and water storage facilities on
Arcadia Lake. In 1987 a dispute arose with the Corps over cost overruns
on the recreation facilities. That dispute was settled in 1992 through
a Consent Decree. Included in that Consent Decree was a provision that
the city of Edmond thought would clarify a potential future dispute
regarding the requirement to pay storage on future water use. Per the
terms of the Consent Decree, the City was not liable for payment of
future use water until such time that City decided to actually use the
water. The cost of the future use water was set at $27 million, which
the City paid in October 1999.
In November 1996, the City was notified by the Corps that they had
to beginning paying interest on the future use water storage because
the 10-year interest free period following the project's completion had
expired (projected was completed in 1986). However, the City believes
that the Consent Decree clearly stated that they were not liable for
the future water until such time as they made use of it which occurred
in 1999 when the City paid $27 million. The Corps continues to charge
the City interest from November 1996 to present. I will be requesting
WRDA02 clarify that City is not liable for the interest from November
1996 to October 1999.
TECHNICAL CORRECTION TO THE DEFINITION OF ``INDIAN LANDS''
Because Oklahoma does not have any Indian reservations, we need to
make a clarification in the law with the respect to the definition of
Indian lands. I will propose that the definition of Indian lands in
Oklahoma for Corps of Engineers purposes be modified to be consistent
that the definition for Indian lands in the Highway program.
TRANSFER OF FLOW EASEMENTS ON GRAND LAKE, OKLAHOMA TO GRAND RIVER DAM
AUTHORITY
I am working with both the Tulsa District Corps office and the
Grand River Dam Authority (GRDA) to transfer Flow Easements on Grand
Lake to the GRDA. Grand Lake is not a Corps lake and there is no
logical reason for the Corps to be involved in the lake. Both parties
are interested in seeing this transfer accomplished.
authorization of 12-foot depth on the arkansas river navigation channel
Currently the Arkansas River is authorized at 9 feet; however a
majority of the system is greater than 12 feet because the natural
scouring of the river. I will be proposing to make the channel a
uniform 12 feet (minimum) to assist in navigation. This is an
opportunity to enter into a private/public partnership because a
company along the system is willing to put some of their own money into
this project.
I think this could be used as a model for future projects and hope
the Committee will give serious consideration to this proposal.
Thank you Mr. Chairman.
Senator Jeffords. Senator Corzine.
OPENING STATEMENT OF HON. JON S. CORZINE, U.S. SENATOR FROM THE
STATE OF NEW JERSEY
Senator Corzine. Thank you, Mr. Chairman. I appreciate your
holding the hearing on the Army Corps' Water Resource
Development Program. Senator Smith's proposals are worthy of
much discussion. It is good to see my friend, Senator Feingold,
taking deep interest in this issue as well.
This is one of those things where I come actually without
strong opinion from experience. I have seen the work of the
Corps on projects such as beach replenishment and dredging of
the New York-New Jersey harbor, as critically important vital
projects that the Corps has extraordinarily good work. I look
forward to working with them in the future on important
projects.
At the same time, I have seen cases like the Delaware River
dredging project where I think frankly the analysis is not up
to the standards of some of the other work that I have seen the
Corps do. I want to clearly identify and echo Senator Reid's
comments about the people I have met in the Corps and their
commitment to patriotic duty and work to support us. But I
would say that my own experience with this one particular
project where the GAO reviewed a $311 million Delaware River
deepening project, there were serious questions about the cost-
benefit analysis that went through. Certainly, if I had looked
at that in the world that I came from, I would have been quite
frustrated with the conclusions relative to the facts that at
least were provided by the independent review.
So there is a lot of work to do here, and I think that
independent review was critical, and I think the review of the
committee is a sound process to make sure that dollars spent
are consistent with good cost-benefit analysis moving forward.
I am open to many of the ideas that Senator Smith's reform
bill proposes, such as increased public participation and
increased agency accountability. There is one particular
provisions that does in fact trouble me, and that is the cost
share flip on beach projects. Local governments simply, in my
view, cannot shoulder the cost share flip. So I would like to
see good healthy debate with regard to that topic.
Overall, I am glad we are having this hearing. I am glad we
are studying this process and the cost-benefit analysis,
business-like approach to this I think is terrific. We have got
very good professionals in the Corps and I look forward to
working with them in many years ahead.
[The prepared statement of Senator Corzine follows.]
Statement of Hon. Jon S. Corzine, U.S. Senator from the
State of New Jersey
Thank you Mr. Chairman for holding today's hearing on the Army
Corps' water resource development programs.
In New Jersey, I have seen how the work of the Corps on projects
such as beach replenishment and the New York-New Jersey harbor are
critically important to the state. And I'll be working with my
colleagues on this committee to authorize several of those projects in
this year's Water Resources Development Act.
At the same time, I have seen cases like the Delaware dredging
project, where the analysis that the Corps has used to support its
projects is severely flawed.
So while I support the Corps, I believe that we need to take a hard
look at reforms that may be needed. In particular, I am concerned about
the process by which the Corps analyzes project costs and benefits. I
say that because of my experience with the proposed $311 million
Delaware River Deepening Project, which would involve deepening 108
miles of the Delaware River from the mouth of the river at the Delaware
Bay north to the Ports of Camden and Philadelphia. In February 2001, I
asked the General Accounting Office to take a look at the project
especially the Corps' cost-benefit and environmental analysis. The
report, just released this month, confirmed our suspicion that the
Corps' economic analysis was flawed and ``. . . does not provide a
reliable basis for deciding whether to proceed with the project.''
(GAO-02-604 Report p. 2)
This independent review was critical, and I think we ought to
examine how we might systematically do independent review of the
economics of large projects.
While I am open to many of the ideas put forth in the various
reform proposals, such as increased public participation and increased
agency accountability, there is one particular provision of the bill
that troubles me the cost-share flip on beach projects. Local
governments simply can't shoulder the cost share flip, and I don't
think they should have to.
In conclusion, I look forward to hearing from our witnesses, and
working with my to move a WRDA bill this year.
Senator Jeffords. Thank you.
Senator Voinovich.
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR
FROM THE STATE OF OHIO
Senator Voinovich. Thank you, Mr. Chairman.
I think that this hearing is one of the most important
responsibilities of this committee--the biannual Water Resource
Development Act. As Chairman of the Transportation and
Infrastructure Subcommittee during the 106th Congress, I had an
opportunity to work on this Act in 1999 and then again in 2000.
Congressional authorization is an important step in the process
to develop and carry out projects that will protect our
Nation's water resources infrastructure. Equally important is
having an adequate level of funding to build, operate and
maintain these projects.
As we on this committee know, this Nation has an aging
national water resource infrastructure. If we are to continue
to ignore the upkeep, what will result is deterioration of our
locks, dams, flood control projects that are not started or not
sufficient to get the job done, and navigation channels that
are inadequate to meet the needs of modern waterway traffic.
The risk of insufficient funding is clear--disruptions in
waterborne commerce, decreased protection against floods and
damage to the environment. Simply put, we need more money.
Mr. Chairman, since this committee did not conduct a
hearing on the Corps of Engineers budget for 2003, I would like
to say a few words about it. In the Administration's fiscal
year 2003 budget, the Corps of Engineers faces overall
reductions of 4 percent over fiscal year 2002. In addition, 30
percent cuts for investigations and planning; 16 percent cuts
for construction, with virtually no starts in these two
accounts.
We have asked the Corps to do an impossible job. The 2003
funding levels are hardly adequate to make a dent in the Corps'
construction backlog, let alone address our first priority,
which is maintenance. The Administration's budget for
construction is $1.4 billion, and the backlog of construction
projects is $44 billion. That is a difference of almost $43
billion. In other words, the Administration's budget only
covers 3 percent of the construction projects that we need.
In Ohio a number of important projects are underfunded. For
example, the West Columbus flood wall, and I will not go into
the details, and I am going for this statement to be put in the
record; or the Mill Creek flood damage reduction project in
Hamilton and Butler County--others.
Senator Voinovich. Maintenance of our critical water
infrastructure should be our first priority, yet this is not
reflected in the funding. The Administration-proposed
maintenance budget for the Corps is $1.9 billion, and there is
already a backlog of over $700 million in maintenance projects
nationwide. Under the Administration's budget, the projected
backlog would total $884 million. So in other words, with this
budget we are going to end up the year with a larger backlog of
maintenance projects that need to be undertaken.
The impact of insufficient maintenance funds for Ohio,
which is the Great Lakes and the Ohio River Division of the
Corps, would exceed $100 million. The average lock chambers on
the Ohio River, for example, are well over 60 years old and
require regular maintenance.
In short, this committee has authorized a number of
environmental restoration programs for the Great Lakes and the
Ohio River which have not been included in the Administration's
budget request. One of the most significant reasons that the
Corps has such wide funding gaps between what is needed and
what is budgeted is the decreasing Federal investment in water
resource infrastructure over the last several decades.
Nevertheless, the Corps' mission has continued to expand in new
areas.
While I do not rule out and generally support increased
funding, as Senator Feingold knows, I do favor spending our
limited Federal resources on the right things. We do not
prioritize. We do not make tough decisions around here.
Moreover, I believe our infrastructure is vitally important to
our domestic security. I look forward to hearing from our
witnesses to learn how Corps projects fit into Homeland
Security and about their financial challenges.
All you have got to do is look at this chart right here and
you can see what I am talking about. This is what we spent in
1932. These are 1999--it's an old chart I used a couple of
years ago. But you can see that up in 1966, 1976, we were
spending about $5 billion. Here we are in 2000, we are talking
about $1.4 billion. If you would put up the first chart--this
is what they were supposed to be doing back in 1965. You can
see how the responsibilities are--this is flood control,
hydropower and navigation.
Put up the next chart. Now, we have got flood control,
navigation; we've got shore protection; hydropower was down.
We've got environmental infrastructure; we've got recreation;
we've got the environment; we've got FSRAP--all these new
responsibilities that are being given to the Army Corps of
Engineers, and a lot less money than they had when they began
with a whole lot less responsibilities when they were first
asked to get involved in this.
Everybody is talking about their new homeland security
issues, and yet we are already at a disadvantage in terms of
our infrastructure. What if our bridges and dams go out? We do
not need Osama bin Laden to destroy our assets in interstate
commerce or travel. We are doing it for ourselves. We are
hurting our own national security because we have not put the
resources into the things that are essential to keeping this
country going.
Today, we are also going to be hearing about legislative
proposals to reform the Corps and how they do business. I
believe that Congress and the Administration need to develop a
strategy to address the Corps' backlog and improve the
effectiveness of investments in our Nation's water resources
infrastructure. The strategy should as its priority address
projects that are economically justified, environmentally
acceptable, and supported by willing and financially capable
non-Federal sponsors.
The Corps needs to ensure that its planning process is
open, objective and inclusive, and that each project evaluation
meets the highest standards of professionalism and quality.
Furthermore, we in Congress must be able to rely on the Corps
to recommend for authorization, and funding only projects that
provide a high return on investment of taxpayer dollars for
economic development and environmental quality.
To that end, Mr. Chairman, we supported a provision in the
WRDA Act of 2000. We have asked the National Academy of Science
to conduct two crucial studies--one, an independent peer review
of Corps projects; and No. 2, a study of Corps methods for
conducting economic and environmental analysis of projects.
These results are going to be due this summer. This is what we
asked them to do. It really gets to the problem that Senator
Smith talks about.
So I think this is an important issue. I look forward to
hearing from our witnesses this afternoon about how they are
going to face up to their challenges and restore people's
confidence in the integrity of the Army Corps of Engineers.
Thank you, Mr. Chairman.
[The prepared statement of Senator Voinovich follows.]
Statement of Hon. George V. Voinovich, U.S. Senator from the
State of Ohio
Thank you, Mr. Chairman.
As Chairman of the Transportation and Infrastructure Subcommittee
during the 106th Congress, I am proud to have had the opportunity to
help develop the Water Resources Development Act of 1999 and to use
that experience in drafting and sponsoring WRDA 2000.
Congressional authorization is an important first step in the
process to develop and carry out projects that will protect our
nation's water resources infrastructure. Equally important is having an
adequate level of funding to build, operate and maintain these
projects.
As we on this committee know, this Nation has an aging national
water resources infrastructure. If we continue to ignore the upkeep,
what will result is deterioration of our locks and dams, flood control
projects that are not started or not sufficient to get the job done,
and navigation channels that are inadequate to meet the needs of modern
waterway traffic. The risk of insufficient funding is clear:
disruptions in waterborne commerce, decreased protection against floods
and damage to the environment. Simply put, we desperately need more
money.
Mr. Chairman, since this committee did not conduct a hearing on the
Corps of Engineers' fiscal year 2003 budget, I would like to say a few
words about it. In the Administration's fiscal year 2003 budget, the
Corps of Engineers faces overall reductions of 4 percent over fiscal
year 2002, and in addition, 30 percent cuts for investigations and
planning, and 16 percent cuts for construction with virtually no ``new
starts'' in these two accounts.
We have asked the Corps to do the impossible. The proposed 2003
funding levels are hardly adequate to make a dent in the Corps'
construction backlog, let alone to address our first priority,
maintenance. The Administration budget for construction is $1.4 billion
and the backlog of construction projects totals $44 billion. That is a
difference of $42.6 billion. In other words, the Administration's
budget covers only 3 percent of the construction projects needed.
In Ohio, a number of important projects are under-funded. For
example, the West Columbus Floodwall, which would provide flood
protection to the downtown area of Columbus, would receive only one-
third of the required $7.4 million needed to complete the project in
fiscal year 2003. The Corps has been involved with the construction of
this project since 1989. The project is a wise investment that will
prevent lost of life and property for approximately 17,000 residents
and more than 6,000 homes and businesses located in the current flood
plain. Most of these homes and businesses remain at risk until
floodwall construction is completed.
In addition, the Mill Creek Flood Damage Reduction project in
Hamilton and Butler Counties, Ohio needs $9.4 million this year to
protect a priority flood control area, but the President's budget only
includes 11 percent of what is needed (only $1.1 million) to fund the
Corps' portion of next year's scheduled activities.
Maintenance of our critical water infrastructure should be our
first priority, yet that is not reflected in the funding. The
Administration's proposed maintenance budget for the Corps is $1.9
billion and there is already a backlog of over $700 million in
maintenance projects nationwide. Under the Administrations' budget, the
projected backlog would total $884 million. So instead of reducing the
maintenance backlog, we are adding to it.
The impact of insufficient maintenance funding for Ohio, which is
in the Great Lakes and Ohio River Division of the Corps, would exceed
$100--million or 11 percent of the total backlog. This is a serious
problem. The average lock chambers on the Ohio River, for example, are
well over 60 years old and require regular maintenance.
In short, this committee has authorized a number of environmental
restoration programs for the Great Lakes and the Ohio River which have
not been included in the Administration's budget requests. Fortunately,
Congress has appropriated small amounts of funding for these worthy
programs. Still, I believe Congress and the Administration can do more
to fund these programs to protect and restore the ecosystems of the
Great Lakes and Ohio River and to protect our domestic infrastructure.
One of the most significant reasons that the Corps has such wide
funding gaps between what is needed and what is budgeted is the
decreasing Federal investment in water resources infrastructure over
the last several decades. Nonetheless, the Corps' mission has continued
to expand into new areas. While I do not, as a general rule, advocate
increased levels of Federal spending, I do favor spending our limited
Federal resources on the right things.
Moreover, I believe our infrastructure is vitally important to our
domestic security. I look forward to hearing from our witnesses this
afternoon to learn how Corps projects fit in with homeland security and
about their financial challenges.
But all we need to do is compare recent funding levels. [CHART:
Here is a familiar chart and one I've used before.] Our capital
investment in the Corps of Engineers has dropped dramatically over the
years. In 1966 at its peak, the appropriation was $5 billion and by the
1990's it averaged only $1.6 billion. For fiscal year 2003, the
administration's construction request is $1.4 billion. So we're
spending less even less than we were a few years ago, and we're asking
the Corps to do more things. We've expanded the mission for the Corps
of Engineers substantially and given them less money. No wonder they
have serious problems.
Everybody's talking about their new homeland security issues and
yet we're already at a disadvantage in terms of our infrastructure.
What if our bridges and dams go out? We don't need Usama bin Laden to
destroy our assets and interstate commerce or travel--we're doing it to
ourselves!
Today we are also going to hear about legislative proposals to
reform the Corps of Engineers and how they do business. I believe that
Congress and the Administration need to develop a strategy to address
the Corps' backlog and improve the effectiveness of investments in our
nation's water resources infrastructure. This strategy should as its
priority address projects that are economically justified,
environmentally acceptable, and supported by willing and financially
capable non-Federal sponsors.
As the former Chairman of the subcommittee with jurisdiction over
the civil works of the Corps, I know very well how the Corps has been
scrutinized and criticized over the last couple of years. At the same
time, the Army Inspector General has substantiated allegations that
officials of the Corps exerted improper influence and manipulated a
cost-benefit analysis in order to justify lock extensions on the Upper
Mississippi River--Illinois Waterway.
These findings raise doubts about the integrity of the Corps'
project evaluation and development processes. Quite frankly, there are
many in Congress who have lost faith in the Corps. I believe, however,
that the Corps plays a vital role in navigation, storm-damage
mitigation, and environmental restoration throughout the United States
and that we should assess the situation thoroughly and fairly before we
insist on sweeping reform.
The Corps needs to ensure that its planning process is open,
objective, and inclusive, and that each project evaluation meets the
highest standards of professionalism and quality. Furthermore, we in
Congress must be able to rely on the Corps to recommend for
authorization and funding only projects that provide a high return on
investment of taxpayers' dollars for economic development and
environmental quality.
To that end, I supported a provision in WRDA 2000 directing the
National Academy of Sciences to conduct two critical studies: (1) an
independent peer review of Corps projects and (2) a study of Corps
methods for conducting economic and environmental analyses of projects.
These results are due this summer and I look forward reviewing the
reports.
Mr. Chairman, this is an important issue and I look forward to
hearing from our witnesses this afternoon on all of the challenges
facing the Corps of Engineers and the reforms they believe are
necessary to restore confidence and integrity in the Corps' ability to
meet our nation's water resources needs. Once we have all the facts, we
will be able to determine whether it is advisable to incorporate any
reforms in the legislation for management of the Corps.
Thank you, Mr. Chairman.
Senator Jeffords. Senator Chafee.
OPENING STATEMENT OF HON. LINCOLN CHAFEE, U.S. SENATOR FROM THE
STATE OF RHODE ISLAND
Senator Chafee. Thank you, Mr. Chairman, for holding the
hearing.
I tend to believe that the Corps can make the reforms
internally, as opposed to legislatively. My experience in Rhode
Island has been that the change of the Corps over the years
that Senator Voinovich's charts showed is that they are
changing into being a more environmentally responsible entity.
It used to be in days gone by that to an environmentalist to
say the Army Corps of Engineers is coming was about the
scariest thing you could say.
Just yesterday in Rhode Island we were at a 25-acre former
drive-in movie site that at one time was a marsh and had been
filled in to become a drive-in movie theater. Now, the Corps
is--we raised the money through various entities and the Corps
is the major entity responsible for restoring that to a marsh--
a 25-acre site.
So I do think a lot of positive things are happening with
the Corps from my experience. I know there has been some
criticism on the large-scale projects, but in general I think
that they can make the reforms internally, but I am willing to
listen to the testimony this afternoon.
Senator Jeffords. Senator Warner.
OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE
COMMONWEALTH OF VIRGINIA
Senator Warner. Sorry to be just a little late, Mr.
Chairman. We were trying to get the Defense bill up. That is a
matter which Secretary Brownlee is familiar with.
Listening to the discussion of my colleagues and so forth,
I think we will have to call on General MacArthur to come back.
He started his career as a second lieutenant in the Corps. Am I
not correct on that, General? You proudly wear his emblems that
were once owned by General MacArthur. Well, Secretary Brownlee,
you spent a lot of time in the Senate of the United States as
Staff Director of the Armed Services Committee. You are
prepared to solve it. Go do it. Thank you very much.
[Laughter.]
Senator Jeffords. Senator Reid.
Senator Reid. Mr. Chairman, could I submit questions to
General Flowers and Secretary Brownlee, and have them respond
in writing?
Senator Jeffords. That is allowable.
Now we are ready to hear from our first witness. Senator
Feingold, please proceed and welcome to the committee. I know
you spent a lot of time in preparation, and we look forward to
hearing your testimony.
STATEMENT OF HON. RUSSELL D. FEINGOLD, U.S. SENATOR FROM THE
STATE OF WISCONSIN
Senator Feingold. Thank you very much, Mr. Chairman. I am
delighted and honored to appear before the Environment and
Public Works Committee today. I want to thank you, Mr.
Chairman, for honoring the commitment to a hearing on the Corps
Water Program and the need for reform of the Corps that was
made to me by the former Ranking Member, Senator Baucus and
Senator Smith during the floor debate over the Water Resources
Development Act of 2000. I am very pleased to be working with
Senators Smith and McCain on this issue. I certainly admire
Senator Smith's dedication in particular to the fiscal
responsibility, as being a driving force in his desire for
Corps reform.
As many of the statements today indicated, Corps reform is
a work in progress. Reforming the Corps of Engineers will be a
difficult task for Congress. It involves restoring credibility
and accountability to a Federal agency that frankly has been
rocked by scandals. It has been struggling to reform itself
over the last year, and in many ways is constrained by
endlessly growing authorizations and of course our rather
gloomy Federal fiscal picture.
But this is an agency that Wisconsin and many other States
across the country have come to rely upon. From the Great Lakes
to the mighty Mississippi, the Corps is involved in providing
aids to navigation, environmental remediation, water control
and a variety of other services to my State. My office does
have a strong working relationship with the Detroit, Rock
Island and St. Paul District Offices that service Wisconsin. So
let me be clear, as many of the members of the committee have,
I want the fiscal and management cloud over the Corps to
dissipate so that the Corps can continue to contribute to our
environment and our economy.
The two reforms bills now before the committee grew in part
from my experience in two legislative efforts. First, as the
committee knows, I sought to offer an amendment to the Water
Resources Development Act of 2000 to create an independent
review of Army Corps of Engineers projects. In response to the
initiative, the bill's managers adopted an amendment as part of
their managers' package that should help this committee the
additional information it needs to develop and refine
legislation in this issue through a study on peer review by the
National Academy of Sciences.
Second, I also learned of the need for additional technical
input into the Corps' projects through my efforts in working
with Senator Bond on the reauthorization of the Environmental
Management Program in the Upper Mississippi, which was the only
permanent authorization in WRDA 1999. Included in the final EMP
provisions is a requirement that the Corps create an
independent Technical Advisory Committee to review EMP
projects, monitoring plans and habitat and natural resource
needs assessments.
Mr. Chairman, I have been deeply concerned that this
provision has not been fully implemented by the Corps and I
feel that as this committee has been historically concerned
about the need to secure outside technical advice in Corps
habitat restoration programs like the EMP, it should also be
concerned about getting similar input for other Corps
construction activities.
Early this Congress, I introduced the Corps of Engineers
Reform Act of 2001, S. 646, and then as Senator Smith
indicated, I joined with him and Senator McCain and introduced
the Corps of Engineers Modernization and Improvement Act of
2002, S. 1987. S. 1987 includes many provisions that were
included in my original bill, and it codifies the idea of
independent review of the Corps, about which Senator Smith and
I agreed in the 2000 Water Resources bill.
It also provides a mechanism to speed up completion of
construction for good Corps projects with large public benefits
by deauthorizing low-priority and economically wasteful
projects. Further, it streamlines the existing WRDA 8060
authorization process. Under Senate bill 1987, a project
authorized for construction but never started is deauthorized
if it is denied appropriations funds toward completion of
construction for five straight years. In addition, a project
that has begun construction, but denied appropriation funds
toward completion for three straight years, is also
deauthorized.
The bill also preserves congressional prerogatives over
setting the Corps' construction priorities by allowing Congress
the chance to reauthorize any of these projects before they are
automatically deauthorized. This process will then be
transparent to all interests, because the bill requires the
Corps to make an annual list of projects in the construction
backlog available to Congress and the public at large via the
Internet. The bill also allows a point of order to be raised in
the Senate against projects included in legislation for which
the Corps has not completed necessary studies that would
determine that a project is economically justified and in the
Federal interest.
It is a comprehensive revision of the project review and
authorization procedure of the U.S. Corps of Engineers. Our
joint goal is to cause the Corps to increase transparency and
accountability, to ensure fiscal responsibility, and to allow
greater stakeholder involvement in their projects. We are
committed to that goal and to seeing Corps reform enacted as a
part of this year's Water Resources bill.
Mr. Chairman, I hope that as the committee examines this
issue, it also reviews my original bill, S. 646, which is
sponsored in the House of Representatives by my colleague from
Wisconsin, Representative Kind. S. 646 includes a number of
important concepts that I think are central to environmental
protection and it should be part of Corps reform. The Corps is
required to mitigate the environmental impacts of its projects
in a variety of ways, including by avoiding damaging wetlands
in the first place, and either holding other lands or
constructing wetlands elsewhere when it cannot avoid destroying
them. The Corps requires private developers to meet this
standard when they construct projects as a condition of
receiving a Federal permit. I think the Federal Government
should live up to the same standards.
Too often, and others on the second panel will perhaps
testify to this in greater detail, the Corps does not complete
required mitigation and enhances environmental risks. I feel
very strongly that mitigation must be completed; that the true
costs of mitigation should be accounted for in Corps projects;
and that the public should be able to track the progress of
mitigation projects. In addition, the concurrent mitigation
requirements of S. 646 would actually reduce the total
mitigation costs by ensuring the purchase of mitigation lands
as soon as possible.
Mr. Chairman, I feel that we need legislation to ensure a
reformed Corps of Engineers. The Corps' recently released list
of projects that it intends to review have been confusing and
the review criteria remain unclear. I think we need a clearly
articulated framework to catch mistakes by Corps planners,
deter any potential bad behavior by Corps officials to justify
questionable projects, and old unjustified projects, and
provide planners a desperately needed support against the
never-ending pressure of project boosters. Those boosters, Mr.
Chairman, include congressional interests, which is why I
believe that this committee which has sought so hard to stick
to its criteria in project authorization, and has done the
better job in holding the line in conference needs to champion
reform so that we can end the perception that Corps projects
are all pork and no substance.
I wish it were the case, Mr. Chairman, and I know that
Senators Smith and McCain share my view, that I could argue
that the changes we are proposing today were not needed, but
unfortunately, I see that there is need for Corps reform
legislation. I want to make sure that future Corps projects no
longer fail to produce predicted benefits, stop costing the
taxpayers more than the Corps estimated, do not have
unanticipated environmental impacts, and are built in an
environmentally compatible way.
I hope this committee will seek to ensure that the Corps
does a better job, which is what the taxpayers and the
environment deserve. I am pleased to have this chance to meet
with this committee and to testify, and I thank you for this
opportunity to share my view with you today.
Senator Jeffords. Thank you very much, Senator.
I have to leave now to establish a quorum in the Finance
Committee. As soon as I am not necessary for the Finance
Committee's quorum, I shall return. In the interim, Senator
Corzine will take charge.
Senator Corzine. Are there any questions from my colleagues
of Senator Feingold?
[No response.]
Senator Corzine. If not, thank you very much. I appreciate
your testimony and consideration.
We ask the next panel to please come up. Assistant
Secretary Brownlee to start, thank you.
STATEMENT OF HON. R.L. BROWNLEE, ACTING ASSISTANT SECRETARY OF
THE ARMY, CIVIL WORKS
Mr. Brownlee. Mr. Chairman, I have a prepared statement
which I would ask be entered into the record, and with your
permission I will briefly summarize that statement.
Senator Corzine. Without objection.
Mr. Brownlee. Thank you, Mr. Chairman. This is only the
second time since I left the Senate Armed Services Committee
staff last November that I have been invited to return to
testify before a committee of the Senate, an institution which
I have loved and which I so proudly served as a member of the
staff for almost 18 years.
I am privileged to appear before you today on behalf of the
Administration to talk with you about the Army Corps of
Engineers, our Nation's water resources, and charting a path
toward continued modernization of both. I have learned a lot
about the Corps of Engineers since I assumed more direct
management responsibilities for Civil Works in mid-March. Among
the things I have learned is that the distinguished history of
the Army Corps of Engineers is the history of our Nation. As
the Nation has changed its priorities and values, the Corps has
also changed as it brought these priorities to reality.
It is with this history, tradition and spirit that I
address the subject of today's hearing, Corps reform. This
Administration supports the goals of Corps reform and will work
with this committee and other interested members to ensure that
the most needed and most worthy projects are implemented, and
to improve the ways in which we formulate projects and fund
them.
I would also propose that we focus our attention on the
question that perhaps lies on a higher strategic plane. What
should our national policy for water resources be in the
future? Our continued understanding of this question is
critical to setting the future direction of the Corps. The
debate over water resources typically centers around a more
specific question. Where should we give priority to the
development of water resources for social and economic benefit,
and where should we give priority to the restoration of these
resources to their natural state? Sometimes we must choose one
over the other. Sometimes we struggle to do both. As science
and engineering evolve, we can enhance our opportunities to
find more balance between these options, and working together
make the right choices for the Nation.
We all agree that the Corps can and should modernize. But
modernization of the Corps needs to be in accordance with the
future direction of our national policy. While advances in
science and technology can move us toward a new era of more
environmentally sustainable projects and integrated water
resources management, we must develop more effective public
policies built on a new public consensus. In terms of our
Nation's priorities, the war on terrorism is and should be our
main focus. We must prioritize our national resources to ensure
that we win this war.
At the same time, we also need to protect and sustain our
Nation's natural resources. Our financial resources are not
unlimited and decisions about the most important priorities
must be made. This Administration has insisted on much stronger
coordination and cooperation among agencies within the
executive branch and wants to work more closely and effectively
with you in the Congress on the plans and policies to address
these long-term needs.
Corps reform is important. General Flowers and I agree that
the Corps of Engineers should be changed and transformed to
better serve the evolving needs of the Nation. However, reform
of the Corps will follow in a more natural and logical way if
we better define our policies and reach agreement on the right
balance on the critical priorities.
I appreciate the opportunity you have given me to testify
before this distinguished committee, recognizing that your
knowledge of these subjects far exceeds what I have been able
to learn in these past few months. I believe we have an
opportunity working together to shape the Nation's future. As
you know better than I, these are serious times and it is often
hard to concentrate on the long term when the more immediate
becomes urgent. I pledge to work with you on these important
issues to achieve a national water policy that serves the best
interests of all our citizens.
Mr. Chairman, this concludes my statement. General Flowers
and I would be pleased to address any questions that you on the
committee might have.
Senator Corzine. Thank you, Mr. Brownlee.
General Flowers.
STATEMENT OF LIEUTENANT GENERAL ROBERT B. FLOWERS, CHIEF OF
ENGINEERS, U.S. ARMY CORPS OF ENGINEERS
General Flowers. Yes, sir. I also have a statement that I
would submit for the record and would summarize orally if
permitted.
Senator Corzine. We will include it.
General Flowers. Mr. Chairman, members of the committee, it
is an honor to be before you today. I would like to state
categorically that the Corps must change. Mr. Brownlee has
articulated what I believe to be the heart of the issue. It
will be more beneficial for the country in the long run if the
transformation of the Corps is consistent with changes that
have been occurring in the Nation's priorities and values
regarding water resources.
The Corps can change, but we need your help and that of the
Administration to transform today's Corps. In previous
hearings, we have talked about too many projects on the books,
some of which do not address solutions in a contemporary way.
We need to solve this. We have, and I will bring forward for
immediate deauthorization, about $5 billion worth of inactive
projects that technically remain on our books whose designs
will not solve the original problem for which there is no
longer support. We also have some ideas on other ways to clear
some other unbuilt projects off the books.
We are also working to change the organization's internal
process and procedures. We certainly must address concerns
about economic analyses. We have had a couple of high-profile
failures recently. That is unacceptable. During the past year,
we have focused on revitalizing our planning capability within
the Corps. Our ability to systematically analyze alternatives
and make sound investment recommendations was once a major
strength. I think it is still pretty good, but not as good as
it once was and not as good as it needs to be.
The other part of this is independent review. It is
possible, in my view, to have such a review without adding
unacceptably to time and cost if that review is designed
properly. We are eagerly awaiting the study findings this
summer from the National Academy of Science that were directed
in WRDA 2000. I am optimistic that the recommendations will
provide us with a road ahead on this issue.
We are also looking forward to the second phase of the
study that will look at the state-of-the-art of the Corps
planning process. We also need to refocus the Corps with your
help and that of the Administration so that we are approaching
problems and opportunities on a watershed basis. For example, I
have restructured the controversial Upper Mississippi
Navigation Study to consider a wide range of options, from
construction of new locks to non-construction alternatives such
as system-wide environmental restoration.
We also need to ensure that the economic analyses used in
the study is current and beyond reproach. The process is being
overseen by an interagency national principles group, and so
far it is working well.
I have revitalized the Environmental Advisory Board, a
board of independent external advisers that will help us
evaluate our processes. I have established a set of
environmental operating principles that reiterates our
commitment to approach our work in a more environmentally
sustainable way. This will refocus our professionals on the
long-term goal.
Quite frankly, though, we need to do more and we need the
Congress' help if we are to truly take a watershed approach.
Right now, existing laws and policies drive us to single focus,
geographically limited projects where we have sponsors willing
and able to share in the cost of the project. The current
approach narrows our ability to look comprehensively and sets
up inter-basin disputes. It also leads to projects that solve
one problem, but may inadvertently create others. Frequently,
we are choosing the economic solution over the environmental,
when we can actually have both.
I believe the future is to look at watersheds first, then
design projects consistent with the more comprehensive
approach. We know that that will require collaboration early
and continuously, but we believe it will minimize disputes
later. So together, we need to develop and agree on criteria.
Transformation of the Corps will not be easy, but we stand
ready to work with you to address these issues.
Thank you, sir. This concludes my statement. I look forward
to your questions.
Senator Corzine. Thank you.
We will have a round of questions, 5 minutes each. I will
begin off the Chairman's inquiries that he left.
Gentlemen, in your testimony, you both indicate the Corps
must adapt to new conditions and change, and that you are
anxious to work with Congress to do so. You cast our challenge
in that regard broadly, indicating that we have to have a broad
review of our Nation's water policy before settling on agency-
level change. Why do you think this type of debate is necessary
before moving forward with changing some ways the Corps does
business? Is there something deficient in the Water Resource
Planning Act which already requires the Corps to balance
economic and environmental considerations that stands in the
way of change?
General Flowers. Sir, it is an excellent question. I think
the water basin or watershed approach will help do just exactly
what you are leading toward--by taking a more holistic
approach, by having the ability to look at all of the interests
in a basin you have a better opportunity to provide the type of
solutions that I think will be in keeping with the values of
this Nation.
In history, we have periodically done this in our country.
Comprehensive looks at the Mississippi authorized decades ago,
but it appears today that we are now being driven to and have
been on a more project-specific approach. When you are that
way, you have the tendency then to build a project that solves
one purpose and solves one problem, and may inadvertently
create another.
So having authority to work on a watershed basis would
provide us an opportunity to do better.
Senator Corzine. If there anything that exists in the Water
Resource Planning Act that stands in the way of that change
that you are suggesting?
General Flowers. No, sir, but to my knowledge we do not
have authority to conduct--we would require specific authority
to conduct water basin-wide studies.
Senator Corzine. The Corps has a growing backlog of
environmental mitigation and incomplete mitigation projects, as
documented by the General Accounting Office. This is
problematic because the Corps is the chief regulator of
wetlands under the 404 Program, and is also in charge of
ensuring that private parties mitigate wetland losses. How can
you ensure that the Corps holds itself to at least a high a
standard as it holds private parties?
General Flowers. Sir, we are working very hard in our
regulatory arena. We have asked and have been granted in the
fiscal year 2003 budget additional funds for regulatory. Our
regulators have the hardest job in the Corps. They are the face
that the public sees most often, and they are probably some of
the best environmental specialists in the business. Having said
that, we agree with findings that were made that the Corps has
not done a very good job in following up on mitigation. We
think that the additional funds provided in the fiscal year
2003 budget will help us in that area. We have committed to
holding people accountable for being in compliance with Corps
permits that are issued.
Senator Corzine. Both the 1999 and 2000 National Academy of
Sciences reports on the Corps criticized Corps planning models
and their focus on maximizing national economic benefits,
without balancing those benefits against environmental
considerations. How could you modify Corps practices to account
for the concerns of the NAS?
General Flowers. Sir, we are looking at--we are looking
forward very much to the reports that were directed in WRDA
2000 from the National Academy of Science that basically asked
them to take a very hard look at the Corps and that specific
issue. We will get the first of the reports, that on
independent review, later this summer, and the second next year
on a very holistic look at Corps processes. We are looking very
much forward to those.
In the interim, what we are doing is, we are working at an
internal look at the Corps and how we do our planning. I
mention in my testimony that it is a core competency that has
eroded some over time. So we have a task force that has been
appointed to help reestablish that core competency within the
Corps, revitalizing the training for our planners, centralizing
that planning capability so that we can have the best minds
working on all of the analysis when they are required.
I think we directed as a result of the Delaware deepening
project that you mentioned, the IG to take a very hard look at
that, and we will continue to work that in the interim.
Senator Corzine. Just one follow on--is that one of the
projects that you were referencing when you said major projects
that you were concerned about the flawed analysis?
General Flowers. Yes, sir.
Senator Corzine. Senator Smith.
Senator Smith. Thank you, Mr. Chairman.
Secretary Brownlee, welcome back in the harness.
Mr. Brownlee. Thank you, sir.
Senator Smith. It's unusual to see you sitting across the
table from me there, and not advising me on some matter that
Senator Warner is asking about.
Senator Warner. I think he prefers to ask questions rather
than answer them. Have you noticed that?
[Laughter.]
Senator Smith. General Flowers, I appreciated the spirit of
your remarks and your candor, and I take them that way. I look
forward to working with you, not against you, as we try to
address some of the problems. My objective here is not to be
out there banging away, highlighting necessarily problems, as
much as it is to discuss and to try to make them better and to
correct them.
Let me ask you, either one of you, but probably General
Flowers, a most specific question. Somebody brought up on the
panel here, it might have been Senator Bond, I am not sure,
that there is a lot of I think political pressure, at least if
it is not exerted, it would feel--you may feel that it is in
the sense of who it might be, whose district it is, whose State
it is, or whatever. If we had independent review, and I would
say to you that my objective on any kind of independent review
is not to add another level of bureaucracy. On the contrary, it
would be to expedite, rather than delay. But if we had some
type of independent review, if it would be done in a way that
did not lengthen the process, perhaps maybe, say, 6 months
while the draft feasibility is being prepared, something along
those lines. Would that remove some of the political concerns
that you might feel in addressing a problem in somebody's State
or district?
General Flowers. Sir, I do not know if it would remove
political concerns. I think the Corps is not afraid of
independent review. I testified last year that any type of
external review or independent review that might be done, as
long as it did not appreciably add time or expense to a
project, would be welcomed by the Corps. We have had a number
of our projects reviewed.
But I must state that as an organization, what we do is try
to provide the best engineering and science that is available,
and base our commendations on that. I was questioned in
testimony last year--you know, General, did you receive
political pressure when you put this budget together? The
answer is yes. But if the question is, did it cause you to
change any of your recommendations, the answer is absolutely
not. They must be based on the best engineering and science
available. That is why some of the things that have come up are
so troubling, and I understand. We need to work together to get
that fixed.
What I am saying, sir, I think is, I will make sure that
the things we do are done right, but I need some help in making
sure that we are working on the right things.
Senator Smith. At least if there is independent review, you
have got a little cover if they tend to agree with you. Right?
Let me ask you this, and maybe Secretary Brownlee could
answer this, in the situation where you have very little
traffic on a waterway, and then you see proposals to dredge it
deeper or to do more with that waterway, is it unfair to ask
those who use that waterway, that very limited waterway, is it
unfair to ask them to increase their burden for the usage of
it?
Mr. Brownlee. Senator, the decision on those kinds of
projects of course are made here. Generally, the projects get
authorized and appropriated and then the Corps ends up doing
them. The issue of fairness with respect to the expenditure of
Federal funds is one that is probably a lot bigger than I am,
but I do not know and I listened very intently to your example.
I also listened very intently when Senator Voinovich made some
of the points he made, to make a note to go back and look into
those things. Senator, the fairness of that, I do not know. We
spend a lot of money on a lot of things in this country--on
national security and economic development. As I indicated,
those decisions are usually made here by committees like this
and on the floor of the Congress. The responsibility does lie
here.
Senator Smith. General Flowers, I mentioned it, and I think
somebody else mentioned it in their remarks, the example of the
118 projects, the economic analysis that came back. Some have
said it was 80, not 118--but whether it is 80 or 118, came back
in 17 days. Can you just shed some light on that? Is there a
reason why it was only 17 days? Could you enlighten the
committee a little bit on that?
General Flowers. Yes, sir. As a result of an out-briefing
we received from the Government Accounting Office, it indicated
to me that for good governance, I needed to initiate a stop on
any projects that had economics over 5 years old, because
essentially what was found was economics that had been done
over 10 years ago and had not been properly validated or
updated. I wanted to make sure, very embarrassing, but
essentially there was no audit trail to the original benefits
that were derived for this project. So I wanted to make sure
that we did not have same situation occurring in projects where
we had done economics that were over 5 years old. There were
some 171 projects that were reviewed. Of those 171, there were
eight projects that were going to require some additional
analysis. In other words, those remaining projects, the
economics did have an audit trail and were verifiable by the
people who had done the work.
Senator Smith. Is it possible for you to provide the
committee with the economic analyses on those projects? How
much of an effort does that require?
General Flowers. Sir, yes, sir. In fact, the economic
analyses on all of those projects is public record. So
absolutely.
Senator Smith. It would be helpful to me just to see the
process, to see if we are being unfair in terms of saying you
came back in 17 days with 80 or 118 or somewhere between number
of projects. I would like to just have the opportunity just to
review that to see what your process is so that I can
understand it better. So I would appreciate it if you could
provide that for the record at some point.
General Flowers. Yes, sir.
Senator Smith. Thank you, Mr. Chairman.
Mr. Brownlee. If I could just add, sir. When this
information came to light, I would just like to point out to
the committee that General Flowers and his people came to see
me on this. They were extremely embarrassed and frustrated by
this kind of a report. Certainly, in the discussions I have had
with them they are extremely conscientious about this sort of
thing and it is horribly embarrassing to them that this
happened. But they have already taken steps to consolidate some
of their expertise in these areas to help improve. As has been
indicated before, hopefully the recommendations of the National
Academy of Sciences that this committee put in motion will help
also.
Senator Smith. Thank you very much.
Senator Jeffords. Senator Bond.
Senator Bond. Thank you, Mr. Chairman.
General Flowers, you have a lot of projects on your plate.
These are not projects you stay up late at night and dream up.
They are local and regional projects. Who brings these ideas to
you and where do you get them from?
General Flowers. Sir, you are making a great point, and
that is the Corps does not dream up any of its projects on our
own. All of these projects come forward based on some public
request, either from elected officials, local entities. Many of
them come about as a result of studies that are conducted into
the feasibility of accomplishing some goal like flood control
or environmental restoration. That is the way they come about.
Senator Bond. How many of the projects you undertake that
are not authorized by Congress, appropriated for by Congress,
are signed-off on by the President?
General Flowers. Zero.
Senator Bond. Zero--about zero--between zero and none.
General Flowers. Yes, sir.
[Laughter.]
Senator Bond. You know, there is a lot of talk about the
huge expenditures of your agency. Current expenditure for
construction is about $1.4 billion. If you look in constant
1999 dollars, back in the 1960's and 1970's we were spending
about $4 billion. In other words, this is down to just a little
over 30 percent of what it was. Senator Voinovich has noted
previously that in the last 30 years our population has grown
40 percent. Our GNP has grown by a factor of four and our water
infrastructure investment has declined by 70 percent. Now, out
of that figure, how much of the current budget, which has
already been diminished by two-thirds, is for environmental
work?
General Flowers. Sir, about 20 percent.
Senator Bond. About 20 percent. Thank you.
If government were to reduce water transportation options,
is it not obvious to say that this would be bad for shippers
such as farmers; good for our foreign competitors; and, say,
good for railroads, who also carry goods?
General Flowers. Sir, potentially.
Senator Bond. The National Academy of Science has said that
the market for American grain over the next 5 years is highly
uncertain. The market over the next century is unknowable. They
also said no one can know or predict with confidence the demand
for water transport or almost anything else 50 or more years in
the future. Are they wrong?
General Flowers. No, sir.
Senator Bond. It seems that we are being held to a standard
of what the shipments are going to be 50 years from now, and I
believe the National Academy of Sciences said what common sense
would tell us, that you cannot know and the actions we take now
are going to make a major impact on those shipments.
I am concerned about the process. Cost-benefit analysis--
almost nobody else does them. We in Congress still want to have
projects. Everybody is pushing for projects. We try to
substitute your forecasts for our judgment. It is simple for us
to tell you just to go and stack up the pennies and if there is
more in one pile than in the other, then it is deauthorized.
But it seems to me that we would be better off--you and we and
the public we serve would be better off--if the Administration
issued projected ranges of costs and benefits and options, and
laid out environmental issues, and included separate analysis
from resource agencies, and then had the Administration give
their political go or no-go recommendation, and let Congress
earn the money we are paid by determining if the projects are
or not priorities worth authorizing and appropriating, and stop
trying to determine with the false security of a mathematical
formula what should and should not be authorized.
These are judgment issues and we value your expertise. Is
there any sense in doing something like that?
General Flowers. Yes, sir. I think again working on a much
more regionalized-type approach would help us. One of the
things, for example, that we are doing on the Upper Mississippi
study is were are examining a very wide range of alternatives
with maximum input possible, running a series of scenarios.
Then we are working with a very large group to try and narrow
this group of scenarios down to as narrow a band as possible,
and then base recommendations on that, rather than on one
finite prediction on what might happen.
Senator Bond. Let me just ask one final question. Despite
the apparent holiness of a full report and benefit cost
analysis, a good number of environmental projects, many of
which I support very strongly, have no cost-benefit report. I
see the budget requests a whopping $98 million for a Columbia
River project. There are individual earmarks from members on
this committee and the Energy and Water Appropriations bill
which have none of the sacred cost-benefit analysis. We also
see the occasional combined sewer operation funding pop into
legislation. Do you see this happening? Are many of these
projects authorized, particularly in the environmental area,
without the same cost-benefit analysis that are required for
the water transportation or levee protection projects?
General Flowers. Sir, yes they are. Environmental
restoration projects do not necessarily need a positive
benefit-cost ratio to be brought forward.
Senator Bond. I thank you, General, and thank the Chair.
Senator Jeffords. Senator Corzine.
Senator Corzine. Thank you, Mr. Chairman.
Can I go back to the Delaware River dredging project, but
more in the context of how we sort through to deal with this. I
am a little troubled in what I thought I heard in response to
the last question. You are not arguing that we should not do
cost-benefit analysis, whether it is against a given project or
whether it is a broader base in our watershed proposal--or am I
hearing you say that you think those are not effective elements
of proposal evaluation?
General Flowers. It is our current evaluation process that
we use the benefit-cost analysis. I am not arguing against
using benefit-cost analysis because I think it can prove
valuable. What I was arguing for was authority to do a more
comprehensive watershed or water basin approach so that you can
lay out all of the interests and make smart decisions and lay
out priorities.
Senator Corzine. As you know, in the Delaware River
dredging project there was a 108-mile basin study, so it was
fairly comprehensive in the context of how you are describing
the situation. I am in no way saying that there are not
judgments that need to come into play. But one of those
elements that one ought to evaluate, at least in my view, in
looking at returns on dollar invested is whether the balance is
in play on the cost-benefits.
But that aside, I am troubled. How do you think we got into
the situation we did with regard to this Delaware project that
saw a flip of the benefits almost 100 percent. It was pretty
remarkable, and it is easy with 20-20 hindsight to go after
analysis. But was there interference on the political side from
those of us who sit on this side of the microphone? How did we
get into such a situation?
General Flowers. Sir, I think it is really tough to answer
that question with great knowledge and finality because the
real answer is, I am not sure, but we are working to try and
make sure that we do not have this happen again.
What you have is across the Corps right now, each one of
our districts has a planning capability and does the analyses
for projects within their district. Some of our districts have
projects frequently and large projects and are very practiced
in doing these analyses. Other districts only do them rarely,
so they may not have all of the expertise that is necessary to
do a good initial analysis. Whether that happened in this case
or not, I do not know. My suspicion is that that was a factor.
What is embarrassing is that subsequent required re-
analyses which are required by our regulations, were not
properly accomplished. I suspect what happened was there was an
initial report done more than 10 years ago and the economic
analysis was in that report. When subsequent updates were done,
they never went back and questioned those original values and
simply updated the values in the original report. So now when
we go back and try and reconstruct where those initial benefits
come from, there is no employee any longer working in that
section that did the original analyses. Very tough. So what you
try to do in the future is set it up so you never have that
happen again.
Our intent is to take a look at our planning capability,
make sure we have the best minds looking at these projects,
incorporate reviews and that is what we will do for this
particular project.
Senator Corzine. It does argue for that third party
oversight--not oversight per se, but peer review of the
analysis to make sure that it is squaring with facts and
circumstances and can be challenged, I presume, particularly on
these mega-projects.
General Flowers. Yes, sir. We have the capability, I think,
to do much of that internally--in other words, to have a review
by a body independent within the organization. Then if some
other review is deemed necessary, that is all right as well.
Senator Corzine. Thank you, General.
Senator Jeffords. Senator Inhofe.
Senator Inhofe. Thank you, Mr. Chairman.
I think that the charts that Senator Voinovich held up I
had forgotten. I had seen those before, but I had forgotten the
history of this and the funding problems. I think each one of
us up here could tell you a story about, well I would use the
Montgomery Point Lock and Dam, which is actually in Arkansas,
but it affects everything forward on up toward upstream.
I was elected to the House 16 years ago. We were talking
about it back then. Then we started in the engineering--we
started in as it progressed along. We got a little bit of
funding and then a third of the funding and then a fourth of
the funding the next time. This thing could have been done, it
is estimated, by less than one-half of what the total cost
would be today, because we just never get these things done.
That is something that if you don't do, there is no way to
predict in advance whether to the wheat farmers going one way
or the oil people going the other way, whether or not they are
going to be able to get all the way down to the Mississippi.
These things are just--we have to get some way we can get
these things done. I know that is not the purpose of this
hearing, but it is one that I hope that the general public can
look at the charts that Senator Voinovich held up and be
concerned with them.
Now, General Flowers, we are really dealing here with three
things. You have got your national security. You've got
economic development and environmental protection--three
things. How do you do all three things?
General Flowers. Sir, I think the Corps is a great
contributor in all three areas. National security--many of the
ports that we maintain are our strategic deployable ports for
this country. I think the inland waterway system gives us an
agility to move within our borders that is the envy of most of
the rest of the world.
Senator Inhofe. I might add in moving our National Guard
around from place to place, that has ended up being the most
cost-effective way of doing it, and has saved a lot of money to
other areas of defense, hasn't it, Secretary Brownlee?
Secretary Brownlee. Yes, sir.
General Flowers. We have been able to use the expertise we
have gained. We have set up an infrastructure security
partnership. It is an association of associations, several
Federal agencies, many national associations such as the
American Society of Civil Engineers, the architects, the
contractors, to come together and share information on how to
better protect the Nation's built environment. So we are making
a contribution there.
I think when you look at the economy, money that is put
into infrastructure that has a positive benefit-cost ratio does
in two ways--short-term, there is an infusion of money into the
local economies through the contracts that are done; and then
longer term to the treasury in terms of benefits realized. So I
think we contribute that way economically. So national defense
and the economy are two things that I think the Corps is a
great contributor in.
Senator Inhofe. There is a phrase that I had not seen
before, but I saw in your written statement. You said,
scenario-based comprehensive planning. So I will go ahead and
add that to a question I am going to ask. What legislative
tools and financing changes do you need to pursue this
scenario-based comprehensive planning, enhance public
participation, increase roles for peers and technical experts
in streamlining of your economic planning and engineering
processes?
General Flowers. Sir, I think what we would ask for would
be the authority to do comprehensive basin-wide studies, using
an interagency process and apply more macroeconomic and larger-
scale scenarios to take a look at outcomes. I think the
engineering and science is good enough today, sir, to do very
models that have great fidelity, using the automation, the
digital terrain data and so forth that we have, and to provide
better options to the decisionmakers for prioritizing and
making sure that we are in fact accomplishing the right work.
Senator Inhofe. Mr. Chairman, I heard Senator Corzine talk
about oversight, and I kind of whispered to Senator Smith,
isn't that what we are supposed to be doing here in this
committee--providing the oversight? I would just like to ask
you, General Flowers, what more can we do that is going to
resolve some of the problems, answer some of the objections
that are out there right now, that is precipitating the
legislation?
General Flowers. Sir, I think the committee already acted
through WRDA 2000 when it directed the National Academy of
Sciences to take a look at the Corps, to one, independent
review; and second, to take a look at the core process and make
recommendations. That is ongoing right now. So I think we are
looking forward to the results of that, and we intend to
incorporate them as we move into the future.
I think as I indicated, the Corps does need changing. We do
need transforming. I think working together, we will do that,
to make ourselves better servants of the public for the future.
Senator Inhofe. All right. Thank you.
Senator Jeffords. Senator Voinovich.
Senator Voinovich. In my statement, I noted the fact that
your budget is $1.9 billion for maintenance. It is only a
couple of years ago that we had a $454 million backlog. Now,
even with this budget it is going to be $884 million. Is that
adequate to get the job done, General? Secretary Brownlee, is
that adequate to get the job done?
Mr. Brownlee. Senator, as you well know, we have backlogs
in almost every maintenance program we have in the military,
and certainly we have maintenance backlogs in the Corps of
Engineers projects. These are a matter of priorities. As I
indicated earlier, our resources are not unlimited and we are
prioritizing on the margin in many cases.
Senator Voinovich. Well, the President's priorities are the
war on terrorism, homeland security, economic security, with
emphasis on jobs. I just wonder, have either one of you or both
of you sat down and laid out specifically for somebody over at
OMB how this maintenance budget impacts on our homeland
security, on our economic security, on jobs?
General Flowers. The answer is yes, sir. I think some
really tough calls have to be made. My job is to make sure and
articulate to the leadership what the status of the systems are
and what the requirements are, and then articulate the best
case I can, and then make sure that whatever money we are
given, we apply in the best way we can to satisfy the needs of
the American people. That is the commitment.
Senator Voinovich. Well, the fact of the matter is that,
are you going to be able to maintain the commitment? You are
talking about some strategic things that are needed here in
this country, and that are in pretty bad shape and could go
down and impact on us negatively in terms of our security and
in terms of our economic security.
Mr. Brownlee. Senator, I might add that in too many cases,
decisions are made on the margin not between things that are
not needed or not wanted, but in many cases between things that
are both needed and both wanted. As you know, decisions have to
be made here on this committee and as well as within the
Administration. I know we are doing the best we can.
Senator Voinovich. The thing that really bothers me is that
we are increasing the Defense budget 14.5 percent, domestic
budget 2 percent. I know full well that is not going to be the
case. We will add on to it. We had a budget surplus of $313
billion, now we are borrowing over $300 billion to take care of
2002, and it will be more in 2003. Somebody has got to sit down
and start looking at this. The Administration has to look at
their Defense budget. If this maintenance is very important to
you, then they may have to nick that Defense budget to put some
more money into the domestic side of this thing to deal with
the problems that you have. It is really disturbing to me that
nobody wants to do that.
Everybody wants to do everything. The Administration knows
dog-gone well that we are probably going to come up with some
more money. We are going to add to the debt and down the road
undermine our national economy. It may not happen right away,
but it is going to happen sooner or later. Son of a gun,
somebody has got to start talking about doing some of these
tough things around this country.
General, you know, his successor quit or got fired. I
understand part of it was is he told them that he did not have
enough money. I told him when he came to see me that he ought
not to take the job unless he told them, I am not taking it
unless I have the money to run the operation. It is get-down
time. I am going to be talking to Daniels about some of this
stuff in terms of these budgets.
The other thing is this $5 billion that you are talking
about. How are you going to get away with knocking off $5
billion with all the politics involved and all these people
here at this table and over in the House and Senate?
Mr. Brownlee. We didn't say we would get away with it, sir.
We said we would just . . .
[Laughter.]
General Flowers. We were asked by the committee last year,
and I think it was you and Senator Graham that basically said,
we really want you to come take a look at the projects out
there and come back to us with ones that you think. So, we have
identified $5 billion so far in projects that we do not think
meet their intended purposes any longer, and we would like to
bring them forward and have them deauthorized. We will follow
the procedure to do that, and we are prepared to do that very
soon.
Then there are some other projects that we would like to
pull together an interagency panel and have another look taken
at as to whether or not we should move these projects along or
also look at them for possible deauthorization. We would like
to work within the Administration and with the other Federal
agencies to pull together a proposal, and then vet that. But I
think that is the proper way to proceed.
Senator Voinovich. Well, I want to tell you, I am going to
help you knock off that $5 billion, even if some of them have
got to do with the State of Ohio. I was thinking, Mr. Chairman,
that maybe if we have the BRAC process where we go through an
independent group and then give them a bunch of them and say,
here, here it is, and you cannot nitpick it and choose, and you
have got to go with it.
But I think it is incumbent on us to really look at this
big backlog of the capital projects and deal with them. The
other thing is this, is that if you have got to choose between
money for maintenance and for these capital projects, I think
the maintenance has got to come No. 1. That is your everyday
stuff. If you do not take care of that, then you cannot keep
going.
So I just think that we really need to have more dialog
here, Mr. Chairman, in terms of where you are going with this
budget, because that is the most important thing, and how we
can help you with that issue.
Senator Jeffords. Thank you, Senator.
Senator Chafee.
Senator Chafee. Thank you, Mr. Chairman.
Secretary Brownlee, did you comment at all on Senator
Feingold's testimony?
Secretary Brownlee. Senator, as I said initially, we
certainly support changes within the Corps to improve their
processes and how things are done. It has been my observation
since the few months that I have been having these direct
management responsibilities and looking back over what the
Corps has done and not done in the past, the Corps pretty much
does what it is told to do. The Corps does what it is directed
to do.
The Corps has changed over time. Looking back, in fact, I
found a copy of a Miami Herald, December, 1947 which describes
the horrible floods in Florida--2,000 people homeless in Dade
County. Almost the whole southern part of Florida was flooded.
The national consensus was and the elected representatives
decided that there should be flood projects down there to
prevent that in the future. The Corps was given that mission
and they did that very effectively. They redirected that water
to the ocean, both the Gulf and the Atlantic Ocean.
Now, we find ourselves, and I just came back from there
last week. I spent Thursday and Friday both flying over the
Everglades and going up the river in one of these propeller-
driven boats. Now you find the Corps very deeply involved in
projects to restore the Everglades as near as possible to its
original state. The Corps did not dream these projects up on
its own. The Corps was directed to do this.
So I guess the message is that I find the Corps to be made
up, just like I found the people in the Senate when I worked
here, to be made up of good, honest, hard-working, dedicated
Americans trying to do the right thing. We are all working, as
I found over the years, with limited budgets. Everybody has
unfunded requirements and priorities. As you work with some of
these transformation projects in the Department of Defense, it
is the same thing. Everybody wants to go to heaven and nobody
wants to die.
[Laughter.]
Mr. Brownlee. So here we are. I was privileged--General
Flowers asked me out to speak to the Corps. I did not want to
do it until I had had the job for about a month, and I do have
another job. But what I told them was, I want you to do your
job professionally and quietly. I want you to know that we are
not trying to be a growth industry and we are not seeking new
business, but what we do, we want to be known for the
excellence and the professionalism of it. All of the people
that I have met within the Corps of Engineers, I believe, are
striving for that.
So certainly we want to improve the methods by which the
Corps does its business. I also believe, as I indicated in my
statement, that we need to work hard to try to develop a
national consensus on what our policies ought to be with
respect to our water resources. I think we are beginning to
realize that these water resources that we may have taken for
granted over the years are not infinite.
So anyway, I know this committee knows a lot more about
these matters than I do, but I do have to say that I have been
impressed by the efforts I have seen in the Corps thus far, and
their ability to do what they do with what they have.
Senator Chafee. Thank you, Mr. Secretary.
General Flowers, Senator Feingold was, I believe, talking
about specific legislation that he and Senator McCain are
introducing relevant to the Corps. Do you have a position on
that legislation?
Senator Jeffords. Are you aware of the legislation? Have
you seen it?
General Flowers. Sir, I have not reviewed in detail the
legislation. I am aware of some of the provisions.
Senator Chafee. That is fair enough.
Senator Jeffords. Can we ask you to take a look and give us
your recommendations or any comments that you have? We would
appreciate that.
General Flowers. Yes, sir.
Mr. Brownlee. Senator, I did read through the side-by-sides
of the legislation as near as I could, and those of you who
have done that know that is kind of an agonizing process, but I
forced myself to do it. The last thing I would want to do is be
critical of somebody's efforts to make something better,
because I know Senator Smith and I worked for him many years on
Armed Services Committee, and everything I saw him do was
characterized by his dedication and desire to make things
better, and tireless efforts in that regard, I might add.
But as I looked at this legislation, I just kind of jotted
down some questions that came to my mind. I might just kind of
track through those questions, if you would like, for the
committee's benefit. The first one was, how will the National
Academy of Science's recommendations on independent review,
which is expected to be received later this summer, be factored
into this bill? I know Senator Smith said he was certainly
willing to consider that, and I sure he will. I just do not
know how that would be factored in.
Are the bill's current provisions expected to be consistent
with the Academy's recommendations? I am not sure if any of us
know that at this point in time. How do provisions of the bill
directly contribute to improving the technical capability and
competence of the Corps of Engineers? Is the primary goal of
the bill to shift the emphasis of the Corps away from economic
development and more toward environmental restoration, or at
least to make it more difficult to justify economic development
projects? What would be the effect of the bill on the Nation's
marine transportation system and the resulting impact on
international trade and competitiveness? In general, how does
this legislation equip the Nation to better deal with growing
water resources challenges of all kinds?
I just submit those, not to anybody specifically, just--I
think that . . .
Senator Chafee. You do not have a firm position on the
bill--just some questions?
Mr. Brownlee. As I indicated, Senator, the Administration,
the Corps, myself--we are all willing to work--I have talked to
Senator Smith's staff--to work with the members of this
committee, the interested members. Senator Bond mentioned a
letter that had been signed which I have seen. I would
certainly expect that we work with a group, that it could
include members of that group. If there is a way to do a Corps
reform bill in that regard, we are certainly willing to pitch
in and help.
Senator Jeffords. Thank you very much, and thank you for
very, very excellent testimony. It gives us confidence when we
listen to you that we will be able to make some improvements
and have it work a little bit better.
Senator Smith. I might just say, Mr. Chairman, while they
are getting prepared to leave the table, that I take those
questions in the spirit they are intended. The objective is to
work together to hear your input, and we will go back and
review those topics that you brought up. It is also obvious
that you are not quite ready to go to heaven yet.
[Laughter.]
Senator Jeffords. Thank you very much.
We do have another panel. Obviously, we have a number of
people here--all very good, excellent witnesses. But if you
want to impress the members that are left, if you can keep your
statements to around 3 minutes, that would be appreciated.
Under the rules, you are allowed five, so I will not interrupt
you, but we would be grateful if you can do that.
Senator Smith. We will just ask you nasty questions after
it is over.
[Laughter.]
Senator Jeffords. We will start with Mr. Chase.
Senator Bond. Mr. Chairman, as I mentioned to you, I was
ready to make a Faustian bargain with you to give up my right
to ask questions if you would let me give a very brief
introduction to two good friends who are here. I have a
longstanding appointment that I have to make.
Senator Jeffords. You have a deal. You have a deal.
Senator Bond. I figured that this would be a good deal.
This would save you about three and a half minutes.
Senator Jeffords. That is right.
Senator Bond. Chris Brescia has been an expert on river
transportation issues. I hope that you will read very carefully
his very thoughtful statement. I have read it, and it will be
submitted in full for the record. It really gives an idea of
the importance of this water transportation issue.
My second friend is Mr. Jim Robinson of Pinhook, MO. He has
been working on closing a hole in a levee for 26 years. They
first testified before this body, the first testimony was by
Senator Eagleton. He has come up here time and time again. Back
in 1999, 2000, he came up after the President flew into the
delta and said we were going to protect the delta. The Vice
President's office came out, look at it--Alvin Brown of the
USDA came out and look at it. They were assured by the Council
of Environmental Quality that they were going to get it done.
After the election, it was sent back to the Corps for its
supplemental, supplemental, supplemental, supplemental study.
Mr. Robinson, it is a real pleasure to welcome you and Mrs.
Aretha Robinson. When you testify, I hope you will tell us why
your family settled where you did and why you stay. Tell us why
you, your families and your neighbors do not just do what all
the smart people have done and move to Washington, DC. to get a
job where the wetlands are already permanently destroyed, and
you do not have to worry about little issues like stopping
floods. I think that the testimony that you have given will be
very, very compelling. If anybody misses it, I will be
repeating it frequently.
I thank you, Mr. Chairman, and Senator Smith, and I thank
all of our witnesses.
Senator Jeffords. The first witness is Mr. Chase.
STATEMENT OF TOM CHASE, DIRECTOR OF ENVIRONMENTAL AFFAIRS,
AMERICAN ASSOCIATION OF PORT AUTHORITIES
Mr. Chase. Thank you, Mr. Chairman.
I have been going through my testimony trying to cut it
back, and I will do my best.
On behalf of the 85 public seaport members of the American
Association of Port Authorities, we thank the committee for the
opportunity to discuss the importance of the Corps of
Engineers' programs.
There are two points I want to leave with the committee
today. First, the Nation's marine transportation system is
highly decentralized, market-driven, and returns untold
benefits to U.S. businesses and consumers. Second, the Congress
needs to fully fund the Corps of Engineers' Civil Works Program
and authorize new navigation projects and policies that meet
the needs of the Nation's businesses and consumers. We urge the
Congress to seriously review the impacts of any proposed
changes to the procedures used to evaluate navigation projects
to avoid needlessly increasing the cost or further delaying the
construction of deep-draft navigation projects.
The deep-draft commercial ports of the United States handle
over 95 percent of the volume and 75 percent of the value of
cargo moving into and out of the Nation. All commercial ports
and navigation channels serve multistate needs. On average,
each State relies on between 13 to 15 ports to handle its
imports and exports. For example, 14 ports handle more than 1
percent of Vermont's foreign trade. Four ports are on the West
Coast, four ports are on the Gulf Coast, and six are on the
Atlantic Coast.
Between 1993 and 1997, U.S.-foreign waterborne grade grew
by 4.6 percent per year to over one billion metric tons, and
now accounts for about 20 percent of global waterborne trade
and almost 30 percent of U.S. gross domestic product. The
number of containers moving through U.S. ports doubled between
1990 and 2000, from 15.3 to 30.4 million TEUs--the unit of a
20-foot equivalent unit container. The volume is expected to
double again over the current decade.
Because of the increased efficiency provided by
containerization and the substantial investments that have been
made in new and larger vessels, ports and navigation panels,
freight rates have declined by between 52 and 72 percent in
real terms during the period of 1978 and 1998. The U.S. marine
transportation system, including its deep-draft navigation
channels, provides over 13 million jobs and $200 billion in
taxes to all levels of government.
In every sense, the Nation's public ports are partners with
the Federal Government in making these benefits happen. With
the passage of the Water Resource Development Act of 1986,
there was a dramatic change in the relationship between the
U.S. port industry and the Federal Government. For almost 200
years, the Federal Government had the sole responsibility for
maintaining and improving the Nation's navigation channels.
State and local port agencies and the private sector have
always been and continue to be fully responsible for building
and maintaining land-side facilities. In 2000, the cumulative
local investment by just public ports in facilities and
navigation channels was nearly $1.1 billion.
However, in 1986 for the first time, the ports themselves,
as local sponsors, began to pay for Federal navigation
channels. Now, ports are being called upon to invest hundreds
of millions of dollars in the development of these navigation
channels--channels that by definition benefit the entire
Nation. Despite Congress' intent that Federal water resource
projects should take into account regional economic development
benefits, the principles and guidelines for water resource
projects established in 1983 sets the maximization of national
economic developments as the definitive threshold for Federal
involvement in such projects. This policy continues even after
non-Federal interests became responsible for cost-sharing
projects. Thus, non-Federal interests are required to pay up to
60 percent of the cost of Federal navigation projects, but any
regional benefits derived from these projects may not be
included in justifying the project.
Notwithstanding the increasing financial burden ports are
carrying, we have discovered after 15 years of working with the
policies established in WRDA 1986 that there are inherent flaws
in the relationship between the local sponsor and the Army
Corps. For example, local sponsors are required to provide
assurances that legally cannot be given under State
constitutions, such as open-ended indemnification of the
Federal Government. In other cases, local sponsors are called
upon to arrange for the relocation of certain utilities which
puts this law in conflict with the 1899 statute that would
require the utilities to relocate their own facilities when
they would hinder or obstruct navigation.
In our written testimony, we provide additional specific
areas of concern with the provisions of WRDA 1986 and recommend
specific amendments that will correct these problems.
Finally, we are greatly concerned by proposals to alter the
procedures the Corps of Engineers uses to evaluate water
resource projects. We believe many of these proposals will add
to the complexity in evaluating projects and increase the cost
and time needed to study and build these projects. The Federal
Government has always built navigation projects in an effort to
spur economic development for the benefit of the whole Nation.
Congress should not abandon this principle now when the world's
markets have never been more open and the promise of global
trade has never been brighter for bringing prosperity and
freedom to all corners of the world.
Thank you, Mr. Chairman. That concludes my remarks.
Senator Jeffords. Thank you for an excellent statement.
Now, we turn to Montgomery Fischer. Monty, how are you?
Glad to have you here--the Director of Water Policy for the
National Wildlife Federation. Good to have you with us, and
please proceed.
STATEMENT OF MONTGOMERY FISCHER, DIRECTOR OF WATER POLICY,
NATIONAL WILDLIFE FEDERATION
Mr. Chase. Thank you, Mr. Chairman.
Chairman Jeffords, Senator Smith, members of the committee,
thank you for the opportunity to present the National Wildlife
Federation's views on proposals for a Water Resources
Development Act. As the Chairman has just noted, I am
Montgomery Fischer, Policy Director for Water Resources at NWF.
I have 30 years of experience working on water resources
protection. After graduating from the University of New
Hampshire, I worked as a commercial fisherman, as well as in
government, academia, and the nonprofit sector.
Mr. Chairman, the Corps has a vital role to play in
managing our Nation's water resources. However, much of our
Nation's wildlife are suffering as a result of artificially
altering critical aquatic habitat. Through its Civil Works and
regulatory programs, the Corps has often had devastating
impacts on the health of aquatic ecosystems. In my written
testimony, I have described our serious concerns about a large
number of Corps projects that could result in unacceptable
environmental damage and unnecessary costs to taxpayers.
There is a serious and growing crisis in public confidence
in the projects and programs of the Corps. Any new WRDA bill
must address this issue to restore the public's confidence and
trust. With the right direction from Congress, the 21st century
Corps can become the Nation's premier environmental restoration
and protection agency. The National Wildlife Federation
congratulates Senator Smith, Senator Feingold and Senator
McCain, who have cosponsored Corps reform legislation,
particularly S. 1987, the Corps of Engineers Modernization and
Improvement Act, and S. 646, the Corps of Engineers Reform Act.
Mr. Chairman, these bills contain critically needed common
sense reforms that improve and modernize the way the Corps
responds to the Nation's water resources needs. The bills
improve the Corps' accountability, modernize its principles and
practices, improve mitigation of wetlands, and improve the
Corps' overall fiscal responsibility. No WRDA should move
forward without incorporating these basic, common sense
reforms.
I will now make five brief points highlighting some of the
key reforms that we are urging Congress to incorporate in the
next WRDA. First, Mr. Chairman, over the past decade, the
Corps' own internal review process has been significantly
weakened from what was already a weak and inadequate process.
Without a strong Washington-level technical and policy review
of Corps documents and plans, there is too much potential for
the national interest to get lost along the way, as evidenced
by the Upper Mississippi navigation expansion, the Delaware
River Deepening Project, and a number of others.
Mr. Chairman, the Delaware Deepening Project represents not
only an appalling failure by the district to apply the Corps'
current planning requirements, but also a complete failure on
multiple occasions by the division headquarters to catch gross
abuses, basic errors and a 300 percent overstatement of Project
benefits. Something is terribly wrong. A system of independent
project review, a critical element in both S. 1987 and S. 646,
would greatly strengthen the Corps' programs. It can take place
without delaying the overall planning process and would help to
restore confidence in the agency.
The second issue is the need to update the Corps' planning
guidelines. The 1983 principles and guidelines have been frozen
in time for almost 20 years. At the same time, economic and
environmental sciences have evolved in response to changing
public needs and attitudes toward the environment and natural
resources. The National Wildlife Federation urges the committee
to incorporate the recommendations contained in the 1999
National Academy of Science's New Directions Report, in
particular establishing ecosystem protection and restoration as
co-equal goals with economic development. S. 1987 and S. 646
include important provisions that respond to these
recommendations.
Third, the National Wildlife Federation urges the committee
to adopt the wetlands mitigation provisions of S. 646, which
would clarify the definition of ``concurrent mitigation'' and
improve standards for mitigation. We also support proposals in
both bills that would redirect the Corps' from claiming
benefits derived from draining wetlands. Current Corps projects
threaten to destroy hundreds of thousands of wetland acres. The
Yazoo Pump alone puts over 200,000 acres at risk.
Fourth, Mr. Chairman, in addition to independent project
review, updating the Corps' principles and guidelines, and
improving wetlands mitigation, the National Wildlife Federation
urges the committee to reduce the backlog of incomplete
projects through expedited deauthorization and prioritization,
as well as to require regional port planning to help ensure
that U.S. ports can meet national transportation needs
consistent with protecting the environment.
Finally, the National Wildlife Federation appreciates the
substantial efforts made by this committee and Congress in past
WRDAs to authorize environmental projects and programs,
particularly restoration of the Florida Everglades. We thank
Senator Smith and Senator Graham especially their leadership on
this project, and we look forward to continuing to work with
them and with you, Chairman Jeffords, to save this endangered
ecosystem. Without a focused and highly disciplined Corps
program, however, there may be insufficient resources available
for successful implementation.
Mr. Chairman, I am happy to answer any questions that you
and other members of the committee may have for me at this
time.
Senator Jeffords. Thank you again. That was an excellent
statement.
Mr. Ellis.
STATEMENT OF STEVE ELLIS, DIRECTOR OF WATER RESOURCES,
TAXPAYERS FOR COMMON SENSE
Mr. Ellis. Thank you.
Good afternoon, Chairman Jeffords, Senator Smith, Senator
Chafee. I am Steve Ellis, Senior Director of Water Resources at
Taxpayers for Common Sense, a national nonpartisan budget
watchdog group. I would like to thank you for inviting me to
testify today on behalf of two of the Nation's leading taxpayer
groups--Taxpayers for Common Sense and Citizens Against
Government Waste. I also have a supportive statement from
National Taxpayers Union, which I would like to submit for the
record, along with my full testimony.
The United States has gone virtually overnight from budget
surpluses to deficits. We are engaged in a costly and lengthy
war against terrorism. In this context, fiscal restraint is
more important now than ever before. Undoubtedly, the Corps has
faced some of the sharpest criticism in its history over the
last 2\1/2\ years, stemming from revelations that the Corps
committed serious mistakes or manipulated project evaluation
studies that could waste billions of taxpayer dollars.
Back in 1836, the House Ways and Means Committee chastised
the Agency for bungling 25 projects that were over-budget,
behind schedule and not performing as planned--and I did say
1836. As Yogi Berra put it, ``It is deja vu all over again.''
We applaud General Flowers and the Acting Assistant
Secretary's recognition that the Corps is in need of reform.
The second step in the Corps reform twelve-step program is to
allow and encourage intervention. We stand ready to work with
the Corps, Congress and the Administration. However,
credibility in the Corps can only be restored through credible
reform in the 2002 Water Resources Development Act that
achieves these four fundamental goals: make the Corps more
accountable; set clear priorities for the Corps; modernize the
project planning process; and ensure everyone pays a fair
share.
In March, Senators Smith, Feingold and McCain introduced
the previously discussed S. 1987. This comprehensive reform
proposal meets each of these four goals in a serious and
effective manner. We urge the committee to adopt S. 1987 as the
basis for reform in WRDA. The need for more accountability in
the Corps becomes more apparent by the month, as a growing list
of project studies have been found to have been manipulated or
to contain egregious errors. As an example, the GAO report on
the Delaware River Deepening Project found that the Corps had
made an appalling series of, quote, ``material errors,'' and
repeatedly cited, quote, ``miscalculations, invalid
assumptions, and reliance upon outdated information,'' that the
Corps used to overestimate benefits by more than 200 percent.
A key way to restore credibility to the Corps' project
planning process is to implement independent peer review for
costly and controversial projects, including the following
elements: independent outside review panels; integrating the
review into the existing public comment period; and capped
review costs.
There is an obvious need for Congress to set clear
priorities for an agency saddled with a $52 billion
construction backlog. Increasing the Corps budget is not a
solution to this problem, which would be like trying to bail
water out of a sinking boat with a huge hole. The system needs
to be fixed first and foremost through common sense reforms
such as a project-blind process for deauthorizing outdated,
marginal and unnecessary projects that have yet to be
constructed.
Recently, Taxpayers for Common Sense conducted an analysis
of the backlog, which found that the median project was only 24
percent constructed. The backlog slows down the construction of
all projects, whether they are good or bad. Following up on a
1999 National Academy of Sciences recommendation, S. 1987 would
also require the Corps to work with the National Academy of
Sciences in modernizing the 1983-vintage planning guidelines to
include common sense concepts like regional port planning.
Our Nation and its thinking certainly have changed since
the New Deal era, but the Corps still relies on the 1936 Flood
Control Act standards to call a billion dollar project
economically justified if the benefits outweigh the costs by
just even one dollar. Just as you would never make an
investment knowing you would get no return on your dollar,
taxpayers deserve no less.
Cost-sharing is another tool for breaking the backlog and
saving taxpayers billions. A 1995 Wharton School of Business
study found that the market-based economics and cost-sharing
rules championed by President Reagan in WRDA 1986 saved Federal
taxpayers 50 percent or more than $3 billion. The financial
effect on local communities was marginal--a 12 percent
increase--even though they were paying a significantly greater
share of the cost.
In conclusion, we recognize the Corps of Engineers' work
affects millions of Americans. Many projects have had a
positive effect, protecting countless lives from floods and
bringing the fruits of Midwestern farmers' labor to the rest of
the world. But there are also many projects that have had a
negative effect on people's lives, have harmed other industries
and users of the Nation's waters who are not the Corps'
traditional clients, and most outrageously squandered taxpayer
dollars on these activities.
The Corps must be accountable to the taxpayer. Therefore,
it is imperative that Congress enacts real Corps reform this
year. No Water Resources Development Act should pass without
reform. At risk is the public's confidence in the Army Corps of
Engineers and any hope that Congress can restrain itself from
ever-escalating pork barrel spending, even in the midst of a
very expensive and vital war on terrorism.
Thank you.
Senator Jeffords. Thank you, Mr. Ellis. We will take into
consideration obviously your comments and appreciate the work
you have done.
Dr. Dickey.
STATEMENT OF EDWARD DICKEY, Ph.D.
Mr. Dickey. Thank you very much, Mr. Chairman.
I speak today based on my two decades of experience in the
Office of the Assistant Secretary of the Army for Civil Works
and my years as Chief of Planning for the Corps of Engineers,
and my education as an economist.
Why has it become increasingly difficult for the Civil
Works Program to compete for budgetary resources? In my view,
the answer is simple. Past policies and practices have not
resulted in a uniform inventory of compelling investments and
available funds are often not applied to the best projects.
Congress needs to provide a consistent and unambiguous policy
framework and allow the executive branch to develop
recommendations to Congress within that framework. Authorizing
legislation is also the opportunity for Congress to eliminate
earlier accommodations of special interests which have so
powerfully shaped the program in the past and which now limit
its ability to compete for budgetary resources.
Looking first at the planning framework, Congress assigned
responsibility for the Corps' planning framework to the
President and the U.S. Water Resources Council in the Water
Resources Planning Act of 1965. I believe that the present
principles are carefully crafted and collectively define a
planning framework that is both powerful and simple. The
principles should be left unchanged and moreover, for reasons
that I have outlined in my written testimony, no additional
planning objectives should be specified.
Instead, Congress should direct the U.S. Water Resources
Council to review its guidelines and update them to reflect the
improvements in the economic and other evaluation techniques
and changes in law and policy that have occurred in the last
two decades.
One area in which Congress apparently is concerned is the
issue of productivity, and S. 1987 would address it through the
1.5 requirement. I think that is better addressed through
addressing the issue of the discount rate directly. The
discount rate used in the evaluation of water projects is
specified in law, section 80 of the Water Resources Development
Act of 1974. It is not based on any economic theory and it
grandfathers the discount rate for certain projects, thus
creating false expectations about the project's prospects for
future funding.
In some instances, Congress has legislated how the Corps of
Engineers is to measure certain economic benefits. Again, my
written testimony lays those out. S. 1987 would go further
toward legislating benefit procedures. Congress, in my view,
should affirm its commitment to using the best available
analytical techniques in every civil works project by
abrogating past benefit-defining provisions and by avoiding new
constraints on objective benefit-cost analysis.
One reason for the decline in the quality of executive
branch project review is that Congress has authorized dozens of
projects without waiting for completion of the report
development and review process. Except in the most
extraordinary circumstances, Congress should authorize only
those projects that have completed executive branch review.
Since the reforms of 1986, Congress has exempted particular
projects from cost-sharing, and in other cases eroded cost-
sharing formulas by requiring consideration of ability to pay
in establishing financing requirements. Congress should apply
the project-specific cost-sharing formulas to all projects
without exception or exemption.
Finally, it needs to look at the issue of demand management
to ensure that the Corps has the necessary authority to make
demand management an integral part of its management of the
Nation's inland waterway system. The Corps also needs to be
supported. We heard the Chief and the Acting Assistant
Secretary talk about reorganization. The Corps desperately
needs to reorganize its planning capability. It has tried that
in the past. It has failed because Congress has opposed it.
Congress needs to make clear that it supports that.
Finally, it needs to make clear that it supports the Corps'
own internal efforts at review reform. There is no substitute
for high quality Corps of Engineers' studies that are reviewed
through the many Federal Agency experts, and that review occurs
in the normal course of project development if Congress allows
it to work.
Mr. Chairman, that concludes my statement.
Senator Jeffords. Thank you very much, Doctor--very
helpful.
Ms. Holland.
STATEMENT OF LISA HOLLAND, STATE COORDINATOR, FLOOD MITIGATION
PROGRAMS, SOUTH CAROLINA DEPARTMENT OF NATURAL RESOURCES
Ms. Holland. Good afternoon, Chairman Jeffords and
distinguished committee members. Thank you for the opportunity
to testify before your panel today.
My comments today will focus on the areas the Association
of State Floodplain Managers believe should be considered in
the text of a reform act.
My name is Lisa Holland, and I am the Federal liaison for
the Association of State Floodplain Managers, as well as the
Manager for the floor Mitigation Programs within the State of
South Carolina's Department of Natural Resources.
The Association of State Floodplain Managers and its State
chapters represent over 4,500 State, local and private sector
officials, as well as other professionals who are engaged in
all aspects of floodplain management and hazard mitigation. All
are concerned with reducing our Nation's flood-related losses.
I will summarize our written statement, which has been
submitted for the record.
The U.S. Army Corps of Engineers is an institution with a
long, proud history. Over the years, they have been lauded and
they have been bashed. Currently, the entire agency is under
scrutiny because of some ill-advised approaches to the project
planning process. The Association of State Floodplain Managers
is neither surprised nor dismayed by what has come to light. We
have been predicting this outcome for years.
The planning process of the U.S. Army Corps of Engineers
was developed for a different era. In reality, it is premised
on a rather short-sighted expression of Federal interest, has
helped to create an unmanageable backlog of projects, and in
spite of well-laid intentions, the process inherently cannot
avoid bias and predetermined outcomes.
Reformers of the Army Corps of Engineers have come out with
proposals, some of which have merit and some which raise
concerns. One such proposal that raises concerns are proposals
associated with the independent peer review of Corps projects.
This well-intentioned, but misdirected, investment does little
more than create another layer of government with questionable
added value. In general, the types of problems the Corps faces
are either associated with bad practices, bad methods or bad
management--none of which can be fixed with an independent
review. The Association of State Floodplain Managers does not
believe that bad management is an endemic issue. However, where
it is found, the Administration and Congress should move
swiftly to restore balance to the process. What is more likely
driving the process relates to quality control and methods.
We believe that both these problems can be managed through
increased emphasis on the execution of quality control plans or
through the use of independent scientific panels to evaluate
methods. While occasional audit of Corps projects would be a
good practice, the Association of State Floodplain Managers
believes that this practice can be carried out through GAO.
Adding an independent or peer review of the Corps projects
again adds an unnecessary step in an already-cumbersome
process.
An area of positive reform is the area of cost-sharing. It
is important to understand that current Federal policy rewards
those communities and States which do the least to prevent and
solve their flooding problems. Those rewards come in the form
of Federal disaster assistance, Federal flood control projects,
and favorable cost-sharing for these actions. What this means
is current policy enables communities to do nothing but wait
for the Federal bailout or the project. This is bad policy and
is a disincentive for communities that have taken
responsibility for dealing with their own flooding problems.
The Association of State Floodplain Managers strongly urges
the incorporation of a sliding cost-share that rewards those
communities and States that actually take responsibility for
managing their own flooding problems. This concept is fair and
need not be complex. Corps staff has previously developed an
implementation strategy for a sliding cost-share, and FEMA has
over a decade of experience in a similar measure called the
Community Rating System.
The final area of reform which we wish to speak relates to
the project justification criteria, most notably the Corps'
planning principles and guidelines. Currently, the principles
and guidelines tend to be our only measure of Federal interest
in a project, and the sum total of that interest is expressed
by the national economic development benefits. An economist
will tell us that this is a perfectly rational decisionmaking
model. However, the reality is this model is too simple to
capture real-world realities.
The realities of today's national economic development
model is the least-cost solution to a problem, and generally is
not the NED alternative. The opportunity cost of Federal
investment is an inherently risky area, as opposed to less-
hazardous areas, is not considered. The model does not consider
the impact that long-term damages will have on the Federal
budget as it is related to disaster payments. NED has a role in
the decisionmaking process, but it needs to be balanced with
other planning objectives. The complexities of this problem
cannot be solved in a limited testimony and should not be
crafted on the fly through the legislative process.
What should be done, however, is to direct the
Administration to develop revisions to P&G to reflect the
current realities, broaden the approach such as the NED as part
of the decisionmaking process, and finally, directs the
Administration to consider the project formulation and delivery
process.
In closing, the Association of State Floodplain Managers
urges you to act swiftly and judiciously in modernizing the
policies of the U.S. Army Corps of Engineers in the areas of
cost-sharing and revising the outdated principles and
guidelines.
Thank you, Mr. Chairman.
Senator Jeffords. Thank you. Very good work.
Mr. Brescia.
STATEMENT OF CHRISTOPHER BRESCIA, PRESIDENT,
MARC 2000
Mr. Brescia. Thank you, Chairman Jeffords, members of the
committee. My name is Chris Brescia. I am President of MARC
2000. MARC 2000 is composed of leading agricultural, industrial
and labor groups in the Midwest, and I am pleased to appear
here to address Water Resource Development Act of 2002
proposals.
We have a proposal of our own that we are putting forward
that urges Congress to support the authorization and
construction of an initial group of seven new 1,200-foot
locks--five on the Upper Mississippi, two on the Illinois--
guidewall extensions and appropriate mooring cells. That
proposal is in more detail in my written text.
However, I want to emphasize that this proposal is limited
to the placement of new locks at only 7 out of 37 possible
locations at the lower portion of the river system just north
of the confluence of the Upper Mississippi and the Illinois
Rivers. We are not advocating new locks on the entire 1,202
miles of the basin system.
We also strongly support an enhanced environmental
restoration effort for our basin, with a reliable and
consistent funding mechanism. Our proposal's third element
calls for timely completion of a WRDA 1999-authorized
comprehensive plan designed to develop an integrated flood
control system in our basin. According to the U.S. Department
of Transportation, maritime trade is expected to double in less
than 25 years. Freight in the United States is expected to clog
the Nation's highways and our rails. Experts project grain
trade will increase two-thirds or more by 2020.
The Corps of Engineers has documented an anticipated 60
percent increase in likely tonnage movements on the Upper
Mississippi and Illinois Rivers. Our waterway system is a
logical means by which we can accommodate growth, reduce
incidence of spills, air pollution accidents, and deaths to our
population. Water traffic options save more than $700 million a
year to our Nation directly, and another $900 million in our
basin alone.
But today's river system is operating at 75 percent
capacity, with antiquated infrastructure. There is no way to
meet these future demands if we do not start modernizing our
locks immediately. Our Nation relies on this outdated system to
move over 60 percent of our export grain crop, Mr. Chairman.
Grain exports still account for a trade surplus in our balance
of payments--one of the top areas that does so.
However, a report issued by the National Corn Growers
Association on the impact of this outdated system is very
sobering. The staggering expected loss of $562 million a year
in income to farmers if we do not modernize is significant. The
loss of 30,000 jobs nationally and the increase of the Federal
deficit by $1.5 billion a year are sufficient cost-benefit
analysis for congressional action. In the words of a noted
legislator, we understand enough about this issue to move
forward, and these are extraordinary circumstances that demand
some action in this basin.
This is a basin that supports over 400,000 jobs on this
waterway system, 90,000 in the manufacturing sector. This
waterway system is critical to our future competitiveness with
the Midwestern agricultural economy. Without efficient waterway
transportation, Midwest grain exports will be lost at
considerable expense. Second, with continued increased
congestion, shippers will have to find alternatives, which
means we are going to have to move these goods via other modes,
which means that there will be higher environmental costs,
social benefits of keeping freight on the waterway will be
lost. There will be higher cost structures, lost economic
activity, increased air emissions, increased fuel consumption,
increased accidents. This is not what we in the basin want and
this is not the direction that we believe we should be burdened
with.
The indecisiveness of modernizing the Upper Mississippi
will continue to embolden our global competitors to increase
placing virgin lands into production and work to capture the
growing share of the world food market. The environmental
benefits of the waterway system, those initially created with
the construction of the lock and dam system, are declining. We
need to move very deliberately in this area in WRDA 2002 if we
are to try to reduce the reduction of lost islands, support
important backwaters and other ecosystem elements.
Mr. Chairman, there is strong support in our basin for
this. Resolutions have been passed in the five States in our
basin overwhelmingly on a bipartisan basis because they
recognize that our five States are connected to 17 others in
this Nation through this waterway system, and to the world
market. Some of the proposals that are on the table to do this
through other means than 1,200-foot locks do not meet the test
of long-term sustainability. We need to have environmental
priorities addressed in this region in connection with the
economic needs. We need your help in doing that, and doing that
now rather than waiting.
Mr. Chairman, thank you very much for listening.
Senator Jeffords. Thank you again. The work you all have
put into your statements for us really gives us confidence that
we have got some very good things to work with.
Mr. MacDonald.
STATEMENT OF TONY MacDONALD, EXECUTIVE DIRECTOR, COASTAL STATES
ORGANIZATION
Mr. MacDonald. Thank you very much, Senator. Good
afternoon.
Thank you for the opportunity to testify today, and a
special thanks to the hardy group of New England Senators who
were patient enough to sit around and listen to these remarks
this afternoon.
Since 1970, the Coastal States Organization has represented
the Governors of the Nation's coastal and Great Lakes States,
Commonwealth and territories on issues relating to improved
management of coastal development and the protection of coastal
resources.
As I listened to the testimony today and review my written
statement, it really comes down to I think three basic things
that we need to do for the Corps Water Resources Programs. One
is we need a much clearer national water resources and
shoreline policy. Although I do not ever deign to disagree with
Dr. Dickey on the details, I think part of the problem with
regard to these programs and the failure of support for them
and increased funding for them is that it is a bit of a black
box. All of the Water Resources Development Act and the cost-
benefit analysis, there is no clear identification of what the
Nation's water resources commitment is. I think as several of
the Senators indicated, it is too important not to have a clear
national policy and a clear commitment to these programs for
the future. So that is one thing I think you need to do a
little work on.
Second, and I think this is more basic, but as important,
is we need efficient project review and approval processes so
that Mr. Robinson never has to come back and visit you again,
except on vacation.
Third, I think we need a commitment to a much more
dependable and sustained funding source. I think that is
clearly the problem. It seems that we are arguing about
priorities among priorities and we are not really stepping back
and saying, what is our long-term commitment to the Nation's
water resources infrastructure, including all of the Corps
traditional missions of flood control, storm water protection,
shore protection, hazards protection, as well as navigation and
safety.
I also need to state, and I think this builds on something
that General Flowers said, that it is very important when you
look at these policies, these efficiencies and this commitment
to funding, that you transcend what is a current sort of
endemic limitation to the Corps' current single-purpose,
project-by-project approach to managing the Nation's water
resources. Even many of the reform efforts still seem to take a
single sort of stovepipe approach to try to reform the various
Corps missions.
Do not look to a more comprehensive commitment to
maximizing the Nation's both environment and economic benefits
from these projects. As I have said often to the Corps folks
that I work with, every Corps project is an environmental
project. They are fundamentally altering the resources, whether
it is for economic or other purposes. We just need to find a
way that we serve the economic needs of this country and the
coastal States, as well as the environmental baseline on which
we must rely.
But policy--I think I was very encouraged to hear General
Flowers' remarks regarding broader regional and watershed
planning. That is something the States strongly support.
However, I have to say that the policy must be supported by
enhanced partnerships with the States and a greater reliance on
the expertise of States and other local project sponsors and
coastal, watershed, and basin-wide management. This committee
has a lot of experience with those things, I think, and the
expertise of other parties, and I think the Corps could benefit
from sharing some of its expertise with us, and us with them.
There needs to be in any effort for reform for the Corps
must take into account these multi-purpose, multi-stakeholder
efforts that get beyond rigid national economic benefits
formulae and include the value of economic, cultural and social
inputs.
You have already heard a lot today about the significant
economic and environmental importance of the Corps water
resources mission, as well as the substantial economic return
to the Federal treasury that results from Corps projects. That
is all true and we strongly support that. As recently observed
by a 2001 Federal Reserve Bank of Kansas City report, the
United States is a coastal nation. It says, quote, ``The
coastal concentration of U.S. economic activity reflects a
productivity effect of access to navigable waters.'' That has
been true historically. That is true today. I think it will be
true for our future as well, so that is why this is important.
However, controversy over port development projects in
places like the Delaware River, Charleston, South Carolina, and
the Columbia River clearly demonstrate the importance of
incorporating more local and regional concerns into the Corps
planning processes, along with the consideration of national
benefits and the Federal standard of the least-cost
environmentally acceptable alternative. As has been mentioned
many times, historically Corps projects, some of them, have
undermined the integrity and function of natural littoral
systems, and the natural flow of sand and other sediment
material, resulting in sediment starvation and erosions along
the shoreline. Shoreline erosion and sea-level rise and lake-
level change will pose increasing challenges for States and the
Nation in the years ahead. It is very important that we
consider these things now.
Coastal States strongly support continuation of the
Federal-State partnership in coastal storm protection and beach
nourishment projects. Beaches are magnets for international as
well as domestic tourism and provide readily accessible
recreation and respite for millions of families from very
diverse urban and rural areas that may not have other options.
The same beaches serve, as previously alluded to, as natural
barriers for flooding, waves, and storm surges and provide
cost-efficient and environmentally preferable alternatives for
protection of life and property. A recent Corps of Engineers
study of six coastal communities in North Carolina show that
the communities with shore protection projects suffered
significantly less from Hurricane Fran. Shore protection
projects can protect lives and save money in the long run.
Very briefly to summarize, three of the specific
recommendations that CSO has made in some detail in our written
statement, I would say there need to be three changes in the
Water Resources Development Act. First, there is a need for
improved dredge material management of natural resources.
Second, there needs to be increased support for regional
sediment management planning. Last, there needs to be support
for a national shoreline study and a consistent national policy
for managing the Nation's shoreline.
Thank you very much.
Senator Jeffords. Thank you, Mr. MacDonald.
Mr. Robinson, please proceed. We have a vote on, as I said.
We still have not started the vote, so we will just keep on
rolling here. OK, Mr. Robinson, please proceed.
STATEMENT OF JIM ROBINSON, JR., PINHOOK, MO
Mr. Robinson. Chairman Jeffords and Senator Bond in his
absence, and members of the committee, again for the record my
name is Jim Robinson.
I am here on behalf of the people of Pinhook, MO. Pinhook
is located in the southeastern corner of Missouri and the
Bird's Point/New Madrid Floodway, about halfway between
Memphis, Tennessee and St. Louis, MO, just a few miles from the
Mississippi River. I have lived there most of my life. The land
that I farm was purchased by my father. When we moved from
Tennessee, my people were not allowed to own certain lands and
live in town. We were only able to purchase the land that the
Mississippi River flooded. We cleared the land with our hands
and with axes and mules. We built up our own communities, and
are proud of what we have done. Pinhook is our home and it is
what we want to pass along to my children and grandchildren.
My entire life, I have lived with floods on the Mississippi
River, destroying what I have worked for. Where we live, the
Mississippi River backs up through a 1,500 foot hole in the
levee that was left there when the levee was build in the
1930's. So every few years, the river comes up and backs
through that hole and we get flooded. I do not know how many of
you have ever been through a flood and know what it is like to
have raw sewage in your home, and what it is like when you get
out of bed in the morning to have to wade through the mess; to
have your children live in it; for them to have to ride in a
tractor-drawn open wagon through the waters just to get to the
school bus. My people should not have to live that way year
after year.
If I go north to St. Louis, I see the fine home surrounded
by big levees, or if I go south to Memphis, I see that same
thing. Those people have been able to build their levees and
protect their homes. I do not want to take away from them. I
just want some of the same thing.
There has been a project on the list for years that would
close our levee and give us some relief. We thought we were
close to ending the problem, but then in 1986 Congress raised
the local cost-share and we were told that we had to come up to
35 percent of a multi-million dollar project. We farm. Some of
our children work in small factories. We pay taxes, but we
cannot afford $20 million.
Finally, in 1993, through the Enterprise Community Program,
we were able to get some help and the local share reduced back
down to 5 percent. I thought we were going to get to close that
hole, the 1,500-foot hole. The Corps of Engineers went to work
and we were on our way. That was 9 years ago and we are still
getting flooded.
I have met with people here in Washington and they all seem
like they want to help, like they understand what we are up
against. But every time we get close, somebody from EPA, Fish
and Wildlife Services says the Corps has to go study some more.
I am tired of studying the same old mud.
[Laughter.]
Mr. Robinson. I have heard what some of you want to do to
the Corps of Engineers. All of the technical stuff is for
someone else to comment on. I want to talk to you a little
about the people that this will affect. I have lived along the
Mississippi River my whole life. I helped evacuate homes in the
flood of 1937. We worked day and night. Over the years, the
Corps has built the levees for the city areas, and has slowly
worked down to us. It has taken most of my life for them to
finally get to us. Now, after all of that work has been done,
you want to say to us that it is no more unless we pay for half
of it. You did not say that to the city folks, but after all
these years, when we finally are going to get our share you
want to cut our piece of the pie in half.
You and I both know that there is no way a farming
community in the Mississippi Delta is going to be able to pay
for half of any water project. This is not reforming the Corps
of Engineers. This is just a nice way of saying you people are
not going to get any help. It looks better in the newspaper to
say you are reforming something.
I was here in Washington over 2 years ago for a meeting
with the EPA, Fish and Wildlife, the Council on Environmental
Quality and the Corps. I was told then that the problems that
were delaying our project would be fixed. Since then, the only
ones that have not dragged their feet have been the Corps.
Every time someone comes down to look at the project, they
promise me that they are going back and find a solution, and I
never see them again. I see someone else who tells me the same
thing. But I always see the same faces from the Corps and they
come back and tell me that they are ready to build, but they
cannot because the other agencies hold them up. From where I
sit, it looks like you are trying to reform the wrong group.
[Laughter.]
Mr. Johnson. Another point that I understand that is being
considered is how the Corps figures its benefits. Some people
do not want them to use increased crop production as a benefit.
Is there something wrong with trying to make a living farming
now? I farmed all last week when the water went down, and if I
can increase how many bushels of soybeans I harvest this fall,
I think that this is good. It is good for me. It is good for my
family and it is good for the country. Farmers grow food and
pay taxes, and that has to benefit everybody.
That concludes my prepared remarks. If there are any
questions, and sorry for taking too much time. Thank you, Mr.
Chairman.
Senator Smith. Thank you very much, Mr. Robinson. As you
can see, the Chairman had to leave to go vote, and he is going
to come back and then I will leave. Senator Chafee, do you want
to ask a quick question? We apologize to the witnesses for
that, but we are trying to keep from inconveniencing you so we
can keep things flowing.
Let me just ask a quick question. Mr. Dickey, on the
legislative benefits, and we accept your comments in the spirit
they were intended and we will try to see if we can improve
what we are trying to do as a result of your expertise, but you
use the term legislative benefits. Were you referring
specifically to us saying that it ought to be 1.5 as opposed to
1.1 return for the dollar? Is that where you were coming from?
What specifically were you . . .
Mr. Dickey. Senator, I have in mind that the supervision,
and I do not remember the exact language, but to the effect it
says that, you know, you cannot count any benefit that somehow
is a private versus a private benefit. As an economist, I have
a hard time understanding what that means, since benefits are
based on the willingness of individuals to pay. The situation--
there is another example, too, of where, say, don't count any
benefits if they result from draining or altering a wetland. To
me, that says, gee, they have said wetlands are infinitely
valuable. They do not care, you know, what the tradeoff is. The
essence of good water planning is to have tradeoffs and
tradeoffs that are informed on the basis of analysis. So that
is why I really want the analysis.
Senator Smith. I think that is right. I would also say,
too, there could be benefits derived from something that are
not necessarily monetary. There may be a national security
benefit. There may be an environmental benefit. There may be
some other benefit. That is not necessarily to say we have to
get 1.5 dollars back for every dollar invested. Let me, Mr.
Fischer, on the--if I asked you to just give me one location
anywhere in the country that would have the lowest economic
priority and the greatest negative environmental impact--in
other words, someplace we ought to fix, where would that be in
all of the waterways that we have?
Mr. Fischer. The lowest economic priority, if you are
talking about a Corps project?
Senator Smith. Yes. A project out there that does not yield
very much economically in return for the dollar, but impacts
negatively on the environment.
Mr. Fischer. I would say the Yazoo Pump Project would be
the ones that we have focused on over the years as having
probably--if you measure the environmental impact on that,
along with the economic cost-benefits, that is one that we have
targeted for years as being one that just absolutely is at the
top of our list of ones that we would prefer to have just go
away.
Senator Smith. Any others? I did not mean to put you on the
spot, but any others?
Mr. Fischer. There is a whole list of them in the Troubled
Waters Report that we did over the recent years, and that
American Rivers has come out with as well. I would think that
the situation in the Missouri River also, where we are trying
to go through with a suggestion of having a better flow regime
to more adequately address natural conditions, rather than a
more limited situation there over the years, would provide
tremendous impacts. On the positive side, if I can give a
positive example, those are the sorts of examples that we look
for on both sides of the equation.
Senator Smith. Mr. Ellis, from a taxpayer's point of view,
do you accept the premise that there may be projects out there
that would not necessarily yield the dollar-plus return that we
should return, but would be acceptable because of perhaps a
national security or an environmental gain?
Mr. Ellis. I do not think you can limit it to just a dollar
for dollar return. We have to look at it in the context of the
whole project. But I do think that contrary to some comments
earlier by your fellow committee members, the benefit-to-cost
ratio is an extremely important element of any decisionmaking
process, and it informs the decisionmaking process in that even
today, you could have a project that has less than a one-to-one
B-C and still authorize it. There is nothing that precludes
that. That is just a guidance and that is a piece that is
there. We need that information. I have not necessarily seen
the case yet, but I am willing to agree that it exists and that
there may be a case. You mentioned national security, and I
think that is absolutely a potential.
Senator Smith. Ms. Holland, I am going to I think have to
recess here. I will not make the vote, and Senator Jeffords
will be back in a moment, but I was going to ask you, and maybe
you could respond when Senator Jeffords comes back. I would
like to keep it so Mr. Robinson does not have to keep coming
back here. How might a community such as Mr. Robinson's
community best take steps to combat future flooding, given the
limited financial resources that they have and live in the area
where he lives?
If I have to walk out in the middle of your answer, I
apologize.
Ms. Holland. That is OK.
Representing the State and local programs, we are the end-
users that try to tie all of the Federal and State programs
together to help the Mr. Robinsons of our States. Having
flexibility in the program so that we can combine Federal
programs to assist with Mr. Robinson's dilemma--more tools in
the toolbox. Some of the things we have talked about here today
is providing Corps reform or modernization to put more tools in
the toolbox; and the flexibility to deal with projects that may
not--that may be excluded under the current guidelines; and
looking at just having that opportunity to evaluate the
environmental impacts, along with the benefits.
Senator Smith. Thank you.
Senator Jeffords is returning and I will go ahead and go
vote. Thank you for your answer.
Ms. Holland. Thank you.
Senator Jeffords. We get pretty good at our timing after a
while.
[Laughter.]
Senator Jeffords. We have heard many recommendations today
for what is needed to reform the Corps. In your opinion--this
is for all of you--in your opinion, what is the one most
important reform that should be undertaken? We will start with
Mr. Chase.
Mr. Chase. Well, sir, respectfully, I think what the Corps
needs is more resources, more money. I think the biggest
problem the Corps has had is the downsizing in their
headquarters, which has not allowed them to do the internal
scrubbing of these projects that they need to do, and to
maintain the expertise within their districts, or to
potentially reform internally their processes so they can
concentrate their expertise. As General Flowers said, right now
each district has to have its own capability to handle all
these kinds of projects, and then they do their own reviews on
the technical adequacy, and then the higher reviews are more
policy-level reviews. I think that was largely driven by
resource constraints. So I really do not see anything in these
reforms. I am happy to talk about some of the problems we see
there, but really that will make the process work better.
Senator Jeffords. Monty.
Mr. Fischer. Mr. Chairman, I think that independent project
review. Those three words say what many of us have said here
today, and that we have heard from other panels and in other
comments. There is no question that the opportunity for
additional review and looking at the projects that are on the
books for consideration by the Corps will not necessarily hold
up, delay. But they will in fact, if done properly, may in fact
allow for better consideration and ultimately more support of
projects that are under consideration by the Corps--so
independent project review.
Senator Jeffords. OK.
Mr. Ellis.
Mr. Ellis. I would like to just reiterate what Mr. Fischer
said about independent peer review. Rather than just saying
exactly that, but put another spin on it as well, and that is
that it is not just a simple matter of the Corps having more
resources at headquarters to look at these projects. For
example, one of your predecessors so to speak, Senator Baucus,
also asked the GAO to do a review of the Oregon Inlet Jetties
Project, which should be coming out very soon. That project was
authorized in 1970 and has been defended by the Corps all this
time. I am quite confident that it will come back--I am
relatively confident that it will come back looking fairly
similar to their criticisms of the Delaware River Deepening
Project.
So I do not think that just stacking more review elements
in the Corps is the answer. I do think that there needs to be
an independent entity to look at these projects on a consistent
basis for certain types of projects that are costly or
controversial, if we are going to guarantee the taxpayers a
return on their investment and also restore some of the
integrity to the Corps' planning process.
Senator Jeffords. Dr. Dickey.
Mr. Dickey. Mr. Chairman, from my perspective, there is no
substitute for an initial high-quality Corps of Engineers
report. I think we have heard today, and these audits have
shown, that the Corps is now organized to produce those
reports. I think that is the most important thing I would do.
Then, I would combine that with allowing the executive branch
to do its review process--go through the whole process that
culminates in the Secretary transmitting a report to the
Congress. Then you have the full benefit of the whole process.
Senator Jeffords. Ms. Holland.
Ms. Holland. Modernizing the Corps' planning process,
principles and guidelines to enable more flexibility and
provide them more tools and resources that are not necessarily
financial, but just options to the local governments and
States.
Senator Jeffords. Mr. Brescia.
Mr. Brescia. Mr. Chairman, we think that many of the
concerns that have been articulated over project purpose,
benefit-cost analysis, cost-sharing are really reflective of
the lack of a national consensus about water resource
development priorities. I think the single-most thing that
Congress can do and this committee can take leadership in is
defining that, clarifying that, to really bring into clarity
the Corps' job and what their roles are and what their
objectives are. I think that the rest will follow.
Senator Jeffords. Mr. MacDonald.
Mr. MacDonald. I think making the individual purpose
projects, put them in the broader context of regional sediment
planning and regional management planning. So how does your
navigation project fit your use of dredge material and
beneficial use and flood control for the watershed? So I think
getting beyond the single-purpose projects to broader regional
and watershed planning.
Senator Jeffords. Mr. Robinson.
Mr. Robinson. Mr. Chairman, after being in this thing as
long as I have, I think they need to be let to do the things
that they have on-line to do all along, not just bypass a
certain area like my Pinhook that I speak about, for some
unknown reason.
Senator Jeffords. Thank you all. We, of course, always
leave the record open and allow ourselves time to bludgeon you
by more questions through the mail or otherwise. I want to warn
you about that, and for other members. But with that, I just
want to thank you, for I know all the work that went into
preparing your testimony, and I deeply appreciate it.
But I would say right now, we are adjourned.
[Whereupon, at 5:15 p.m., the committee was adjourned, to
reconvene at the call of the chair.]
[Additional statements submitted for the record follow.]
Statement of Hon. Tom Daschle, U.S. Senator from the
State of South Dakota
Mr. Chairman, thank you for inviting me to testify today at
this hearing. I am here to express my strong belief that
fundamental reform of the Corps of Engineers is necessary not
only to protect the nation's environment, but also to protect
the integrity of the process by which Congress authorizes Corps
projects and to restore the severely damaged credibility of the
Corps itself.
In that regard, I want to commend the Committee for taking
up the Water Resources Development Act, and for recognizing
that passage of any new authorizing legislation for the Corps
of Engineers should be accompanied by meaningful reform
legislation. I also want to encourage the Committee to include
many of the provisions of S. 1987 in the next Water Resources
Development Act. This bill is a thoughtful and justifiable
response to the ongoing problems associated with the Corps of
Engineers, and I will cosponsor it today.
My one reservation about the bill is the establishment of a
benefit-to-cost ratio of 1.5. It has been my experience that
some projects with lesser benefit-to-cost ratios are
defensible, while some with higher benefit-to-cost ratios may
not be justified. I think it is important that Congress
establish a more sensitive metric for evaluating projects than
simply increasing the minimum benefit-to-cost ratio, and I
would like to explore this issue further with the Committee.
Mr. Chairman, I have advocated reform of the Corps of
Engineers for years. In fact, in March of 2000, I introduced S.
2309, the Corps of Engineers Civil Works Independent
Investigation and Review Act, calling for an independent review
of the Corps of Engineers. That bill established an independent
commission to take a hard look at the Corps.
At the time, I was extremely concerned by evidence that the
Corps was neglecting its responsibilities to comply with the
nation's environmental laws and was systematically engaged in
producing fraudulent analyses of proposed projects to
manufacture economic justifications in cases where factual
analyses could not have supported their authorization by
Congress.
Two years ago the Washington Post published a number of
very troubling articles about the operations of the U.S. Army
Corps of Engineers. Those stories exposed the existence of
independent agendas within the Corps. They suggested cost-
benefit analyses rigged to justify billion dollar projects,
disregard for environmental laws, and a pattern of catering to
special interests.
The actions described in the Post articles raise serious
questions about the accountability of the Corps and present a
compelling case for a thorough review of the agency's
operations and management. And it is not only the Post articles
that cause me to believe this.
The Corps' current effort to update the Missouri River
Master Control Manual--the policy document that governs the
Corps' management of the river from Montana to Missouri--
illustrates not only that the Corps can be indifferent to the
environment. It also demonstrates that the close relationship
of the Corps to the barge industry often drives the Corps'
willingness to manipulate and falsify data and analyses to
protect those special interests and justify the work of the
Corps in supporting those activities.
On the Missouri River, for example, the Corps has taken
pains to protect the $7 million barge industry at the expense
of public recreational opportunities and fish and wildlife. One
important factor that motivates the Corps' actions is its
ongoing program to maintain the barge channel--a Corps jobs
program that costs taxpayers over $7 million per year--more
than the value of the barge industry itself.
This example ought to be a concern to all Americans. It is
a deep concern to South Dakotans. The Missouri runs down the
center of our state and is a major source of income, recreation
and pride for us. More than 40 years ago, the Corps built dams
up and down the Missouri River in order to harness
hydroelectric power. In return, it was expected to manage the
river wisely, and in compliance with the nation's laws.
The Corps has not kept that trust. The Missouri river is
dying a slow death. And the Corps continues to bend over
backward to ensure that the management changes necessary to
meet the requirements of the Endangered Species Act and recover
the health of the river are not made.
In recent years, studies have been done to determine how to
restore the river to health. An overwhelming amount of
scientific and technical data all point to the same conclusion.
The flow of the river needs to more closely mimic nature. Flows
should be higher in the spring, and lower in the summer--just
as they are in nature.
Yet, if and when the Corps ever releases its plan for
managing the river--and after 12 years of study, that is still
in doubt--observers expect that it will propose to continue
doing largely what it has been doing all these years. That is
what most expect, despite knowing exactly what the practices
have produced now for the last 40-plus years. The agency's
refusal to change will further jeopardize endangered species.
And, it will continue to erode the natural beauty and
recreational value of the river.
The Washington Post series suggested that the Corps'
handling of the Missouri River Master Manual is not an isolated
case. The Post articles contained allegations by a Corps
whistleblower who says that a study of proposed upper-
Mississippi lock expansions was rigged to provide an economic
justification for that billion-dollar project. In response to
these allegations, the Corps' own Office of Special Counsel
concluded that the agency ``probably broke laws and engaged in
a gross waste of funds.''
In my own dealings with the Corps of Engineers, I, too,
have experienced the institutional problems recorded so starkly
in the Post series. In South Dakota, where the Corps operates
four hydroelectric dams, we have fought for more than 40 years
to force the agency to meet its responsibilities under the 1958
Fish and Wildlife Coordination Act and mitigate the loss of
wildlife habitat resulting from the construction of those dams.
For 40 years, the Corps has failed to meet those
responsibilities. That is why I have worked closely with the
Governor of my state, Bill Janklow, and with many other South
Dakotans, to come up with a plan to transfer Corps lands back
to the state of South Dakota and two Indian tribes.
Unfortunately, instead of attempting to work with us, the Corps
fought us for years--hoping to prevent us from reinforcing the
precedent that the Corps is responsible for mitigating the
environmental damage caused by its projects.
Just last week, the Post described a new General Accounting
Office report on a project in Delaware, where once again
fraudulent analysis was performed to justify moving forward
when it appears an objective analysis would have concluded the
opposite. When considered in the context of the litany of
problems that have come to light in the Post, Congress has no
choice but to enact serious reforms prior to providing the
agency with any new authority.
In a democracy, institutions of government must be held
accountable by representatives of the people. That is the job
of Congress--to hold that agency responsible and make sure it
follows the nation's laws and provides lawmakers with accurate
information upon which million- and billion-dollar decisions
are made.
Contempt for environmental laws and self-serving economic
analyses simply cannot be tolerated if Congress is to make
well-informed decisions regarding the authorization of
expensive projects, and if the American taxpayer is to be
assured that Federal moneys are being spent wisely.
The Corps of Engineers provides a valuable national
service. It constructs and manages needed projects throughout
the country. The size and scope of the biannual Water Resources
Development Act is clear evidence of the importance of the
Corps' civil works mission. Because the Corps' work is so
critical, it is essential that steps be taken immediately to
determine the extent of the problems within the agency--and to
design meaningful and lasting reforms to correct them. Our
Nation needs a civil works program we can depend on. We need a
Corps of Engineers that conducts credible analysis.
We need a Corps that balances economic development and
environmental protection as required by its mandate--not one
that ignores environmental laws as it chooses. History does not
offer much room for confidence that the Army Corps of Engineers
can meet these standards under its current management system.
Consequently, I urge this committee to take a hard and
systematic look at the Corps and include reforms in the next
Water Resources Development Act to address these obvious
problems. In particular, I hope the Committee will look at the
Corps' compliance with environmental laws, the quality and
objectivity of the agency's scientific and economic analysis,
the extent to which the Corps coordinates and cooperates with
other state and Federal agencies in designing and implementing
projects, and the appropriateness of the agency's size, budget
and personnel.
It is my hope that all those who care about the integrity
of the Army Corps of Engineers and its mission will support an
effort by this committee to identify and implement whatever
reforms are necessary to rebuild public support for its work. I
look forward to working with all members of the Committee to
help craft responsible reform legislation, and I encourage you
to look to the provisions of S. 1987 as a basis for needed
reform in this year's Water Resources Development Act.
----------
Statement of Hon. Russell D. Feingold, U.S. Senator from the
State of Wisconsin
Mr. Chairman, I am delighted to appear before the
Environment and Public Works Committee today. I thank the
Chairman for honoring the commitment to a hearing on the Corps'
Water Program and the need for reform of the Corps made to me
by the former Ranking Member, Senator Baucus, and Senator Smith
during floor debate over the Water Resources Development Act of
2000. I am very pleased to be working with Senators Smith and
McCain on this issue, and admire their dedication to fiscal
responsibility as a driving force in their desire for Corps
Reform.
Corps Reform is a work in progress. Reforming the Corps of
Engineers will be a difficult task for Congress. It involves
restoring credibility and accountability to a Federal agency
rocked by scandals, struggling to reform itself over the last
year, and constrained by endlessly growing authorizations and a
gloomy Federal fiscal picture. But, this is an agency that
Wisconsin, and many other states across the country, have come
to rely upon. From the Great Lakes to the mighty Mississippi,
the Corps is involved in providing aids to navigation,
environmental remediation, water control and a variety of other
services to my state. My office has strong working
relationships with the Detroit, Rock Island, and St. Paul
District Offices that service Wisconsin, and, let me be very
clear Mr. Chairman, I want the fiscal and management cloud over
the Corps to dissipate so that the Corps can continue to
contribute to our environment and our economy.
The two reform bills now before the committee grew from my
experience in two legislative efforts. First, as the committee
knows, I sought to offer an amendment to the Water Resources
Development Act of 2000 to create independent review of Army
Corps of Engineers' projects. In response to my initiative, the
bill's managers adopted an amendment as part of their Manager's
Package that should help get this Committee the additional
information it needs to develop and refine legislation on this
issue through a study on peer review by the National Academy of
Sciences.
Second, I also learned of the need for additional technical
input into Corps projects through my efforts working with
Senator Bond on the reauthorization of the Environmental
Management Program in the Upper Mississippi, which was the only
permanent authorization in WRDA 99. Included in the final EMP
provisions is a requirement that the Corps create an
independent technical advisory committee to review EMP
projects, monitoring plans, and habitat and natural resource
needs assessments. I have been deeply concerned that this
provision has not been fully implemented by the Corps, and I
feel that as this Committee has been historically concerned
about the need to secure outside technical advice in Corps'
habitat restoration programs, like the EMP, it should also be
concerned about getting similar input for other Corps
construction activities.
Earlier this Congress, I introduced the Corps of Engineers
Reform Act of 2001 (S. 646). This year, I joined with Senators
Smith and McCain in introducing the Corps of Engineers
Modernization and Improvement Act of 2002, S. 1987. S. 1987
includes many provisions that were included in my original
bill, and codifies the idea of independent review of the Corps
about which Senator Smith and I agreed in the 2000 Water
Resources bill. It also provides a mechanism to speed up
completion of construction for good Corps projects with large
public benefits by deauthorizing low priority and economically
wasteful projects. Further, it streamlines the existing WRDA 86
deauthorization process. Under S. 1987, a project authorized
for construction, but never started, is deauthorized if it is
denied appropriations funds toward completion of construction
for five straight years. In addition, a project that has begun
construction but denied appropriations funds toward completion
for three straight years is also deauthorized.
The bill also preserves congressional prerogatives over
setting the Corps= construction priorities by allowing Congress
a chance to reauthorize any of these projects before they are
automatically deauthorized. This process will be transparent to
all interests, because the bill requires the Corps to make an
annual list of projects in the construction backlog available
to Congress and the public at large via the Internet. The bill
also allows a point of order to be raised in the Senate against
projects included in legislation for which the Corps has not
completed necessary studies determining that a project is
economically justified and in the Federal interest.
It is a comprehensive revision of the project review and
authorization procedures at the U.S. Army Corps of Engineers.
Our joint goal is to cause the Corps to increase transparency
and accountability, to ensure fiscal responsibility, and to
allow greater stakeholder involvement in their projects. We are
committed to that goal, and to seeing Corps Reform enacted as
part of this year's Water Resources bill.
I would hope, Mr. Chairman, that as the Committee examines
the issue of Corps Reform, it also reviews my original bill, S.
646, which is sponsored in the House of Representatives by my
colleague from Wisconsin, Representative Kind. S. 646 includes
a number of important concepts that are central to
environmental protection and that should be part of Corps
Reform.
The Corps is required to mitigate the environmental impacts
of its projects in a variety of ways, including by avoiding
damaging wetlands in the first place and either holding other
lands or constructing wetlands elsewhere when it cannot avoid
destroying them. The Corps requires private developers to meet
this standard when they construct projects as a condition of
receiving a Federal permit, and I think the Federal Government
should live up to the same standards. Too often, and others on
the second panel can testify to this in greater detail, the
Corps does not complete required mitigation and enhances
environmental risks. I feel very strongly that mitigation must
be completed, that the true costs of mitigation should be
accounted for in Corps projects, and that the public should be
able to track the progress of mitigation projects. In addition,
the concurrent mitigation requirements of S. 646 would actually
reduce the total mitigation costs by ensuring the purchase of
mitigation lands as soon as possible.
Mr. President, I feel that we need legislation to ensure a
reformed Corps of Engineers. The Corps' recently--released
lists of projects that it intends to review have been confusing
and the review criteria remain unclear. We need a clearly--
articulated framework to catch mistakes by Corps planners,
deter any potential bad behavior by Corps officials to justify
questionable projects, end old unjustified projects, and
provide planners desperately needed support against the never
ending pressure of project boosters. Those boosters, Mr.
Chairman, include congressional interests, which is why I
believe that this Committee, which has sought so hard to stick
to its criteria in project authorization and has done a better
job in holding the line in Conference, needs to champion
reform--to end the perception that Corps projects are all pork
and no substance.
I wish it were the case, Mr. Chairman, and I know that
Senators Smith and McCain share my view, that I could argue
that the changes we are proposing today were not needed, but
unfortunately, I see that there is need for Corps Reform
legislation. I want to make sure that future Corps projects no
longer fail to produce predicted benefits, stop costing the
taxpayers more than the Corps estimated, do not have
unanticipated environmental impacts, and are built in an
environmentally compatible way. This Committee should seek to
ensure that the Corps does a better job, which is what the
taxpayers and the environment deserve. I thank you for this
opportunity to share my views with you today.
----------
Statement of R.L. Brownlee, Acting Assistant Secretary of the Army
(Civil Works), Department of the Army
Mr. Chairman and Members of the Committee. I am Les
Brownlee, the Acting Assistant Secretary of the Army for Civil
Works. Thank you for inviting me here today. I'm privileged to
appear before you on behalf of the Administration to talk with
you about the Army Corps of Engineers, our Nation's water
resources, and charting a path toward continued modernization
of both.
I've learned a lot about the Corps since I assumed more
direct management responsibilities for civil works in March. A
piece of history that was interesting to me is how the Army got
into civil works and water. After the War of 1812, both
commercial development and national defense in the country
required more reliable transportation arteries. Federal
assistance, however, was slow in coming and was a ``product of
contentious congressional factions'' and an Administration that
did not want to meddle in the states' affairs. In the 1824 case
of Gibbons vs. Ogden, however, the Supreme Court ruled that
Federal authority covered interstate commerce including
riverine navigation. Shortly thereafter, the General Survey Act
authorized the President to conduct a survey of nationally
important roads and canals from a commercial, military or mail
transportation point of view. The President gave that
responsibility to the Army Corps of Engineers. About a month
later, a second act appropriated $75,000 for improving
navigation along the Ohio and Mississippi Rivers by removing
sandbars, snags and other obstacles. The Corps was also tasked
with that work, and so began the Corps of Engineers' continuous
involvement in civil works and our Nation's water resources.
Since that time, the Corps has always been a dedicated
servant of the American people. For 200 years, the Nation has
relied on the Corps to help resolve some of our difficult
problems. In addition to its water resources responsibilities,
the Corps has supported our military forces in time of war. The
Corps provided the technical expertise for the Manhattan
Project. Army engineers oversaw the building of the Panama
Canal. The Kennedy Space Center and the Johnson Manned
Spacecraft Center in Houston are products of Corps efforts.
When a disaster strikes, Corps personnel in red jackets are
there to help. Research work by the Corps resulted in building
designs that saved lives in the Pentagon on September 11th.
Today, 35,000 Corps employees work around the world to help
improve the quality of life for people at home and abroad. We
also want to ensure, as I'm sure you do, that this country can
continue to rely on the capability, expertise and leadership of
the Corps now, and in the future.
The distinguished history of the Army Corps of Engineers is
the history of our Nation. As the Nation has changed its
priorities and values, the Corps has also changed as it brought
these priorities to reality.
It is with this history, tradition and spirit that I
address the subject of today's hearing--Corps reform.
This Administration supports the goals of Corps reform and
is willing to work with the Committee to eliminate unneeded
water projects to pursue only those that are worthy; and to
improve the ways in which we formulate projects and fund them.
I therefore would propose that we focus our attention on the
question that lies perhaps on a higher strategic plane: Where
is our national policy regarding water resources heading next?
Our continued understanding of this question is critical to
setting the future direction of the Corps.
The people of America increasingly understand that our
Nation's water resources are finite. The debate over its use
classically centers around this question: Where should we give
priority to the development of water resources for social and
economic benefit and where should we give priority to the
restoration of these resources to their natural state.
Sometimes we must choose one over the other. Sometimes we
struggle to do both. As science and engineering evolve, we can
enhance our opportunity to find more balance between these
options and, working together, make the right choices for the
Nation.
We all agree that the Corps can and should modernize. But
modernization of the Corps needs to be in accordance with the
future direction of our national policy.
With your permission, I would like to give you my
perspective on the water policy issue. Here are just a few of
the facets of the issue.
Our society is growing more complex. We have competing
interests and disputes in many watersheds--in the Everglades,
along the Missouri River, the Mississippi River, the Columbia
River, and many others. These interests and disputes are
intensified when we experience drought conditions as severe as
we have now over much of the country.
As members of this important committee, you are more aware
than most that many Corps navigation projects have extensive
maintenance and repair backlogs.
While advances in science and technology can move us toward
a new paradigm of more environmentally sustainable projects and
integrated water resources management, we must develop more
effective public policies built on a new public consensus.
In terms of our Nation's priorities, the war on terrorism
is, and should be, our main focus. We must prioritize our
resources to ensure that we win this war. We must also ensure
that we are looking out for the Nation's long term future and
ensure that our country's economy remains strong. At the same
time, we also need to protect and sustain our Nation's natural
resources. Our financial resources are not unlimited. We
therefore must address the following questions: What water
resources investments do we most need to make now? To what
extent should these be a Federal responsibility? To what extent
should the Corps have this responsibility? Which investments
should we not undertake until later? What can we do without?
Should we continue all ongoing construction projects? Can we
afford to build them all simultaneously? Should we continue to
operate, maintain, and rehabilitate every investment that we
have made in navigation?
This Administration has insisted on much stronger
coordination, collaboration, and cooperation among agencies
within the executive branch and wants to work more closely with
you to collaborate more effectively on the plans and policies
we should put in place to address these long-term needs.
I believe that it is important to focus our time and effort
on such a debate at the national level. Corps reform is
important. General Flowers and I agree that the Corps of
Engineers should be changed and transformed to meet and better
serve the evolving needs of the Nation, and General Flowers
will address this in more detail. However, reform of the Corps
will follow in a more natural and logical way if we better
define our policies and reach agreement on the right balance on
the critical priorities.
The Corps professionals' body of knowledge on water
resources is unparalleled, and we must exploit that knowledge
and associated skills to ensure that the Federal Government can
continue to meet the needs of its citizens.
I appreciate the opportunity you have given me to testify
before this distinguished committee, recognizing that your
knowledge of these subjects far exceeds what I have been able
to learn in these past few months. I believe we have an
opportunity, working together, to shape the Nation's future. As
you know better than I, these are serious times and it is often
hard to concentrate on the long term when the more immediate
becomes urgent. I pledge to work with you on these important
issues to achieve a national water policy that serves the best
interest of all our citizens.
Mr. Chairman, this concludes my statement, and I would be
pleased to address any questions that you or the committee may
have.
----------
Statement of Lieutenant General Robert B. Flowers, Chief of Engineers,
U.S. Army Corps of Engineers
Mr. Chairman, and Members of the Committee. I am honored to
be testifying before your committee today, along with the
Acting Assistant Secretary of the Army (Civil Works), the
Honorable Les Brownlee, on two things we share a deep concern
for the U.S. Army Corps of Engineers and the management of our
nation's precious water resources.
I'm willing to state categorically that the Corps must
change. Mr. Brownlee has articulated what I believe to be the
heart of the issue about changing the Corps. It will be more
beneficial for the country in the long run if this
transformation is consistent with the changes that have been
occurring in the Nation's priorities and values regarding water
resources. The Corps can change, we have before at critical
turning points and are certainly at a turning point right now.
There are some basic questions about how the Nation will
use and protect water in the future, some of which may have
implications for future Corps activities. For instance, in the
future, to what extent will water be a mode of transportation?
To what extent will it be open for recreation? Will there be
enough clean water to drink? Where do we place priority when it
comes to water animals, farmers, ecosystems, plants, people?
Our future depends on gaining some direction and focus on our
priorities. This direction will also profoundly affect the way
we do business in the Corps. Together we need to craft the 21st
Century Corps of Engineers, an organization based on
contemporary values and future needs. The needs that the Corps
addresses--water resources and support to the war fighter--are
as critical today as at any moment in history.
Today I'd like to talk about what I'm doing to transform
into the 21st Century Corps. I'd also like to talk about three
particular areas in which we know we need to make some changes:
reducing the backlog of projects, improving our internal
processes and working toward watershed approaches. I'm
optimistic that we will see improvement in all three of these
areas as we address the national water policy issue. But in the
interim, while I'm working on some solutions for these areas,
we need to work with you in Congress, as well as the
Administration, and our partners, stakeholders and critics to
figure out what changes should be made and get them
implemented.
Let's talk first about how we reduce the backlog. Frankly,
we have too many projects on the books, and some do not address
solutions in a contemporary way. This has been the center of
discussions at previous hearings of this Committee.
We are looking for opportunities to reduce the number of
projects that we are authorized to address. For some projects,
considerable time elapses between when a problem is studied and
the project to fix it is built. During that lapse we may see
scientific progress that could better address the problem, and
we may see shifts in public policy. We have about $5 billion
worth of inactive projects that technically remain on our
books, whose designs won't solve the original problems or for
which there is no longer support.
Then there are projects that could solve real problems but
are unpopular for any number of reasons. Most were authorized
years ago, but haven't been built. They show up on the hit
lists of some of our most vocal critics. Sometimes the critics
are right. And the challenge is how to ultimately decide
whether we even should be trying to solve the problems for
which these projects were designed. In many cases, I believe
that it would be helpful for an interagency task force composed
of all interested Federal agencies to take a fresh look at
these projects.
Let me tell you what we are doing to improve our internal
processes.
During the past year, we have focused on our planning and
review capability within the Corps. We have identified the most
critical capability deficiencies and are reemphasizing such
basics as formulation, environmental science, economics, public
involvement, and internal review. We are also looking at how we
consolidate our planning and review capability for some high
priority, but not high volume activities, so that our best
people can be assigned to the most complex projects.
The other part of this is independent review. We're eagerly
awaiting the study findings this summer from the National
Academy of Sciences. I'm optimistic that the recommendations
will provide us with a road ahead on this issue. We are also
looking forward to the second phase of the study that will look
at the state-of-the-art of Corps planning processes and
procedures.
In the interim we are using various new forms of review,
from the internal and external standpoints, to improve and
validate our studies and projects. We are taking advantage of
our value engineering expertise, our cross-district review
capability and using outside experts to increase the validity
of our recommendations and findings.
As an aside, it is a test of the adage that the pendulum
swings both ways that we are looking at our review function
within the Corps again. As you probably remember we had an
internal review board, called the Board of Engineers for Rivers
and Harbors for the majority of the 20th century, just
disbanded in 1993. With that step, and reorganizing our
internal structure, we streamlined the process but at a cost. I
believe its quite possible to improve the process but continue
to move the studies and recommendations forward at a fairly
quick pace.
In some instances where the independent review has included
getting other Federal agencies to the table, we have reaped
immense benefits from the increased collaboration and
partnership within the Federal family. These partnerships will
serve us well as we move toward a watershed approach, the last
topic I want to address. Here are a few things I've done:
I've restructured the controversial Upper Mississippi
Navigation Study to consider a wide range of options from
construction of new locks to non-construction alternatives such
as system-wide environmental restoration. We also will need to
ensure that the economic analysis used in this study is current
and beyond reproach.
I have also revitalized the Environmental Advisory Board, a
board of independent, external environmental advisers that will
help us evaluate our process. They have advised us on our Upper
Miss River Navigation study and will also be looking at peer
review, cost sharing, breadth of authority and reviewing our
work in the Everglades in the upcoming sessions.
To refocus Corps professionals on the long-term sustainable
goal, I have established a set of environmental operating
principles that reiterates our commitment to approach our work
in a more environmentally sustainable manner and challenged our
people to make them real.
Quite frankly though, we need to do more and we need the
Congress's help if we are truly to take a watershed approach.
Right now, existing laws and policies drive us to single
focus, geographically limited projects where we have sponsors
sharing in the cost of the study. The current approach narrows
our ability to look comprehensively and sets up inter-basin
disputes. It also leads to projects that solve one problem, but
may inadvertently create others. Frequently we are choosing the
economic solution over the environmental, when we can actually
have both. I believe the future is to look at watersheds first;
then design projects consistent with the more comprehensive
approach. We know that will require collaboration early and
continuously but we believe it will prevent lawsuits later. So
together, we need to develop and agree on 21st Century
criteria.
Transformation of the Corps won't be easy, but we stand
ready to work with you to address these issues. As our critics
continue to chide us, I would ask that they work with us, as
well with you in the Congress, the Administration, interest
groups, our partners and stakeholders, for the well being of
the American people and the environment in which we live.
Thank you Mr. Chairman and members of the committee. This
concludes my statement.
----------
Statement of Thomas J. Chase, Director of Environmental Affairs,
American Association of Port Authorities
INTRODUCTION
Good morning. I am Thomas J. Chase, Director of Environmental
Affairs at the American Association of Port Authorities (AAPA). Founded
in 1912, AAPA represents virtually every U.S. public port agency, as
well as the major port agencies in Canada, Latin America and the
Caribbean. AAPA members are public entities mandated by law to serve
public purposes, primarily the facilitation of waterborne commerce and
the generation of local and regional economic growth. I am testifying
today on behalf of the 86 U.S. public port members of the American
Association of Port Authorities.
Mr. Chairman, AAPA commends you for calling this hearing on the
Water Resources Development Act of 2002. We appreciate the opportunity
to testify on behalf of the U.S. members of AAPA.
The Corps of Engineers, in partnership with the nation's public
ports, plays a vital role in ensuring the nation's marine
transportation system (MTS) meets the needs of the nation's businesses
and consumers. The MTS is a complex, market-driven system that provides
many benefits to the Nation. Federal investment in one part of this
system--navigation channels--is critically important to the success of
the system and produces benefits to the Nation far in excess of the
investment.
AAPA and the public port authorities of our country, the agencies
on whom the responsibility for the development and operation of our
nation's ports rests, urge the Congress to keep these essential
arteries of international commerce open in an efficient, cost-effective
and environmentally protective manner by providing the Corps of
Engineers with the resources and authorities it needs to get the job
done. To that end, we urge the Congress to fully fund the Corps of
Engineers civil works program, to maintain a biennial cycle in enacting
Water Resources Development Acts, to consider carefully any changes to
Corps of Engineers project authorities, and to seriously review the
impact of any proposed changes to avoid needlessly increasing the cost,
or further delay the construction, of needed deep-draft navigation
projects.
In my testimony today, I will discuss the following four points:
<bullet> Importance of the Corps deep-draft navigation mission;
<bullet> The need to enact a Water Resources Development Act of
2002; and,
<bullet> The potential impact on the MTS of S. 1987, the Corps of
Engineers Modernization and Improvement Act.
IMPORTANCE OF THE CORPS DEEP-DRAFT NAVIGATION MISSION
Our water highways are national assets that serve a broad range of
economic and strategic interests. The United States has the most
extensive, complex and decentralized marine transportation system in
the world; it is an appropriate asset for the world's largest trading
country and sole superpower. A large measure of this country's
unprecedented economic growth is due to the increased productivity of
the American economy and foreign trade. To remain competitive in the
global marketplace, U.S. businesses must have an efficient and reliable
transportation system.
This section of my testimony discusses the many benefits provided
by the nation's system of deep-draft navigation channels. The structure
of the broader marine transportation system and its relation ship to
deep-draft navigation channels is also discussed. Finally, a number of
challenges facing the Corps of Engineers and its non-Federal partners
on deep-draft navigation projects--the nation's public port
authorities--are also highlighted.
Benefits of Deep-Draft Navigation Projects
Economic Benefits: Ports' activities link every community in our
Nation to the world marketplace, enabling us to create export
opportunities and to deliver imported goods more inexpensively to
consumers across the Nation. The deep-draft commercial ports of the
U.S. handle over 95 percent of the volume and 75 percent of the value
of cargo moving in and out of the Nation.
The marine transportation system has helped American exporters from
every state develop and maintain markets around the world for a variety
of commodities, ranging from paper, forest and agricultural products,
to plastics, chemicals and pharmaceuticals; from fruits and vegetables
to poultry, beef and cotton; and, from machinery and automobile parts
to frozen fish.
The industry has also provided American consumers and businesses
with inexpensive access to a vast array of goods from around the world,
including more than half of the petroleum used, 75 percent of the
apparel and 95 percent of the footwear worn in this country, food
products, beverages such as coffee and beer from around the world,
flowers, kitchenware, household appliances, furniture and bicycles,
marble and tile, automobiles, auto parts and tires, machinery and
tools, electronic goods, computer equipment and copiers, manufacturing
components and supplies, and thousands of other goods.
All ports serve multi-state needs. The foreign trade activities of
each state are supported by a variety of ports both within and, more
often, outside the state. On average, each state relies on between 13
to 15 ports to handle 95 percent of its imports and exports. The goods
from 27 states leave the country through the ports in Louisiana alone.
Midwestern grain supplies the Pacific rim market through ports in the
Pacific Northwest. Imported crude oil refined in New Jersey and
Pennsylvania reaches consumers on the entire East Coast, from Maine to
Florida. Steel that travels to major Midwestern industrial centers is
delivered cheaply and efficiently through Great Lakes ports. Ports on
the West Coast handle goods such as cars, computers, and clothing,
which are destined for consumers throughout the country.
World trade increased by 3.8 percent annually (on a tonnage basis)
between 1993 and 1997 to a total of 5.3 billion metric tons. In that
same period, U.S. foreign waterborne trade grew by 4.6 percent per year
to 1,071 million metric tons and accounted for about 20 percent of
global waterborne trade and almost 30 percent of U.S. Gross Domestic
Product.3 By 2020, U.S. foreign maritime trade is expected to more than
double over 1996 tonnage levels, with total tonnage projected to grow
3.5 percent annually. Figures 1 and 2 illustrate the range and scope of
import and export cargos, respectively, moving through U.S. ports in
2000.
[GRAPHIC] [TIFF OMITTED] T3967.001
The nation's system of ports and harbors provides the nation's
shippers--importers and exporters--with a range of choices that allow
them to minimize transportation costs, and, thus, deliver goods to the
consumer more cheaply and compete more effectively in international
markets. As a result of the proliferation of just-in-time manufacturing
practices, time definite delivery, and vendor managed inventory in our
manufacturing and retail sectors, an interruption of only four to five
business days can have devastating consequences for our global supply
chain, as evidenced by the impact of September 11 on our land border
crossings.
These global business trends are interrelated to the demand of
cargo shippers for increasing reliability, reduced damage, and
decreasing cost. All of these demands drive the transportation provider
to improve service and find efficiencies at each link in the
transportation chain. This is especially true for the ocean carrier who
transports large volumes of cargo over relatively long distances. The
drive to satisfy cargo shippers in ocean transportation has led to the
building of larger ships and to the increasing containerization of
cargo. Figure 3 illustrates the trend in the containerized cargo
segment of U.S. foreign trade. The number of containers moving though
U.S. ports doubled between 1990 and 2000, from 15.3 to 30.4 million 20-
foot equivalent units (TEUs) and the volume is expected to double again
over the current decade. Relative increases were consistent on the
Atlantic, Gulf and Pacific Coasts with volumes in 2000 of 13, 1.7, and
15.7 million TEUs, respectively.
[GRAPHIC] [TIFF OMITTED] T3967.002
Recent testimony by the World Shipping Council discusses trends in
freight rates for containerized cargo moving in U.S. international
trade.\1\ Table 1 summarizes the changes in average rates for moving
containerized cargo in the major U.S. foreign trade routes from 1978
through 1998. Significantly, rates in real terms have declined by
between 52 and 72 percent, during this period of rapid expansion in the
use of containers for shipping cargo. It has been an unrecognized
success that all segments of the maritime transportation system have
made the investments necessary to sustain, and in turn foster, the
explosive growth in global trade.
---------------------------------------------------------------------------
\1\ Testimony of Christopher Koch, President & CEO of the World
Shipping Council Before the House Committee on the Judiciary Hearing on
International Liner Shipping Regulatory Policy, June 5, 2002.
---------------------------------------------------------------------------
According to a semi-annual survey conducted by the U.S. Department
of Agriculture, American shippers of containerized agricultural goods
have reported that they are able to obtain cost-efficient ocean
transportation. Specifically, the USDA's December 2001 report on
Agricultural Ocean Transportation Trends states that:
The rates for U.S. outbound dry containers, particularly westbound
transpacific rates, are approaching historically low levels. Virtually
all U.S. agricultural exporters are paying less for transportation than
they were in early 2001 when rates were already perceived to be
extraordinarily low . . . It is remarkable that commodities are
reportedly moving in certain transpacific, westbound trades at $225 per
40-foot equivalent unit . . . Rates are so uniformly low, they are no
longer the primary determining factor for carrier selection. There is a
presumption that rates will hit ``rock bottom,'' so, while agricultural
shippers continue to keep an eye on the overall rates (the base rate
plus the surcharges), carriers are now primarily selected according to
service capabilities.\2\
---------------------------------------------------------------------------
\2\ Agricultural Marketing Service, ``Agricultural Ocean
Transportation Trends,'' December 2001, at www.ams.usda.gov/tmd/AgOTT/
December%202001/Dec2001--content.htm.
Table 1.--Changes In Average Freight Rates In U.S. East-West Trades,
1978-1998
------------------------------------------------------------------------
Current Dollars Real Terms [In
[In Percent] Percent]
------------------------------------------------------------------------
Trans-Pacific
Eastbound..................... -32.1 -72.1
Westbound..................... -20.8 -67.5
Trans-Atlantic
Eastbound..................... -4.6 -60.9
Westbound..................... 18.2 -51.5
------------------------------------------------------------------------
Besides providing cost savings to the country's businesses and
consumers through more efficient transportation, the U.S. marine
transportation system, including the nation's deep-draft navigation
channels, creates substantial economic and trade benefits for the
Nation, as well as for the local port community and regional economies.
The following statistics highlight how critical ports are in
facilitating national economic activity:\3\
---------------------------------------------------------------------------
\3\ Source: U.S. Maritime Administration.
---------------------------------------------------------------------------
<bullet> U.S. Customs duty revenues totaling approximately $15.6
billion were paid into the general treasury in fiscal year 1996 on
cargo moved through ports.
<bullet> Our nation's commercial deep draft ports annually handle
in excess of $600 billion in inter national trade.
<bullet> Foreign trade is an increasingly important part of the
U.S. economy, currently accounting for almost 30 percent of our Gross
Domestic Product. U.S. exports and imports are projected to increase in
value from $454 billion in 1990 to $1.6 trillion in 2010. The volume of
cargo is projected to increase from 875 million to 1.5 billion metric
tons in 2010.
<bullet> The overall national economic impact of port activities in
1996 generated:
<bullet> 3 million jobs;
<bullet> $743 billion to the Gross Domestic Product; and
<bullet> $200 billion in taxes at all levels of government.
National Defense Benefits: We should also not lose sight of the
fact that the ports continue to play a very critical role in our
nation's defense. That role has never been more apparent than during
the loadouts of military cargo and personnel during Operation Desert
Shield/Desert Storm. The huge buildup of U.S. forces in and around the
Persian Gulf would have been impossible without the modern facilities
and strong support provided by America's ports. According to the U.S.
Military Traffic Management Command (MTMC), between August 1990 and
March 1991, MTMC loaded 312 vessels and more than 4.2 million
measurement tons of cargo in 18 U.S. ports for delivery to the Persian
Gulf in support of Desert Shield/Desert Storm. More than 50 ports have
agreements with the Federal Government to provide ready access for
national emergency purposes.
Environmental Benefits: Several navigation projects that have
substantial environmental features, including the creation of thousands
of acres of wildlife habitat using dredged material, would not proceed
under the proposed funding levels. For example, the Port of Oakland is
currently building a project to expand its container handling
capability that will redevelop a former military facility, create 120
acres of shallow-water habitat, restore 3200 acres of wetlands, provide
30 acres of new public parkland, and reduce vehicle emissions by 40
tons per year. In addition, the larger, more efficient ships that will
be able to call at the port will result in reduced volumes of ballast
water discharged and air pollutants emitted. Similar multi-objective
projects are the hallmark of local public port development projects
throughout the country.
Structure of the MTS
The U.S. Marine Transportation System (MTS) consists of ports and
their inland connections, vessels, and navigation channels. Each
component is a complex system within itself and is closely linked with
the other components. The first two components are primarily an
aggregation of State, local, or privately owned facilities and private
companies; navigation channels are primarily Federal assets. As with
the U.S. economy as a whole, decisionmaking and investment are
primarily driven by the marketplace. In addition, Federal, state, and
local governments participate in the management, financing, operation
and regulation of the MTS.
The MTS is subject to an almost infinite variety of economic,
political and market conditions and forces which affect the need for
and types of investment in MTS facilities and services (i.e., ports,
vessels, and navigation channels). These factors include:
<bullet> Demand for MTS services has been, and is expected to
continue, growing at a rate significantly greater the rest of the
economy, and prediction of the exact need for and locations of new MTS
facilities is extremely complex;
<bullet> Short term demand for MTS services can be highly variable
and is related to, among other things, global economic conditions,
evolving trading patterns, changing consumer preferences, and seasonal
fluctuations.
<bullet> Investments in MTS facilities are capital intensive and--
<bullet> take long lead times to bring into the market,
<bullet> must be sufficient to meet peak demand,
<bullet> are not easily transformed to meet changes in demand
because of large fixed costs and the need to maintain minimal
levels of service,
<bullet> can only be delivered in ``lumps'' or relatively large
units of capacity and,
<bullet> have a relatively long lifetime (often on the order of
25 years).
Because of these factors, the addition of new MTS facilities cannot
be precisely coordinated with increase in demand. Also, in the presence
of the vigorous competition inherent in the port and ocean carrier
segments of the MTS, there is a potential for some excess capacity to
exist at any given point in time. However, quantifying the level or
cost of excess capacity is extremely complex and may not be relevant in
investment decisionmaking. In addition to providing an ability to
handle peak demand, excess capacity also ensures competition among the
various ports and vessels to the advantage of the nation's business and
consumers.
Another important benefit of excess capacity is demonstrated when
there are interruptions in certain segments of the MTS. For example,
following the September 11 attacks on the World Trade Center, the Port
of New York and New Jersey was closed to all vessels for several days.
Cruise ships were rerouted to the ports in Baltimore, Boston, and
Philadelphia; cargo ships were also diverted to other ports. In 1997,
problems with rail service in the Southwest U.S. caused cargo
diversions to ports in the North west. A westward shift in
manufacturing patterns in Asia has resulted in more consumer goods from
that region being delivered to the U.S. through East Coast ports, via
the Suez Canal. The excess capacity also serves the country well during
times of crisis when the military needs to quickly move troops and
materiel.
Ports: The majority of port terminals, 87 percent on the inland
waterways and 66 percent in deep-draft harbors, are privately owned.\4\
Public port authorities are creations of state governments and are
generally set up as semi-autonomous authorities with their own elected
or appointed governing boards. Local, state-wide or regional ports are
responsible for investment, development and operation of public marine
terminal facilities. Ports and other marine terminals, both public and
private, are responsible for dredging of berthing areas and access
channels connecting the port facilities to Federal navigation channels.
The U.S. Maritime Administration reports that in 2000 alone, the
cumulative local investment in public port facilities was nearly $1.1
billion.\5\
---------------------------------------------------------------------------
\4\ An Assessment of the U.S. Marine Transportation System--A
Report to Congress. U.S. Department of Transportation, Washington, DC
104 pp., September 1999 (www.dot.gov/mts/report/).
\5\ United States Port Development Expenditure Report, December
2001, U.S. Department of Transportation Maritime Administration, Office
of Ports and Domestic Shipping, Washington, DC.
---------------------------------------------------------------------------
Table 2 provides a break down of capital expenditures by type of
facility as well as a projection of capital spending for the 5-year
period 2001 to 2005. Each of the five cargo type categories includes
expenditures for pier or wharf structures, storage facilities, and
handling equipment. Infrastructure expenditures cover improvements,
such as roadways, rail, and utilities that are located on or off
terminal property. Dredging consists of local port expenditures
associated with the dredging deepening and/or maintenance of Federal
and non-Federal channels and berths as well as the local costs for
land, easements, rights-of-way, and disposal areas. The ``other''
category includes those structures and fixtures not directly related to
the movement of cargo, such as maintenance and administrative
facilities.
Table 2.--Comparison of Annual Capital Expenditures by Type of Facility for 1992-2000 and Projected Capital Expenditures for 2001-2005
--------------------------------------------------------------------------------------------------------------------------------------------------------
General Liquid On Off Total
Cargo Specialized Dry Bulk Bulk Passenger Other Terminal Terminal Dredging Expenditure
Year [In Cargo [In [In [In [In [In [In [In [In [millions
Percent] Percent] Percent] Percent] Percent] Percent] Percent] Percent] Percent] of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001-2005.................................... 9.8 44.4 1.5 0.6 4.3 8.0 8.5 6.3 16.6 $9,434
2000......................................... 22.8 31.2 3.5 0.8 5.7 8.2 8.0 8.7 11.1 1,058
1999......................................... 11.5 39.2 5.2 1.4 6.4 9.0 8.8 8.6 9.9 1,116
1998......................................... 10.9 35.8 8.3 0.2 1.9 8.5 7.1 11.2 10.8 1,414
1997......................................... 14.8 35.5 8.3 0.1 3.8 8.5 14.0 6.7 8.3 1,542
1996......................................... 14.7 41.0 5.9 0.5 2.7 4.8 10.7 8.8 10.9 1,301
1995......................................... 22.2 28.8 3.0 0.9 4.7 8.2 18.0 3.1 11.1 1,203
1994......................................... 22.8 34.8 5.6 0.3 4.7 7.3 15.1 6.0 3.4 687
1993......................................... 24.5 27.6 4.5 1.7 5.6 11.9 11.6 3.6 9.0 654
1992......................................... 23.9 31.8 4.8 0.2 7.5 9.5 9.0 3.8 9.5 680
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 3 presents information on the methods used by the U.S. public
port authorities to finance their capital expenditure programs. The
table identifies six funding categories to classify the financing
sources: port revenues, general obligation bonds (GO bonds), revenue
bonds, loans, grants, and other. The ``other'' funding category
includes all financing sources that were not described above, such as
state transportation trust funds, state and local appropriations, taxes
(property, sales), and lease revenue. As the table illustrates, public
ports are relying on either direct revenue or revenue-backed bonds for
a greater percentage of the financing needs, and this trend is expected
to continue with revenue-based financing expected to reach almost 78
percent of capital financing needs in 2001-2005. (Note: Total financing
and total expenditure levels from Table 2 may not agree because of
incomplete survey responses.).
Table 3.--Comparison of Annual Capital Financing by Method for 1996-2000 and Projected Capital Financing for
2001-2005
----------------------------------------------------------------------------------------------------------------
2001-2005
Method 1996 [In 1997 [In 1998 [In 1999 [In 2000 [In [In
Percent] Percent] Percent] Percent] Percent] Percent]
----------------------------------------------------------------------------------------------------------------
Port Revenues..................... 31.7 30.4 33.8 44.4 48.1 46.5
GO Bonds.......................... 9.4 10.0 6.6 7.8 9.1 7.1
Revenue Bonds..................... 42.6 47.1 40.9 21.4 10.9 31.1
Loans............................. 1.1 0.5 1.1 6.6 3.8 2.9
Grants............................ 2.5 8.1 10.4 14.0 16.0 7.8
Other............................. 12.7 3.9 7.2 5.8 12.1 4.6
Total (millions).................. $1,240 $1,478 $1,355 $1,066 $898 $7,457
----------------------------------------------------------------------------------------------------------------
Vessels: The world's ocean cargo vessels enter the market offering
a wide variety of shipping services and trade routes from a variety of
ownership patterns representing large global integrated logistics
companies to national entities to niche carriers. Because the majority
of ocean carriers are non-U.S. owned, some critics of Federal
investment in navigation channels have charged that the benefits of
such investments only accrue to ``foreigners'' and, therefore, such
investments are somehow defective. There are several reasons why this
is otherwise.
First, the ocean carrier industry is highly competitive. There are
no barriers to entry in international shipping as there are in other
industries, such as international commercial aviation. In the liner
industry, which is often the focus of this criticism, the shipping
public has a wide array of carriers and variety of shipping services
from which to choose. For example, as illustrated in Table 4, only one
carrier has a market share above 10 percent, and the top ten carriers
combined account for only 57.5 percent of the total containerized cargo
carried (exports and imports combined) in U.S. trades.
Second, as discussed above, freight rates for the shipment of
containers in the liner industry have declined substantially over the
last 15 years due to, among other reasons, the increased efficiencies
resulting from larger vessels and deeper navigation channels.
Table 4.--Market Share In U.S. Liner Trade in the First Quarter 2002
(Source: JoC/PIERS)
------------------------------------------------------------------------
Jan.-March Combined
TEUs 2002 Market Market
Lines Carried Share [In Share [In
Percent] Percent]
------------------------------------------------------------------------
1. Maersk-Sealand................ 572,106 13.2 13.2
2. Evergreen..................... 307,382 7.1 20.3
3. APL........................... 280,932 6.5 26.8
4. Hanjin........................ 264,420 6.1 32.9
5. Cosco......................... 217,990 5.0 37.9
6. P&O Nedlloyd.................. 186,405 4.3 42.2
7. Hyundai....................... 171,274 3.9 46.1
8. OOCL.......................... 166,379 3.8 49.9
9. Yang Ming..................... 164,828 3.8 53.7
10. MSC.......................... 164,382 3.8 57.5
All Lines (over 100)............. 4,340,611 100 100
------------------------------------------------------------------------
Third, vessel owners have made huge investments in new equipment,
information technology, and larger vessels to achieve economies of
scale, developed alliances with other vessel owners to take advantage
of these economies of scale and scope that made possible significant
cost savings. To keep pace with the expected doubling of trade by 2020,
the liner industry expects that it will need to invest an estimated
$100 billion in new vessels and containers alone. Those efficiency
gains and cost reductions resulting from these investments are passed
on to shippers in lower rates and improved service.
Some critics have pointed out that the liner industry enjoys anti-
trust immunity as proof that these foreign companies enjoy a benefit
that is detrimental to U.S. businesses, consumers and, in the case of
Federal investments in navigation channels, to the American taxpayer.
Again, a closer examination of this issue demonstrates that this is not
the case.
The anti-trust immunity provided to the liner industry is limited
and highly regulated. The protection to the industry was established by
the U.S. Congress, not some foreign, unaccountable entity. In fact,
Congress most recently reviewed and reauthorized this protection in
1998 with passage of the Ocean Shipping Reform Act of 1998. Carriers
may operate under agreements filed with and overseen by the Federal
Maritime Commission that promote and enable operational cooperation and
efficiencies. Under this system, carriers, among other things:
<bullet> May not operate under an agreement that unreasonably
increases rates or decreases service;
<bullet> May not engage in unjust or unfair or predatory practices;
<bullet> May not retaliate against any shipper;
<bullet> May not drive competitors out of a trade; and,
<bullet> May not impose any unreasonable prejudice or disadvantage
with respect to any port.
Given the highly competitive marketplace for transporting U.S.
foreign trade evidenced by the large number of companies engaged in
this business and the dramatic reduction in rates that have occurred
over the last 15 years, it is clear that there is no monolithic
``foreigner'' dictating the terms of the trade to U.S. businesses and
consumers. Instead, these companies are continually making investments
in their operations to reduce costs and provide better service to users
of the nation's marine transportation system U.S. businesses and
consumers.
Navigation Channels: Since its beginning, the U.S. Congress has
authorized and funded activities to ensure free and open access of the
nation's waterways to navigation. The General Survey Act of 1824
established the U.S. Army Corps of Engineers (USACE) as the agency
responsible for the nation's navigation system.1 Since that time, the
Federal Government has consistently exercised its power to develop and
maintain a navigation system for the benefit of the whole nation.
Today, there are approximately 1,000 Federal navigation channel
projects spanning over 25,000 miles of inland, intracoastal, and
coastal waterways.\6\
---------------------------------------------------------------------------
\6\ Civil Works Program--1998. U.S. Army Corps of Engineers,
Washington, DC, 54 pp., 1998.
---------------------------------------------------------------------------
Prior to the Water Resources Development Act of 1986, the Federal
Government paid 100 percent of ``general navigation features'' (GNFs)
of harbor projects that consisted primarily of harbor dredging.\7\
Lands, easements, rights of way and relocations (LERRs), and dredging
for berthing areas were a local or private responsibility, as were all
landside improvements including terminals and equipment. All
maintenance dredging was federally funded out of general revenue. With
the passage of WRDA 1986, cost-sharing for general navigation features
changed to include a local or non-Federal share as shown in Table 5.
Maintenance dredging remained 100 percent federally funded; however,
today Federal costs may be recovered 100 percent from deposits of the
Harbor Maintenance Tax to the Harbor Maintenance Trust Fund.
---------------------------------------------------------------------------
\7\ Cost sharing requirements are contained in Section 101 of the
Water Resources Development Act of 1986, Public Law 99-662, November
17, 1986, 33 U.S.C. 2211.
Table 5.--Navigation Cost-Sharing Formula From WRDA 1986
------------------------------------------------------------------------
Federal Share [In Non-Federal Share
Channel Depth Percent] [In Percent]
------------------------------------------------------------------------
20 feet or less................. 80................ 20
20 to 45 feet................... 65................ 35
Over 45 feet.................... 40................ 60
------------------------------------------------------------------------
Note: Non Federal shares include 10 percent cash contribution
requirement for all depths. The 10 percent cash contribution may be
offset by a credit for lands, easements, rights of way and
relocations, which are still a non-Federal responsibility. To the
extent not offset, this 10 percent can be repaid over period not to
exceed 30 years.
Figure 4 illustrates the volume of material dredged and the cost of
dredging for new work and maintenance dredging from Federal navigation
channels between 1965 and 1999.\8\ Annual construction costs have
averaged about $125 million for the period between 1977-1996 and
average annual maintenance costs have averaged about $450 million.
Average Federal investment in new channels increased since 1996 to a
level $271.4 million in fiscal year 2002. Maintenance dredging volumes
range annually between 250 and 300 million cubic yards.
---------------------------------------------------------------------------
\8\ Actual Dredging Cost Data for 1963-1999, Long-Term Continuing
Cost Analysis data. U.S. Army Corps of Engineers Dredging Program.
Navigation Data Center, U.S. Army Corps of Engineers, Fort Belvoir, VA
(www.wrsc.usace.army.mil/ndc/ddhisbth.htm).
---------------------------------------------------------------------------
Individual navigation channel improvements must be demonstrated to
be in the Federal interest before becoming eligible for Federal
funding. Congress established that the Federal interests in water
resources projects are as follows:
It is the intent of Congress that the objectives of enhancing
regional economic development, the quality of the total
environment, including its protection and improvement, the
well-being of the people of the United States, and the national
economic development are the objectives to be included in
federally financed water resource projects (including shore
protection projects such as projects for beach nourishment,
including the replacement of sand), and in the evaluation of
benefits and cost attributable thereto, giving due
consideration to the most feasible alternative means of
accomplishing these objectives.(42USCj 1962-2)
Congress also authorized the establishment of a Water Resources
Council composed of the Secretaries of the Interior, Agriculture, Army,
Commerce, Housing and Urban Development, and Transportation and the
Administrator of EPA. In 1983, the Council adopted The Federal
Principles and Guidelines for Water and Related Land Resources
Implementation Studies, which continues today as the benchmark against
which Federal water resources projects are measured. The P&G, as the
policy document is informally called, applies to all water and land-
related resources projects undertaken by the Federal Government,
including projects by the Corps of Engineers, the Bureau of
Reclamation, and the Department of Agriculture. Despite Congress'
intent that Federal water resources should also take into account
regional economic development benefits, the P&G sets the maximization
of national economic development (NED) benefits as the definitive
threshold for Federal involvement in such projects.\9\ This policy
continues even after non-Federal interests became responsible for cost-
sharing projects. Thus, non-Federal interests are required to share up
to 60 percent of the cost of Federal navigation projects, but any
regional benefits derived from these projects may not be included in
justifying the project.
---------------------------------------------------------------------------
\9\ Principles and Guidelines for Water and Related Land Resources
Implementation Studies. U.S. Army Corps of Engineers, Washington, DC,
1983. (www.wrsc.usace.army.mil/iwr/pdf/p&g.pdf)
[GRAPHIC] [TIFF OMITTED] T3967.003
The Corps of Engineers project planning process is divided into two
stages, a reconnaissance study and feasibility study, which together
require an average of 5.6 years to complete. Corps reconnaissance
studies, which are conducted by the Corps' district offices, are today
required to be completed with 12 months. There is then often a lag
between the end of reconnaissance and the start of feasibility. Between
1985 and 1996, the average length of this gap was roughly 1 year.
Feasibility studies during the same period averaged 3.6 years.\10\
---------------------------------------------------------------------------
\10\ New Directions in Water Resources Planning for the U.S. Army
Corps of Engineers. National Academy of Sciences, Washington, DC, 120
pp., 1999.
---------------------------------------------------------------------------
The basic economic benefits from navigation plans are the reduction
in the value of resources required to transport commodities and the
increase in the value of output for goods and services. Specific
transportation savings may result from the use of larger vessels, more
efficient use of large vessels, more efficient use of existing vessels,
reductions in transit time, lower cargo handling and tug assistance
costs, reduced interest and storage costs such as from an extended
navigation season, and the use of water transportation rather than an
alternative land mode.
Corps of Engineers' navigation improvement studies examine the
transportation costs of an identified set of commodity flows both with
and without the proposed project over the planning period, usually 50
years. Elements of analysis of current tonnage include: size and type
of vessel, annual volume of movements, frequency of movements, volume
of individual shipments, adequacy of existing harbor and transportation
facilities, rail and truck connections, and service considerations.
Generally this prospective traffic is the aggregate of a large number
of movements (origin-destination pairs) of many commodities; the
benefit from the navigation project is the savings on the aggregate of
these prospective movements.
Next, the analysis evaluates the vessel fleet composition and cost.
Key components in the study are the size and characteristics of the
current and future fleet that would use the harbor both with and
without the proposed improvement. Vessel characteristics are often
dependent on trade route, type of commodity, volume of traffic,
waterway restrictions, foreign port depths, and lengths of haul. Vessel
costs include the full origin-to-destination cost, including necessary
handling, transfer, storage, and other accessory charges. The without-
project condition is based on costs and conditions prevailing at the
time of the study. Transportation costs with a plan reflect any
efficiencies that can be reasonably expected, such as use of larger
vessels, increased loads, reduction in transit time and delays (tides),
etc. In evaluating these cargo flow assessments, the Corps conducts a
systematic determination of alternative routing possibilities, regional
port analyses, and intermodal networks. Benefits may not be claimed for
cargo that may be diverted from another port because of a Federal
navigation project.
Challenges
There are a variety of challenges that threaten the ability of the
MTS to meet the growing demands of the nation's businesses and
consumers for transportation services. These challenges include:
<bullet> Growing Levels of Demand.--As discussed above, the volume
of trade is expected to double over the next 20 years and the movement
of cargo in containers is expected to double in the next 10 years. The
business environment in which American companies must operate has
become more competitive. They must be lean and capable of effectively
serving larger, more demanding markets. Ports and other MTS service
providers must meet increasingly stringent requirements to successfully
meet the needs of American business and consumers. Everything must be
accomplished faster and less expensively, while maintaining dependable,
secure, and safe movement of goods. Consequently, the need to provide
investment in improved MTS facilities and services is great.
<bullet> Increasing National Security Needs.--The attacks of
September 11 have dramatically heightened everyone's awareness of the
threat to the U.S. from rogue states and terrorists. Ports and other
MTS service providers are, and will continue, spending substantial
resources to improve the security at their facilities. These resources,
however, are being diverted from other investments that would have been
made in improving the efficiency of the system.
<bullet> Minimizing conflicts among land uses along the waterfront
and intermodal connections.--Many of our nation's port cities are
trying to revitalize their communities through waterfront re
development that has focused on residential, commercial, and tourist-
related uses, leaving less land available for port development.
Intermodal connections at ports, such as roads and railroads, also
experience land constraints because of zoning and environmental
regulations that restrict expansion, particularly in densely populated
areas. Proposals for port expansion, largely for projects handling
cargo that will move far outside the local port area, are facing
increasing public opposition due to concerns about local environmental
impact. Many port communities are reluctant to bear the environmental
and social costs for projects that largely benefit people outside of
their region.
<bullet> Ensuring Adequate Navigation Channels.--Larger vessels are
increasingly carrying the cargos of U.S. international trade because
they provide the cost efficiency and level of service that U.S.
businesses and consumers are demanding. These larger vessels require
deeper waterways. The nation's public port authorities are working
closely with the Corps of Engineers and the Congress to ensure that
appropriate investment in the nation's system of navigation channels is
made. In addition to the need for adequate Federal funding of studies
and construction of navigation improvement projects, we have also
identified several areas in the partnership between the Federal
Government and non-Federal sponsors of navigation projects that should
be improved so we can improve the timeliness and cost effective
delivery of these projects. A summary of these recommended improvements
are discussed in the next section.
NEED TO ENACT WRDA 2002
Regular and dependable enactment of Water Resources Development
Acts and Federal investment in navigation is of critical importance to
the nation's economy. The local non-Federal project sponsor must be
able to rely on a dependable biennial WRDA authorization, as well as
annual appropriations. Delays in authorizing vital navigation and water
resource projects result in increased costs and reduced benefits from
substantial Federal, local and private investment in port facilities
and navigation channels. AAPA urges Congress to enact a Water Resources
Development Act of 2002 that authorizes needed deep-draft improvement
projects and refines several provisions of WRDA' 86 relating to the
Federal-local partnership to make project formulation more efficient
and cost effective as discussed below.
In enacting the Water Resources Development Act of 1986 (WRDA
1986), after 200 years of solely Federal responsibility, Congress for
the first time imposed mandatory cost-sharing of navigation projects
(aside from previous ad hoc requirements for local contribution of
lands, easements and rights of way) under which non-Federal interests
acting as local sponsors were required to contribute to the cost of
planning, constructing and maintaining navigation projects on a sliding
scale based upon project depth. The elements of what, at that time, was
portrayed as the ``quid pro quo'' in consideration of mandatory cost
sharing were: (1) greater local latitude in partnering in project
construction; (2) environmental and planning streamlining to reduce
project planning and construction time and cost; and, (3) local user
fee authority to recover local expenditures for project construction.
Port authorities have greatly increased their ability to plan,
design, and resolve complex environ mental, social and economic
conflicts since WRDA 1986 was enacted. After more than 15 years of
experience in working as non-Federal sponsors under the framework
provided in WRDA 1986, the nation's public ports have identified a
number of policy and legal changes that are needed to improve the
collaborative partnership envisioned in 1986.
AAPA established a special Task Force in 2000 to review the
existing authorities for project partnership and to make
recommendations on policy changes that should be included in a WRDA
2002 authorization. Each member of the Task Force has been intimately
involved in the navigation project partnership process, with most
members having experience spanning over 20 years involving projects
with total values in the hundreds of millions, if not billions, of
dollars.
The Task Force identified changes in seven policy areas that would
significantly improve the partnership between non-Federal sponsors and
the Federal Government and would improve the ability of local sponsors
to participate in Federal navigation projects. These proposals include
the following subjects:
<bullet> Improvements to the Local-Federal Partnership in
Navigation Projects
<bullet> Project Cooperation Agreements
<bullet> Indemnification
<bullet> Relocations
Other Improvements to Help Local Sponsors Participate in Navigation
Projects
<bullet> Credit for In-Kind Services During Construction
<bullet> Deep-Draft Cost Sharing
<bullet> Port and Harbor Dues
<bullet> Non-Federal Sponsor Led Projects
Further detail on these proposals, including a discussion of the
purpose and need for the proposal and specific legislative language for
each proposal, is included below.
Improvements to the Local-Federal Partnership in Navigation Projects
Project Cooperation Agreements: As part of the cost-sharing
provisions included in WRDA 1986, Congress directed that non-Federal
sponsors and the Secretary of the Army enter into a cooperative
agreement before initiating construction of the project (Section
101(e)). The law directs that such agreements shall be in accordance
with the Flood Control Act of 1970.
Many ports are frustrated by the rigid approach the Corps of
Engineers takes in negotiating project cooperation agreements (PCA).
While there was an assumption in 1986 that a Federal-local sponsor
partnership would be formed, ports believe the current approach does
not represent a true partnership between the Federal Government and
non-Federal sponsors. PCA negotiations often take 6 months or more to
complete. Delays often result from the need to accommodate special
local circumstances which were not envisioned in the model agreements
developed promulgated by the Corps of Engineers.
For all the discussion by both Congress and the Corps of Engineers
concerning the need for ``partnering'' during and since enactment of
WRDA 1986, there is no legislative embodiment of such a policy nor,
unfortunately, any great incentive for the Corps to follow such a
policy. In fact, by expressly incorporating the requirement for a
cooperative agreement between the U.S. Government and a non-Federal
interest under Section 221 of the Flood Control Act of 1970 and
concurrently enacting Section 912 of WRDA 1986 to impose substantial
civil penalties upon a non-Federal interest for non-compliance and
conferring jurisdiction upon U.S. District Courts for that purpose,
Congress arguably did precisely the opposite by substituting a
``contract of adhesion'' one-sided, one-size-fits-all arrangement for a
cooperative agreement. The negative connotation attributable to civil
penalties, reinforced through the mandatory attorney's certificate
(required by the Corps, not by statute) as to the ability of the local
sponsor to respond in damages, is the antithesis of the nature of a
cooperative agreement.
AAPA believes there is a better model for conducting cooperative
agreements within the existing body of Federal law. The Federal Grants
and Cooperative Agreements Act was enacted in 1986 and defines and
distinguishes cooperative agreements from grants and contracts as a
procurement device. This law provides the means to better define the
relationship that should exist between the Government and the Local
Sponsor.
Section 6305 of Title 31, United States Code prescribes the use of
such cooperative agreements as follows:
An executive agency shall use a cooperative agreement as the
legal instrument reflecting a relationship between the U.S.
Government and a State, a local government, or other recipient
when
(1) the principal purpose of the relationship is to transfer
a thing of value to the State, local government or other
recipient to carry out a public purpose of support or
stimulation authorized by a law of the United States instead of
acquiring (by purchase, lease, or barter) property or services
for the direct benefit or use of the United States Government;
and
(2) substantial involvement is expected between the
executive agency and the State, local government, or other
recipient when carrying out the activity con templated in the
agreement.
A cooperative agreement entered into pursuant to the Federal Grants
and Cooperative Agreements Act carries certain advantages not realized
by the current WRDA. A true cooperative agreement is the nearest thing
to a private sector partnership agreement that exists under Federal
law. It reflects the fact that two independent sovereign entities come
together on an equal footing to accomplish a common purpose in which
each brings competence, expertise and a commitment of resources to that
end. While the Corps of Engineers may have led the way back in the days
of Section 221 Agreements under the Flood Control Act of 1970, since
then more than 30 agencies--including the Department of Defense
routinely use true cooperative agreements for everything from
cooperative research, to sharing law enforcement responsibilities, to
infrastructure improvements.
AAPA requests that the Committee consider language such as the
following:
SEC.----. COOPERATIVE AGREEMENTS
(a) Section 2211(e) of Title 33, United States Code is
amended by inserting after the words ``cooperative agreement''
the words ``under Section 6305 of Title 31, United States Code
and incorporating the alternative dispute resolution procedures
under Section 575 of Title 5, United States Code and''
(b) Section 1962-5b of Title 42, United States Code is
amended in subsection (b) by striking the words ``pay damages''
and insert in lieu thereof the words ``collect any amounts due
in the event of a payment default and subject to the march in
rights of the Chief of Engineers under subsection (f) of this
section in the event of a performance default''
(c) Section 912(b) of Public Law 99-662 (42 U.S.C. 1962-5b
Footnote; 100 Stat. 4190) is amended as follows:
(1) In subsection (b) by striking paragraph (2) in its
entirety and redesignating paragraphs (3), (4), and (5)
as paragraphs (2), (3) and (4) accordingly; and
(2) In redesignated paragraph (3) by striking the words
``to collect a civil penalty imposed under this
section,''.
Indemnification: Section 101(e) of WRDA 1986 refers to Section 221
of the Flood Control Act of 1970 and in paragraph (e)(2) requires that
a Project Cooperation Agreement provide that the local sponsor hold and
save the United States free from damages due to the construction or
operation and maintenance of the project, except for damages due to the
fault or negligence of the United States or its contractors. As a
matter of policy, the Corps has expanded this requirement and has
demanded in its ``model'' agreement that the local sponsor also hold
and save the Government free from damages due to the construction,
operation and maintenance of local service facilities and berths
adjacent to local service facilities as well as betterments, even
though these provisions are not specifically required by statute.
Many local sponsors find that they have a legal impediment to
agreeing to the indemnification that is now required by statute and
demanded by the Corps. The ``hold and save'' provision creates an open-
ended liability that may not be supported by an appropriation, thus
creating a problem under a many state constitutions. Essentially, many
state agencies have a legal problem not unlike the one claimed by the
Corps under the Anti-Deficiency Act. The normal reaction of most local
sponsors when confronted with this provision is to insist on a cross-
indemnification. The Corps takes the position that it cannot provide
the local sponsor with a cross-indemnification providing similar
protection because of the Anti-Deficiency Act. Essentially, it demands
to be indemnified but will provide no indemnification to a local
sponsor, notwithstanding the fact that the design and implementation of
the project is controlled by the Corps.
AAPA believes a possible remedy to the problem is to authorize the
Corps to require its contractors to carry insurance that protects both
the contractor, the non-Federal sponsor and the Federal Government. The
cost of such insurance should be included in the total project cost and
shared accordingly between the Federal Government and the non-Federal
sponsor. This, we believe, not only addresses the indemnity problem but
provides protection to the public.
AAPA requests that the Committee consider language such as the
following:
SEC.----. INDEMNIFICATION
Section 101 of the Water Resources Development Act of 1986,
as amended, is modified as follows:
(1) Paragraph (e)(2) is deleted;
(2) Paragraph (e)(3) is renamed ``(e)(2);'' and,
(3) The following new section is appended at the end of
the section:
``(f) Indemnification Costs of insuring the
Federal Government and non-Federal sponsor
against damages due to the construction or
operation and maintenance of the project shall
be shared in the same proportion as the sharing
provisions applicable to the project.''
Relocations: Section 101 of WRDA 86 requires the non-Federal
sponsor to provide the lands, easements, rights-of-way, relocations
(other than utility relocations) necessary for the Federal project. The
non-Federal sponsor also is to perform or assure the performance of all
relocations of utilities necessary to carry out the project. Under
Section 101 of WRDA 86, the value of lands, easements, rights-of-way,
relocations and the costs of utility relocations borne by the sponsor
shall be credited to the non-Federal sponsor's share of project costs.
In practice, non-Federal sponsors do not have sufficient authority
to compel owners of property needing to be relocated from within a
navigation channel to remove their property. In most cases, such
property was placed under the navigation channel pursuant to a Section
10 permit issued by the Corps of Engineers under the Rivers and Harbors
Act of 1899. This has resulted in numerous lawsuits and counter-suits
as non-Federal sponsors seek to compel relocations by private entities,
and private entities seek to have the non-Federal sponsors pay the cost
of the relocations.
AAPA believes it is appropriate for the Federal Government, acting
through the Corps of Engineers, to compel property owners to remove or
relocate all obstructions to navigation improvement projects which are
located within the navigable waters of the United States. In fact,
Section 10 permits, which authorized the placement of the property in
navigable waters originally, contain conditions requiring such removals
when directed by the Corps. The utilities were installed with the
assumption that they would be subject to those conditions. Property
owners have argued that the WRDA 1986 language supersedes the permit
condition, and the Corps has been reluctant to enforce the permits
until the non-Federal sponsor has exhausted all efforts to compel the
removal or relocation.
The ability of the Corps to permit the placement of property in
navigable waters and to compel its removal stems from the concept of
``navigation servitude.'' The navigation servitude stems from the
Commerce Clause of the U.S. Constitution. The case law is very solid
that against the U.S., there is no right to compensation when a Federal
project requires use of submerged lands. In U.S. v. 597.75 acres of
land, U.S. District Court, Western District of Louisiana in 1965, the
court stated, ``There is nothing novel or unconstitutional in the
requirement that the defendants relocate pipelines they constructed in
and across the bed of a navigable river. The right of free unobstructed
navigation is of paramount interest to the welfare of the citizens of
the United States.'' 241 F. Supp. 798, at 799.
This should not be confused as exercising a right for a non-Federal
sponsor. These are still Federal projects, authorized by Congress. In
fact, it is the U.S. who determines what interests need to be acquired
to meet the requirements of the Fifth Amendment. If the Federal
Government already has a power, it does not need to and should not ask
the non-Federal sponsor to provide the for the removal or relocation.
AAPA's proposal would ensure the transfer of all costs for removals
and relocations in navigable waters from the public sector to the
owners (private sector), who in fact installed their utilities assuming
that they would have that responsibility. These costs are estimated to
be millions of dollars per year for Corps projects. It would relieve
some pressure on the Federal budget and allow these dollars to be
redirected to other urgent infrastructure needs. This change will also
reduce delays in projects caused by litigation.
AAPA requests that the Committee consider language such as the
following:
SEC.----. RELOCATIONS AND REMOVALS IN NAVIGABLE WATERS
Section 101 of the Water Resources Development Act of 1986,
as amended, is modified as follows:
(1) Paragraph (a)(2) following the word ``relocation'' is
modified by inserting the phrase ``(except for those
relocations located within navigable waters of the United
States)''.
(2) Paragraph(a)(4) is modified as follows:
``(4) UTILITY RELOCATIONS. The non-Federal interests
for a project to which paragraph (1) applies shall
perform or assure the performance of all relocation of
utilities necessary to carry out the project, except
that the cost of each such relocation within navigable
waters of the United States shall be borne by the owner
of the facility utility being relocated.''
Other Improvements to Help Local Sponsors Participate in Navigation
Projects
Credit For In-Kind Services During Construction: While WRDA 1986
allows local sponsors to receive credit for in-kind services during
feasibility studies, current law does not allow for such credit during
preliminary engineering and design or construction. AAPA is seeking
authorization to allow credit for in-kind services during design and
construction of specifically authorized harbor projects. This
authorization should also allow local sponsors to be given credit for
design and construction work carried out before a cooperation agreement
is signed between the local sponsor and the Corps of Engineers if the
work done is integral to the project. This proposal would not increase
Federal costs. This proposal provides an opportunity to better use the
capabilities of local sponsors in collaborative ways that will promote
a more efficient and timely project implementation process while
maintaining a strong Corps engineering, design and construction
management role.
AAPA requests that the Committee consider language such as the
following:
SEC.----. CREDIT FOR IN-KIND SERVICES
Section 101(d) of Public Law 99-662 (33 U.S.C. 2211(d)) is
amended to read as follows:
``(d) Non-Federal Payments of amounts incurred under Pre-
construction engineering and design and during construction-The
amount of any non-Federal share of the cost of any navigation
project for a harbor or inland harbor incurred under pre-
construction engineering and design and during construction
shall be paid to the Secretary on an annual basis during the
period of construction beginning not later than 1 year after
construction is initiated. [Larry: Can we add a sentence saying
non-feds can accelerate payment if they choose to?] The non-
Federal interest may accelerate payment of the non-Federal
share, advance funds subject to credit or reimbursement, or
make in kind contributions at any time after a Pre-Construction
Engineering and Design Agreement for the project is executed.
The non-Federal share of the costs of the project incurred
under pre-construction engineering and design and during
construction may be provided in cash or in the form of in-kind
services or materials. [Larry: I suggest adding the following
sentence to make clear credit can be made for non-fed work
before PCA is signed: The Secretary shall allow credit toward
the non-Federal share the cost of design and construction work
carried out by the non-Federal interest before the date of
execution of a project cooperation agreement]''. The Secretary
shall allow credit toward the non-Federal share of project
cost: (1) before, during, and after construction for planning,
engineering, and design and construction management work that
is performed by the non-Federal interest and that the Secretary
determines is necessary to implement the project; and (2)
during and after construction for the costs of construction
that the non-Federal interest carry out on behalf of the
Secretary and that the Secretary determines is necessary to
implement the project.
Deep-Draft Cost Sharing: A 1998 report prepared by the U.S.
Maritime Administration documents the status and trends of general
cargo ship design and its impact on transportation infrastructure\11\.
The report finds that the rate of growth in containerized cargo in the
U.S. is at 6 percent per year, and predicts that by 2010 nearly 90
percent of general cargo will be shipped in containers and that nearly
33 percent of those containers will be transported on vessels carrying
more than 4,000 20-foot equivalent container units (TEUs). Such
vessels, commonly referred to as ``megaships,'' are a key element in
the strategies of the world's leading steamship carriers as they seek
to meet growing trade requirements and optimize operations through
global alliances. These large vessels obviously pose major challenges
to ports because of their size and the potentially large number of
containers they could discharge or load during any one port call. Key
requirements will include suitable terminal facilities, container
yards, rail and highway access, as well as deeper channels and berths.
Simply put, the standards have changed and what was once the exception
has become the norm.
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\11\ The Impacts of Changes in Ship Design on Transportation
Infrastructure and Operations, U.S. Maritime Administration, February
1998.
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Prior to 1986, a channel depth of 45 feet would accommodate almost
all of the container ships in the world's fleets. The Clarkson
Containership Register indicates that most of the container ships in
1986 had maximum capacities of less than 3,000 TEUs of containerized
cargo with average drafts of about 38 feet. There were only a few
larger container vessels with capacities over 3,000 TEUs which were
built to the maximum size that could be handled by the Panama Canal.
Most of these panamax vessels had drafts of 41.6 feet or greater.
Vessels with these drafts cannot use a 45-foot deep channel when fully
loaded.
In the years since 1986, the containership fleet has undergone a
major evolution. The world's major ocean carriers have greatly
increased the size of the ships and the number of large ships they use.
Today there are over 200 ships classified in the panamax sector of the
fleet. These are vessels that carry between 3,000 and 4,500 TEUs and
are built to the maximum size of the Panama Canal. As stated above,
most panamax vessels cannot use a 45-foot deep channel when fully
loaded.
Furthermore, in 1996, a new class of post-panamax ship was
introduced into the world's container shipping fleet. Today there are
over 150 of these large ships in service. There are currently 68 post-
panamax ships, with a capacity of in excess of 6,000 TEUs, in service
with an additional 59 being built or on order. These vessels are
generally wider than can be handled in the Panama Canal. They also have
deeper drafts. The average draft of the current post-panamax ships is
42.9 feet. The largest ships have drafts of about 45.5 feet, which
require channels that are at least 50 feet deep. An analysis contained
in the Maritime Administration report cited earlier suggests naval
architecture constraints on ships as large as 15,000 TEUs would not
result in drafts much greater than 46 feet. Thus, with allowances for
under-keel clearance, vertical ship movement (squat), and uncertainty
in predictions of future ship design, AAPA believes the norm for
general cargo navigation channels will be as great as 55 feet.
As I described earlier, in WRDA 1986, Congress created a cost-
sharing formula for navigation improvement projects based on the needs
of the general cargo fleet at that time. Specifically, a cost-sharing
transition was set at 45 feet, above which (i.e., shallower) local
sponsors would pay a 35 percent (25 percent plus 10 percent over 30
years) cost-share and below which (i.e., deeper) would be cost shared
at 60 percent (50 percent plus 10 percent over 30 years) local.
According to the legislative history for WRDA 1986, the rationale for
setting 45 feet as the transition to significantly greater local
participation was that,
The Committee has surveyed the manner of financing navigation
projects in most developed countries. Based upon this survey
the committee found that most of the national Governments in
those countries financed general navigation improvements,
including main and entrance channels to a depth of 45 feet to
accommodate general cargo vessels (emphasis added). This
assistance is normally justified on the basis of national and
regional economic development. At the same time, most of these
countries require local contribution to the cost of
construction and maintenance of navigation projects in excess
of that depth to accommodate larger, specialized vessels
increasingly operating in liquid and dry bulk trades.
The bill, as reported, applies this experience by reconciling
national investment policy toward future port development with
prevailing international practice. This is accomplished through
the establishment of 45 feet as the maximum standard depth for
ports not designed to accommodate deep draft vessels, and the
declaration of channel depths in excess of 45 feet as ``deep
draft ports.'' A graduated scale for the local contribution to
the cost of project construction depending upon depth
culminates in a 50:50 Federal/local cost-sharing formula for
deep-draft navigation projects.
While Congress intended for non-Federal sponsors to pay a greater
share for projects used by ``specialized vessels increasingly operating
in liquid and dry bulk trades,'' it intended for more moderate cost-
sharing for ports handling generalized cargo. As discussed above,
because of the country's explosion in international trade, greater
numbers of general cargo vessels are large containerships requiring
depths greater than 45 feet. In addition, many of the benefits of the
cargo moving through these ports are accrued outside of the port area,
while a greater share of the cost of building these facilities are
borne within the port area. The justification for setting a punitive
cost-sharing rate for projects greater than 45 feet is no longer
justified. For these reasons, AAPA believes Congress should revise the
definition of deep-draft harbor and the cost-sharing formula to reflect
the changes that have occurred in the general cargo fleet. AAPA
requests that the Committee consider language such as the following:
SEC.----. DEEP DRAFT COST SHARING
(a) Section 101 of Public Law 99-662 [100 Stat. 4082-4084]
and is amended by striking ``45'' wherever it appears in that
section and inserting ``55'' in lieu thereof.
(b) Section 214(1) of Public Law 99-662 [100 Stat. 4108] is
amended by striking ``45'' and inserting ``55'' in lieu
thereof.
Port And Harbor Dues: As a means of cost recovery of the required
non-Federal share of a navigation project, WRDA 1986 included a
provision that authorized a non-Federal interest to levy port or harbor
dues in the form of tonnage duties or fees to help finance the local
share of project construction cost. During the course of the
legislative process, conditions, criteria and limitations were added
that effectively impeded their use by non-Federal interests. The
conditions imposed so limited the use of the provision that over the
past 15 years, ports have found it to be virtually unusable.
The statutory authorization to collect port dues or fees was
considered to be in addition to any legal authority already held by
ports. There are relatively few reported cases on the subject, but the
existence of limited legal authority for the establishment of harbor
user fees is well settled law.
The key case describing existing authority is Clyde Mallory Lines
v. State of Alabama State Docks Commission, 296 U.S. 261 (1935) in
which the U.S. Supreme Court reaffirmed the authority of a State
created port authority authorized to ``conduct the operation of . . .
harbors and seaports within the State'' and ``to adopt rules . . . for
the purpose of regulating, controlling, and conducting the said
operation: and with power ``to fix from time to time reasonable rates
or charges for all services and for the use of all improvements and
facilities provided under the authority'' as sufficient authority to
levy a ``harbor fee'' for the privilege of mooring a vessel in a harbor
separate from wharfage or fees for other services. Implicit recognition
of the improved harbor itself as a facility underlies the Court's
reasoning. The charge was upheld as a valid charge incident to the
exercise of the police power to ensure the safety and facility of
movement of vessels in the harbor.
Clyde Mallory is the most recent embodiment of a long line of U.S.
Supreme Court pronouncements upholding the authority of a State, or a
political subdivision of a State, under its regulatory authority to
levy a toll or fee as compensation for navigation improvements or other
services. This should be distinguished from (a) a duty of tonnage based
exclusively on navigation, or entry upon State waters, subject to
constitutional challenges as violative of the interstate commerce
clause of 3 of Section 8, or tonnage duties clause 3 of Section 10 of
Article 1 of the United States Constitution, or (b) a fee for specific
services rendered such as wharfage or dockage.
The legislative history of Section 208 appears to reflect an intent
of Congress to supplement common law authority emphasizing the
existence of both direct and indirect benefits to be exercised by ports
in the case of a navigation project in particular. The section by
section analysis of the predecessor bill, the Port Development and
Navigation Improvement Act of 1981 (incorporated into WRDA 1986
substantially without legislative change) explained that it was the
intention of the drafter that a mechanism be provided to permit the
local share to be borne in whole or in part, on a self-sustaining basis
by public ports, agencies or municipalities. Originally, the mechanism
was an extension of the consent of Congress to local agencies to levy
an appropriate duty of tonnage on U.S. and foreign flag vessels, and
the import and export cargo loaded or discharged by those vessels.
The need for legislation to implement the original concept to
expand common law authority was required because of Article I, Section
10, Clause 3 of the United States Constitution, which provides that a
state may not impose a ``duty of tonnage'' upon ships without the
consent of Congress. The clear legislative intent was to supplement the
aforementioned Clyde Mallory decision that distinguished and permitted
a state to impose a harbor fee used for harbor policing under a theory
that it represented a fee for services to and enjoyed by the vessel and
not a ``duty of tonnage.'' This concept that the payments must be
related to the benefits received to avoid being a duty of tonnage was
incorporated in the harbor dues safe harbor provision of WRDA 1986
based upon the District of Columbia 1985 Circuit decision in the
National Cable Television Association case.
Ironically, while legislation was considered necessary because the
fees levied might ultimately extend beyond common law authority, i.e.,
those related to benefits received, the final legislation became overly
restricted by conditions ostensibly relating to benefits but more
intended to provide redundant protection to classes of vessel owners at
ports' expense. In the process, the final legislation lost sight of the
principal purpose of the legislation to finance navigation project
construction while expanding the role of local ports as non-Federal
interests in planning, financing, and constructing those improvements
through being given delegated Federal authority to do so. Thus, the
legislation did little to expand already existing authority.
Significantly, only one AAPA member port has successfully invoked
Section 208 authority since enactment of WRDA 1986.
Section 208 (a)(1) imposes restrictions on the purposes for which
dues may be levied. They may be levied only in conjunction with a
harbor navigation project, or separable element, whose construction is
complete. The dues must be used to finance the non-Federal share of
construction and O&M (up to 100 percent of project cost). There are
also limitations on the type of vessel that may be subject to a levy.
Port or harbor dues may not be levied in conjunction with a deepening
feature of a navigation improvement project on any vessel if that
vessel, based on its design draft, could have utilized the project at
mean low water before construction. Section 208 (a)(4) dealing with the
formulation of Port or Harbor Dues requires that they be levied only
``on a fair and equitable basis'' without clarifying what is fair and
equitable. At first glance, this may be perceived as fertile ground for
statutory challenge, although Federal courts (including the U.S.
Supreme Court) have had little difficulty in upholding Federal user
fees established by agencies in a different context.
The levy of dues only when a project is complete may make it
difficult to generate a revenue stream to support funding when the
local sponsor must pay for the project through the use of revenue
bonds. Local shares typically are paid for out of the proceeds from the
sale of state or local bonds supported by the taxpayers rather than
port revenues or port dues. The limitation imposed on the type of
vessels that may be subjected to harbor dues may leave a pool of
available vessels so small that recovery of a non-Federal interest's
share of project costs would result in exceedingly high rates that
would drive those ships away to another port. Port diversion is a
concern that would trouble any port authority but should be a concern
to be dealt with locally rather than have options taken from it.
While the Act provides a theoretical tool for ports to use to
recover their huge contributions to the cost of port navigation
projects, the imposition of conditions, restrictions and criteria on
the right of a port to levy dues has resulted in the use of the right
to be difficult if not impossible. AAPA believes a revision to Section
208 can make it more usable to a greater number of ports, while
protecting shallow draft vessels from being subject to any port and
harbor fees established under this section. At a minimum, restrictions
and conditions on the use of Port and Harbor dues should be eliminated
and local sponsors given the greatest flexibility possible to recover
the huge investment they must now make to preserve our nation's ports.
The AAPA hopes to present a separate specific proposal relating to that
funding.
AAPA proposes the following recommended bill text:
SEC.--. PORT OR HARBOR DUES
Port-Led Projects: In WRDA 1986, Congress included several
provisions that attempted to fashion a fast-track mechanism for the
planning and construction of navigation projects. These provisions were
intended to provide flexibility to non-Federal sponsors where the
traditional Corps of Engineers-led planning and construction processes
were not adequate to deliver a needed navigation improvement in a
timely manner or for other reasons.
Section 203 authorized non-Federal sponsors to conduct feasibility
studies of potential navigation improvement projects. Section 204
authorized non-Federal sponsors to construct navigation projects and
provided for the reimbursement to the non-Federal sponsors of the
Federal share of the project and for the assumption of maintenance
responsibility of the project by the Federal Government under specified
conditions. Section 205 established procedures for a non-Federal
sponsor to seek the streamlined processing of Federal permits for the
construction of navigation improvement projects solely under the
planning, construction and funding of the non-Federal sponsor. under a
permit regime prior to project authorization.
While Section 203 has been used by several ports to accelerate the
development of navigation projects, Sections 204 and 205 have not been
as widely used. In most instances, a non-Federal sponsor seeking
reimbursement and Federal maintenance under Section 204 will enter into
a reimbursement agreement analogous to a project cooperation agreement,
but based upon experience may not be given credit for certain
expenditures or obligations incurred either prior to authorization or
date of agreement (although in some instances for certain projects
exceptions have been made both administratively and legislatively).
In other instances, a non-Federal sponsor may undertake a project
exclusively under Section 205 in order to initiate the project in the
most expeditious manner using port-generated funds. However, Section
205 does not authorize reimbursement of the Federal share or assumption
of maintenance under this provision.
Under current law in order for a non-Federal Sponsor to take full
advantage of Sections 204 and 205 as enacted, the Sponsor must execute
a Reimbursement Agreement before undertaking any work--including work
done under permit with Corps approval. Based upon experience, if the
Corps approves a project applying the trilogy of requirements-
economically viable, engineeringly feasible and environmentally
acceptable even if additional mitigation measures are subsequently
required, there is no reason why a project may not be approved as-built
and a favorable Chief of Engineer's report being the vehicle for
subsequent congressional authorization for reimbursement subject to
availability of appropriations and future Federal maintenance.
For these reasons, Sections 204 and 205 should be revised and
updated in light of project experience and increased local sponsor
capabilities that were largely non-existent in 1986. More options can
be created to effect a seamless transition toward project authorization
with proper credit given for prior work by the project sponsor, as well
as to address under the project definitional umbrella elements that are
becoming increasingly commonplace today such as the need to consider
all available dredged material disposal options including confined
upland disposal early in project planning.
AAPA requests that the Committee consider language such as the
following:
SEC.--. CONSTRUCTION OF PROJECTS BY NON-FEDERAL INTERESTS
Section 2232 of Title 33, United States Code is amended as
follows:
(a) In subsection (a) by inserting adding after the words
``subject to'' the words ``entering into to a cooperative
agreement with the Secretary under subsection (e) of this
Section or under Section 2233 subject to'';
(b) Paragraph (e)(1) is amended:
(1) By inserting after the word ``Acts'' the words for the
liquidation of contract authority,''
(2) By amending subparagraph (A) to read as follows:
``(A) Before authorization of the project----
(i) The Secretary approves the plans of construction of the
project by the non-Federal interest or approves the project, or
separable element, as built; and
(ii) The Secretary finds before approval of the plans of
construction of the project that the project, or separable
element, is economically justified and environmentally
acceptable, or as built that the project, or separable element
is complete and substantially in compliance with appropriate
engineering and design standards and applicable environmental
standards; and''; and
(3) By amending subparagraph (B) to read as follows''
``(B) The non-Federal interest and the Secretary
enter into a cooperative agreement under this Section
and obligate themselves to pay their respective shares
of the cost of construction and maintenance of the
project under this chapter.''
(c) Paragraph (e)(1) is amended by striking the word
``construction'' and inserting the words ``undertaking any
operation and maintenance,''
SEC.--. COORDINATION AND SCHEDULING OF FEDERAL, STATE AND
LOCAL ACTIONS
Section 2233 of Title 33, United States Code is amended:
(a) In subsection (a) by inserting a comma after the word
``project'' followed by the words ``or separable element
(including a project constructed under Section 107 of the River
and Harbor Act of 1960 ((33 U.S.C. 577)),'' and
(b) By redesignating subsection (g) as subsection (h) and
inserting the following new material in redesignated subsection
(g), and by redesignating subsections (h) and (i) as (i) and
(j) accordingly as follows:
``(g) Reimbursement--Subject to the enactment of
Appropriations Acts for the liquidation of contract authority,
the Secretary may reimburse any non-Federal interest an amount
equal to the estimate of Federal share, without interest, of
the cost of construction of any authorized harbor or inland
project, or separable element thereof, or separable element
(including a project constructed under Section 107 of the River
and Harbor Act of 1960 (33 U.S.C. 577),'' constructed under
this section in the same manner and under the same terms and
conditions as under Section 2232 of this chapter.''
S. 1987
AAPA does not have a formal position on S. 1987, the Corps of
Engineers Modernization and Improvement Act. Corps of Engineers
projects focus on diverse social, economic development and
environmental protection needs of the Nation. This bill as crafted,
however, could have a significant impact on the marine transportation
system in the U.S., and the ability of the Corps of Engineers to
undertake vital water resources projects. Therefore, AAPA strongly
encourages the Committee to carefully consider all negative
ramifications of this proposal.
Issues to consider when reviewing this legislation include:
<bullet> Directly and indirectly increasing the cost of projects;
<bullet> Directly and indirectly constraining the benefits
attributable to projects;
<bullet> Directly and indirectly extending the time to complete
projects; and,
<bullet> Setting stricter economic performance criteria and
deadlines by which projects are automatically deauthorized, which may
impact some current projects.
At the same time, the bill would impose substantial restudying of
authorized projects, the promulgation of numerous new regulations, and
the generation and reporting of vast amounts of project data that would
involve a significant diversion of Corps resources. Many of the
provisions do not recognize existing project formulation policies and
processes by requiring activities that duplicate existing Corps
practices or misstating the nature of existing policies.
Virtually no other Federal public works program is subject to this
level of regulation from Washington. The national highway programs, the
airport improvement programs, drinking water and waste water treatment
programs are all highly decentralized and decisions about the
formulation and selection projects are done at the state and local
levels following broad guidelines related to the ability to receive
Federal funding. In addition, the Corps of Engineers programs are rare
among other Federal public works program in using benefit-cost
evaluations in formulating projects.
Like most major development projects, both public and private, the
Corps of Engineers' water resources projects often generate significant
public controversy about the appropriate use of public resources and
the potential adverse effects of the project. The Corps of Engineers
process for formulating water resources has developed over the last 35
years and includes numerous requirements for detailed alternative
evaluations, multi-objective planning, impact assessment, public
involvement, and regulatory compliance. Sometimes, in the successful
cases, this process leads to timely, cost effective and socially
beneficial projects. In too many cases, this process leads to
protracted conflict, lost social opportunities, and wasted resources.
While the congressionally crafted process vests in the Corps of
Engineers the central role of balancing all of the competing demands
and interests related to water resource projects, the agency by no
means has the final say in selecting projects. Several Federal agencies
must approve aspects of the process and the Administration and Congress
have numerous opportunities to review, approve and fund individual
projects. S. 1987 would remove this broad discretion from the Corps of
Engineers in conducting the balancing needed to formulate successful
public projects and would replace it with narrowly focused, stricter
project standards and ``independent review'' of the agency's
decisionmaking that would strip away any agency discretion afforded in
judicial proceedings.
Under the current system, it often takes between five and 10 years
or more to move a project from problem identification to the start of
construction. S. 1987 would create a process that is even less
efficient than the current system. In the Water Resources Development
Act of 2000, the Congress directed the National Academy of Sciences to
study the need for improvements to several areas of the Corps of
Engineers process. Congress should not undertake any significant
changes to the process for formulating and authorizing Corps of
Engineers projects until it thoroughly reviews the existing process,
clearly identifies the sources of problems with the process, and fully
understands the likely consequence of its intended solutions. We urge
the Congress to defer action on attempts to fundamentally alter the
process for formulating and authorizing Corps of Engineers projects
until the NAS' studies are completed and Congress has had an
opportunity to gather sufficient information about the issues through
hearings or other appropriate means.
Conclusion
Thank you for the opportunity to testify today. As I hope we have
made clear in this testimony, the Corps of Engineers plays a vital role
in ensuring the nation's marine transportation system (MTS) meets the
needs of the nation's businesses and consumers. The MTS is a complex,
market-driven system that provides many benefits to the Nation. Federal
investment in one part of this system navigation channels is critically
important to the success of the system and produces benefits to the
Nation far in excess of the investment.
AAPA and the public port authorities of our country, the agencies
on whom the responsibility for the development and operation of our
nation's ports rests, will continue to work with the Corps and Congress
to keep these essential arteries of international commerce open in an
efficient, cost effective and environmentally protective manner. To
ensure our nation's continued international competitiveness, it is now
more important than ever for Congress to continue to invest in an
improved and efficient water transportation system.
______
Responses by Thomas J. Chase to Additional Questions
from Senator Jeffords
Question 1. What is your association's position on regional port
analysis?
Response. A number of questions must be clearly thought through
related to the issue of regional port analysis, including who does the
analysis (e.g., Federal, regional, state, local), what is the size of
the region, what factors are analyzed, what are the goals of the
analysis, and how is the analysis used in decisionmaking about
improvements to the port system.
There is no doubt that the structure of the nation's ports system
has transformed over the last 50 years from being a collection of
discrete ports primarily serving local markets and discrete
hinterlands. More recently, in addition to serving local markets, a
greater number of ports now have the ability to expand, and are
expanding, their hinterlands to include much of the nation. This
blending of hinterlands has been driven by improvements in the nation's
surface transportation system, the integration and expansion of the
nation's railroad system, and deregulation of transportation services
in these two modes.
This transformation of the port system has occurred at the same
time as the Nation has seen an explosive growth in its demand for
maritime transportation services and as technological changes have
transformed the way goods are transported around the world. The
flexibility inherent in the current governance structure of the
nation's port system has allowed port communities to develop facilities
and services to meet these market-driven demands. The evidence is quite
clear that the nation's port communities, in partnership with the
Federal and state governments and the private sector, have adapted to
these unprecedented demands by expanding the nation's capacity to
transport its foreign trade efficiently, cost-effectively, and with due
care for the environment. The challenge before us now is whether we
will continue to meet growing demand in the future.
Throughout this period, though, concerns have been raised about,
among other things, whether public resources are being allocated
efficiently in port development; whether we have too many ports; and,
whether these ports are focused on the right activities. In 1976, the
National Academy of Sciences published a report concerning these
issues.\1\ The report provides a comprehensive assessment of the issues
related to port development. The committee directly examined the port
development decisionmaking structure and concluded:
---------------------------------------------------------------------------
\1\ Port Development in the United States, Panel on Future Port
Requirements of the United States, Marine Transportation Research
Board, National Research Council, National Academy of Science,
Washington, DC, 1976.
---------------------------------------------------------------------------
A basic conclusion of the Panel on Future Port Requirements of the
United States is that centralization of planning for U.S. ports is
neither desirable nor practicable. It appears not feasible to determine
in a centralized approach, either for the short-run or for the long-
term, the optimum amount or character of port development that will be
required for the Nation as a whole, for individual coastal ranges, or
for local areas. (p.126)
In addition, the NAS report endorsed the multi-objective planning
approach adopted by the Water Resources Council (in the then existent
``Principles and Standards''), which sought to quantify the benefits
and costs of development alternatives in monetary terms. The report
also recommended that ``the Corps of Engineers should conduct regional
as well as specific cost-benefit analyses to be certain that benefits
are not overestimated when evaluating port improvement projects (p.
149).''
While we do not believe the current set of ``Principles and
Guidelines'' (P&G), which was adopted by the Water Resources Council in
1983, is perfect, it does provide for the Corps of Engineers to assess
the impact of a specific port project on other ports through a
procedure called ``multi-port analysis.'' According to the P&G,
multiport analysis is ``a systematic determination of alternative
routing possibilities, regional port analyses, and intermodal networks
that may require the use of computer modeling techniques. The data
needed for such a determination are often difficult to obtain;
therefore, interviews with knowledgeable experts will often have to be
relied upon. (p. 65)''
In practice, because of the complexity of conducting these studies,
the Corps of Engineers often limits the types of potential benefits it
considers for a navigation project to only those which are unlikely to
induce cargo diversions from other ports in order to avoid the need for
a comprehensive multiport analysis. Provided these benefits are
sufficient to justify a project, most local sponsors agree to this
approach to avoid the expense and delays resulting from such a study,
even though it may seriously understate the actual benefits of the
project.
With regard to the specific proposal for regional port analysis
contained in S. 1987 (Section 5(b)), AAPA has a number of concerns.
This section establishes a requirement for the ``detailed and thorough
consideration'' of three highly complex assessments of potential
regional effects of individual navigation improvement projects. Because
of their complexity, these assessments will almost always be expensive
to undertake and contain substantial uncertainty. Ultimately, these
assessments are unlikely to provide additional value to the
decisionmaking process, will likely increase the cost and time to
formulate projects, and do little to reduce the level of controversy
around projects because of the additional complicated and uncertain
studies that will be produced.
We also have the following concerns with each of the three
assessments called for in S. 1987. First, the requirement for an
assessment of the economic impacts of a project on other ports within a
region appears to be unnecessary in light of the current requirement
for multiport analysis under the P&G. Second, we are unclear about what
would be required for a ``detailed and thorough consideration of
cumulative environmental impacts of a project within the region.''
Given the expansive definition of a region within this section, would a
port in Florida, for example, be required to consider the environmental
effects of its project in addition to the effects of all activities on
the entire U.S. Atlantic seaboard.
Finally, we are concerned with the requirement for an assessment of
the cumulative impacts of the project on overcapacity in the region.
The NAS report reviewed the issue of over capacity, and found:
The panel has concluded that it cannot quantitatively determine the
existence of redundancy. Redundancy implies excess capacity, and it is
impossible to provide an adequate measure for the capacity of a port.
There are many reasons for this measurement problem: One is that the
nature of cargo ships and productivity of facilities will vary greatly
through time. Cargoes are not uniform. Peaking--the concentration of
demand during limited periods of time--occurs in port operations as in
all other aspects of transportation. It is economical [sic] and, in
some instances, physically impossible to provide for the maximum peaks.
At the same time, it is undesirable that undue waiting time, leading to
costly delays to vessels and cargo, occur because of failure to provide
for periodic peaks. Such delays, in common, would result in traffic
being diverted to competing ports or, in some instances, not moving at
all.
Excess capacity, in one sense, does not exist even though a port or
terminal may have 100 per cent utilization of its capacity for only
short periods of time, if ever. Consideration of peak activities, other
than for very infrequent occasions, is an important element of port
planning. Capacity must be supplied in order to provide adequate
service to the shipping public as well as to anticipate possible
national emergencies, when even the largest ports may be crowded.
Another important reason, in the judgment of the panel, for
providing capacity in excess of normal demand is to create competition
among various ports and port services to the advantage of the shipping
public. That is, the public can be reasonably assured not only of
continued availability of port services in the event of accidents or
other closures or reductions but also of competitive rates and
services. Thus, the shipper receives a series of options that would not
be available unless interport competition continued (p. 128).
We believe that assessments of overcapacity are unlikely to provide
additional value to the decisionmaking process for navigation projects,
will likely increase the cost and time to formulate projects, and do
little to reduce the level of controversy around projects because of
the additional complicated and uncertain studies that will be produced.
Question 2. Do you believe that such analyses could significantly
improve the planning of navigation in the United States port system and
result in more economic and financial efficiencies in port development
for the country?
Response. For the reasons stated in response to Question 1., above,
we are concerned that the complexity and uncertainty inherent in such
analyses are unlikely to provide additional value to the decisionmaking
process for navigation projects, will likely increase the cost and time
to formulate projects, and do little to reduce the level of controversy
around projects because of the additional complicated and uncertain
studies that will be produced.
AAPA again agrees with the observation made in the NAS report that
``the future port requirements of the United States are subject to an
almost infinite variety of conditions and forces, many of which are
nonquantifiable and unpredictable'' (p. 125). We believe the current
decentralized, market-driven approach to port development has, and can
continue, to serve the country well.
______
Responses by Thomas J. Chase to Additional Questions from Senator Smith
Question 1. I recognize the importance of our nation's ports, both
to national security and international commerce. My concern though is
this ``race to the bottom'' that we see occurring. In your written
testimony, you ask this committee to consider a provision to ease the
non-Federal cost-share for deepening projects, yet in my mind, this
will serve only to encourage more ports to pursue deeper drafts than
they will ever realistically be able to attract. In light of this
problem and the reality of limited Federal resources, would you be
supportive of a regional port planning mechanism?
Response. With regard to whether AAPA would be supportive of a
regional port planning mechanism, please see our response to the
questions of Chairman Jeffords.
I would also like to respond to your concern about a ``race to the
bottom'' and the potential that changes in the cost-sharing formula for
deep-draft harbors will ``serve only to encourage more ports to pursue
deeper drafts than they will ever realistically be able to attract.''
First, nothing in our proposal would alter the requirements for the
Corps of Engineers to justify each navigation project in accordance
with the ``Principles and Guidelines,'' as discussed in my response to
Chairman Jeffords' question on regional port analysis. These procedures
ensure that speculative development of navigation channels is not
undertaken.
Second, the reason AAPA is recommending this change is to re-
balance the Federal-local partnership in port and harbor development
that was established in 1986, after over 200 years of the Federal
Government paying the full cost of harbor dredging. Local ports are
investing billions of dollars each year, without Federal assistance, to
build the landside facilities that handle the nation's waterborne
trade. It is the unbridled growth in this trade that has driven vessels
to get much larger, requiring deeper navigation channels. In setting
the cost sharing formula in 1986, Congress established a threshold to
much higher local cost-sharing at the maximum depth needed for general
cargo vessels (see AAPA's testimony for a summary of the legislative
history). Today, the maximum depth needed for general cargo vessels is
much greater. We believe this change is needed so local port
authorities can devote a greater proportion of their limited resources
to constructing landside facilities rather than paying a high cost-
share for Federal navigation channels.
Finally, we are uncertain about the source of the perception that
there is a ``race to the bottom'' for navigation projects. We are aware
of a total of 14 ports that are studying channels deeper than 45 feet
or have authorized projects deeper than 45 feet that contain
unconstructed features (a list of these projects is appended to the end
of these comments). Of the 300 Corps of Engineers deep-draft harbor
projects in the U.S., this is a very small number seeking projects
deeper than 45 feet.
Question 2. In your opinion, what steps can be taken to ensure that
navigation projects maximize both economic and environmental benefits?
There is not currently a requirement that navigation projects
maximize both economic and environmental benefits. The Congressional
objective for such projects is ``enhancing regional economic
development, the quality of the total environment, including its
protection and improvement, the well being of the people of the United
States, and the national economic development (42 USC Section 1962-
2).'' In establishing the ``Principles and Guidelines,'' the Water
Resources Council identified the maximization of national economic
development benefits as the primary Federal objective.
Consequently, local sponsors of navigation projects are sharing the
cost of projects that only maximize national economic development
benefits. Because the Corps analysis does not consider regional
economic development benefits, local sponsors have a difficult time
explaining to their communities why they should pay for projects that
only have national benefits. Indeed, this controversy has become
especially acute in some areas where local communities perceive that
they are carrying all of the negative effects, such as traffic
congestion and pollution, for projects that only benefit the nation.
Under existing Corps authorities, features can be added to projects
that provide environmental benefits. These project features are cost-
shared separately from the navigation feature, and are common on many
navigation projects. We believe the Corps has sufficient authority to
continue formulating projects with environmentally beneficial features.
Significant obstacles to this approach are finding cost-sharing
partners for the environmentally beneficial features and ensuring the
Corps receive adequate funding.
We do not believe it would be appropriate for the Congress or the
Administration to change the existing policy to require all navigation
projects to maximize both economic and environmental benefits. Local
sponsors of navigation projects are cost sharing the navigation
benefits. Local sponsors are also sharing the cost to ensure that these
projects mitigate their impact on the environment. We are not opposed
to the formulation of multi-objective projects that include navigation
and environmental enhancement features, but we believe the
environmental enhancement features should continue to be cost shared
separately.
Authorized Projects Deeper Than 45-Feet With Unconstructed Features
------------------------------------------------------------------------
Port Notes
------------------------------------------------------------------------
New York Harbor Channels.................. Authorized in WRDA 2000. No
Contracts Have Been Awarded
to date.
Norfolk, VA............................... WRDA 86 authorized a 50-foot
project; to date, the out-
bound lane has been
constructed.
Mobile, AL................................ WRDA 86 authorized a 55-foot
project; to date, a portion
of the project has been
deepened to 45-feet.
Mississippi River, LA..................... WRDA 86 authorized a 55-foot
project; to date, the
project has been deepened
to 45-feet.
Savannah, GA.............................. Authorized in WRDA 1999. No
Contracts Have Been Awarded
to date.
Los Angeles, CA........................... Authorized in WRDA 2000. No
Contracts Awarded to Date.
Oakland, CA............................... Authorized in WRDA 1999.
First Contract Awarded: ???
------------------------------------------------------------------------
On-Going Studes Deeper Than 45-Foot
------------------------------------------------------------------------
Port Notes
------------------------------------------------------------------------
New York Harbor Anchorages................ Feasibility Study (Auth
2004?)
Charleston, SC............................ Reconnaissance Study (Auth
2010?)
Corpus Christi, TX........................ Feasibility Study (Auth
2002)
Port Everglades, FL....................... Feasibility Study (Auth
2002)
Miami, FL................................. General Reevaluation Report
(Auth 2002)
Freeport, TX.............................. Reconnaissance Study (Auth
2012?)
Sabine--Neches Waterway, TX............... Feasibility Study (Auth
2006?)
------------------------------------------------------------------------
__________
Statement of Montgomery Fischer, Policy Director for Water Resources,
National Wildlife Federation
On behalf of the National Wildlife Federation (NWF), I would like
to thank the Chairman, Ranking Member and the members of the Committee
for the opportunity to present the Federation's views on issues
pertaining to water resources development programs of the U.S. Army
Corps of Engineers.
I am Montgomery Fischer, Policy Director for Water Resources at the
National Wildlife Federation. We are the nation's largest not-for-
profit conservation, education, and advocacy organization with more
than four million members and supporters and nine natural resource
centers throughout the United States. The National Wildlife
Federation's family also includes forty-six state and territorial
affiliate conservation organizations. Founded in 1936, the National
Wildlife Federation works for the protection of wildlife species and
their habitat, and for the conservation of our natural resources. With
a graduate degree in Soil and Water Science from the University of New
Hampshire in Durham, my personal work with water resources protection
spans three decades, including working as a commercial fisherman as
well as in the government, academic, and non-profit sectors.
The National Wildlife Federation and our affiliates have a long
history of interest and involvement with the development of our
nation's water resources, particularly as it relates to projects and
programs of the U.S. Army Corps of Engineers.
Much of our nation's wildlife is dependent on critical aquatic
habitat, which includes rivers, streams, bays, estuaries, wetlands and
coastlines. But, our wildlife resources are hurting. Artificially
altering waterways--along with water pollution and introduction of
foreign species--have been identified by the scientific community as
the principal causes of the shocking state of decline of aquatic
ecosystems and wildlife that has been experienced in many regions
across the country. Through its Civil Works and regulatory programs,
the U.S. Army Corps of Engineers has a profound impact on the health of
aquatic ecosystems. While much of the Corps' work in the 20th Century
has had devastating impacts on the natural environment, NWF believes
that with the right direction from Congress, the 21st Century Corps can
become the premier Federal agency for restoring and protecting our
nation's aquatic ecosystems and the species that depend on them. The
Corps' efforts to restore the Florida Everglades is a prime example of
the type of restoration work the Corps should focus on during this
Century.
As this Committee considers proposals for a Water Resources
Development Act (WRDA), a fundamental goal must be to address the
serious and growing crisis in confidence that much of the American
public has about the Corps of Engineers. A series of recent reports and
investigations over the past several years by policy experts and
scientists have found that the Corps' planning process for major water
resource projects is failing in fundamental ways to address
contemporary needs of communities and regions in an environmentally
sound and cost effective manner. A Water Resources Development Act
presents Congress with a critical opportunity to provide the Corps
greater oversight and clearer direction to meet the nation's water
resource needs and to restore confidence in this agency.
NWF congratulates the Ranking Member of this Committee and other
Senators who have sponsored legislation that would make critical,
common sense reforms in Corps programs--particularly, S. 1987, the
Corps of Engineers Modernization and Improvement Act of 2002, and S.
646, the Corps of Engineers Reform Act of 2001.
WRDA SHOULD NOT MOVE FORWARD WITHOUT CORPS REFORM
The National Wildlife Federation strongly supports both S. 1987 and
S. 646 because these bills contain critically needed reforms to improve
and modernize the way the Corps responds to the nation's water
resources development needs and to ensure every project the Corps
undertakes represents a sound, environmentally sustainable investment.
The bills improve the Corps' accountability, modernize its principles
and practices, improve mitigation of wetlands, pull the plug on
projects that no longer make sense, keep Federal costs down, and stop
the ``race to the bottom'' among ports and harbors.
Improve Accountability. S. 1987 and S. 646 would make the Corps
more accountable to help restore the public's confidence in this agency
by:
<bullet> requiring independent peer review for costly projects and
controversial projects;
<bullet> enhancing the public's ability to participate in the
Corps' planning process; and
<bullet> increasing the public's access to information.
Modernize the Corps. S. 1987 and S. 646 would modernize the Corps'
basic approach to developing and planning water resources projects by:
<bullet> directing that the Principles & Guidelines be revised and
updated to define environmental protection and restoration as a co-
equal goal with economic development, and to incorporate other changes
that ensure this goal is carried out; and
<bullet> modernizing the basic criteria used by the Corps to
justify moving forward with a project.
Wetlands Mitigation Improvement.
<bullet> S. 646 would improve the way the Corps mitigates for
wetlands impacted by Corps projects; and
<bullet> both S. 646 and S. 1987 would exclude from economic
justification analyses benefits derived from draining wetlands.
Pull the Plug on Outdated Projects. S. 1987 would help prioritize
the Corps' efforts by:
<bullet> expediting the automatic deauthorization process to reduce
the Corps' burgeoning backlog; and
<bullet> updating the Corps' benefit-to-cost ratios to ensure
taxpayers get a better return on their investment.
Keep Federal Costs Down. S. 1987 would reduce the Federal
Government's burden for sand pumping projects.
Stop the Race to the Bottom. S. 1987 would improve the way the
Corps plans to deepen ports and harbors by requiring regional port
planning.
Given the record of problems that has amassed over the past several
years, the Corps should not be allowed to continue with business as
usual. The problems are so grave, a WRDA should not move forward
without these reforms. I will now spend a few minutes discussing some
of the problems that have plagued the Corps and that the bills seek to
address.
CORPS CRISIS IN PUBLIC CONFIDENCE
There Is No Effective, Independent Technical and Policy Review of Corps
Projects
Mr. Chairman, among the most critical issues that must be addressed
in any potential WRDA is the establishment of an effective, independent
system of technical and policy review by outside experts for Corps of
Engineers projects. For years, the public, other Federal and state
agencies, academicians and scientists, government auditors, and many
Members of Congress have questioned the accuracy of Corps planning
documents, and, in some cases, whether under the present system, the
Corps is capable of being truly objective in planning its projects. In
the 1980's, the General Accounting Office identified numerous serious
issues in this regard. A critical means to help ensure objectivity in
the planning process is to formally engage outside experts to conduct
public reviews of Corps plans and their underlying studies and
assumptions.
In recent years, the number of major concerns regarding the quality
and accuracy of Corps plans has increased in both seriousness and
number, and the need for independent review has become increasingly
clear. During the 1990's, several factors converged to bring about this
situation.
Changes in the Review Process
Since the early 1990's, the level of effective project review has
dramatically decreased within the Corps. In part, this is in response
to continuing calls for ``streamlining'' the planning process and
changes in the general focus of the Corps to operate more as a service
agent, particularly to local project sponsors.
Over the past decade, the Corps has instituted substantial changes
that have greatly weakened what was already a weak and inadequate
review process. Up to the early 1990's, the primary mechanism for
independent review was the congressionally established Board of
Engineers for Rivers and Harbors. This Board, consisting primarily of
Division Engineers, and supported by a staff of 30 to 40 professional
project reviewers, was independent of Corps Headquarters management,
and had the job of top-to-bottom review of all new Corps project
proposals. In WRDA 1992, however, in an effort to cut expenses and
improve efficiency, the Board was abolished, and the professional staff
was reorganized into a Washington Level Review Center, still
organizationally outside the Headquarters Division of Civil Works. In
1995, in another reorganization, the Review Center became a Review
Branch within the Headquarters Division of Civil Works. The staff was
cut from 35 to about 24, and their responsibilities were substantially
expanded to include other duties.
In a series of steps, the responsibility for project technical
reviews was devolved to the Corps Districts themselves, and the
Washington level review became focused on policy compliance only. The
District-level technical reviews are generally conducted by peer staff
or are focused on reviewing the work of Corps contractors. Two years
ago, in yet another reorganization, the Project Review Branch became
the Policy Compliance Support Branch and the Washington level review
staff was cut back to a dozen.
Timeframes for review have been cut to a minimum with final reviews
by other Federal agencies and states running concurrently with that of
Corps headquarters. In recent years, many Corps Districts rush to
complete project plans in order to seek ``contingent authorization'' in
even-years for inclusion in WRDA bills, which puts immense and
inordinate pressure on the Corps to approve projects while deferring
many studies and often deferring serious unresolved issues until after
construction authorization.
The result of all this reorganization has been a substantial
reduction in resources and emphasis on critical review of projects
within the Corps. The devolution of much oversight to the local
District level--where the greatest pressures exist to justify the
projects sought by local sponsors and promoters--often comes at a far
greater ultimate cost to the taxpayers and the environment than it
should.
Lessons From the Upper Mississippi River
The case of the potential $1.2 billion Upper Mississippi River
Navigation Expansion project illustrates the strong need for a system
of truly independent review, outside of the agency. The $56 million
study to expand a system of locks and dams on the Upper Mississippi
River was among the most expensive in Corps history. It became the
subject of an Army Inspector General investigation after a Corps
economist alleged that the books had been cooked in order to justify
the project. In addition, the Department of Defense requested that the
National Academy of Sciences (NAS) review the economic analysis in the
Corps' feasibility report. The Army Inspector General and the NAS found
evidence of bias in the planning process, utter failure by the Corps to
evaluate alternatives to large-scale construction that would be less
expensive and less environmentally damaging, such as scheduling and
tolls, and flawed economic analysis.
The Army Inspector General's November 2000 investigation found:
``Nearly all the economists expressed a view that the Corps (or
individuals within the Corps) held an inherent preference for large
scale construction.'' The Inspector General made clear that problems
were not limited to a single project, but in fact, agency-wide:
``Although this investigation focused on one study, the testimony and
evidence presented strong indications that institutional bias might
extend throughout the Corps. Advocacy, growth, the customer service
model, and the Corps reliance on external funding combined to create an
atmosphere where objectivity in its analyses was placed in jeopardy.''
In addition, the report concluded, ``The overall impression conveyed by
testimony of Corps employees was that some of them had no confidence in
the integrity of the Corps study process.''
In the followup February 2001 report of the National Academy of
Sciences, Inland Navigation System Planning: The Upper Mississippi
River--Illinois Waterway, the NAS recommended: ``The feasibility study
would benefit from a second opinion from an independent, expert, and
interdisciplinary body from outside the Corps of Engineers and
Department of Defense. Congress should thus direct the Corps to have
the waterway system management and lock extension feasibility study
reviewed by an interdisciplinary group of experts--including
environmental and social scientists--from outside the Corps of
Engineers.''
The Corps has attempted to diffuse the significance of the
Inspector General and NAS findings in the Upper Mississippi River
Navigation Expansion case by stating that the feasibility study was in
draft form. This argument may have carried some credibility if there
were a strong independent review process in place. But as just
explained, that process has been weakened severely--without the
Inspector General or the NAS, there is no guarantee that anyone would
have checked the Corps' math. Since then, the Corps has rescoped the
Upper Mississippi Navigation study and is now engaged in a
collaborative process with other state and Federal resource agencies
and stakeholders to identify a comprehensive range of issues and
potential solutions that address navigation and the environment. NWF
would strongly oppose any attempts to prematurely authorize
construction of the expansion project before the Corps submits a
completed report to Congress. A comprehensive approach must not focus
solely on the transportation issues without addressing the very serious
environmental impacts associated with the project. An authorization
request at this time is nothing more than an attempt to once again
short-circuit the planning process.
GAO Report on Delaware River Main Channel Deepening
Mr. Chairman, the findings of the General Accounting Office's (GAO)
report, Delaware River Deepening Project--Comprehensive Reanalysis
Needed, (GAO-02-604, June 2002), released last week, demonstrate a
fundamental breakdown of the Corps' internal project review process. In
the case of this $420 million navigation dredging proposal, the GAO
concluded that Corps review was ``ineffective'' and ``does not provide
a reliable basis for deciding whether to proceed with the project.'' In
March of 2000, the National Wildlife Federation and Taxpayers for
Common Sense identified this project as the No. 2 worst Corps project
in our report, Troubled Waters, because of extremely questionable
economic justification and potential environmental threats to the
Delaware Bay region, yet the Corps continued to claim the project was
completely and properly justified.
The GAO found that despite the Corps' claims of $40.1 million in
annual benefits from the project (largely from transportation savings
to shippers), only $13.3 million in annual benefits had ``credible
support.'' The Corps' economic justification was fraught with
``miscalculations, invalid assumptions, and the use of significantly
outdated information.'' The Corps greatly overstated benefits based
upon improperly double-counted time savings for shippers in both the
Delaware Bay and in foreign ports, ``miscalculated trade route
distances,'' blamed certain unjustified benefits on ``computer error'',
hugely overestimated crude oil and scrap metal traffic projections, and
utterly failed to make the required adjustments in benefit projections
during the 1990's to reflect shipping realities, among many other
fundamental errors.
No stronger case could be made for the need for basic reform of the
project review process.
Other Examples of Projects Under Investigation
As documented by the Inspector General, NAS and GAO reports,
problems within the Corps' planning process are not limited to a single
project study. Other examples of where the Corps' planning process has
failed or is currently under serious investigation include:
<bullet> The Oregon Inlet Jetties Project in North Carolina is also
the subject of a General Accounting Office investigation. There, the
Corps has continually refused to consider alternatives to constructing
stone jetties on environmentally significant public lands on North
Carolina's Outer Banks, despite more than two decades of objections
from other responsible Federal agencies and independent economists, who
believe the Corps economic justification is false. This project is also
subject to a referral to the President's Council on Environmental
Quality.
<bullet> Savannah Harbor Expansion Project in Georgia received
contingent authorization for $230 million of construction in 1999. The
Chief of Engineers approved the project despite numerous basic
environmental and economic issues that were left unresolved over the
objections of other Federal and state agencies and the State of South
Carolina to post-construction authorization. The project is now a
subject of litigation and the Corps is undertaking a major new planning
study.
<bullet> Dallas Floodway Extension Project in Texas is yet another
example of where the Corps has refused to give serious consideration to
a less costly and more environmentally friendly alternative, involving
buy-outs and voluntary relocations being sought by a lower income
community in south Dallas. Last year, the Office of Management and
Budget concluded that the Corps had failed to follow its own planning
guidelines and rules in designing the $140 million (2001 dollars)
project by not identifying the most cost-effective alternative
consistent with protecting the environment. This spring, a U.S.
District Court ruled that the Corps' environmental analysis failed to
comply with the National Environmental Policy Act because the Corps did
not analyze the cumulative effects of the project with other activities
planned in the area. The Administration has refused to budget this
project and the Court ordered the Corps to cease work until it has
completed evaluating the cumulative environmental impacts.
<bullet> Projects in the Lower Mississippi River Basin, such as the
Yazoo Pumps and the Big Sunflower River Dredging Project in the State
of Mississippi would cost more than $200 million and threaten to
destroy hundreds of thousands of wetlands acres, even though less
costly and more environmentally sound options exist to reduce flood
damage risks in the region. An independent economic analysis of the
Corps' Yazoo Backwater pumping plant in Mississippi, revealed that the
Corps overestimated just the agricultural benefits of that project by
$144 million, and that even if all of the remaining benefit
calculations were correct, it could not justify construction of the
project. For the Big Sunflower Project, the U.S. Fish and Wildlife
Service found that the Corps significantly overestimated the costs of
purchasing easements, which could achieve the project objectives
without dredging.
<bullet> Columbia River Deepening Project was recently the subject
of a 6-month investigation by a Portland newspaper, which found that
the Corps had overestimated project benefits by 140 percent, and that
the benefits only amount to 88 cents on the dollar. The proposed
dredging of 103 miles of the lower Columbia has also raised huge
questions about the Corps' proposed mitigation for water quality and
wetlands impacts, and impacts to salmon and other sport and commercial
fisheries habitats. After the newspaper stories ran the Corps agreed to
review its economic analysis.
Independent Project Review Would Strengthen the Corps' Program
At a minimum, Congress should require that studies of all Corps
projects representing a significant investment of taxpayer dollars, and
studies of all projects that generate controversy because of threats
posed to the environment be reviewed by a panel of qualified and
independent experts in various fields, such as economics, engineering,
biology, geology and hydrology. This type of review can take place
without delaying the overall planning process for justified projects,
and would help to restore confidence in the process. Perhaps most
importantly, a system of independent project review would provide the
Corps' own study preparers with a strong incentive to resist pressures
to ``cook the books.'' It would help to ensure that the Corps projects
that do proceed to construction are the best they can be. NWF strongly
supports implementing a system of independent project review, which is
a critical element in each of the Corps reform bills, S. 646 and S.
1987.
Corps' Approach to Planning and Developing Water Resource Projects
Gives Short Shrift to the Environment
Among the key findings of recent National Academy of Sciences
reports are the need for the Corps' planning process to be updated to
reflect current economic and environmental procedures and approaches to
water resources development and management. The 1999 report, New
Directions in Water Resources Planning for the U.S. Army Corps of
Engineers, points out that the 1983 Principles and Guidelines for Water
and Related Land Resources Implementation Studies (``P&G'') have been
frozen in time for almost 20 years. At the same time, economic and
environmental sciences have increasingly evolved sophisticated
methodologies to evaluate benefits and costs of structural and
nonstructural approaches in response to changing public needs and
attitudes toward the environment and natural resources.
The need to amend the P&G to require that national economic
development and environmental protection and restoration be afforded
co-equal status in the formulation of Corps of Engineers projects is
even more relevant today than it was when the NAS made the
recommendation 3 years ago. This is a fundamental change that is needed
in the Corps' project planning that must be included in any future
Water Resources Development Act.
Update the P&G to Reflect 21st Century Principles and Practices
The NAS 1999 New Directions report recommended updating the P&G,
including these specific examples:
(1) Movement away from consideration of the National Economic
Development (NED) account as the most important concern in order to
encourage consideration of innovative and nonstructural approaches to
water resource planning, which can often better address ecological and
social concerns.
(2) Many aspects of the Corps' environmental programs are not
reflected in the P&G requirements because they were enacted after the
P&G was approved in 1983. The P&G needs to be updated to reflect these
new and important Corps programs.
(3) The P&G should be updated to reflect new advances and
techniques for risk and uncertainty analysis.
(4) The P&G should be updated to eliminate biases or disincentives
that work against nonstructural approaches, and to ensure that the
benefits of flood damages avoided by nonstructural projects are
consistently and uniformly considered.
The P&G were written by the Water Resources Council (WRC), which
was created in the 1960's to coordinate the formulation and execution
of Federal water policies. The WRC is dormant today because of lack of
funding. The lack of procedural clarity for how to update the P&G
should be eliminated by identifying a clear mechanism for review.
The Corps' customer-service model, aimed at providing services to
local communities that are sharing the cost of a project, is
undermining the Corps' responsibility to promote the national interest
in its water planning activities. To promote efficient plans and
projects across the nation's river basin systems, the Corps should use
the watershed or river basin, estuarial region, and coastal unit as the
basic spatial units in water project planning, when and where it is
appropriate and circumstances allow. The use of such hydrologic units
for planning can help account for downstream effects of flood damage
reduction projects, for example, or provide a system to account for
cumulative effects of Corps projects. Most of the nation's large river
basins cross state lines, which requires Federal involvement to store
and manage data, model hydrology and analyze system-wide impacts.
The 1999 New Directions report strongly recommends modernizing and
revising the P&G, and requiring that ecosystem protection and
restoration be established as co-equal goals with economic development.
The report also recommends that Corps planning be more oriented to
watershed and regional perspectives, particularly where projects have
significant upstream and downstream impacts, or for functions that
serve or impact regions, such as ports and harbors. Advances in
scientific knowledge, ecological sciences, and economic analytic
techniques should be further incorporated in Corps planning procedures.
A growing cry of support for these changes is coming from states and
professional societies as among the greatest failings of Corps water
resources development programs.
Several of these key elements are included in S. 646 and S. 1987,
and we strongly urge that these provisions be incorporated into WRDA
legislation.
Corps Projects Continue to Threaten Enormous Amounts of the Nation's
Critical Wetland Resources and the Corps Fails to Mitigate
Losses
The National Wildlife Federation is very concerned about the Corps'
growing backlog of mitigation for Civil Works projects. Although the
Corps is required to mitigate for wetlands lost as a result of a Civil
Works project, the existence of a growing mitigation backlog means that
the mitigation is not being done and the environment is suffering.
Despite requirements that mitigation occur concurrently with Civil
Works projects, the Corps has failed to follow through on significant
amounts of acres of mitigation required for projects that are well
underway, or for all practical purposes, completed. For example, in the
Lower Mississippi River Valley, the Corps has been authorized to
purchase tens of thousands of acres of mitigation land that have not
been purchased. The mitigation backlog in the Vicksburg District alone
currently exceeds 28,000 acres. The time lag in completing mitigation
for water resources projects is resulting in an enormous temporal loss
of wetland functions and values in many valuable and vulnerable
watersheds.
Ironically, the Corps reports that permits issued under the entire
Section 404 dredge and fill permit program of the Clean Water Act
account for 24,000 acres of direct wetlands loss per year. The U.S.
Fish and Wildlife Service estimates that on average just under 30,000
acres of wetlands were lost each year between 1987 and 1997 from urban
and rural development. Yet the Corps Civil Works program currently
threatens 300,000 acres of critical bottomland hardwood losses from
just a handful of projects that are among the most controversial in the
Nation to reduce flooding in what are often low-lying areas in 2-year
floodplains to promote marginal soy bean production. We urge the
Committee to help redirect the Corps away from such activities that are
environmentally damaging to wetlands and toward programs that would
help rural economies benefit from restoring wetland resources and
develop sound, sustainable economies that benefit from these special
resources.
Improvements in Wetlands Mitigation
NWF strongly supports the wetland mitigation provisions of S. 646,
which would clarify the definition of concurrent mitigation and improve
the standards for mitigation, including improving the probability of
cost-effectively and successfully mitigating habitat losses. In
addition, S. 646 would address the mitigation backlog by requiring the
Corps to establish a tracking system to identify the status of
mitigation.
We further recommend that the Corps prepare a Mitigation Backlog
Management Plan that is updated each year and will enable the Corps to
eliminate its backlog of mitigation by seeking to have lands in place
by fiscal year 2005, and future schedules for initiating and completing
mitigation activities in a timely fashion. Further, as proposed in S.
646, new requirements should be placed upon mitigation for Corps Civil
Works projects to ensure that at least 50 percent of mitigation is
completed in advance of the start of construction, with mitigation to
be completed by the time construction is complete. All mitigation
should be, in addition, initiated and completed at least within 2 years
of a resource impact due to a Civil Works project. NWF also supports
proposals in S. 646 and S. 1987 that would disallow benefits for
increased private property and service values derived from draining
wetlands. Corps projects that would destroy hundreds of thousands of
wetland acres should not be authorized because the extent of
environmental destruction could never be fully mitigated.
Last month, the GAO issued a report assessing the Corps' fish and
wildlife mitigation guidance, U.S. Army Corps of Engineers: Scientific
Panel's Assessment of Fish and Wildlife Mitigation Guidance (GAO-02-
574, May 15, 2002). The GAO found that in a majority of the projects
authorized since WRDA 1986 that required a fish and wildlife mitigation
plan and that received construction appropriations, the Corps completed
less than 50 percent of the required mitigation before project
construction started. According to the GAO, the Corps has completed at
least 50 percent of the mitigation before project construction in just
a few cases. This report documents that while it is feasible for the
Corps to complete half of the mitigation before starting project
construction, the Corps' mitigation work has been shoddy and
inconsistent.
Additionally, NWF objects to the Corps' reliance upon preservation
or enhancement of existing lands or wetlands as the sole mitigation for
destruction of natural habitats. When mitigation is limited to
protecting or enhancing existing habitats, a net loss of habitat
occurs. The Corps has further entrenched this concept in its Regulatory
Guidance Letter [RGL 01-01] on wetlands compensatory mitigation,
allowing unlimited use of preservation of existing wetlands, and even
upland areas as mitigation for the loss of natural wetlands. NWF calls
on the Committee to substantially elevate mitigation requirements,
evaluation and monitoring for Civil Works projects, using the
recommendations of the National Academy of Sciences report on
Compensating for Wetlands Losses Under the Clean Water Act (National
Research Council, 2001) to ensure that no net loss of ecosystem
functions or values occur in the construction of Civil Works projects,
as required by the 1990 WRDA ``no net loss of wetlands'' policy.
Corps' Construction Backlog Is Out of Control
Mr. Chairman, the Corps has a huge construction backlog with some
estimates as high as $52 billion dollars worth of projects. This
enormous stockpile of uncompleted projects serves no one well. With
hundreds of projects in various stages of construction and hundreds
more having passed through the authorization process, the backlog can
only be expected to increase. It prevents the Corps from completing a
smaller number of projects sooner, which in turns adds to the ultimate
cost of all projects. Congress authorizes new projects faster than the
Corps can reasonably complete them. Unfortunately, this means that many
new projects that would address contemporary needs, including critical
environmental restoration projects, cannot be completed efficiently.
The Corps continues to assume an optimal construction schedule in its
cost-benefit analysis, even though the optimal schedule is not at all
realistic because of the project backlog, which has the effect of
artificially understating project costs and overstating project
benefits.
Expedite Deauthorization for Outdated, Unconstructed Projects and
Prioritize
Throwing more money at the Corps' construction backlog without
prioritizing and focusing the Corps' work only perpetuates the problem.
In order to effectively address the ever-mounting project backlog, we
urge the Committee to adopt a mechanism that identifies the projects
that no longer make economic or environmental sense in light of current
circumstances, and to impose some discipline on the new projects that
are authorized. NWF urges the Committee to include provisions from S.
1987 that would expedite the current deauthorization process.
In addition, Congress could insure that high priority projects are
completed in a timely manner by deauthorizing those projects that are
no longer economically beneficial or that are proven to be
environmentally destructive. Wasteful Corps projects can be replaced
with positive developments by submitting them to rigorous economic
analyses and environmental impact reviews. S. 1987 proposes updating
the current 1.0 to 1.0 benefit-to-cost ratio, which was originally
established in the 1930's, with a more modern 1.5 to 1.0 ratio. We urge
the Committee to include such a provision in a WRDA to help prioritize
among the nation's water resource investments. Finally, NWF strongly
supports President Bush's policy decision in the fiscal year 2003
budget to focus the Corps on its traditional mission areas of flood
damage reduction, navigation and environmental protection.
Beach Sand Pumping Projects Are Exploding
Funding for beach sand pumping projects is consuming increasingly
larger portions of the Corps' budget. Currently, the Federal Government
pays 65 percent of the cost of construction and periodic renourishment
of beach projects authorized before 2000. Beginning in 2003, the
Federal portion will be 65 percent for construction and 50 percent for
renourishment of new beach projects authorized after 2000. For
currently authorized beach projects, it could easily cost Federal
taxpayers more than $10 billion in the next several decades to continue
to put sand on beaches that is literally washed away to sea. In many
cases, these projects tend to promote high-risk development along
coastlines. The Corps is currently pumping sand onto the beaches of 18
of America's 200 richest towns listed in Worth Magazine, including Gulf
Stream, Florida, where the typical home sells for $1.5 million.
While sand pumping activities have existed in certain locations for
decades, America's coastlines have never been subject to the magnitude
of sand pumping activity that would be represented if Congress stays on
the present course of authorizing large numbers of new projects in each
WRDA bill. For instance, virtually the entire Atlantic shoreline in New
Jersey and half of North Carolina's shoreline is authorized for beach
sand pumping. NWF is extremely concerned about the long-term ecological
effects that are likely to accompany such massive and expensive
shoreline dredging and pumping activities. Sand pumping projects, which
generally involve dredging sand from one location and dumping it on
another, put aquatic wildlife and their habitat at great risk. Among
the most immediate effects of beach projects is the burial of habitats
and organisms living in these zones. Sand pumping projects also pose a
problem to the nesting patterns of both sea turtles and bird species.
Nesting turtles and birds can be easily deterred by the pipelines,
lights and noise that accompany beach projects. In addition, the
success of hatching eggs is affected by changes in the incubating
environment, such as density, color, moisture content, compaction, and
gas exchange of the beach sands. The dredged material used for the
beaches often contains a different composite than the natural sands.
If sea levels rise as predicted--the predictions range from two
feet per century for the next few hundred years to as much as 15 feet
by the year 2200\1\--erosion pressures will accelerate and the current
response is unsustainable. We urge oversight and a much more
thoughtful, scientifically based response than we have seen to date to
help guide a rational approach to erosion.
---------------------------------------------------------------------------
\1\ See Working Group 1, Intergovernmental Panel on Climate Change,
Climate Change 1995: The Science of Climate Change, at 6 (estimating
that IPCC's best estimate is that global sea level will rise 49 cm from
1990-2100). See also James G. Titus & Vijay K. Narayanan, U.S.
Environmental Protection Agency, The Probability of Sea Level Rise iii,
145-46 (1995)(explaining that along much of the U.S. coast sea level is
likely to rise about 10 cm more than the global average).
---------------------------------------------------------------------------
Reduce the Federal Government's Burden for Sand Pumping Projects
While there are instances where sand pumping may be either
economically justified or can serve as temporary measures to allow
communities that face erosion problems to make permanent adjustments,
such as relocating at-risk buildings, a fundamental concern is that
many believe this should not be largely a Federal responsibility, given
the range of demands on the Federal budget. NWF strongly urges the
Committee to seriously consider supporting a substantial reduction in
the Federal cost-share for beach nourishment activities, such as
proposed by S. 1987 and the President's fiscal year 2002 budget
recommendation. In addition, we urge the Committee to resist attempts
to allow more of these types of projects that are primarily for
recreation rather than storm damage prevention. Until a much clearer
picture can be gained of the ecological impacts that may be represented
by expanding Federal beach nourishment activities, the Committee should
resist new authorizations.
A Race To The Bottom Among Ports and Harbors Is Bad for Taxpayers and
the Environment
Our nation's ports and harbors are critically valuable resources
for our economy and our environment and they must be managed in a
manner that continues to support both. NWF has previously expressed our
severe concern to the Committee that a number of ports and harbors are
engaged in a race to deepen their channels in order to accommodate many
of the largest and deepest draft ships operating on the trans-oceanic
routes. At the same time, port authorities have sought to increase
Federal subsidies for deep draft harbor dredging by modifying current
cost-share formulas to treat ports from 45 to 55 feet in depth the same
as 45-foot depth or less general cargo ports. This would amount to a 25
percent increase in Federal costs for deep draft dredging. The Corps is
not currently dredging any commercial U.S. port deeper than 55 feet.
We also caution the Committee about relying on generalized future
growth in trade predictions as a rationale for an across the board
effort to deepen our ports. For instance, just 2 years ago at the time
predictions were made that trade would double over the next 20 years,
eastbound trans-Pacific trade grew at very high rates of 12 percent to
14 percent per year. Since then, trade traffic has seen far less
significant growth. According to recent reports in the Journal of
Commerce, cargo volumes in the eastbound Pacific increased by only 2
percent last year, and despite the nation's recovering economy, volumes
are expected to grow by single digit rates through next year. See,
e.g., Bill Mongelluzzo, The Dire TransPacific, Journal of Commerce,
March 18, 2002. The uncertainties associated with port and harbor needs
argue even more strongly for the development of regional port planning
to integrate the Corps program with national transportation policy.
The Corps Should Strive to Focus Deep Draft Port Dredging Activities to
the Most Efficient, Environmentally Sound Ports
We must invest in our ports wisely. Growth tends to be concentrated
in a few major U.S. ports. More than half is concentrated in 20 ports
and more than a quarter is handled by just five ports. In 1997, 25
ports handled 98 percent of the foreign container cargo, and the
leading 10 ports accounted for 80 percent with the Los-Angeles-Long
Beach port complex responsible for one-third of all container traffic.
The 50 leading U.S. ports handle nearly 90 percent of all waterborne
commerce. (NAS, Applying Information Systems to Ports and Waterways
Management, 1999).
NWF supports provisions from S. 1987 that would require the Corps
to conduct comprehensive coordinated planning to look regionally at
shipping needs and the economic and environmental cumulative impacts of
deepening ports and harbors. In WRDA 1986, Congress wisely established
a cost sharing formula requiring that the very deepest ports--those
with channels dredged deeper than 45 feet--pay a higher share of the
costs for dredging than those below 45 feet. We believe any decision to
increase the Federal subsidy, such as the proposal sought by the port
authorities to increase the subsidy by 25 percent, would unnecessarily
fuel major expansions of capacity at too many locations that would have
dire long-term environmental consequences. There is no reason to
believe that the current formula will not allow the necessary capacity
to meet the nation's transportation needs where the business exists. We
strongly oppose this cost-sharing change because it will undoubtedly
fuel the race to the bottom, thereby unnecessarily wasting taxpayer
resources and threatening further harm to the nation's bays, rivers and
estuaries. Instead, we urge the Committee to require regional port
planning as an element of helping to guide the Federal interest in
ensuring U.S. ports can meet national transportation needs, consistent
with protecting the environment.
21ST CENTURY VISION FOR THE CORPS: THE PREMIER ECOSYSTEM RESTORATION
AND PROTECTION AGENCY
The National Wildlife Federation is greatly encouraged by the
substantial efforts made by the Committee and Congress in past WRDAs to
authorize environmental programs, such as Section 1135 Project
Modifications for Improvement of the Environment, Section 206 Aquatic
Ecosystem Restoration, Floodplain Management Services, the
Comprehensive Everglades Restoration Plan, the Upper Mississippi River
Environmental Management Program, and numerous others. We remain
concerned, however, that without a focused and highly disciplined Corps
program, there will be, in fact, insufficient resources available for
the Corps' environmental programs to make the critical contributions
that the public seeks. We support adjustments to Corps flood damage
reduction cost-sharing requirements that would increase the level of
responsibility taken by local and state governments in managing flood
risk. Among the ideas that have significant merit is to establish a
sliding cost-share formula that gives communities incentives to reduce
and manage their flood risk.
We are also especially concerned, for instance, that the Corps has
received no funding to date for the landmark Challenge 21 program,
which provides the Corps with substantial opportunities to add
nonstructural approaches to its flood damage reduction programs. These
are areas where the need for priority-setting becomes of paramount
importance.
CONCLUSION
In sum, the Corps of Engineers has a vital role to play in managing
the nation's water resources. Continuing business as usual, however, is
not acceptable. Several new reports by the National Academy of Sciences
and others, the results of extensive audits and investigations, as well
as much thoughtful legislation, have provided critically important
recommendations for long-needed reforms. We applaud the Corps of
Engineers for taking a first step in signaling its commitment to a
sustainable environment by formalizing a set of ``Environmental
Operating Principles'' applicable to its decisionmaking and programs.
These principles were recently articulated by the Chief of Engineers,
Lt. General Flowers, at the dedication of the Davis Pond Fresh Water
Diversion Project in Louisiana. We urge the Environment and Public
Works Committee to directly address the Corps' crisis in confidence by
including important legislative reforms in the next WRDA. These reforms
would provide critical direction for all Corps programs, including
direction for what may be among the Corps' most important functions in
the twenty-first century--ecosystem restoration and protection.
Chairman Jeffords and Ranking Member Smith, once again, thank you
for the opportunity to present our views. We look forward to working
with you and the other members of the Committee to help bring the Corps
into the 21st Century by incorporating critically needed reforms in the
next WRDA legislation. I am happy to respond to any questions the
Committee Members may have.
______
APPENDIX
The State of the Nation's Aquatic Resources
The U.S. leads the world in species number for many freshwater
organisms including insects, snails, salamanders, turtles, and mussels.
It also ranks high for subterranean invertebrates and freshwater
fishes. This vast array of diversity is primarily the result of the
unparalleled system of watersheds that filter through the country. It
is no coincidence that the greatest species loss has occurred in the
precise regions where large water projects have rearranged the natural
landscape. The impacts of water development affect 30 percent of the
listed endangered species, ranking behind only agriculture and
commercial development. According to the Association for Biodiversity
Information, ``Species that depend on freshwater ecosystems are, as a
whole, faring the worst of any group of U.S. organisms.'' The
deteriorating conditions are undeniable with the list of extinct/
imperiled species growing every year. Modern science has concluded that
the three leading threats to aquatic species are agricultural non-point
pollution, alien species, and altered hydraulic regimes due to dams and
impoundments. Many Corps projects and programs are directly involved in
exacerbating these threats.
Global Significance of Select U.S. Plant and Animal Groups/Species:
------------------------------------------------------------------------
[In percent of Total]
------------------------------------------------------------------------
Mammal....................... 416 in U.S. out 9
of 4600
globally.
Bird......................... 768 in U.S. out 8
of 9700
globally.
Reptile...................... 283 in U.S. out 4
of 6600
globally.
Freshwater Fish.............. 799 in U.S. out 10
of 8400
globally.
Amphibian.................... 231 in U.S. out 5
of 4400
globally.
Salamander................... 140 in U.S. out 40
of 350 globally.
Freshwater Mussel............ 292 in U.S. out 29
of 1,000
globally.
Freshwater Snails............ 661 in U.S. out 7
of 4,000
globally.
Crayfishes................... 322 in U.S. out 61
of 525 globally.
Freshwater insects:
Caddisfly.................... 1400 in U.S. out 13
of 10769
globally.
Mayfly....................... 590 in U.S. out 30
of 1967
globally.
Stonefly..................... 610 in U.S. out 40
of 1525
globally.
------------------------------------------------------------------------
All information in this Appendix is from Precious Heritage: The Status
of Biodiversity in the United States. The Nature Conservancy &
Association for Biodiversity Information. Oxford University Press
(2000).
[GRAPHIC] [TIFF OMITTED] T3967.004
Sources of Harm For at Risk Species
--------------------------------------------------------------------------------------------------------------------------------------------------------
Insect Mussel
Overall Vertebrates Invertebrate Bird Reptile Amphibian Fish Mollusk
(n=1207) (n=329) (n=155) (n=91) (n=39) (n=16) (n=116) (n=39) (n=69) (n=23)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture.......................................... 38 40 57 42 33 63 45 56 64 35
Commercial Development............................... 35 30 42 33 56 44 16 67 29 13
Water Development.................................... 30 47 66 22 28 63 91 21 99 48
Outdoor Recreation................................... 27 16 19 15 31 25 9 41 4 26
Livestock Grazing.................................... 22 17 10 20 8 19 16 15 1 9
Pollutants........................................... 20 27 66 10 21 25 55 26 97 48
Infrastructure Development........................... 17 16 12 8 28 38 17 23 6 9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage of Federal endangered, threatened, and proposed species harmed by types of habitat destruction and degradation.
June 12, 2002.
Hon. James Connaughton,
Chair, Council on Environmental Quality
Washington, DC.
Hon. Mitchell E. Daniels, Jr.,
Director, Office of Management and Budget,
Washington, DC.
Subject: U.S. Army Corps of Engineers
Dear Messrs. Connaughton and Daniels: We are writing to urge the
Administration to work with Members of Congress and with our
conservation, taxpayer, and professional organizations to support
legislation that will reform the way the Corps of Engineers (Corps)
plans, evaluates, and implements water resources projects. The Corps'
failure to address the contemporary needs of communities in an
environmentally sound and cost-efficient manner is taking a tremendous
toll on the nation's natural and financial resources. Your leadership
in this effort is critical.
The Corps' implementation of its much touted nationwide project
``pause'' starkly underscores the need for the Bush Administration and
Congress to act now to reform the Corps. We had hoped that the project
``pause'' was a genuine sign of the Corps' interest in ensuring that
its water resource projects were economically and environmentally
sound. Unfortunately, the review appears to have been little more than
a charade, and the Corps has made it abundantly clear that it is either
unwilling or unable to reform itself.
First, less than 3 weeks after announcing the ``pause,'' the Corps
announced that it had reviewed 172 projects and cleared 118 to move
forward. Only eight projects were flagged for additional review as a
result of this process (with the remainder already undergoing
reevaluation due to previously identified problems). That timeline made
it abundantly clear that General Griffin's direction to conduct a new
economic analysis for projects approved prior to fiscal year 99 was not
followed.
Second, just a few days later, the Corps released a ``corrected''
list that deviated in significant ways from the first list. The second
list identifies only 164 projects as having been reviewed, clearing 80
to proceed (with the remainder already undergoing reevaluation due to
previously identified problems). Again, only eight projects were said
to require additional review as a result of the project pause
directive.
With no explanation, the Corps completely removed from the second
list some of the worst projects that were identified on the original
list with the nomenclature ``review complete.'' These projects include
the Grand Prairie Irrigation Demonstration Project in Arkansas, the
Yazoo Pumps Project in Mississippi, St. John's Bayou Project in
Missouri and the Inner Harbor Navigation Canal (Industrial Canal)
Project in Louisiana. In addition to being costly, these projects are
highly controversial and would destroy some of America's most valuable
wetlands and aquatic habitat. Because the Corps has left the public
completely in the dark on the process used in its review, the only
conclusion we can reach is that although the Corps originally announced
to Congress and the public that these projects had in fact been
reviewed, the reviews never occurred. If the Corps' review and
reevaluation process is to have any credibility, these projects must be
fully and openly re-evaluated.
Third, in addition to the Corps' apparent inability to be able to
accurately identify projects that were reviewed, the list contains
glaring omissions of projects that most certainly should have been
reevaluated. For example, the list does not include the Dallas Floodway
Extension project in Texas an authorized project for which construction
has not begun. Not only did the Office of Management and Budget inform
the Corps that they had failed to comply with their own planning
guidance for this project, but a U.S. District Court also ordered the
Corps to reevaluate the project's cumulative environmental impacts.
Finally, the project reevaluation was conducted behind closed doors
with no involvement from the public, other Federal and state agencies,
or apparently the Administration. The Corps has not identified or
described the information reviewed, the results of each review, or the
documentation supporting its conclusions. The fact that the Corps
originally cleared more than 100 projects in less than 3 weeks
including some of the most highly questionable and controversial Corps
projects and then substantially revised the list of projects reviewed
and their status (once again all behind closed doors), gives the public
no confidence that the ``cleared'' projects represent a sound and
environmentally sustainable investment.
Instead, the Corps' actions have increased the public's lack of
confidence in the Corps' ability to plan water resource projects in an
objective and reliable manner. Now more than ever, Congress must enact
meaningful Corps reforms to improve the broken process and help restore
faith in this scandal-plagued agency. The Corps reform bills introduced
in the Senate and House (S. 1987, S. 646, H.R. 1310 and H.R. 2353)
contain crucial reforms that cannot be postponed. We urge the
Administration to actively support these legislative proposals as
Congress considers authorizing even more water resource projects during
debate over the Water Resource Development Act.
We very much appreciate the leadership of the Bush Administration
in proposing a more environmentally responsible budget for the Corps of
Engineers for fiscal year 03, and hope that you will fight to keep this
year's budget from growing as it moves through Congress. We also hope
that the Administration will work to make the Corps' entire program
more environmentally and fiscally responsible by actively supporting
the important legislative proposals directed at reforming the Corps of
Engineers.
Sincerely,
Bradford T. McLane, Executive Director, Alabama
Rivers Alliance; Kathy Andria, President,
American Bottom Conservancy; S. Elizabeth
Birnbaum, Director of Government Affairs,
American Rivers; David McLain, Executive
Director, Apalachicola Bay and Riverkeeper;
David Gowdey, Executive Director, Arizona
Wildlife Federation; Daniel DeVun, Vice
President, Arkansas Nature Alliance; Jim
Wood, Representative, Arkansas Wildlife
Federation; Rob Fisher, Conservation
Director, Audubon Arkansas; Sidney Maddock,
Environmental Analyst, Biodiversity Legal
Foundation; John Koeferl, Founding Board
Member, Citizens Against Widening the
Industrial Canal; Jamie Matera, Outreach
Coordinator, Coast Alliance; Peter Huhtala,
Executive Director, Columbia Deepening
Opposition Group; Matthew Van Ess,
Director, Columbia River Estuary Study
Taskforce; Patricia A. Pendergrast,
President, Connecticut Ornithological
Association; Karen Blue, Executive
Director, Conservation Council for Hawaii;
Michael E. Riska, Executive Director,
Delaware Nature Society; Maya K. van
Rossum, Delaware Riverkeeper, Delaware
Riverkeeper Network; Val Washington,
Executive Director, Environmental Advocates
of New York; Mona Shoup, Chair, Friends of
Clear Creek; Erich Pica, Director, Green
Scissors Campaign, Friends of the Earth;
Manley K. Fuller III, President, Florida
Wildlife Federation; Jim Blackburn, Chair,
Galveston Bay Conservation and Preservation
Association; Jerry L. McCollum, President
and CEO, Georgia Wildlife Federation;
Margaret Wooster, Executive Director, Great
Lakes United; Cyn Sarthou, Executive
Director, Gulf Restoration Network; Marilyn
Blackwell, President, Help Save The
Apalachicola River Group; Pamela Dashiell,
President, Holy Cross Neighborhood
Association; Steven G. Sorensen, Past
President, Kansas Wildlife Federation; Tom
Fitzgerald, Director, Kentucky Resources
Council, Inc.; Judy Petersen, Executive
Director, Kentucky Waterways Alliance,
Inc.; Cam Davis, Executive Director, Lake
Michigan Federation; Larry Mitchell,
President, League of Ohio Sportsmen; Mark
F. Ten Eyck, Advocacy Director, Minnesota
Center for Environmental Advocacy; Kenneth
Hiemenz, President, Minnesota Conservation
Federation; Tim Sullivan, Executive
Director, Mississippi River Basin Alliance;
Bea Covington, Executive Director, Missouri
Coalition for the Environment; Perry
Plumart, Director of Government Relations,
National Audubon Society; Jamie Rappaport
Clark, Senior Vice President, National
Wildlife Federation; Marian Maas, Ph.D.,
Conservation Programs Chair, Nebraska
Wildlife Federation; Jim Stephenson,
Program Analyst, North Carolina Coastal
Federation; Chuck Rice, Executive Director,
North Carolina Wildlife Federation; Nina
Bell, J.D., Executive Director, Northwest
Environmental Advocates; Vicki Deisner,
Executive Director, Ohio Environmental
Council; Ella F. Filippone, Executive
Administrator, Passaic River Coalition; Jim
Stevens, President, People to Save the
Sheyenne; Gerald H. Meral, Ph.D., Executive
Director, Planning and Conservation League;
Clark Bullard, Member of the Board, Prairie
Rivers Network; Magi Shapiro, Member of the
Board, Public Employees for Environmental
Responsibility; Todd Ambs, Executive
Director, River Alliance of Wisconsin; Mike
Fremont, President, Rivers Unlimited;
Angela Viney, Executive Director, South
Carolina Wildlife Federation; Chris Hesla,
Executive Director, South Dakota Wildlife
Federation; Gwen Griffith, DVM, MS, Program
Director, Tennessee Environmental Council;
Michael Utt, President, The Ohio Smallmouth
Alliance; Melanie Winter, Director, The
River Project; Wilfred Cwikiel, Water
Resource Program Director, Tip of the Mitt
Watershed Council; Kelly D. Lowry, Esq.,
General Counsel and Water Program Director,
Vermont Natural Resources Council; Larry
Baesler, Executive Director, Wyoming
Wildlife Federation
______
Responses by Montgomery Fischer to Additional Questions from Bob Smith
Question 1. Can you give some specific examples of how the Corps
project planning process needs to be modernized?
Responses. The National Academy of Sciences' 1999 report, New
Directions in Water Resources Planning for the U.S. Army Corps of
Engineers, documents several examples of how the planning process needs
to be brought up to date to reflect 21st Century water management
principles and practices. As explained in the National Wildlife
Federation's written testimony and the New Directions report, the
Corps' planning process is based upon the Principles and Guidelines for
Water and Related Land Resources Implementation Studies (``Principles
and Guidelines''), which were set in 1983 (when the preceding
Principles and Standards were revised) and these guidelines have
remained unchanged since then. The Principles and Guidelines direct
water resources to be developed to promote national economic
development, but assumes that all projects are to be developed for
economic reasons. Since 1983, the Corps has been given important
authorities to develop environmental protection and restoration
projects, yet the Principles and Guidelines provide no guidance for
developing such projects.
One of the most basic reforms identified by the NAS New Directions
report that would help modernize Corps procedures is to modify the
statement of objectives to make clear that environmental protection and
restoration is as equally important as national economic development in
order to encourage more innovative and creative approaches that benefit
not only the economy, but also the environment. This recommendation is
reflected in both reform bills, S. 1987 and S. 646.
Chapter 5 of the New Directions report discusses how the Principles
and Guidelines lack guidance for environmental protection and
restoration projects. While the Principles and Guidelines direct the
Corps to evaluate environmental impacts of water resource development
projects, it lacks guidance on evaluating the outcomes of environmental
restoration projects. Presently, only conceptual models and general
principles guide ecological system planning. There is a lack of
instruction for assigning project benefits and costs for ecosystem
restoration projects, which is emerging as an important mission area
for the Corps.
In addition, the New Directions report explains that since 1983
substantial advances have been made in economic and environmental
sciences in developing procedures for evaluating consequences of water
resource projects, and for assessing risk and uncertainty. As a result,
the Corps is either using or refraining from using such analytical
tools without the benefit of policy review by the nation's water
resources planning community.
The 1999 NAS report also documents how the Corps' customer-service
model is undermining the Corps' responsibility to promote the national
interest in water resources planning. The Army Inspector General (IG)
supported this conclusion when the IG investigated allegations of
economic manipulation for the Upper Mississippi Navigation Expansion
project. The IG found: ``The Corps' employment of the customer service
model also created a conflict with the Corps' role as honest broker.
Because of the taxes it paid into the Inland Waterway Trust Fund, the
barge industry was viewed as a partner during the study. This view led
the Corps leadership to involve the industry to a far greater extent
than other interest groups.'' The planning process needs to be revised
to move away from a strictly customer service approach and to be more
inclusive of a variety of stakeholders.
Finally, the Corps' planning process needs to be updated to be more
oriented to watershed and broader regional perspectives. Even the Corps
acknowledges that sometimes projects developed to address one problem
in a watershed, create new problems for others downstream or elsewhere.
The Corps' guidance should direct that the watershed or river basin,
estuarial region, coastal unit or key ecosystem components be used as
the basic spatial units in water project planning, when and where it is
appropriate. The January 2002 National Academy of Sciences report, The
Missouri River Ecosystem: Exploring the Prospects for Recovery,
documents the devastating impact the Corps has had on the Missouri
River by planning water development projects without consideration of
the watershed-wide effects.
Question 2. In his testimony, the Chief of Engineers pointed to the
use of ``value engineering'' to lend credibility to the Corps review
process. Can you comment on whether you think this is an effective
means of review that will have a meaningful impact on how the Corps
conducts its studies and reviews?
Response. The National Wildlife Federation understands ``value
engineering'' to mean a methodology for analyzing systems down to the
subsystems and component levels of a design or product, and
consequently to its value. Rather than reviewing existing documents to
check for safety, accuracy and workability of the design, value
engineering can occur at various stages of project planning. Value
engineering seeks to determine whether true value has been attained
through the design and can generate alternatives that will achieve the
desired results at the lowest possible cost.
While this is a valuable tool, it cannot substitute for appropriate
policy guidance, and a vigorous quality control system. The benefit of
establishing a system independent project review, for instance, extends
beyond checking the justification of particular project elements. It
provides greater support for the public and the Congress to trust Corps
studies that have been reviewed. A system for independent project
review also provides the Corps strong incentives to get the studies
right the first time. At present, there is no indication that an
internal review process would provide that type of incentive to the
districts.
Question 3. What steps can be taken to improve the credibility of
Corps studies?
The most important step that would improve the credibility and
reliability of Corps studies is implementing a system of independent
project review. As explained in detail in NWF's written testimony (pp.
3-4), in recent years there has been major erosion in the extent,
scope, quality and staffing of project reviews within the Corps. The
failure to establish a truly independent system of review has been a
significant hindrance to ensuring that the Corps will consistently
develop high quality projects. As evidenced by cases like the Delaware
River Main Channel Deepening Project, the Upper Mississippi River
Expansion Project, and numerous others highlighted in the Federation's
written testimony, the current process is producing studies with
questionable economic justifications and unresolved or completely
ignored environmental issues.
Question 4. Are there additional reforms, not included in either my
legislation or other legislative proposals out there (e.g. S. 646),
that you would like to see enacted?
Response. There are several additional potential areas for reform
that we urge the Committee to consider that are not included in either
S. 1987 or S. 646.
First, the National Wildlife Federation is concerned about
impediments that continue to hamper the Corps' ability to develop and
implement nonstructural approaches to reduce flood damages. In Section
219(a) of WRDA 1999, Congress directed changes in the way economic
benefits are calculated for nonstructural flood damage reduction
projects in response to reports documenting impediments, including the
1994 Sharing the Challenge report of the Interagency Floodplain
Management Review Committee, the Corps' 1995 Floodplain Management
Assessment report on the Upper Mississippi Floods, the National Academy
of Sciences' 1999 New Directions report, and a series of studies and
reports by the Corps' Institute for Water Resources (IWR). Due to
ambiguities in the final version of the bill, however, critical
impediments to nonstructural approaches have not been eliminated.
On January 22, 2002, the Corps issued guidance implementing Section
219. In essence, while the language allows Corps to consider benefits
for nonstructural projects, the process is extremely cumbersome and
impractical. The guidance ignores the findings of the IWR economists
that clarified the need for a simple declaration that primary flood
damages avoided should be counted as benefits of evacuation-type
projects without requiring expensive econometric studies. Thus, we
believe the Corps guidance fails to capture the spirit of the
Conference agreement. We urge the Committee to include in the 2002
WRDA, the original 1999 Senate-passed language as a replacement for the
current Section 219(a). The Senate version directly addressed these
findings and greatly simplified the calculation of benefits consistent
with current economic science. Such a change would help remove a
significant and unjustified impediment to nonstructural flood damage
reduction projects.
The National Wildlife Federation also believes that there is
considerable merit to the idea of establishing a sliding cost-share
formula for flood damage reduction projects. Such an approach would
reward local communities and states that take increased responsibility
for managing and reducing flood risk. In 1998, the Federation released
a report, Higher Ground, which documented the rising cost of flood
damages that has accompanied increasing investments made in strategies
dominated by structural projects, rather than wise floodplain
management. We note that the testimony of the Association of State
Floodplain Managers identifies a significant concern that the current
static cost-sharing policy often rewards communities that do the least
to manage flood risks. It also fails to give communities an incentive
to use their own authorities to manage and reduce their flood risks. We
would strongly support including measures in WRDA that would use
thoughtfully crafted cost-sharing incentives to reward communities that
engage in wise floodplain management.
Next, the Federation urges the Committee to continue to support
current Corps programs that encourage environmental protection and
restoration and wise floodplain management. Specifically, we urge the
Committee to consider increasing the authorization ceilings for the
Section 1135 and Section 206 programs, as well as the Corps' Floodplain
Management Services and Planning Assistance to States programs. The
Committee should consider ways to encourage more activity under these
programs through modifying local cost-sharing requirements to allow a
broader range of potential funding sources. This is particularly
relevant to restoration projects where, because the benefits are often
non-monetary and tend to be more widely distributed over larger
geographic regions and over longer periods of time, it has been
difficult to find local cost-sharing partners that are capable of
financing the non-Federal share alone.
Finally, despite requirements that mitigation occur concurrently
with Civil Works projects, the Corps has failed to follow through on
significant amounts of mitigation required for projects that are well
underway. In order to reduce the backlog of mitigation, in addition to
the mitigation provisions contained in S. 646, we recommend requiring
the Corps to prepare a Mitigation Backlog Management Plan that is
updated each year and seeks by fiscal year 2005 to have the necessary
lands purchased to eliminate the current backlog, as well as schedules
for initiating and completing mitigation activities in a timely
fashion. We also urge the Committee to adopt recommendations from the
National Academy of Sciences' 2001 report, Compensating for Wetland
Losses Under the Clean Water Act to substantially elevate mitigation
requirements in order to ensure that no net loss of ecosystem functions
or values occur in the construction of Civil Works projects, as
required by the 1990 WRDA ``no net loss of wetlands'' policy.
We would be happy to discuss further details regarding these
recommendations, if you are interested in any or all of these ideas and
concepts.
Question 5. What step can be taken to ensure that Corps projects
maximize both economic and environmental benefits?
Response. As discussed above, in order to ensure that Corps
projects maximize both economic and environmental benefits, the
Principles and Guidelines should be revised to establish environmental
protection and restoration as co-equal goals with economic development.
In addition, the Corps should be directed to include all environmental
costs and benefits of a project in the benefit-cost analyses. Because
environmental costs and benefits can be difficult to quantify, it is
important that the Principles and Guidelines be revised and updated to
provide guidance on how to capture those values in a meaningful way.
The Principles and Guidelines should, in fact, be revised periodically
to reflect modern economic and scientific understanding.
__________
Statement of Steve Ellis, Senior Director of Water Resources, Taxpayers
Good afternoon, Chairman Jeffords, Senator Smith and other
distinguished members of this Committee. I'm Steve Ellis, the Senior
Director of Water Resources at Taxpayers for Common Sense, a national,
non-partisan budget watchdog group. I'd like to thank you for inviting
me to testify on behalf of two of the nation's leading taxpayer
advocacy groups--Taxpayers for Common Sense and the Council for
Citizens Against Government Waste--at this hearing on the Water
Resources Development Act of 2002 and reforming the Army Corps of
Engineers. The National Taxpayers Union (NTU) is also concerned with
the Army Corps of Engineers and advocates reform of the agency. I would
like to submit for the record a statement from the NTU.
The last time there was significant reform of the Corps of
Engineers and the United State's approach to water resources
development was in 1986 with the approval of cost sharing reforms
championed by President Reagan.
Virtually overnight we have gone from budget surpluses to deficits.
We are engaged in a costly and lengthy war against terrorism. In this
context, fiscal restraint is more important now more than ever to get
to a balanced budget.
Wasteful spending through the Army Corps is symbolic of everything
that is wrong with Inside the Beltway politics, where Members of
Congress abandon their duty to promote the best interests of the Nation
in order to help a handful of special interests.
In this election year, the temptation will be great to focus on
just bringing more projects home to please special interests. But
enacting true, meaningful reform of the Corps of Engineers this year
will be an indication of whether Congress has the will to make the hard
decisions necessary to achieve fiscal responsibility.
Undoubtedly, the Corps of Engineers has faced some of the sharpest
criticism in its history over the last two and half years. However,
concern over the Corps and the way it conducts business is not new. For
example, more than 150 years ago in 1836 the House Ways and Means
Committee chastised the agency for bungling 25 projects that were over-
budget, behind schedule, and not performing as planned.
Similarly, the criticism in recent years is the result of
revelations that the Corps manipulated or committed serious mistakes in
project evaluation studies that could waste billions of taxpayer
dollars.
This series of scandals has severely eroded public trust in the
Corps. To restore the agency's credibility, it is critical that the
20002 Water Resources Development Act address the problems that led to
these scandals. The Corps needs to be reformed, and it needs it now. It
is vital that we define what exactly is meant by Corps reform? Real
reform will achieve these four fundamental goals:
<bullet> Make the Corps more accountable;
<bullet> Set clear priorities;
<bullet> Modernize the project planning process; and
<bullet> Ensure that everyone pays a fair share
In March, Senators Bob Smith, Russ Feingold, and John McCain
introduced S. 1987, the Corps of Engineers Modernization and
Improvement Act. This comprehensive reform proposal addresses each of
the four key reform areas in a serious and effective manner. We urge
the Committee to adopt S. 1987 as the basis for reform in the Water
Resources Development Act.
I would like to outline each of these tenets of reform and provide
a few examples of why reform is essential.
ACCOUNTABILITY
The need for more accountability in the Corps becomes more apparent
by the month, as a growing list of project studies have been found to
have been manipulated or contain egregious errors:
<bullet> In December 2000, the Army Inspector General reprimanded
three senior Corps officials--including the second-ranking general in
the agency--for manipulating studies of a billion dollar expansion of
seven locks on the Upper Mississippi and Illinois River.
<bullet> In January 2001, the Corps suspended all work on the $90
million Chesapeake and Delaware Canal deepening project after four
Eastern Maryland retirees demonstrated basic math errors and
fundamentally flawed assumptions that erroneously showed the project to
be justified.
<bullet> In March 2002, the Portland Oregonian concluded an
extensive investigation that found the Corps had overstated the
benefits of a $190 million deepening project for the Columbia River by
more than 125 percent, and that in fact there was no economic
justification for proceeding with the project.
<bullet> A few days later a National Academy of Sciences panel
harshly criticized a Corps of Engineers model of the carrying capacity
of the Florida Keys to accommodate future development: ``Incomplete and
outdated information, coupled with inaccurate assumptions, makes the
model--as it stands now--inappropriate for drawing conclusions about
the impact of future development.''
<bullet> Also in March, a U.S. District Court judge in Ft. Worth,
Texas issued an injunction against proceeding with the $127 million
Dallas Floodway Extension project. The judge ruled the Corps had failed
to consider smaller-scale alternatives--such as a simple levee raise--
to re-engineering the whole Trinity River. Most of the benefits of the
re-engineering project could be achieved through the smaller project at
less than one-third of the cost.
<bullet> And just last week, the General Accounting Office issued a
scathing report on the lack of economic justification for the $420
million Delaware River deepening project. The report found that the
Corps had made an appalling series of ``material errors'' citing
``miscalculations, invalid assumptions, and reliance upon outdated
information'' that led the Corps to overestimate benefits by more than
200 percent.
Dozens of other examples of problematic and controversial projects
could also be cited that together account for billions more dollars in
wasteful spending.
A key way to restore some credibility to the Corps' project
planning process is to implement a system of independent peer review
for costly and controversial projects. A workable and faithful
independent peer review process should include the following elements:
<bullet> True independence from the Corps we suggest locating the
Director of Independent Review in the Office of the Army Inspector
General.
<bullet> Integration into the existing public comment period so as
not to unnecessarily delay completion of project studies.
<bullet> Capped review costs at $250,000 or no more than half of 1
percent of total project costs for more expensive projects.
The need for independent review has now been endorsed by the
National Academy of Sciences, the General Accounting Office, President
Bush and many Members of Congress, and dozens of public interest groups
across the Nation.
RESTORING INTEGRITY TO THE AUTHORIZATION PROCESS
There are growing external pressures placed on the Corps to green-
light projects lacking true economic justification. Congress will
``contingently authorize'' a project based upon a favorable finding by
the Corps prior to the necessary feasibility studies being completed.
There is a correlation between contingent authorizations and later
findings that a project study had been poorly conducted on an
unjustified project. For example, two of the projects listed earlier in
this testimony, the Columbia River deepening project and C&D Canal
deepening project in Eastern Maryland, were both contingent
authorizations.
The Smith-Feingold-McCain reform bill would address this problem by
allowing Senators to raise a point of order when controversial projects
are included in authorizing legislation without the Corps first
completing the mandatory feasibility studies and approval from the
Chief of Engineers. S. 1987 would take significant steps toward
restoring integrity to the authorization process.
We are also very concerned that there are efforts underway to seek
a contingent authorization of the billion-dollar Upper Mississippi and
Illinois Rivers lock expansion project in the hopes of beginning Pre-
construction, Engineering, and Design. The Corps has only prepared an
Interim Report introducing various scenarios, but has still not done
any in-depth re-evaluation of alternatives that would lead to a
recommendation to Congress.
One of the best arguments for not proceeding with authorization of
any Upper Mississippi navigation project in this WRDA comes from the
Inland Waterways Users Board themselves, an industry advisory committee
for the Army Corps of Engineers. A construction schedule for inland
waterways projects posted on its website lists the Upper Mississippi
lock expansion as not being able to start construction until 2020--and
this is the optimistic scenario. A limiting factor is that despite a
current surplus in the Inland Waterways Trust Fund, so many waterways
expansion projects are being sought by the navigation industry that the
pace of construction will be limited by the availability of money from
this fund, which is generated from a tax on diesel fuel used for
barges.
NEED FOR CLEAR PRIORITIES
Contingent authorizations have contributed to a ballooning
construction backlog that is now $52 billion. Even with increased
construction budgets, it will still take the Corps more than 25 years
to build all of these projects.
Each year when the President's budget is introduced, Senators
inevitably complain that projects in their state did not receive
``full'' funding and consequently benefits are delayed and project
completion costs increase. This is a result of too many projects
competing for a limited amount of resources. Under the current funding
process, bad projects are just as likely to receive funding as good
projects.
This enormous backlog is partly due to the Corps having provided
bad information to Congress upon which it authorized a project, as well
as Members of Congress seeking authorization despite Corps data
pointing out serious problems with the project.
Recently, Taxpayers for Common Sense conducted an analysis of the
backlog that has made available to the public. Detailed information is
easily accessible to the public on the 285 projects, for which the
President has requested funding and submitted a Budget Justification
Statement to Congress. This amounts to only $28 billion worth of the
construction backlog. We urge Congress in this year's WRDA to require
the Corps to make the full backlog available to the public, accompanied
by, at a minimum, the same detailed information included in Budget
Justification Statements.
TCS' analysis found that the median project was only 24 percent
constructed. In fact, 25 projects authorized in 1986 are still less
than half-complete. These alone account for $2.4 billion of the
backlog. An additional 39 projects representing $4.3 billion of the
backlog have benefit-to-cost ratios of less than 1.5, and are less than
half-complete.
The backlog slows down the construction of all projects, whether
they are good or bad. Just as the Base Realignment and Closure (BRAC)
process was a tough pill to swallow but nonetheless one that will
improve the health of our nation's military forces, Congress needs to
institute a project-blind process for deauthorizing outdated, marginal,
and unnecessary projects that have yet to be constructed. Deauthorizing
these low-priority projects will enable funds to be focused on
legitimate projects that provide large benefits to the public at a low
relative cost.
The Smith-Feingold-McCain bill proposes two simple improvements to
an existing automatic deauthorization process that would significantly
help break the backlog. First, S. 1987 would shorten the amount of time
in which a project must receive funds for construction in order to
continue to be authorized. Currently, a project must receive funds at
least once every nine and a half years. S. 1987 would reduce the
timeline to 5 years for newly authorized projects and 3 years to
projects that have already received some construction funds.
Second, S. 1987 would require that construction funds actually be
used on physical construction to re-set the clock, as opposed to
planning, design, or re-evaluation studies. There are dozens of
projects that have been kept on life support while tens of millions of
taxpayer dollars are wasted having the Corps perform repetitive studies
in a futile attempt to resolve major controversies.
In the case of the $108 million Oregon Inlet Jetties proposed for
the Outer Banks, the Corps has been continuously ``studying'' the
viability of the project for more than 30 years. Yet through all those
years, a half dozen separate independent reviews by notable economists
and scientists have determined the Corps is incapable of finding a way
to design a cost-effective and scientifically sound project. In the
coming months, we believe a forthcoming General Accounting Office
report will add to the already overwhelming evidence supporting the
case that the Oregon Inlet Jetties are an immense boondoggle.
These two simple reforms would put more pressure on Congress to
weed out bad projects and speed up construction of good projects. In
fact, President Bush's proposed FY03 budget request follows this same
logic by focusing much of the Corps construction budget on completing
30 major projects. While certainly not a perfect budget, the Bush
Administration has recognized the need for priorities and reining in
the Corps much more seriously to date than Congress.
MISSION CREEP
A more recent, but growing, pressure on the backlog is ``mission
creep'' within the Corps of Engineers. The Corps has three
congressionally mandated primary missions: navigation, flood damage
reduction, and environmental protection. Other activities such as
hydropower, recreation management, and water supply are permitted when
associated with a multi-purpose project. However, the Corps has sought
and Congress has authorized to extend its tentacles into irrigation,
municipal water supply, wastewater treatment, and even construction of
public schools. Each of these areas has traditionally been carried out
by the private sector or through other government programs.
The Corps does not have extensive experience in cross-basin water
transfer projects, for example, but is seeking to build more than a
billion dollars worth of pump and distribution infrastructure in
Eastern Arkansas to assist rice irrigation. A lack of experience led
the Corps to only look at structural solutions to long-term groundwater
depletion concerns. After the release of the Corps' initial design for
the $319 million Grand Prairie Area demonstration plan, hundreds of
farmers--the very people the Corps was trying to help withheld support
for the project because they prefer cheaper and more effective non-
structural conservation alternatives that would minimize water taxes
slated to be assessed on them to pay for the project.
In the case of municipal water supply and wastewater treatment, or
what has also been called ``environmental infrastructure'', Corps
involvement in these projects is a redundant--and wasteful--substitute
for the Environmental Protection Agency's Drinking Water and Clean
Water State Revolving Funds. The only difference is that projects
obtained through the Corps effectively receive grants as opposed to
loans, and the allocation of funds to projects under the Corps budget
is driven almost exclusively by politics.
In Los Angeles and Washington, DC, the Corps has entered into
billion dollar and hundred million dollar contracts, respectively, to
build and renovate public schools. But they have done a poor job at
that too, while at the same time crowding out construction management
firms in the private sector that could have performed the work faster
and at less cost.
President Bush has sought to limit mission creep by not requesting
funds for these types of projects. His fiscal 2003 budget request
outlines the impacts of ``mission creep'':
Congress periodically directs the Corps to work in other
areas that duplicate existing Federal programs or are
activities that should be carried out by non-Federal interests.
This ``mission creep'' diverts the Corps from its primary
business lines, slows down completion of higher priority
construction projects, and postpones the benefits that
completing these projects would bring.
The reform to check mission creep is simple: deauthorize all of the
unconstructed irrigation, municipal water supply and wastewater
projects, and stop the Corps from entering into contracts with local
school districts to build schools.
OUTDATED PROJECTS
The Corps of Engineers' recently announced that it would pause more
than 150 authorized projects in order to ``resolve questions'' over the
``accuracy and currency of economic analyses, the validity of plan
formulation decisions, and the rigor of the review process.'' This was
a significant acknowledgement that the agency too often relies upon
outdated economic information, as well as other problems with the
project planning process.
For example, the Delaware River deepening project was justified in
1992 primarily upon projections of increased oil imports and scrap
metal exports. However, we now have the benefit of 10 years of actual
data, which reveals that the Corps predictions were overly optimistic.
None of the area refineries have significantly increased their oil
imports, mostly because they have not, nor plan to, make any expansion
of plant capacity in order to avoid having to install expensive
pollution control technology if they did expand. By 2000, scrap metal
was no longer being exported from the Port of Philadelphia because the
former Soviet states replaced the U.S. as the main provider of scrap to
Turkey.
Both of these trends were apparent during the early and mid-1990's,
but the Corps never updated its project studies to reflect these real
world market changes, even though they did revise cost estimates
downward during that time. In fact, the Corps continually denied the
economic reality of the project and continually sought construction
funds for this project despite knowing its benefits analysis was
woefully out of date. Only after the General Accounting Office examined
the project has the Corps acknowledged these errors and sought to
update their feasibility report.
Although we hoped the Corps ``pause'' represented a real effort to
change the way the agency did business, the Corps did not follow
through with an honest evaluation of the 150 projects. In fact, only
eight projects will be subjected to further analysis. Although the
Corps cited that dozens of projects were already undergoing further re-
evaluation before the launch of the nationwide review, the Corps failed
to correct its studies on dozens of other boondoggle projects like the
Dallas Floodway and Grand Prairie irrigation projects.
The Corps' review fiasco is yet another indication the agency is
incapable of reforming itself and that real reform must be passed into
law this year by Congress.
MODERNIZING THE PROJECT PLANNING PROCESS
The Smith-Feingold-McCain bill would also require the Corps to work
with the National Academy of Sciences in modernizing the planning
guidelines. For example, the guidelines should be updated to ensure
full accounting of costs of projects--including adverse economic
impacts to other interests--incorporating new techniques in risk and
uncertainty analysis, eliminating biases and disincentives for
nonstructural flood damage reduction projects, incorporate new
analytical techniques, and ensuring projects are justified upon
benefits to the public interest rather than a few private firms or
individuals.
A full revision of the Corps planning guidelines was recommended by
the National Academy of Sciences itself in a 1999 report on the Corps'
project planning process. The Principles and Guidelines, the Corps
planning documents, was last updated in 1983, and with the exception of
a few minor revisions, has basically been frozen in time for nearly two
decades.
Many of the Corps' problems stem from an increasingly obsolete
planning process that was developed at a time when water projects were
seen as more of a job creation program than a national investment.
Our Nation and thinking certainly have changed since the New Deal
Era, but the Corps still relies on the 1936 Flood Control Act's
standards to call a billion dollar project economically justified if
the benefits outweigh the costs by even one dollar. No business would
ever make an investment knowing that they would get no return on their
dollar, and we deserve no less from our investment of tax dollars.
The Smith-Feingold-McCain bill's proposal to require project
benefits be 1.5 times the total estimated costs in order to qualify as
economically justified makes strong fiscal sense, by ensuring at least
a modicum of a return to the Federal taxpayer. An additional benefit is
that this reform will help break the backlog by deauthorizing marginal
projects that have yet to start construction.
Another problem with the Corps is that it studies and plans
projects in a vacuum. The Corps assumes there are no budget or other
constraints when developing a construction schedule. For example, the
Corps benefit-cost analysis for the $420 million Delaware River
deepening project, anticipated construction over a 4-year period. There
was virtually no chance of this ever happening, as the project would
have to receive more than $90 million--5 percent of the agency's
overall construction budget--each year for four straight years. The
actual construction appropriations for the project have not exceeded
$20 million--with none of those funds ever being spent on actual
construction--but by optimistically scheduling construction over only 4
years, the Corps was able to reduce estimated costs by maximizing
scales of efficiency. In fact, this problem was cited by the General
Accounting Office as another factor that led the Corps to overestimate
the true benefits of the project.
Although being able to construct large-scale projects quickly is
ideal and preferred because it minimizes construction costs while
quickly returning benefits to taxpayers. However, such scheduling does
not reflect the harsh reality of a massive backlog and growing budget
constraints. S. 1987 requires the Corps to devise more realistic
construction schedules for projects and reflect the impacts on project
costs.
The Corps' tunnel vision is also apparent in its planning of port
development projects. Currently, there is a ``race to the bottom''
amongst major U.S. ports, including 12 major Corps deepening projects
along the East Coast that together will cost taxpayers $2.4 billion to
complete. This phenomenon is stoked by a shift amongst the shipping
lines to larger and deeper-draft container ships and a fear among ports
that they may be left behind.
The problem is that few of these ports will be successful in
alluring these larger ships to their docks. With significant
deregulation of the shipping industry in the 1990's and other factors,
shipping lines have consolidated and begun to rely more heavily upon
hub ports like New York/New Jersey Harbor and the Ports of Los Angeles
and Long Beach. The result is these larger ships will carry more cargo,
but to fewer ports. Medium-sized ports are poised to become feeder
ports in this system, similar to the way the airport network has
evolved. These ports will also find advantages in specializing in niche
cargos, like the Port of Wilmington, Delaware's successful makeover
into one of the nation's premier ports for refrigerated produce.
Certain ports like those in New York and Los Angeles are logical
choices for hubs due to the tens of millions of consumers within a
relatively few miles of the piers. Other ports have natural advantages
like the Port of Seattle that requires very little dredging to maintain
its deep berths, or Hampton Roads, Virginia, which already is
maintained at a deep draft and is well positioned only a few miles from
the Atlantic Ocean.
On the other hand, the Ports of Philadelphia and Portland, Oregon
are more than 100 miles inland, and the cost of maintaining deep access
channels is inherently expensive. Furthermore, it is more difficult and
much slower to navigate up 100 hundred miles of a restricted channel,
consequently it takes much longer for ships to traverse those rivers to
deliver their goods than it would to a port near the open ocean.
The Corps continues to pursue many more deepening projects than the
Nation needs. This is because the Corps evaluates a particular
deepening project without any consideration of potential adverse
economic affect upon its competitor ports. These studies do not take
into account the potential impacts of other nearby port development
projects in the works, but not yet completed, that can affect the
ability of the port under study to ultimately attract more ships.
Also, the Corps expertise and mandate generally limit it to only
consider deepening a port's access channels when studying port
improvements. However, a port's depth is only one of many factors that
determine its competitiveness. The amount of dockside land available to
store containers, intermodal connections to rail and highways, crane
equipment, labor conditions, geography and many other factors are just
as important.
On April 15, the Alameda Corridor project opened, connecting the
Ports of Los Angeles and Long Beach to downtown L.A.'s rail and highway
nexus, 20 miles inland. The $2.4 billion collaborative project was on
time, on budget, had almost no public opposition, and used only a
moderate amount of Federal funds--22 percent of the total cost plus a
$400 million loan. The loan and the rest of the costs of the project
are being borne by the ports, Los Angeles County, and revenue bonds to
be paid off over time by a $15 user fee on each loaded container that
uses the corridor.
Port experts are predicting that the efficiencies gained from the
corridor by facilitating the quick transfer of containers from ships to
the highways and rail lines leading out of L.A. will solidify Los
Angeles and Long Beach's position as the Nation top two ports for
decades to come. Transportation Secretary Norman Mineta at the corridor
dedication ceremony called the project, ``a powerful example of what we
want to encourage'' throughout the country.
We urge Congress to require the Corps to institute rational port
planning to consider what investments are in the best national interest
on a regional basis. In fact, the Department of Transportation is
already ahead of the Corps on this issue, and is currently funding a
project at the University of Rhode Island Transportation Center to
develop a comprehensive framework for sustainable container port
development.
S. 1987 would require the Corps to work with the National Academy
of Sciences in revising its project planning guidelines include
rational port planning. Unfortunately, in recent years some port
interests have pushed for increasing the Federal subsidy of dredging
ports deeper than 45-feet from 40 percent to 65 percent. If such a
change were applied to the New York/New Jersey Harbor project to deepen
to 50-feet, taxpayers would be fleeced for more than $375 million.
There is no need for the U.S. to subsidize port overcapacity through
the dredging of dozens of ports past 45-feet. A few select ports with
depths of 45-feet or more can serve the whole Nation well as hubs.
We strongly urge Congress to reject any attempt this year to
increase the Federal subsidy for dredging deep draft ports past 45-
feet.
ENSURING EVERYONE PAYS THEIR FAIR SHARE
Weeding out wasteful water projects through a streamlined
deauthorization process, holding the Corps more accountable and
modernizing the planning process are all effective ways to ensure the
best water projects get built. Cost sharing is another tool for
breaking the backlog. Forcing beneficiaries to pay their fair share,
can be used to reduce the budget, freeing up Federal resources to speed
up construction of good projects, and provides incentives for good
local policies that also further reduce Federal disaster bailouts.
In 1995, Dr. Robert P. Inman of the Wharton School of Business
published a study on the effects of cost sharing for Corps of Engineers
water projects, ``Changing the Price of Pork.'' The study examined the
Water Resources Development Act of 1986 and the unique situation where
Members of Congress and their constituents had an opportunity to seek
smaller-scale, more efficient projects once it became apparent that
cost-sharing rules were going to be adopted in the legislation. The
Inman study found that the cost-sharing rules of 1986 saved Federal
taxpayers more than $3 billion, or a 48 percent savings of what
taxpayers would have otherwise paid for projects in the bill. The
financial effect on local communities was marginal, a 12 percent
increase of what they otherwise would have paid, even though they were
paying a significantly greater share of the cost. The reason the
increased costs for local communities was minimal is that they chose
smarter and more efficient projects that met only their true water
resource development needs.
The cost sharing reforms of WRDA 1986, championed by President
Reagan, ushered in a new era that sought to instill market-based
economics into water development project planning. It marked a
significant evolution from the New Deal era thinking of building
projects to simply put people to work regardless of whether the project
had any lasting benefits.
The cost sharing reforms of the Smith-Feingold-McCain bill seeks to
buildupon the Reagan reforms. The guiding principle behind S. 1987's
cost share formula changes is that the greater the proportion of
benefits that are local in nature the greater the financial
responsibility of the local sponsor. The Inman study also endorsed this
principle.
Specifically, S. 1987 implements tiered cost sharing for operations
and maintenance of inland waterways, reduces the Federal subsidy for
flood damage reduction projects to 50 percent, and reduces the Federal
subsidy for beach building projects to 35 percent.
According to the Corps of Engineers, the Inland Waterways System
currently has a maintenance backlog of $350 million. However, each year
30 percent of the inland waterways maintenance budget is spent on
underused waterways that carry only 2.3 percent of the system's cargo.
Eliminating the huge Federal subsidy of the most wasteful waterways and
requiring a 25 percent cost share contribution from non-Federal
interests for other low use waterways could free up tens of millions of
dollars each year to reduce the maintenance backlog on the nation's
workhorse rivers, like the Ohio and Mississippi.
The effect of eliminating subsidies for the handful of waterways
would be minimal. For example, if the Corps were to stop dredging the
Apalachicola River in Florida's Panhandle, only three-dozen barges a
year would be affected. On average only one barge every 10 days floats
down the Apalachicola at more than the river's natural depth. Yet,
recent annual Federal appropriations for this waterway have been $12
million.
Despite the Corps of Engineers having spent more than $120 billion
on flood control projects over the last five decades, annual flood
damages continue to increase. This trend was cited in the Interagency
Floodplain Management Review Committee or Galloway Report on the
Midwest floods of 1993, which recommended a new course for the Nation
to implement policies that discourage further or more intensive
development within floodplains. A 1998 report by the National Wildlife
Federation, Higher Ground, illustrates the double, triple, and even
quadruple subsidies from the Federal Government as a result of a series
of uncoordinated policies.
Corps of Engineers subsidized construction of large structural
projects encourages further development of floodplains by making people
feel safe to live closer to the river. Inevitably, there will be the
big flood, which then usually brings flood insurance claims and Federal
Emergency Management Agency disaster assistance. And as Higher Ground
documented, there are tens of thousands of homes that have repeatedly
flooded and received checks from the Federal Government to rebuild
within the floodplain.
Reducing the Federal subsidy of Corps of Engineers flood damage
reduction projects from 65 percent to 50 percent can help break this
cycle of subsidies and encourage smarter flood damage reduction options
like non-structural flood-proofing of moderate risk homes and voluntary
buyouts of homes located within high risk flood zones.
Beach building projects are another example where the beneficiaries
are easily identified and are very local in nature, the people who
visit the beach, the people who live along the beach, and the people
who own second homes along the beach and rent them out. In fact,
beneficiaries of beach projects tend to be the most affluent
beneficiaries of any Corps subsidy.
For example, roughly one-third of America's 74 wealthiest beach
towns are beneficiaries of a Corps beach building project. Palm Beach
County, Florida is receiving a $2 million reimbursement from Federal
taxpayers this year for sand that was pumped in front of very wealthy
homes, including those in Gulf Stream where the median home value is
$1.5 million. All the beaches in the Hamptons of New York have been
maintained by Federal sand subsidies.
During the 106th Congress, a provision was snuck into WRDA 2000
approving the world's most expensive beach project, $1.8 billion for
Nags Head, Kitty Hawk, and Kill Devil Hills in North Carolina's Outer
Banks. This 15-mile stretch of beach is one of the most highly eroding
beaches along all of the Atlantic Coast. To compensate, the Corps will
have to rebuild one-third of the beach every year repeatedly for the
next 50 years. A cursory glance at any of the websites for the many
real estate brokers in this booming county will turn up a half-dozen or
more listings for $1 million beachfront homes for sale. The going rate
for beach house rentals during the peak summer season is $4,000 to
$8,000 a week. Obviously, these towns are not poor by any means.
Federal subsidy for beach projects is a relatively recent
phenomenon. Federal subsidies for sand pumping projects were not very
common before the 1980's, but in the last 3 years these projects have
been consuming a rapidly increasing amount of the Corps' construction
budget. Many towns nourish beaches on their own without Federal
assistance, using hotel occupancy taxes or property taxes assessed on a
home's proximity to the beach. The State of Florida recently
established an annual beach building fund.
Between the wealth of the beneficiaries and the proven alternative
local revenue raising mechanisms, reducing the Federal beach subsidy to
35 percent is common sense. Such a policy change will also discourage
the more intensive development of high-risk coastal areas, which would
in turn reduce Federal flood insurance bailouts following hurricanes.
Some states have sought to limit development of high-risk areas with
only limited success. Despite zoning regulations in Florida that
establish a ``line of control'' beyond which developers cannot build
seaward, the state has issued developers more than 400 permit waivers
in the last several years.
Many of these same points are made in a White House Office of
Management and Budget memo to the Corps, which is very critical of a
draft agency report that attempts to determine an optimal cost sharing
formula for beach projects. We have included this OMB memo as an
attachment this testimony.
Ultimately, beach erosion only becomes a problem when there are
homes on the beach. Beaches naturally migrate, and they will always
exist. It is just a matter of where the beach is and if it is in front
of your house or rental house. Federal policies, including cost sharing
for beach nourishment, ought to discourage irresponsible development in
high-risk zones.
EFFECT ON DISADVANTAGED COMMUNITIES
Some have concerns over whether cost sharing and even other reforms
could negatively affect underprivileged communities. However, most
likely the reforms in the Smith-Feingold-McCain bill would be a net
benefit to poor and minority communities.
In the case of cost sharing reforms, Section 103(m) of the Water
Resources Development Act of 1986 allows for cost sharing reductions on
flood damage reduction projects down to as little as 5 percent for
qualifying poor communities. In WRDA 2000, Congress extended the
ability to pay rules to all Corps projects and directed the Corps to
rewrite the qualifying rules and formulas. The Corps has not completed
revision of these rules, and concerns regarding the impact of cost
sharing upon financially strapped communities are best addressed
through that process.
A significant benefit to disadvantaged communities and all
stakeholders are the reforms in S. 1987 that call for greater public
involvement in the project planning process, inclusion of adverse
economic impacts of a project on a community in the benefit-to-cost
analysis. Additionally, independent peer review would ensure that the
voices of all communities are better heard and listened to by the
Corps.
One of the worst cases of the Corps failing to take into account a
project's effect on a poor, minority community is the $715 million
Inner Harbor Navigation Canal in New Orleans. This project lacks
economic justification. In addition, there is evidence that the Corps
used Enron-style accounting and cost-apportionment to add-on a hundreds
of million dollar deepening element of the project, to benefit just one
shipyard.
This lock replacement and canal-deepening project was first
authorized in 1956 and has been vigorously fought by the surrounding
poor African-American neighborhoods ever since. Concern over the Corps'
ignorance of the local residents in planning the project came to a head
in 1991, when Congress directed the Corps to create a stakeholder
advisory committee composed of local citizens from affected
neighborhoods and to establish a mitigation fund to compensate those in
the neighborhood who would have to suffer the extremely disruptive
effects of seven straight years of construction.
However, despite this congressional directive, the Corps has in
many ways treated the local residents even worse by hiding critical
facts from them about various aspects of the project.
In an off-hand remark to residents at a public meeting about the
project, a Corps engineer mentioned that the canal was going to be
dredged to 40-ft. The plan Congress approved only included designs for
a 36-ft deep lock. Testing has shown that between 36 and 40-ft levels
there are tons of toxic sediments, which now will be flushed out to
Lake Pontchartrain, a popular swimming area for the children of the
nearby neighborhoods. This additional dredging would also add tens of
millions or more costs to the project to only accommodate a handful of
additional ships.
The Corps also claimed for years that the project would actually
reduce traffic congestion at the bridges that cross the canal because
barges and ships would be able to move through the new lock faster.
After close examination of the Corps' plans, a local retired engineer
discovered that the construction process would frequently cause several
mile long backups for 45 minutes or more each day, creating a traffic
nightmare for thousands of commuters trying to get to their jobs in the
heart of New Orleans. Only recently at a public meeting did the Corps
acknowledge that these traffic problems would be created and now pledge
to investigate solutions. New solutions that could add another hundred
million dollars or more to the cost of this already unjustified, over-
budget project.
There are dozens of other cases where the Corps has ill-treated or
just flat out ignored citizens who are not considered their project
``clients'' such as:
<bullet> The poor African-American Cadillac Heights neighborhood of
Dallas, which prefers a non-structural flood control alternative. The
Corps' plan is designed specifically to accommodate new toll highways
inside existing levees that would actually reduce the flood capacity of
the river channel;
<bullet> Rice farmers on the Grand Prairie of Arkansas who are
being forced to swallow higher taxes and a gold-plated project just to
get the smaller-scale on farm assistance that they really desire;
<bullet> Crab fishermen who are the greatest economic engine of
struggling Clatsop County, Oregon and Pacific County, Washington whose
fishery will be at risk from the Corps' plan to dump tens of millions
tons of dredged material onto their fishing grounds.
TIME FOR CHANGE
The Corps of Engineers has a vast influence over our nation's
waters, and its work affects millions of Americans. Many projects have
had a positive effect, protecting countless lives from floods and
bringing the fruits of midwestern farmers' labor to the rest of the
world. But there are also many projects that have had a significant
negative effect on people's lives, have harmed other industries and
users of the nation's waters who are not the Corps' traditional
``clients'', and most outrageously squandered taxpayer dollars on these
activities.
At the root of so many of the agency's problems is the belief that
the local sponsor of a project is Corps' sole client. What agency
officials lose sight of when they promote a wasteful project is that
the Federal taxpayer is the primary client, and the majority
shareholder of virtually all Corps projects.
The Army Inspector General went out of his way to highlight these
concerns in his December 2000 report on the Upper Mississippi River
project scandal:
Although this investigation focused on one study, the testimony
and evidence presented strong indications that institutional
bias might extend throughout the Corps. Advocacy, growth, the
customer service model, and the Corps reliance on external
funding combined to create an atmosphere where objectivity in
its analysis was placed in jeopardy The overall impression
conveyed by testimony of Corps employees was that some of them
had no confidence in the integrity of the Corps study process.
The Corps has certain expertise and resources that can greatly
assist local communities in building something they would not be able
to do on their own. But the agency is accountable to the Nation as a
whole, and its mandate is to pursue a civil works program that will
benefit the overall national economy and welfare of its citizens.
Unfortunately, the Corps has failed to remember that it serves the
American taxpayer. Therefore, it is imperative upon Congress to enact
real Corps reform this year. In fact, no Water Resources Development
Act should pass without reform. At risk is the public's confidence in
the Army Corps of Engineers and any hope that Congress can restrain
itself from ever-escalating pork barrel spending, even in the midst of
the a very expensive and important war on terrorism.
______
Taxpayers for Common Sense
The Construction Backlog
Taxpayers for Common Sense performed a detailed analysis of 285
projects in the U.S. Army Corps of Engineers' ``Known Active
Construction Backlog'' based upon a review of the FY02 Budget
Justification Statements submitted to Congress by the Corps in support
of the President's budget request.\1\ The full construction backlog is
currently $52 billion.\2\
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\1\ Projects by the Corps' Northwestern Division were not included
in this analysis because Budget Justification Statements for this
division were not available on the Internet.
\2\ Based upon $28 billion of the known active construction backlog
(those projects listed in the Corps' FY02 Budget Justification
Statements, not including the Northwestern Division), $8 billion of
inactive projects (those that even the Corps has determined are no
longer economically justified, are no longer in the Federal interest,
or are no longer supported by a local sponsor), approximately $16
billion in additional projects that have been authorized by Congress
and projects in the Pre-construction Engineering and Design (PED)
phase.
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CONSTRUCTION DELAY
<bullet> There are 285 projects in the known active construction
backlog--those projects that are funded in the Construction General
account of the President's budget request--which still require $28.1
billion to complete.
<bullet> The typical project in the known active construction
backlog is only 24 percent complete (based on median rate of
completion).
<bullet> 190 projects in the known active construction backlog are
less than 50 percent complete and will require $22.3 billion more of
taxpayer funds to complete.
projects with a benefit-to-cost ratio of less than 1.5 to 1.0
<bullet> 60 projects--representing $4.6 billion of the known active
construction backlog--provide a low economic return compared to
taxpayer investment.
<bullet> 39 of these projects ($4.3 billion remaining balance) are
less than 50 percent completed, with the typical project being 24
percent complete (based on median rate of completion).
<bullet> The Dare County Beach replacement project will cost $1.8
billion to maintain 15 miles of wide beach in front of four booming
beach towns for the next 50 years. The Corps has estimated only a 27
percent return in net benefits (1.27 to 1.0 benefit-to-cost ratio),
despite much uncertainty about the cost and ability of the beach to
hold the sand for very long.
PROJECTS WITH OUTDATED ECONOMIC ANALYSES
<bullet> 61 projects--representing $8.1 billion of the known active
construction backlog--whose most recent economic analyses upon which
the project was approved is ten or more years old.
<bullet> 30 of these projects ($4.4 billion remaining balance) are
less than 50 percent completed
<bullet> The Corps has been relying upon a 1974 economic analysis
as the basis for claiming justification for the $207 million Yazoo
Backwater Pumping Plant, which is still only 5 percent constructed.
status of projects authorized in the water resources development
ACT OF 1986
<bullet> 44 projects--representing $4 billion of the known active
construction backlog--were authorized 16 years ago, however, the
typical project is still only 39 percent completed.
<bullet> 25 of these projects ($2.4 billion remaining balance) are
less than 50 percent completed.
INLAND WATERWAYS BACKLOG
<bullet> Completing the 25 high-priority projects as identified by
the 2001 Inland Waterways Users Board Annual Report plus an estimated
$60 million in annual major rehabilitation costs for renovating the 37
locks and dams on the Upper Mississippi and Illinois Rivers will cost
$7 billion over the next 20 years.
<bullet> With annual revenues of only $100 million and a current
$400 million surplus, there still will be a $1.1 billion shortfall for
the Inland Waterways Trust Fund's (generated from a $0.20 per gallon
barge fuel tax) share of the inland waterways backlog.
BEACH REPLACEMENT PROJECTS
<bullet> In recent years the Administration has budgeted a modest
amount for sand pumping projects only to see Congress dramatically
increase funding for beaches. In the last 3 years, beach funding has
increased 60 percent while the overall Corps budget increased 9
percent.
<bullet> 35 projects--representing $6.3 billion of the known active
construction backlog--were budgeted for in President Bush's Fiscal Year
2002 Budget.
<bullet> Congress subsequently funded a total of 58 beach projects
for construction and 48 studies of new beach projects, which if all are
continued through to completion over the next several decades would
cost taxpayers well over $10 billion.
______
The Distribution of Shore Protection Benefits, Draft Army Corps of
Engineers Report, November 2001, Comments of the Office of Management
and Budget
BASIC ASSUMPTIONS
The analysis of the hypothetical scenario in the draft report
relies upon two key assumptions that lead to a substantial
understatement of the benefits that accrue locally.
It uses an inappropriate measure--the place of principal
residence of the people who own local property or who use the
beach--to allocate the benefits of a project to the ``beach
region'' (local) or to the ``rest of the nation'' (national).
The issue here is not who benefits, but whether the way in
which the benefits accrue enable the State or local authorities
to support a non-Federal cost-share. That depends largely upon
where the benefits will occur, not on where the people who
receive the benefits reside most of the year.
Although the report views some national and some regional
economic development benefits as local, it limits the local
area to the county or counties in which the shore protection
project physically is located. Coastal States typically pay
much of the non-Federal costs of these projects. e.g., between
50 percent and 100 percent in the five States that the Corps
surveyed. Therefore, we believe the report should have viewed
as local all benefits that flow to any resident or business in
the State or should have attempted, at a minimum, to estimate
the benefits that accrue in-State beyond the county line.
Instead, it simply includes them on the national side of the
ledger.
STORM DAMAGE REDUCTION
All storm damage reduction effects redound to the benefit of the
local community. By reducing damages to structures and their contents
and to local infrastructure, a shore protection project raises local
property values compared to the ``without project'' condition. Since
real property is a fixed asset, most of this added value remains within
the reach of local authorities and augments their ability to contribute
towards the project's construction costs, for example, through property
or occupancy taxes. It does not matter that some property owners may
reside elsewhere. The project reduces storm damages only locally, for
those who live elsewhere, it reduces damages to their second home,
rental property, or business; its contents; and the surrounding land.
RECREATION
Shore protection projects that support recreation can add
significantly to the ability of the State and local sponsor to
contribute to the costs of construction. The analysis of the
hypothetical scenario in the report underestimates these local benefits
in several ways:
In limiting the beach region to the county, the report understates
the local component of the regional economic development benefits. The
people who travel farther to reach the beach are more likely to stay
overnight nearby in a hotel or rental unit and to spend money when they
get there. Their beach-trip spending beyond the county line is likely
to occur mostly in-State, but the report allocates the associated
benefits to the ``rest of the nation.''
Although spending by foreign tourists in the coastal State is new
spending from a national perspective, the added value that it
contributes to the national economy primarily benefits the local
coastal community and the State.
The intangibles, subjective value of the beach experience generally
exceeds the financial costs that beach users incur. For beach users who
live within the State either part-time or full-time, all of this
consumer surplus is local.
The State or local authorities can access only a part of this
consumer surplus via a user fee without significantly affecting overall
tourist spending. Since the amount that they could so collect from out-
of-State and foreign visitors is potentially available to help pay for
the project, it is a local benefit as well.
The report treats the Federal tax revenue from spending in the
beach region as a benefit that occurs outside the beach region.
However, the net effect of a project on Treasury receipts probably is
insignificant. In the absence of the project, it is likely that: (1)
spending by recreation users (perhaps elsewhere) would generate a
similar level of tax revenue and (2) the alternative Federal investment
(same amount spent elsewhere) would produce a comparable level of tax
revenue.
PUBLIC FINANCE CAPABILITIES
The draft report does not sufficiently explore a complex question
that is central to determining an appropriate non-Federal coat-share.
To what extent will the predicted benefits of a shore protection
project occur within the reach of local or State authorities and
therefore potentially be available to support a non-Federal cost-share?
The draft report assumes that local authorities can support a
portion of the project's costs only through belt tightening or by
developing an additional source of recreation-based revenue. However, a
shore protection project chiefly benefits homes and businesses in the
local coastal community. By preserving existing property value and
facilitating further coastal development in that community, a project
in affect augments the long-term local tax base. The draft report did
not examine the extent to which this effect of a project on private
property values, under a range of property tax rates that now prevail,
contributes to the revenues that coastal communities now are
collecting.
The report also should have examined the option of charging
existing users of the beach a fee or a higher fee. It focuses only on
the ability of local authorities to raise additional funds from new
visitors or a sales tax increase.
In calculating the fiscal capability of State and local interests,
the report also makes two significant computational errors:
It does not represent the stream of payments property. Beach
replenishment occurs periodically over a project's lifetime. The report
assumes the local sponsor would issue a bond at the outset of a project
that is large enough to pay all future costs up front, years and
decades before much of the work actually will occur.
It also overestimates the up-front gum that non-Federal interests
would need to borrow when it multiplies average annual costs by 50. The
amount that a local sponsor would borrow is equivalent to the principal
of the loan; average annual costs include both the principal and a
substantial interest component.
ENVIRONMENTAL IMPACTS
According to the draft report, shore protection projects can
benefit species that use the beach such as shorebirds, but cause short-
term damage to habitat in the marine subtidal zone. The draft report
does not try to assess the relevance, if any, of these benefits to
possible changes to the cost-sharing formula.
Project opponents claim that shore protection projects also can
lead to more serious long-term impacts, e.g., to fishery habitat areas
of particular concern, new estuaries, and in shallow areas that are
less subject to littoral drift such as a bay. By facilitating the
further development of certain coastal communities and adjacent areas,
projects may have other adverse environmental impacts as well. Since
the early 1970s, the Corps has recommended dozens of projects that
involve periodic beach replenishment, covering major stretches of the
New Jersey, Florida, and North Carolina coastlines and significant
segments in a few other States. It is involved in a multi-year effort
to monitor the biological impact of six projects in New Jersey, but has
not examined the cumulative environmental impacts of: (1) the Corps
program as a whole; (2) the many other such projects that local
authorities and States now fund on their own; and (3) related Federal
disaster relief and Federal flood insurance efforts that affect coastal
development. The draft report does not address such concerns.
__________
Statement of G. Edward Dickey, Ph.D.
Mr. Chairman, members of the Committee, I appreciate this
opportunity to present my views on how Congress can improve the Army's
Civil Works Program executed by the Corps of Engineers. My remarks draw
upon my two decades of experience in policy development and
implementation in the Office of Assistant Secretary for Civil Works, my
years as Chief of Planning for the Corps of Engineers, and my education
as an economist. Having worked many years with many fine professional
and dedicated people in the Corps, both civilian and military, I know
first hand of their capabilities and their desire to be responsive to
the values and priorities of the public as expressed in law and
executive branch policy.
Water resources are indeed precious and warrant careful management.
Water is not only a vital factor in human activities, it obviously also
profoundly influences the environment. These influences are realized
though complex physical, chemical and biological processes that also
support our economic well being. The Civil Works Program is the major
mechanism for the Federal Government to make investment and management
decisions regarding use of the Nation's water resources. As a result of
past investments, we have a valuable legacy of facilities that allows
us to manage and redirect those resources in the interest of human
welfare. These facilities must be periodically modernized and their
operations modified to respond more fully to current demands including
those of natural ecological systems. In addition, construction of new
facilities can both add to our nation's productivity and restore
damaged natural ecosystems.
If Civil Works projects are a vital governmental responsibility,
why has it been increasingly difficult for the program to compete for
budgetary resources? In my view, the answer is simple; not all proposed
projects are equally meritorious. Some are unproductive; that is, they
would not produce benefits commensurate with their economic and
environmental costs. Past policies and practices have not resulted in a
uniform inventory of compelling investments, and available funds are
not always applied to the best projects. The tools are available to
change the situation. Congress and the Nation can have the full benefit
of the Army Corps of Engineers unique and indispensable ability to plan
and implement the development, management and restoration of our
nation's water resources.
Congress needs to provide a consistent and unambiguous policy
framework and allow the executive branch to develop recommendations to
Congress within that framework. The Corps is a highly responsive
agency; it will bring the full power of its expertise to solve problems
in a more productive way if that is what the Congress directs. New
authorizing legislation is the means for Congress to provide a new and
clear direction and to remove the vestiges of earlier generic and
project-specific accommodations of special interests which have so
powerfully shaped the program in the past and which now limit its
ability to compete for budgetary resources.
My statement addresses three policy elements, which, if
incorporated into legislation, would produce a total package of changes
necessary for the effective redirection of the program. They are (1)
the project planning and decisionmaking process; (2) project cost
sharing; and (3) Corps organization to maximize professional
capabilities. Congress and the President must work together to achieve
success in modernizing Civil Works. Congress can provide clear
direction in each of these areas; however, the executive branch has an
essential role to play in modernizing the program as well.
PROJECT PLANNING AND DECISION MAKING
The need to update planning guidelines
Congress assigned responsibility for Corps of Engineers planning
framework to the President and the U. S. Water Resources Council in the
Water Resources Planning Act of 1965 (P. L. 89-80, as amended).
Pursuant to this authority, President Reagan issued the present
statement of Economic and Environmental Principles for Water and
Related Land Resources Implementation Studies in 1983, and the Council
issued its Economic and Environmental Guidelines for Water and Related
Land Resources Implementation Studies that same year. These Guidelines
are composed of ``Standards'' and ``Procedures,'' which are more
specific guidance to the Corps (as well as the Bureau of Reclamation
and the Natural Resources Conservation Service) on the conduct and
content of water project implementation studies.
These Principles and Guidelines direct the Corps to develop
systematically cost-effective plans that also address all Federal
concerns, as expressed though environmental and other laws and
executive branch policy, as well as state and local concerns. The
present Principles and Guidelines are the third version of Water
Resource Council planning guidance issued since 1973. I believe the
current Principles are carefully crafted and, collectively, define a
planning framework that is both powerful and simple. They essentially
direct agencies to weigh the economic and other benefits and costs for
every reasonable alternative and to recommend the best plan considering
all benefits and costs. As a planning model, they are far superior to
other decision frameworks that govern other Federal programs that are
based on standards, such as in the case of the water quality program.
Congress should direct the U.S. Water Resources Council to review
its Economic and Environmental Guidelines for Water and Related Land
Resources Implementation Studies and to update them to reflect the
improvements in economic and other evaluation techniques and the
changes in law and policy that have occurred in the last two decades.
In this regard, the reports of the National Research Council's
Committee reviewing Corps procedures pursuant to Section 216 of Water
Resources Development Act (WRDA) of 2000 will provide valuable
information to the executive branch concerning the most appropriate
evaluation techniques.
The lack of value in additional objectives
I do not believe water project planning would be in any way
improved by specifying additional generic planning objectives such as
``environmental enhancement'' beyond the single objective now stated in
the Principles. Section 2(a) of the Principles states: 'The Federal
objective of water and related land resources planning is to contribute
to national economic development consistent with protecting the
Nation's environment, pursuant to national environmental statutes,
applicable executive orders, and other Federal planning requirements.''
The Principles and the Guidelines (P&G) clearly provide for
accommodation of other Federal, state and local and international
concerns in the context of a specific study. The flexibility of the
present P&G was amply demonstrated by the ability of the Corps to
develop the Comprehensive Everglades Restoration Project, which was
authorized in WRDA 2000.
The present Federal objective is well defined and made
operationally meaningful in each individual project study by a broadly
accepted body of economic theory. This theory also provides clear and
objective standards for measuring economic benefits and costs.
Virtually all controversies over Corps of Engineers studies involve
challenges to either (1) the quality of Corps' estimates of economic
benefits and costs, or (2) the subjective tradeoffs between economic
benefits and other values reflected in the Corps' recommended plan.
Much can be done to improve the analysis of economic and environmental
impacts, but difficult choices between economic and non-monetized
values will remain subjective and controversial no matter how well they
are analyzed.
In contrast to economic benefits and costs, there are no generally
accepted theories of environmental, ecological or social value that
allow the executive branch to develop objective, operationally
meaningful evaluation standards. Specification of additional objectives
will not lead to better analysis or more effective consideration of
these kinds of impacts in planning individual Civil Works projects.
Moreover, as demonstrated by the 1980 version of the Principles, adding
additional planning objectives will only result in unproductive
complexity and ambiguity in the planning process, which already is
criticized as being overly complex and lengthy.
Improving project productivity
One area in which there is apparent congressional concern is the
economic productivity of Civil Works projects. The Corps of Engineers
Modernization and Improvement Act of 2002 (S. 1987) would require
future projects to have a 1.5 to 1 ratio of benefits to costs at the
current discount rate. The issue of project productivity can be best
addressed by directly considering the discount rate, which governs the
formulation of projects. The discount rate, which is used to convert
future benefits and costs to present value equivalents, is an important
public policy choice. The present discount rate is based on a formula
established by Section 80 of the WRDA 1974 (P.L. 93-251). This law
bases the discount rate on the current cost of long-term Federal
borrowing and also ``grandfathers'' certain old (now at least over 30
years) projects at a lower discount rate (3.5 percent or less).
In considering the policy regarding the discount rate, it is
important to know that the discount rate used in water project
evaluation is a ``real'' or inflation-free rate since all benefit and
cost estimates are in constant dollars. Thus, a study being conducted
today would project future costs and benefits in 2002 dollars. However,
benefits and costs occurring in the future would then be reduced by the
discount rate because we place a higher significance (economic value)
on benefits and costs when they occur today rather than in the future.
The higher the discount rate, the less important we consider a benefit
or cost that would accrue in the future. Choice of a discount rate
affects not only the number of projects having benefits greater than
costs, it also affects the scale of projects and their design. As the
discount rate is increased, fewer projects will have benefits greater
than costs, and the best projects will be smaller and more capital
intensive. Most of the completed Corps projects that are now criticized
as ``unproductive'' were based on low discount rates. The choice of a
discount rate has important consequences for our future infrastructure.
The discount rate formula in Section 80 of the WRDA'74 (P.L. 93-
251) is not based on economic theory. Furthermore, annual
recalculations of the benefits and costs of uninitiated construction
projects are generally required because the rate usually changes based
on the required yearly application of the formula. Finally,
grandfathered discount rates for certain projects create false
expectations about those projects' prospects for future funding. No
Administration that I worked for made new construction start
recommendations on the basis of any rate lower than the current
discount rate.
The Office of Management and Budget (OMB) presently establishes the
discount rate to be used in the evaluation of other public investments.
OMB Circular A-94 directs the use of 7 percent real discount rate for
these projects. According to the circular, ``This rate approximates the
marginal pretax rate of return on an average investment in the private
sector in recent years.''\1\ Congress should either establish a
discount rate based on sound economic theory or allow the Corps to
apply the rate used to evaluate other Federal investments.
---------------------------------------------------------------------------
\1\ Circular A-94, Guidelines and Discount Rates for Benefit-Cost
Analysis of Federal Programs, page 7.
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Allowing the executive branch to fulfill its responsibilities for good
analysis
In my view, Congress should have the executive branch's best
analysis and recommendation before it considers a project. Congress may
reject that analysis, evaluate the information in the analysis
differently, or make its decision based on other considerations; that
is Congress' prerogative. However, in some instances Congress has
legislated how the Corps of Engineers is to measure certain economic
benefits. I am aware of at least two cases where legislation specifies
a particular way of measuring benefits that cannot be supported by
commonly accepted economic theory. In Section 7(a) of the Department of
Transportation Act (P.L. 89-670), Congress defines the primary
navigation benefits in terms of rate savings to shippers rather than
resource cost savings. In Section 219 of WRDA 1999 (P.L 106-53),
Congress requires to Corps to ``. . . calculate the benefits of the
nonstructural project using methods similar to those used for
calculating the benefits of structural projects, including similar
treatment in calculating the benefits from losses avoided.''--despite
the fact that the economic impacts of structural and non-structural
alternatives are quite different.
The executive branch develops implementation guidance that allows
the best estimate of economic benefits within the constraints imposed
by law, but benefit-defining legislation signals that Congress seeks
outcomes different from those that would be produced by objective
economic analysis. Unfortunately, S. 1987 would move further toward
legislating benefit procedures for the executive branch. Congress
should affirm its commitment to using the best analytical techniques in
every Civil Works project study by abrogating past benefit-defining
provisions and by avoiding new constraints on objective benefit and
cost measurements.
Review is an essential part of the recommendation development process
Sound water project planning requires not only a clear policy
framework in which to conduct analyses, it requires time--time to
develop a plan and time for review of the plan so that national as a
well as local perspectives can be brought to the attention of
decisionmakers. During the last decade, the quality of the internal
executive branch review processes has declined; one major reason for
this decline is that Congress has authorized many projects that had not
received the full benefit of executive branch review. The executive
branch project review culminates when the Secretary of the Army
transmits a report of the Chief of Engineers to Congress. In the last
decade, Congress has authorized dozens of projects without waiting for
completion of the report development and review process. Many of these
authorizations were conditioned on favorable report of the Chief of
Engineers by a future specific date.
Conditional authorizations create enormous pressures on the Corps'
review staff. In the interest of time and to avoid disappointing
Members of Congress who supported conditional congressional approval,
problems are glossed over and reviewers' concerns are ignored. In any
case, even if the Chief of Engineers' report is completed by the
deadline, the Secretary and the other Departments of Government may not
have even initiated their final policy-level review.
It is not surprising that projects that have been found deficient
in one way or another in recent times Delaware River Deepening, The
Chesapeake and Delaware Canal and the Dallas Floodway Project were
authorized without a report transmitted by the Secretary of the Army.
In the case of the Upper Mississippi River Navigation study, Congress
specifically authorized the Corps to proceed with engineering and
design on expanded locks before even a draft report was released. Is it
surprising that the Corps was eager to find expansion projects
justified? Except in the most extraordinary circumstances, Congress
should authorize only those projects that have completed the executive
branch review process.
COST SHARING AND IMPROVED RESOURCE ALLOCATION
Appropriately structured non-Federal financial participation and
pricing for project services contribute to at least three important
objectives: increased project credibility, increased returns on scarce
Federal funds, and better utilization and greater benefits from
existing project capacity.
Project cost sharing
The first two objectives can be realized by non-Federal
participation in the financing of water project construction. Whenever
a non-Federal sponsor is willing to pay for a major portion of the cost
of a project, added credibility is given to any analytical
justification for the project. The absence of a non-Federal public
entity willing to pay the non-Federal share suggests the project is not
being given a priority by that entity's constituents, who normally are
also the project's beneficiaries. Second, non-Federal financing allows
limited Federal funds to be spread over a greater number of projects
resulting in a greater total investment. The effective constraint in
the rate of water resource investment is the availability of Federal
funding. By requiring every project to have a significant amount of
non-Federal financing, unproductive, low priority projects would be set
aside, and productive projects could move ahead more quickly. Congress
has not been consistent in its approach to project cost sharing. Since
the major reforms of WRDA 1986, Congress has exempted particular
projects from cost-sharing and, in other cases, eroded cost sharing
though requiring consideration of ``ability to pay'' in establishing
financing requirements. As an economist, I see a glaring inconsistency
between project advocacy based on the importance of project benefits
and a plea that the beneficiaries, or their governmental proxies,
cannot possibly pay their share of project costs. Congress should apply
the purpose-specific cost-sharing formulas to all projects serving
those purposes. There should be no exceptions or exemptions.
Demand management as an essential management tool
The third objective of financial participation is obtained by
improved use of existing project capacity. Efficient management of
existing projects requires use of appropriate pricing or other demand
management strategies whenever public use begins to exceed their
capacity. As consumers, we expect demand management to be an essential
part of the normal course of business in the management of utilities
water, electricity, telephone service and natural gas. Airlines and
railroads are becoming increasingly sophisticated in this arena as
well.
No more compelling case can be made for demand management than in
the case of congested inland waterway locks. The Federal Government, as
the sole manager of the greatest inland waterway system in the world,
should be enthusiastic about adopting congestion management to increase
the benefits of important, highly valuable waterway facilities. The
National Research Council's Committee to Review the Upper Mississippi
River Illinois Waterway Study recommended: ``The benefits and costs of
lock extensions should not be calculated until nonstructural measures
for waterway traffic management have been carefully assessed.''
Congress should ensure that the Corps has the necessary authority to
make demand management an integral part of continued modernization of
our nation's inland waterways.
Study scope and cost sharing
Finally, the Congress should review cost sharing for feasibility
studies. Cost sharing by non-Federal sponsors has greatly reduced the
total cost of Civil Works project feasibility studies and substantially
reduced the time to complete them. In cases where a project is likely
to emerge from the study process, study sponsors are anxious to get on
with it. When the prospects for a project are slim or non-existent,
sponsors have better uses for their resources.
There is a downside to study cost sharing, however. The non-Federal
sponsor may have preconceived ideas as to the desired solution and may
resist expending funds on alternatives that it believes would be
inferior or beyond its capability or authority to implement. For
problems warranting comprehensive basin studies, states or regional
bodies should be required to be the sponsor, or other mechanisms should
be found to limit study cost and time. For studies of deep-draft ship
channel improvements, which are often rightly criticized for their
naivete and lack of regional perspective, Congress should require
regional analysis of improvements and adjust study cost-sharing
requirements accordingly. Unless the present requirement for
feasibility study cost sharing for deep draft navigation channel
improvements is altered, unbiased regional port planning will not be
done--regardless of the existing requirements for regional studies in
the current Water Resources Council Guidelines and the continuing
complaints of watch-dog groups and independent project reviewers.
Improving Corps Analytical Capabilities and Products
To be able to meet the challenges of modern analysis, the Corps
must reorganize and concentrate its professional planning resources
into centers of expertise. Reorganization would have many benefits: (1)
Professionals in the major planning disciplines would be able to share
knowledge and experience face-to-face. (2) Enhanced opportunities for
professional growth and advancement within a given discipline would be
created. And, (3) pressures to ``justify'' a questionable project would
be reduced. Such changes in Corps planning were last proposed at the
end of the Administration of George Bush in 1992. Like earlier attempts
at reorganization, this last attempt was abandoned in the face of
powerful congressional opposition.
The Army and the Corps are taking steps to reestablish an effective
internal review process after a decade of decentralization and
denigration of the review function. While consultation with outside
experts and independent review of planning documents is appropriate for
large, controversial or highly risky projects such as the Comprehensive
Everglades Restoration Project and the Missouri River operating plan,
it should not become a routine requirement. Such reviews are expensive,
time consuming and unlikely to produce a definitive conclusion
regarding the best investment or management decision. Moreover, for
such outside consultation to be effective, the outside experts must
have a clear charter and understanding of the policy context in which
their help is being solicited. In short, I believe there is no
substitute for an initial high quality Corps of Engineers study that is
reviewed thoroughly by the many Federal agency experts in the normal
course of development of a final Administration recommendation.
Congress should direct the Secretary of the Army to reorganize the
Corps in the interest of improving its analytic capabilities and to
ensure effective internal reviews for Civil Works projects. Congress
should authorize the Secretary to utilize the services of outside
experts at the beginning of studies likely to lead to large and
controversial projects and to provide for independent review of those
projects prior to their transmittal to Congress. It should also provide
criteria for the types of studies for which outside consultation and
review is required.
SUMMARY AND CONCLUSIONS
The Corps of Engineers is uniquely qualified by its professional
resources and its adherence to the Principles and Guidelines to address
the full spectrum of the nation's water problems. I believe that the
best opportunity for the Nation to integrate the management of all
water quality and quantity problems is through the Civil Works planning
process under the existing Principles and up-dated Guidelines.
Congress and the President must work together to take full
advantage of the Corps' potential to develop solutions to the nation's
water and related land resource problems and to recommend productive,
cost-effective public investments. Congress can best ensure that the
Corps consistently pursues sound water resources development and
management by taking these actions: (1) direct the U.S. Water Resource
Council to review and update executive branch planning guidance, (2)
remove obstacles to unbiased analysis created by past legislation, (3)
authorize only those projects that have completed the executive branch
study and review process, (4) re-institute substantial cost sharing for
all projects without exception, (5) clarify the kinds of studies it
expects and modify study cost sharing to support those studies, and (6)
require demand management be an integral part of the delivery of
project services when it can increase project benefits. Finally
Congress should support the Department of the Army and Corps in
strengthening the Civil Works planning and review capabilities and
require use of outside experts to guide and review important studies.
______
Responses of G. Edward Dickey to Additional Questions from Senator
Smith
Question 1. I am particularly interested in your suggestion in your
written testimony that the Corps reorganize to concentrate its
professional planning resources into ``centers of expertise.'' Can you
comment in more depth how you would envisions these ``centers of
expertise'' working, describe the 1992 proposal, and what the specific
opposition was to this attempted reorganization?
Response. ``Centers of expertise,'' in my view, are offices where
there is a concentration of experts in a particular area of economic or
environmental analysis. These experts would be called upon to perform
all benefit or impact analyses of a particular type for Corps studies.
For example, one or two districts or the Corps' Institute for Water
Resources could house all the deep-draft navigation benefit estimation
experts. This organizational structure would allow the staff who are
most knowledgeable in a given subject area to routinely interact, to
keep abreast of the latest analytic developments, and to continually
apply their detailed and specific knowledge to concurrent and
successive studies. In addition, the potential for bias toward
favorable study outcomes is reduced. The analysts' future employment
and that of their fellow workers would not be tied to a favorable study
outcome, and the lack of proximity to the sponsor may reduce untoward
pressures for the outcome sought by the non-Federal sponsor.
The 1992 study called for this kind of organization. Under that
plan, the project manager for the study would remain in the geographic
district where the project would be located; he would then contract
with other Corps offices to do study tasks just as he presently does
with private contractors. Another objective of the 1992 plan was to
promote competition among districts with the goal of improving cost and
schedule performance as well as study quality.
Congressional opposition to the 1992 plan came from two sources:
The first was the loss of employment in and diminution of the stature
of specific districts that would not become centers of expertise. The
second, I believe, was a fear that the Corps would not be as responsive
to local desires as they are under the present organizational
structure.
Question 2. Can you give some specific examples of how the Corps
project planning process needs to be modernized?
Response. Two obvious and compelling examples are the integration
of demand management into inland navigation studies and adoption of
regional port analysis for deep draft navigation studies. The Corps,
reflecting the concerns of its traditional constituencies as well as
its own proclivities for structural solutions, has resisted evaluating
demand management despite the large economic costs to shippers
associated with congested locks. In similar fashion, the Corps
continues to justify coastal navigation improvements based on the
assumption that the port's volume of commerce will be the same without
the improvement being in place as with the project. This assumption can
result in a serious distortion in the estimate of project benefits and
is contrary to existing guidance in the Water Resource Council's
Guidelines. The reason Corps continues to conduct these naive analyses
is that neither the executive branch nor Congress has raised serious
objection. Project advocates are content with the present approach
because I believe they recognize that a more defensible analysis may
reduce their prospects for getting a project.
Question 3. What steps can be taken to improve the credibility of
Corps studies?
Response. Good water resources planning is ultimately an art
requiring professional judgments and policy direction to determine
``how much study is enough.?'' There are several elements to producing
a credible project recommendation. The first is to insist that
competent analysts carry out every project study. Second, the analytic
techniques must be appropriate to the size of the expected project and
the character of the alternatives. When it comes to techniques, one
size does not fit all. In some cases, state-of-the-art analytic
techniques may be much too expensive for the decision to be made.
Third, studies must be thoroughly and effectively reviewed for their
technical soundness and compliance with law and policy. A complete
executive branch review should be the norm, and Congress should have
the benefit of the Administration's recommendation not simply that of
the Corps. Fourth, the Corps needs to also consult with outside experts
in the case of especially complex studies with exceptional risks and
uncertainties. My own experience with the Comprehensive Everglades
Restoration Projects, shows that large ecosystem restoration projects
should routinely rely upon input from outside experts including those
from other Federal and state agencies.
Question 4. In your opinion, what steps can be taken to ensure that
Corps projects maximize both economic and environmental benefits?
Response. Unfortunately economic and environmental ``goods'' are
seldom coincident; it is rarely possible to maximize both in the same
project. Water projects typically involve manipulation of the natural
environment in the interest of some economic benefit. If the preserving
and protecting natural ecosystems is an environmental ``good,'' then a
development project will have some adverse consequences. While such
consequences may be reduced or mitigated at no economic cost, not all
of the adverse environmental impacts can be avoided through refinement
of the plan. Choices made between competing values must be made. In my
view, the proper role of the Corps is to analyze the choices and to
make a recommendation as to the most appropriate balance between
economic, environmental and other considerations. Since such choices
are ultimately subjective, we can expect controversy. The Corps should
not be blamed for showing that there are tough choices to be made.
However, it should be held responsible for the quality of the analysis
that describes the public's choices.
Responses of Edward Dickey to Additional Questions from Senator
Jeffords
Question 1. You stated that independent review may be appropriate
for some, large controversial projects, but not for all. In your
opinion, should the Corps reestablish a more independent, internal
organization to review all other projects?
Response. I think there should be a review organization that
reports to the Secretary of the Army. In 1992, the Administration did
not object to Congress' elimination of the Corps' own review body, the
Board of Engineers for Rivers and Harbors. The Board had become
redundant in light of the more complete review function then being
performed by the Office of the Assistant Secretary (Civil Works) in
close cooperation with review staff in the Corps Headquarters. These
review activities were largely eliminated during the eight years of the
Clinton Administration. In my opinion, the downgrading of the
Washington level review function accounts for much of the present lack
of credibility in Corps planning reports. It is my understanding that
the Office of the Assistant Secretary is rebuilding its review
capabilities. I believe Congress should review the Secretary's actions
and either support the reestablishment of the Secretary's review
function in its present form or further strengthen it by providing a
clear charter and policy direction in legislation.
Question 2. You indicated that the available procedures for the
evaluation of the environmental potentials of Corps projects are
limited. Do you believe that most Corps projects adequately consider
the environmental opportunities or impacts? If not, what would you
recommend to improve this?
Response. I believe the Corps has all the authority to evaluate the
environmental potential and impacts of its projects that is necessary
or appropriate. Moreover, the Corps has been a leader in developing
analytic techniques to measure and evaluate environmental impacts.
Unfortunately, in some (rather than most) situations, Corps districts
have not chosen to apply all of the agency's expertise or comply with
existing policy guidance. In some cases, the study sponsor, who must
pay half the cost of a project study, may have no appreciation for or
interest in such values and thus resists such analyses. In other cases,
the district itself may not have an appropriate appreciation of the
need to study and consider environmental consequences. These twin
forces result in Corps districts avoiding studies that explore the full
range of choices or which indicate the importance to both the economy
and the environment of the choices to be made. The way to fix these
serious problems is first through reestablishment of effective
Washington level review that will assure that: (1) More than local
perspectives are reflected in the scope of district project studies and
in the range of alternatives considered, and (2) the districts'
evaluation techniques are appropriate and correctly applied. The second
step would be to allow the Corps to move its experts, who should be
responsible for important environmental evaluations, into centers of
expertise. As I stated in my prepared statement, there is no substitute
for an initial high quality Corps study that has been reviewed
thoroughly in the course of developing a final Administration
recommendation.
__________
Statement of Lisa Holland on behalf of The Association of State
Floodplain Managers, Inc.
INTRODUCTION
The Association of State Floodplain Managers, Inc. (ASFPM) is
pleased to share comments on issues related to Authorization programs
of the Corps of Engineers. These include the 2002 Water Resources
Development Act (WRDA), and proposed bills S. 1987 and S. 646.
The Association of State Floodplain Managers, Inc. and its state
chapters represent over 4,500 state, local and private sector officials
as well as other professionals who are engaged in all aspects of
floodplain management and hazard mitigation. All are concerned with
reducing our Nation's flood-related losses and many have worked with
Corps Staff on the implementation of flood control and restoration
projects in their community or state.
The ASFPM chooses not to comment on specific water resource
projects, rather we choose to focus on policies that drive project
formulation and implementation.
THE PROBLEM
In general the ASFPM believes that the US Army Corps of Engineers
has a long proud tradition of providing water resource projects to the
Nation. However, we also believe that the model being used today best
served the Nation in a past era, and that it is time reshape the Corps
based on modern domestic policies.
Current policy and process have resulted in disagreement over the
economic and environmental viability of many projects; a huge backlog
of controversial projects; division among the nation's policymakers on
how to invest in projects; and a situation where the cost of operating
and maintaining existing projects is becoming excessive.
The policy and process model that we are currently working under:
1. Assumes that national return on investment (NED) is our focus
for water resources, yet we never consider the opportunity cost of this
investment.
2. Assumes that environmental or social benefits are of a lesser
value than economic benefits, in spite of congressional actions to the
contrary.
3. Has led to many non-Federal sponsors wasting time and money on
projects that are not justified, or will not be funded.
4. Has attempted to meet national objectives through an altruistic
planning process that is prone to manipulation to meet pre-conceived
project outcomes.
5. Has failed to expand from a Federal investment mentality to one
that embraces and supports a broader array of domestic policies, most
notably the lack of focus on actions that reduce future disaster
expenditures.
In order to address these issues and others, we will focus our
testimony on the following areas:
Trends in Flood damages--Growing disaster expenditures
Despite the expenditure of over 100 billion dollars and years of
efforts in Federal programs to reduce flood damages and encourage sound
floodplain management flooding costs are now approaching $5-$8 billion
per year. On one hand this may be surprising, but on the other hand it
was predictable. Our policies and practices have tended to encourage
people to occupy areas that are marginally protected from flooding, or
to take actions in the floodplain that have transferred their problem
onto others. The economist would suggest that these occasional damages
are reflected in the economic models, and as long as benefits exceed
cost, that escalating flood damages is a rational outcome. For this
model to work however, based on current policies, it would needs to
assume that there is virtually an unlimited supply of money to pay for
the disaster costs, and that other programs of domestic policy would
not suffer because of the transfer of dollars to pay for disasters.
The fact is that there is not an unlimited supply of cash, and that
other domestic programs do suffer from escalating disaster costs. To
break this cycle the Corps must begin to modify its model such that it
leads to solutions that provide permanent flood protection with an eye
toward reducing disaster costs. Many times these solutions may be the
least cost solution, but may not satisfy the NED criteria. Recognizing
the regional economic development goals of many local sponsors, we
would suggest that Congress encourage the ability to link Corps
projects with other programs of economic development outside of flood
hazard areas.
Principles and Guidelines (P&G)
The P&G have been used since 1983, when they replaced the
Principles and Standards. In spite of their shortcomings, in theory
they provide a reasonable approach to justify an investment mentality
for project alternatives. In reality, they are a maze which both
Federal and non-Federal sponsors navigate to justify a pre-conceived
outcome. The P&G alone fall short of supporting the domestic policies
of the Nation. At a minimum the P&G need to be reissued with the
environmental quality account being a required input to the process.
For P&G to be effective, the Congress must mandate the Corps to
develop and adopt methods for quantifying the economic value of
environmental, cultural, and social inputs. For the expenditures of the
Corps to be effective, the P&G must be augmented with decisionmaking
criteria that reflect current domestic policies and programs. In
essence they need more than tweaking. The P&G do not reflect the way
planning is done today, by any level of government, let alone the
Corps. Forcing Corps staff to use these guidelines sets up an instant
conflict in the project alternatives. The Principles and Guidelines
need to reflect a collaborative, multi-objective approach in the
beginning, rather than attempting that collaboration at the end of the
process. The list of Environmental operating principles put forth by
General Flowers provides some excellent ideas for incorporation.
We would urge that the Principles and Guidelines be revised in
collaboration with a group of Corps ``partners'', who work with the
Corps and other programs in developing projects for flood loss
reduction and environmental restoration. Incorporating the ability to
coordinate project implementation with other programs will provide an
opportunity to leverage dollars.
Benefit/Cost analysis.--There is broad support of the need for
modifications in the approach for determining the cost effectiveness of
projects. Much of this focus is misplaced due to the emphasis in the
process that results in selection of the NED plan. Better to spend our
efforts re-thinking the process to select the alternative, so we end up
with a project appropriate to the multiple needs of the local partner.
Incentives in cost sharing
There has been considerable discussion about the Federal/non-
Federal cost share formula. We offer no preference on a specific cost
share, and suggest that formula is a policy decision of Congress. We
urge Congress to base their decisions on independent studies, which
carefully assess where the true interests of the nation's taxpayers
lies.
What we do urge is a sliding cost share for non-Federal partners,
which would provide incentives for those partners to take
responsibility for reducing flood risk in their community.
There are communities in the Nation that are aggressively
implementing programs that reduce the need for Federal project
expenditures or for disaster relief. Yet, we have likewise heard
concerns from our members as to why should they continue to proactively
fight future flood damages, when they can take the easy political
route, do nothing and simply wait for Federal projects and disaster
relief. The current system makes no sense, and does nothing to
encourage local accountability and responsibility for combating
disaster expenditures.
It is time to Congress to communicate to those States and
Communities that are taking proactive steps to combat future flood
losses, that they are doing the right thing for their community and for
the Nation. We would argue that by providing a more favorable cost
share to those communities that are proactively dealing with future
losses, that in the long run Federal expenditures for projects and
disasters will decrease.
Some might argue that this may be quite complex, but we would like
to remind these individuals that in the mid-90's Corps Staff had
developed the details for implementing a similar plan, and that FEMA
has over a decade of experience in a similar program called the
Community Rating System. These positive actions would demonstrate a
commitment that will save the Federal taxpayers money on disaster
relief, thus justifying the investment in the sliding cost share. A
list of low cost incentives is attached.
The Federal role
The Federal Government has a key role to play in helping to reduce
flood damage, but that role has changed and evolved from what it was 30
to 60 years ago. It has become apparent that federally developed
solutions often yield single purpose projects which tend to address
specific flooding problems, but may pay insufficient attention to other
critical local considerations such as economic development, housing,
water quality, watershed planning, natural resources, recreation and
quality of life. Without those considerations, local buy-in is often
razor thin.
We have learned that some structural solutions to specific flooding
problems can inadvertently create new flooding problems downstream.
Some generate higher operation and maintenance costs than can
realistically be supported by the local sponsor. Current programs tend
to promote that flooding and flood protection is a Federal and not a
local issue. Local governments and citizens grow to believe the Federal
Government will bail them out if flooded or if the problem gets worse.
Structural flood control projects are necessary in many instances
and are often advocated by our members. Unfortunately, without the
ability to offer various solutions or a mix of approaches, structural
policies and programs can provide incentives to pursue solutions, which
may not be the best choice for building hazard resistance in some
communities. It is important to recognize that current Federal flood
policy rewards those communities and states, which do the least to
prevent and solve their flooding problems. Those rewards come in the
form of Federal disaster assistance, Federal flood control projects and
cost sharing for these actions. The Corps cost-sharing formula needs to
evolve in order to be consistent with the evolution to new approaches
in flood loss reduction in the Nation.
Independent Peer Review
The ASFPM understands the cry for independent review, in light of
the revelations during recent years. The problem with the independent
peer review proposal is that peer review is necessary for two reasons.
The first is to introduce a level of quality control, the second is to
safeguard against what some might see as abuses to the process. If the
peer review is meant to implement a level of quality control, than one
needs to question why this is not already being accounted for within
the planning and design process. If it is to safeguard against abuses,
than one needs to question whether the problem is so severe within the
Corps that the entire program needs to be reorganized with new
management. While clearly there is always room for improved quality,
the evidence would suggest that ``cleaning house'' is NOT necessary.
What we do believe is necessary however is the following:
1. A renewed commitment by the Corps to quality Control measures
and plans.
2. Occasional GAO audits of projects.
3. A zero tolerance policy for those found to be directing the
manipulation of project results.
4. Independent peer groups that are formed to evaluate the
assumptions used in the planning guidance.
While some direct abuses have been alleged, for the most part what
we have heard about tends to indicate planning guidance that is out of
touch with real world situations and current domestic policy. If
independent project review comes about, we suggest a streamlined
process and a logical funding threshold is considered. Surely a $25
million project is not reasonable. We see some individual homes being
built in the Nation with costs approaching that. Perhaps something 8 to
10 times that amount might make more sense.
Backlog and de-authorization
There is a need to address review of the huge backlog of projects,
with an eye toward either re-authorizing or de-authorizing the
projects. The experience of our members suggests this backlog creates
many problems. A common example occurs immediately after a flood
disaster. The community wants to do something because of the damages it
received, and the first thing they think of is some Corps project that
was looked at in the past, which sits on the shelf now, in an inactive
state. It may be there for a number of reasons, including being not
cost effective, major environmental harm, controversy, etc. In most
instances, the project would probably not be viable under today's
circumstances, if it ever was. But the community sees it as a quick
solution and spends lots of effort and time trying to make the project
work, rather than looking at their problems and needs today, and
working with all the interests in community to identify viable and
implementable solutions.
__________
Statement of Christopher J. Brescia, President, Midwest Area River
Coalition 2000
Chairman Jeffords and members of the Committee, my name is
Christopher Brescia, President of the Midwest Area River Coalition
2000. MARC 2000 is composed of leading agricultural producer groups,
grain and industrial shippers, cement manufacturers, utilities,
waterway transportation companies, labor unions, rail feeder systems,
concerned individuals, economic development entities and many more
facets of the Midwest community. Our coalition members generate over
$125 Billion in economic activity from the Midwest and conservatively
employ or self-employ more than 130,000 people in 24 states. These
activities principally span the length of the Mississippi, Missouri,
and Illinois Rivers. I am pleased to appear today to address proposals
for a Water Resources Development Act of 2002, especially as it relates
to the Upper Mississippi River Basin.
MARC 2000's Upper Miss Basin proposal includes support for the
authorization and construction of an initial group of seven new 1200-
foot locks, five on the Upper Mississippi (locks 20-25) and two on the
Illinois River (LaGrange and Peoria), five guidewall extensions (locks
14-18) and appropriate mooring cells. This proposal is limited to the
placement of new 1200-foot locks at 7 out of a possible 37 locking
locations, clustered at the lower portion of the river system just
north of the confluence of the Upper Mississippi and Illinois Rivers.
We are not advocating new locks on the entire 1202 miles of the basin
system.
We also strongly support an enhanced environmental restoration
effort for our basin, beyond those identified as mitigation for
navigation impacts, with a reliable and consistent funding mechanism.
Our proposal's third element calls for timely completion of the
WRDA'99-authorized Comprehensive Plan, designed to develop an
integrated flood-control system for the Upper Basin.
WORLD CLASS TRANSPORTATION & ECONOMIC SYSTEM
According to the U.S. Department of Transportation, U.S. maritime
trade is expected to double in less than 25 years. Freight in the U.S.
is expected to clog the nation's highways and rails. Our waterway
system is a logical means by which we can accommodate growth and reduce
incidents of spills, air pollution, accidents and deaths to our
population. But while our markets experience increased congestion, the
world does not stay still. K. Kiplinger, author of ``World Boom
Ahead,'' notes that, ``World agriculture trade will blossom in the next
two decades. Grain trade will increase two-thirds or more by 2020.
Imports and exports of soybeans will double. Livestock trade will
triple.'' Does any casual observer of these trends believe the Midwest,
the center of our productive capability can respond to these
developments?
The Upper Mississippi Basin covers a total area of 1202 river
miles, which was 10 percent of the inland waterway system, but which
provides 48 percent of the ton-miles of the total inland waterway
system. In the Upper Midwest, between 100-120 million tons of traffic
moves through an antiquated lock and dam system, operating well beyond
the 50-year design life. The Upper Miss navigation traffic data
connected to likely future scenarios project a 60-70 percent increase
in this traffic over the next 50 years. Today, the typical 15-barge tow
(1100 feet long) must break in two parts in order to transit locks
designed for paddlewheel ships of another era. With the advent of
towboat power and stronger engines in the 1940's, the 600-foot lock
system built in the Upper Mississippi has rapidly become obsolete.
Major rehabilitation efforts have been underway for over 20 years to
shore up crumbling concrete, outdated electrical systems and many
moving parts. But none of these actions have addressed the issue of
increasing the locking capacity of the Upper Miss system.
Our Nation relies on this outdated transportation system for the
movement of our corn, soybean and wheat exports into the world market.
Over 60 percent of all grain exports move through the Upper
Mississippi, en route to New Orleans. Grain exports still account for a
trade surplus in our balance of payments account, but at a considerable
cost to our producing community. The report issued by the National Corn
Growers Association last month on the impact of this outdated system to
the nation's economy is very sobering. The staggering expected loss of
farmer income, grain exports and the resulting increase of the Federal
deficit by $1.5 Billion dollars per year should be sufficient cost/
benefit analysis for congressional action.
It's important to view the investment of our navigation
infrastructure within the context of a global economy, just as American
companies view their competitive position. Over the last 10 years, the
U.S. has worked hard to open world markets through World Trade
Organization negotiations and other regional multilateral agreements.
U.S. agricultural trade policy supports active programs encouraging
corn and soybean exports. Our transportation infrastructure, however,
is not keeping up with these developments, nor is it positioning U.S.
producers to capture future growth. Rather, inaction has fueled foreign
competition with increased virgin lands put into production and a
juggernaut in the making.
Over the last 10 years, our South American competitors have visited
our country, learned from our past investments and are duplicating the
vision of our forefathers by creating a state-of-the-art transportation
infrastructure. While they have invested in their future, we have
``studied the problem.'' While we determine the best forecasting tool
and argue whether exports will grow at 1.5 percent average annual
growth or 2 percent average annual growth, they seize on our nation's
indecision by taking away market share growth from our farm community.
Brazil has doubled their share of soybean exports over the last 5
years. U.S. soybean exports have fallen 27 percent.
About 18 percent of U.S. annual GDP goes to private investment
money spent by individuals and businesses for goods and services, which
will endure and produce future value. Foreign trade's share of total
economic activity nearly doubled, from 13.8 percent in 1986 to 26
percent in 1996. Looking forward, there is no reason to suggest that
the trade share of total economic activity will not continue to grow
dramatically.
As our economy becomes more dependent upon exports, our ability to
access and compete for world markets will become more critical. Many
believe that the world stands on the threshold of a long, strong surge
in economic growth and subsequent higher living standards. Those
nations who will share in that growth will be those who have the most
efficient export-oriented infrastructures in place to compete in the
marketplace.
All the major U.S. grain companies agree that 60-65 percent of
future grain exports will travel down the Mississippi River. Ocean
freight rates will determine whether, on an annual basis, about 5
percent of movements might shift from the Mississippi River to the
Pacific Northwest or vice versa. Well-established shipping patterns of
the last 30 years are expected to be replicated in the next 30 years.
Private sector investments in the infrastructure have already been made
and now we are waiting for the Federal Government to make
infrastructure investment in the Upper Basin a priority.
Currently, about 10 percent of world food production enters
international trade. Most scenarios have the volume of trade doubling
by 2010 and doubling again by 2025. The most environmentally benign
transportation system our inland waterways--is physically incapable of
handling this surge in demand. We don't rely on 1940's vintage roads
and air transportation to meet our needs, neither should we expect
modern tows to rely on steamboat era locks.
U.S. investment to reverse the years of neglect and restore our
inland waterway system into a world-class transportation system is
critical to merely keep pace with other nations and supporting our
economy. According to independent studies conducted by Price Waterhouse
and Mercer Management Consultants, the Upper Miss provides benefits to
a wide range of employment groups. More than 400,000 jobs are supported
from traffic that originates and terminates in the Upper Mississippi
River Basin. Of those, 90,000 are in the manufacturing sector. Those
jobs are estimated to generate $4 Billion in income and between $11-$15
billion in business revenue.
Equally important to the modernization decision in the Midwest is
the fact that an efficient waterway transportation system is integrally
connected to the sustainability of agriculture in general. The food and
fiber industries are our nation's largest sector contributing
approximately 13.1 percent of total GDP, 17 percent of the value-added,
16.0 percent of the total labor force, and 10 percent of the total
income. It also accounts for about 23 million jobs.
The efficiencies and economies of scale created by agricultural
exports are what keep our consumer prices the lowest in the world,
about 10.7 percent of disposable personal income. If exports fall, the
production base contracts and consumer food prices rise. If exports
rise, further efficiencies are created to keep consumer food cost
prices low. Over 30 percent of U.S. crop acreage can be considered
produced for export. As world demand rises, simply maintaining current
market share would require an inland waterway system capable of
handling twice the tonnage by year 2025.
UPPER MISSISSIPPI/ILLINOIS RIVERS NAVIGATION FEASIBILITY STUDY
Mr. Chairman, MARC 2000 has been involved in the Upper Miss
navigation study since the inception of the feasibility study in 1993.
Ten years later, we are on the edge of our seats as the Corps of
Engineers is poised to issue an Interim Report on July 1 of this year.
We believe there will be sufficient information in that report for
Congress to initiate a balanced modernization program in the Upper
Mississippi Basin that includes lock modernization and enhanced
environmental restoration programs.
This study has taken many turns and permutations over the last 10
years. One of the most important developments in the past year has been
the Chief of Engineers' decision to restart and restructure this study
with the assistance of other Federal and state agencies and stakeholder
groups in the basin.
This Interim report should provide a fresh look at the risks we
take in not modernizing the lock system in the Upper Miss Basin. It
should also provide important guidance on the risks we take as a Nation
if we don't address pressing environmental declines in the river.
Private stakeholder groups have met and continue to meet to find the
right balance toward sustaining economic growth and protecting the
environment. The discussion has shifted from one of mutual exclusivity
in investment to how we manage the future of the river for all uses
without jeopardizing the uses of future generations.
The following is clear and irrefutable:
First, this waterway system is critical to the future
competitiveness of the Midwest agricultural economy. Without efficient
waterway transportation, Midwest grain exports will be lost at
considerable expense to producers and the national treasury;
Second, with continued and increased congestion costs on the
waterway, shippers will have to find alternatives to ship their goods
or lose sales. Every modal shift study concludes considerable economic,
environmental and social benefits to keeping freight on the waterway.
Creating higher cost structures on the water through investment
inaction will lead to lost economic activity, increased air emissions,
increased fuel consumption, increased accidents and increased
fatalities in our communities.
Third, continuing to show indecisiveness in modernizing the
waterway infrastructure in the Midwest will continue to embolden our
global competitors to increase placing virgin lands into production and
work to capture the growing share of a world food market that will
double in the next 10 years. Our inactivity is ensuring that the U.S.
may not be in a position to capitalize on these new markets.
Fourth, the environmental benefits of the waterway system,
including those initially created with the construction of the lock and
dam system, are declining. Without a high priority commitment to
redressing that decline, we will continue to lose islands, important
backwaters, and other ecosystem elements critical to this recreational
Mecca and national flyway.
STRONG BASIN SUPPORT
Equally clear and irrefutable are the thousands of private citizens
who have expressed their support for modernization of the lock system
over the last 10 years, either through direct communications to
Congress, at Corps of Engineers-sponsored public meetings and
information sessions and most recently through statewide-elected
officials.
The MARC 2000 coalition includes a multitude of industries,
individuals, labor groups, trade associations and community economic
development groups. These constituent groups know that as a region,
over 151 million tons of commodities moved on the 2,000 navigable miles
of the Upper Mississippi, Illinois, and Missouri River System in 1999.
The combined value of these commodities totaled approximately $24
billion. For the same year, 92.5 billion tons of commodities were
shipped out of our region \2/3\rds of which consisted of corn,
soybeans, wheat and other grains. Louisiana receives 54 million tons of
this grain for export to world markets, while 3 million tons went to
processing facilities on the Tennessee River.
Our region's docks received more than 28 million tons from outside
the system, most of which were fertilizers and other chemicals. Another
30 million tons moved within the basin in 1999, more than half of which
consisted of gravel, sand, and other aggregates.
A 39 percent majority of the shipments out of our region consisted
of grain, but many other commodities travel our river system. The Corps
of Engineers figures reveal impressive statistics for total traffic in
1999 on the UMRS: almost 28 million tons of coal ($1.1 B), over 10
million tons of petroleum ($1.6 B) 27 million tons of aggregates ($943
million) over 59 million tons of grain ($8.7 B) over 9 million tons of
chemicals ($4.3 B) over 3 million tons of ores and minerals
($453million) over 6 million tons of iron and steel ($4.2 B) and over 8
million tons of other products ($2.3 B) moved on our waterways in 1999.
On a state level, shipments to and from Illinois totaled 92.3
million tons, worth over $15 B. Shipments to and from Missouri totaled
46.1 million tons, worth over $3.8 B. Shipments to and from Minnesota
totaled over 20.2 million tons, worth over $3.3 B. Shipments to and
from Iowa totaled 18.4 million tons, worth over $2.7 B. Shipments to
and from Wisconsin totaled over 4.5 million tons, worth over $340
million. These shipments of goods connected our five states with 17
other states in the Nation (TX, OK, KS, NE, MI, IN, OH, KY, WV, PA, AR,
MS, AL, TN, LA, FL and GA), not to mention world markets. Copies of our
state profiles can be accessed on our web site at www.marc2000.org.
The importance of the waterway to this region has not been lost on
witnesses over the years. Our stakeholder groups have spent the last 10
years waiting for the Federal study process to produce an assessment of
the navigation and environmental needs. While the restructured study
may achieve that goal, the economic and environmental imperatives
dictate action necessary this year to launch a lock modernization and
enhanced restoration initiative.
Last year, the State of Minnesota started a process that has
mushroomed in the basin. Acting on its own initiative and encouraged by
Rep. Jim Oberstar, the state legislature passed House Resolution 208
and Senate Resolution 551 overwhelmingly, expressing support for lock
modernization and environmental restoration. Minnesota rejected
suggestions that they could not offer direction just because the Corps
study was not completed. Minnesota legislators recognized the economic
and environmental value of moving bulk commodities on the inland
system--as most Americans do when offered the choice--and chose to
forge ahead with their expression of support.
This year, the Iowa, Missouri, Illinois and Wisconsin legislatures
went a step further, passing their own resolutions recognizing that:
<bullet> Efficient operations of the inland system is critical to
their economy and environment;
<bullet> Modern 1200-foot locks have a proven track record of
alleviating congestion on the inland waterway system; and among other
things,
<bullet> It's time to get on with this program and authorize
funding to construct 1200-foot locks.
Mr. Chairman, I would ask that copies of Minnesota House Resolution
208, Illinois Joint Resolution 54, Iowa House Concurrent resolution 109
and Senate Concurrent Resolution 104, Missouri Senate Concurrent
Resolution 44 and House Concurrent Resolution 11, and Wisconsin
Assembly Resolution 56 be included in the record with my testimony.
These resolutions passed with broad bi-partisan support and call on
Congress to authorize and fund the construction of 1200-foot locks on
the Upper Mississippi and Illinois Rivers.
Testimonies at the most recent round of public meetings made it
clear that the labor community joins our industrial, agricultural, and
economic development communities in expressing strong support for the
authorization and construction of new locks on our inland waterway
system. These projects provide a double investment to the economic
security of our region and country. First, good family wage jobs in our
Nation are supported by the efficient functioning of our transportation
system and the construction of modern locks. Second, infrastructure
renewal has a proven record of stimulating additional economic activity
and more jobs. Historically, navigation water project investments have
returned to the national economy benefits many times over the original
dollar investment.
SMALL SCALE OPTIONS
Smaller scale investments are certainly part of the study's area of
concentration. Industry representatives have spent countless hours with
engineering contractors and the Corps of Engineers reviewing over 100
different proposals. It appears we are revisiting some of the same
alternatives, such as industry self-help and now scheduling.
The theoretical underpinnings of scheduling promise to reduce lock
congestion, reduce barge rates to shippers, improve equipment
utilization for barge operators and reduce operating costs for barge
operators. In reality, all it will likely accomplish is another layer
of bureaucracy and delay solving the problem with the most efficiently
recognized alternative, 1200-foot locks.
Lock delays and resulting high barge rates are symptoms of a
seasonal river system that primarily operates 9 months, and inadequate
lock infrastructure incapable of meeting shipper demand. Congestion is
a function of the timing of market demand with the ability to move
carrying capacity to the areas of the system to meet that demand.
Scheduling will not allow the industry to increase barge supply in
the spring, will not result in increased barge supply in the fall, will
not reduce shipper rates in the spring, nor in the fall. It might
minimize some lock delay costs. But, in order to reduce carrier
operating costs, equipment that otherwise would be waiting in queues
must be productively and economically employed in alternative income
producing uses. On the Upper Mississippi River system, equipment either
waits in queue or waits at an alternate location until scheduled
lockage time is allocated. Mr. Chairman, I would like to introduce into
the record a report issued by the Inland Waterway Users Board to the
Chief of Engineers outlining these key reasons why scheduling is not
the answer to our problems on the inland waterway system.
Finally, some have suggested that small-scale measures, though not
the long-term solution to address a 60 percent growth in traffic, might
be a short-term solution. Regrettably, this thinking is what got us
behind the eight ball today. History has proven that average annual
growth is not how the real world works, but only how models can operate
to project future needs. The reality of surges in grain exports means
that if we build infrastructure solely to meet average annual growth,
rather than capturing peak movements, we will continue to lose growth
opportunities.
ENVIRONMENTAL PRIORITIES
This Feasibility study has already spent over $26 million reviewing
biological impacts of increased traffic and the cumulative impacts of
navigation on the Upper Basin system. In addition, we have invested $76
million more creating a monitoring system under the Environmental
Management Program (EMP), which has proven invaluable in providing us
with better information about the environmental status of the river's
ecology.
In addition, the Upper Mississippi River Conservation Committee has
issued a document entitled ``A River that Works and a Working River,''
chronicling the evolution of the Mississippi River sustaining multiple
uses, but one whose environmental values provide a mixed report.
Through the EMP, our region has also produced a Habitat Needs
Assessment outlining initial ideas on activities to restore lost
habitat to the river's ecosystem. These combined efforts have helped
scope a range of opportunities for an enhanced restoration effort in
the Upper Mississippi River Basin.
The solutions to site-specific navigation improvements are well
documented. Agreement on how best to achieve environmental
sustainability is still very much the focus of our collaborative
effort. MARC 2000 would urge the Committee to give careful
consideration to evaluating WRDA 2002 proposals to address the
following concerns:
<bullet> The Corps' traditional approach and funding of Operation
and Maintenance needs to be re-evaluated to address both the navigation
system and the ecosystem. O&M costs have been increasing as the
navigation infrastructure ages and the challenge of finding
environmentally acceptable approaches increases pressure on a budget
item unable to meet current needs;
<bullet> Setting aside the traditional approach of addressing
environmental restoration in the Upper Miss Basin primarily through
mitigation by exploring means by which the full range of actions
required for future environmental sustainability can be implemented;
<bullet> Establishing a viable approach for funding environmental
improvements. While the Inland Waterway Trust Fund provides cost-
sharing dollars for navigation improvements, there is considerable
question on how to finance environmental restoration efforts largely
needed to balance the creation of a Federal locking river whose
benefits are enjoyed by multiple users.
CONCLUSION
Mr. Chairman, our Basin is prepared to work with Congress to find a
reasonable approach to lock modernization and environmental
restoration. In addition to working as part of the collaborative
process with the Corps of Engineers and other Federal agencies and the
Governors' representatives, we are engaged in dialogs with leading
environmental groups in the Basin. We sincerely seek a balanced
approach to the Basin's needs.
Unfortunately, the lack of resource commitment to completing
navigation projects of national significance is sapping our Nation of
vital economic benefits associated with responsible water resource
development.
Lock modernization on the Upper Miss and Illinois must begin this
year with authorization language and pre-construction and design work
if we have any hope of staying competitive in world grain trade. It
will take at least 2 years or more for the PED process to be completed
prior to construction. We believe the Interim Report will provide
sufficient guidance for Committee action. In order for the benefits of
U.S. Trade, Agriculture and Transportation policy to be realized in our
part of the country, we must move rapidly to protect our Achilles heel:
the aging, antiquated, trade-limiting inland waterway system.
Many different products are transported on our waterway system.
However, I would like to close with another agricultural example of why
this investment decision should be acted on immediately. In the 1999/
2000 farm production year, over 270 million bushels of soybeans and
1.214 Billion bushels of corn were loaded on barges for export from the
Upper Miss Basin. Those exports were valued at over $4 Billion.
According to USDA multipliers, these exports generated a gross economic
output of over $22 Billion, personal income of over $6 Billion and
supported gross employment of over 230,000. This activity would have
generated $776 million to the U.S. treasury, or almost 60 percent of
the total cost of lock modernization on the Upper Mississippi and
Illinois Rivers.
By any other standards, this investment would be a given,
especially when half the cost of modernization is paid for out of the
Inland Waterway Users Trust Fund, which is currently running a surplus
of over $400 million. Modernization helps redress the extensive
rehabilitation costs of old structures and reduces the backlog. The
economy wins with stronger farm economies, efficient transportation
systems and a reinforced jobs base. The environment wins with slower
growth of alternative modes that consume more fuel and emit more
pollutants, such as hydrocarbons, carbon monoxide, and nitrogen oxides
into the air. Societies win with sustained quality of life, fewer
accidents and transportation-related fatalities.
It is far more likely that export growth will surge prior to
completion of new locks than construction of new locks being built
prior to the next wave of export growth. The risk to the Nation is
greater if we can't meet that surge of demand than if we're meeting it
head on or waiting for it to develop as food experts predict it
inevitably will.
CORPS OF ENGINEERS STUDY PROCESS
Mr. Chairman, I would like to express a few words about the Corps'
Feasibility study process.
The picture of the Corps painted by certain elements of the press
along with the glib commentaries of selected opponents to water
resource development are very different from the Corps of Engineers we
work with and, yes, argue with over technical analyses and how best to
achieve congressionally authorized purposes for projects and programs
throughout this Nation. The Corps is made up of a unique blend of
civilians and military personnel who serve their Nation well. This
agency was recently voted as one of the two best government agencies in
value produced for taxpayer dollar received.
The people in our basin worked side-by-side with Corps personnel in
1993, 1995, and 1997 and most recently during the 2002 floods that have
resulted in minimum loss of life and in protection of the environment.
Before the long-standing policies and procedures of the Corps of
Engineers are too quickly attacked, let's reflect on the fact that
we're dealing with an organization that has an unprecedented record of
civil works and emergency response accomplishments. The last thing in
the world that we need is change which makes the Corps study process
more costly, time-consuming and burdensome.
The Upper Miss study is an example of an extremely open
participative process. The public has been involved in this study at
every step of the way. There have been over 80 ``open'' technical
meetings at each step of the way. There have been over 41 public
meetings between 1993-2000. Some might even argue this has been too
much public participation and has perpetuated the problem of paralysis
by analysis.
This study is a compilation of countless other smaller studies that
have been scoped out, conducted collaboratively with resource managers
and economists throughout the basin, and then reviewed by expert
elicitations and peer reviews. The direction of the study has evolved
over these years. Additional sub-studies have been commissioned. I
can't imagine how many PhDs this study has produced over the last 10
years. There has never been any problem with the public's access to
information. If anything, this open, collaborative process has miscued
over one important promise and congressional desire--to be expeditious,
deliberative and conclusive within a 6-year timeframe.
We agree with the National Academy of Sciences (NAS) that certain
expectations placed on this study, such as 50-year projections, are
unrealistic. In addition, we believe the process is overwhelmed because
there is a crisis of clarity over what this nation's priorities should
be. Any attempts to change technical assumptions without clear policy
agreement, at this time, would be premature and likely harm and confuse
the Corps' ability to meet congressional objectives.
Many of the concerns articulated over project purposes, benefit
cost analysis and cost sharing are reflective of a lack of National
consensus about water resource development priorities. In our basin,
the citizens overwhelmingly would prefer that barge transportation move
bulk commodities on the inland waterway system, rather than further
overburdening the highways and rails that move through our communities.
The national benefits of the waterways have been recognized since the
inception of our Nation, and need to be re-emphasized. Water resource
projects built our basin and now support an economic structure that
competes in a global marketplace. Our investment in modernizing
navigation lock infrastructure and improving the ecosystem must begin
in earnest if we are to continue to provide family wage jobs in our
basin.
Thank you for the opportunity to present MARC 2000's views on WRDA
2002 lock modernization opportunities and the Corps of Engineers study
process. I would be pleased to answer any questions.
__________
Statement of Tony MacDonald, Executive Director, Coastal State
Organization, Inc.
Mr. Chairman and Members of the Committee: Good afternoon. I am
Tony MacDonald, Executive Director of the Coastal States Organization
(CSO). On behalf of CSO, I want to thank Chairman Jeffords and the
Members of the Committee for the opportunity to present testimony on
the U.S. Army Corps of Engineers water resources programs and Water
Resources Development Act of 2002 (WRDA). Since 1970, the Coastal
States Organization (CSO) has represented the Governors of the nation's
coastal and Great Lakes states, Commonwealths and Territories on issues
relating to the improved management of coastal development and the
protection of coastal resources.
My comments today focus primarily on the need to get beyond the
criticism of the implementation of the Corps of Engineer's current
limited single-purpose, project approach to water resources management
to building support for an affirmative national policy that encourages
efficient and sustained investment in the nation's water resources and
port infrastructure. This must include investment in the nation's
``green'' infrastructure including wetlands, critical habitats,
nonstructural and natural flood and storm protection features, and the
beneficial use of dredged material. In CSO's view, this can best be
achieved by making individual Corps projects accountable to a
consistent national policy to manage the nation's shoreline and
navigable waterways. This policy should be supported by an enhanced
partnership with the states that builds upon the expertise of states
and other local project sponsors in coastal, watershed and basin-wide
management.
Pursuant to the Coastal Zone Management Act of 1972 (CZMA), states
develop programs for the management of rapidly developing coastal
areas, and protection of water dependent uses and coastal resources.
Under the CZMA, States must develop a planning process for assessing
the effects and ways to control or lessen the impact of improper
development in flood prone, storm surge and shoreline erosion prone
areas, and to restore areas adversely affected by coastal hazards.
Corps and other Federal activities are required to be consistent to the
maximum extent practicable with federally approved coastal zone
management plans.
Under WRDA 1986, States share in the cost of Corps Civil Works
projects. States also serve as local project sponsors, or work with
port authorities and local governments that serve as local project
sponsors. States have a public trust responsibility to their citizens
to protect coastal resources including navigation, fishing and public
access. Increasingly, states and local governments are also embracing
initiatives to manage coastal sprawl and collaborative community-based
planning and management models such as the National Estuary Programs.
Effort to ``reform'' the Corps must take into account these
multipurpose, multi-stakeholder efforts that go beyond traditional
economic benefit analysis to take into consideration the value of
environmental, cultural and social inputs, as well as so-called
national economic development benefits.
Recent conflicts over significant port expansion projects in
Delaware River and Charleston, SC and challenges posed by port
expansion in places like the Columbia River, Houston and New York
demonstrate the importance of a broader incorporation of local and
regional concerns into national port planning. A closer look at port
project success stories such as Oakland and Houston reveal that port
and transportation benefits can and must be matched with environmental
restoration and enhancement efforts.
THE NATIONAL INTEREST IN THE COASTAL WATER AND NATURAL RESOURCE
INFRASTRUCTURE
The critical importance of the Corps' Civil Works programs to the
Nation should not be lost amidst the often legitimate criticism. More
than half of the nation's population lives within 50 miles of the
shore. Our ports and harbors are the nation's interface with the global
economy. Ports are connected by inland waterways and other
transportation access to every state. Ninety-five percent of
international trade by volume passes through U.S. ports. In 1996, U.S.
Customs revenues totaled $15.6 billion. A recent report by the Federal
Reserve Bank of Kansas City, The U.S. as a Coastal Nation, observed:
``. . . the coastal concentration of U.S. economic activity reflects a
productivity effect of access to navigable water.'' In addition, the
report examined the significant historical and cultural importance, as
well as quality of life factors that draw people to live, work and
recreate along the nation's coasts and beaches.
The coast provides a staging area for fishing fleets, seafood
processing, and offshore oil and gas production, as well as supports
critical habitats for spawning fish, shellfish and threatened and
endangered species. Any visit to the beach confirms that they are the
nation's premier recreation areas. Their beauty and accessibility
provide a magnet not only for international visitors, but also provide
readily accessible recreation and respite for millions families from
diverse urban and rural areas that may not have other options. Travel
and tourism is the nation's largest industry with more than 85 percent
of industry revenues being generated in coastal areas. Federal tax
revenues from beach tourism activity has been estimated to generate $14
billion in California alone. Most importantly, these same beaches
provide protection of life and property as natural barriers to
flooding, waves and storm surges. A recent Corps of Engineers study of
six coastal communities in North Carolina showed that communities with
shore protection projects suffered significantly less from Hurricane
Fran.
Arcane cost-benefit ratios and budgeting exercises obscure the full
range of benefits--the economic stimulus, tax revenues, environmental
protection, and life and property protection--derived from our nation's
coastal infrastructure. For example, we spend billions on constructing
highways and transportation corridors to enable people to get to
coastal areas and the beach. Yet, to spend several million on ensuring
that the beach exists protecting the natural and economic resource
which justifies the transit project is characterized by some as
extravagant. The entire national budget for beach nourishment
projects--approximately $135 million in fiscal year 2002--would be a
virtual rounding error on most significant transportation projects.
I want to dispel several myths which too often distort the debate
over shore protection projects.
<bullet> Shore protection projects do not simply wash away into the
sea. They absorb wave energies that typically save millions of dollars
in property damages. Although the sand is lost temporarily from the
beach, many times the majority of the sand remains in the littoral
system and is either returned to the beach or deposited on downstream
beaches.
<bullet> Nourishment projects are typically less expensive in
current dollars than structural solutions as much of the costs are
deferred well into the future while structures must be paid for at the
time of initial construction.
<bullet> In addition, nourishment projects are preferable to hard
structures which would undermine the natural protective features of the
shoreline and would be less environmentally acceptable and adversely
impact downdrift beaches.
<bullet> Finally, the Federal investment is justified based on
formulating a project for hurricane/storm damage protection and not
recreation. In addition, for Federal participation, all shore
protection projects must have a benefit / cost ratio of greater than
1.0 and more than 50 percent of that justification must be based on
storm damage reduction benefits.
In addition to the clear national interest and economic return of
investment in the coastal water resource infrastructure, many Corps
Civil Works projects have historically had, and continue to have,
adverse effects upon the proper functioning of littoral system. Dams,
channelization and improvements to navigation including navigational
dredging and jetties often disrupt the natural flow of sand and other
sediment material resulting in sediment starvation and erosion. While
it is a Federal responsibility to mitigate damages resulting from these
Civil Works projects, current Corps policies only support mitigation of
damages directly induced by the project and do not give priority to a
comprehensive solution to overall shore protection problems. While it
is important to remedy past errors, it is even more important to
provide a framework for planning and implementing Corps projects that
encourages not simply mitigation but the maximization of economic and
environment benefits.
PROBLEMS IDENTIFIED WITH THE CIVIL WORKS PROGRAM
There are significant opportunities for project savings by
simplifying Corps project reviews and allowing local sponsors, working
with private sector partners, to take the lead more often in planning
and implementing water resource projects. However, given the Corps
continued insistence in controlling the planning process and the
uncertainties in obtaining sufficient funding to reimburse project
sponsors, there is no incentive for the Corps to take advantages of the
efficiencies that could be generated by implementing these changes.
There is a catch-22, which is common among all Corps project types,
that results from the gap between construction authorizations under
WRDA and annual congressional appropriations for the Civil Works
Program. With huge project backlog within the Civil Works Program, the
Corps has allocated funding among as many projects as it can keep
going. By allocating less funding per project to sustain a greater
number of projects, the Corps has lengthened the completion times and
costs for projects, and consequently for local project sponsors.
Timelier project completion is one of the primary means of reducing
costs within the Civil Works Program and reducing the project backlog.
There are fundamental problems with the Civil Works Program which
should be addressed in the Water Resources Development Act of 2002.
1. The project by project approach to project planning and
authorization does not take into account how projects affect each
other, including opportunities for achieving efficiencies among
projects or limiting cross-project impacts.
2. It simply takes too long to complete a project. If greater local
participation in projects is sought, projects, particularly project
studies, needs to be simplified and streamlined.
3. The Corps Districts and Divisions are effectively discouraged
from finding creative ways for the beneficial uses of dredged material.
The so-called ``Federal standard,'' least-cost environmentally
acceptable alternative requirement, favoring open water disposal of
clean dredged material, thwarts the long-term cost savings to the
Federal Government and resource benefits resulting from keeping sand
within littoral systems. The effect of the least-cost alternative
policy is to miss opportunities for environmental restoration and shift
costs from the Corps budget to other Federal accounts such as disaster
assistance due to the lack of protection that would otherwise have been
available from sand starved beaches.
4. The full range of benefits resulting from projects, both
economic and environmental, are not being credited. For example, states
with comprehensive planning in place which limits development along the
shore and bans sea walls have difficulty meeting the benefit thresholds
for renourishment assistance, thereby penalizing states for good
coastal planning. Without the availability of renourishment assistance,
the pressure to allow sea walls or other shore protection structures
can be overwhelming. The effect of hard structures is increased erosion
as wave energy is focused at the point of impact with the wall. With
the loss of the beach, the associated recreational, economic and
environmental benefits are also lost.
5. The increasing pressure to reduce spending is impairing the
ability of the Corps to fulfill its service functions to support state
and local efforts. In addition to assistance for project planning and
construction, the Corps provides much needed services to states and
coastal communities, such as technical advice and data for flood plain
management, planning assistance for state constructed projects, and
research for improved understanding of coastal littoral systems and
project designs.
WRDA 2002: AN OPPORTUNITY
WRDA 2002 presents the opportunity to improve the Army Corps of
Engineers Civil Works Program through requiring more comprehensive and
strategic planning, rational project selection, effective project
design, and enhancement of the cost effectiveness of Civil Works
projects. Making these improvements will require institutional and
legal changes, as well as changes in the overall approach to managing
the nation's coastal infrastructure.
There are lessons to be learned by passage of laws like the Estuary
Habitat Restoration Partnership Act, which was championed by this
Committee. That law not only set out a clear national policy goal of
restoring one million acres of estuarine habitat, but also called for
the Corps to take the lead in development of a multi-agency national
restoration strategy to guide selection of the Corps projects funded
under the Act and to serve as guidance other Federal, state and local
investment in estuarine restoration.
In changing the overall approach to managing coastal water
resources infrastructure, we recommend that Congress incorporate the
following basic premises:
Our management of coastal infrastructure needs to take a systems-
based approach.--The entry and movement of the sediment which forms our
shoreline is a dynamic system. Man has made many alterations to the
system through the erection of dams, navigational dredging, jetties and
groins. While man has altered the system in many ways, we cannot stop
it. We can work with the system or against it. The difference is found
mostly in long-term project effectiveness and overall costs.
Working within the littoral system, we need to develop a strategy
for meeting regional and state needs.--We need to move away from taking
a project by project approach to the coast and develop a framework that
addresses crosscutting coastal shoreline issues along with setting
priorities and strategies for meeting our Nation's coastal
infrastructure protection needs including targeted needs for specific
inlet and regional management plans.
CSO RECOMMENDATIONS
(1) Use of Dredged Material
(a) Congress should declare sand within littoral systems a
natural resource which is in need of management and
conservation.
(b) The Federal standard should include a presumption that
favors retaining sand within the littoral system.
(c) The authorization for beneficial uses of dredged material
under section 204 should be expanded to include beneficial uses
in addition to ecosystem restoration but with ecosystem
restoration being the priority use of available funds.
Congress should establish a national policy which mandates a
preferred alternative to keep sand and sediment within the littoral
system. In some cases, the difference between the preferred beneficial
use alternative and open water disposal is less than 5 percent of
project costs. The Corps is locked into rigid cost-benefit analyses
that do not take into account the long-term cost of traditional
disposal. If a beneficial use is reasonably available, it should be
incorporated into the project design and cost. There should be
incentives provided for Districts and Divisions to include
environmental restoration and beneficial use into planning and design
navigation and other Corps projects. Currently, local projects sponsors
are left to patch together a quilt of disparate Corps authorities into
a project that meet restoration, protection and water resource goals.
When it is determined through sampling and testing that dredged
material from a project or portion of a project, contains predominantly
sand or other coarse grained material, the Corps of Engineers, and
other agents of the Federal Government, should be required to look to
the beneficial use of dredged material as the first option for dredged
material. The Corps should work with the states and other local
partners to provide guidance to the Districts and Divisions on the
implementation of best management practices in beneficial use to plan
and implement the onshore or near-shore disposal of the dredged
material
Congress should remove the institutional and legal constraints
which deter better management, e.g., the Corps' least cost alternative
policy which is limited to assessing what is the least costly option to
the Corps rather than the least cost.
(2) Regional Sediment Management Planning
(a) Direct the Assistant Secretary of the Army for Civil
Works to study and prepare recommendations including projected
resources to carry out a comprehensive program for regional
sediment management studies.
(b) Authorize the Corps to amend existing project authorities
and expand the construction and maintenance of navigation
projects that promote the natural movement of sediments.
With the objective of improved information-based decisionmaking,
increased project coordination and more cost effective management,
Congress should direct the Corps to develop a plan to undertake
regional sediment management. The plan should include estimates of
baseline data requirements and their maintenance, and cost-savings from
implementation.
The project-by-project approach to responding to shoreline change
is costly, inefficient and sometimes inconsistent. The nation's water
resources policy long ago recognized that in order to manage rivers
effectively, the entirety of the river and its surrounding watershed
needs to be considered. The same needs to be done for managing the
nation's shoreline. Shoreline management requires an understanding of
the littoral processes and systems occurring along the shore, sediment
sources and their movement within the system.
The goal of regional sediment management (RSM) is to manage sand
for coastal projects on a regional scale. RSM recognizes that the
dynamics of littoral systems extend beyond individual, local-scale
projects. Regional sediment management planning will provide an
inventory and strategic vision of regional coastal sediment management
needs. RSM planning will identify, evaluate and prioritize sediment
management approaches in a Geographic Information System framework that
coordinates existing information into one body of knowledge that can be
applied to efficient implementation of sediment management projects. By
synthesizing data from past and current projects on a regional basis,
opportunities to address multiple sediment-related problems can be
developed and redundant studies avoided.
In addition to providing a better understanding of littoral
systems, regional sediment management can provide improved information
on the environmental, economic and social consequences of proposed
actions and potential tradeoffs associated with management decisions.
RSM can improve planning, development, damage reduction, and resource
management in coastal regions resulting in reduced Federal and local
sponsor expenditures for channel maintenance and nourishment of storm-
damage reduction projects.
Among leading experts in the field of coastal processes and
shoreline management, there is already strong support for the RSM
concept. The Strategic Plan for the Corps of Engineers Coastal
Engineering program produced by the congressionally chartered Coastal
Engineering Research Board (CERB) has recommended the adoption of a
systems approach to coastal sediment management.
The objectives of RSM are within reach with new monitoring,
modeling, and information management capabilities. Several RSM
demonstration projects are already underway--
Northern Gulf of Mexico Regional Sediment Management (RSM)
Demonstration Program covers the shorline of Mississippi, Alabama and
the northern Gulf coast of Florida. The product of the demonstration
program will be a Regional Sediment Management Plan consisting of a
calibrated regional sediment budget, a calibrated numerical regional
prediction system, and a regional data management and Geographic
Information System. These tools will assist in making management
decisions and will increase benefits resulting from improved sand
management throughout the region.
California Coastal Sediment Management Master Plan--is a
collaborative effort between Federal, state, and local agencies and
non-governmental organizations to evaluate California's coastal
sediment management needs on a regional, system-wide basis.
Great Lakes Regional Sediment Management--The Great Lakes region
has been designated as one of the demonstration sites for regional
sediment management. The region being studied is from Ludington,
Michigan at the north end, to Michigan City, Indiana at the south. This
172-mile region contains 11 Federal structures, several of which have
Section 111 beach nourishment programs in place. The goals of the Great
Lakes demonstration project are: to identify key stakeholders who have
a role in sediment management for the Southeast Lake Michigan Region;
collect available coastal data and develop a centralized web page and
GIS data base for use by all regional stakeholders; improve current
coastal programs and Corps operations and maintenance performance by
linking navigation, dredging, disposal, and beach nourishment projects;
and, to implement regional sediment management practices for the
southeast region of Lake Michigan. These results will have direct ties
to the operation of the Section 111 program, the National Shoreline
Management Study, the Lake Michigan Potential Damages Study, and the
National Erosion Control Development and Demonstration Program.
Additional demonstration sites are planned for the New York/New
Jersey, New England, North Carolina/Virginia, and the Pacific
Northwest.
The Corps also should be authorized to expand the design and
maintenance of navigation projects to promote the natural movement of
sediments to benefit adjacent shorelines and beaches. Small amounts of
additional spending for activities like advanced maintenance, sand
bypassing, berm building and catchment basin pump-out can enhance the
movement of sand to produce environmental and economic benefits. The
Corps presently has some authority to promote better sediments
management. For example, the Corps can protect, restore or create
aquatic habitat using dredged material (Section 204 of WRDA 92) and
place suitable material on adjacent beaches (Section 145 of WRDA 76).
But these authorities are difficult to apply to sediment management
measures with indirect, delayed or cumulative benefits, and activities
with widespread beneficiaries across multiple communities or states.
These authorities should be supplemented by authorizing the Corps to
undertake additional Federal expenditures to promote proper sediment
management.
(3) Amend the Authorization for the National Shoreline Study
(a) Congress should amend the authorization for the National
Shoreline Study (Section 215, WRDA 99) to require that it be
conducted by an independent body under a set timeframe and
budget,
(b) The study reauthorization should also include a specific
directive for state and Federal interagency participation
including but not limited to the Corps. NOAA, USGS, and FEMA;
(c) The study authorization should include a directive that
the study be conducted using and analyzing existing information
and studies.
Section 215(c) of the Water Resources Development Act of 1999
requires the Corps to prepare a report describing the--
<bullet> Extent of erosion and accretion along the shores of the
U.S.;
<bullet> Economic and environmental effects of shoreline change;
<bullet> Systematic movement of sand along the shores of the U.S.;
and
<bullet> Resources committed by Federal, state and local
governments to restore and renourish beaches.
The report is to include recommendations on the--
<bullet> Use of a systems based approach to sand management; and
<bullet> Appropriate levels of Federal and non-Federal
participation in shore protection.
The study will bring into full view the geophysical, anthropogenic,
economic and environmental factors needed to be assessed in order to
improve the nation's policy to manage the shoreline in a manner which
fulfills multiple objectives.
Much of the data and information required for the completion of
this study has already been developed. The Corps has a wealth of
project specific data including information being developed by on-going
regional sediment management demonstration projects. FEMA, through the
John H. Heinz Center, recently completed a congressionally mandated
study of erosion and its economic impacts, The Hidden Costs of Coastal
Hazards. NOAA, through the use of LIDAR laser technology, employed by
the Coastal Services Center (CSC), has remapped the shoreline of most
of the continental U.S. CSC is also converting analog data contained on
over 14,000 T-sheets to a GIS format. This will provide an electronic
record of shoreline change for much of the coast. The USGS Coastal and
Marine Geology Program has already compiled excellent regional and
local studies of the coastal geologic framework of the U.S. Much of the
most comprehensive information about shoreline change and related
economic and environmental impacts has been developed by states.
The National Shoreline Study is particularly timely in two
respects. First, it has been nearly 30 years since the first National
Shoreline Study was completed in 1971. The new study will provide an
opportunity to re-examine the critical erosion areas identified in the
original study to determine what has happened in those areas in terms
of geophysical processes and the responses to shoreline change. The new
study will determine whether the number of critical erosion areas has
increased and, more importantly, whether the vulnerability in those
areas has increased. The new Study is also warranted and particularly
timely given recent leaps in technology and methodology. In just the
last few years, a technology threshold has been crossed which has
provided the opportunity to examine shoreline process utilizing complex
modeling like never before. It is expected that an ancillary benefit of
the National Shoreline Study, which may even exceed the prescribed
outcomes for the study, will be improved interagency cooperation and
data integration.
The National Shoreline Study is a necessary step toward examining
and reassessing Federal and state programs and policies responding to
shoreline change. It is hoped that the study will provide a stimulus
and objective basis for--
<bullet> Recognizing a shared national interest in responding to
shoreline change;
<bullet> Developing a systems based approach to responding to
shoreline change through a better understanding of shoreline processes;
and
<bullet> Integrating Federal agency policies and processes,
including data and information sharing, to tailor shoreline change
response decisions to littoral systems and regional objectives.
Completion of the study has been hampered by an oversight in the
authorization for the study. Without an express authorization of
funding, it has been difficult for the Corps, Office of Management and
Budget, and congressional appropriators to have a sense of the scale
and funding parameters of the study and we request that Congress
included a specific funding authorization and completion date based on
the date when appropriations are made available.
To this end, we also request that Congress amend the study
authorization with a specific directive that the study is to be
conducted using and analyzing existing data and information. Congress
should also specify that the study is to be conducted making use of
information to be made available from the United States Geological
Survey, National Oceanic and Atmospheric Administration and Federal
Emergency Management Agency, and close cooperation with the states.
Thank you for the opportunity to testify before you. I am pleased
to answer any questions.
__________
Statement of Jim Robinson, Jr., Pinhook, MO
Chairman Jeffords, Senator Smith, Senator Bond and Members of the
Committee.
Again for the record, my name is Jim Robinson and I am here on
behalf of the people of Pinhook, Missouri. Pinhook is located in the
Southeastern corner of Missouri in the Bird's Point/New Madrid Floodway
about half-way between Memphis, Tennessee and St. Louis just a few
miles from the Mississippi River. I have lived there most of my life.
The land that I farm was purchased by my father when we moved from
Tennessee. My people were not allowed to own certain lands or live in
town. We were only able to purchase the land that the Mississippi River
flooded. We cleared the land with our own hands with axes and mules. We
built up our own community and are proud of what we have and what we
have done. Pinhook is our home and it is what I want to pass along to
my children and grandchildren.
My entire life I have lived with floods on the Mississippi River
destroying what I have worked for. Where we live the Mississippi River
backs up through a 1500-foot hole in the levee that was left there when
the levees were built in the 30's. So every few years the river comes
up and backs through that hole and we get flooded.
I don't know how many of you have ever been through a flood and
know what it is like to have raw sewage in your home. What it is like
when you get out of bed in the morning to have to wade through that
mess. To have your children live in it. For them to have to ride in a
tractor drawn open-wagon through the water just to get to a school bus.
My people should not have to live that way year after year.
If I go north to St. Louis I see fine homes surrounded by big
levees, or if I go south to Memphis I see that same thing. Those people
have been able to build their levees and protect their homes. I don't
want to take that away from them, I just want the same thing for us.
There has been a project on the list for years that would close our
levee and give us some relief. And we thought we were close to ending
the problem. But then in 1986, Congress raised the local cost share and
we were told that we had to come up with 35 percent of a multi-million
dollar project. We farm some, our children work in small factories, we
pay taxes, but we cannot afford $20 million.
Finally in 1993 through the Enterprise Community program we were
able to get some help and the local share was reduced back down to 5
percent. I thought we were going to get to close that hole. The Corps
of Engineers went to work and we were on our way. That was 9 years ago
and we had a flood again this year.
I have met with people here in Washington and they all seem like
they want to help, like they understand what we are up against. But
every time we get close, somebody from the EPA or Fish and Wildlife
Service says the Corps has to go study some more. I am tired of
studying the same old mud.
I have heard about what some of you want to do to the Corps of
Engineers. All of the technical stuff is for someone else to comment
on. I want to talk to you a little about the people that this will
effect. I have lived along the Mississippi River my whole life, I
helped evacuate homes in the Flood of 1937, we worked day and night.
Over the years the Corps has built levees for the city areas and has
slowly worked down to us it has taken most of my life for them to
finally get to us. Now, after all of that work has been done you want
to say to us that is it, no more unless you pay for half of it. You did
not say that to the city folks, but after all these years when we
finally are going to get our share you want to cut our piece in half.
And you and I both know that there is no way a farming community in
the Mississippi Delta is going to be able to pay for half of any water
project. This is not reforming the Corps of Engineers, that is just a
nice way of saying you people are not going to get any help. It looks
better in the newspapers to say you are reforming something.
I was here in Washington over 2 years ago for a meeting with the
EPA, Fish & Wildlife, the Council on Environmental Quality and the
Corps. I was told then that the problems that were delaying our project
would be fixed. Since then the only ones that have not drug their feet
have been the Corps. Everytime someone comes down to look at the
project they promise me that they are going back and find a solution
and I never see them again, I see someone else who tells me the same
thing. But I always see the same faces from the Corps and they come
back and tell me that they are ready to build, but they can't because
the other agencies hold them up. From where I sit it looks like you are
trying to reform the wrong group.
Another point that I understand that is being considered is how the
Corps figures its benefits. Some people don't want them to use
increased crop production as a benefit. Is there something wrong with
trying to make a living farming now? I farmed all last week and if I
can increase how many bushels of soybeans I harvest this fall I think
that is good. It is good for me, it is good for my family and it is
good for this country. Farmers grow food and pay taxes and that has to
benefit everybody.
That concludes my prepared remarks. I will be glad to answer any
questions that you have.
__________
Statement of Peter J. Sepp, Vice President for Communications, National
Taxpayers Union
Mr. Chairman and Members of the Committee, on behalf of the
335,000-member National Taxpayers Union (NTU), I am pleased to offer
our support for S. 1987, the ``Corps of Engineers Modernization and
Improvement Act of 2002.'' Although I am unable to attend these
important hearings in person, and am aware that several colleague
organizations will be providing testimony on this legislation, I am
pleased to offer NTU's own brief views on S. 1987.
Over the past several decades, taxpayers have witnessed a sharp
decline in discipline as well as accountability in virtually every
component of the Federal budget process. Federal taxes are hovering at
a postwar high in terms of their burden on the nation's economic
output, and thereby inflict huge ``deadweight losses'' on a private
sector that is currently struggling its way out of an economic
downturn. In the past 10 years alone, Federal spending has grown nearly
twice as fast as the rate of inflation.
Meanwhile, agencies continue to mismanage these funds with an
astounding level of indifference. This year the Office of Management
and Budget (OMB) gave ``red lights'' for fiscal recklessness to over
half of the 26 Federal departments in each one of the five categories
used to evaluate them. For its part, Congress often shuns a more
methodical merit-based appropriations process in favor of a politically
tilted patchwork of earmarks and open-ended authorizations. Last year,
the Washington Post reported that House Members alone had requested
nearly 19,000 earmarks totaling $279 billion in the spending bills
before Congress, marking a threefold escalation of the practice since
1995.
Few areas of Federal spending seem more impacted by these trends
than public works projects, many of which are undertaken by the Army
Corps of Engineers. Members of the Committee and their staff, led by
Senator Smith, are to be commended for taking such a systematic
approach to addressing the accumulated defects of the water resources
development spending process, through the Corps of Engineers
Modernization and Improvement Act. Although this legislation cannot
erase the fiscal perils of the past overnight, it could, if properly
implemented and vigorously enforced, provide measurable and significant
benefits to taxpayers.
Among the advantages we find most attractive are:
<bullet> A more vigorous cost-benefit analysis.--A recent study by
Congress's Joint Economic Committee found that the cost to the economy
of raising $1 in additional taxes for new Federal programs is $1.40--
after factoring in the deadweight loss of consumer substitution,
reduced private-sector activity, compliance costs, and government
enforcement costs. Conversely, reducing government spending by $1 and
returning that money to taxpayers will eventually yield $1.40 in
overall economic benefits. Thus, the bill's provision to ``require
Corps projects to meet benefits at least 1.5 times as great as the
estimated total cost of the project,'' is far more justified than the
current ``1:1'' requirement. Indeed, the proposed ``1.5:1'' ratio ought
to be the absolute minimum taxpayers expect for the dollars they send
to Washington.
<bullet> A more rational review process.--As the National Endowment
for the Arts and the National Science Foundation have both
demonstrated, a review process for federally supported projects is no
guarantee that tax dollars will be spent wisely. However, this
legislation holds a better promise of success, by creating an
Independent Review Board overseen by the Director of OMB, and operating
within the Army Inspector General's office. Equally important to
avoiding past mistakes is the bill's requirement for a ``balance of
expertise'' among Board members, which will include economists and
engineers.
A push toward self-sufficiency.--Federal taxpayers have long been
threatened with spiraling costs associated with flood control and beach
re-nourishment projects of parochial rather than national benefit. The
legislation would encourage more state, local, and possibly private
involvement in these particular projects--and perhaps lead to the
termination of economically unsustainable projects--by reducing the
Federal cost ``share'' among them.
A more visible ``sunset.''--Far too many Federal construction
programs take on a life of their own, especially when their systematic
growth escapes the attention of Congress until billions of dollars are
at risk. S. 1987 would help to address this problem in several manners,
by de-authorizing projects that fail cost-benefit analyses, by
restricting mission creep into areas such as school construction, and
by encouraging de-commission of underused waterways. Obviously, de-
authorizing a project does not ensure that it will be denied funding,
but such a mechanism is helpful in highlighting expenditures of a lower
priority.
No statutory legislation can promise to completely overhaul a
fundamentally flawed budget process. In an ideal world, constitutional
restraints on tax and spending increases, merit-and performance-based
budgeting, more state and local responsibility for their own programs,
and regulatory reform to promote privately built and--maintained public
works projects, would all be part of a comprehensive solution. However,
the Corps of Engineers Modernization and Improvement Act of 2002 could
serve as a solid bridge to take our Nation toward this more fiscally
responsible destination. Equally important, this bill could serve as a
guide for policymakers seeking reform in other capital spending-
intensive areas, such as transportation or Federal office space.
For these reasons, the National Taxpayers Union strongly urges
Members of the Committee and your colleagues in the Senate to support
the Corps of Engineers Modernization and Improvement Act of 2002, and
NTU looks forward to working with you toward the enactment of this
critical legislation. Once again, I appreciate the opportunity to
present our perspective on an issue that deserves a rightful place on
Congress's agenda.
__________
Statement of Eric Draper, Director of Policy, Audubon of Florida
Mr. Chairman, Senator Smith, and members of the Committee, on
behalf of Audubon of Florida, a strategic alliance of the National
Audubon Society, Florida Audubon Society and 43 chapters and 40,000
members in the State of Florida, thank you for the opportunity to
present our views regarding proposals for the Water Resources
Development Act (WRDA) of 2002. The purpose of our testimony is to
recommend that consideration be given to the authorization of three
urgent and crucial Everglades restoration projects and deauthorization
of the Apalachicola-Chattahoochee-Flint River Project, as well as much
needed comprehensive reforms to the U.S. Army Corps of Engineers
(Corps).
Audubon of Florida recognizes the Chairman Jeffords' support for
Everglades restoration, a cause of utmost importance to Florida. We
also recognize the contribution of past Chairman and Ranking Minority
Senator Bob Smith for his vision, courage and determination in
championing the historic legislation designed to restore the Everglades
and return the abundance of birds and wildlife to its world-renowned
ecosystem. We also thank the other members of the committee and the
staff for their role in the passage of the Restoring the Everglades, an
American Legacy Act in WRDA 2000, and for their continued support for
Everglades restoration. We especially thank Florida's senior senator,
who has provided steadfast and effective leadership on the Everglades
and other Florida issues.
EVERGLADES RESTORATION: EVERGLADES AUTHORIZATIONS FOR 2002
The Everglades is a model for future Corps environmental
restoration projects. The Comprehensive Everglades Restoration Plan
(CERP) is an outstanding example of how a reformed Corps would repair
damage from previous water resource projects, while functioning in a
manner that is responsive, accountable, and fiscally responsible.
Again, we thank the Committee for its long-standing support for
Everglades restoration and urge your continued support for the
restoration of America's Everglades.
Audubon strongly urges the Committee to include in WRDA three
critical Everglades restoration projects that are scheduled for
authorization by Congress this year and contain more than half of the
total land area of the Comprehensive Everglades Restoration Plan
(CERP). These projects will deliver enormous benefits to the Everglades
natural system. Like other parts of the Everglades ecosystem, these
projects are largely an attempt to repair previous damage by Federal
and state projects. The partnership between America and Florida on
these three projects will contribute significant improvements to the
Everglades and our nation's natural resources.
The proposed 2002 Water Resources Development Act (WRDA) must
include authorization for the Water Preserve Areas (WPAs), the Indian
River Lagoon (IRL), and the Southern Golden Gates Estates (SGGE)
Hydrologic Restoration Project in order to accomplish significant early
restoration. The three projects also provide the earliest ecological
and economic value for the investment that Florida's and America's
taxpayers are making in this historic restoration effort.
The Indian River Lagoon Project will reverse the deterioration and
restore a nationally significant and unique system connecting Lake
Okeechobee to the most diverse estuary in North America. The project
restores, protects and utilizes 92,900 acres of water storage and water
quality treatment areas. Restoring, cleaning up and enhancing the
area's wetlands and waterways increases the extent of natural storage
and limits the dumping of harmful stormwater into Lake Okeechobee, the
Indian River Lagoon and the St. Lucie Estuary. These water bodies will
benefit enormously from land acquisition and improvements for
stormwater retention and water storage and by changing the current
project's drainage patterns.
The Southern Golden Gates Estates Hydrologic Restoration Project
will restore to its previous natural condition 113 square miles (72,320
acres) of Southwest Florida that was ditched and drained for a
sprawling development. Efforts to restore this area's unique ecology of
cypress, wet prairie, pine, hardwood hammock and swamp have been
underway for decades. The project is connected to the Florida Panther
National Wildlife Refuge, the Belle Meade State Conservation and
Recreation Lands Project Area, the Fakahatchee Strand State Preserve,
and will restore flows to the Ten Thousand Island Estuaries and Aquatic
Preserve through sheetflow and flowways rerouting approximately 185,000
acre-feet of water currently discharged as point source to the Faka
Union Bay. Immediate benefits for the booming adjacent urban area
include water supply through aquifer recharge and the prevention of
saltwater intrusion while maintaining current authorized levels of
flood protection for developed areas. The State of Florida has already
acquired more than 90 percent of the 60,000 acres needed for the
project. The restoration benefits of this project are critically needed
and too long overdue.
The Water Preserve Areas (WPAs) Project, (including the Bird Drive
Recharge Area and the Southern Compartment of the Hillsboro
Impoundment), an integral part of the Everglades restoration plan, is
located within Palm Beach, Broward, and Miami-Dade Counties east of the
Everglades and west of existing development, creating a 13,600 acre
buffer area (Recommended Plan of the Draft WPA Feasibility Study). The
WPAs are designed to increase the spatial extent of wetlands acres,
improve habitat in the Everglades Protection Area, enhance the
Loxahatchee National Wildlife Refuge, as well as store water, and
safeguard urban wellfields. WPAs provide a critical source of water
storage for restoration by reducing undesirable losses from the natural
system through seepage and providing a means of capturing stormwater
runoff that was previously wasted to tide. Further, development
continues to encroach on the remaining natural areas adjacent to the
Everglades, which serve a critical role in the restoration of the
Everglades by maintaining wetland spatial extent. The WPAs also provide
a mechanism for increased aquifer recharge and surface water storage
capacity to enhance regional water supplies for the lower east coast
urban areas, thereby reducing demands on an already degraded natural
system.
These three projects demonstrate large-scale ecosystem restoration,
while maintaining or improving water supply and flood protection. The
success of these projects hinges on timely authorization. These
projects require intensive and significant acquisition of land under
significant development pressure delay could result in failure. If
authorized in 2002, these projects will result in significant ecosystem
restoration early in CERP implementation the kind of early success that
will be essential to maintaining the broad support CERP now enjoys from
both the public and private sectors.
CORPS REFORM
The Army Corps of Engineers, through its authorized projects, has
contributed to the nation's prosperity, saved lives and improved living
conditions for millions of Americans. Many of these projects have also
had serious negative environmental consequences. In Florida alone,
billions of dollars are being spent to correct damage from Corps
projects.
It is time to reform the role and activities of the Army Corps of
Engineers and strongly supports legislation such as S. 1987, S. 646,
H.R. 1310 and H.R. 2353 to accomplish reforms. We specifically urge the
passage of legislation with the following elements:
<bullet> New tests and rules for fiscal responsibility, public
accountability and environmentally sustainable projects.
<bullet> Full mitigation of environmental damages incurred by
project construction.
<bullet> Increased public participation and input at the outset of
every proposed project.
<bullet> Deauthorization of those projects that are shown to be
economically unjustified.
<bullet> New rules to prevent the Corps from basing any of a
project's benefits upon any economic value resulting from the
destruction of wetlands.
<bullet> Requirements that the Corps to count the cost of
destroying natural resources when calculating the economic costs and
benefits of projects
<bullet> Independent peer review of large and controversial
projects concurrent with the Corps' current project planning process.
<bullet> Increased fiscal responsibility and public accountability
of the Corp activities and projects.
APALACHICOLA-CHATTAHOOCHEE-FLINT RIVER PROJECT
In addition to the specific reforms noted above, Audubon of Florida
supports deauthorization of the nine by 100 foot channel of the
Apalachicola-Chattahoochee-Flint River Project between the Gulf
Intracoastal Waterway near Apalachicola, Florida to Jim Woodruff dam
near Chattahoochee, Florida as supported by the Governor and Cabinet of
the State of Florida. The maintenance dredging of this section of the
Apalachicola River, which is little used for commercial navigation, has
had enormous negative environmental impacts. Remarkably, this river
project accounts for 30 percent of the Inland Waterways operations and
maintenance budget, although the project only amounts to 3 percent of
all navigation in the Inland Waterways. Dredging of the Apalachicola-
Chattahoochee-Flint River Project is both environmentally and
economically irresponsible. By ending the dredging of this waterway,
the Apalachicola River may repair itself and once more become home to
abundant fish and wildlife.
Congress should enact meaningful Corps reforms to help restore
faith in an agency that has suffered a significant loss of credibility.
However, Congress should also act to authorized the three
aforementioned Everglades projects and deauthorize the harmful
operation of the Apalachicola River. We ask Congress to direct the
Corps to manage ecosystems in an environmentally sustainable manner and
to provide equal consideration and resources to environmental
restoration as to flood control and navigation. Audubon of Florida will
continue to support efforts to reform the U.S. Army Corps of Engineers
and we look forward to working with you to ensure that the next WRDA
contains comprehensive and much-needed reforms.
We greatly appreciate this opportunity to provide the Committee
with our views for WRDA.
__________
Statement of Bob Perciasepe, Senior Vice President for Policy, National
Audubon Society
Mr. Chairman, Senator Smith, and members of the Committee, on
behalf of Audubon's more than one million members and supporters, thank
you for the opportunity to present our views regarding proposals for
the Water Resources Development Act (WRDA) of 2002. The purpose of our
testimony is to recommend for inclusion in WRDA 2002 much needed
comprehensive reforms to the U.S. Army Corps of Engineers (Corps), as
well as three projects, that are vital to the continued restoration of
the Everglades. Audubon's mission is to conserve and restore natural
ecosystems, focusing on birds and other wildlife for the benefit of
humanity and the earth's biological diversity.
Audubon thanks the Chairman for his long-standing support for our
nation's precious natural resources and for his recent actions to
protect our environment since assuming the Chairmanship of the
Environment and Public Works Committee. Audubon also recognizes the
past Chairman and Ranking Member for his vision, courage and
determination in championing historic legislation designed to restore
the Everglades and return the abundance of wading birds and rich
diversity of life to the unique and globally significant River of
Grass. We also thank the other members of the committee and the staff
for their role in the passage of the Restoring the Everglades, an
American Legacy Act in WRDA 2000, and for their continued support for
Everglades restoration.
CORPS REFORM
Before discussing specific proposals of Corps Reform legislation,
Audubon would like to acknowledge the vital role that the Corps has
played in helping to increase commerce and strengthen our economy and
especially for its role in protecting American lives and safeguarding
communities during natural disasters. The Corps has done an able job
constructing congressionally authorized projects for over 220 years.
Unfortunately, 220 years of water resource projects have also left
a legacy of environmental destruction and billions of taxpayer dollars
wasted on projects that are often without merit. Water resource
projects have been identified by the scientific community to be a
leading cause of dramatic population declines in a large percentage of
our wading birds, native fish and other freshwater species that are
threatened with extinction.
Mitigation plans to repair the environmental damage for water
resource projects often do not address the full impacts of the projects
and in some instances are never undertaken. Several major Corps
environmental restoration projects, such as Everglades restoration, are
now directed at undoing the damage of previous Corps projects, yet
additional projects that cause the same kind of environmental
devastation continue to be constructed. Several currently authorized
projects would destroy hundreds of thousands of acres of wetlands and
threaten our environmentally sensitive floodplains, rivers and other
critical aquatic habitat that so many species of wildlife depend on.
More than half of our country's original wetlands have already been
lost, and we continue to destroy wetlands at a rate of approximately
60,000 acres per year. In addition to their enormous ecological
benefits, wetlands also benefit society by filtering pollutants out of
our water, providing flood control, recreational opportunities, and
economic benefits. We can no longer subsidize the destruction of
wetlands and other critical aquatic habitat through wasteful Corps
water resource projects.
The need for comprehensive reform of the Corps and the water
resources development process has become increasingly clear. Several
Corps projects have recently been shown by government reports and
scientific reviews to be wasteful, economically unjustified, and
devastating to our nation's natural resources. The Corps has been shown
by the Army Inspector General and the National Academy of Sciences to
have used flawed economic models and intentionally manipulated data in
order to justify expanding locks and dams on the Upper Mississippi
River. The General Accounting Office has found the Delaware River
Deepening project to be similarly unjustified. Government reports have
also corroborated internal revelations that the Corps has an
institutional bias toward large projects that are often without merit
and result in grave environmental consequences for our environment and
especially for our remaining wetlands.
Audubon strongly supports proposed reforms to the Corps that
emphasize fiscal responsibility, public accountability and
environmentally sustainable projects. The Corps reform bills introduced
in the Senate and House (S. 1987, S. 646, H.R. 1310 and H.R. 2353)
contain crucial reforms that cannot be postponed.
Audubon strongly urges the Committee to adopt reforms proposed in
S. 646 and H.R. 1310 to ensure that environmental damages incurred by
project construction are fully mitigated. This will require the Corps
to acquire and restore an acre of similar habitat to replace each acre
of habitat negatively impacted by a project. Seeking a balance between
the economic developments of a project with other social priorities,
and mitigating the environmental damages will positively impact all of
the Corps water projects, while ensuring safer and healthier habitats
for people, birds, and wildlife.
Audubon strongly supports reforms proposed in S. 1987, which aim to
address the enormous $52 billion construction backlog of Corps projects
by deauthorizing those projects that are shown to be economically
unjustified. We especially endorse the provision to prevent the Corps
from basing any of a project's benefits upon any economic value
resulting from the destruction of wetlands. We also back the proposal
to deauthorize low-benefit projects that have a benefit-to-cost ratio
of less than 1.5 and are less than one-third completed, if Congress
chooses not to reauthorize this project within a 3-year period. A
critical element of S. 1987 is its direction to the Corps to define
economic development and environmental protection as co-equal goals of
water resources planning and development.
Both S. 1987 and H.R. 2353 rightfully require the Corps to count
the cost of destroying natural resources when calculating the economic
costs and benefits of projects. Both bills also require the Corps to
give taxpayers a better return on their investment by raising the cost-
benefit ratio from 1:1 to 1:1.5, which will eliminate many unjustified
projects.
Audubon also endorses reforms proposed in S. 646 and H.R. 1310 to
increase public participation and input at the outset of every proposed
project. The bills create new advisory and review procedures for the
Corps and require that information on water resource project analyses
be made available for review by the public throughout the planning
process, thereby improving the public accountability of the Corps.
All of the proposed Corps Reform bills, S. 1987, S. 646, H.R. 1310
and H.R. 2353, contain provisions to improve the Corps' accountability
by instituting a system of independent peer review for large and
controversial projects. Audubon supports independent peer review that
is concurrent with the Corps' current project planning process.
Similarly, Audubon strongly endorses reforms proposed in all of these
bills that will increase the fiscal responsibility and public
accountability of the Corps.
Now more than ever, Congress must enact meaningful Corps reforms to
improve the broken water resources development process and help restore
faith in an agency which has suffered a significant loss of
credibility. We ask Congress to direct the Corps to manage ecosystems
in an environmentally sustainable manner and to provide equal
consideration and resources to environmental restoration as to flood
control and navigation. Audubon will continue to support efforts to
reform the U.S. Army Corps of Engineers and we look forward to working
with you to ensure that the next WRDA contains comprehensive and much-
needed reforms.
EVERGLADES RESTORATION: EVERGLADES AUTHORIZATIONS FOR 2002
Again, we thank the Committee for its long-standing support for
Everglades restoration and urge your continued support for the
restoration of America's Everglades. The Everglades is a model for
future Corps environmental restoration projects. The Comprehensive
Everglades Restoration Plan (CERP) is an outstanding example of how a
reformed Corps would repair damage from previous water resource
projects while functioning in a manner that is responsive, accountable,
and fiscally responsible.
Everglades restoration embodies Corps Reform. The Corps has set
about to undo the damage wrought by a half-century of civil works
projects that diked and drained the Everglades and each day divert up
to 2 billion gallons of life-giving water away from the Everglades and
out to sea. In Everglades restoration, the Corps has demonstrated
public accountability by conducting extensive public outreach and
remaining extremely open and accessible throughout the process. In some
ways the Corps is already operating the largest restoration project
ever attempted in human history in the manner that the proposed reforms
intend. Everglades restoration amounts to Corps Reform in action, on-
the-ground, righting the wrongs of the past by restoring one of the
world's most unique and diverse ecosystems.Audubon strongly urges the
Committee to include in WRDA three vital Everglades restoration
projects that are scheduled for authorization by Congress this year and
contain more than half of the total land area of the Comprehensive
Everglades Restoration Plan (CERP). These projects will deliver
enormous benefits to the Everglades natural system. Like other parts of
the Everglades ecosystem, these projects are largely an attempt to
repair previous damage by Federal and state projects. The partnership
between America and Florida on these projects will contribute
significant improvements to the Everglades and our nation's natural
resources.
The proposed 2002 Water Resources Development Act (WRDA) must
include authorization for the Water Preserve Areas (WPAs), the Indian
River Lagoon (IRL), and the Southern Golden Gates Estates (SGGE)
Hydrologic Restoration Projects in order to accomplish significant
early restoration. These projects also provide the earliest ecological
and economic value for the investment that Florida's and America's
taxpayers are making in this historic restoration effort.
The Indian River Lagoon Project will reverse the deterioration and
restore a nationally significant and unique system connecting Lake
Okeechobee to one of the most diverse estuaries in North America. The
project restores, protects and utilizes 92,900 acres of water storage
and water quality treatment areas. Restoring, cleaning up and enhancing
the area's wetlands and waterways increases the extent of natural
storage and limits the dumping of harmful stormwater into Lake
Okeechobee, the Indian River Lagoon and the St. Lucie Estuary. These
water bodies will benefit enormously by land acquisition and
improvements for stormwater retention and water storage and by changing
the current project's drainage patterns.
The Southern Golden Gates Estates Hydrologic Restoration Project
will restore to its previous natural condition 113 square miles (72,320
acres) of Southwest Florida that was ditched and drained for a
sprawling development. Efforts to restore this area's unique ecology of
cypress, wet prairie, pine, hardwood hammock and swamp have been
underway for decades. The project is connected to the Florida Panther
National Wildlife Refuge, the Belle Meade State Conservation and
Recreation Lands Project Area, the Fakahatchee Strand State Preserve,
and will restore flows to the Ten Thousand Island Estuaries and Aquatic
Preserve through sheetflow and flowways rerouting approximately 185,000
acre-feet of water currently discharged as point source to the Faka
Union Bay. Immediate benefits for the booming adjacent urban area
include water supply through aquifer recharge and the prevention of
saltwater intrusion while maintaining current authorized levels of
flood protection for developed areas. The State of Florida has already
acquired more than 90 percent of the 60,000 acres needed for the
project. The restoration benefits of this project are critically needed
and too long overdue.
The Water Preserve Areas (WPAs) Project, (including the Bird Drive
Recharge Area and the Southern Compartment of the Hillsboro
Impoundment), an integral part of the Everglades restoration plan, is
located within Palm Beach, Broward, and Miami-Dade Counties east of the
Everglades and west of existing development, creating a 13,600 acre
buffer area (Recommended Plan of the Draft WPA Feasibility Study). The
WPAs are designed to increase the spatial extent of wetlands acres,
improve habitat in the Everglades Protection Area, enhance the
Loxahatchee National Wildlife Refuge, as well as store water, and
safeguard wellfields. WPAs provide a critical source of water storage
for restoration by reducing undesirable losses from the natural system
through seepage and providing a means of capturing stormwater runoff
that was previously wasted to tide. Further, development continues to
encroach on the remaining natural areas adjacent to the Everglades.
These remaining wetlands serve a critical role in the restoration of
the Everglades by maintaining wetland spatial extent. The WPAs also
provide a mechanism for increased aquifer recharge and surface water
storage capacity to enhance regional water supplies for the lower east
coast urban areas, thereby reducing demands on an already degraded
natural system.
These three projects demonstrate large-scale ecosystem restoration,
while maintaining or improving water supply and flood protection. The
success of these projects hinges on timely authorization. These
projects require intensive and significant acquisition of land under
significant development pressure delay could result in failure. If
authorized in 2002, these projects will result in significant ecosystem
restoration early in CERP implementation the kind of early success that
will be essential to maintaining the broad support CERP now enjoys from
both the public and private sectors.
Chairman Jeffords and Ranking Member Smith, thank you for the
opportunity to present our views to the Committee. We look forward to
working with you and the other members of the Committee to ensure that
the next WRDA includes comprehensive Corps Reform along with vital
Everglades restoration projects that are a model for future Corps
restoration projects.
__________
Statement Melissa Samet, Senior Director of Water Resources,
American Rivers
Mr. Chairman, Senator Smith and members of the Committee, thank you
for the opportunity to present testimony on the Water Resources
Development Programs within the U.S. Army Corps of Engineers. I am
Melissa Samet, Senior Director of Water Resources at American Rivers, a
national conservation organization dedicated to protecting and
restoring the nation's rivers. American Rivers has, over 33,000 members
across the country, and works in partnership with over 4,000 river and
conservation organizations. American Rivers also works closely with a
growing network of organizations working to reform the way the Army
Corps of Engineers does business.
THE CORPS OF ENGINEERS MUST BE REFORMED
During the past few years, increased scrutiny of U.S. Army Corps of
Engineers (Corps) projects has revealed a disturbing pattern of flawed
economic and environmental analyses, biased and insupportable
decisionmaking, and failed mitigation. These problems have been
identified by the Army Inspector General, the National Academy of
Sciences, the General Accounting Office, the Environmental Protection
Agency, the U.S. Fish and Wildlife Service, the media, environmental
and taxpayer organizations, and citizen activists.
Projects based on flawed analyses damage the nation's rivers and
wetlands, wreak havoc on recreation, tourism, and other businesses that
rely on healthy rivers, and squander agency resources and tax dollars.
When tax dollars and Corps resources are spent on planning, defending,
or constructing such projects, the Corps has less ability to carry out
environmental protection and restoration projects, or more deserving
flood control and navigation projects.
To ensure that the Corps provides true benefits to the Nation, and
does not cause unnecessary and entirely avoidable environmental harm,
Congress should reform the way the Corps plans and constructs water
resources projects. Importantly, these same reforms also will save
taxpayer dollars.
American Rivers opposes the passage of another Water Resources,
Development Act without these reforms. More potentially wasteful and
environmentally damaging Corps activities should not be authorized
without substantially changing the way the Corps plans, evaluates, and
constructs its civil works projects.
American Rivers strongly supports congressional proposals that
would change the way the Corps does business. We believe that reforms
contained in S. 646 (Corps of Engineers Reform Act of 2001), and S.
1987 (Corps of Engineers Modernization and Improvement Act of 2002),
H.R. 1310 (Corps of Engineers Reform Act of 2001), and H.R. 2353 (Army
Corps of Engineers Reform and Community Relations Improvement Act of
2001), are essential to bringing about this change. In this testimony I
would like to highlight three critical reforms: requiring independent
peer review of costly or controversial Corps projects; requiring full
and concurrent mitigation, and prohibiting the Corps from claiming
project benefits for draining wetlands in cost-benefit ratios.
CORPS STUDIES MUST BE REVIEWED BY AN INDEPENDENT PANEL OF EXPERTS
Study after study has shown that the Corps' economic and
environmental analyses cannot be trusted. Indeed, the Army's own
Inspector General found that many Corps employees have no confidence in
the integrity of the Corps' planning process.\1\ Unfortunately, the
impacts of flawed analyses go far beyond issues of trust and integrity.
All too often, they are used to justify the construction of projects
that unnecessarily harm the environment, and that divert tax dollars
away from serving the real needs of the Nation.\2\
---------------------------------------------------------------------------
\1\ U.S. Army Inspector General, Report of Investigation, Case 00-
019, 2000, at 8.
\2\ The National Academy of Sciences has also found that the Corps
is making unsupportable decisions in its Clean Water Act Section 404
regulatory program through which the Corps is responsible for
protecting the nation's rivers, streams, and wetlands. National
Research Council, Compensating for Wetland Losses Under the Clean Water
Act at 6, 2001, ``Conclusion 4: Support for regulatory decisionmaking
is inadequate''); at 6. The General Accounting Office has similarly
concluded that many Corps districts have touted the success of wetlands
mitigation required under the Corps' regulatory program without having
any data to support those claims and without having bothered to assess
whether the mitigation efforts have been ecologically successful.
General Accounting Office, Wetlands Protection, Assessments Needed to
Determine Effectiveness of In-Lieu-Fee Mitigation, 2001, at 3.
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The transformation of the nation's rivers brought about by Corps
levees, dams and dredging projects are among the leading reasons that
North America's freshwater species are disasppearing five times faster
than land based species, and as quickly as rainforest species.\3\ The
widespread damage has led the National Research Council to call for the
establishment of a national goal to restore riparian functions along
America's rivers. The National Research Council has concluded that
protecting and restoring riparian areas will have a ``major influence
on achieving the goals of the Clean Water Act, the Endangered Species
Act, and flood damage control programs.''\4\
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\3\ Ricciardi, Anthony and Rasmussen, Joseph B., ``Extinction Rates
of North American Freshwater Fauna''; Conservation Biology; 13 (5),
October 1999, at 1220.
\4\ National Research Council, Riparian Areas: Functions and
Strategies for Management, 2002, at 2.
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Despite an explicit environmental protection mission, and specific
environmental restoration programs and projects, the Corps' traditional
flood control and navigation projects do not appear to be doing any
better for the environment. To the contrary, agency-wide biases,
institutional barriers, and faulty analyses are all contributing to the
continued degradation of the nation's rivers and wetlands.
Two National Academy of Sciences panels and the Army Inspector
General have concluded that the Corps has an institutional bias for
approving large and environmentally damaging structural projects, and
that its planning process lacks adequate environmental safeguards.\5\
Less environmentally damaging, less costly, nonstructural measures that
would result in the same or better outcomes are routinely ignored or
given short shrift.
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\5\ National Research Council, New Directions in Water Resources
Planning for the U.S. Army Corps of Engineers, 1999, at 4, 21, 61-63;
National Research Council, Inland Navigation System Planning: The Upper
Mississippi River-Illinois Waterway, 2001, at 25-28; 53-54; U.S. Army
Inspector General, Report of Investigation, Case 00-019, 2000, at 7-8.
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The National Academy of Sciences, the Army Inspector General, the
General Accounting Office and numerous other independent reviews also
have revealed fundamental and critical technical flaws in the Corps'
analyses of highly, controversial and expensive projects.
EXAMPLES OF THE FLAWS ARE QUITE SHOCKING:
<bullet> Just last week, the General Accounting Office reported
that the Corps had overestimated the benefits of the $311 million
Delaware River Deepening Project by an incredible 300 percent. The
General Accounting Office concluded that the ``Corps' analysis of
project benefits contained or was based on miscalculations, invalid
assumptions, and outdated information.''\6\ The Corps said the project
would produce $40.1 million in annual benefits. The General Accounting
Office found that the project benefits could be no more than $13.3
million a year. Unable to explain its own analysis, the Corps blamed
$4.7 million of that discrepancy on, a computer error.\7\ The Corps
suspended work on this project in late April 2002 when the General
Accounting Office advised the Corps of its preliminary findings.
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\6\ General Accounting Office, Delaware River Deepening Protect
Comprehensive Reanalysis Needed, GAO-02-604, June 2002 at 5.
\7\ Id.
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<bullet> In one of the Corps' more notorious episodes, the Army
Inspector General concluded that the Corps had deceptively and
intentionally manipulated data in an attempt to justify a $1.2 billion
expansion of locks on the Upper Mississippi River.\8\ In short, the
Corps had ``cooked the books.''
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\8\ U.S. Army Inspector General, Report of Investigation; Case 00-
019, 2000, at 8.
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<bullet> An independent economic analysis of the Corps' proposal to
construct the $181 million Yazoo Backwater pumping plant in
Mississippi, clearly demonstrates that the Corps overestimated just the
agricultural benefits of that project by $144 million.\9\ hat study
also concludes that even if all the remaining benefit calculations were
correct, those benefits could not justify construction of the project.
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\9\ Leonard Shabman & Laura Zepp, ``An Approach for Evaluating
Nonstructural Actions with Application to the Yazoo River (Mississippi)
Backwater Area''; February 7, 2000 (Prepared in cooperation.with the
U.S. Environmental Protection Agency, Region 4); Shabman and Zepp
Review Comments on ``Yazoo Backwater Reformulation'' dated September
24, 2000. Dr. Shabman has participated in a number of National Academy
of Sciences panels reviewing Corps activities.
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<bullet> The U.S. Environmental Protection Agency (EPA) working
with the U.S. Geological Survey also demonstrated that the Corps had
grossly underestimated the wetland impacts of the Yazoo Pumps project.
EPA has concluded that the Yazoo Pumps will drain and damage more than
200,000 acres of ecologically significant wetlands--10 times more
wetlands than are destroyed in an entire year by private developers.
The Corps claims that ``only'' 23,200 acres of wetlands will be
affected.\10\
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\10\ The Corps also claims that all of the wetland impacts of the
Yazoo Pumps could somehow be mitigated by the purchase of 17,028 acres
of conservation easements. However, the Corps is not proposed any
mitigation for the project. Instead it has proposed a goal of
purchasing conservation easements that, as discussed in the mitigation
section below, cannot be met.
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<bullet> The U.S. Fish and Wildlife Service (the Service) also
conducted an extensive analysis of the Yazoo Pumps and concluded that
the Corps was claiming environmental benefits that were physically
impossible to obtain. The Corps told that public that this agricultural
drainage project would benefit the environment through attempts to
purchase conservation easements on 62,500 acres of privately owned
agricultural land located below the 87-foot elevation and within the
project area. The Service documented, however, that in the project
area, there are fewer than 9,100 acres of agricultural land in private
ownership below 87 feet. In short, the Corps claimed environmental and
economic benefits for reforesting 53,400 acres of privately owned
agricultural lands that do not exist.
<bullet> The U.S. Fish and Wildlife Service also conducted a
detailed investigation of the methodology used by the Corps to evaluate
the relative costs of purchasing flowage easements for the $62 million
Big Sunflower River dredging project. The Service found that the Corps
significantly overestimated the costs of utilizing nonstructural
alternatives to meet the objectives of the Big Sunflower project.\11\
The Corps' failings on this project continue. After EPA advised the
Corps that it should prepare a supplemental environmental impact
statement to evaluate, in part, the human health risks associated with
dredging DDT and toxaphene contaminated sediments from 104 miles of the
river bottom, the Corps issued an inadequate environmental assessment
that does not even acknowledge the existence of the toxaphene
contamination, let alone evaluate the impacts of dredging the toxaphene
contaminated sediments.
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\11\ U.S. Fish and Wildlife Service, Considerations in the Pricing
of Flowage Easements: A Case Study of Non-Structural Flood Control in
the Big Sunflower River Basin (October 1997).
---------------------------------------------------------------------------
<bullet> A newspaper's 6-month review of the economics of the $188
million Columbia River channel deepening project revealed that the
Corps had overestimated the project's benefits by 140 percent. The
Corps told the public that the project would return $2.10 for each
dollar of public money invested. The Oregonian found that the project
would return just 88 cents for each tax dollar spent. The newspaper
identified six key areas where the Corps had relied on outdated or
faulty data, or left out important factors. Lester Lave, the chairman
of the National Research Council panel that investigated the Upper
Mississippi River lock expansion project, endorsed the paper's analysis
as fair and reasonable.\12\ In just a few days before the Oregonian
series ran--and after the Oregonian had shared its findings with the
Corps--the Corps advised the paper that it would be reexamining the
cost-benefit analysis.\13\
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\12\ The Oregonian, ``Key parts of corps analysis don't hold
water'', March 3, 2002.
\13\ The Oregonian, ```Digging deeper' in Columbia'', March 10,
2002. The Corps noticed the new study on March 19, 2002 (67 Fed. Reg.
1246).
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<bullet> Four retirees with engineering and other technical
backgrounds from Cecil County, Maryland devoted an extraordinary amount
of time and energy to document dozens of flaws in the Corps' economic
analysis of the $90 million Chesapeake & Delaware Canal deepening
project. One of these flaws was a ``basic math error that boosted the
benefit-cost ratio from a failing 0.65 to a passing 1.21.''\14\ In
January 2001, the Corps finally acknowledged that the project was not
economically justified and suspended work.
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\14\ Michael Grunwald, ``A Race to the Bottom'', The Washington
Post, September 12, 2000, at A 15.
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As evidenced by the range of projects discussed in this testimony,
the Corps' inability to properly analyze costly or controversial
projects is widespread. Unfortunately for the taxpayers and the
environment, this is just a sampling of Corps projects with significant
analytical problems.\15\
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\15\ For example, the General Accounting Office is currently
investigating the Corps' analysis of the $108 million Oregon Inlet
Jetties project.
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Flawed Corps studies also are a long-standing problem. For example,
in 1987, the Washington Post editorialized that the Tennessee-Tombigbee
Waterway ``was justified over the years by egregiously skewed cost-
benefit estimates--what you would call lies if your children told them
instead of the-Corps of Engineers.''\16\
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\16\ Editorial, ``Wet Elephant'', The Washington Post, January 5,
1987, at A16.
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The Corps Is Unable Or Unwilling To Police Its Own Planning
Process.--During the past few years, a steady stream of studies
exposing fundamental and critical errors in Corps planning documents
has driven the public to call for substantial reforms of the agency.
Unfortunately, during this same time, the Corps has amply demonstrated
that it is either unwilling or unable to reform itself--and it has
continued to use egregiously flawed studies to support its
recommendation of costly and highly destructive projects.
The Corps' unwillingness to reform itself is perhaps best
exemplified by one of the Corps' most recent attempts to quell
criticism of its planning process. After being forced to suspend two
major projects in just 2 months--the $311 million Delaware River
Deepening project and the $188 million Columbia River Channel Deepening
project--when independent reviews revealed dramatic flaws in the Corps'
economic analyses, the Corps announced an agency-wide ``pause'' of
approximately 150 water resources projects.
This much-touted ``pause'' was ordered to address the ``serious
questions'' that had been raised regarding the accuracy of the Corps'
planning process. Corps Districts were ordered to ``have a new economic
analysis (not an update) completed before [projects with an economic
analysis approved prior to fiscal year 1999 would be] allowed to
proceed.''\17\
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\17\ Memorandum from Robert H. Griffin, Major General, U.S. Army,
Director of Civil Works, April 30, 2002.
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The Corps quickly dashed any hopes that this was a serious attempt
at reform. Just 17 days after it announced the project ``pause'' and
review to the public, the Corps claimed that it had reviewed 171
projects, clearing 118 to proceed. Only eight projects were flagged for
additional review as a result of the project ``pause'' directive.\18\
The remaining projects were already being reviewed before the Corps'
announcement. A legitimate economic analysis for a Corps project
requires the gathering of data, selection and justification of models
and assumptions, and careful review and evaluation. Claims that the
economic analyses for 118 projects can be redone in just 17 days is
simply not believable.
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\18\ The Corps' already battered credibility took yet another hit
when just a few days later it released a ``corrected'' list under the
project ``pause'' directive that deviated in significant ways from the
first list. The second list identifies only 164 projects as having been
reviewed, clearing 80 to proceed (with the remainder already undergoing
reevaluation due to previously identified problems). Again only eight
projects were said to require additional review as a result of the
review process. With no explanation, the Corps completely removed from
the second list some of the worst projects that were identified on the
original list with the nomenclature ``review complete,'' including the
Grand Prairie Irrigation Demonstration Project in Arkansas, the Yazoo
Pumps Project in Mississippi, and the St. John's Bayou Project in
Missouri. In addition to being costly, each of these projects is highly
controversial and would destroy some of America's most valuable
wetlands and aquatic habitat. Because the Corps has left the public
completely in the dark on the process used in its review, we can only
conclude that although the Corps originally announced to Congress and
the public that these projects had in fact been reviewed, the reviews
never occurred.
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As the St. Louis Post-Dispatch so aptly editorialized when the
Corps announced its agency-wide project review:
Critics still worry, and rightly so, that the Corps may be trying
to preempt true reform by making a show of falling on its sword.
Congress must see to it that doesn't happen. For years the Corps has
downplayed the costs of its projects to the environment and the
taxpayers and overstated their benefits to agriculture and the barge
industry.\19\
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\19\ Editorial, ``Backpaddling'', St. Louis Post-Dispatch, May 6,
2002.
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Congress should stop these abuses, and restore credibility to the
Corps' planning and decisionmaking process.
American Rivers urges Congress to require independent peer review
as set forth in S. 1987 and S. 646. These provisions would require
independent peer review for projects whose total costs exceed $25
million, or for projects that. are deemed to be controversial. These
provisions ensure that the review is truly independent by placing the
review office outside of the Corps, and that each review is carried out
by a panel that represents a balance of expertise in the areas of
biology, economics, and engineering.
Importantly, independent review will not delay planning for
projects of concern--unless, of course the review finds fundamental
flaws or dishonesty, in which case delays would be inevitable but would
serve the public interest. The Corps' review of costly or controversial
projects typically takes approximately 1 year from the date the draft
report is released for public comment until a final report is issued,
and can take much longer. For example:
<bullet> A draft reformulation report/environmental impact
statement for the Yazoo Pumps project discussed in this testimony was
issued in September 2000, and 21 months later a final study still has
not been released.
<bullet> A draft feasibility report for the $311 million Delaware
River Deepening Project discussed above, was issued in June 1990, and
the final feasibility report was not issued until February 1992, 20
months later.\20\
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\20\ Environmental threats from this project include severely
damage to the banks of the Delaware River, its wildlife, and nearby
drinking water wells and aquifers.
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<bullet> A draft feasibility report/environmental impact statement
for the $390 million Lower Snake River Juvenile Salmon Migration
project was issued in December 1999, and a final study was not issued
until February 2002, 26 months-later.\21\
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\21\ This study was prompted by National Marine Fisheries Service
and U.S. Fish and Wildlife Service Biological Opinions on the impacts
of operation of the navigation dams on four federally endangered salmon
stocks.
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The 180-day independent review period required under S. 1987 and S.
646 could easily have been carried out during these time periods.
Independent review also will decrease wasteful spending by ensuring
that analytical flaws are brought to light before a project is built or
becomes entangled in protracted litigation. Independent review will
ensure that the Corps plans, recommends, designs, and builds projects
that are based on sound science and economics. Most importantly,
independent review will help ensure that environmental.impacts have
been adequately addressed, that less environmentally damaging
alternatives have been fully evaluated, and that Corps projects are
economically justified.
Independent peer review is a common sense solution, and a practice
used routinely in the scientific community. 'It is a practice that is
sorely needed to help restore the Corps' battered credibility.
congress should require the corps to fully mitigate for the harm caused
by corps projects and to implement that mitigation in a timely manner
The Corps has abjectly failed to plan and implement ecologically
successful mitigation for the significant damage caused to rivers and
wetlands by Corps projects. The Corps generally does not even attempt
to mitigate hydrologic impacts to rivers and streams, and undertakes
only limited efforts to mitigate for wetland impacts.
There are many reasons for the Corps' lack of mitigation success.
The Corps' civil works mitigation is not properly planned, and
typically calls for the creation of non-wetland habitat to ``replace''
wetlands harmed by Corps projects. It does not reflect contemporary
science and the importance of natural systems, often is riot
implemented in anything remotely approaching a timely manner, and is
not effectively tracked or monitored.
In reality, the Corps imposes far more stringent mitigation
requirements on private developers than it imposes on itself And,
unfortunately, even the more stringent mitigation requirements under
the Corps' regulatory program are alarmingly far from achieving the
goal of no net loss of wetlands.\22\ The ``actual amount of wetland
impacts offset is only about 20 percent, meaning that the section 404
permitting program has been fostering an 80 percent net loss of
wetlands.''\23\
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\22\ National Research Council, Compensating for Wetland Losses
Under the Clean Water Act 2001, at 2.
\23\ R. Eugene Turner, et al., ``Count It by Acre or Function--
Mitigation Adds Up to Net Loss of Wetlands'', National Wetlands
Newsletter, November-December 2001.
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Poor Planning.--When selecting a preferred project alternative for
its own civil works projects, the Corps frequently provides little more
than a vague indication of its intent to mitigate. Typically the Corps
does not provide: (1) a detailed mitigation plan that identifies
specific mitigation sites; (2) evidence that proposed mitigation will
produce the promised ecological benefits; (3) evidence that the
proposed mitigation can actually be implemented; (4) evidence that the
proposed mitigation is ecologically appropriate with respect to
mitigating project impacts; or (5) a detailed monitoring plan to ensure
that the mitigation produces the promised ecological results.
The lack of detailed planning leads to a variety of problems. In
the case of the Yazoo Pumps; project discussed earlier in this
testimony, lack of a detailed plan led the Corps to claim that it could
implement mitigation on lands that do not exist. Specifically, the
Corps said it could purchase conservation easements on 62,500 acres of
private agricultural land within the affected area to offset the
project's impacts, when only 9,100 acres of privately owned
agricultural land exist in that area.
Where the details of mitigation are not carefully planned, the
Corps has no ability to effectively evaluate the potential for
mitigation success. This leads to unsupportable claims--made routinely
by the Corps--that a project should proceed because mitigation will
alleviate the harms caused.
Just as importantly, where the details of a mitigation plan are not
established, the costs of mitigation also cannot be realistically
established. Since the costs of mitigation are a project cost, failure
to have--a detailed and realistic mitigation plan can seriously skew
the cost benefit analysis.
Out-of-Kind Mitigation--The mitigation that is proposed by the
Corps frequently ignores its ``interim goal of no overall net loss of
the Nation's remaining wetlands base, as defined by acreage and
function'' that was established by the Water Resources Development Act
of 1990.\24\
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\24\ 33 U.S.C. Sec. 2317(a)(1).
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The Corps ignores the functional replacement element of this goal
by frequently replacing rare aquatic and riparian habitat with more
common terrestrial habitat. This out-of-kind mitigation by definition
cannot replace lost wetland functions. The Corps has completely
abandoned the mandate to ensure ``no net loss of wetland acres'' by
consistently requiring far less than one-to-one wetland replacement.
For example, though the Corps' plan to dredge over 100 miles of the
Big Sunflower River will adversely impact 3,631 acres of wetlands, the
Corps has limited its mitigation to planting tree seedlings on 1,912
acres of frequently flooded agricultural lands.\25\ This is not
wetlands mitigation and will not replace the wetland functions that
will be lost through the project. Even if this mitigation somehow
miraculously created 1,912 acres of wetlands, it would still result in
a 47 percent loss of wetlands.
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\25\ Final Project Report and Supplement No. 2 to the Final
Environmental Impact Statement, Flood Control, Mississippi River and
Tributaries, Yazoo Basin, Mississippi, Big Sunflower River Maintenance
Project, Volume 1, Project Report, Supplemental Environmental Impact
Statement, and Appendices A-C, July 1996, at Appendix B, U.S. Fish &
Wildlife Coordination Act Report at i. At least 443 acres of bottomland
hardwood wetlands and 476 acres of farmed wetlands will be destroyed,
and an additional 2,712 acres of wetlands will be severely impacted.
Id.
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Not Implemented In A Timely Manner.--Though existing law requires
the Corps to implement mitigation prior to or concurrently with,
project construction; the Corps has exploited the somewhat vague
definition of ``concurrent'' to allow decades-long delays in the
implementation of mitigation. For example, the Corps currently is
scheduled to complete the enlargement of the Mississippi River Mainline
levees in the year 2030. That project consists of hundreds of
individual and completely separable construction projects (for example,
some sections of levees will be raised in Louisiana while others will
be raised in northern Mississippi) each with separate mitigation
requirements. The Corps nevertheless asserts that all mitigation will
have occurred ``concurrently'' as long as it is completed when the very
last portion of levee is raised in 2030 or later, even though
construction of most of the separate components will have been
completed decades earlier.
This can lead to wholesale failures in the Corps' mitigation
program. For example, by its own admission, the Vicksburg District of
the Corps has a mitigation backlog of almost 30,000 acres that it is
legally obligated to implement.\26\ Despite the fact that much of this
mitigation was to have been undertaken years ago, the Vicksburg
District has not even purchased the vast majority of the land needed to
start these efforts.
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\26\ As of June 24, 1999, the Corps' Vicksburg District was legally
obligated to implement compensatory mitigation on well over 25,000
acres that had yet to be purchased. That backlog did not include the
mitigation required in the Vicksburg District for the Mississippi River
Mainline Levee Project that includes the purchase and reforestation of
an additional 5,200 acres of frequently flooded agricultural lands.
Letter and Attachments from Joseph W. Westphal, Assistant Secretary of
the Army (Civil Works) to Melissa A. Samet, Attorney, Earthjustice
Legal Defense Fund (August 9, 1999).
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Not Tracked or Monitored.--As importantly, the Corps makes little
effort to track or evaluate the ecological success of mitigation
efforts for either its own civil works program or the Clean Water Act
Section 404 program. For example, it took the Corps almost 5 months to
identify the promised mitigation--and the mitigation backlog--in just
one of the Corps' 38 domestic Districts. And despite a specific
request, the Corps did not provide any data evaluating whether any
mitigation that was attempted in that District has been ecologically
successful. The Corps did not provide that information because it had
none to provide--a response to a later Freedom of Information Act
request revealed that no ecological monitoring had been carried
out.\27\
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\27\ Response to September 25, 2000 Freedom of Information Act
Request submitted by Melissa Samet, Earthjustice, requesting
information and data on the Corps' wetlands monitoring program in the
Vicksburg District.
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In another telling admission, the Corps has advised the General
Accounting Office that the Corps bases its evaluation of whether or not
mitigation is complete on the amount of money spent. ``According to the
Corps, the point at which 50 percent of mitigation is completed occurs
in the fiscal year in which the Corps district office's cumulative
expenditures toward the mitigation plan total at least 50 percent. of
the estimated cost of these activities.''\28\ Mitigation monitoring and
ecological success apparently do not come into play in the Corps'
determination.
---------------------------------------------------------------------------
\28\ General Accounting Office, U.S. Army Corps of Engineers
Scientific Panel's Assessment of Fish and Wildlife Mitigation Guidance,
GAO-02-574, May 2002 at 4 n.2.
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The Corps also does not track implementation of mitigation required
under the Clean Water Act Section 404 regulatory program. The General
Accounting Office has concluded that many Corps districts have touted
the success of wetlands mitigation required under the Corps' regulatory
program without having any data to support those claims and without
having bothered to assess whether the mitigation efforts have been
ecologically successful.\29\ The National Academy of Sciences also has
found that the Corps is making unsupportable decisions in its Clean
Water Act Section 404 regulatory program, which are causing profound
impacts on the nation's rivers, streams, and wetlands.\30\
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\29\ General Accounting Office, Wetlands Protection, Assessments
Needed to Determine Effectiveness of In-Lieu-Fee Mitigation, 2001, at
3.
\30\ National Research Council, Compensating for Wetland Losses
Under the Clean Water Act at 6, 2001, (``Conclusion 4: Support for
regulatory decisionmaking is inadequate''); at 6.
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Even though the Corps apparently has little idea of whether
promised mitigation is successful or even attempted, it continues to
build projects and to issue Section 404 permits based on the premise
that mitigation will correct all environmental damage. To make sound
decisions, both the Corps and the public must have ready access to
mitigation data.
Congress also recognized that it needed ready access to mitigation
information in the Water Resources Development Act of 1986. That Act
requires the Corps to include a specific fish and wildlife mitigation
plan for any project proposal submitted to Congress for authorization
after 1986, or provide Congress with a determination that the project
will have negligible adverse impacts on fish and wildlife.\31\ However,
the Corps often does not provide accurate mitigation information to
Congress, preventing Congress from honestly assessing a. project's
impacts prior to authorization.
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\31\ 33 U.S.C. Sec. 2283(d).
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Between 1986 and 2001, the Corps advised Congress that only 47 of
150 projects required. a fish and wildlife mitigation plan.\32\ It
strains credulity to suggest that only 31 percent of Corps projects
require mitigation. This is particularly true when one examines some of
the projects that did not include mitigation plans when proposed to
Congress.\33\
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\32\ General Accounting Office, U.S. Army Corps of Engineers
Scientific Panel's Assessment of Fish and Wildlife Mitigation Guidance,
GAO-02-574, May 2002 at 4. The Corps provided the mitigation planning
information for 150 projects that it says were authorized between the
Water Resources Development Act of 1986 and September 30, 2001 that
received construction appropriations. Id.
\33\ Information supporting the GAO's May 2002 Study entitled U.S.
Army Corps of Engineers Scientific Panel's Assessment of Fish and
Wildlife Mitigation Guidance. The list of projects was provided to
American Rivers by the U.S. Army Corps of Engineers upon request.
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For example, the Corps did not present a fish and wildlife
mitigation plan to Congress for the American River Watershed Flood
Plain Protection Project, which the Environmental Protection Agency has
determined will have ``adverse environmental impacts that are of
sufficient magnitude that EPA believes the proposed action must riot
proceed as proposed.''\34\ The Corps also did not provide fish and
wildlife mitigation plans to Congress for the Boston Harbor Navigation
Improvements and Berth Dredging Project or the John T. Myers and
Greenup Lock Improvements, each of which the Environmental Protection
Agency has said will have ``significant environmental impacts that
should be avoided in order to adequately protect the environment.''\35\
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\34\ The Environmental Protection Agency gave the Corps'
environmental impact statement for this project a rating of EU2. The
criteria for that rating, which includes the quote above, is described
at http://www.epa.gov/compliance/nepa/comments/ratings.html.
\35\ The Environmental Protection Agency gave the Corps'
environmental impact statements for each of these projects a rating of
E02. The criteria for that rating, which includes the quote above, is
described at http://www.epa.gov/compliance/nepa/comments/ratings.html.
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The Corps should be required to mitigate for all unavoidable harm
caused by its projects and to carry out its mitigation in a timely and
ecologically sound manner. American Rivers urges Congress to pass into
law each of the mitigation provisions in S. 646, which we believe would
significantly improve the Corps' mitigation success rate.
Among other things, S. 646 would require the Corps to mitigate
fully for the adverse environmental harm caused by its projects,
including adverse hydrologic impacts. It would require the Corps to--at
an absolute minimum--implement one acre of mitigation for each acre of
habitat harmed by a Corps project, and to ensure that each mitigation
plan reflects contemporary science and the importance of natural
systems. It would require the Corps to develop a specific mitigation
plan flat includes monitoring for each project.
S. 646 also would require the Secretary of the Army to determine
that the mitigation plan has the greatest possibility of cost-
effectively and successfully mitigating' the adverse impacts of a
project, before the Corps can proceed with that project.
To ensure timely implementation of mitigation, S. 646 also
clarifies the definition of ``concurrent'' mitigation to require that
50 percent of mitigation be completed before project construction
begins.
S. 646 further requires the Corps to set up a publicly accessible
system to track promised and implemented mitigation, both for the
Corps' civil works program and its regulatory program.
Each of these mitigation reforms is critical for ensuring the
protection and restoration of the nation's rivers, streams, and
wetlands. Without these provisions, the Corps will have no hope of
meeting its statutorily established goal of ensuring no net loss of
wetlands as defined by acreage and function. And the Nation will
continue to lose key resources necessary to protect water quality,
provide habitat for fish and wildlife, and provide protection from
flooding.
CONGRESS SHOULD ENSURE THAT THE CORPS' COST BENEFIT CRITERIA COMPLY
WITH FEDERAL LAW AND LONGSTANDING FEDERAL POLICY
The Corps currently can, and does, claim project benefits for
draining wetlands--an activity that undeniably harms the environment
and that requires mitigation. For example, over 83 percent of the
benefits of the Yazoo Pumps project are derived from draining wetlands
to promote increased agricultural production on marginal lands that
have always flooded. As I discussed earlier, EPA has concluded that the
Yazoo Pumps will drain and damage more than 200,000 acres of
ecologically significant wetlands. Approximately 150,000 of those
wetland acres are located within the 2-year floodplain.
Claiming project benefits from the draining of wetlands is directly
at odds with the mandates of the Clean Water Act Section 404(b)(1)
Guidelines (which apply to Corps projects), the implementing
regulations of the National Environmental Policy Act, and long-standing
national wetlands protection policies, national farm policies, and
national floodplain policies. It also is wholly inconsistent with the
Corps' environmental protection mission and with the Corps' statutorily
mandated goal of no net loss of the nation's wetlands. Specifically:
<bullet> This practice is at odds with the implementing regulations
of the National Environmental Policy Act, and the Section 404(b)(1)
Guidelines, both of which require mitigation for wetland impacts that
cannot be avoided. 40 C.F.R. Sec. 1508.20; 40 C.F.R. Sec. 230.10(d).
<bullet> This practice is at odds with Executive Order 11990, which
since 1977 has directed every Federal agency to provide leadership and
take action to minimize the destruction, loss, or degradation of
wetlands, and to preserve and enhance the natural and beneficial values
in carrying; out agency responsibilities. Indeed, this Executive Order
specifically compels the Corps to avoid draining, dredging, and filling
wetlands.\36\ The courts have held that Executive Order 11990 is
judicially enforceable and should be given the full force and effect of
law.\37\
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\36\ Protection of Wetlands Executive Order (Executive Order
11990), reprinted in 42 U.S.C. Sec. 4321. As importantly, Executive
Order 11990 provides that each Federal agency: ``shall avoid
undertaking or providing assistance for new construction located in
wetlands unless the head of the agency finds (1) that there is no
practicable alternative to such construction, and (2) that the proposed
action includes all practicable measures to minimize-harm to wetlands
which may result from such use.'' Id. at Section 2(a). The term ``new
construction'' is defined to include ``draining, dredging,
channelizing, filling, diking, impounding and related and any
structures or facilities begun or authorized after the effective date''
of the Executive Order. Id. at Section 7(b).
\37\ City of Carmel By-the-Sea v. United States Dep't of
Transportation, 123 F.3d 1142, 1166 (9th Cir. 1997); City of Waltham v.
United States Postal Service, 786 F. Supp. 105, 131 (D. Mass. 1992).
The courts also have found that this Executive Order imposes duties on
Federal agencies beyond those of NEPA. It requires a specific finding
that no practicable alternative to the proposed action exists. City of
Carmel, 123 F.3d at 1167.
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This practice is at odds with national farm policy and the Federal
Government's significant efforts to take excess and environmentally
sensitive croplands out of production, and to remove incentives for
draining wetlands to enhance crop production.\38\
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\38\ The Food Security Act of 1985 and the Erodible Land and
Wetland Conservation Program, 16 U.S.C. Sec. 3801 et seq., encourage
the removal of fragile lands from production and provide various
opportunities for wetland habitat protection and restoration. A special
conservation provision in this Act, known as ``Swampbuster,'' removes
incentives for draining wetlands by eliminating most agricultural
subsidies to farmers who drain wetlands to enhance crop production, or
who produce commodities on wetlands converted after 1985.
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For floodplain wetlands, this practice is at odds with Executive
Order 11988, which since 1977 has directed all Federal agencies to take
action to ``restore and preserve the natural and beneficial values
served by floodplains'' in carrying out their water resources
activities. This Executive Order was passed to help reduce flood
damages by protecting the natural values of floodplains and reducing
unwise land use practices in the nation's floodplains.
This practice is at odds with the long-standing bipartisan national
policy of no net loss of wetlands which was established under the first
Bush Administration, and which was codified as to the Corps in the
Water Resources Development Act of 1990.
Congress should put a stop to this outdated practice. American
Rivers strongly urges Congress to prohibit the Corps from claiming
project benefits for increased value of privately owned property and
services, or increases in the quantity of privately owned property,
derived from draining wetlands, as provided in S. 1987 and S. 646.
CONCLUSION
American Rivers respectfully urges Congress to act quickly and
decisively to restore credibility to the Corps' civil works program.
The absence of meaningful review, the absence; of clear requirements to
ensure full and ecologically sound mitigation, and outdated methods of
predicting project benefits, have created a climate where abuse has
flourished. Without these long overdue reforms, these abuses will
continue and the environment and the taxpayers will continue to suffer.
'We urge you not to pass another Water Resources Development Act unless
these reforms are included. American Rivers would like to work with the
Committee to make these reforms a reality.
Statement of the National Association of Flood and Stormwater
Management Agencies
The National Association of Flood and Stormwater Management
Agencies is very pleased to have the opportunity to submit this
testimony to the committee for consideration on an issue of importance
to the NAFSMA membership.
BACKGROUND ON NAFSMA
NAFSMA represents more than 100 local and state flood control and
stormwater management agencies serving a total of more than 76 million
citizens and has a strong interest in this important legislation.
NAFSMA's members are public agencies whose function is the
protection of lives, property and economic activity from the adverse
impacts of storm and flood waters. NAFSMA member activities are also
focused on the improvement of the health and quality of our nation's
waters.
The mission of the association is to advocate public policy,
encourage technologies and conduct education programs to facilitate and
enhance the achievement of the public service functions of its members.
Many of NAFSMA's members are currently involved in ongoing water
resources projects with the Corps of Engineers, including flood
management and environmental restoration projects.
Since the organization was formed in 1979, NAFSMA has worked
closely with the U.S. Army Corps of Engineers and other Federal
agencies, including the U.S. Environmental Protection Agency and the
Federal Emergency Management Agency in numerous efforts. Our members
have supported the concept of cost sharing as first authorized in WRDA
86 and a group of our members worked closely with the Corps to redesign
what is now the Project Cooperation Agreement in the early 1990's.
We have supported new initiatives such as the Corps Challenge 21
riverine restoration and other environmental restorations initiatives
as a necessary complement and vital tool to add to the Corps ability to
meet environmental challenges in their traditional water resource
projects.
NAFSMA very much appreciates the Committee's commitment to hold
hearings to keep WRDA on its biennial renewal process. NAFSMA members
are on the front line protecting their communities from loss of life
and property and therefore the organization is keenly aware that flood
management measures are a necessary investment required to prevent loss
of life and damages to people's homes and businesses. Flood management
is a wise investment that will pay for itself by preserving life and
property and reducing the probability of repeatedly asking the Federal
Government for disaster assistance.
NAFSMA RELATIONSHIP WITH THE CORPS
Over the past twenty years of NAFSMA's existence, our relationship
and the role of our agencies and the Corps of Engineers has changed.
Our members are dedicated to looking at both non-structural and
structural approaches to flood management. Environmental restoration is
a key focus of our member agency missions as well as the Corps. Urban
stream restoration and other similar projects have been undertaken and
have been quite successful.
We are proud of the commitment of our member agencies to protect
and restore the environment. The Corps is an important partner to state
and local agencies in carrying out these environmental restoration
initiatives.
NAFSMA firmly believes that the Corps has the technical
capabilities and expertise to carry out its stated missions. The Corps
must have the funding resources to maximize the public benefits that
can be obtained from the Corps capabilities and expertise.
The Corps has strengthened and improved its partnership with the
non-Federal sponsors over recent years. This partnership can continue
to be strengthened and improved with some new policy initiatives.
Changes in the Water Resources Development Act this year will help our
member agencies better carry out their evolving missions and
responsibilities. I would like to describe some of those issues for you
today.
POLICY INITIATIVES FOR WRDA 2002
It is important to preface comments about WRDA with NAFSMA's
position that the organization encourages Congress to make sufficient
annual appropriations that support those projects and programs
previously authorized and those yet to be authorized. As non-Federal
sponsors, it is often difficult to keep project costs down and ensure
the continuation of the local cost share funding while project costs
escalate due to lack of matching Federal appropriations.
COST SHARING FOR FEDERALLY PARTNERED FLOOD CONTROL PROJECTS
NAFSMA supports the current Federal project cost sharing for flood
control activities of 65 percent Federal/35 percent non-Federal. We
also support the development of incentives to implement floodplain
management measures above the minimum measures, allowing the project
cost sharing to be modified upwards to 75 percent Federal/25 percent
local. Decisions as to whether local communities would qualify for
improved cost sharing could be based on the community's rating under
the National Flood Insurance Program Community Rating System or
submission of a floodplain management plan that substantially exceeds
minimum requirements.
Such an approach has already been passed by the California state
legislature and is currently implemented at the State level for State
participation with local agencies in Corps-partnered projects.
We know that in the past, a number of interests have proposed that
this cost sharing be reduced to a 50/50 Federal/non-Federal approach.
NAFSMA is strongly opposed to such a move. This type of change would
keep critical public safety projects from moving forward.
CREDIT FOR IN-KIND SERVICES
NAFSMA supports that local cost sharing requirements be allowed to
be met in its entirety by local in-kind services. We also urge that
credit toward the non-Federal share of the cost of authorized flood
control, ecosystem restoration projects, or other Corps-partnered
projects include all work that is determined to be an integral part of
the project (such as the cost of design and construction) for work
undertaken before the signing of the Project Cooperation Agreement
(PCA).
ENCOURAGE MULTI-OBJECTIVE INITIATIVES WITHIN WRDA
Within the Water Resources Development Act, NAFSMA urges the
Committee to include language that would encourage multi-objective
efforts, to include flood management, river restoration, recreation,
environmental preservation and enhancements. Such an approach would
produce long-lasting multiple benefit projects for communities
throughout the nation.
Although we can currently do combined flood damage reduction and
environmental restoration, with some difficulty, under the Corps
General Investigation Program, multiple objective projects cannot be
done through the more efficient Continuing Authorities Program for
small projects, such as flood control projects (Section 205),
environmental restoration (Section 1135.) or, aquatic restoration
(Section 206).
NAFSMA recommends combining all the continuing authority programs
into a single program that allows inclusion of any of the benefits
presently provided for in the individual continuing authority programs,
or establishing anew continuing authority program for multi-objective
projects. We are learning that single purpose projects do not meet the
demands of today's society and are less efficient to implement.
REVISION OF CURRENT NED POLICIES
NAFSMA recommends the review and revision of current National
Economic Development (NED) policies to encourage more environmentally
sensitive, multi-objective flood management projects.
NAFSMA supports the Corps movement in this direction through their
development and use of the National Ecosystem Restoration (NER) plan
process for project formulation of ecosystem restoration projects.
NAFSMA encourages the melding of NED and NER approaches to achieve
multi-objective projects.
CONTINUED SUPPORT FOR SECTION 211 INITIATIVES
NAFSMA supports policies and programs, such as Section 211 of WRDA
1996, that allow local implementation of Federal projects where
advantages and effectiveness can be demonstrated and provide for
reimbursement.
MAXIMIZE THE BENEFIT OF THE USE OF FEDERAL FUNDS
NAFSMA is concerned about some of the approaches suggested for
Corps reform. NAFSMA encourages a process and funding mechanism to
maximize the benefit of the use of Federal funds for federally
authorized projects. The following items address this issue.
Independent Peer Review
NAFSMA opposes efforts to add external independent peer review to
the approval process for federally partnered flood control or
environmental restoration projects. Corps projects presently go through
an extensive review process that includes review and involvement by the
U.S. Environmental Protection Agency, Fish and Wildlife and others.
While there are constituencies promoting such reviews under the
umbrella of cost savings and better use of Federal tax dollars, the
addition of such a review process would only serve to slow down the
process for much-needed flood management projects and increase the cost
of such projects at both the non-Federal and Federal levels.
A logical sequence of events is to consider this issue after a
thorough review of the congressionally requested National Academy of
Sciences study on the feasibility of independent review panel. The
study is expected to be released in July.
We understand that independent review panels are being recommended
because the Corps feasibility study and project authorization process
is believed by some not to fulfill the program's intent. That being the
situation, NAFSMA suggests that first consideration be given to a
review and correction of the existing feasibility and authorization
process before adding an additional process such as independent review.
NAFSMA would be supportive of language to encourage partnerships
that are formed early and amongst all parties, including the regulatory
agencies, whose goal is to seek participant consensus on the
recommended flood management and watershed enhancement projects.
Benefit Cost Ratio
NAFSMA opposes increasing the current benefit cost ratio for water
resources projects subject to benefit cost analyses. The benefit cost
ratio should not be the sole criteria for project screening. Non-
Federal sponsors and the Corps are moving toward multi objective
environmentally sensitive projects to better address public needs and
maximize the use of Federal funds. Increasing the benefit cost would
hinder that approach. We are also concerned that disadvantaged areas
would be discriminated against with this higher benefit cost ratio.
Non-Federal sponsors need to be involved in any effort to examine
changes to the current benefit cost ratios.
NAFSMA supports review of all laws, regulations, policies,
procedures, and guidance to determine what changes are required to
expedite implementation of flood management and/or watershed
enhancement projects, without the project suffering in quality. An
example would be the elimination of the Preconstruction, Engineering
and Design (PED) agreement.
NAFSMA urges Congress to authorize a process and Federal funding
mechanism for nonfederal sponsor developed projects to maximize the
benefit of the use of Federal funds for federally authorized projects.
This would include local sponsors taking the lead in design and/or
construction in partnership with the Corps on federally authorized
projects.
Deauthorization of Backlogged Projects
Deauthorization of projects in the backlog should occur only where
the Non-Federal sponsor no longer expresses desire to participate.
NAFSMA believes that revocation of an authorization or commitment to
the public without public support would be inappropriate.
Deauthorization efforts shouldn't apply to projects.where non-Federal
sponsors have expressed a desire to participate, such as having
executed Preconstruction, Engineering and Design (PED) agreements,
Project Cooperation Agreements (PCA's) or initiated actions on Lands,
Easements, Rights-of-way, Relocations, Disposal Areas (LERRDS).
Review Of Corps Projects That Have Exhausted Their Project Life
NAFSMA encourages Congress to authorize the Corps to develop
Guidance and Policy for reevaluation of Corps-constructed or federally
authorized flood control projects that have reached or surpassed their
project life.
The guidance and policy should include at a minimum, an option for
de-authorizing all or portions of the project, cost shared
implementation of alternatives, such as nonstructural approaches that
provide the same benefits, or cost shared reconstruction without going
through the rigors required of new projects. NAFSMA is prepared to
assist in developing such guidance.
Early Attention to Environmental Issues and Potential Benefits and
Impacts
NAFSMA supports and encourages the Corps of Engineers to make
personnel available to participate early and throughout the planning,
design and permitting phases of new civil works projects to address all
environmental issues and regulations in order to obtain the necessary
permitting in a timely and uncontested manner.
Assessment of ``True Costs'' During Feasibility
NAFSMA advocates the Federal Government to assure the true costs
and benefits incurred by the local sponsor for Lands, Easements,
Rights-of-way, Relocations, Disposal Areas, construction, environmental
mitigation, operation and maintenance are considered during the
feasibility phase of the project. The true costs include those costs
mandated by laws, rules, and regulations of local, state, and Federal
Governments.
Full-Credit for Project Related Expenses, Including CERCLA
NAFSMA supports non-Federal sponsors receiving full credit for all
legitimate project related expenses, similar to credit received by the
Corps for project related expenses. NAFSMA members also urge Congress
to make Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) activities necessary for project execution
eligible for cost-sharing credit.
CONCLUSIONS
In closing, NAFSMA very much appreciates the technical
capabilities, expertise and the commitment of the Corps representatives
that we work with at the District, Division and Headquarters. We also
appreciate the Committee's commitment to move forward with a WRDA bill
this year. We pledge to work with you and the Corps to improve the
project review process, to use a multi-objective approach to the
nation's water resources activities, to keep the costs of projects down
and maximize the benefits of Federal, state and local tax dollars.
__________
Yellowstone River Conservation District Council,
Billings, MT., July 26, 2002.
Hon. James Jeffords,
Chair, Environment and Public Works Committee,
U.S. Senate,
Washington, DC.
Dear Senator Jeffords: Since 2000, the Yellowstone River
Conservation District Council has been engaged as the local partner in
a study authorized by section 431 of the Water Resources Development
Act of 1999. This legislation directed the Army Corps of Engineers to
conduct a comprehensive study of the Yellowstone River to determine the
hydrologic, biological, and socioeconomic cumulative impacts on the
river.
The Council would like to take this opportunity to enter comments
related to the Yellowstone River Study into public comment record of
the WRDA 2002 legislation.
We would first like to call attention to the efforts of the
principal Corps representatives, Mr. Don Becker and Mr. Ralph Roza,
Omaha District of the Corps, for their hard work in accommodating our
exhaustive public involvement process and their efforts on behalf of
the Study. They have been very responsive and helpful as the Council
has sought to understand and participate in the process that will lead
to the successful Implementation of the Study. The Council acknowledges
that taking on such a wide-ranging study rather than a proposed water
project is new territory and is hence a unique effort for the Corps,
and we appreciate their hard work.
Our other reason for writing is to offer a few observations based
on our own experience to date, which may offer insight on how to help
ensure the success of this and other such projects in the future. In
the spirit of constructive cooperation, the Council offers these
observations:
Allow sufficient time to establish local buy-in.--The Council
recognizes that the process we are going through is valuable, albeit
lengthy and difficult given the complex nature of public involvement.
In particular, while the Council, its Resource and Technical Advisory
Committees, and its active partner the Yellowstone Conservation Forum
make up a very diverse group, its members are committed to working
together to find the areas on which we can agree and support each
other.
One of the Council's fundamental goals for this study is to create
information and tools that have practical application for the local and
regional users of the river, This means that adequate time needs to be
given to building the local buy-in that is crucial in order for such
studies to enjoy support and success over the life of the study. This
is critical and time-consuming since the study covers eleven counties
and six hundred miles.
Provide a flexible framework for proceeding.--The Corps currently
uses a process designed to investigate and engineer proposed water
projects as the framework for defining how to proceed with this study.
This type of procedure seems to work well for water development
projects, but it is cumbersome for a cumulative effects study such as
ours:
<bullet> The collaborative nature of the Study, combined with
stringent contractual commitments for cost sharing means that the local
partners and their constituents must thoroughly understand a process
whose structure has little to do with the study. This is time-consuming
and expends resources that could be spent elsewhere, such focusing
specifically on the design and execution of the study. Because legal
requirements for entering cost share agreements can vary across
potential sponsors, the required use of institutional `boilerplate'
legal language without a means for tailoring it can present a
substantial roadblock for local entities attempting to enter into such
cooperative agreements. While such a mechanism works well for water
projects, studies can have considerably more flexibility and offer more
ways for partners to share the cost of the Study through their own
contracting or in-kind assistance.
Strengthen the Corps' ability to enter into cooperative agreements
with local partners.--Many Federal agencies successfully use such
agreements. For example, the Conservation Districts in this area have a
history of entering into flexible and creative agreements with the
NRCS. This develops sound participation with local sponsors and
promotes local buy-in, contributing to the overall success of such
studies.
Increase flexibility of funding.--An effort such as the current
study can and should draw on local expertise and past work performed by
local entities. However, there is little procedural room to assign a
monetary value on past work, even if that work is integral to and will
be included as part of the ongoing study. If these efforts could be
included in the local cost share, this would foster more local
participation, because they share the costs of the work. In addition,
the crucial local acceptance and buy-in is much greater if the work of
the community is not only used in the study, but it is valued in a
tangible--i.e., available for cost-sharing--way as well.
One of the outcomes we hope will result from these collaborative
efforts are recommendations for best management practices that will
stand up under rigorous challenges. We are looking forward to working
with the Corps on these goals, and making the study a success.
Thank you for the opportunity to submit these comments.
Respectfully and on behalf of the Yellowstone River
Conservation District Council,
Barbara Yoder,
YRCDC Coordinator.
______
Yellowstone River Conservation District Forum,
Billings, MT., July 28, 2002.
Hon. James Jeffords,
Chair, Environment and Public Works Committee,
U.S. Senate,
Washington, DC.
Dear Senator Jeffords: This is letter to in support of the
Yellowstone River Conservation Districts Council's (YRCDC) letter,
dated June 26, 2002, explaining the process the stakeholders along the
Yellowstone River have been involved in as a result of the Water
Resource Recovery Act of 1999's mandate for the Army Corps of Engineers
(Corps) to complete a cumulative impacts study for the 692-mile long
Yellowstone River. This mandate also required that the public be
included in this process which takes time. For the record, the
Yellowstone River Conservation Forum (Forum) was in support of the
mandate.
To date, the Corps has been determining Federal involvement through
their Reconnaissance Phase at the cost of $100,000; whereas, their
potential cost-share partners have been doing actual research for the
studies to be done during the Feasibility Phase and working to ensure
public involvement. The potential partners did this work prior to the
25 percent to 75 percent Cost-Share Agreement (CSA) being signed. As an
active partner with the YRCDC, who is one of the proposed signers of
the CSA, the Forum, comprised of 22 cooperating conservation groups,
believes that the Federal interest came from the Congressional mandate.
Because the process has been unwieldy, the Forum believes that
language should be prepared that will:
<bullet> Have the Corps come up with a process for cumulative
impact studies to include all the stakeholders and governmental
regulatory and management agencies in a public process that will
identify the needed studies, implementation of the studies and a draft
of results and recommendations for future river use. This process would
not include the current reconnaissance and feasibility steps used for
decisions for a project.
<bullet> Allow partners in the CSA to use funds they have expended
for research done primarily for the project studies prior to the
signing of the CSA as part of their in-kind services.
With the Corps working toward consensus on reform, the Forum
believes this would be an ideal opportunity for a different process to
be implemented.
Thank you for your consideration in this matter.
Sincerely,
Kathleen K. Blehm,
Project Liaison Officer.
<all>