[Senate Hearing 106-951]
[From the U.S. Government Publishing Office]
S. Hrg. 106-951
U.S. ARMY CORPS OF ENGINEERS' BACKLOG OF AUTHORIZED PROJECTS AND FUTURE
OF THE CORPS' MISSION
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HEARING
BEFORE THE
SUBCOMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
OF THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MAY 16, 2000
__________
Printed for the use of the Committee on Environment and Public Works
U.S. GOVERNMENT PRINTING OFFICE
68-420 cc WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
one hundred sixth congress
BOB SMITH, New Hampshire, Chairman
JOHN W. WARNER, Virginia MAX BAUCUS, Montana
JAMES M. INHOFE, Oklahoma DANIEL PATRICK MOYNIHAN, New York
CRAIG THOMAS, Wyoming FRANK R. LAUTENBERG, New Jersey
CHRISTOPHER S. BOND, Missouri HARRY REID, Nevada
GEORGE V. VOINOVICH, Ohio BOB GRAHAM, Florida
MICHAEL D. CRAPO, Idaho JOSEPH I. LIEBERMAN, Connecticut
ROBERT F. BENNETT, Utah BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas RON WYDEN, Oregon
LINCOLN CHAFEE, Rhode Island
Dave Conover, Staff Director
Tom Sliter, Minority Staff Director
------
Subcommittee on Transportation and Infrastructure
GEORGE V. VOINOVICH, Ohio, Chairman
JOHN W. WARNER, Wyoming MAX BAUCUS, Montana
CHRISTOPHER S. BOND, Missouri DANIEL PATRICK MOYNIHAN, New York
JAMES M. INHOFE, Oklahoma HARRY REID, Nevada
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
LINCOLN CHAFEE, Rhode Island JOSEPH I. LIEBERMAN, Connecticut
(ii)
C O N T E N T S
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Page
MAY 16, 2000
OPENING STATEMENTS
Bond, Hon. Christopher S., U.S. Senator from the State of
Missouri....................................................... 8
Graham, Hon. Bob, U.S. Senator from the State of Florida......... 12
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 14
Smith, Hon. Bob, U.S. Senator from the State of New Hampshire.... 11
Thomas, Hon. Craig, U.S. Senator from the State of Wyoming....... 10
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 1
WITNESSES
Brinson, Ron, President and CEO, New Orleans Port Authority...... 27
Prepared statement........................................... 53
Responses to additional questions from Senator Smith......... 57
Faber, Scott, Senior Director of Public Policy, American Rivers.. 29
Prepared statement........................................... 61
Responses to additional questions from:
Senator Baucus........................................... 65
Senator Smith............................................ 65
MacDonald, Tony B., Executive Director, Coastal States
Organization................................................... 31
Prepared statement........................................... 66
Parrish, William, vice chairman, Association of Flood Plain
Managers; Chief, Hazard Mitigation Planning, Maryland
Department of Environment...................................... 34
Prepared statement........................................... 69
Responses to additional questions from Senator Smith......... 71
Tornblom, Claudia, Deputy Assistant Secretary of the Army
(Management and Budget), U.S. Department of Defense............ 15
Prepared statement........................................... 48
Van Winkle, Major General Hans A., Deputy Commanding General for
Civil Works, U.S. Army Corps of Engineers, U.S. Department of
Defense........................................................ 17
ADDITIONAL MATERIAL
Statements:
Brunetti, Wayne, New Century Energies, Inc................... 74
Grugett, George, Mississippi River Flood Control Association. 72
Responses to additional questions from Senator Smith..... 73
McCrary, Charles D., Southern Company Generation............. 76
(iii)
U.S. ARMY CORPS OF ENGINEERS' BACKLOG OF AUTHORIZED PROJECTS AND FUTURE
OF THE CORPS' MISSION
----------
TUESDAY, MAY 16, 2000
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:10 a.m. in
room 406, Senate Dirksen Building, Hon. George V. Voinovich
(chairman of the subcommittee) presiding.
Present: Senators Voinovich, Bond, Smith, Thomas, Graham
and Lautenberg.
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH,
U.S. SENATOR FROM THE STATE OF OHIO
Senator Voinovich. The hearing will please come to order.
Today's hearing is intended to be a backdrop to our
consideration of the Water Resource Development Act of 2000.
Last week we had a full committee hearing on the Comprehensive
Everglades Restoration Plan which will be the cornerstone of
this year's WRDA bill.
On May 23, the subcommittee is scheduled to hold its
initial WRDA hearing. However, I felt it was extremely
important to have this hearing today prior to our first WRDA
hearing to discuss a major point of concern that I have. I
asserted this concern as the full committee hearings on the
Comprehensive Everglades Restoration Plan were held.
As most of my colleagues know, Congress passes Biannual
Water Resources Development Act with billions of dollars of new
authorization for projects and programs and assumes the money
will be available to build these projects.
The stark reality is that the current levels of
construction appropriations for the Corps water resource
projects, we already have more water resources projects
authorized for construction than we can complete on any
efficient construction schedule.
At the current low levels of construction appropriations,
it would take 25 years to complete the active projects in the
backlog without even considering additional project
authorizations.
Currently, the Corps has a backlog of over 500 active
authorized projects with a Federal cost to complete these
projects of about $38 billion. I want to emphasize the words
``active projects.'' These are projects that have been recently
funded, economically justified and supported by a non-Federal
sponsor.
If we included the outdated, unneeded authorized projects,
the backlog figure would be almost 800 projects at a cost of
$46 billion.
Let me make this one point on the obsolete projects. We
have made an excellent start in WRDA 86 to deauthorize these
projects. We need to accelerate the process.
The Administration has a proposal to speed up that
deauthorization process and it merits our serious
consideration.
However, deauthorizing inactive and outdated projects will
have relatively little impact on the backlog which is largely
made up of active projects which have positive benefit-cost
ratios and a willing, capable, non-Federal sponsor.
Chart One, which we have here and the members of the
committee have a copy before them, shows the general breakdown
of the backlog by project purpose. You can see that it covers
the full range of traditional Corps projects including
navigation, flood control, shore protection projects,
hydropower project rehabilitation, and recreation-plus projects
and the major new emission area of environmental restoration.
Projects in the other new mission areas of remediation of
formerly used nuclear sites that we call fuse wrap and
environmental infrastructure are also in the mix. So there are
quite a few categories of projects.
Why this backlog? There are a couple of reasons. The first
and most significant is the decreasing Federal investment in
water resources infrastructure.
Chart Two, and this is very interesting, Chart Two
dramatically illustrates what has occurred. It shows our
capital investment in water resources infrastructure since the
1930's shown in constant 1999 dollars as measured by the Corps
of Engineers Civil Works Construction appropriation, you can
see the sharp decline from the peak in 1966 of a $5 billion
appropriation and appropriations through the 1970's in the $4
billion level to the 1990's where annual Corps construction
appropriation have averaged only around $1.6 billion.
The second reason for the backlog is that we are asking the
Corps of Engineers to do more with less. We have a series of
charts in front of you showing the breakdown by mission area
for the Corps construction appropriation by representative year
from the decades of the 1960's, 1970's, and 1990's.
These charts are going to show that the mission of the
Corps has grown substantially. If we look at Chart Three you
will see that in fiscal year 1965 there were three large
dominant mission areas: flood control, navigation and
hydropower, with a low level of spending for recreation
development.
Switching to Chart four, in fiscal year 1975 you can see
the big three of flood control, navigation and hydropower but
with increased recreation spending. In fiscal year 1975 shore
protection enters the picture and the first tiny wedge of
environmental restoration work emerges.
When we talk about environmental restoration work, we are
talking about habitat protection, restoration of particularly
wetlands and aquatic habitat.
Now in Chart Five, in the 1990's we see a dramatic mission
increase with environmental restoration as a significant
mission area and two new mission areas of environmental
infrastructure and remediation of formerly used government
nuclear sites.
Environmental infrastructure as contrasted with
environmental restoration includes such work as construction of
water plants and sewerage treatment facilities. Again, we can
see we are broadening the scope of the Corps of Engineers.
Now, what is the point of this? Well, if you recall our
second chart, the Corps' construction appropriations have been
falling since 1965 and it fell sharply in the 1990's. At the
same time the Corps' mission has been growing. The result is
today's huge backlog of projects.
The final chart illustrates where we are. This shows the
recent construction requests by the Corps of Engineers and the
anticipated future requests in the areas of navigation, flood
control, shore protection, hydropower, environmental
restoration, environmental infrastructure, recreation,
remediation of formerly used sites, Everglades restoration
work, and the anticipated future requests we continue to
authorize.
As you can see, the budget requests, which are constrained
by Administration budget policy, are far short of historic
funding levels and are in the range of about $2.5 billion and
anticipated to approach $3 billion in 2010.
So it is obvious, we need another billion, at least, and if
we are going to look at projections, another $2 billion more
than what we are spending to respond to the needs that we have.
If we don't receive that money, the result will be an even
greater backlog and inefficient construction schedules.
What should be done? First, I think our witnesses will tell
us that the needs are not going away. Given that reality, I
think we need to significantly increase the construction
appropriation of the Corps of Engineers.
I think a doubling of the current construction
appropriations would be appropriate. I am a fiscal
conservative, but there are certain areas where the Federal
Government has an appropriate role.
I think navigation, flood control, restoration of
nationally significant environmental resources like the Florida
Everglades are areas where the Federal Government does have a
role.
In this regard recently the House passed the Conservation
and Reinvestment Act, CRA, which authorizes $2.8 billion in
expenditures for land acquisition, coastal conservation,
wildlife conservation and historic preservation.
One wonders if anyone ever sits down and weighs the unmet
Federal and non-Federal roles versus the poll-driven spending
too often by Congress. Does the left hand know in the
Administration, or for that matter, in Congress, what the right
hand is doing?
We just keep going on with new projects and we have great
unmet needs. Does anybody ever put them on the scale and
balance them?
Second, I think we need to control emission creep of the
Corps. For example, even though I have obtained a limited
authority for the Corps for environmental infrastructure in
Ohio, I am not convinced that there is a Corps role in water
and sewerage plant construction. That should be a State and
local responsibility with some Federal assistance through the
State revolving loan funds.
We will never get control of the backlog if the mission of
the Corps continues to creep.
Finally, I think we need to assure that the Corps process
of planning and recommending projects is open, objective, and
inclusive and the project evaluation meets the highest
standards of professionalism and quality.
We must be able to continue to rely on the Corps to
recommend to the Congress for authorization and funding only
projects that make maximum net contributions to the economic
development and environmental quality of this country.
These are some pretty weighty issues and I am eager to hear
what our witnesses have to say about our responsibility to meet
our national water resources needs effectively and efficiently
and whether we should narrow the scope of projects being
considered for authorization by this committee.
The Senator from Missouri was first today. And we are lucky
to have with us the chairman of the committee.
The Senator from Missouri.
OPENING STATEMENT OF HON. CHRISTOPHER S. BOND,
U.S. SENATOR FROM THE STATE OF MISSOURI
Senator Bond. Thank you very much, Mr. Chairman. I would be
happy to let our distinguished committee chairman go ahead or
you can come back and clean up and go after us and straighten
out anything that you disagree with.
I very much appreciate your efforts to hold this hearing. I
wish I could stay for the entirety, but this is a busy time, as
you know, and I am going to have to leave.
I welcome Dr. Westphal's representative, Ms. Tornblom,
before us today. I know the Civil Works has done its best to
survive the crossfire you must often find yourselves in more
frequently than not these days. You have always been responsive
and worked hard to try to balance the difficult and competing
issues that land on your desk.
In my opinion, you have done so not only without the
support of the White House political leaders, but you have done
so despite some active attempts to undermine the Corps.
You don't need to consult the pollsters to tell us who the
least favorite agency at the White House is. But the future of
the Corps is critical to my State and many situated States in
this Nation that understand how critical, one only has to look
at the history of the Corps, the chairman did an excellent job
of outlining some of the vitally important projects that have
been undertaken in the past.
The record of the Corps in terms of flood damage prevented,
lives saved, economic development and other national benefits
speaks for itself.
To understand the broad, bipartisan support for the mission
of the Corps, you look at the programs and the projects funded
by this Congress and the politics suggested by this
Administration that the Congress has rejected.
The new policy that we will reject on a bipartisan basis, I
predict, is the proposal to raise local cost share from 35
percent to 50 percent which creates a class system of flood
control whereby only rich urban communities with very
significant financial resources and bonding authority can
protects their homes or jobs.
When you talk about local flood control, frankly, that is
where floods happen. Floods happen locally. They don't happen
on some great flood starting elsewhere. They start with a hole
in the levee or a rise in a creek someplace and that is what
happens.
Now, I have a couple of issues on which I would welcome the
comments of the Civil Works in the Corps. One has to do with
the situation we are now in, on the outside looking in, as the
Fish and Wildlife Service drafts the new Missouri River
Management Plan.
Well, many in this room may disagree honestly and
passionately about where this should go, but I regret that the
U.S. Government, the Federal Government, directed the Corps to
work with the agencies and the States, the directly affected
States, to seek a consensus, and 5 years, scores of meetings,
difficult negotiations, negotiations where my State didn't
always come out a winner, but after all of that, Washington has
turned around, thrown out that work, and turned it over the
Fish and Wildlife Service.
If Fish and Wildlife should have had it in the first place,
then Washington shouldn't have been wasting the time, the
resources and the energy of the State who naively thought that
Washington was serious about listening to them.
This is a major change in policy and, I believe, a
subversion of process which is absolutely indefensible.
Another apparent swan song from the White House and CEQ are
the new eleventh hour proposed guidelines designed to make
flood control more difficult to achieve.
These came out of the White House and I need to know if
rewriting these guidelines will be subject to public comment
and which of the existing projects will be revisited.
Also, Ms. Tornblom, for the record, will you provide the
subcommittee your analysis of what our foreign competitors are
doing with respect to modernizing their water resources?
I know Dr. Westphal is abroad meeting with other agencies.
I would like to find out what is going on in other countries.
As much as we would like to pretend that the rest of the world
is not relevant, I don't believe we can answer that question,
which is a subject of this hearing, without the context of
knowing what is going on in water projects in other countries.
Finally, I welcome other panelists here today, the
representative from American rivers who has been very active in
my region and who has been willing, on occasion, to take the
risk of developing a balanced consensus on river management, a
representative who has been fair in dealings with me and we
have even conspired a time or two to work on environmental
legislation.
These efforts deserve some credit for the trend we all
support to make the Corps projects as great as possible.
I do want to raise one issue with respect to the literary
license and that has to do with a column that appeared in the
latest issue in which they castigated the projects, which is
your prerogative, and I think that is something you may want to
do, but it also, I believe, went far beyond the pale and made
significant derogatory comments about the military leaders.
I think people who have distinguished records of military
service, have been decorated for their honor and sacrifice,
served tours in Vietnam and Desert Storm, and deserve not to be
trashed in public.
They deserve some more respect than is incorporated in the
editorial which convicts them of wrongdoing and suggests that
top military leaders who contributed to this culture and gave
direct orders to cheat should be digging latrines in Kosovo by
the time you read this.
I can assure you that I don't always agree with Corps
officials either. There are investigations ongoing which should
and must resolve the issues that have been raised.
I was disappointed to see this attack on the people in the
Corps. I believe I these difficult times when we disagree with
policies, we ought to keep our disagreements on a policy level
and avoid ad hominem attacks.
Mr. Chairman, I thank you for the time. I look forward to
the hearing.
Senator Voinovich. Thank you.
Senator Thomas?
OPENING STATEMENT OF HON. CRAIG THOMAS,
U.S. SENATOR FROM THE STATE OF WYOMING
Senator Thomas. Thank you, Mr. Chairman. I will be brief. I
don't have a written statement.
First of all, I would say that I am not an expert in this
area. I haven't worked with the Corps as much as many of you
have, but I am impressed with what they do. I am no expert.
But I do think as we look at these things and we have an
oversight hearing we ought to review a little bit the role of
the Corps. I do think things in this government and this agency
as well get institutionalized and are very resistant to change.
There has to be change.
I think we ought to do that. Part of it has to do with
utilizing the private sector. Many of the things the Corps does
are equally done by the private sector and I am one who thinks
that is where we ought to go with a lot of the things we can.
Second, I am not sure it is the role of the Corps to be
offering its services to the States and the local governments;
maybe it is.
I just came yesterday from the Space Command in Colorado
Springs. It is the same question. We ought to talk a little bit
about what the goal is, what the mission is, and then review
everything we do to see if it fits in to the accomplishment of
that mission.
I understand that is a broad issue. For us here, I think
when we have this backlog and all these authorizations we ought
to take a look at ourselves. It is easy to authorize. We do
that for political purposes.
When we do that, we leave the decisions up to the
appropriators. I think we ought to take a look at our own
process as we do some of those other things.
By the way, we had a hearing here, I think, on February 24.
I submitted a list of about ten questions, none of which I have
heard about from the Corps since February.
I would appreciate it if we could get a response to some of
the questions that we asked at these hearings.
Thank you, Mr. Chairman.
Senator Voinovich. Thank you. Again, we are very pleased
that the chairman of the Environment and Public Works Committee
is with us today.
Senator Smith?
OPENING STATEMENT OF HON. BOB SMITH,
U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE
Senator Smith. Thank you, Senator Voinovich. Thank you for
holding this hearing today. It is a very important hearing to
discuss the unfounded projects that Congress has authorized and
also the future mission of the Corps.
Like you, Mr. Chairman, I am concerned about the number of
these projects that have been authorize but have not received
funding and also somewhat disturbed to see the Administration
once again requested inadequate funds in the President's fiscal
budget this year to meet the Nation's continuing demand for
Corps service. The backlog will continue to increase.
In order to address the problem, I believe it is important
for us to get a sense of how many projects on the backlog list
are still viable. Projects, as you know, should be deauthorized
if the local sponsor no longer exists, if the project is
environmentally unacceptable, or economically unjustified, or
the needs of the area changed.
For example, it is my understanding that there is $1
billion worth of projects in Florida alone that might be
deauthorized once the comprehensive Everglades Restoration
Project is enacted.
If this is the case, then the committee should take a look
at these projects and see what the scenario would bring us.
Although the Administration includes a provision to amend
the authorization process in its Water Resources Development
Act, I believe the process can and should be more stringent. I
look forward to working with you, Mr. Chairman, to rectify
this.
One other issue that we did take a close look at is the
type of projects that we authorize. I just whispered to the
chairman that I received so far 150 projects on the new Water
Resource Development Act Bill from our colleagues. I think the
only one who didn't send one was me. I didn't send one to
myself. Maybe I should, I guess, get on the list.
But since 1986, the committee has authorized only those
projects that are consistent with cost-sharing requirements
established in the Water Resources Development Act of 1986.
In addition, there must be an identified local sponsor for
the non-Federal share of the cost and the project must have a
completed reconnaissance and feasibility study and the chief's
report must find the project technically sound, environmentally
acceptable, and economically justified.
Although this criteria serves us well, as you know, Mr.
Chairman, the next few weeks I have committed to work with you
to examine that criteria and to see if we need new criteria to
determine if revision needs to be made and we pledge to you
that we will be working to do that.
I know there will be questions raised today about whether
the Corps' mission should include environmental restoration
projects. I agree with what you said, Mr. Chairman, when you
said some of the water and sewer problems are more for the
local communities.
But I think there is some justification for environmental
restoration and I think it is within the scope and
responsibility of the Corps.
I am not sure how many know this, but the Army Corps has
long been involved in environmental projects. In doing a little
research I found that the Corps in 1874 operated and protected
Yellowstone National Park. When the buffalo herds across
America were severely threatened from over-hunting, the Corps
build a four-mile fence around the few remaining buffalo in
Yellowstone and the herd that once numbered 25 now is in the
vicinity of 3,000.
I don't know how that stacks up with my colleague down
there, but I am sure you are glad we saved the buffalo. Defense
was probably not too happy with that.
Senator Thomas. Remember, the Army was in charge of the
park at that time.
Senator Smith. But also the two other points, the key
player in restoring the Chesapeake Bay was the Army Corps. They
engineered a plan that would allow water to flow once again
through the Everglades which we are now looking at.
So, protecting our Nation's watersheds and even working to
design fish ladders, the Corps has developed an expertise in
mitigating environmental damage, and I, for one, welcome their
expertise and their knowledge and hope to draw on it
considerably as we develop criteria for future water resource
development projects and other Army Corps projects.
Thank you, Mr. Chairman.
Senator Voinovich. Thank you.
Senator Graham?
OPENING STATEMENT OF HON. BOB GRAHAM,
U.S. SENATOR FROM THE STATE OF FLORIDA
Senator Graham. Senator, I appreciate very much the
opportunity to join you today in this hearing focusing on the
project backlog in the Corps of Engineers.
I have great respect for the work of the Corps and the
direction under which it operates at Congressional
authorization.
I want to make particular comment about the Jacksonville
District of the Corps of Engineers which serves most of
peninsula Florida as well as the U.S. interests in the
Caribbean.
I have been intimately involved with the Jacksonville
District for the last 30 years and I have seen a dramatic
transformation in that district in terms of its greater
sensitivity to environmental concerns and its openness to
public involvement in its decisionmaking.
The outstanding work in developing the Comprehensive
Everglades Restoration Plan is an example of that coordination
with the State of Florida, local government interests and a
multiplicity of citizen interests.
All of them demonstrate the Corps' willingness to adapt,
make decisions with public input and ensure that sound
engineering decisions remain the cornerstone of project
planning.
Mr. Chairman, I would share with you your desire to support
Corps projects that are authorized by Congress. I would make a
couple of suggestions that this subcommittee and full committee
might consider.
One is that we set standards for project eligibility before
they are authorized so as to give us greater confidence in
terms of things like the capacity of the local sponsor to meet
both the construction and the ongoing operation and
maintenance, financing of a project, some rational process of
establishing priorities of projects, and that the projects meet
the standards of environmental compatibility which in many
cases led to their being proposed in the first place.
As an example, Mr. Chairman, I am going to be suggesting
some standards in the area of beach renourishment projects that
try to capture these concepts and which I believe, if adopted,
would help to assure that those projects which were authorized
would be projects that we would be prepared to urge their
completion through continuing appropriations.
I also share your desire to eliminate unneeded, outdated
and unjustifiable projects which have been authorized in the
past, some of which have moved beyond authorization to
construction and some of which are still awaiting
appropriations for construction.
Here I would suggest, Mr. Chairman, that we might request
the Corps to develop a set of standards by which they would
evaluate previously authorized projects, whether they were
still awaiting design and construction or whether they had
actually moved forward.
Then, against that set of standards, recommend those
projects that they think should be either modified in their
authorization or in some cases even deauthorized. So this
committee could have the benefit of the Corps' informed
knowledge as we look at projects that may not justify going
forward against current national priorities.
So, Mr. Chairman, I look forward to this hearing today with
the Corps and the other witnesses as to how we can work
together to streamline existing project authorizations as well
as look to the future in terms of assuring that any new
authorizations meet standards that will justify their sustained
support and completion.
Thank you, Mr. Chairman.
Senator Voinovich. Thank you.
The Senator from New Jersey?
OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,
U.S. SENATOR FROM THE STATE OF NEW JERSEY
Senator Lautenberg. Thank you, Mr. Chairman.
Welcome, General, and Ms. Tornblom.
I think what we are seeing is continuing recognition of the
varied assignments that we are giving to the Corps as being
very worthwhile projects. As that expands, we also see some
problems and the questions are raised about how we continue to
finance these and whether or not there is the effect of the
kind of cost-benefit analysis that we would like to see done.
So, Mr. Chairman, I want to thank you for holding the
hearing to review the Army Corps of Engineers backlog of
authorized projects and the future missions.
The Corps has an enormous list, over 500 active projects,
the cost to complete of almost $38 billion, projects that have
been funded within the past 7 years that are economically
justified and supported by the non-Federal sponsor.
Now, Mr. Chairman, the backlog is the result of inadequate,
insufficient Federal funding for civil works projects. In an
era of budget surplus we need to support projects in the
Federal interest that protect life and property and the
economy.
One of the things that I run into on a continuing basis, I
think, is directly similar to some of the questions that
Senator Graham might raise. That is beach replenishment. How
does that square with disaster aid, flood control, drought
assistance, and things of that nature?
These are fundamentally economic decisions. That is where
they are coming from, quality of life decisions.
Whether they are in a coastal State or a non-coastal State,
an agricultural State, the fact of the matter is that we do
wind up, I think, with not only a financial obligation, but I
might go so far as to say a moral obligation and to make sure
that we recognize what the problems are in each of these cases.
So, on the issue of the Army Corps of Engineers mission, I
would point out that many Congresses prior to the 106th, have
tried to address the issue. Throughout the nineteeth century
the Corps supervised the construction of coastal light houses,
railroads, public buildings, as well as mapped most of
America's West.
So, later on Congress added rivers, harbor improvements,
short protection, and life control work. Other Congresses have
expanded their role to include electric power generation, water
supply, irrigation, recreational facilities and emergency
response.
In my State, that tiny State of mine manages to call on the
Corps quite frequently because we have problems. We are the
most densely populated State in the Union. When we have a
problem it affects the lives of thousands of people as we saw
in the recent hurricane and flooding cycle.
The Corps has done a terrific job in my State in cleaning
up hazardous waste sites under Superfund and FSRP programs.
Under this Administration I have seen the Corps improve its
openness to public concerns about environmental protection.
Still the Corps has much to do to ensure that the projects it
undertakes truly benefit both, the economy and the environment.
I look forward to hearing from our distinguished officials
here today about the Administration's reforms and last, Mr.
Chairman, as a member of the Appropriations Committee, I was
disturbed to find a rider tucked into the Supplemental
Appropriations Bill dealing with the Army Corps.
The rider actually prevents rather than encourages real
reform efforts underway by the Administration to fix some of
the problems this committee has raised. The rider says, ``let's
keep things the way they are'' and not look at ways to do our
business better, when we know in many cases when we have seen
reform take place and change take place, Superfund for
instance, the pace of the work has improved and the quality of
the work has improved.
We have a right and an obligation to look at the way an
agency as large and important as the Army Corps does its
business. I think that we have to run this through this
committee and not simply look at it through the appropriator's
eyes.
This committee has an enormous attachment to the Corps of
Engineers. So, Mr. Chairman, I hope that we can work together
to remove that from the final bill.
I once again commend you for calling this hearing. I think
it is timely and critical. Thank you very much.
Senator Voinovich. Thank you, Senator.
Our first panel this morning is composed of Claudia
Tornblom, who is the Deputy Assistant Secretary of the Army,
and Major General Hans A. Van Winkle, Deputy Commanding General
for Civil Works, U.S. Army Corps of Engineers.
Ms. Tornblom, Assistant Secretary of the Army Westphal
called me and apologized for not being here, but he said that
he was sending someone that probably knew as much or more than
he did about the subject matter of this hearing today.
We welcome you and we welcome General Van Winkle as our
first panel.
STATEMENT OF MS. CLAUDIA TORNBLOM, DEPUTY ASSISTANT SECRETARY
OF THE ARMY (MANAGEMENT AND BUDGET), U.S. DEPARTMENT OF DEFENSE
Ms. Tornblom. Thank you, Mr. Chairman.
I appreciate the opportunity to testify today on behalf of
Dr. Westphal, the Assistant Secretary for Civil Works, on the
missions and construction backlog of the Corps of Engineers
Civil Works Program.
I will briefly summarize my statement. The Army takes great
pride in the Corps of Engineers and its service to the Nation
through the Civil Works Program. We welcome and encourage
dialog about the challenges that lie ahead and how we plan to
meet them.
The current primary civil works missions today are
navigation, both inland waterways and deep draught channels and
harbors, flood and coastal storm damage reduction, ecosystem
restoration, the regulation of work by others in waters of the
United States including wetlands, emergency management and
support to other Federal agencies.
The Corps may also provide additional water resources
purposes, recreation, hydropower and water supply in
conjunction with these six primary responsibilities.
The goal of the Army Civil Works Program is to contribute
to the welfare of the Nation by providing, in partnership with
customers, desired goods and services that are of the highest
quality and are economic, technically sound, and
environmentally sustainable.
The Army Corps of Engineers construction backlog, as we are
using the term today, consists of the uncompleted portions of
individually authorized projects and projects currently under
design.
The total Federal cost of these projects is $71 billion, of
which $23.5 billion has been allocated to date and another $1.5
billion is included in the President's 2001 budget.
This leaves a balance to complete construction of $46
billion. This amount, $46 billion, comprises the construction
backlog. The projects in the backlog have been divided into
three overall groups: active, deferred and inactive projects.
Active projects are economically justified and are
supported by a non-Federal sponsor. The backlog includes $38
billion of work in this category.
Deferred projects either have doubtful economic
justification and need restudy to determine their economic
feasibility or are projects for which the non-Federal sponsor
is unable to provide the required terms of local cooperation.
The backlog includes $2 billion for deferred projects.
Inactive projects are in one or more of the following
categories: They are not economically justified and a restudy
would not develop a justified plan; they no longer meet current
and prospective needs; or they are not supported by a non-
Federal sponsor.
The backlog includes $6 billion for inactive projects. It
is unlikely that the deferred and inactive projects will ever
proceed to construction.
The $38 billion active component of the construction
backlog is in turn made up of three distinct parts. $26 billion
is for active authorized construction projects of which about
$21 billion is attributable to the out-year costs of projects
included in the President's 2001 budget.
About $4 billion is for authorized projects currently in
pre-construction engineering and design or PED, and $8 billion
is for PED projects that are active but have not yet been
authorized.
We have included these PED projects in what we are calling
the viable backlog because our experience shows that projects
in this phase of development have about a 90 percent likelihood
of being constructed.
We are continuing our review of the $26 billion active
backlog to determine the extent to which this category may also
include elements of on-going projects that are unlikely to be
constructed and should also be deauthorized.
The size of the construction backlog imposes a burden on
the Federal budget that cannot be satisfied in the light of
today's budgetary realities and overall governmentwide budget
priorities.
Sufficient funding is not available to the Civil Works
Program to implement all of these projects in a timely way.
Throughout history external forces have affected the Civil
Works Program. The most important of these have been and
continue to be customer demands for goods and services and
taxpayer concerns that investments shall be well justified.
For our program to remain relevant and a viable contributor
to the Nation's welfare, we must remain sensitive to both of
these forces.
Based on our assessment of current water resources needs,
we strongly believe that the Nation faces significant and
demanding challenges.
Thank you, Mr. Chairman. This concludes my statement. I
would ask that my complete statement be entered in the record.
Senator Voinovich. Without objection it will be entered in
the record.
General Van Winkle?
STATEMENT OF MAJOR GENERAL HANS A. VAN WINKLE, DEPUTY
COMMANDING GENERAL FOR CIVIL WORKS, U.S. ARMY CORPS OF
ENGINEERS, U.S. DEPARTMENT OF DEFENSE
General Van Winkle. I don't have a prepared statement. I
just wanted to make two comments. First of all, we worked with
the Assistant Secretary's Office in preparing both the written
and the oral statements, so we are in complete agreement about
the data and the issues at hand.
Second, let me state that we are very thankful that you and
the members of the committee are holding this hearing. We think
this is a topic that has concerned us in the Corps for some
time and the willingness of this committee to deal with this is
very important to us.
Principally, it is because when we enter into the project
formulation stage, we work very closely with our cost-shared
sponsors.
Once we establish the relationship and determine that there
is a viable project, I think our cost-shared sponsors have some
feeling that this project should move along at a reasonable
pace.
Again, given the problems that you have noted here, we are
not able to do that for many of our sponsors. That creates some
difficulties for us as an agency, as a Federal agency working.
So, bringing these issues before us, I think, is very
important and we welcome this hearing.
Senator Voinovich. Thank you.
Could I have some help with those charts again?
The first question I want to ask is this: If you look at
the charts, and the ones I want to show are the growing areas
of responsibility by the Corps of Engineers. Let's start out
real quickly so that we can really get a sense of that.
Of course, we will finish up with the last one, Rich. This
is 1965 and you can get a sense of what it was there, pretty
much the traditional things that one would think about the Army
Corps of Engineers.
Then we move from that chart to the next one that shows the
growing areas of responsibility. Fuse draft was in recreation
and then shore protection there that Senator Lautenberg talked
about.
Then over here on this side, this is 1999 Appropriations.
You can see how the role and the mission of the Corps has
changed.
Ms. Tornblom, some of the initiatives that appear on that
chart took place during the 1990's, during the Clinton
Administration.
The question I want to ask is this: In light of the
expanded role and mission of the Army Corps of Engineers in
areas, for example environmental restoration which all of us
are very supportive of, the question is, why is it that you
have not asked for more money in order to take care of these
projects?
In other words, you have expanded the mission for
worthwhile projects. But if you look at the request from the
Administration in terms of funding, it is below what it was
earlier on. So you have a period of increased mission
responsibility and less requests for dollars to fund these
projects.
At the same time when the Administration is going into
other areas on the Federal level, increasing spending for
education and you name it, what bothers me about what I have
observed is that the responsibilities that we have, the Federal
responsibilities, the Federal role in so many areas, is being
neglected and we are going off into a lot of these other areas.
We need to get back to basics.
I want to know, why haven't we received requests for more
money from you?
Ms. Tornblom. As you pointed out, the Administration's
requests I the 1990's have been significantly below those in
the two or three prior decades. During this period, the
balancing of the budget was a very high priority for both the
Administration and Congress.
The agreements on the Budget Enforcement Act and other
agreements between the Administration and the Congress to
reduce and finally eliminate the deficit put spending limits in
all categories that constrained the ability of the
Administration to provide more money for this program.
While we only have to look at the water resources needs of
the country, the President is required to consider the entire
array of government responsibilities.
The amount of funds in the budget reflected his assessment
of the amount that should be made available to this program.
I would note that Congress as a rule appropriated more than
the budget request, but even the Congressional appropriations
were insufficient to keep projects on schedule. That is another
reflection of the fact that all parties have been constrained
in recent years.
Senator Voinovich. I would just like to comment that I
looked at the numbers for, for example, education, which is
pulling double digits now. In the last 10 years we have
increased it 100 percent. I think we have gone from $10 billion
to $20 billion.
Again, it bothers me as a former Governor and one who has
had a look at the competing demands that we haven't
concentrated more on these unmet needs.
For example, is the Administration in favor of this CRA
bill that just passed the House? Do you know?
Ms. Tornblom. No, I don't.
Senator Voinovich. I would like to find out. Is the
Administration in favor of it? That is going to spend almost $1
billion more a year. It is very worthy. I have been lobbied
very hard about it. I have looked at people in the eye and say,
``We have other unmet needs that need to be taken care of.''
Then I mention the $38 billion of unmet needs that we have
here in the same area. So some of this is going to have to be
reconciled if we are going to move forward and get the job done
or we might as well not even have another WRDA Bill.
Ms. Tornblom. Yes, sir.
Senator Voinovich. The other question I have is that with
environmental restoration, new missions, do you believe that
there should be a cap on environmental restorations, say of 25
percent?
Ms. Tornblom. I don't believe it is necessary to put a cap
on it. We have traditionally and continue to recommend the
projects that are ready to move forward and are most highly
justified in terms of economics and environmental benefits.
I think it would be a mistake to restrict the Civil Works
Program to the traditions of the past. It would put the Corps
in the back seat in terms of meeting the present and future
needs for the country.
I personally think it would be unfortunate to miss an
opportunity to apply the Corps' significant expertise to
addressing the newly emerging priorities of the country.
Senator Voinovich. The problem gets back again to the
allocation of resources. I have thought on several occasions
that should we get into a new pot of money just to focus in on
environmental restoration.
We are interested, for instance, in my State, on the Ohio
River, in environmental restoration. We have them all over the
country. The demand is very great.
When you have that limited sum of money, some real thought,
I think, needs to be given to how do you get more money to take
care of some of these very, very worthy projects that we would
like to get into. Have you given any thought to that?
Ms. Tornblom. That is an interesting concept, sir. We will
be happy to look at it. Of the top of my head, a couple of
concerns I may have would be the difficulty of defining the
kinds of projects that would go in that account as opposed to
an infrastructure account and also the management in the Civil
Works Program has traditionally relied heavily on the ability
to reprogram funds among projects.
As one project may go faster than expected and others may
be delayed for various reasons, the more we distribute the
money among separate appropriation accounts, we limit the
ability to manage the program in a way that most efficiently
uses the funds available in any given year.
Senator Voinovich. So you have to get some more money,
right?
Ms. Tornblom. Yes, sir.
Senator Voinovich. One last question: We had the hearing,
Senator Smith, the chairman of this committee, had a hearing on
the Everglades Restoration. One of the questions that I asked
the Governor of Florida, and I am not sure he understood what
the question was, was that they were asking for special
permission in that legislation to move forward with the
restoration of the Everglades, that is, that they would not be
held back by the annual appropriations coming out of the Energy
and Resource Appropriations Committee; so that they just move
down the road and just build and then they would back-charge
the Federal Government for the Federal share of it.
What I suggested is that if special permission is given,
what about the concept that the States could then pay more
than, say in this case they are paying 50 percent, let's say
they pay 60 percent of the project costs and in consideration
of their paying more of the share, they would be given
permission to move forward and get these projects finished up
and wait their turn as the appropriations come through.
Have you ever given any thought to that concept?
Ms. Tornblom. We don't have any formal position on that.
Again, that would be something that we would be happy to look
at.
There are many other kinds of projects that have used the
same process, some of the large deep draught navigation
projects have benefited from that same practice.
As I am sure you know, the chairman of the Senate
Appropriations Committee, a few years ago, asked for particular
notification. Then last year the Appropriations Committee
placed limits on the amount of annual funds, debt that can be
incurred in this manner.
We will be happy to look at that.
Senator Voinovich. I really would be interested in your
opinion on that. With Chairman Smith we have the special
request that is being made and it basically says, ``move down
to get it done and then bill us back.'' That is extraordinary
authority that we would give a State in regard to a particular
project.
You have talked about the backlog of projects. One thing I
am pleased about is that our numbers are the same. It is $46
and about $38 billion on those that have received some
authorization or funding and are ``legitimate projects.''
So, if you are really realistic, I would like your reaction
to this: You could probably eliminate some $8 billion worth of
projects, but you are still down to a $38 billion backlog of
projects that are worthy projects, where local funding has been
identified and really should go forward.
Would you disagree with that or do you think there is still
some fat in the $38 billion figure?
Ms. Tornblom. We are looking at that now. General Van
Winkle's staff is working on that analysis. We have identified
one particularly large project that you mentioned earlier, the
central and southern Florida project.
It may have $400 or $500 million still within that $38
billion that will never be built because of the redirection of
the project toward restoration of the Everglades rather than
the draining of it.
We need to look more closely at that number and see exactly
what is in it before any recommendations are made. Would you
like to add anything to that?
General Van Winkle. Senator, we have been working with
these numbers since you tasked us to look into this for you. I
feel pretty confident that that number in the range of $38
billion in backlog is correct. As I said, we have been pouring
over our books and there may be some small deviations, but I
feel very confident to say that the backlog number is somewhere
in the high to mid-$30 billions.
So, we have in fact done that. I don't think there is a lot
more in terms that you could easily remove from the books. I
think that work has already been done and presented to you in
this testimony.
Senator Voinovich. Thank you.
Senator Thomas.
Senator Thomas. Thank you, Mr. Chairman.
Madam Secretary, your description of the current program
mission is very broad. Do you have any inclination to narrow
that a little bit? You could almost deal with anything under
this definition.
Ms. Tornblom. Well, we do focus most of our resources on
three of those mission areas: navigation, flood control, and
environmental restoration.
Senator Thomas. But you include resource regulation,
hazardous clean-up, assistance with natural disasters, response
and recovery of related land resource issues. That is pretty
broad stuff.
Ms. Tornblom. Yes. Much of the emergency response we do is
done in support of FEMA and uses their funds. We have a small
amount of our own funds that are for that purpose.
Senator Thomas. I guess I don't entirely agree with the
chairman that the only answer is more money. I think as we look
at all of government we have to define the roles a little more
clearly and we have to upgrade from time to time and change our
roles.
They are not the same forever, certainly. You indicate here
that one of your roles is to provide engineering and technical
assistance for other Federal agencies and the States.
Ms. Tornblom. Yes, sir, and that is 100 percent
reimbursable by the party for whom we are doing the work.
Senator Thomas. Why should the Corps of Engineers compete
with the private sector in assisting the States with
engineering?
Ms. Tornblom. I am going to make one comment and let
General Van Winkle respond to that, also. While we don't
believe that this is competition with the private sector, we
are providing a protection of the government's interest.
An example of this is the Superfund work we do with the
Environmental Protection Agency. We do a lot of construction
and engineering management, project management, oversight, and
quality assurance.
Those capabilities may exist in the private sector, but
there is a governmental interest to be protected and there have
been some examples of agencies being criticized for not having
paid enough attention to contractors.
Senator Thomas. The government has a policy also. I think
it is called A-76, which says, ``Where it is possible, we would
prefer the private sector.''
Do you just disregard that?
Ms. Tornblom. No, sir. In fact, 100 percent of the Corps'
construction work is contracted. We have no in-house
construction work force. All of the work is constructed by
contract to the private sector and a large portion of the
design and engineering work is also contracted.
General would you like to comment on that?
Senator Thomas. Just before you do, let me remind you that
we passed the bill last year with respect to having each agency
report their activities that were necessarily governmental and
those that were not.
The Department of Defense is one of the best contractors in
the whole unit. It would seem to me there is very little reason
why you all wouldn't be similar to that, but you haven't really
responded to the separation of your functions.
General Van Winkle. Senator, if I might, let me say I agree
with Ms. Tornblom in the sense that I don't view us working in
opposition or in competition with the private sector.
Senator Thomas. I am sorry, you say you are not in
competition with the private sector?
General Van Winkle. Well, I don't like to characterize it
that way. I like to characterize us as working in concert and
in cooperation with the private sector.
I think there are certain instances where there is a
Federal role for the Corps of Engineers to work, again, in
concert with private industry.
In fact, as Ms. Tornblom has stated, we do that, in fact,
100 percent of our construction is done by the private sector.
We maintain essentially no capability. Forty percent of the
engineering and design work is contracted out to the private
sector.
So we feel that the work we are doing is to protect the
Federal interest. There is a Federal role. There is a
governmental role in the formulation of these projects in
determining it as a Federal interest.
Then a lot of additional work then can be contracted out.
So, again, I would agree with her in terms of characterizing
that as a cooperative effort rather than a competitive effort.
Senator Thomas. Well, I just would say to you that--and
those are the questions that I had submitted to you before
which have not been responded to.
We work very hard and will continue to, to try and get each
of the government agencies to take a look at those things that
are necessarily governmental and those that are not, and to
identify those, which in fact is under the law that you are
supposed to do that.
You also say here, ``Given America's strong and growing
interest in downsizing the Federal Government and, in turn, its
work force, ongoing outsourcing and privatizing for
accomplishment of government work,'' and so on. You have that
in your statement along with your goal of providing these
services to the States. To me that is contradictory. But I
understand you don't agree with that.
But I am going to push and press for the idea of government
agencies perfecting their ability to oversee projects, but not
doing them themselves. I feel very strongly about it. I think
we need more changes in this operation than simply more money.
More money is important, of course.
But for instance with the States, is that what we are
there, too, to do the services for the States? It is certainly
worth consideration.
I thank you.
Senator Voinovich. Thank you, Senator.
Senator Smith?
Senator Smith. Let me ask each of you, the General and Ms.
Tornblom, has Congress authorized any projects that you are
aware of which the Corps believes is outside your expertise or
could be better done by another agency?
Ms. Tornblom. I will let you answer that.
General Van Winkle. That is a difficult question, Senator.
I certainly have a long history dealing at a national level
with your question. I guess we could do some research and see.
I would say in general we are comfortable with the missions
that have been given to us. Water, of course, has multi-
dimensions. So as we discuss separating out flood control and
navigation and environment, a gallon of water serves many
purposes.
Our projects are intended to be multi-functional in that
regard. So, I think in the case that we would be given projects
and as they have expanded, I think a number of people have
recognized that fact that many of our water projects do have
multi-functions. So that may be a beginning of an answer to
that.
I feel comfortable that the missions we have been given we
have had the capability to conduct.
Ms. Tornblom. I might add to that, sir, that there is
perhaps $1 billion worth of work that the Corps of Engineers
does in support of the military, the Army and other services.
There is a great deal of expertise gained through that work
that then can be applied by the organization to a civil works
mission if and when the Corps is asked to carry out such an
effort.
The FUSRAP would be an example of a program where the Corps
had developed the expertise through its support for the
military, the environmental restoration clean up programs and
support for EPA. So, they were well prepared to take on the
work of the FUSRAP program.
Senator Smith. You heard Senator Voinovich and I discussing
the criteria, in our opening statements, for these projects.
What suggestions would you give us? Are there any new
criteria that you would like to see us use other than the
criteria that you are aware of which the committee has in
establishing these projects? Either one.
Are you satisfied that the criteria is satisfactory? If so,
why do we have a backlog? If you are not, then what suggestion
would you make?
General Van Winkle. Senator, I will address that. I think
the criteria are good ones in the sense of the evaluations
basically, is there a Federal role, do we have an authorization
for the project and second, is there an economic justification,
and third, does it meet the environmental principles?
So, I think those are sound. I don't think the general
criteria need any change or adjustments. I think there is some
role for discussing how those are applied and the level of
expertise which we apply to those.
But I think those in general are sound principles upon
which we make our decisions. I guess in some degree we are
faced with the issue that given the requirements and given the
needs out there and given the authorities and expertise the
Corps has, and we have built up this backlog to deal with it.
That would be my answer.
Senator Smith. What is the reason for the backlog, then? Is
it purely money?
General Van Winkle. It is a combination of funding given
the requirements level and the needs.
Senator Smith. If money was not an issue, would there be
projects you would recommend not doing that are in the backlog?
General Van Winkle. Well, I think we could find those out
in our data as to what we would not want to do at this point
either because conditions have changed and are no longer
applicable to the cost-shared sponsor. I think we have
addressed that in the data we have given you.
Senator Smith. Do you have chiefs reports that have been
completed on projects that were not funded in this budget?
General Van Winkle. I believe that is correct.
Senator Smith. How many? Do you know?
Ms. Tornblom. We will provide that for the record.
Senator Smith. In order to eliminate the O&M backlog, what
level of funding would the Corps require on an annual basis,
Operations and Maintenance backlog?
General Van Winkle. Our O&M budget this year was $1.8
billion. That increased the backlog that we currently have on
the books by about $100 million. So, we have about a $450
million backlog currently on the books.
I think to do that efficiently we would have to take that
over a couple of years. I don't believe we could address that
immediately. That is the backlog figure that we would need to
deal with.
Senator Smith. A final question, Mr. Chairman.
Do all the projects in the active category, as far as you
know, adhere to the applicable cost-sharing formulas that the
Water Resources Development of 1986 set as standards?
Ms. Tornblom. No.
General Van Winkle. Do you want to answer that?
Ms. Tornblom. No. There are exceptions that were authorized
in ways that excepted them from that.
Senator Smith. I am sorry. Would you repeat that?
Ms. Tornblom. There are projects within the active backlog
that are not consistent with the overall cost-sharing
requirements.
Senator Smith. But why would that be? Ms. Tornblom. Because
they were authorized as exceptions with special considerations
or prior to; probably most of them prior to. Senator Smith.
What is one example of a special consideration, just so I
understand it.
Ms. Tornblom. The Section 202 Program.
General Van Winkle. Typically a disadvantaged community,
low-income sorts of communities. Those are considerations that
come up that where the local cost-share sponsor does not have
the capability or wherewithal to provide the spot, to provide
the funding support, then often times we deal with that issue
of should there be a consideration in that regard.
Senator Smith. Thank you, Mr. Chairman.
Senator Voinovich. Thank you.
I just have two quick questions. Environmental
infrastructures, sewers, waste treatment facilities, should
they be on the list?
Ms. Tornblom. The Administration does not believe that this
is an appropriate mission to be budgeted as a civil works
program. We have traditionally provided planning assistance to
States. We provide technical assistance through various
authorities.
But it is the Administration's view that this is not a role
that should be assigned to the Corps of Engineers.
Senator Voinovich. Well, I would invite the Administration
to think about criteria that they think should be applicable to
these WRDA bills. I think the Senate under Senator Chafee did a
pretty good job and then what happened is it got into
conference and lots of projects were added over on the House
side.
It seems to me that we need to really give more careful
consideration to just what criteria we are going to be using in
terms of funding these projects in the WRDA bill.
The last question is for you, General Van Winkle. You have
500 projects, a $38 billion backlog. Obviously, when you are
waiting for funding each year and it is not adequate, doesn't
that extend the construction schedule of those projects and
what impact does that have on the overall cost of the project?
General Van Winkle. Yes, sir, it has a big impact. That is
one of the principal things we have to do given the funding
sources, allocate that in the most efficient manner that we
can.
We roughly attribute the benefits that are lost by having
those extended schedules to be about $4 billion overall. Our
figures show that if we were to calculate the additional costs
simply by putting off construction, inflation alone adds close
to $500 million to the project in and of itself.
So there are significant delays both to the sponsor and
also to the Federal Government in terms of costing for delaying
these projects.
Senator Voinovich. Are those projected costs in that $38
billion figure or would that be on top of it?
General Van Winkle. Well, those are inflationary costs in
the process, so they are roughly included.
Ms. Tornblom. The $500 million due to inflation would be
included, although I don't know that we have inflated the
backlog. We should double-check that. The $4 billion is
actually foregone benefits which would be foregone by the
entire economy rather than costs that would be borne by the
Civil Works Program.
Senator Voinovich. The one is the reckoning on the loss to
the economy of some $4 billion. The interesting thing would be
that if you did increase the funding for these projects and you
were able to move them up, how much saving would occur as a
result of that because of not having that long-term delay and
that stop and start.
We have a flood control project in Columbus, Ohio that has
been ongoing. General, I think you probably started it several
years ago. You know, it is a bump and a grind and depending on
what the--and I am not sure that is the best way to build a
flood wall or a railroad.
General Van Winkle. Senator, those costs of an inefficient
schedule, we don't have a good handle on that. Clearly, there
is a cost as we make adjustments on a yearly basis to our
construction schedule.
Senator Voinovich. But again, if you had more money and you
were able to better schedule those projects, we would get the
economic benefits and we would also benefit because we would be
doing them over a shorter period of time and we avoid the
inflationary cost as we move down the road.
General Van Winkle. Yes, sir.
Senator Voinovich. We need efficiencies that are connected
with that stop and start business.
General Van Winkle. Yes, sir.
Senator Voinovich. Do you have any other questions, Senator
Smith?
Senator Smith. I might just ask one more. What would you do
to address the backlog?
General Van Winkle. Well, I think we are doing all we can
in the Corps. We have adopted a project management schedule so
that we can use the dollars that were given to us more
efficiently. So we will continue to do our part in that regard.
I think the work the committee is doing in terms of looking
at deauthorization to get the unworthy projects off the books
is worthwhile.
My recommendation is to continue to work on the priority
setting so that the projects that are most worthwhile do
receive the funding.
Senator Smith. These are active. The $38 billion that
Senator Voinovich referred to are in the active status. So your
point is that some of those are unworthy projects; is that
correct?
General Van Winkle. I didn't mean to imply that. I think in
the numbers we provided, the total amount have unworthy
projects, I feel comfortable that the $38 million figure are
worthy projects now deserving consideration.
Senator Smith. So it is a backlog, but you are saying it is
a backlog of worthy projects, the $38 billion?
General Van Winkle. Yes, sir, that is correct.
Ms. Tornblom. If I may, sir, if the committee saw fit to
adopt into law the Administration's proposal in the WRDA 2000
Bill to tighten up the deauthorization process, we would have a
mechanism to self-regulate this question, if you will, in the
future.
If any of these projects turn out to not have a willing and
capable sponsor or not be currently desired, then they probably
would not receive funding over the next 4 years and perhaps
Congress wouldn't appropriate money for them over that time and
then the proposed automatic deauthorization would address the
question of whether they should stay in the active backlog.
Senator Smith. And that is in the $38 billion backlog, that
is what you are referring to?
Ms. Tornblom. That would affect the entire backlog over
time.
Senator Smith. I know it would affect those that are not in
the deferred category backlog.
Ms. Tornblom. It may. It would be a real test of whether or
not those projects are supported.
Senator Smith. Thank you.
Senator Voinovich. Thank you. We appreciate your being here
today.
Our next panel is made up of Mr. J. Ron Brinson, President
and CEO of the New Orleans Port Authority. Unfortunately,
George Grugett, Executive Vice President of the Mississippi
Valley flood Control Association is not going to be here today.
He is ill. His testimony would have focused on structural flood
control. His testimony will be placed in the record.
Mr. Scott Faber, Senior Director of Public Policy, American
Rivers; Mr. Tony MacDonald, Executive Director, Coastal States
Organization; and we have Mr. Bill Parrish who is the Vice
Chairman of the Association of Flood Plain Managers, Chief,
Hazard Mitigation Planning, Maryland Department of Environment.
We welcome you here today. We appreciate your patience. We
would appreciate your limiting your remarks to no more than 5
minutes, assuring you that the rest of your testimony will be
captured in the record of this hearing.
We will start with Mr. Brinson. Welcome.
STATEMENT OF RON BRINSON, PRESIDENT AND CEO OF THE NEW ORLEANS
PORT AUTHORITY
Mr. Brinson. Mr. Chairman, thank you. I am J. Ron Brinson,
President and Chief Executive Officer of the Port Authority at
New Orleans and also for the last 14 years the Port Director at
New Orleans.
I am honored to be here today representing the American
Association of Port Authorities and the National Waterways
Conference, two very fine groups that look after the interests
of the great navigation industry of this country.
I thank you for having this hearing. These issues are so
very important to our industry, the U.S. port system, and the
inland waterways industry. The critical importance of these
issues, I promise you, resonates throughout the businesses and
the users of the navigation system.
You know, with all of these pie charts, Mr. Chairman, I
thought that summarizing my testimony I would offer up a
practical, outside-the-Beltway view of these issues.
What we have here is a well-documented every expanding
backlog of Corps projects which very clearly is bringing into
question the Corps' ability to manage its mission, and at the
same time, the point that you made in your opening statement,
the possibilities of mission creep.
The Corps is our partner. It is our partner in the
operation, the maintenance and perhaps more importantly the
development of the port system and the inland waterway system.
Today, this country is well-served by that system. It is a
partnership that has created the competitiveness upon which our
country relies today in terms of handling water-borne commerce,
both international and domestic. We need not deal with this in
the abstract.
Mr. Chairman, one million people today and thousands of
businesses are involved in the operation of our ports and our
inland waterways industry. Its operations in the Upper
Mississippi reaches where are farmers are, of course, very,
very concerned about the future of the Upper Mississippi
navigation system.
More than 50 percent of the traffic today on the Ohio River
will be coal moving from mines to power plants, assuring low-
cost energy for the Midwest.
The commerce of 27 States will flow through the ports of
Louisiana in the Lower Mississippi River today. In the great
populations centers of New York, Los Angeles, Long Beach will
find port operations serving the immediate needs of these great
population centers.
In Virginia we will see the kind of three-part functional
role of ports, giant container ships, giant bulkers handling
coal exports, and giant Navy ships.
I could go on and on and on. The point here is that our
navigation system is vitally important to this country's best
interests. When we think of the risks and the opportunities
provided in the global market place, one could observe that
water-borne commerce has never been more important to our
country.
The Corps has been our partner. Local and state port
authorities and private businesses take the initiative to
develop the system. The Corps carries out the traditional
Federal responsibility for assuring the adequacy of navigation
channels.
The Corps has been a good partner, Mr. Chairman, an
excellent partner. Today, we could readily conclude, as we have
already in this hearing, that the Corps is under funded and, I
think, far too often, under-appreciated.
The Corps is a professional organization, has been
resourceful. As you pointed out, they have shown that they can
do a lot with a little. But that proposition, I think, is
coming home to roost.
We are looking at a doubling, a doubling, in some of our
trade routes, Mr. Chairman, of container ship and cargo
movements within the next 8 years. Most of our markets will
show a doubling within the next 15 years.
We simply have to develop the capacity, the shore-side
terminal capacity and the related roadway, rail infrastructure
to accommodate that, or our country will simply no longer be
competitive in the global marketplace. It is a simple reality.
U.S. ports are now preparing to invest $20 billion in
shore-side facilities over the next 12 to 15 years. The way we
do this in terms of developing what ultimately is the U.S. port
system and the inland waterway system is that we proceed with a
good faith reliance upon our Federal partners, in this case,
the Corps of Engineers.
While the Corps has these problems just now, a backlog,
mission creep, and we are worried about their ability to carry
on their part of this progressive port planning proposition.
It is the market that is placing these demands. The market
demands must be answered. In this case the market is saying,
``You have to have adequate ports. You have to take advantage
of your water-borne commerce capacities.''
Financial resources, well, as far as the ports and the
inland waterway system, and we have been dealing with that for
decades, our concern now is whether the Corps will be empowered
with the mandate and the financial resources to assure that we
can carry out what this country expects us to carry out, and
that is to develop and maintain an adequate ports and waterway
system.
The bottom line here, what do we do? Well, at the end of
the day, Mr. Chairman, it seems this is a policy and a
management and a planning issue.
It has already been documented here today that the Corps
has a backlog in large measure because the Corps is not being
given adequate financial resources.
It would seem that now is the time to shake the tree, get
the unworthy projects out of the way, give the Corps what it
needs to carry out this very, very important mission, and along
the way I think it would be very, very helpful if the processes
of Congress could call a little bit more attention to the
urgency of competitiveness.
Mr. Chairman, thank you so much for the opportunity to be
here today. I would be very glad to answer any questions that
you or Senator Smith might have.
Senator Voinovich. Thank you, Mr. Brinson. We are going to
hear from the entire panel and then we will ask you all
questions at the same time.
Our next witness is Mr. Scott Faber, Senior Director of
Public Policy for American Rivers.
Mr. Faber?
STATEMENT OF SCOTT FABER, SENIOR DIRECTOR OF PUBLIC POLICY,
AMERICAN RIVERS
Mr. Faber. Thank you, Mr. Chairman.
I am testifying today on behalf of a number of conservation
groups including American Rivers, Sierra Club, Environmental
Defense, and Friends of the Earth.
We recognize that the Corps of Engineers has played an
indispensable role in the repair of many of the Nation's
degraded waterways.
Indeed our scientists tell us that many of the Nation's
most historic rivers, including the Ohio, will increasingly
lose the ability to support wildlife unless Corps habitat
restoration efforts are accelerated.
We also recognize that the Corps must continue to construct
navigation and flood control projects which are economically
justified, environmentally sound, and serve the Nation's
interests.
But some Corps projects continue to be economically
suspect, environmentally unacceptable, and serve primarily
private interests. The reasons are two-fold. The Corps outdated
methods for predicting benefits and costs, and a hopelessly
politicized decisionmaking process.
The evidence supporting the need for reform is
overwhelming. Many Corps projects, though economically
justified on paper, have not proved to be economically
justified in reality.
Some Corps planners have bent the rules of project planning
to support questionable projects. The current absence of
meaningful oversight has created an atmosphere conducive to
this kind of abuse.
Despite a growing backlog of authorized projects, an
increasing number of Corps projects primarily benefit private
interests, including many projects which lie outside the Corps'
traditional missions.
The Corps frequently treats its local cost-sharing
partners, rather than the American people, as their clients.
In some cases the Corps has simply failed to mitigate for
environmental impacts or mitigation projects have failed to
produce the promised benefits. For example, the Vicksburg
District of the Corps has failed to complete nearly 30,000
acres of promised mitigation.
We believe that Congress must act now to ensure that future
Corps projects are economically justified, environmentally
sound, and serve the national interest, and in particular,
Congress should include reforms in WRDA which modernize the
agency's measurements of benefits and costs, require
independent review of significant or controversial projects,
expand the input of local stakeholders, prioritize Corps
spending, and hold the Corps to the same mitigation standards
that we hold private developers.
First, Congress should require the projects have primarily
public rather than private benefits and should also require
that Corps project benefits be twice as great as project costs
to reflect the uncertainty of Corps benefit-cost calculations.
Second, Congress must take steps to restore the integrity
of the Corps' decisionmaking process. Self-preservation, the
virtual elimination of technical review, the absence of
meaningful oversight, and growing pressure from cost-sharing
partners and Corps constituents has created an atmosphere where
abuse has flourished.
Unless the decisionmaking process is reformed, no Member of
Congress and no member of the public will have a guarantee that
projects are economically justified and that project's
environmental impacts have been adequately assessed and
mitigated.
Congress should require independent review for projects who
total costs exceed $25 million or projects which are considered
controversial.
We do not propose that Corps feasibility studies continue
endlessly as they did in the 1970's, but instead believe that
independent review could be blended seamlessly into the
feasibility study phase.
Third, Congress should balance the influence of cost-
sharing partners by creating a stakeholder advisory group to
collect the input of all local interests and to seek a
consensus regarding project objectives and design early on in
the feasibility study phase.
Fourth, we urge you to work with the Clinton Administration
to quickly restore civilian oversight of the Corps, the absence
of which offends the Constitution, violates Federal law, and
has contributed to an environment where abuse has flourished.
We strongly oppose Section 3102 of the Agriculture
Appropriations Bill which is designed to frustrate these
important reforms.
Finally, we believe Congress should create new criteria and
apply that criteria to the backlog of existing projects as well
as the proposed projects to ensure that future projects reflect
the Nation's highest priority water resources needs.
In addition to requiring that project benefits be twice as
great as project costs, Congress should require that proposed
and previously authorized projects meet the same mitigation
standards as private projects, prohibit the construction of
projects when impact cannot be cost-effectively or successfully
mitigated, and reject projects which could be constructed by
private interests or which have primarily private benefits.
Other steps could be taken to expand the reach of scarce
Federal funds, including increasing local cost-sharing for
structural flood control, beach replenishment and navigation
projects.
In summary, we believe Congress must act quickly and
decisively to restore credibility to the Corps civil works
program. Certainly this committee should use its oversight
powers to investigate abuse of the Corps' decisionmaking
process.
But the committee should also recognize that the absence of
meaningful review, outdated methods of predicting benefits and
costs, and studies designed to meet the needs of project
sponsors rather than meeting the needs of the Nation have
created an environment where abuse has been able to flourish
and will continue to flourish.
We urge you to implement these long-overdue reforms of the
Corps of Engineers.
Thank you, Mr. Chairman.
Senator Voinovich. Thank you, Mr. Faber.
Our next witness is Mr. MacDonald, Executive Director of
the Coastal States Organization.
Mr. MacDonald, welcome.
STATEMENT OF TONY B. MAC DONALD, EXECUTIVE DIRECTOR OF THE
COASTAL STATES ORGANIZATION
Mr. MacDonald. Thank you, Mr. Chairman. Good morning.
My name is Tony MacDonald and I am the Executive Director
of the Coastal States Organization. Thank you very much for the
opportunity to testify today.
Since 1970, CSO has represented the collective State
interests in improving the management of our Nation's coasts,
including, of course, the Great Lakes.
The task of coastal management is complex, but the
objective is simple: to protect and enhance the national
interests in coastal resources and the economic and social
benefits that rely on those resources.
This requires a shared commitment of the Federal Government
with the States and local project sponsors. I stress ``shared
commitment'' because although the topic of this hearing is the
Corp's project backlog, these projects are all done in
partnership with and are jointly funded by States and local
project sponsors. This is our shared backlog. This is our
shared future.
My comments today do not focus on problems of the Corps,
but rather on ways to strengthen our joint commitment.
While on one hand the current backlog reflects that the
Corps is over-committed taking on new missions and marginal
projects, on the other it can and should be seen as a
reflection of legitimate, pent-up and growing demand for
necessary investment in our Nation's water resource and
environmental infrastructure.
While the current controversy over the Corps raises many
important questions, it should not obscure the fact that in
reviewing whether to undertake projects the Corps undertakes a
more rigid cost-benefit analysis than many other Federal
investments.
CSO believes that the Corps should continue to focus on its
essential missions, maintaining 25,000 miles of Federal
navigation channels, providing shore protection to protect
coastal communities against loss of life, property and damage
to natural resources, ensuring the protection of lives and
public and private investment from flooding and erosion,
environmental protection and restoration, as well as
remediation of past injury to the environment from Corps
projects.
I will diverge from my remarks for a minute now to talk
about environmental restoration because so far I have heard
mostly about environmental restoration as an independent
mission of the Corps.
I think it is important to stress that we think that
getting ahead with these projects will mean integration of
environmental restoration objectives into the other four
missions. That may be more important and as important as
deciding what the future mission of the Corps should be on
environmental restoration projects specifically.
This is not only a question of addressing the backlog, but
as I stated, of ensuring that we have a framework in place to
meet future demand.
Population and economic development in coastal areas,
already the most densely populated area of the country,
continue to expand more rapidly.
The total volume of domestic and international maritime
trade, as we have heard previously, will more than double in
the next 20 years. Coastal storms are on the rise and the
threat of resulting damages is increasing.
Since capital investment needs to anticipate these
challenges, it is not surprising that our backlog has reached
$37.9 billion.
As we have heard before, so far Congress and the
Administration in funding the program has not been motivated by
future capital investment needs, but by other legitimate, but
nonetheless backward-looking investment decisions.
There are three simple answers. These are not new answers.
I think the problem is that associated with these answers are
very difficult choices that we have not for whatever reason
been able to make so far.
One, we need to increase funding for the Corps of
Engineers.
Two, we need to demand greater efficiencies in planning,
designing, constructing, and maintaining projects.
Last, we need to constantly work with local project
sponsors to review the backlog, to assess the current need of
projects as authorized.
These aren't new, but again, I think they are important.
First, there are few questions of the need for investment
in the need for our roads, rail and air traffic systems; there
should be little question as well of our need to maintain
marine and inland waterways transportation as well as to invest
in storm protection, flood and erosion control.
The vast majority of projects address very real needs. This
is especially true along the coast. The Water Resources
Development Act of 1996 specifically reaffirms shore protection
as a function of the Corps.
Yet the Administration continues to refuse to recommend
funding for authorized projects for shore protection for beach
nourishment, even though Congress has increased the local cost
share for the long-term maintenance of these projects in WRDA
1999.
Pressures within coastal communities to resolve the problem
of erosion frequently lead to more costly and more
environmental damaging solutions.
The construction of seawalls. The damaging effects that
these structures have on beaches, the biological communities
that depend on the intertidal zone, and the economic revenues
and tax bases of communities are the reasons why beach
renourishment is a desirable alternative to shoreline
hardening.
Reduce time for project completion, reduced conflicts which
contribute to delays, and more comprehensive approaches to
management and greater coordination with other Federal agencies
and States can result in greater efficiencies within the Corps.
The Corps should take a look for opportunities to work more
creatively with local project sponsors in the project sector to
implement projects through project grants and expedited
construction schedules.
In some cases, many different Corps projects may be
combined into a comprehensive coastal resource scheme. For
example, in Toledo, Ohio, they worked very creatively to bring
together sediment reduction in the river with the need to clean
up Toledo Harbor, with the need to dredge Toledo Harbor, with
the need for better use of that material.
That is, I think, a very good example of the kind of
approach we should have to resource management issues and
cross-mission objectives of the Corps of Engineers. The Toledo
solution was extremely difficult in coming. Hopefully, in the
future we will use that model in more areas.
Another source of project delay is the result of
controversy which results from the Corps setting out their
project objectives, working with sponsors, but not necessarily
working with the broader community of State policies and the
public.
Among coastal States there have been numerous conflicts
with the Corps of Engineers about how dredging is conducted and
dredge materials disposed.
Working with the National Dredging Team, CSO sponsored a
workshop last year for Corps district personnel, State managers
and port representatives to stimulate discussions of ways to
avoid and resolve these conflicts.
Along with my testimony, I have provided committee members
with proceedings from this workshop. We think this workshop is
the kind of thing we should do more often in terms of broader
outreach and early outreach to communities.
There are recommendations within that report which I think
will apply more broadly to some of the public Corps missions.
They include improved clarity about goals and greater
transparency in the decisionmaking process to reduce conflicts
between the Corps and State and local organizations.
The planning process and procedures for State and Federal
cooperation can be improved with earlier project planning,
regular meetings between State and Federal agency
representatives, broader participation, and longer range
comprehensive planning.
Also, I think something that hasn't been previously
discussed is something I think we need to bring to this
discussion as well. That is better scientific understanding and
greater public education are necessary to make better decisions
and garner support for further expansion of these programs.
I think, Mr. Chairman, you referenced the public poll
response sometimes. I think to a degree, for some reason, the
public at large does not understand the very importance and the
crucial element of these investments. That is something I think
we need to work together to include.
Finally, I think I would like to work on again, reiterating
my point about comprehensive planning. We have long realized
that in order to manage rivers effectively we need to have a
consideration of the entire river and the surrounding
watershed.
I think we need to bring this same comprehensive approach
to Corps programs. CSO, for example, supports a sediment
management policy that recognizes the importance of conserving
sand resources wherever possible, not necessarily picking up
dredge material and simply disposing it at a traditional
disposal site.
We need to prevent the removal of sand and sediment
resources from the littoral system along the Nation's coast and
we need to look at alternatives that favor the beneficial use
of those sand resources.
We also would like to more interagency cooperation. I will
conclude right now. I appreciate it. Again, we heard Senator
Lautenberg mention working with other agencies, on FEMA and so
forth, and resource agencies. I do think we can work with the
Corps to improve interagency coordination as well.
In conclusion, I would like to thank you for the
opportunity to testify today. Thank you.
Senator Voinovich. Thank you, Mr. MacDonald.
Now we will call on Mr. Parrish, vice chairman, Association
of Flood Plain Managers, Chief, Hazard Mitigation Planning from
the State of Maryland.
Mr. Parrish?
STATEMENT OF WILLIAM PARRISH, VICE CHAIRMAN, ASSOCIATION OF
FLOOD PLAIN MANAGERS; CHIEF, HAZARD MITIGATION PLANNING,
MARYLAND DEPARTMENT OF ENVIRONMENT
Mr. Parrish. Thank you, Mr. Chairman. Good morning Senator
Smith and Mr. Chairman.
I am Bill Parrish, Vice Chair of the Association of State
Flood Plain Managers, and State Flood Plain Manager for the
State of Maryland.
The association and its 12 State chapters represent 3500
State and local officials and other professionals engaged in
all aspects of flood plain management and hazard mitigation.
The association strongly supports the inclusion and
continuation of the planning, the assistance to the States and
the flood plain management services programs as a part of the
Corps' essential mission.
All of the association's members are concerned with working
to reduce our Nation's flood related losses. We work daily with
cities, towns and counties that are struggling with pressure to
build in flood-hazard areas, working to rebuild more wisely
after floods, and planning to implement new programs and
undertake flood control and management projects.
Our State and local officials are the Federal Government's
partners in implementing programs and working to achieve
effectiveness in meeting our share of the objectives.
Wise sustainable flood plain development and reduction of
flood losses in our Nation's 20,000 flood-prone communities
saves lives and property. It also saves taxpayer dollars in
relief and recovery costs.
The association has been involved in flood plain management
and flood control policy for decades. During the most recent
decade the Nation has made some progress toward more
sustainable and responsible approaches to reducing flood damage
and costs.
Nevertheless, we continue to see increased damages from
flooding, now approaching $5 to $8 billion per year.
The association supports both structural and nonstructural
flood loss reduction projects, but believes we need to achieve
a better balanced approach to flood loss reduction and
prevention through stronger roles and responsibilities at the
local and State levels.
Federal flood policies should support and encourage local
and State solutions to flooding problems and costs. Often
locally developed solutions will address multiple-level
concerns incorporating economic, social, and environmental
considerations into flood control and management strategies.
We encourage Congress to support policies and programs that
will assist communities and citizens to develop and implement
local solutions.
Successful examples of locally generated of flood plain
management approaches that address multiple local objectives do
exist. We should learn from these success and replicate them.
The association is proud of the efforts coordinated by our
member, Dave Kennedy, village administrator of the Village of
Richmond on the Ohio River.
Mr. Chairman, you may be familiar with this local decision
not to build a flood wall. It is a good example of a local
economy not being able to support the cost-share and
maintenance components of a Corps of Engineers project, but the
need to reduce flood risk while preserving cultural richness
and aesthetic attractiveness of the village.
An approach instead was devised which included the clearing
of a floodway, developing a public response plan geared to
water levels, and engaging in a significant public awareness
effort.
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.
We have learned that some structural solutions to specific
problems can inadvertently create new flooding problems
downstream. Some generate higher operation and maintenance
costs and are feasible for a community and its citizens and
local officials to support.
Local governments and citizens grow to believe the Federal
Government will bail them out if flooded or if problems get
worse. Structural flood control projects are necessary in many
instances and are often advocated by our members.
However, 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 and flood
loss reduction in the Nation.
As State and local officials who job it is to assist our
communities in saving lives and avoiding damage from floods, we
know how important it is to have a variety of tools available.
This allows us to help communities to plan their flood
plain management comprehensively, to meet multiple objectives,
to get the most value for the Federal, State and local dollar
spent and to become fully engaged in managing their own risks.
In recent years the Army Corps of Engineers, with the
assistance of Congress, has developed a number of programs
which provide broad technical assistance and expertise to local
communities in these efforts.
Our members have found programs like flood plain management
services and planning assistance to the States to be valuable
tools for which there is much more demand than can be met.
Thousands of communities have used these low-cost technical
assistance programs which help them plan and implement local
solutions with long-term benefits, thus saving in Federal,
State and local disaster expenditures.
We are very pleased with the authorization of the Challenge
21 initiative because it offers essential flexibility such as
the ability to accommodate smaller projects for communities
where a traditional structural project may not be justified or
the ability to mix structural and non-structural elements to
better design an overall project.
This program can fill a gap that has existed in the Corps'
ability to be effective in addressing certain kinds of flood
plain management situations. If sufficiently well funded, it is
likely that hundreds of communities in the Nation can benefit
substantially from the Corps' efforts.
We encourage the Congress to continue these efforts as a
supplement to any cost-effective, feasible and environmentally
acceptable projects funded.
In summary, the Federal Government should facilitate local
development of flood loss reduction strategies and offer
incentives for wise decisionmaking.
The Corps of Engineers is pursuing some directions that add
new tools for enhancing the effectiveness of those already in
the toolbox, tools which allow poorest programs to meet
multiple objectives for localities in their flood plain
strategies which compliment other Federal programs and stress
the positive impact of Federal dollars on loss reduction and
public safety represent forward-looking evolution of the Corps'
critical mission.
Thank you for the opportunity to present this testimony.
Senator Voinovich. Thank you, Mr. Parrish.
I think that the panel has done a very good job of giving
us a pretty good understanding of the work the Army Corps of
Engineers is doing in the United States.
It is a little bit mind-boggling, all of the projects that
the Corps is involved with.
Just hearing the testimony refreshed my memory of some of
my experiences as Governor. Toledo Harbor, the Ohio River, the
two floods that I experienced and the importance of mitigating
the damage and what they are trying to do in Richmond, the
major undertaking that we did to evaluate the entire coast of
Lake Erie in the State of Ohio and put some restrictions on it
and the controversy that we got into on that one. It took us 4
years to finally come up with a plan that people were satisfied
with in terms of what they could do with the shoreline and what
they needed to do to protect it.
So, this is quite a smorgasbord out there, isn't there, for
the Corps of Engineers?
My first question is this, and it is an easy one: Do you
all agree that we need to increase spending to get this job
done? I would like to get your point of view on it. I will
start out with you, Mr. Brinson.
Mr. Brinson. Absolutely, Mr. Chairman. It has been somewhat
interesting and somewhat depressing over the last six or 7
years to sort of watch the budget-appropriations process begin
and end with a very small number and Congress has to go through
the process of making it at least adequate.
We have a backlog because of the lack of funding. Surely,
there is some value-added management that could take place. But
fundamentally, the Corps just hasn't had the resources that it
has needed to carry out these projects in a timely way.
It is becoming more and more important to the industry that
I represent.
Senator Voinovich. It takes just a yes or no. Have you
lobbied the Administration to increase spending in this area?
Mr. Brinson. Constantly.
Senator Voinovich. Mr. MacDonald?
Mr. MacDonald. Yes, I will agree with Ron. I will say here
also that in my previous life I was Director of Congressional
Affairs for the American Association of Port Authorities. So, I
had the pleasure to work with Ron and I also know a fair amount
about their needs.
I want to make two points. One is again, yes, the Federal
share should be increased, but don't forget, these are all
cost-shared, because we also take a local share. The State
share should increase along with that.
We are willing to make that commitment and the local
sponsors are, I think, as well. So, I think that is an
important point to keep in mind as we try to break this logjam
to increase funding.
I think as well that again, once we recognize that the
reasons we haven't increased funding really have nothing to do
with the need. They are independent factors having to do with
budget and other issues, extremely important.
But I think we need to be able to refocus our energies on,
again, setting up that framework for investment. I know the
port community has spent a considerable time identifying the
needs and the amount of money.
We have worked as well very closely with the Administration
on needs for shore protection projects along the coast to
protect communities against coastal hazards.
We thought we had reached an agreement with the
Administration last year with regard to some changes in cost
sharing which we were willing to do. Yet the Administration
still has balked at funding those projects.
So, we think there is a need for more funding and again I
think the local project sponsors are willing to work with you
to identify those kinds of projects that need to be funded in
the future.
Senator Voinovich. Mr. Faber.
Mr. Faber. Mr. Chairman, respectfully, we disagree, in
particular because so many past Corps projects have failed to
meet the benefits that the Corps predicted. More than half of
the segments of the Inland Waterway System have never attracted
as many barges as the Corps predicted when they said those
projects were economically justified.
Because of fundamental flaws in the way they predict costs
and benefits, many of the flood control projects that they have
constructed have not produced the benefits that they have
predicted.
So, it is our opinion that if you reformed the Corps'
decisionmaking process by using modern estimates of benefits
and costs, then many of the projects which are currently
authorized, certainly many of the projects which are not on the
active list, would not have a positive benefit-cost ratio.
The other problem, of course, is that operation and
maintenance costs have skyrocketed during the period in which
construction costs have fallen. That reflects part of the
problem that many of the segments of the Inland Waterway System
are very expensive to maintain.
The Ohio is not an example, nor is the Mississippi or the
Illinois, but many segments, in fact, 19 of the segments of the
Inland Waterway System consume almost half of the maintenance
costs of the Inland Waterway System.
In addition, if the Corps was required to mitigate at the
same level that private developers and the rest of the Federal
Government is required to mitigate for the environmental
impacts of projects, again, many Corps projects would not be
cost-justified, in particular many projects in the Lower
Mississippi Delta if the real costs of mitigation were included
in the Corps' benefit-cost calculation.
Then those projects simply would not be cost justified. So,
regardless of whether we support more funding, if there is no
more funding available, another way to get at the backlog is to
reform the Corps' decisionmaking process.
Senator Voinovich. Thank you.
Mr. Parrish?
Mr. Parrish. We, of course, support non-structural projects
as well as structural. In particular, we would support
additional funding to support non-structural flood mitigation
and flood loss reduction programs that the Corps operates
including the two that I mentioned earlier, planning assistance
to the State and flood plain management services.
Senator Voinovich. I have one more question and then I will
let the chairman ask questions.
Mr. Faber, you, in your testimony, and I read it, made some
very serious allegations about the Army Corps of Engineers in
terms of cost-benefit and whether it is benefiting private
parties more than it is the public and so on.
You just again reiterated that you think a lot more people
could work harder and could do more with less of the money and
so forth.
I would like the other members of the panel to comment on
Mr. Faber's testimony. Do you agree with what he has to say in
terms of the Corps of Engineers and do you think that there is
substantial need to review what they are doing and improve it?
Do you agree or disagree with Mr. Faber's conclusions that
too often the projects that have been undertaken have not met
the cost-saving benefits that were predicted?
Mr. Brinson. Mr. Chairman, I would like to know more about
his processes of documenting these conclusions. So far, and
again, all we know is what we read in the newspapers, but so
far he has kind of had a free ride.
It would be fun to get him in a forum and cross-examine him
just a little bit just to see. Because I think a lot of these
projects, I mean time will tell whether or not the Corps has
done a good job.
Now, having said that, the Corps has not been perfect and
will not be perfect. But what we have to guard against here is
vulcanizing this process of Corps projects to the point that we
jeopardize this country's competitiveness and we are talking
about the navigation system.
If it is faulty, let's fix it. But so far the argument that
we have heard is ``let's shut the whole thing down and then fix
it.''
That is just simply an irrational approach given the
imperatives of keeping our navigation system in a progressive
mode.
We are doing a good job with the navigation system now, but
when we look on the 10-year horizon, unless we get ourselves in
high gear on the channel side of this equation, we are going to
start having some serious problems.
So, sure, I think we should listen to his argument. I would
like to see more documentation of his argument, but certainly
we shouldn't accept the notion that we should shut the whole
process down while we fix it on his terms.
Senator Voinovich. Well, I would like to just get into it,
really, to get more specific.
There is some interest, particularly in the environmental
community that question the need to deepen our ports to
accommodate the latest generation of container ships,
indicating that the benefits of this deepening accrues to non-
U.S. based carriers and represents destructive competition
between U.S. ports without benefit to the U.S. economy.
We have some projects that are being proposed to deepen
some ports that are mind-boggling in terms of the dollars that
are involved.
What is your reaction to that?
Mr. Brinson. Well, first of all I want to tell you that in
my professional view I don't think in the end we are going to
need all these deepening projects. This is not like the great
race to have every port deepened to 55 feet back in the late
1970's and early 1980's when we were going to dominate the coal
export market.
But I really don't understand the point of foreign carriers
using our ports. You know, our ports serve all carriers and
that is the demand of the marketplace. We do have a decline in
U.S.-flag presence in the liner services.
But at the end of the day, Mr. Chairman, this country is
absolutely dependent upon the coming and going of ships and it
is the port industry's duties to prepare for that and
accommodate it.
So, I really don't understand that issue. But let us prove,
let us on a port-by-port basis prove what we need. If we can't,
we shouldn't carry out the projects. We also, I think, have to
be on guard against any sort of redundancy, over-capacity.
We watch our industry very, very carefully and we are
beginning to see some trends that if they fully mature we could
end up with some over-capacities in some parts of our port
system.
But today, the challenge is to get ready for a doubling of
international trade, and again, depending on the trade route,
it could take place within 8 years or not more than 20.
Hemispheric trade, north-south trade is projected to double in
the next decade.
Ninety-six percent of it will move by water carriage and
thus we will become dependent upon adequate ports and
waterways.
Senator Voinovich. Is there anybody that is really sitting
down right now? We know that we are in the international
marketplace. I can tell you that the economy of Ohio is tied up
in international trade and international investment, big time.
But is anybody in the Federal Government looking down the
road to see or make some projections about what kind of
activity will be generated or what has already been generated
or what will be generated or how do you deal with it and plan
so that you don't end up deepening more ports and spending
money that you ought not to?
In other words, who is putting together a strategic plan
for the next decade about where we ought to go in terms of that
international marketplace and our ports in this country?
Mr. Brinson. The Department of Transportation has an
initiative that I would characterize as being somewhat
embryonic just now attempting to do that, to really package the
marine transportation assets of this country and then try to
draw it down into single, rational, strategic planning focus.
I can assure you, Mr. Chairman, that our industry as a
whole is attempting to do this. We do it on a port-by-port
basis and then we kind of pool our work so that as an industry
we have a pretty good idea of what the demands are going to be.
We definitely want to avoid any sort of over-capacities.
I think at the end of the day no port is going to insist on
a deepening project that is not going to meet cost-benefit
tests in a legal sense nor commercial tests in a rational,
logical sense.
Senator Voinovich. Thank you.
Chairman Smith?
Senator Smith. Thank you, Senator Voinovich.
Mr. Faber, in your comments you talk about, at least in
your testimony, you talk about the under-utilization, that
Congress should direct the Corps to measure the extent to which
goods shipped by barge could be shipped by other means and to
other destinations, et cetera.
Yet, Mr. Brinson in his written testimony said one gallon
of fuel can move one ton of cargo 514 miles approximately by
barge, but only 59 miles by truck or 202 miles by rail. They
are pretty compelling figures that would be both economically
and environmental sound in terms of fuel use.
No. 1, do you agree with his figures? No. 2, where
specifically are we under-utilizing our rivers?
Mr. Faber. Well, there are two answers to that question.
What I intended to say in my testimony is to suggest that when
the Corps assesses whether a river should be channelized to
support inland navigation or new locks should be constructed to
facilitate 1200 foot tows, I wanted to make sure that when the
Corps does that analysis they analyze what happens to demand
for barges on that particular river when transportation costs
change.
So, if the cost of moving barges on the Mississippi, for
example, goes up, what is the likelihood that a farmer in
Illinois will ship his grain to another destination or by
another mode? It is simply requiring another demand curve to be
included in the Corps' estimates of demand for Mississippi
River barges, for example.
Now, one of the interesting things that has occurred
recently is that the Corps has begun to do this. It is one of
the reasons that the proposed locks on the Upper Mississippi
and Illinois Rivers apparently were not originally economically
justified according to the original economist.
But it is not done as a matter of course on all Corps
navigation studies and it certainly hasn't been done to study
the value of projects which were authorized years ago.
So, making sure that we accurately reflect demand for new
locks or new channelization projects is important because, as
you talked about, there are scare resources. As far as fuel
efficiency goes, there are some studies done by Iowa State
University that show that because of a revolution in the
technology of rail, that rail is now, especially rail moving to
the West Coast, rail is much more fuel efficient than barge.
So, I think we would have a difference of opinion about the
fuel efficiency of rail and barge.
Senator Smith. Where specifically would you say they were
under-utilized, rivers?
Mr. Faber. Well, many segments of the Inland Waterway
System have little or no traffic. I can provide you a list, but
obvious examples are the Missouri, the Apalachicola, the
Kentucky, the Coosa, and the Alabama. The list is very long,
Senator.
I am not suggesting that we shut down those waterways. We
strongly support navigation on rivers like the Mississippi and
that is why we work with Marksey Dows and other navigation
interests to make sure that they are navigated in an
environmental acceptable way.
What I am suggesting is that the analysis which showed that
those projects were cost-justified were wrong because the
number of barges that the Corps originally predicted would use
the Apalachicola, the Red, the White, the Missouri, the
Tennessee Tombigbee, the Coosa, the Black Warrior, the list
goes on.
Those original projections were never met.
Senator Smith. Well, let me ask you, Mr. Brinson, are there
waterways that have not met the volume of traffic that was
expected when the project was authorized?
Mr. Brinson. Yes, sir.
Senator Smith. Do we have any idea what the cost to operate
those might be?
Mr. Brinson. I don't have it. I am sure Mr. Faber can help
you. As I said earlier, this process has not been perfect, nor
should be expect it will be.
But on the other hand, Senator, we have many projects that
have exceeded Corps projections about 50-fold. This is going to
be a constant process of trying to get it right.
May I go back to a point that Mr. Faber was just making? I
think he is getting into some intermodal or some quantitative
analysis related to intermodalism. I think that would probably
be the exercise as I would describe it, Mr. Faber.
If you just stop right there, you could prove just about
any point that he wanted to. But there is another dimension to
saying OK, let's take it out of barges and put it in trucks or
rail. One that comes to mind immediately is that you just put
another truck on the highways and we are having problems
maintaining and developing highway infrastructure.
So, if we are going to get into this kind of quantitative
analysis, it is so very important that it deserves more than
just a simple, straightforward calculation.
We have to look at this as a decision tree and again, you
read the testimony, Senator, and quoted accurately from it, but
the barge traffic is taking trucks off highways. It is
relieving at-grade crossings. It is a safety issue. It is an
environmental issue. It is an economic issue. If we are going
to talk about this, let's talk about it in all dimensions.
Let's carry the quantitative analysis out to the ultimate limb
of the decision tree.
Mr. Faber. May I respond to that?
Senator Smith. Sure.
Mr. Faber. There is no question that if some of these goods
were not moved by barge they would obviously have to move by
other means. But as Mr. Brinson knows, most of the truck
movement associated especially with grain is short haul to a
nearby terminal.
Increasingly, farmers own their semis and they haul to a
terminal or processing facility where it is either taken over
by a processor or shipped.
Whether it is shipped by rail or shipped by barge is not
the question in the mind of the farmer. Once it is taken by
truck to the facility, it is out of his mind. So that one of
the things that I think many people said over the years is that
if you eliminate barges then you would have hundreds of
thousands of new trucks on the road.
In reality, most of the grain that would be moved by barge
would simply be moved by rail if, and it's a big if here, you
are going to shut down a segment of the Inland Waterway System
that are under-performing or under-utilized.
That is a question obviously you have to struggle with. To
answer your first question, we spend about 45 percent of our
navigation maintenance funding, over $200 million a year, on
segments of the Inland Waterway System that support about 3
percent of the traffic.
So, nearly half of the money we spending O&M on the Inland
Waterway System is spent on segments with virtually no traffic.
Getting rid of those waterways is difficult politically.
But what you might do if your long-term goal is to try to
reduce the O&M burden on the Corps, is to create some sort of
program to help facilitate the closure of some waterways
providing groups or cities or counties some funding to help
them transfer to another use of that river, whether it be a
recreational use or some other use, that would replace the
benefits the waterway now provides.
Senator Smith. That is all. Thank you.
Senator Voinovich. Thank you.
I just have to speak from my experience, in my State, well,
actually in the middle part of it, well, actually the northern
part, with the merger of the railroads the people are just up
in arms about the number of trains and about the delays and the
rest of it. So you have a real problem with rail in this
country today.
In addition to that, part of my responsibility is also the
highways and transportation and we have a challenge there in
terms of capacity and being able to respond to it.
One of the things that you may not take into consideration
is the alternative that water makes to the customer. You say
the farmer doesn't care about it. But if the farmer is going to
have to pay more or get less for his product because it is not
going out on water, then put it on rail----
For example, I lost a steel facility in the State of Ohio
that went to Indiana. They wanted a location on the Ohio River
in a certain place. The major reason they wanted it was because
they could get their raw material in off the river. They could
ship their product out on the river. They probably wouldn't
ship it out, but they wanted the option.
So, when they negotiated with the railroads they weren't
hosed in terms of the cost of their rail coverage. I think that
the idea of intermodal in looking at some of these things, that
we ought to take that into consideration.
You know, if I am looking at half the moneys being spent on
the most unproductive part, then we ought to look at it. Do we
need to maintain those rivers and should we convert them over
to a different use?
If we are talking about Federal dollars, could it be better
used to maintain the things that really do make a difference
for our Nation?
Then you also look at the dollars coming in. Of course,
transportation, now the trust fund is all going for the highway
system.
But I just think that some of the organizations like yours,
Mr. Faber, and Mr. MacDonald's or Mr. Parrish or Mr. Brinson, I
don't know; do you guys ever sit together and talk and discuss
your respective concerns and put the other guy's shoes on and
try to figure out how we can work together to figure this thing
out? Do you ever do that?
Mr. Faber. We have many conversations with our colleagues
at Mark-2000 and Dynamo and others. So we are in regular
contact, perhaps not enough.
Mr. Brinson. I was just thinking, perhaps we ought to
invite Mr. Faber and his colleagues to New Orleans and show
them exactly what a barge full of grain looks like.
Mr. Chairman, you make the basic point. That is, without
the availability of water transportation, chances are that
farmer is not going to be shipping his grain because he has
just lost his competitiveness in the global markets.
Mr. Faber. In reality, Senator, if I may, on rivers like
the Ohio, the Mississippi, the Illinois, barge navigation does
have an impact on rail rates and other transportation costs and
I think everybody agrees with that.
We are not quibbling with whether there should be barges on
any of these rivers, especially the Ohio. But what many
economists will tell you is that on rivers like the Missouri
River, for example, where there is very little traffic and very
little agricultural related traffic, there is simply not enough
grain moving to have a competitive impact on rail rates.
So, you have to draw a distinction between the high volume
segments of the Inland Waterway System which have an impact on
railways and the under-utilized segments that have virtually no
impact on rail rates.
The main point I am making here isn't whether we need to
decide to kick people off the Ohio River. The main point I am
trying to make here is that the method by which the Corps has
predicted whether these projects will be successful or not has
failed and that many of these projects which on paper appear to
be cost-justified, I think is you did a post-facto review,
would be horribly economically unjustified.
I think in addition to that, one big mistake that we have
made, and I think General Van Winkle and General Furman would
agree, is that there are simply some projects that we should
not have built because their environmental impacts were so
great.
The Snake River dams, I think, are a great example, where
we built dams to afford navigation even though we knew then and
certainly know now that there would be no way that we could
cost effectively or successfully mitigate for those projects.
The Everglades is another example. We are spending billions
and billions and billions of dollars to undo the damage of past
Corps projects that probably should never have been built.
Senator Voinovich. But the issue is that the Corps built
them. I have heard that over and over again. You are right, the
original concept was to drain the Everglades out and use it for
agriculture and development purposes.
That was in response to the political leadership. That was
decisionmaking based on bad political leadership. Then all of a
sudden people woke up to the fact that we are losing the
Everglades.
Mr. Faber. Here is the problem: We are about to repeat that
same mistake all over the country today. We are building
projects right now and we are going to build projects in the
coming years that have environmental impacts that are so great
that they cannot be cost-effectively or successfully mitigated.
I hope this is not the case, but 50 years from now the
Senator in your seat will be trying to figure out how to undo
the damage that we are about to do to the White River and to
many others in Arkansas and many other rivers around the
country because the Corps somehow showed that those projects
were economically justified.
Senator Voinovich. Well, you obviously represent a
perspective that is supported. I would be interested in your
submitting to this committee some of the material that you just
talked about in some detail and give the Corps an opportunity
to go over it and look at it.
Let us see just what the facts are in terms of your
perspective and your perspective.
Again, though, I think that it would be well-taken for some
of the others, and I don't know all of the others that are out
there and what groups they are in, but somebody ought to
convene a group and sit down and figure out--you know, we have
our competing interests, is there any way that we can work
together to try and devise--for example, you know, all of your
members are going to want deep ports. How do you decide as an
organization which ones you are going to support? As an
organization you are probably going to support all of them.
But it would be challenging for your organization to come
together and say, you know, there are some criteria that we
ought to look at in terms of, you know, what we ought to do in
this area to give those of us in decisionmaking positions a
better insight into just what we should support and not support
and how many of them can we support.
Give us some of that kind of information and then again,
sit down with Mr. Faber and look at some of these projects that
they are talking about where organizations are interested and
does this make sense.
Then talk about the issue of funding. You know, your answer
was, ``take care of it.'' Let's get serious. You can do a lot
of this stuff and you are still not.
You are talking about $39 billion worth of projects. Find
out if there are ways that some could not be built and so
forth. But the fact is that the money is not there and we need
to recognize that it is not there and try to figure out how do
we get it there.
Mr. Faber. Just because in 1936 your predecessors decided
that a project should be built as long as the project benefits
exceed the costs, that formulation doesn't make sense any more.
We can't build a project just because it is cost justified.
The trick is, I think, respectfully, to start to say which
projects are in the national interest, which are the highest
priority projects, and maybe it is locks on the Ohio River, and
which are the projects which are low priority or should be
built by private interests?
This New Deal era formulation that said we should justify
projects regardless of who the beneficiaries are----
Senator Voinovich. And let's face it, a lot of the projects
that were built in those days were public works projects to put
people to work. They were out of work and the Federal
Government went out and did a lot of things.
We could look back and a lot of them were terrific. But you
are right. It is a different environment. The issue is: How do
you come up with a formula to reflect the reality of today and
put it in place and get people to buy off from it?
I feel sorry for the Corps of Engineers. You have people
banging away on them. Some Senators are putting in this
language that you can't touch the Corps of Engineers and a lot
of it is because they want to protect their own pet projects;
we don't care what the Corps of Engineers cost-benefit is, we
are going to build it anyhow. And it is done because Congress
says it is going to be built.
Somebody is in charge of some appropriations committee or
another committee and jams it through. Then you go back and you
don't capture the history of some guy who was chairman of this
committee or appropriations who said, ``I am going to do this
come hell or high water.''
Mr. Faber. Here is the solution honestly. It is to replace
that system with a system of criteria that says we are only
going to authorize and fund projects which are in the national
interest, which provide significant benefits which are
environmentally acceptable so there is some restraint on the
ability of Congress to authorize projects which are frankly not
in the national interest.
Mr. MacDonald. If I could say something, one thing is that
I think the Corps, if they were up here, would say to a large
extent they do consider those things and in fact their cost-
benefit is intended to consider those things.
There is a legitimate question about whether they do it
correctly and what the criteria is. I think you focused on
establishing criteria and I think that is the basis upon which
you can get some understanding.
Senator Voinovich. I am a big believer in the public-
private partnership, you know. I believe there are a lot of
things that can get done if you get the right people talking
together and then come back and get a consensus from the
customers.
I haven't been in the Senate very long, but I have watched
some of my colleagues and sometimes there is a tendency on my
part that I am going to micro-manage, that I know all the
answers.
I believe in quality management. If you believe in quality
management you go to the people who have the problem, empower
them and ask them, ``What is your best idea about how this
problem can be solved?'' and then get their best thoughts.
Too often I just see a lot of competition. This group
represents this group and this group. They all do their thing
and they all come in here. I really do. I challenge you today
to sit down and you have some ideas on this; why don't you work
together and spend the next couple of months?
I am going to ask you to come back in 6 months. We will be
around here in September. I'll tell you what the challenge is.
I am going to ask you to really work on coming back to deal
with some of the things we have just talked about here,
including the issue of this criteria thing. One of them is the
waste treatment facilities. I have some money put in the last
one because everybody else was doing it.
My feeling is give it up. Let's just concentrate on the
stuff that ought to really be in this WRDA thing and I would
like your opinion on just what should be and what ought not to
be. Then get together and come back and talk about some of the
stuff we have been talking about today with some
recommendations that you think would make sense.
I know it is not going to be easy. But I can assure you of
this, if you all can get together and come back with something,
there is a darned good chance that what you want will get done.
On the other hand, Mr. Faber, you go off over here, Mr.
Brinson, you go over here. You do your thing and you do your
things. God knows if anything will get done. Let's make
something happen; OK?
Let's not just have another hearing and everybody go off
and do their thing. Will you do that? Can I get you to agree
today that you will do that?
Mr. Brinson. I would enjoy doing that. Mr. Faber, I hope
you will come visit us in New Orleans. We will close the door
and take as long as necessary.
Mr. Chairman, Mr. Faber was referring to the 1986 WRDA
bill, I think. I think we need to point out that with the 1986
bill, and this gets to your point about are we going to build a
bunch of ``Fields of Dreams'' in our industry, with that comes
some sizable cost sharing that our industry has factored into
strategic planning ranging from 35 to 50 percent.
So, even as his view is that the Congressionally mandated
policy has not been controlling enough, on the other hand, we
have taken as a discipline that we are not going to be pursuing
projects that are not going to be productive because we have to
come up with a cost-share straight up.
I can tell you that the port industry would welcome this
kind of dialog and I hope that I can be involved personally.
Senator Voinovich. I would like you to do that. We are
going to have another hearing on the same subject and see if we
have made some progress.
Your point also about cost, by the way, that is a really
good thing. If you say we are going to do this project and in
order for you to get to where the State or the country or the
local people are going to participate and even the private
sector, then you find out that separates the men, you know,
from the boys.
I will never forget, they had a Federal program that helped
urban areas. I was Mayor of Cleveland and President of the
National League of Cities. The Federal Government would
guarantee 90 percent of the project. So a lot of projects got
built that shouldn't have been built.
They didn't worry about it because it was 90 percent
guaranteed.
We went to another program called the Urban Development
Action Grant Program, the UDAG Program, and it required $5 or
$6 private dollars for every public dollar. It was interesting
to see how it changed, the whole presentation of projects
because there were some folks who were putting some private
sector money in it so you really did get the issue of whether
or not it they had the cost-benefit and it was justified.
So, that is a very good point that you made. Maybe we ought
to look at more of that.
Mr. Faber. Well, you might think about applying cost
sharing to previously authorized projects as well as projects
authorized after 1986. I think many of the projects in the
backlog would suddenly lose support if local beneficiaries were
required to pay 25 or even 30 percent of the cost.
Senator Voinovich. That is not a bad idea. One of the
things about the backlog, we are trying to find out if they
really are legitimate.
Mr. Faber. That would be the simplest way.
Senator Voinovich. Yes. So much of the stuff, it gets
passed and it gets authorized but it just never happens. So
that is a good idea.
So listen, we will see you in five or 6 months.
Thank you very much.
[Whereupon, at 12:29 p.m., the subcommittee was adjourned.]
[Additional statements submitted for the record follow:]
Statement of Claudia L. Tornblom, Deputy Assistant Secretary for
Management and Budget, Office of the Assistant Secretary of the Army
(Civil Works)
introduction
Mr. Chairman and members of the subcommittee: I am pleased to have
this opportunity to represent the Assistant Secretary of the Army for
Civil Works and to testify on Army Corps of Engineers missions and the
construction backlog. Accompanying me is Major General Hans Van Winkle,
the Corps' Deputy Commander for Civil Works.
We welcome and encourage dialogue about the challenges that lie
ahead and how we plan to meet them. Flooding continues to threaten
communities. The nation's capability to respond to natural disasters is
being stretched. Much needs to be done to clean up, restore, and
improve the environment.
Meeting these needs is a continuing commitment that challenges the
entire organization. The Army takes pride in the Corps' record of
carrying out its stewardship responsibilities.
In this statement, I will summarize briefly the Corps' historic
role in service to the nation, followed by a more in-depth summary of
the current Civil Works program mission, current construction backlog,
and water resources related socio-economic trends and future
challenges. I conclude my statement with a summary of the our strategic
planning efforts, including actions we are undertaking to ensure that
the Civil Works Program remains strong, balanced, responsive, and
highly productive.
meeting the nation's water and related land resources development and
management needs
Corps' Historic Role in Service to the Nation
The Army Corps of Engineers began its distinguished public service
in the New England Provincial Army, before our nation existed, with
construction of fortifications for the Battle of Bunker Hill in 1775.
Since then, for more than 225 years, the Corps has responded ably to
the Army's and nation's needs.
What began as a military mission at the birth of the nation in the
eighteenth century grew into civil and military missions of building
and preserving the nation in the nineteenth century. The Corps mapped
the frontier and laid out roads, canals, and railroads for westward
expansion. The Corps aided national commerce through development of a
vast navigation system of coastal and inland channels, ports, and
harbors. The Corps built many of the public buildings in the nation's
capital, including the Capitol. In the twentieth century, The Corps
built the Panama Canal, after others had failed. Based on the Corps'
performance over the years, the Administration and Congress expanded
both the civil and military missions dramatically.
Civil Works primary project purposes include flood, hurricane, and
shore erosion protection; water and related land environmental
management; hydropower generation; water-based recreation; and
technical support for other Federal agencies, States, and other
nations. The Corps water and related land management infrastructure
includes over 400 multi-purpose reservoirs, 12,000 miles of navigation
channels, hundreds of ports and harbors, and 11.6 million acres of
land.
As our national needs and priorities have changed, the Corps has
been at the leading edge to meet them. As we enter the twenty-first
century, we envision that the Corps will continue in its longstanding
and exemplary leadership role as a great problem solver for the Nation.
Current Civil Program Mission
The goal of the Army Civil Program is to contribute to the welfare
of our nation by providing, in partnership with customers, desired
goods and services of highest quality, designed to be economic,
technically sound, and environmentally sustainable. We do this through:
formulation, development, and operation of facilities and
practices for management of the nation's water and related land
resources (including protection, restoration, and management of
environment resources);
administration of water resources management programs
(including resource use regulation, hazardous waste cleanup, and
assistance with natural disaster response and recovery); and
engineering and technical services for other Federal
agencies and States.
The Army Civil Program is executed through subordinate programs
established expressly for accomplishment of distinct phases of work,
such as investigation, construction, and operation and maintenance.
These programs are designed to address needs of all purposes
thoroughly, fairly, and in a timely way. They are executed by a
talented team of multidisciplinary staff specialists and private sector
contractors. This team develops comprehensive perspectives across
technical, socioeconomic, cultural, political, geographic, and
environmental boundaries, in examination and recommendation of
solutions to problems in all phases of our work.
The Corps works with many partners throughout this process. These
include direct customers; other stakeholders such as local, State, and
Federal agencies; and the general public. As a result, competing goals
of many interests are balanced to satisfy needs and desires for a wide
variety of water and related land resource management goods and
services that contribute directly to the national welfare.
In light of these broad responsibilities and the Corps' experience
in executing them, and the national needs for water and related land
resources management as we enter the new century;, we present the
following assessment.
construction backlog
The Army Corps of Engineers construction backlog consists of the
uncompleted portions of all projects authorized by Congress in the
Construction, General account and the construction portion of the Flood
Control, Mississippi River and Tributaries account. The total Federal
cost of these projects is $71 billion of which $23.5 billion has been
allocated to date, $1.5 billion is included in the FY 2001 President's
budget, leaving a balance to complete construction of $46 billion. This
includes all authorized projects, whether or not they have received
funding. This amount comprises the construction backlog.
The projects in the backlog have been divided into 3 groups:
active, deferred, and inactive projects. Active projects are funded,
economically justified, and supported by the non-Federal sponsor.
Deferred projects have doubtful economic justification and need restudy
to determine their economic feasibility, or are projects for which the
non-Federal sponsor is currently unable to provide required
cooperation. Inactive projects are either (1) not economically
justified and restudy would not develop a justified plan; (2) no longer
meet current and prospective needs; or (3) are not actively supported
by the non-Federal sponsor.
Within these groupings, the construction backlog is comprised of
five distinct parts: $8 billion for active preconstruction engineering
and design (PED) projects not yet authorized, $4 billion for authorized
PED projects, $26 billion for active projects that have been funded for
construction, $2 billion for deferred projects, and $6 billion for
inactive projects. It is unlikely that the deferred and inactive
projects will proceed to completion; therefore, the viable portion of
the backlog totals $38 billion for active projects.
About $21 billion of the backlog is attributable to 180 projects
included in the FY 2001 President's budget. The size of the
construction backlog, coupled with the known projects awaiting
authorization, imposes a burden on the Federal budget that today's
budgetary realities cannot satisfy. Sufficient funding is simply not
available to implement all of these projects in a timely way.
water resources trends and challenges
Introduction
Throughout its history, external forces have affected the Civil
Works Program. The most important of these have been, and continue to
be, customer demands for goods and services and taxpayer concern that
investment in such goods and services be advisable. Our customers
include direct beneficiaries of our projects, most of whom are cost-
sharing partners. Taxpayers include the general public and taxpayer
advocates. For our program to remain a relevant and viable contributor
to national welfare, we must remain sensitive to these forces,
continually reorienting, rescoping, and refocusing the program in light
of them.
Meanwhile, our current assessment of water resources trends and
challenges is summarized in the following:
Trends
As global markets expand, international commerce will
demand more efficient system of domestic ports and harbors and improved
vessel and intermodal cargo handling facilities.
With many properties and major populations located in the
nation's floodplains, flooding will continue to threaten national
welfare. Moreover, as pressures continue to develop flood-prone lands
and natural flood management systems are compromised, the threat of
flood damage will increase.
Ongoing migration of the nation's population to coastal
plains and coasts, and attendant property development, will increase
risks of loss from coastal erosion, floods, and hurricanes.
The ongoing migration to coastal plains and coasts will
put increasing pressure on coastal habitat, especially wetlands, and
other fish and wildlife ecosystems.
Through Water Resources Development Acts of 1996 and 1999
(WRDA 1996 and WRDA 1999), the Congress placed national environmental
health near the forefront of social priorities. These Acts provided
additional authorities to the Corps for ecosystem restoration and
watershed protection, environmental infrastructure development, and
placed an increased emphasis on nonstructural floodplain management.
As the nation's population grows, there will be growing
conflicts among multiple interests within watersheds wanting to use
available water for diverse needs.
As the nation's water resources related environmental
infrastructure ages, it must be rehabilitated, modified, replaced, or
removed.
Given the American public's strong and growing interest
in downsizing the Federal Government and, in turn, its workforce,
ongoing outsourcing and privatizing for accomplishment of government
work, including engineering, will increase. Also, the nonfederal sector
will have to take on more water resources responsibilities.
Current Challenges
In light of our current assessments of trends in the nation's water
and related land resources management, we have identified 5 significant
challenges currently facing the nation. They are as follows:
Navigation--dealing with capacity and efficiency needs;
Flood Protection--dealing with development of
floodplains, including coastal plains and coasts, and increased demand
for protection from flooding, erosion, and winds;
Environmental Management--dealing with restoration of
habitat, especially protection of wetlands;
Infrastructure Renovation--maintaining the nation's water
and related land management infrastructure and effects of global
climate change; and
Disaster Response Assistance--dealing with increasing
severity and frequency of natural disasters.
We must meet these challenges in order to preserve and promote our
future national welfare. In cases where other Federal agencies have
authorities to address them, we promote interagency alliances and
partnerships where appropriate. Each challenge is discussed next.
Navigation
The National Marine Transportation System (NMTS) comprises
approximately 1,000 harbor channels; 25,000 miles of inland,
intracoastal, and coastal waterways; and 238 locks. This system serves
over 300 ports with more than 3,700 terminals for cargo and passenger
movement, and connects to 152,000 miles of rail, 460,000 miles of
pipelines, and 45,000 miles of interstate highways. The system annually
provides enormous national benefits.
However, the system is nearing capacity, while demands on it will
grow substantially. The Corps estimates that total volume of domestic
and international marine trade is expected to more-than-double in the
next 20 years to more than 4 billion tons per year by 2020. We project
that inland shipments will increase over that same period by 200
million tons, to 830 million tons. This increase in shipment volume
will severely stress the NMTS.
Flood Protection
Flooding is the most destructive and costly natural disaster in our
nation, accounting for 85 percent of all natural disasters that occur
annually. We have made a major investment in flood protection
infrastructure, including, for the Corps only, nearly 400 major
reservoirs and 8,500 miles of levees and dikes, as well as hundreds of
smaller local flood protection improvements. The Corps estimates that,
since 1950, its infrastructure has prevented nearly $500 billion in
riverine and coastal flood damage, returning nearly $6.00 in flood
protection benefit for every $1.00 invested, and preventing, on
average, $16 billion in flood damages annually.
Despite its considerable success in flood protection, the nation
still has an extensive residual flood damage problem. Costs of floods
(emergency assistance costs plus property losses) still average over $4
billion annually. News coverage of recent flood disasters, including
the 1993 Mississippi River Flood and the 1997 catastrophe in Grand
Forks, North Dakota, have shown the enormous economic costs of
flooding. Unquantifiable social costs include, in addition to injury
and loss of life, stress on individuals and families caused by
disruption, evacuation, and life in temporary quarters. It also
includes loss of irreplaceable property, and destruction of entire
communities.
The Environment
Protection and restoration of the environment is an important goal.
Indeed, restoration of native ecosystems and, possibly, creation of new
ones, is crucial to sustaining natural systems and habitats for future
generations. Our nation has more than 3.6 million miles of rivers and
streams that, along with floodplains and upland areas, comprise
corridors of great economic, social, and environmental value. These
corridors are complex ecosystems that perform vital environmental
functions, including modulating streamflows, storing water, removing
harmful materials from water, and providing habitat for aquatic and
terrestrial plants and animals. Until passage of the National
Environmental Policy Act (NEPA) in 1970, however, development of these
corridors proceeded without concern, resulting in degradation of water
quality, decreased water conveyance and storage capacity, loss of
habitat for fish and wildlife, and decreased recreational and aesthetic
values. NEPA prescribed integration of environmental protection and
social goals with economic ones in the development of water and related
land resource management projects. However, despite the shift in
emphasis toward environmental benefits in such projects, much work
remains to be done. The environment has suffered heavily. In order that
it might sustain future generations, it must be cleaned up and
restored, and further development must be tempered by an ethic of
ensuring environmental sustainability of any such development.
The nation needs a healthy, sustainable environment for current and
future generations.
Infrastructure Renovation
Water resources management infrastructure has improved the quality
of our citizens' lives and provided a foundation for the economic
growth and development of this country. Our systems for navigation,
flood protection, hydropower generation, and recreation management all
contribute to our national welfare. The stream of benefits is realized
as reduced transportation costs, avoided flood damages, electricity,
and recreation services.
Investment in economically justified and environmentally sound
maintenance, major rehabilitation, and new infrastructure is needed to
maintain and improve our capital water and related land resources
management stock, and, in turn, benefits received from it.
Disaster Response Assistance
In recent years, our nation has suffered a series of major
disasters whose impacts have been measured officially in terms of lives
lost and high costs of damage to property and relocations. In addition,
impacts have included loss of jobs; business failures; disruption of
safe water, sanitation, food, and shelter, and transportation; public
health risks due to diminished capability of public health care
systems; loss of income and tax revenues; and impacts on other
government programs from diversion of tax dollars to disaster response,
relief, and recovery.
Adequate investment in emergency management is needed to ensure the
capability of Federal agencies to respond fully and quickly when
disasters strike. Coordinated planning is needed among key agencies who
must work together to perform the readiness requirements under the
Federal Response Plan. Our nation needs the Federal capability to deal
with multiple emergency contingencies.
strategic plan
We are currently developing a strategic plan to help guide the
direction and priorities of the Civil Works program over the next 5
years. This effort is guided by the precepts and requirements of the
Government Performance and Results Act of 1993 (Results Act). However,
it is also just good business to chart our course in a deliberate
fashion. We intend to use the process of developing this strategic plan
to call attention to critical water resources needs facing the nation.
I want to emphasize however, that the plan is now only in early
draft form. Its depiction of water resources challenges, as well as our
priorities, primarily reflects analysis from water resources technical
experts within the Corps. We are therefore embarking on a series of 14
regional listening sessions to hear what our stakeholders, the general
public, as well as our colleagues in other agencies have to say. Also,
people who wish to can participate by using the Corps' website. Results
will be compiled into a report that will be shared with the public and
decision-makers. We expect to learn a lot, and to incorporate what we
learn into the next version of the strategic plan scheduled for the end
of the fiscal year. We will, of course, fully coordinate the strategic
plan within the Administration and with Congress.
In response to the challenges described previously, our priorities
for action are described in the following:
Stress on the National Marine Transportation System
In consonance with the Marine Transportation Strategy
vision and in partnership with the Department of Transportation,the
Army will invest in American waterways and harbors, including the
inland system of channels and ports, deep draft ports and harbors, and
other harbors. We will seek accelerated construction funding for high
priority justified inland and coastal navigation projects.
Continued Development of Watershed Management and Floodplain Policy
We will take a proactive approach in watershed and river
basin management, with increased emphasis on non-structural measures,
within a sustainable development framework, with attention to meeting
economic, environmental, and social objectives. We will seek more
multi-purpose comprehensive basin studies, in partnership with other
agencies, to find innovative solutions to water resources needs. We
will also develop the capabilities and partnerships with FEMA, other
Federal agencies, and state and local floodplain and emergency
management agencies to achieve consistent and complementary floodplain
development guidelines, standards, and evaluation principles.
An Aging National Water Resources Infrastructure
We will ensure that our existing water resources
infrastructure is operating and producing expected levels of benefits.
This will involve allocating resources to reduce our high priority
maintenance backlog of $450 million and to modernize aging and
antiquated recreation facilities. We will also ensure that we are
achieving the maximum efficiencies in our O&M procedures.
Environmental Consequences of Past Development
We will increase environmental restoration and clean-up
activities, including brownfields, and fully utilize existing
environmental Continuing Authorities.
Ensuring the Capability to Respond to Disasters
We will promote disaster planning, response, and
recovery, with an emphasis on advance measures planning assistance to
communities.
conclusion
Based on our assessment of the nation's current water and related
land resources management needs, we feel strongly that the nation faces
significant and demanding challenges in dealing with those needs. We
also know that the Corps has many unique assets from which to draw in
tackling those challenges. These include its longstanding and exemplary
leadership role in water and related land resources management; highly
competent multi-disciplinary workforce, complemented through
contracting by a large public sector workforce; world-class research
and development laboratories; highly developed and continually improved
business processes, including the recently fielded project management
process; geographically dispersed organization; and capital
infrastructure including thousands of completed facilities.
Finally, we are committed to improvement in performance and
customer satisfaction within available resources--continually
maximizing the value of the Civil Works Program to the Army and the
nation.
Thank you Mr. Chairman and members of the committee. This concludes
my statement.
__________
Statement of J. Ron Brinson, President and CEO. Port of New Orleans, on
Behalf of the National Waterways Conference, Inc., and the American
Association of Port Authorities
Good morning. My name is J. Ron Brinson, President and Chief
Executive Officer of the Board of Commissioners of the Port of New
Orleans. I am testifying today on behalf of the American Association of
Port Authorities (AAPA) and the National Waterways Conference, Inc.
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. The National
Waterways Conference, of which I am currently first vice president, is
a 40-year-old organization of inland waterway shippers and carriers,
ports and terminals, shipyards and other waterways services, and river
valley associations dedicated to the establishment of a greater
understanding of the widespread public benefits of the American
waterways system.
Mr. Chairman, we commend you for calling this hearing on the Army
Corps of Engineers' civil works program and, more particularly, whether
it has sufficient funding and the high-level public policy priority it
needs and deserves to respond to pressing navigational and other water
resources needs. Since colonial times, waterborne commerce has
stimulated the economic growth and vitality of this great Nation.
Inland waterways foster trade and commerce within our borders, and the
coastal and Great Lakes ports are America's gateways to the global
marketplace. A modern, world-class, well-maintained port and waterways
system is essential to the United States continuing its role as a world
leader in trade and, even more importantly, in maintaining our economic
competitiveness and national security.
The ports and waterways infrastructure is vital to our Nation's
economy, environment, and quality of life. Waterways provide the most
inexpensive, energy-efficient mode of transportation, and they are the
lifelines to foreign markets. As the importance of international trade
grows, so does the value of waterborne commerce to our country and its
future. This is the motivation for the U.S. Department of
Transportation's far-sighted ``marine transportation system''
initiative that pulls 17 Federal agencies and 31 waterway-related
organizations in the private sector together with the objective of
transforming the U.S. marine transportation system into ``the world's
most technologically advanced, safe, secure, efficient, effective,
accessible, globally competitive, dynamic and environmentally
responsible system for moving goods and people.'' The Army Corps of
Engineers' central mission of maintaining Federal shallow- and deep-
draft navigational channels is critical to our ability to meet DOT's
overall goal.
In my testimony today, I will discuss the following principal
points:
The importance of the navigational mission of the Army
Corps of Engineers to the national well-being, and the relevance of
investments in the ports and waterways infrastructure to today's public
policy objectives.
The critical need to address the Nation's huge backlog of
Congressionally authorized water resources projects and to reverse the
growing volume of deferred maintenance which threatens the integrity of
numerous projects.
The urgency of assuring adequate funding for the
navigation program despite so many competing demands within the civil
works budget for new and perhaps deserving missions, which threaten
essential investment in ports and waterways infrastructure.
The Importance of the Navigational Mission of the Army Corps of
Engineers
Improving and maintaining navigational channels and waterways is
one of the oldest programs of the United States government, starting in
1789 with the construction of lighthouses to guide sailing vessels into
safe harbors. In 1824, the Corps of Engineers was authorized to begin
clearing snags to facilitate navigation on the Ohio and Mississippi
Rivers. Following World War I and for the next 30 years, the Federal
Government itself operated a demonstration bargeline on the inland
waterways system to encourage efficient waterborne commerce. At
present, the Corps of Engineers maintains 12,000 miles of mainstem
inland waterways, 627 shallow-draft ports and 299 deep-draft ports. The
resulting transportation system safely and efficiently handles more
than 2.34 billion tons of domestic and foreign commerce annually,
almost equally divided between the shallow- and deep-draft segments.
Foreign trade is an increasingly significant part of the U.S.
economy, currently accounting for over 30 percent of our Gross Domestic
product. Our exports and imports are projected to increase in value
from $664 billion in 1998 to $1.6 trillion in 2010. In fact, the volume
of cargo is expected to double over the next 20 years. More than 13.1
million U.S. jobs now depend on waterborne commerce and the number is
expected to grow as world trade increases. Trade pacts with other
countries could escalate this intense exchange of commerce. Currently,
more than 95 percent of U.S. overseas trade by volume passes through
U.S. ports. With the huge increases in trade expected in the next few
years, our navigation infrastructure must be in place, in top-notch
shape, and able to cope with soaring demands.
Our water highways are national assets that serve a broad range of
economic and strategic interests. The navigation system links countless
communities throughout the Nation to the world marketplace, enabling us
to create export opportunities for many small businesses as well as for
the products of our mills, mines, forests and farms. Efficient ports
and waterways also allow the delivery of imported goods more
inexpensively to consumers across the Nation. However, the benefits of
increased international trade will be realized only if we continue to
maintain and modernize the navigation infrastructure.
In addition, the waterways play an increasingly critical role in
our Nation's defense. That role was never more apparent that during the
loadouts of military cargo and personnel during Operation Desert
Shield/Desert Storm. The huge build-up of U.S. forces in and around the
Persian Gulf would have been impossible without the up-to-date
facilities and strong support afforded by America's ports. More than 50
ports have agreements with the Federal Government to provide ready
access for national emergency purposes. With the ever-present military
threats about the globe, the U.S. military depends on our ports as
bases of operations to ensure that our men and women serving overseas
are properly supplied.
Ports and inland waterways serve broad 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. Mid-western 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. Great Lakes ports supply steel and
other products to Midwestern industrial centers. Ports on the West
Coast handle goods such as cars, computers and clothing, which are
destined for consumers throughout the country, including Rocky Mountain
and Desert Southwest states not generally associated with the water
transportation system.
Economic Benefits of the Inland Waterways System
The inland system of navigable rivers and waterways helps to drive
American dominance of the global economy of the twenty-first century.
Almost every conceivable commodity goes to market or reaches consumers
along the extensive inland waterway network:
Farmers from the Canadian border of Minnesota to the
Mississippi Delta rely on the Mississippi River system to get their
corn, wheat and soybeans to feed lots, processing plants and store
shelves, both here and abroad. A whopping 56 percent of U.S. grain
exports go through the Port of New Orleans and neighboring Lower
Mississippi River ports each year. That means money in the pockets of
farm families the length and breadth of the Mississippi River and its
tributaries. And this also explains why Louisiana ports are the state's
most important economic resource.
The Ohio River is a ``kilowatt highway.'' The quickest
and most cost-effective way to move coal from the mines to a power
plant's boilers is by river barge. It's little wonder that coal
accounts for 58 percent of the total traffic on the Ohio River system
and is critical to the economy of the Ohio Valley and the Nation as a
whole. Without the electric power reserves of the Ohio Valley, America
would see its economic expansion short-circuited.
The Nation's freight transportation network relies
heavily on the inland waterways. Petroleum products make up 20 percent
of all the commodities moving on the rivers, some 125 million tons of
crude oil, diesel fuel, JP4 jet fuel, gasoline, heavy fuel oils and
asphalt. No other mode is as efficient in moving massive quantities of
fuels, farm crops, forestry products, industrial chemicals, and
manufactured goods. True, barges are slow but they are very efficient,
particularly in the movement of heavy-loading and/or price-sensitive
commodities.
Environmental Benefits of Waterways Transportation
Waterways efficiently convey large volumes of bulk commodities over
long distances with minimal disruption to the environment. Waterways in
the United States, including the Great Lakes, move about 16 percent of
all intercity freight. Because of the buoyancy of water itself, far
less fuel is required to transport a ton of waterborne commerce.
Typically, one gallon of fuel can move one ton of cargo approximately
514 miles by barge, equivalent to the distance from Pittsburgh to
Louisville. That same one gallon of fuel will move cargo only::
59 miles by truck, equivalent to the distance from
Washington, D.C., to the Delmarva Peninsula, or
202 miles by rail, equivalent to the distance from Toledo
to Cincinnati.
The fuel efficiency of waterborne transport means nearly 10 times
less emissions than if that same cargo were carried by truck, and two-
and-a-half times fewer emissions than if the cargo were moved by rail.
Waterways transportation means cleaner air for all Americans.
Safety benefits. Highway safety is of increasing concern to a
growing number of Americans. Every year, hundreds of motorists are
killed in accidents at unguarded rail crossings. More thousands are
killed or injured in accidents involving passenger vehicles and long-
haul semi-trailer trucks. Millions of man-hours are lost each year as
motorists sit on jammed Interstate highways backed up by semi-trailer
rollovers, collisions and other accidents.
The toll in deaths, injuries and lost productivity would be
exponentially greater were it not for the Nation's inland waterway
system. One 1,500-ton barge can carry 52,500 bushels of grain or
433,000 gallons of petroleum products. That's equivalent to:
15 jumbo rail hoppers, or
57 semi-trailer trucks.
The scope of waterways' contributions to reducing congestion on the
Nation's highways and rail networks is even more evident when the large
carrying capacity of barge tows is taken into account. Each 15-barge
tow, which is typical on the Upper Mississippi River, is approximately
1/4 mile in length and replaces:
225 jumbo rail hoppers in 2-1/4 unit trains stretching 2-
3/4 miles in length, or
879 semi-trailer trucks. Assuming 150 feet between
trucks, it would take a nearly 35-mile-long convoy of trucks,
stretching in a solid line from Washington, D.C., to Baltimore, to haul
the commodities carried by one 15-barge tow.
Waterways help reduce traffic congestion and contribute to highway
safety, benefitting every American motorist.
Quality of life. Last, but not insignificantly, waterways serve to
enhance America's quality of life. The construction of locks, dams and
impoundments on the river system in the first three-quarters of the
twentieth century was driven as much by flood control as by navigation.
The floods that ravaged the Midwest in 1993 and North Dakota's Red
River just 3 years ago were a frighteningly common occurrence on the
Nation's rivers in the early part of this century. Hundreds of lives
were lost, hundreds of thousands left homeless, and millions of dollars
in property damage were inflicted in the floods of:
1913 on the Ohio and its tributaries.
1927 on the Lower Mississippi.
1937 on the main stem of the Ohio.
1943 on the Missouri and its tributaries.
1951 on the main stem of the Missouri.
The construction of locks and dams created a reservoir system which
became a mecca for recreational boating and sport-fishing throughout
America's river valleys. Flood protection allowed industries to locate
in interior regions, and the availability of waterway transportation
allowed these plants to obtain their raw materials from much more
distant locations and to reach more far-flung markets than would
otherwise have been possible. This process allowed for the dispersal of
industries away from fragile, overcrowded coastal regions and thus help
revive the economies of thousands of inland cities and towns. The
result is an improved quality of life for millions of Americans.
Inadequate Funding Leading to Intolerable Civil Works Backlog
In terms of real dollars, the amount of funding provided for the
Corps of Engineers' civil works mission has declined dramatically in
recent years. There was very little change, in fact, from the funding
level in FY 1994 to that in FY 2000. In FY 1994, $3.97 billion was
appropriated for civil works. By FY 2000, the total had increased to
$4.14 billion a growth of only $170 million in real dollars. When you
consider inflation, plus the transfer of the $140 million-a-year
Formerly Utilized Sites (FUSRAP) program from the Department of Energy
to the Corps of Engineers, the amount of funding available for civil
works has dropped substantially.
In comparing funding for traditional Corps missions, such as the
construction-general account, there is relatively no change between FY
1994 and FY 2000. In FY 1994, $1.38 billion was appropriated for
construction-general as compared with $1.4 billion in FY 2000. The
President's budget requests in those years are, unfortunately, also
closely aligned $1.2 billion in FY 1994 and $1.23 billion in FY 2000.
As a matter of fact, since 1965, the civil works budget has continually
become a smaller percentage of both the total Federal Government budget
and the Gross Domestic Product. Since 1955, civil works appropriations
have not exceeded 1.1 percent of the Federal budget. Currently, it
represents about 0.2 percent of all Federal outlays.
These situations have conspired to create an incredible backlog of
Corps of Engineers' civil works projects in all categories. The
navigation function, particularly on the inland system, has been
acutely affected. The disparity between the amount provided for these
types of projects and the amount needed to keep the program on track is
continuing to grow. According to some estimates, the backlog of
construction projects on the Corps of Engineers' plate amounts to at
least $27 billion, not counting those authorized in the 1999 Water
Resources Development Act (WRDA). In addition, deferred maintenance of
inland navigation projects is approaching the half-billion dollar mark,
increasing by some $100 million or more annually.
All the while, the locks and dams and other capital stock are aging
and deteriorating. Forty percent of all the lock chambers on the fuel-
taxed inland waterways system have already exceeded their original 50-
year design lives. Construction of new locks with additional capacity
and major rehabilitation of older locks is essential to maintain the
efficiency of the system. The 1986 WRDA authorized eight new or
replacement navigation locks. Through 1998, six additional lock-and-dam
replacements and 10 major rehabilitations were authorized. The need for
these modernizations is evident. However, the limitation on the civil
works program in terms of constant dollars will doubtless lead to
further traffic delays and increased expenditures.
Strengthening the Federal Partnership
Ports and waterways rely on the Army Corps of Engineers to operate
and maintain the system to facilitate trade and commerce, maintain U.S.
competitiveness, and augment national defense. The Corps of Engineers
is the only agency which has the expertise to assess and address
current and future infrastructure needs. Through a fuel tax, bargelines
pay one-half of the cost of constructing new or replacement locks and
of undertaking major rehabilitations. To improve deep-draft channels,
ports must enter into specified cost-sharing arrangements. So the
navigation program is really a Federal-state-private sector
partnership. Because of this partner-ship, the Corps of Engineers must
be diligent in improving the timeliness of its project planning and
decision-making processes so that we do not fall further behind in
meeting the rapidly mounting navigation infrastructure needs.
Over the years, the Corps of Engineers has been directed to
undertake more and more missions, including environmental restoration
as well as FUSRAP. Pending proposals would thrust the Corps more
directly into such areas as water supply, wastewater infrastructure,
brownfields, etc. All are worthy programs, and the Corps would seem to
be ably equipped to tackle these new assignments. However, we are
concerned that these expansions may come at the expense of traditional
Corps missions, such as navigation.
Environmental restoration is a rapidly growing program, but it is
the responsibility of several Federal agencies, many of which have this
goal as a central mission. We encourage the committee to investigate
methods of funding the Corps of Engineers' work in these new areas, as
important and popular as they may be, in ways which do not take funds
away the traditional missions whose benefits can be measured in
dollars-and-cents returns to the American economy. For example, in the
Superfund program, funding for the Corps of Engineers' work is
transferred from the Environmental Protection Agency's budget. By using
more pass-troughs, Congress may eliminate some of the pressures on the
Corps of Engineers' budget and ensure that funding to pay for
environmental restoration and other new initiatives does not reduce
funds available for such vitally significant endeavors as the
navigation program.
Addressing Navigation Needs of the 21st Century
The Federal Government, through the Army Corps of Engineers,
provides only in-channel navigation improvements. Port authorities
along the coasts, the Great Lakes and inland waterways spend billions
of public non-Federal dollars in providing and maintaining the landside
infrastructure that allows goods to be transferred between water and
land modes. It is this Federal/non-Federal partnership which makes the
navigation system work. The functions of the Corps of Engineers are
two-fold managing maintenance and providing improvements in Federal
navigation channels that support U.S. domestic and international trade
and enhance national defense.
In spite of the huge construction backlog, new projects are needed
to allow our ports to continue to dock new, larger and deeper-draft
containerships and other vessels which are joining the world merchant
fleet. On the inland waterways system, several needed lock replacements
are pending on the Ohio River system, and agricultural producers in the
Upper Midwest must have efficient waterway access to seaports to
compete with South America which is pouring billions into its
transportation infrastructure. American farmers' principal navigation
artery, the Upper Mississippi Waterway, is over 60 years old but its
modernization is now mired in controversy over its economic
feasibility.
Predicting how much traffic will move on a waterway over the next
half-century is a rough guess at best. In many cases, the Corps of
Engineers' estimates have been overly conservative. Before its
construction, for instance, the agency predicted the Gulf Intracoastal
Waterway would move 5 to 7 million tons annually, but it actually
carried 113.6 million tons in 1998! Despite reports to the contrary,
the Red River Waterway's tonnage is ahead of official projections, and
just this month a 64-barge convoy moved the Indiana National Guard's
military equipment half-way up the Red River for training exercises at
Fort Polk, Louisiana.
With regard to the Upper Mississippi modernization project, let me
quote from the venerable Prairie Farmer: ``The Federal Government,
through its current farm policy, expects American farmers to get more
income from the global marketplace. Our competitiveness is linked to
our ability to efficiently transport products from farm to market,
wherever that market may be. To maintain this advantage, we must have
viable, efficient transportation systems. Currently, the per-ton cost
for transporting grain in the United States is lower than in other
countries. But we'll lose that advantage as other countries gain the
ability to transport at lower costs. We have allowed our river
transportation infrastructure to deteriorate, jeopardizing our position
in world markets. And despite the recent scandal at the Corps, the time
for study is over. We must push forward on river infrastructure
improvements--now.''
Thank you for the opportunity to testify today. To ensure that our
Nation maintains its international competitiveness, it is presently
more important than ever to commit the necessary funding to provide a
world-class water transportation system, to consider this investment as
a high-priority public policy objective vital to America's national
growth and prosperity, and to ensure that navigation continues to be a
central mission of the Army Corps of Engineers.
Thank you.
______
Responses by J. Ron Brinson to Additional Questions from Senator Smith
Question 1. How much does it cost annually to maintain the nation's
navigation system and how does this amount compare to what is being
appropriated?
Response. This is really a question for the program management
officers of the Army Corps of Engineers, but it is my understanding
that the President's budget for fiscal year 2001 requests $1.067
billion for operation and maintenance (O&M) of the U. S. navigation
system. This figure includes approximately $700 million for deep-draft
waterways and port access channels and $367 million for shallow-draft
inland and intracoastal waterways. How much Congress will appropriate
for O&M in fiscal year 2001 is not known, but assuming the figure is
$1.067 billion, this will leave a maintenance shortfall of about $252
million--$180 million for deep-draft channels and $72 million for
shallow-draft waterways.
For fiscal year 2000, Congress appropriated approximately $678
million for deep-draft maintenance and $376 million for shallow-draft
maintenance, leaving a maintenance shortfall for the current year of
$202 million. I am told that the shortfall amounts to $149 million for
deep-draft channels and $53 million for shallow-draft waterways. When
added to the existing backlog, needed but unfunded maintenance totals
almost one-half billion dollars, and it is growing rapidly, all too
rapidly. In the case of structures like locks and dams, the longer
preventive maintenance is delayed, the greater the risk of catastrophic
failure.
For deep-draft ports, 100 percent of maintenance dredging comes out
of the Harbor Maintenance Trust Fund, which is funded from an ad
valorem tax on imports and domestic cargo. Because of budget caps,
Congress does not appropriate the full amount of the trust fund
collections each year. Over the last 14 years, this fund has built up a
surplus of more than $ 1.6 billion--money which is needed for
maintenance. This situation has prompted calls for the trust fund to be
taken ``off budget.''
Question 2. Which waterways are the most heavily used? Are these
same waterways the most expensive to operate and maintain?
Response. In terms of cargo tonnage, the Lower Mississippi (Cairo
to Baton Rouge) and Ohio Rivers and the Gulf Intracoastal Waterway are
the most heavily used shallow-draft channels. Among deep-draft
channels, the Lower Mississippi (Baton Rouge to Head of Passes),
Houston Ship Channel, and Port of New York-New Jersey handle the
largest volumes of commerce, and all require periodic dredging to
maintain authorized depths.
The Army Corps of Engineers has current figures on tonnages moved
on each waterway segment and the cost to operate and maintain those
segments, but I believe you will find that the Lower Mississippi River
is listed among the most expensive to operate. This is because it is
funded as a part of the massive Mississippi River and Tributaries flood
control project, and 25 percent of these expenditures (which include
levees, concrete mattresses along the banks in river bends, and the Old
River Control Structure to keep the Mississippi from flowing down the
Atchafalaya River) are arbitrarily assigned to navigation. On a ton-
mile basis, however, navigation costs on the Mississippi River are very
low because so much traffic moves up and down this vital waterway--
averaging 116.4 billion ton-miles annually or 44.1 percent of all fuel-
taxed inland waterway traffic in 1990-94. And the ports along the lower
river (Greater Baton Rouge, South Louisiana, New Orleans and
Plaquemines)constitute the largest port complex in the world.
Some critics have charged that many smaller waterways authorized
and funded by the Congress have fallen short of projected tonnages. One
explanation is that often 20 years or more elapse between the time of
the evaluation and the completion of the project--during which time the
domestic and international economy undergoes structural changes (less
steel used in fabricating ships and cars, a decline in iron and steel
production, lower coal exports, etc., as well as the emergence of new
waterborne movements such as wood chips, containers on barge in the
Pacific Northwest and more exotic industrial chemicals).
However, not all tributary waterways handling less traffic than
originally forecast should be considered as economic failures. Far from
it. The overwhelming reason why Congress authorized and funded most
tributary improvements was for the purpose of regional economic
development. Critics have tried to portray such low-volume navigation
channels as ``rivers of no return'' because they handle only a few
barges. Even one barge, however, takes at least 58 trucks off busy
roads and a jumbo barge hauls as much commerce as 116 18-wheelers.
Barge cargo volumes, however, are only one measure of a waterway's
worth. The value of commerce moved is a more valid indication of its
regional importance. Two jumbo barges per week on the little-used
Ouachita River may seem insignificant at first glance, but they provide
an oil refinery at Smackover, Arkansas, with 350,000 tons of petroleum
per year, sustaining the jobs of 110 employees in a very economically
depressed area. A single barge on the Tennessee-Tombigbee Waterway may
go almost unnoticed but it could be carrying a 300-ton shipment of
rocket motors manufactured at a riverside plant employing some 2,000
workers and worth the equivalent of 4,000 barge loads of coal!
Nationally, 72.6 percent of the tonnage moving on tributaries actually
originates or terminates on mainstem waterways.
The availability of barge transportation attracts industries which
pay family wage jobs, and navigable waterways serve to hold down
railroad rates for all shippers. Waterway development frequently
provides flood protection, and reservoirs behind navigation dams afford
a dependable, year-round water supply for homes and industries. These
pools also allow freely accessible, widely available water recreation--
for skiffs and outboard motorboats, houseboats, regattas, fishing, bass
tournaments, water skiing, waterside camping, picnicking and sunbathing
as well as marinas, restaurants and motels, all of which are extremely
significant to local and regional economies. Far from destroying the
environment, navigation channels back up water into sloughs, creeks and
other tributaries, enhancing fish, wildlife and wetlands resources,
forming ``chains of lakes'' which frequently become flyways for ducks,
geese and other waterfowl to the delight of hunters and fishermen.
While barge tonnages moved on some tributary waterways may be less
than anticipated, the committee should not write off these investments.
In many cases, they are proving to be extremely beneficial to local and
regional economies, providing jobs, incomes and an expanding tax base.
It should be noted that estimates of the traffic which may move on any
waterway segment over the next half-century is dependent on a multitude
of factors, most of them having nothing to do with any single waterway
or the waterways system. First and foremost, potential traffic is
influenced by overall economic conditions in the United States and
abroad. No wonder no other Federal agency, except the Corps of
Engineers, even attempts such a fine-line forecast of the future.
Question 3. In your testimony, you talk about the great economic
benefits that are gained from our navigation channels and water
highways. Considering they are creating so much money, do you believe
that the users can and should contribute more financially to address
the backlog?
Response. Asking users to pay is a complicated issue. Currently for
deep-draft ports, importers and shippers of domestic cargo are already
paying for maintenance dredging through the Harbor Maintenance Tax
(HMT). The tax on exports was declared to be unconstitutional and is no
longer being collected, and the European Union has stated it plans to
challenge the import tax in the World Trade Organization because it
discriminates against other nations. In finding the export levy to be
unconstitutional, the courts ruled that it constituted a tax rather
than a user fee because more was being collected than spent on
maintenance and also because some ports did not require much
maintenance dredging. As a result, the American Association of Port
Authorities (AAPA) spent 3 years investigating possible alternatives to
the HMT but was unable to identify any user fee that could equitably
raise revenues in reasonable relationship to the distribution of
benefits to the nation. That is why AAPA supports the SHIP Act, H.R.
1260, introduced by Representatives Borski and Oberstar, which would
repeal the existing Harbor Maintenance Tax and fund maintenance
dredging from general revenues.
On the shallow-draft system, some 27 waterway segments are subject
to the inland waterways fuel tax enacted in 1978. The tax is now 20
cents per gallon plus another 4.3 cents collected for deficit
reduction. Proceeds are deposited in the Inland Waterways Trust Fund
and used to pay one-half of lock-and-dam replacements and one-half of
the shallow-draft share of deep-draft projects like the Inner-Harbor
Lock replacement in New Orleans as well as certain other navigation
construction like the Sargent Beach erosion control project to keep the
Gulf of Mexico away from the Gulf Intracoastal Waterway. In addition,
the trust fund pays one-half of the cost of major rehabilitation of
shallow-draft navigation locks and dams. However, trust fund revenues
have not been fully utilized. In spite of mounting construction and
rehabilitation needs--which for navigation projects total approximately
23 percent of the huge $38 billion civil works backlog--the Inland
Waterways Trust Fund surplus has been steadily growing and at the end
of March totaled $388.3 million. So user taxes are not a panacea.
Relying on a public right-of-way open to all, waterborne commerce
is intensely competitive. Hundreds of bargelines continually compete
for traffic, guaranteeing the lowest possible freight rates and
ensuring that the savings in transportation costs from channel
improvements are passed on to shippers, receivers, processors and
ultimately consumers. Because of this competition on the waterways and
resulting rock-bottom barge rates--and frequently only because of these
low rates--U.S.-produced corn, soybeans, coal and other products are
able to enter foreign markets. Who benefits? Not the bargelines, but
tens of thousands of U.S. producers. The price they receive for their
crops is the seaport price minus transportation and handling costs. As
transport costs go up, their incomes go down.
When waterborne commerce is exported or imported, shippers and
carriers contribute significant taxes and fees to the Federal
Government so funding dredging from general funds is simply a small
return on these payments. In a report last fall, the U.S. General
Accounting Office found that 11 Federal agencies collect 124 different
fees and assessments on maritime commerce and that these collections
amounted to a whopping $21.9 billion in 1998. The lion's share comes
from customs collections at U. S. seaports. To recompense the
individual states for relinquishing the privilege of collecting these
customs duties, the fledgling U.S. Government, in one of its first acts
after ratification of the Constitution, agreed to build and maintain
lighthouses as an aid to navigation. Without modern ports, the Federal
Government would not have this sizable revenue source. This fact has
encouraged some lawmakers to discuss whether there should now be
``customs sharing'' to finance port improvement projects.
Shallow-draft waterways users already pay a substantial fuel tax.
If waterways shippers were required to ``contribute more financially,''
this would increase the cost of transportation--a cost increase which
would have to be passed on. In the case of agricultural exports,
farmers would receive less Or their crops. In the case of coal,
electricity customers throughout the Midwest and as far away as New
York and New England (which receive ``peaking power'' from Ohio Valley
power plants) would face higher bills. Motorists would find the cost of
gasoline increased in many parts of the Nation which rely on barge
deliveries of petroleum and petroleum products. In short, the American
consumer would foot the bill.
Question 4. Since 1986, the committee has authorized only those
projects that are consistent with cost-sharing requirements established
in WRDA 1986. In addition, there must be an identified local sponsor
for the non-Federal share of the costs, the project must have a
completed reconnaissance and feasibility study, and the Chiefs Report
must find the project to be technically sound, environmentally
acceptable, and economically justified. Do you believe that the
committee standard is inadequate and, if so, why?
Response. In the judgment of most proponents of water resources
development, the ``committee standard'' and the existing criteria for
evaluating the economic, engineering and environmental feasibility of
navigation, flood protection, and other proposed water projects are
quite adequate. The present criteria quickly weed out inefficient,
short-sighted and localized projects. Indeed, most proposed projects
never pass this test. Besides, the use of a realistic interest/discount
rate, currently 6-5/8 percent, practically eliminates all new
construction in which benefits would accumulate slowly over a period of
years and concentrates available funding on projects like deepening
port access channels and replacing congested locks--projects which will
handle additional traffic almost immediately upon completion.
It would make no sense to require that potential economic benefits
amount to twice projected project costs, or a benefit/cost ratio of 2-
to- 1, when only a portion of the benefits are evaluated. At present,
only ``national economic development'' benefits are counted in
feasibility studies. Other benefits, including regional development,
water-compelled freight rate reductions, social well-being, and quality
of life, are ignored. Neither does the present evaluation include any
accounting of the ``environmental amenities,'' as described in a recent
National Academy of Sciences report (``New Directions in Water
Resources Planning for the U. S. Army Corps of Engineers''), such as
wetlands creation, ``water-enhanced, non-consumption recreation
(picnicking, bird-viewing, camping),'' visual and cultural benefits,
etc.
And why should wealth- and tax-producing projects like navigation
and flood protection be subjected to elaborate, time-consuming economic
analysis when it is humanly impossible to predict underlying national
and global trade patterns more than a few weeks into the future? Also,
why should we subject navigation and flood control projects to such
intense scrutiny when projects serving other national needs, such as
environmental restoration, need only a conceptual framework and are
frequently launched without any feasibility report, benefit/cost
analysis or even detailed cost estimate? Such projects are approved
because of a judgment that they are worthwhile and meritorious Federal
investments.
Why shouldn't navigation projects, in particular, also be
authorized because they are good for America?
Cost-sharing formulas enacted in WRDA 1986 not only provide a
portion of the construction costs but also help to rationalize the
waterways system by restraining unwarranted improvements and in holding
down project costs by encouraging innovative, money-saving construction
techniques. However, the American Association of Port Authorities
(AAPA) strongly favors one change in cost-sharing formulas because
ships in the world's merchant fleet are now much larger, carry more
cargo at lower cost but require deeper navigation channels than was the
case in 1986. For that reason, AAPA believes that the 45-ft.
``standard'' for port access channels should be raised to a 53-ft.
standard and the Federal/non-Federal cost share be changed
appropriately.
__________
Statement of Scott Faber, Senior Director for Public Policy American
Rivers
Mr. Chairman, thank you for the opportunity to testify today. My
name is Scott Faber and I am Senior Director for Public Policy for
American Rivers, a national river conservation organization.
Corps of Engineers projects have produced significant benefits for
the nation, including many navigation and flood control projects, and
the Corps has played an indispensable role in the repair of many of the
nation's environmentally degraded waterways. Indeed, scientists warn
that many of the nation's most storied waterways--including the
Missouri, Mississippi, Ohio, Sacramento, Columbia and Snake rivers--
will increasingly lose the ability to support river wildlife unless
Corps habitat restoration efforts are accelerated. It has become
increasingly clear that the Corps is only agency with the legal
jurisdiction and requisite expertise to repair many of our nationally
significant rivers and estuaries.
We recognize that the Corps must continue to construct navigation
and flood control projects which are economically justified,
environmentally sound, and serve the nation's interest. However, many
Corps projects continue to be economically suspect, environmentally
unacceptable, and serve primarily private interests. The reasons are
two-fold: the Corps' outdated methodology for predicting the benefits
and costs of proposed projects, and a hopelessly politicized decision-
making process.
The evidence supporting the need for reform is overwhelming.
Many Corps flood control and navigation projects have failed to
produce predicted benefits, or have resulted in unacceptably high
environmental costs. Some Corps planners have bent the rules of project
planning to support economically questionable projects, and the current
absence of meaningful oversight has created an atmosphere conducive to
this kind of abuse. Many projects are built to serve the needs of a
handful of special interests, and the Corps frequently treats local
cost-sharing partners--rather than the American people--as their
clients. Despite a growing backlog of authorized projects, an
increasing number of Corps projects primarily benefit private
interests--including many projects which lie outside the Corps'
traditional missions of flood control, navigation and restoration. In
some cases, the Corps has simply failed to mitigate for the
environmental impacts of levees, dams and channels, or mitigation
projects have failed to produce promised benefits. Some flood control
and navigation projects are constructed even when there is ample
evidence that project impacts cannot be cost-effectively or
successfully mitigated.
Congress must act now to ensure that future Corps projects are
economically justified, environmentally sound, and serve the national
interest. In particular, Congress should include reforms in the Water
Resources Development Act of 2000 which modernize the agency's
measurement of benefits and costs, require independent review of
significant or controversial projects, expand the input of local
stakeholders, prioritize Corps spending, and require adequate
mitigation for Corps projects. We will not support, and will urge the
President to veto, water resources legislation which fails to reform
the Corps.
1) Require Modern Estimates of Benefits and Costs
Congress should direct the Corps to reform the agency's feasibility
study process to require that Corps projects have primarily public,
rather than private benefits, and should include reforms which reflect
the uncertainty of Corps benefit-cost calculations.
The nation should no longer invest public resources simply because
the benefits of a proposed project, to whomever those benefits may
accrue, exceed project costs. We should instead replace this New Deal-
era formulation which a system which requires that future projects
produce primarily public benefits--including the public benefits of
healthy rivers--and apply this system to both proposed and previously
authorized projects. Congress should direct the Corps to develop new
tools to better predict the benefits and costs of proposed projects.
For example, Congress should direct the Corps to measure the extent to
which goods shipped by barge would be shipped by other means and to
other destinations as transportation costs change. Congress should also
require that project benefits be twice as great as project costs to
reflect the Corps' inability to accurately predict likely benefits and
costs.
Many completed projects have failed to produce promised benefits,
including many segments of the Inland Waterway System. Unlike the
Mississippi, Ohio and Illinois rivers, many segments of the Inland
Waterway System have never supported as many barges as predicted,
including the Missouri, Alabama-Coosa, Atlantic-Intracoastal,
Tennessee-Tombigbee, Allegheny, Pearl, Willamette, Apalachicola,
Kaskaskia, Kentucky, White, and Red rivers. Consequently, 18 of the
Inland Waterway System's 29 segments move less than 3 percent of the
nation's barge traffic while consuming more than 30 percent of the
system's Operations and Maintenance costs.
Similarly, the costs of many Corps projects are frequently greater
than forecast. In retrospect, many Corps projects--though economically
justified on paper--have not proved to be economically justified in
reality. Congress should direct the Corps to develop new tools to
predict project benefits and costs and, to address this uncertainty,
require that project benefits be twice as great as project costs.
Congress should apply this requirement to previously authorized
projects as well as future projects. Steps should be taken to better
monitor the performance of completed projects to ensure that the Corps'
benefit-cost calculations are reasonably accurate, and a new process
should be created to regularly review and update project operations to
reflect changed conditions and new information.
2) Require Independent Review, Greater Local Input and Civilian
Oversight
Congress must take steps to protect the integrity of the Corps'
decision-making process. There is mounting evidence that Corps planners
have bent the rules of project planning to support economically
questionable, environmentally unsound projects. There are many reasons
for this abuse: self-preservation; the elimination of technical review
by the Corps' review branch; the absence of meaningful oversight by
Congress and the Assistant Secretary of the Army; and, growing pressure
from cost-sharing partners and other Corps constituents.
As we have seen, there is evidence of abuse of the Corps's
decision-making process by the Rock Island District--a string of e-
mails, internal memos and affidavits which show that the Corps'
military and civilian leaders urged economists to exaggerate expected
demand for barges to justify the construction of new locks. Top Corps
officials ordered the Rock Island study team ``to develop evidence or
data to support a defensible set of . . . projects.'' One memo candidly
declared that if the economics did not ``capture the need for
navigation improvements, then we have to find some other way to do
it.''
But there are other examples of abuse and inaccuracies as well.
A $311 million proposal to deepen the Delaware River incorrectly
presumes that oil refineries will deepen their approach channels to
take advantage of the deepening project. Indeed, the Corps knowingly
ignored evidence that some refineries will not deepen these approach
channels. A $230 million proposal to deepen Savannah Harbor is based
upon predictions of unprecedented and unlikely demand for the port,
estimates which ignore ongoing consolidation in the deep draft shipping
industry. Corps planners have routinely underestimated the long-term
maintenance costs of beach replenishment projects. And, as we have seen
in the case of Devil's Lake, this abuse of agency planning rules is not
limited to the Corps' military leadership or the agency's civilian
planners.
Unless the Corps' decision-making process is reformed, Members of
Congress and the public will have no guarantee that projects are
economically justified or that a project's environmental impacts have
been adequately assessed and mitigated. In order to ensure that Corps
studies are based on sound science, Congress should require independent
review for projects whose total costs exceed $25 million, or projects
which are considered controversial by the U.S. Fish and Wildlife
Service. Independent review of large Corps projects would have several
benefits: independent review would detect abuses or mistakes,
discourage abuses, and empower Corps planners being pressured to bend
the rules by Corps cost-sharing partners and other constituents.
Independent review would also inject new ideas into the Corps' planning
process.
We do not propose that Corps feasibility studies continue endlessly
and fail to recommend projects, as was the case during the 1970's. We
believe independent review could be blended seamlessly into the
feasibility study phase and would not increase the length or the cost
of feasibility studies.
We also urge Congress to balance the influence of cost-sharing
partners by creating a stakeholder advisory group, subject to the
Federal Advisory Committee Act, to collect the input of local interests
and to seek consensus regarding project objectives and design.
Congress should create a commission, as proposed by Senator Daschle
in S. 2309, to assess the civil works functions of the Corps, including
the quality of the Corps' analysis, whether the Corps' management
structure should be changed, compliance with environmental laws, and
whether any civil works functions should be transferred from the
Department of the Army to a civilian agency or privatized.
Finally, we urge you to work with the Clinton Administration to
quickly restore civilian oversight of the Corps, unessential tenet of
our system of government. The absence of meaningful civilian oversight
offends the Constitution, violates Federal law, and has contributed to
an environment where the abuse of Corps rules has flourished. We
strongly oppose Sec. 3102 of the Agriculture Appropriations Bill for
Fiscal Year 2001, which is designed to frustrate these important
reforms.
3) Require Adequate Mitigation
In some cases, the Corps has failed to mitigate for the
environmental impacts of levees and dams, or mitigation has not
produced expected benefits. For example, the Vicksburg District of the
Corps has a backlog of more than 30,00 acres of promised mitigation
which has not been completed. In addition, mitigation for Corps
projects often replaces a fraction of the habitat destroyed.
Congress should require that the Corps meet the same habitat
mitigation standards as must be met by private developers. In
particular, Congress should require the Corps to concurrently replace
an acre of habitat for each acre of habitat impacted by a project, and
should design projects to reflect the contemporary understanding of
aquatic ecosystems. Funding for project construction and mitigation
should be included in a single construction appropriation to ensure
that mitigation is completed.
In addition, we believe the Secretary should not recommend a
project when the impacts of a proposed project cannot be cost-
effectively or successfully mitigated. In the past, the Corps would
attempt to mitigate for projects regardless of cost or the likelihood
of success. Efforts to mitigate for the construction of four dams on
the Lower Snake River is an example of this approach--though we have
spent more than $3 billion on mitigation, all runs of Snake River
salmon are considered endangered by the Federal Government. This has
been neither cost-effective nor successful. We propose that an expanded
Environmental Advisory Board evaluate projects in the reconnaissance
phase to determine whether the project is likely to have environmental
impacts which cannot be cost-effectively or successfully mitigated.
4) Meet National Priorities
In light of the backlog of authorized projects, Congress should
create new criteria to ensure that future Corps projects reflect the
nation's highest priority water resources needs.
Many authorized projects have questionable economic benefits and
unacceptably high environmental costs. I have already mentioned several
new tests that could be applied to proposed projects as well as
currently authorized projects: Congress should require that project
benefits be twice as great as project costs, ensure the Corps
adequately mitigates for projects, and prohibit the construction of
projects when expected impacts cannot be cost-effectively or
successfully mitigated. Congress should expand the scope of the current
Reauthorization statute to eliminate projects which do not satisfy
these tests as well projects with questionable economic benefits, and
projects which could be constructed by private interests.
Other steps should be taken to address the backlog and expand the
reach of scarce funds. For example, Congress should increase the local
contribution required for structural flood control projects, beach
replenishment projects, and navigation improvements, and should apply
those cost-sharing reforms to proposed and previously authorized
projects. In particular, Congress should require states to share part
of the cost of navigation projects.
To help guide appropriators, Congress should direct the Corps to
develop, in collaboration with the Federal Emergency Management Agency,
a flood damage reduction priority list which recognizes the importance
of protecting people and public infrastructure. Though FEMA has
identified the location of the nation's most repeatedly flooded
structures, the Corps does not use this information to guide flood
control spending. Indeed, currently proposed Corps flood control
projects protect few of the nation's most frequently flooded homes and
businesses.
Clearly, many projects should be Reauthorized. In general, we
propose that the Congress apply new criteria to authorized and proposed
projects to identify those projects which should no longer receive
Federal support. However, we believe several projects merit special
attention, including environmental infrastructure projects, municipal
water supply projects and agricultural irrigation projects. In
particular, Congress should Reauthorize irrigation and navigation
projects slated for Arkansas' White River.
Finally, the Congress should declare a moratorium on new beach
replenishment projects until the Corps completes a National Shoreline
Study, and should carefully review beach replenishment projects slated
for New Jersey and Long Island. Experts predict that a recent
authorization to provide 100-foot wide beaches along all 127 miles of
New Jersey's sea coast will cost more than $9 billion over the next 50
years.
5) Expand the Corps' Restoration Mission
As I have already mentioned, many Corps flood control and
navigation projects have had devastating impacts on the nation's
aquatic resources. Scientists have linked dams, levees and channel
training structures to the extinction of scores of freshwater species,
and the likely extinction of hundreds more freshwater species during
the next century. Indeed, North America's freshwater species are
disappearing as quickly as tropical rainforest species and five times
faster animals that live on land. To date, 17 freshwater fish species
are extinct, and one in ten of North America's mussel species are
extinct. Two-thirds of North America's remaining mussels and one-third
of North America's amphibians are imperiled.
Corps projects are a major contributor to the loss of our
freshwater biodiversity. More importantly, the Corps is, in many cases,
the only agency with the legal jurisdiction and engineering expertise
capable of repairing these damaged waterways. For example, the Corps is
frequently the only state or Federal agency which can restore wildlife
habitat along segments of the 11,000-mile Inland Waterway System. The
simple fact of the matter is that the biological future of many of the
nation's most nationally significant waterways--including the
Mississippi, Missouri, Ohio, Columbia, Snake, Rio Grande, Sacramento
rivers--depends solely upon the restoration skills of the same agency
which has placed their biological future in peril.
Just as Congress must ensure that flood control and navigation
projects reflect sound science, Congress must also ensure that the
Corps' restoration and mitigation projects reflect the state-of-the-
art. We urge you to apply the same reforms I have already mentioned to
the Corps' restoration program--independent review, greater local
input, better estimates of cost-effectiveness, and adequate economic
mitigation for the economic impacts of proposed restoration projects.
These reforms will ensure that restoration and mitigation projects are
cost-effective, scientifically sound, and meet broad ecological goals.
Other steps can be taken to improve the Corps' restoration mission.
In particular, Congress should allow the Corps to share the cost of
land acquisition for restoration and mitigation projects. Currently,
project sponsors are required to provide all lands, easements and
rights-of-way. In addition, Congress should allow the local-share to be
satisfied by in-kind contributions.
6) Restore the Rivers of Lewis and Clark
We also urge the Congress to act now restore the rivers of Lewis
and Clark by boosting restoration efforts for the Missouri River by
$250 million, as has been proposed by Senator Bond; creating a $200
million Ohio River restoration program; and creating a $175 million
Lower Columbia River Estuary restoration program. In next few years,
millions of Americans will retrace the steps of Lewis and Clark. But,
America's most famous explorers would not recognize these arteries of
the continent if they were to return today. Corps flood control and
navigation projects have so altered these rivers that many of the
wildlife species they encountered are now in jeopardy of extinction.
You have an once-in-a-lifetime opportunity to repair these damaged
waterways that must not be squandered.
Army engineers forced the broad, slow-flowing Lower Missouri River
into a deep, faster canal, eliminating virtually all of the river's
islands, sandbars and side channels--the places river wildlife need in
order to survive. The river's floodplain was cleared and cut off by a
wall of public and private levees. Consequently, more than 30 species
have been placed on state and Federal watch lists and more than 100
species are considered rare in some places. One species of sturgeon
which has resided in the Missouri for more than 100 million years has
been nearly eliminated by Corps alterations implemented in the last 50
years. The Missouri River Valley Improvement Act sponsored by Senators
Bond, Daschle, Kerrey,Johnson and Brownback would give wildlife a
fighting chance by expanding the Missouri River Fish and Wildlife
Mitigation Project and the Missouri River Enhancement Program,
assessing opportunities for restoration along reservoirs in the Dakotas
and Montana. and bv establishing a long-term monitoring program to
measure success.
Dams constructed on the Ohio River to aid commercial navigation
inundated spawning habitat for popular sportfish like bass and
undermined the river's floodplain forests and wetlands. Legislation
that is being developed by Senator McConnell would help meet the needs
of river wildlife by authorizing the Corps to restore wildlife habitat,
including spawning grounds, side channels, and floodplain forests and
wetlands
Finally, several House members have proposed the creation of a
program to restore the Lower Columbia River's estuary, where Corps
navigation and flood control projects have contributed to lethal
conditions for young salmon preparing for life in the ocean. The
river's estuary serves a critical role in the survival of salmon,
providing refuge and nutrients while juvenile salmon change
physiologically from a freshwater to a saltwater organism. Scientists
with the National Marine Fisheries Service have concluded that estuary
restoration is one of the most promising means of restoring Columbia
and Snake salmon runs. Although estuary restoration does not reduce the
need to remove four dams from the Lower Snake River, estuary
restoration must be a central component of our salmon recovery
strategy.
Conclusion
Congress must act quickly and decisively to restore credibility to
the Corps' civil works program. Certainly, this committee should use
its oversight powers to investigate abuse of the Corps' decision-making
process, including potential abuses by the Clinton Administration. But,
the committee should also recognize that the absence of meaningful
review, outdated methods of predicting benefits and costs, and studies
designed to meet the needs of project sponsors rather than the nation
have created an environment where abuse has been able to flourish and
will continue to flourish. We urge you to implement important, long-
overdue reforms of the Corps of Engineers, including independent
review, greater local input, modern estimates and benefits and costs,
and adequate mitigation for project impacts.
______
Responses of Scott Faber to Additional Question from Senator Smith
Question. Since 1986, the committee has authorized only those
projects that are consistent with cost-sharing requirements established
in WRDA 1986. In addition, there must be an identified local sponsor
for the non-Federal share of the costs, the project must have a
completed reconnaissance and feasibility study, and the Chief's Report
must find the project to be technically sound, environmentally
acceptable, and economically justified. Do you believe that the
committee standard is inadequate and if so, why?
Response. The recent elimination of meaningful technical review by
Corps civilian planners undermines the credibility of the Chief's
Report--that is, the committee should no longer assume that a proposed
project is economically justified and environmentally sound in spite of
the presence of a Chief's Report. There are several reasons for this
development: the elimination of Washington-level technical review, the
Corps' desire to increase agency spending by 50 percent, and pressure
by Corps cost-sharing partners. Because Congressional committee members
and staff do not have the time or expertise to scrutinize Corps'
economic and environmental analyses, we propose that all large projects
be subject to independent technical review. In particular, we urge you
to require independent technical review for projects with costs greater
than $25 million, limit review costs to $250,000, and weave technical
review into the feasibility study.
______
Responses of Scott Faber to Additional Questions from Senator Baucus
Question 1. Mr. Faber, as you may recall in 1994, I introduced a
flood plain management reform bill that would have made some changes to
the way the Corps evaluates flood control projects, including calling
for the revision of the Principles and Guidelines, which is a reform
you say is still needed today. What do you see as the result of
revising the guidelines?
Response. Revising the Principles and Guidelines--as was proposed
by the Federal Interagency Floodplain Management Review Committee--
would ensure that future water resources projects meet both economic
and environmental objectives. Currently, the Corps constructs projects
which maximize economic benefits and separately construct projects to
restore lost habitat--a dichotomy rejected by modern water resource
planners and managers. Instead, the Corps should establish an
environmental restoration account to complement the existing economic
development account, and seek tradeoffs among these two planning goals.
Question 2. Another reform that you say is needed is independent
review of projects with a cost of more than $25 million. Independent
review often minimizes later controversies and in many agencies already
is required for far less costly projects. Could you elaborate on why
the Corps needs independent review and why $25 million is your
suggested trigger for such a review!
Response. The absence of meaningful technical review of Corps
projects has created an environment where Corps planners, under
pressure from project cost-sharing partners and boosters, have
exaggerated the economic benefits of proposes projects and
underestimated environmental costs. We believe that projects which
would have significant economic and environmental impacts--that is,
projects which cost more than $25 million--should be subject to greater
scrutiny.
Question 3. During your testimony, you indicated there were a
number of Corps projects that did not achieve the anticipated benefits.
Could you provide the committee a list of those projects and the
projected benefits compared to the actual achieved benefits?
Response. Many Corps projects declared economically justified on
paper have not proven to be economically justified in reality. Let me
give you a few examples:
On paper, the Corps predicted that barges on the Lower
Missouri River would carry 12 million tons of cargo. In reality, barges
have never carried more than 3.3 million tons and now carries about 1
to 2 million tons annually. Unfortunately, channelizing the Lower
Missouri eliminated nearly all of the river's islands, sandbars and
side channels--the places wildlife need to survive--and more than 30
species are now on state and Federal watch lists.
On paper, the Corps predicted that the Tennessee-
Tombigbee waterway would carry 27 million tons of cargo. In reality,
barges have never carried more than 8.4 million tons. And the promised
regional economic development benefits have never materialized either.
On paper, the Corps predicted barges on the Red River
would carry 3.7 million tons by 1996. In reality, traffic reached 1.1
million tons, and 99 percent of this cargo was materials used to build
the waterway, or sand and gravel and limestone--mineral operations
which do not require a navigable waterway. Traffic in commercial
products was less than 20,000 tons in 1996 and less than 50,000 tons in
1997--less than 2 percent of the predicted traffic. None of the
commodities used to justify construction of the Red River waterway in
1968 are among the top ten commodities moving on the river.
__________
Statement of Tony B. MacDonald, Executive Director of the Coastal
States Organization
Chairman Voinovich and members of the Subcommittee, I am Tony
MacDonald, Executive Director of the Coastal States Organization (CSO).
On behalf of CSO, thank you for the opportunity to testify on the
future of the Corps of Engineers. The Coastal States Organization is an
association of states formed in 1970 to represent the collective
interests of the states in improving the management of our nation's
coast along the Atlantic and Pacific oceans, Gulf of Mexico, and Great
Lakes. Each member state is represented by a Delegate appointed by the
Governor.
Let me say at the outset that I am an admirer of the Corps of
Engineers. I say this knowing full well that CSO and individual states
have often disagreed with the Corps.
The task of coastal management is complex but the objective is
simple, to protect and improve the quality of life for the people who
live near and visit the coast. One of the primary means of meeting this
objective is the protection of the resources and livelihoods which
attract people to the coast. This requires a shared commitment by the
Federal Government working with the states and other local project
sponsors and communities.
The Federal responsibility in meeting this objective is clear. The
Federal Government has a constitutional duty to administer navigable
waters. The Corps of Engineers serves a critical national function as
the lead agency with the authority and expertise to meet this
responsibility. In addition, among Federal agencies, the Corps of
Engineers is charged with some of the most challenging tasks:
Maintaining 25,000 miles of Federal navigation channels
which serve as the highways and gateways to the more than 300 ports in
the nation, and are essential to maintaining the competitiveness of the
United States and meeting our energy and defense needs;
Providing shore protection to protect coastal communities
against loss of life, property and damage to natural resources
resulting from coastal storms;
Ensuring the protection of thousands of lives and
billions of dollars of public and private investment from flooding and
erosion;
Environmental protection and restoration of wetlands and
other coastal habitat, and
Correcting the mistakes of the past when the adverse
environmental effects of activities and projects were unappreciated.
Over its nearly 200-year history, the missions of the Corps have
evolved and continue to evolve. With its multiple missions and the
increasing complexity of public policy, the challenges facing the Corps
are increasing:
Population in coastal areas, already the most densely
populated area in the country, is increasing rapidly;
The total volume of domestic and international marine
trade is expected to more than double over the next 20 years. Much of
the cargo delivered to our ports will be delivered on larger vessels
which require deeper waterways;
More than 44 percent of the inland waterway locks and
dams are at least 50 years old. Many locks are undersized for modern
commercial barge movements;
Coastal storms are on the rise and resulting damages are
increasing;
The active project backlog for the Corps estimated to be
$37.9 billion;
Funding for the Corps has been stagnant. Downsizing of
the Corps is threatening its ability to provide critical services.
Questions have been raised about the projects which the Corps
undertakes, but it needs to be pointed out that the Corps does not just
decide on its own initiative to go out and do a project. Projects are
demand driven with input from local project sponsors, states, and
support from Congress.
The Corps has also been much criticized for the way it conducts its
studies and analyses. It should be remembered that the project
recommendations are driven more by the specific mandates under which
the Corps operates, than by the arbitrary discretion of the Corps.
Despite the faults of the Corps studies and analyses, they are based
upon comprehensive cost-benefit and project assessment tools developed
to address both public policy and economic considerations.
How do we address the current backlog?
There are three simple answers, although hard choices, to meeting
the over $30 billion backlog of authorized projects.
(1) Increase funding for the Corps;
(2) Find and establish greater efficiencies in planning, designing,
constructing and maintaining projects; and
(3) Carefully work with local project sponsors to review the
backlog to assess the current need for projects as authorized.
Recommendation No.1
Increase Funding for the Corps. CSO strongly supports increased
funding for the Corps of Engineers. Corps projects comprise vital
components of our nation's infrastructure, and are essential to our
well-being. Few question the need for investment and maintenance in our
road, rail and air traffic systems. There should be little question of
the need to maintain our marine and inland waterway transportation
system as well. Likewise, the investments in storm protection, flood
and erosion control have prevented the loss of untold billions of
dollars.
There is a misimpression among some of the public that the Civil
Works Program is a pork barrel. The vast majority of projects address
very real needs. This is especially true along the coast. Coastal
erosion, such as along the bluffs of Lake Erie or the beaches of
Virginia, Long Island, or Florida, is threatening property and public
infrastructure. In addition, it is destroying wetlands and other
habitat. The Water Resources Development Act of 1996 specifically
recognized shore protection as a function of the Corps, yet the
Administration has refused to fund authorized projects for shore
protection through beach renourishment even though Congress increased
the local cost share for the long-term maintenance of these projects in
WRDA 1999. While the Administration turns a blind eye on the need to
maintain our nation's beaches, the problems resulting from erosion and
threats of coastal storms only worsens.
Without Federal assistance and the planning and design expertise of
the Corps of Engineers, the pressures within coastal communities to
resolve the problem of erosion can frequently lead to more costly and
more environmentally damaging solutions, i.e., the construction of
seawalls. The damaging effects that these structures have on beaches,
the biological communities that depend on the intertidal zone, and the
economic revenues and tax bases of communities are the reasons why
beach renourishment has been utilized as an advanced alternative to
shoreline hardening. Furthermore, I note that this is a glaring
inconsistency in the Administration's policy in regards to its much
touted commitment to environmentally beneficial nonstructural
approaches to flood damage reduction. In WRDA 1999, Congress authorized
the Administration's proposed Challenge-21 program which is intended to
restore the flood plain environment with the use of nonstructural
approaches. Yet, in regards to preserving the beaches and their role in
the coastal ecosystem, the Administration policy would abandon
communities to fend for themselves using seawalls and groins which
compound the problems resulting from shoreline change.
Recommendation No. 2
Increase the Efficiency of the Corps. Reduced time of project
completion, reduced conflict, more comprehensive approaches to
management, and greater coordination with Federal agencies and states
can result in greater efficiencies in planning, designing, constructing
and maintaining projects.
Reduce the Time of Project Completion
One of the greatest factors in the escalation of project costs is
the increase in the time it takes to complete a project. Time wasted is
money spent. Many, if not most, projects are not completed in the
shortest available time. This is due in part to the need of the Corps
to keep as many Congressional and local project sponsors as happy as it
can at any given moment. By spreading around funding to as many
projects as possible, project completion is lengthened and costs
increased. A good answer to this dilemma is found in CSO's first
recommendation: provide more funding for the timely completion of
projects. The Corps should also look for opportunities to work more
creatively with the local project sponsors and private sector to
implement projects through project grants and expedite construction
scheduled. In some cases, many different Corps ``projects'' may be
combined into comprehensive and restore management schemes. For
example, navigation and restoration in San Francisco Bay, sediment
reduction, beneficial reuse of dredged material and harbor dredging in
Toledo.
Reduce Conflicts which Contribute to Delays
Another source of project delays results from controversies which
result when project objectives may be inconsistent with state policies.
Among coastal states, there have been numerous conflicts with the Corps
of Engineers over how dredging is conducted and dredged material
disposed. Working with the National Dredging Team, CSO cosponsored a
Workshop last year for Corps District personnel, state coastal
managers, and port representatives to stimulate discussion of ways to
avoid and resolve the conflicts being experienced by the Corps
Districts and states. Along with my testimony, I am providing committee
members with the proceedings of the Workshop prepared by the National
Academy of Public Administration. Within the proceedings are several
key recommendations:
Improved clarity about goals and greater transparency in
the decision-making process can reduce conflicts between the Corps and
state and local organizations;
The planning process and procedures for state and Federal
coordination can be improved with earlier project planning, regular
meetings between state and Federal agency representatives, broader
public participation;
Longer-range planning will contribute to better project
implementation and funding; and
Better scientific understanding and greater public
education are necessary to make better decisions and to garner support
for further expansion of these programs.
Provide for a More Comprehensive Approach to Management
Much of the conflict between the Corps and states has centered on
how to meet state requirements for the beneficial reuse of sand and
other dredged materials. This issue highlights, another avenue for
improving the efficiency of the Corps of Engineers the need for greater
project integration. WRDA 1999 signaled a movement in this direction
with the authorization of the National Shoreline Study. CSO holds out
much hope for the findings and recommendations of this study, one of
which is the feasibility of a systems-based approach to shoreline
management.
The project-by-project approach of the Corps to respond to
shoreline change is costly, inefficient and sometimes inconsistent. We
long ago realized that in order to manage rivers effectively, we need
to take into consideration the entirety of the river and its
surrounding watershed. We need to do the same in managing the nation's
shoreline. The change needed in our approach is the difference between
responding to shoreline change and managing for shoreline change.
Shoreline management requires an understanding of the littoral
processes and systems occurring along the shore, sediment sources and
their movement within the system, and agreement on the primary
objectives in managing segments of the shoreline. CSO supports a
sediment management policy that recognizes the importance of conserving
sand resources and, wherever possible, prevents the removal of sand and
sediment resources from the littoral system along the nation's coast or
promotes beneficial reuse of that sand to restore beaches and shoreline
habitat.
The National Shoreline Study will:
Advance our understanding of the dynamic processes, both
natural and anthropogenic, which change the coastlines and sea floor
along coastal margins;
Provide information critical to planning for the future
environmental and economic health of the nation's coastal areas;
Provide a geologic framework for policy decisions; and
Provide a foundation for a reassessment of national
policy.
The Office of Management and Budget, the Under Secretary of the
Army for Civil Works as well as the Coastal States Organization, the
American Coastal Coalition and the American Shore and Beach
Preservation Association all support the National Shoreline Study. The
President's fiscal year 2001 budget requests funding for the Study, and
we are especially pleased that Senator Lautenberg has provided his
support for funding the study.
Promote Interagency Cooperation
The benefits of the aforementioned National Shoreline Study go
beyond the study itself. The National Shoreline Study is intended to be
a multi-agency cooperative effort which utilizes and integrates the
data, expertise and resources across federal, state and local agencies.
It is our hope that this effort will be an exemplary demonstration of
how improved efficiencies can be obtained by the Corps working with its
Federal and state partners.
This type of interagency cooperation envisioned for the National
Shoreline Study can and should be applied to many other areas. For
example, legislation of the Corps mission before this Congress, S. 835,
the Estuarine Habitat Restoration Partnership Act (sponsored by the
late Senator John Chafee), would require the Corps working with its
Federal counterparts also charged with estuarine restoration
responsibilities to develop a joint strategy to restore one million
acres of estuarine habitat over the next 10 years. The integration and
coordination of Federal agency projects pursuant to the strategy will
provide greater leverage of the funds provided under the Act. CSO is
very pleased that the Senate has passed S. 835, and we are strongly
encouraging the House to bring its companion, H.R. 1775 (Gilchrest, R-
MD), to the floor for approval.
Recommendation No. 3
Review the Project Backlog to Reassess Project Needs. With a $37.9
billion backlog, there needs to be an independent review in partnership
with the local project sponsor and reassessment of authorized projects.
While I do not believe that such a reassessment should be binding on
the Congress, it would at least provide a framework to begin to
establish a plan to reduce the backlog of Corps projects.
Conclusion
The specific recommendations provided to the Subcommittee today on
improving efficiencies in the Civil Works Program reflect CSO's
perspective and experience. The general recommendations provided in our
testimony--reducing the time of project completion, reducing conflicts,
taking a more comprehensive approach for project integration, and
promoting interagency cooperation, can be applied to a much greater
range of Corps activities. Over the years, there have been numerous
studies and recommendations on improving the Corps. CSO recommends that
Congress request a study by an independent entity, summarizing these
strategies and providing recommendations on improving efficiency and
needed changes to Corps authorities.
The Corps has a difficult job to do. We need to help them to do it
better. We hope that the attention from the current controversies
involving the Corps will be utilized to undertake a review of the Corps
which will result in constructive improvements to the Civil Works
Program and the Federal policies that guide it.
Thank you again for the opportunity to testify before you. I am
pleased to answer any questions.
__________
Testimony of William Parrish, Association of State Floodplain Managers,
Inc.
Mr. Chairman, Senator Baucus, members of the subcommittee, I am
Bill Parrish, vice chair of the Association of State Floodplain
Managers and State Floodplain Manager for the State of Maryland. The
Association of State Floodplain Managers, Inc. and its 12 State
Chapters represent over 3,500 State and local officials and other
professionals engaged in all aspects of floodplain management and
hazard mitigation. All are concerned with working to reduce our
nation's flood-related losses. we work daily with cities, towns and
counties that are struggling with pressure to build in flood hazard
areas, working to rebuild more wisely after floods and planning to
implement new programs and undertake flood control and management
projects. Our State and local officials are the Federal Government's
partners in implementing programs and working to achieve effectiveness
in meeting our shared objectives. .
Wise, sustainable floodplain development and reduction of flood
losses in our nation's 20,000 flood prone communities saves lives and
property and also saves taxpayer dollars in disaster relief and
recovery costs. The Association has been involved in floodplain
management and flood control policy for decades. During the most recent
decade, this nation has made some progress toward more sustainable and
responsible approaches to reducing flood damage and costs.
Nevertheless, we continue to see increased damages from flooding' now
approaching $5-8 billion each year.
toward local solutions
The Association supports both structural and non-structural flood
loss reduction projects, but believes we need to achieve a better
balanced approach to flood loss reduction and prevention through
stronger roles and responsibilities at the local and state levels.
Federal flood policy should support and encourage local and
state solutions to flooding problems and costs. Often, locally
developed solutions will address multiple local concerns, incorporating
economic, social and environmental considerations into flood control
and management strategies. We encourage Congress to support policies
and programs mat will assist communities and citizens develop and
implement local solutions.
Successful examples of locally generated floodplain management
approaches that address multiple local objectives do exist. We should
learn from these successes and replicate them. The Association of State
Floodplain Managers (ASFPM) is proud of the efforts coordinated by our
member, Dave Kennedy, Village Administrator of the Village of Richmond
on the Ohio River. Mr. Chairman, you may be familiar with that local
decision not to build a flood wall. It is a good example of the local
economy not being able to support the cost-share and maintenance
agreement components of a Corps of Engineers project, but needing to
reduce flood risk, while preserving the cultural richness and aesthetic
attractiveness of the village. An approach was devised which included
clearing the floodway, developing a public response plan geared to
water levels and engaging in a significant public awareness effort.
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.
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 are feasible
for a community and lead citizens and local officials to believe
flooding is a Federal problem, enabling them to ignore prevention and
mitigation at the local level. 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, however, 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.
adding tools
As state and local officials whose job it is to assist our
communities in saving lives and avoiding damage from floods, we know
how important it is to have a variety of tools available. This allows
us to help communities to plan their floodplain management
comprehensively, to meet multiple objectives, to get the most value for
the federal, state and local dollars spent and to become fully engaged
in managing their own risk.
In recent years, the U.S. Army Corps of Engineers, with the
assistance of the Congress, has developed a number of programs which
provide broad technical assistance and expertise to local communities
in these efforts. Our members have found programs like Flood Plain
Management Services and Planning Assistance to States to be valuable
tools for which there is much more demand than can be met. Thousands of
communities have used these low cost technical assistance programs
which help them plan and implement local solutions with long term
benefits, thus saving in federal, state and local disaster
expenditures. We are very pleased with the authorization of the
Challenge 21 initiative because it offers essential flexibility such as
the ability to accommodate smaller projects for communities where a
traditional
structural project might not be justified or the ability to mix
structural and non-structural elements to better design an overall
project. This program can fill a gap that has existed in the Corps'
ability to be effective in addressing certain kinds of floodplain
management situations. If sufficiently well funded, it is likely that
hundreds of communities in the nation can benefit substantially from
Corps' efforts. We encourage the Congress to continue these efforts as
a supplement to any cost-effective, feasible and environmentally
acceptable projects funded.
in summary
In summary, the Federal Government should facilitate local
development of flood loss reduction strategies and offer incentives for
wise decision-making. The Corps of Engineers is pursuing some
directions which add new tools for enhancing the effectiveness of those
already in the toolbox. Tools which allow Corps' programs to meet
multiple objectives for localities in their floodplain strategies,
which complement other Federal programs and which stretch the positive
impact of Federal dollars on loss reduction and public safety represent
forward looking evolution of the Corps' critical mission.
Thank you for the opportunity to present this testimony.
______
Responses by Bill Parrish to Additional Questions from Senator Smith
This letter responds to the questions submitted by Senator Smith
for the hearing record. This letter supplements the testimony of the
Association of State Floodplain Managers that I presented on May 16,
2000.
Issue one.--Proposal to increase the non-Federal cost share from 35
percent to 50 percent for structural flood control projects. Would it
provide incentives for non- structural flood control projects?
Response. We believe that continued debates over the cost share
percentage as currently crafted is non-productive. The primary policy
outcome becomes ``how much is implemented by the Federal Government and
who pays''. Adjustments in other policy areas such as the mix and match
of projects is a bit too obscure to draw any conclusion.
We think there is a better approach, one that in time reduces the
reliance on the Federal Government, and encourages the development of
local and state self sufficiency in managing flood damages and costs. A
sliding cost share that financially rewards local and state governments
for proactive floodplain management activities will restore that self
reliance, lead to long term reduction in Federal expenditures, and
reduce disaster costs. This concept has been discussed previously and
does not need to be complex.
Issue two.--Is the Committee on Environment and Public Works
standard for approving projects adequate?
Response. Problems with projects are more apt to occur in the
process before the projects get to Congress. The Congressional process
seems thorough, in most cases, and is surely time consuming. However,
it relies on data developed in a process that has many concerns,
including an over reliance on the Benefit/Cost.
The ASFPM suggests this question may not lead to consideration of
the best national approach to encourage wise use of floodplains and
sustainable development in the nation. It is now clear that projects
which (1) get built the quickest, (2) have the most community support
(and thus least opposition), and (3) address multiple community
problems, such as flooding, community development, ecosystem stability,
water quality, etc., are those projects which are locally planned, with
technical and financial support from Federal and state agencies.
Examples of communities where the Corps has played such a role include:
Stockton, CA; Clark Co, NV; Napa Valley, CA; Harris Co, Texas and
Tulsa, OK.
The role of the Federal Government must change from ``doing'' the
projects to ``facilitating'' projects. Local governments must take the
lead in developing their comprehensive plans and involving all members
of their public to solve multiple problems and gain broad support. Only
in this fashion, will we move to truly sustainable development, with
the Federal Government assuming a role which will be less costly and
lead to more feasible projects which get built quicker.
We suggest to the committee that a transition to a sliding cost-
share would be a strong step to lead the Nation forward. Communities
and states will be encouraged to accept responsibility for their share
in preventing future disasters, in a way that they can control and
support. To help explain some of the local initiatives which could
determine cost-shares, and to show such local initiatives need not be
complex or expensive to undertake, an example list is attached.
______
December 15, 1997.
RE: Low cost incentives for better floodplain management
The Association of State Floodplain Managers has long advocated
Federal cost sharing arrangements that would provide incentives to
state and local governments to take actions on their own which will
reduce the number of structures at risk in their community/state to
flooding.
Some people feel such incentives will penalize poorer communities
and states, because they feel all such actions require money to
implement. In response to that concern, the ASFPM provides this partial
listing of actions which we feel can be implemented at little or no
cost to the community, but rather simply require a commitment from
local leaders to reduce the exposure of citizens and property to
flooding.
Identify and inventory community natural hazards.
Adopt local comprehensive community mitigation plans--
using the many available programs which help with planning [HUD,FEMA,
RPC's and state]
Determine if public buildings are in flood hazard areas;
purchase flood insurance, and implement low-cost mitigation measures
for those buildings.
Preserve open space use through planned density
development.
Information and education to citizens about hazards they
face.
Real estate disclosure of the hazards that property may
experience.
Development regulations beyond national minimum
standards.
Warning and preparedness planning in the community.
Retrofit at-risk structures using available programs for
funds.
Partnering with private business on mitigation so
everyone saves money.
Certification of local code administrators and planners
so programs can be planned and administered by knowledgeable staff.
State/local tax break for money invested in risk
reduction measures.
Tax differential depending on hazard risk location of
property.
Many of these items can be done at the local level, or the State
can assist or require each community to undertake them in order to
comply with rules or to be eligible for certain programs. If it's a
state-wide requirement, all communities in that state receive credit
for the action, as long as its clear the state has a mechanism for
monitoring compliance.
As an aside, many of the communities eligible for Community Rating
System credit, are not affluent, but still commit to making communities
safer from natural hazards.
__________
Statement of George Grugett, Executive Vice President, Mississippi
Valley Flood Control Association
Chairman Voinovich and members of the committee. Thank you for
letting me come before you today to discuss some matters very important
to the Mississippi Valley Flood Control Association, the people of the
Lower Mississippi Valley, and the Nation as a whole. The Corps Civil
Works program, processes and management structure have come under a
well-financed and well-orchestrated attack by a group of organizations
and agencies. These groups have little understanding of the role civil
works projects across the Nation has played in the protection of
citizens and property, and the better standards of living that would
not have been possible without their construction. If these groups are
successful in their efforts, we will continue to suffer irreparable
damage from the devastating floods that regularly keep many parts of
the Nation from making economic progress.
Of particular interest to residents of the Lower Mississippi Valley
is the Mississippi River and Tributaries Project. Although this project
is regional in scope, I believe it serves to demonstrate a national
issue. Before the MR&T Project, floods regularly devastated the Lower
Valley, killed hundreds of residents, flooded millions of acres, and
kept the region in a state of poverty with poor health and living
conditions. Because of the 1927 Flood, recognized as one of the great
natural disasters ever to occur in the United States, the MR&T Project
was implemented to protect this area from ever having to suffer another
such disaster. With the MR&T Project, the region has become
economically stable, and although it still needs to make strides
economically, contributes greatly to the economy of the Nation.
However, the job isn't complete. Today, $4.6 billion remains to be
constructed on a project begun many years ago, and because of
inflation, lack of funding, and environmental and structural
modifications, the completion date has slipped 31 years over the past
20 years. Because of low and declining investment levels, we are
actually getting further away from completion!
Although many areas of the Nation are protected from major floods,
there are still very important portions of other projects that,
although authorized by the Congress, remain uncompleted. Indeed, there
is a large backlog of authorized, uncompleted or unstarted projects
nationwide that are not being financed. Without these projects, we are
losing benefits and economic efficiencies that can never be recouped.
Proposals that are being pushed by environmental groups and the
Administration will put unparalleled new environmental restrictions on
all civil works projects. This will not only further stifle completion
of the projects, but will jeopardize the needed maintenance of existing
features. We cannot risk the lives of the citizens and the billions in
property protected by these projects.
Some of the current proposals that greatly concern us include:
1) A draft policy that the Council on Environmental Quality is
circulating within the Administration, entitled, ``Enhanced Protection
of Wetlands and Water Resources''. The proposal calls for a review of
all Corps policies and possible changes to the current Principles and
Guidelines for Water Resource Planning, likely imposing much stricter
environmental standards. We are greatly concerned about the following
possible impacts and implications of this proposed policy:
This proposed policy will halt all structural flood
control projects because it is impossible to have structural flood
control that does not impact wetlands.
It will stop all maintenance of existing flood control
channels and navigation projects as well as raising of the main line
Mississippi River Levees.
The draft directive not only targets Federal flood
control, but port authorities, navigation, drainage projects, and
private development activities.
2) In a move perhaps related to the CEQ initiative, the U. S. Fish
and Wildlife Service is pushing for a comprehensive environmentally-
focused review of the MR&T Project calling for implementation of non-
structural flood control measures that would create so-called New
Directions for the MR&T Project.
3) The Administration has submitted its version of the Water
Resources Development Act of 2000 to Congress. There is no request for
authorization for any flood control, navigation, or harbors project in
the bill. Instead, there is increased funding for the environmental
project for the Florida Everglades. We have no objection to a balanced
approach to protecting the environment, but we cannot continue to risk
the lives of people and billions in property with such a one-sided
approach. Also, the bill would increase cost sharing for structural
flood control from 35 percent to 50 percent. The Lower Valley already
suffers economic problems and simply cannot bear any more project
costs. I am sure the same is true of other areas in the Nation.
We think that the current Principles and Guidelines for Water
Resource Planning have served the Nation well and provide a balanced
approach. We do not object to, in fact we have always recommended, a
balanced approach to addressing the needs and opportunities related to
water projects, including environmental concerns. However, there must
be a process that continues to recognize economic growth, and standard
of living while maintaining high environmental standards.
Another broad concern is the apparent shift from the proven
concepts of structural flood control to unproven concepts. While we
think that non-structural solutions can be part of an overall plan, it
is wishful thinking to believe that such methods can completely solve
flooding problems. In the case of areas that can be impacted by major
flood events, this approach alone is too risky to citizens and
property.
In conclusion, I request that you reject these proposed changes.
This is in the best interest of millions of citizens whose very lives,
as well as their livelihoods, depend on a sound, balanced approach to
solving water resource problems. Such an approach is already in place
with current guidelines and the Corps management structure. We need the
national will and determination to face them. The Nation's future
depends on it. Thank you for the opportunity to speak to you today.
______
Responses by Bob Grugett to Additional Questions from Senator Smith
Question 1. Are there flood control navigation or harbor projects
that had completed Chief's Reports on April 10, 2000, the date on which
the Administration transmitted its WRDA 2000 proposal to Congress,
which were not included in the Administration's proposal?
Response. No.
Question 2. Since 1986, the committee has authorized only those
projects that are consistent with cost-sharing requirements established
in WRDA 1986. In addition, there must be an identified local sponsor
for the non-Federal share of the costs, the project must have a
completed reconnaissance and feasibility study, and the Chief's Report
must find the project to be be technically sound, environmentally
acceptable, and economically justified. Do you believe that the
committee standard is inadequate, and if so, why?
Response. Although the Mississippi Valley Flood Control Association
disagrees with the cost-sharing requirements for flood control projects
and opposed passage of WRDA 1986 for this and other reasons, we realize
that WRDA 1986 is now a matter of law, therefore we believe that the
committee standard as outlined is adequate.
__________
Statement of Wayne Brunetti, New Century Energies, Inc.
Mr. Chairman. My name is Wayne Brunetti, and I am the Chairman and
Chief Executive Officer of New Century Energies, Inc. New Century
Energies is a public utility holding company headquartered in Denver,
Colorado, serving 1.6 million customers in Colorado, Texas, Wyoming,
New Mexico, Kansas and Oklahoma. NCE will soon merge with Northern
States Power, a utility based in Minneapolis, Minnesota, to form Xcel
Energy. Xcel Energy will be the eighth largest utility in the country,
serving 3.1 million customers and generating over 21,000 megawatts of
electricity.
NCE has made environmental excellence one of its priorities. It has
been responsible for a number of innovative environmental programs,
such as its Windsource program. Windsource is the largest customer
driven renewable energy program in the country. Later, I will discuss
another innovative program that is especially pertinent to your
efforts.
I appreciate the opportunity to testify today regarding some of our
experiences with the Clean Air Act. As in other parts of the country,
the West has often grappled with the Clean Air Act's rigidity and the
EPA's inflexibility. In the last 5 years, we have found that one of our
greatest challenges is complying with the requirements imposed on us by
EPA under the Clean Air Act.
Much of the electricity in the West is generated by coal-fired
power plants. For example, 74 percent of the electricity generated by
NCE comes from coal-fired facilities. The West also produces a growing
percentage of the coal burned in power plants throughout the country.
The popularity of Western coal arises from its low sulfur content,
something we in the West have known about for a long time. Typically,
even our uncontrolled plants emit sulfur dioxide at a lower rate than
two-thirds of the country's coal-fired plants.
The air quality concerns in the West are also different from the
East. Most of the country's National Parks, Wilderness Areas and other
``Class I'' areas are located in the West, so the region is naturally
concerned about the impact of emissions from mobile and stationary
sources on visibility in these areas. For our company, that translates
into concerns about emissions of sulfur dioxide, in spite of the fact
that these emissions are already relatively low.
The West's urban centers have made great progress addressing air
quality. For example, although it is still characterized as a ``non-
attainment'' area, Denver has not violated an ambient air quality
standard for 5 years. As the committee may know, the Denver
metropolitan area is among the fastest growing in the country. Our
company struggles daily to provide adequate power supplies to meet this
expansive growth. Air quality issues have a significant impact on this
effort.
In the West, as elsewhere, EPA administers the Clean Air Act in an
irrational, costly way that often does not benefit the environment. Let
me give you some examples:
As I mentioned, growth in Colorado is substantial and
requires that we obtain significant new generating capacity to avoid
energy shortages in the Denver metropolitan area. The Colorado Public
Utilities Commission requires our subsidiary, Public Service Company of
Colorado, to acquire these new resources through competitive bidding
and encourages the company to enter into contracts with independent
power producers rather than build new plants itself. Last fall, EPA
ruled that a new, independent power plant owned by a third party was a
modification of a nearby, existing plant. EPA based this ruling only on
the fact that the independent power plant would be connected to the
Public Service Company electric system. The effect of EPA's
interpretation is to require expensive emission controls on new,
independent ``peaking'' power plants that operate only a few hours a
year--often making them uneconomical to operate. Because it may stand
in the way of our efforts to provide adequate power to the people of
Colorado, we have challenged EPA's interpretation in the 1Oth Circuit
Court of Appeals.
Earlier this year, we were attempting to obtain a
Prevention of Significant Deterioration permit for a new gas-fired
generating unit at our Fort St. Vrain plant. Rather than install EPA's
preferred nitrogen oxide control equipment (selective catalytic
reduction), we proposed to make much greater nitrogen oxide emission
reductions--at much lower cost--at one of our existing coal-fired
units. The state of Colorado and the environmental community were
supportive of this proposal. EPA, however, rejected it as an affront to
the ``integrity'' of the Clean Air Act.
These are just two examples of the perverse outcomes that often
result from EPA's interpretation of the Clean Air Act. Our experience
with the Agency stands in sharp contrast to our dealings at the state
level, and I think you might find our experience useful as you grapple
with these problems.
At NCE, one of our operating priorities is ``Customer First.'' We
try to be responsive to our customer needs and desires. During the
initial phase of our Windsource program, we conducted surveys that
indicated 62 percent of our customers would be willing to pay a little
bit more for ``cleaner'' power. As a result, we began to consider
alternatives to address the customers' concerns. Our best opportunity
was in Denver itself.
Public Service Company operates three coal-fired power plants in
the Denver metropolitan area. We became convinced that, unless we
responded to the community's concerns, our next great challenge would
be over the emissions from these plants. Therefore, in 1997 after much
study of different alternatives, we proposed a voluntary emission
reduction program to reduce sulfur dioxide emissions from those plants
by 70 percent and nitrogen oxide emissions by 40 percent. We stated
that we would need three things to implement our proposal:
Flexibility in the operation of the facilities;
Assurance that new state regulations would not require
additional reductions from those facilities for a period of 15 years;
and
Recovery of the cost of the new controls.
Having worked successfully with the environmental community on our
Windsource program, we first presented this proposal to them. We also
took it to a wide range of other interested parties, including
businesses, labor unions, coal suppliers, the local air quality
planning agency and the appropriate Colorado state agencies. We worked
closely with these groups to develop and pass legislation that would
allow our proposal to become a reality. That legislation, Colorado
Senate Bill 98-142, was passed by the General Assembly during the 1998
session. Senate Bill 142 encourages the Colorado Air Pollution Control
Division to enter into flexible voluntary emission reduction agreements
with stationary sources. It grants such sources a period of
``regulatory assurance'' during which they will not be subject to
additional state regulatory requirements. For coal-fired power plants,
Senate Bill 142 specifies that a 70 percent reduction in sulfur dioxide
emissions will result in a fifteen-year period of regulatory assurance.
The Act also ensures that regulated utilities (such as Public Service
Company) can recover the costs of these controls from its customers.
In July 1998, Colorado and Public Service Company entered into a
voluntary emission reduction agreement to implement our proposed Denver
emission reduction program. The Agreement grants Public Service Company
flexibility in complying with its requirements--through annual
emissions averages, flexible tonnage caps and trading of emissions
between the different plants. It grants us certainty by ensuring that
the plants will not be subject to new or different state requirements
for a period of 15 years. And, it assures that we can recover the costs
of these controls in a way that does not put the plants at a
competitive disadvantage should the electric utility industry in
Colorado be restructured.
Unlike traditional command and control approaches, Senate Bill 142
allowed us to define the most cost-effective way to reduce emissions
from the plants. Our analysis led us to retire the two oldest and
smallest units, install relatively low cost, less effective controls on
the smallest of the remaining units and install controls to achieve the
maximum reductions on the largest units. We are now in the process of
engineering these controls and will be in compliance with the new
emission limits beginning on January 1, 2003.
The success of this plan was the result of a great deal of hard
work by a broad range of interests. I do not believe that, under the
current Clean Air Act, we could have reached such an environmentally
beneficial result by working with EPA. This plan became a reality
largely because of the leadership of the state of Colorado.
As compared to our Denver emission reduction program, EPA's
regulation of air quality under the Clean Air Act appears to be broken.
It frequently creates obstacles to cost-effective environmental
improvements. Our recent experience at our Fort St. Vrain plant
confirms that fact. As Senate Bill 142 demonstrates, there are ways to
make environmental improvements without jeopardizing the financial
integrity of companies. We did it in Colorado.
Again, this committee is to be commended for exploring a new
approach to regulation of air quality. I urge you to learn from our
experience. I believe that the four broad concepts embraced in Colorado
Senate Bill 142 should form the basis of any reforms to the Clean Air
Act: flexibility, regulatory assurance, cost recovery and state
control. These four concepts were at the heart of Senate Bill 142. We
have already seen how effectively they can result in significant
emission reductions. I believe that, in one form or another, they will
work in your process as well. With them, you will be surprised by the
degree of environmental progress that the utility industry can achieve.
Thank you for allowing me to be here today. We look forward to
working with you and your staff on these issues in the months ahead.
__________
Testimony of Charles D. McCrary President, Southern Company Generation
Chairman Inhofe, Senator Graham and members of the Subcommittee, it
is a pleasure for me to present testimony to you on significant issues
related to the reauthorization of the Federal Clean Air Act
specifically as they relate to the electric power generation industry.
There are few industries as heavily regulated under Federal, state and
local environmental laws as electric power generation. The industry has
made remarkable strides in providing reliable economic electric power
to a growing economy while steadily improving its environmental
performance and reducing emissions. There is growing pressure at many
levels for the industry to reduce its environmental impact even
further. It is certainly appropriate for this subcommittee to explore
ways to improve the environmental performance of our electric
generation infrastructure while at the same time making sure that we do
not disrupt the supply of economic energy that is so necessary for our
continued economic growth.
I am President of Southern Company Generation, which provides
services to the fossil and hydro generation assets owned and operated
by the operating companies of Southern Company in our traditional
Southeastern U.S. service area. Southern Company is the largest
generator of electricity in the United States including operating about
30,000 Megawatts of fossil-fueled generation in the Southeast. In this
area, encompassing more than 120,000 square miles, Southern Company
also operates 5800 Megawatts of nuclear capacity and 2700 Megawatts of
hydroelectric capacity. We serve 3.8 million retail customers in this
area through our operating affiliates: Alabama Power, Georgia Power,
Gulf Power, Mississippi Power, and Savannah Electric.
About 70 percent of Southern Company's generating capacity is
fueled by coal, which is the most abundant domestic supply of energy
for electricity generation. In Ski coal is used to generate 55 percent
of the electric energy in the United States and its ready availability
and low cost have been key factors in providing an economic supply of
electric energy to fuel America's growing economy over the last decade.
Background
There are presently over 25 Federal programs that regulate air
emissions from electric generating plants and some of these programs
are over 30 years old. (See Figure 1) The 1977 and 1990 amendments to
the Federal Clean Air Act set up a structure for requiring reductions
of air emissions along with technology requirements, and very stringent
permitting and monitoring requirements. Title IV of the 1990 amendments
required a 50 percent reduction in sulfur dioxide emissions and a 2
million-ton reduction of nitrogen oxide emissions from electric
generating plants. Further reductions of nitrogen oxide emissions are
occurring under the ozone non-attainment provisions of Title I of the
1990 amendments.
The electric generating industry, and specifically Southern
Company, has stepped up to the plate and met the challenge of reducing
emissions as required by legislation and the follow-on regulatory
programs. We have accomplished this by taking advantage of lower than
projected costs for low-sulfur coal and by increased competition in
coal transportation. Southern Company has also harnessed the power of
the marketplace by playing a leading role in developing an emission
trading market in sulfur dioxide and been an industry leader in the
development and use of advanced emissions controls.
These reductions in emissions have occurred while the generation of
electricity and the use of coal has increased to fuel a growing
economy. Figure 2 shows that over the last 30 years America's growth in
Gross Domestic Product (GDP) has been almost exactly matched by the
growth in sales of electricity. While this has occurred, however,
industry wide emissions of sulfur dioxide and nitrogen oxides have gone
down. (See Figure 3)
In the case of Southern Company, while our generation is projected
to increase by 49 percent between 1990 and 2010, our emissions of
nitrogen oxides and sulfur dioxide are both projected to decline by
about 42 percent. Our emission rate or emissions per unit of product
are projected to decline even further.
These reductions include our commitment in Alabama and Georgia to
assist in those state's efforts to demonstrate compliance with the 1-
hour ambient ozone standard. We will spend over $1 billion in those
states on control technology for further reductions of nitrogen oxides.
This involves the installation of selective catalytic reduction
technology at seven units in Georgia and one unit in Alabama as well as
burner modifications at numerous other plants. This cost means that in
the case of Georgia, 85 percent of the state's reductions of nitrogen
oxides under its recently revised State Implementation Plan will come
from power plants while those plants only represent some 40 percent of
the total emissions.
There will also be a steep increase in the use of lower emitting
natural gas in Southern Company's future generating fleet. By the year
2010 natural gas will make up 26 percent of our total fuel mix as
compared to 2 percent in 1998. Coal is expected to fall from 77 percent
of our fuel mix in 1998 to 58 percent in 2010. This does not represent
a decrease in our use of coal but reflects the fact that almost all of
the growth in demand over the next decade is expected to be met with
natural gas fired technology.
Regulatory Agenda
Even with this record of performance, pressure has built for even
more reductions in emissions from coal fired generation. An aggressive
regulatory agenda has been advanced by the EPA that appears to be
targeted specifically at coal fired generation. There are over a dozen
proposed or pending regulatory actions that could drive up the cost of
coal fired generation or make it impractical. These include the
Regional NOx SIP Call, the adopted (though remanded) new 8-hour ozone
and fine particle standards, and a proposal to adopt a radically
different approach to applying new source review at existing
facilities. (See Figure 4) The possible adoption of the Kyoto Protocol
or other mandatory program for the reduction of carbon emissions would
also demand a large replacement of coal-fired generation with natural
gas or some other less carbon intensive fuel.
An issue that greatly concerns us is EPA's recent actions on New
Source Review. For several years EPA has been considering modifications
to the existing new source review program in ways that would limit the
ability of utilities to perform routine maintenance on power plants to
ensure their safety and reliability without triggering extremely costly
NSR requirements. To meet EPA's goals in a more cost effective manner-;
Southern Company and other utilities in the Utility Air Regulatory
Group (UARG) in the spring of 1999 developed an alternative proposal
that would ensure the reduction of generating plant emissions beyond
current requirements over time.
EPA never engaged in serious negotiations over the UARG proposal
but in November 1999 filed lawsuits against Southern Company and seven
other utilities alleging numerous past violations of new source review
requirements. Under EPA's interpretations, new source review would be
triggered by many common routine maintenance operations including
operations that improve plant efficiency. Trying to retroactively apply
a new interpretation to actions clearly considered acceptable in the
past has resulted in litigation that is diverting major amounts of time
and other resources that could be used more productively in working
together to solve problems. In addition, future efficiency and
reliability improvements are now being discouraged.
These issues can all be addressed but it is extremely important
that it be done in an orderly manner that avoids threatening the
continued economic supply of electric energy. The potential
requirements, as currently being applied, are often duplicative,
piecemeal and do not allow time for the design and installation of
multiple additional pollution control systems. In many cases decisions
to install pollution control equipment can be rendered uneconomic in
just a few years due to future regulations. For example, the decision
to install flue gas desulfurization to remove sulfur dioxide may be
ultimately be uneconomic with the prospect of some future program to
reduce carbon emissions, which could require the retirement of coal
units to be replaced with natural gas.
Clean Air Act Reauthorization
You have asked me here today to testify about ``incentives'' for
utility emission reductions in regard to the reauthorization of the
Clean Air Act. There certainly are many challenges ahead for the
electric generation sector as I have discussed. I am not here today
however to tell you that these challenges are due to the Clean Air Act
being broken. In fact Southern Company thinks that the foundation for
the Act is sound. The goals and objectives are clear and the processes
that are set forth for the EPA to follow in adopting standards and
regulations are comprehensive and allow for the best decisions to be
made to protect the public health and welfare. Deliberations on
reauthorization of the Clean Air Act should examine both the strengths
and weaknesses of the Act and not focus only on what to ``fix''.
We believe that most of the problems related to the future
regulatory agenda for electricity generation stem from the EPA's
failure to follow the proper procedures and appropriately apply
available scientific information in implementing the Clean Air Act.
They also have improperly revised the historic application of rules to
create wholly new interpretations of existing law. Recent court actions
have supported this view with several rulemakings being remanded due to
EPA's failure to follow proper procedure. Other potential regulatory
conflicts we ark facing could have been avoided if EPA had more closely
followed the recommendations from the Agency's own scientific advisory
committees.
Alternative Approaches
Some parties have espoused changes in the Clean Air Act and other
Federal laws that would constitute alternatives to the way that
emissions from electric generating plants are now regulated. These
alternatives deserve inquiry and we agree that the Subcommittee should
include them in its deliberations on reauthorization of the Act. The
examination of these approaches must include looking at ways to meet
clean air goals in the most cost effective and efficient manner
possible. The benefits of alternative legislative approaches should be
compared against the provisions of the existing Act as intended by
Congress.
Some examples of alternative approaches that have been discussed
include:
Comprehensive Approach
A proposal to develop a comprehensive package of emission reduction
requirements that would combine many of the pending and proposed
regulatory programs has been suggested by some in the industry. It is
argued that this could provide some efficiency as compared to an
unorderly pollutant by pollutant approach. It is also believed that
this approach could provide some regulatory ``certainty'' for a period
of time during which capital investment decisions could be made. This
general concept has been discussed in several forums and we feel that
there are potential positives but also potential hurdles to this
approach. Positives include possible cost savings from a multi-
pollutant approach compared to command and control for individual
pollutants on single generating units at different timelines. Issues to
overcome include ensuring that such an approach does not codify
requirements that could not otherwise be justified on scientific or
economic grounds, that deadlines make sense from a reliability and
economic standpoint, ensuring that ``regulatory certainty'' could in
reality be achieved, and reaching agreement on a large number of other
details that are likely to be controversial.
Financial Incentives
The adoption of financial incentives to encourage cleaner
generation and the installation of emission controls has been urged by
some. Examples include:
1. Investment Tax Credits
2. Production Tax Credits
3. Accelerated Depreciation
4. Grants, Low interest loans and tax exempt bonds
Individually or in combination such proposals could provide an
incentive to early reductions by generating companies or help to
mitigate the impacts of regulatory requirements.
Advancement of New Technology
Proposals have been made to facilitate the development and
installation of new technologies. At Southern Company we believe that
the development and commercialization of advanced technologies holds
the key to improving the environmental performance of electricity
generation. We have been leaders in the Department of Energy's Clean
Coal Technology demonstration program and currently operate DOE's Power
Systems Development Facility in Wilsonville, Alabama. The PSDF is the
nation's premier testing and development site for the demonstration of
technologies that increase the efficiency and environmental performance
of coal in the generation of electric energy. Our goal is to
demonstrate technologies that ultimately will mean coal fueled
generating facilities that are as clean as natural gas fired plants.
Southern Company is also a leader in the development of distributed
generation options including fuel cells and micro-turbines. We have
developed partnerships with some of our key commercial customers to
demonstrate these technologies including the installation of a 250-
kilowatt molten carbonate fuel cell at a Daimler-Chrysler plant near
Tuscaloosa, Alabama.
Principles for Clean Air Programs
We believe that the development and implementation of any clean air
program that applies to the electricity generation sector should
include certain common principles. These principles will help to ensure
that improvements in environmental performance will result in real
enhancements of environmental quality in the most cost- effective
manner possible. Most of these could be incorporated under the
provisions of the existing Clean Air Act. They are:
Any new program for controls must be based on sound peer-
reviewed science and an accurate assessment of the environmental
improvements expected from existing regulatory programs.
Targets and timetables for emission controls should
reflect environmental needs and priorities and not controls for
controls sake or a ``one size fits all'' approach.
Air quality control programs should consistently utilize
unencumbered market based trading systems. The SO2 control program
under Title IV of the 1990 Amendments has been very successful in
accelerating emission reductions and minimizing costs and we should
build on the success of those provisions.
Any control program should allow a source to meet
reduction requirements in the most cost-effective and flexible manner
possible and avoid unit-by-unit technological controls.
Compliance with new emission reduction requirements
should be timed to recognize the size of the generating fleet and phase
in compliance requirements over a long enough period to allow the
orderly installation of controls and the avoidance of a supply
disruption.
Summary
Southern Company and the electric utility industry have made
tremendous strides in improving the environmental performance of
electricity generation. Emissions have been reduced and the quality of
our air and water have substantially improved. This has occurred even
while electricity generation and the use of coal has increased.
Southern Company is committed to continuing to improve environmental
quality in the areas that we serve. The future regulatory agenda put
forth by the EPA however will present great challenges in ensuring that
we can continue to utilize coal, the most abundant domestic energy
supply in the generation of economic electric energy. This is not due
to the failure of the Clean Air Act but the failure of EPA to follow
the proper procedures and effectively utilize its discretion under the
Act in making regulatory decisions. There are numerous proposals to
amend the Clean Air Act to implement alternative approaches to
regulating the electric generating industry. All of these concepts
should be examined against the benefits of the implementing the
existing Act in a proper manner.
Southern Company is committed to playing a constructive role during
the process of reauthorizing the Clean Air Act. We will continue to
work with Congress, EPA, states, courts and other interest groups to
meet the challenges of maintaining a clean and safe environment and an
adequate and affordable supply of energy.
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