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[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

=======================================================================

                                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

                              ----------                              
                                                                   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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