The Delaware River deepening project calls for dredging the river’s main navigation ship channel to 45 feet, from a depth of 40 feet, beginning at the mouth of the Delaware Bay through Philadelphia Harbor, and to the Beckett Street Terminal in Camden, New Jersey—a distance of 102.5 miles. The Corps plans to use nine existing federal disposal sites in Delaware (one), New Jersey (seven), and Pennsylvania (one) to dispose of the material dredged from the bottom of the river. The new dredged material is to be layered on top of the material already deposited at these sites during annual maintenance dredging in the channel to maintain its 40- foot depth. Additionally, a portion of the material to be dredged is sand from Delaware Bay, which would be used by the Corps to restore wetlands at Kelly Island, Delaware, and the shoreline at Broadkill Beach, Delaware. According to the Corps, dredged material has been used in a variety of beneficial projects over the years, including environmental restoration, landscaping, and airport runway fill material. Often, the material must be drained and dried for several months before it can be used in these ways. Figure 1 shows the area to be dredged, the nine federal disposal sites, the two Delaware restoration locations, and other features discussed in this report. In 1992, the year Congress authorized the deepening project, the Corps completed a Final Interim Feasibility Study and Environmental Impact Statement (EIS) for the project. This document was used to inform decision makers and the public of the Corps’ recommended plan for the project, potential alternatives to it, its benefits and costs, and the likely environmental effects. The Corps then prepared a design memorandum in 1996, which provided details on the final design and engineering plans for the project, and published a Supplemental Environmental Impact Statement (SEIS) in 1997. In its 1998 LRR, the Corps updated its economic analysis of the project’s benefits and costs. In our June 2002 report, we found that the Corps’ 1998 analysis was based on miscalculations, invalid assumptions, and outdated information, and did not consider a number of uncertainties that could affect the project’s benefits and costs. Consequently, we concluded that the Corps’ analysis did not provide a reliable basis for determining whether the project was economically justified and recommended that the Corps (1) prepare a comprehensive, new economic analysis of the project; (2) obtain the information necessary to address uncertainties that could affect benefits and costs; (3) engage an external independent party to review the new analysis; and (4) submit the new analysis to Congress. In response to our 2002 report, the Corps reanalyzed the economic benefits and costs of the deepening project and issued a Comprehensive Economic Reanalysis Report in 2002, followed by a Supplement to Comprehensive Economic Reanalysis Report in 2004. (In this report we use the term “reanalysis” to refer collectively to both the Corps’ 2002 report and 2004 supplement.) The Corps’ reanalysis concluded that the project would yield average annual benefits of $24.2 million, about $16 million less than the Corps’ 1998 annual benefit estimate of $40.1 million. According to the Corps’ reanalysis, annual benefits would result largely from transportation cost savings associated with the importation of specific commodities—crude oil; containerized cargo, such as refrigerated meat and produce; and dry bulk commodities, such as steel slabs and blast furnace slag (an additive used in the production of cement). Crude oil savings would account for about half of these benefits, with cost savings related to containerized cargo accounting for another quarter of them. See table 1 for details on the benefit estimates and share of total benefits for each benefit category in the reanalysis. The benefit estimates in the Corps’ reanalysis depend on a number of factors, including (1) the extent to which future growth expands the total volume transported for each of the benefiting commodities; (2) the savings associated with using less of certain economic resources, such as the Delaware River lightering fleet; and (3) the economy’s prevailing price level and discount rate. For the reanalysis, the Philadelphia district contracted with a private consulting firm to analyze project benefits. According to the Corps’ reanalysis, the Delaware River deepening project would generate benefits relating to commodities imported by the following entities: Five crude oil refining facilities with six deep-draft terminals now owned by Sunoco (four), Valero (one), and ConocoPhillips (one), with four terminals located in Pennsylvania and two in New Jersey. Other commodity terminals, including those at Beckett Street Terminal in Camden, New Jersey; Packer Avenue Marine Terminal in Philadelphia, Pennsylvania; and Delaware Terminal at the port of Wilmington, Delaware. (The nine commodity terminals appear in the figure 1 map.) With regard to project costs, the Corps’ reanalysis estimated average annual project costs of $21.0 million, almost $8 million less than the Corps’ 1998 annual cost estimate of $28.8 million. This revised cost estimate includes channel dredging, disposal site construction, and any related land costs, such as land for new disposal sites and rights of way. It also includes associated costs, which are those needed, in addition to project costs, to achieve the benefits claimed during the period of the Corps’ analysis. These costs include, for example, berth deepening and dock modifications to accommodate deeper ships at refinery facilities and container terminals. Although associated costs are the responsibility of the potentially benefiting facilities, the Corps includes these costs in its total cost estimate, in accordance with its guidance. See appendix II for more information about the project’s associated costs. In addition to the 2002 and 2004 reanalysis documents, the Corps prepared the following documents that provide supplemental information on the benefits and costs of the Delaware River deepening project: an economic update to the project that reaffirmed the reanalysis’s benefit and cost estimates for budgeting purposes (April 2008), an environmental assessment that included a section summarizing the project’s potential economic benefits (April 2009), and an economic update to support the Corps’ fiscal year 2011 budget request (December 2009). See figure 2 for a summary timeline of key documents related to the to the deepening project. deepening project. As of December 2009, the Corps estimated average annual benefits of $30.1 million and average annual costs of $22.3 million for the project, yielding annual net benefits of $7.8 million. Because estimated benefits exceeded estimated costs—resulting in positive net benefits and a benefit- cost ratio greater than one—the Corps determined that the project remained economically justified. See table 2 for a summary of the benefit and cost estimates and resulting benefit-cost ratios in the Corps’ reanalysis and in its most recent economic update. As noted in table 2, the benefit and cost estimates are based on different price levels and discount rates, which accounts for some of the changes observed in the estimates between the 2002-2004 reanalysis and the 2009 economic update. This means that the estimates and resulting net benefits and benefit-cost ratios are not directly comparable between the two analyses. With regard to assessing the project’s potential environmental impacts, the Corps is required to comply with the National Environmental Policy Act (NEPA). In addition to summarizing the project’s potential economic benefits, as noted earlier, the 2009 environmental assessment’s primary purpose was to evaluate the impacts of changes to the project and in the project area since the 1992 EIS and 1997 SEIS, as well as to present the results of post-SEIS environmental monitoring and data collection. Although the Corps has made efforts to conduct a reanalysis of the project and provide assessments of its potential environmental impacts, the project has remained controversial. For many years the project has been criticized by regional environmental groups, among others, who have raised concerns about the project’s impact on water quality and various fish and wildlife species, as well as the accuracy of the Corps’ estimates of the project’s benefits and costs. Notwithstanding, because of the results of the reanalysis, congressional funding, and support for the project from its local sponsor and others, the Corps continued its efforts to begin construction. Specifically, in 2008 the Philadelphia Regional Port Authority (PRPA)—an independent agency of the state of Pennsylvania—replaced the Delaware River Port Authority as the project’s local sponsor. In that same year, PRPA and the Army signed a project partnership agreement for the construction of the deepening project. As the local sponsor, PRPA is to contribute 25 percent of the project’s total costs. The Corps’ reanalysis addressed many of the limitations that we had identified in 2002 in the project’s original economic analysis by using more recent information to correct invalid assumptions and outdated data, recalculating benefits and costs to correct miscalculations, and accounting for some of the economic uncertainty associated with the project. In addition, as we recommended, the Corps had independent experts review the reanalysis before submitting it to Congress. Although the Corps’ efforts were responsive overall to the recommendations we made in 2002, we found several additional limitations in the reanalysis. For example, in its analysis of the economic uncertainty associated with the project, the Corps considered the effects of negative-growth scenarios only for crude oil and refined petroleum but not for the remaining benefit categories. The Corps’ reanalysis was based in large part on the information that its contractor, David Miller & Associates (DMA), an economic consulting firm, developed between 2002 and 2004. Using the updated information that DMA developed, the Corps revised its list of potential benefit categories to exclude those that would no longer benefit from the project or those for which the agency had insufficient information to calculate benefits. For example, our 2002 report noted that the Corps had assumed benefits resulting from coal and iron ore imports, as well as scrap metal exports, even though trade in these commodities had greatly declined since the Corps had last studied them.