8:35 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment, which is cosponsored by the gentleman from South Carolina (Mr. SANFORD), my very able colleague, the gentleman from Maryland (Mr. GILCHREST), is a sensible due diligence amendment, and here is what it says. The bill proposes to spend approximately $30 million of our constituent's money to pursue a project to deepen the main channel of the Delaware River which divides the States of New Jersey and Pennsylvania and which empties into a bay which sits next

to the State of Delaware.

We believe that there are significant unanswered questions about this project, and the purpose of our amendment is to be sure that there is adequate time for this Congress to first get the facts, and then decide whether to spend the $30 million of our respected taxpayers' money.

There are questions in this project about environmental concerns which is why the amendment is supported by the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, the National Wildlife Federation and Friends of the Earth.

There are questions about the economics of this project, which is why the amendment is supported by Citizens Against Government Waste and Taxpayers for Common Sense. Finally, there are questions about the equity and feasibility of the plan to distribute the dredged spoils from this project.

Due diligence requires that we gain the answers to these questions, and that is the way this amendment works. It says that funds for this deepening project are prohibited to be spent before June 1 of 2001 so that this Congress and the executive branch can answer these kinds of questions.

Environmentally, is this project going to be a significant threat to the drinking water and the natural resources of the Delaware River and bay system? The proponents would say that the environmental impact statement answers that question.

I think the environmental impact statement raises more questions. The method that is used with respect to toxic and polluted sediment is to average the presence of those sediments in the river bed, but that does not allow for toxic hot spots which could arise.

It does not deal with the question of the environmental consequences that could be done to the dredged disposal sites, and it does not deal with the consequences of the dredging that would take place for berths next to oil refineries, if they are ever dredged, that are relevant to this project. There are too many environmental questions to go forward with this project at this time.

On the economics, the proponents of this project, the Army Corps of Engineers, say that 80 percent of the economic benefit derives from being able to get more crude oil to six oil refineries along the Delaware River at a cheaper rate which then lowers production costs. Mr. Chairman, that requires those oil refineries to make a commitment with their money to dredge their berths and make themselves available for this crude oil before we spend $30 million of the public's money.

The record though shows that Best One Company has committed to make that investment; the others have not. They have given us words. They have given us gestures. They have not given us commitment or money. Mr. Chairman, this project proposes to build a superhighway with no exit ramps. A $311 million superhighway without an exit ramp.

Mr. Chairman, finally, there is the question of the equity of dredged disposal sites. This project calls for 10 million cubic yards of dredged material to be distributed on the beaches of Delaware, but the Army Corps has refused to cooperate with the Delaware environmental agency and get the appropriate permits which is why Senator ROTH and Senator BIDEN in the [Page: H5263]

other body have urged that this project not be funded at this time.

The project takes the remaining 22 million cubic yards of material and proposes to put it all in southern New Jersey, which is why elected officials, Republican and Democrat, State, local, and county throughout southern New Jersey have objected to this project. We need due diligence here, Mr. Chairman. We need to look at the essentials of this project when it comes to environment, economics and dredged disposal before we commit $30 million of the public's money to this project, which is why environmental

groups and taxpayer groups support this amendment and why I urge my colleagues to do so as well.

Mr. Chairman, I reserve the balance of my time.

8:35 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment, which is cosponsored by the gentleman from South Carolina (Mr. SANFORD), my very able colleague, the gentleman from Maryland (Mr. GILCHREST), is a sensible due diligence amendment, and here is what it says. The bill proposes to spend approximately $30 million of our constituent's money to pursue a project to deepen the main channel of the Delaware River which divides the States of New Jersey and Pennsylvania and which empties into a bay which sits next

to the State of Delaware.

We believe that there are significant unanswered questions about this project, and the purpose of our amendment is to be sure that there is adequate time for this Congress to first get the facts, and then decide whether to spend the $30 million of our respected taxpayers' money.

There are questions in this project about environmental concerns which is why the amendment is supported by the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, the National Wildlife Federation and Friends of the Earth.

There are questions about the economics of this project, which is why the amendment is supported by Citizens Against Government Waste and Taxpayers for Common Sense. Finally, there are questions about the equity and feasibility of the plan to distribute the dredged spoils from this project.

Due diligence requires that we gain the answers to these questions, and that is the way this amendment works. It says that funds for this deepening project are prohibited to be spent before June 1 of 2001 so that this Congress and the executive branch can answer these kinds of questions.

Environmentally, is this project going to be a significant threat to the drinking water and the natural resources of the Delaware River and bay system? The proponents would say that the environmental impact statement answers that question.

I think the environmental impact statement raises more questions. The method that is used with respect to toxic and polluted sediment is to average the presence of those sediments in the river bed, but that does not allow for toxic hot spots which could arise.

It does not deal with the question of the environmental consequences that could be done to the dredged disposal sites, and it does not deal with the consequences of the dredging that would take place for berths next to oil refineries, if they are ever dredged, that are relevant to this project. There are too many environmental questions to go forward with this project at this time.

On the economics, the proponents of this project, the Army Corps of Engineers, say that 80 percent of the economic benefit derives from being able to get more crude oil to six oil refineries along the Delaware River at a cheaper rate which then lowers production costs. Mr. Chairman, that requires those oil refineries to make a commitment with their money to dredge their berths and make themselves available for this crude oil before we spend $30 million of the public's money.

The record though shows that Best One Company has committed to make that investment; the others have not. They have given us words. They have given us gestures. They have not given us commitment or money. Mr. Chairman, this project proposes to build a superhighway with no exit ramps. A $311 million superhighway without an exit ramp.

Mr. Chairman, finally, there is the question of the equity of dredged disposal sites. This project calls for 10 million cubic yards of dredged material to be distributed on the beaches of Delaware, but the Army Corps has refused to cooperate with the Delaware environmental agency and get the appropriate permits which is why Senator ROTH and Senator BIDEN in the [Page: H5263]

other body have urged that this project not be funded at this time.

The project takes the remaining 22 million cubic yards of material and proposes to put it all in southern New Jersey, which is why elected officials, Republican and Democrat, State, local, and county throughout southern New Jersey have objected to this project. We need due diligence here, Mr. Chairman. We need to look at the essentials of this project when it comes to environment, economics and dredged disposal before we commit $30 million of the public's money to this project, which is why environmental

groups and taxpayer groups support this amendment and why I urge my colleagues to do so as well.

Mr. Chairman, I reserve the balance of my time.

8:35 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, this amendment, which is cosponsored by the gentleman from South Carolina (Mr. SANFORD), my very able colleague, the gentleman from Maryland (Mr. GILCHREST), is a sensible due diligence amendment, and here is what it says. The bill proposes to spend approximately $30 million of our constituent's money to pursue a project to deepen the main channel of the Delaware River which divides the States of New Jersey and Pennsylvania and which empties into a bay which sits next

to the State of Delaware.

We believe that there are significant unanswered questions about this project, and the purpose of our amendment is to be sure that there is adequate time for this Congress to first get the facts, and then decide whether to spend the $30 million of our respected taxpayers' money.

There are questions in this project about environmental concerns which is why the amendment is supported by the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, the National Wildlife Federation and Friends of the Earth.

There are questions about the economics of this project, which is why the amendment is supported by Citizens Against Government Waste and Taxpayers for Common Sense. Finally, there are questions about the equity and feasibility of the plan to distribute the dredged spoils from this project.

Due diligence requires that we gain the answers to these questions, and that is the way this amendment works. It says that funds for this deepening project are prohibited to be spent before June 1 of 2001 so that this Congress and the executive branch can answer these kinds of questions.

Environmentally, is this project going to be a significant threat to the drinking water and the natural resources of the Delaware River and bay system? The proponents would say that the environmental impact statement answers that question.

I think the environmental impact statement raises more questions. The method that is used with respect to toxic and polluted sediment is to average the presence of those sediments in the river bed, but that does not allow for toxic hot spots which could arise.

It does not deal with the question of the environmental consequences that could be done to the dredged disposal sites, and it does not deal with the consequences of the dredging that would take place for berths next to oil refineries, if they are ever dredged, that are relevant to this project. There are too many environmental questions to go forward with this project at this time.

On the economics, the proponents of this project, the Army Corps of Engineers, say that 80 percent of the economic benefit derives from being able to get more crude oil to six oil refineries along the Delaware River at a cheaper rate which then lowers production costs. Mr. Chairman, that requires those oil refineries to make a commitment with their money to dredge their berths and make themselves available for this crude oil before we spend $30 million of the public's money.

The record though shows that Best One Company has committed to make that investment; the others have not. They have given us words. They have given us gestures. They have not given us commitment or money. Mr. Chairman, this project proposes to build a superhighway with no exit ramps. A $311 million superhighway without an exit ramp.

Mr. Chairman, finally, there is the question of the equity of dredged disposal sites. This project calls for 10 million cubic yards of dredged material to be distributed on the beaches of Delaware, but the Army Corps has refused to cooperate with the Delaware environmental agency and get the appropriate permits which is why Senator ROTH and Senator BIDEN in the [Page: H5263]

other body have urged that this project not be funded at this time.

The project takes the remaining 22 million cubic yards of material and proposes to put it all in southern New Jersey, which is why elected officials, Republican and Democrat, State, local, and county throughout southern New Jersey have objected to this project. We need due diligence here, Mr. Chairman. We need to look at the essentials of this project when it comes to environment, economics and dredged disposal before we commit $30 million of the public's money to this project, which is why environmental

groups and taxpayer groups support this amendment and why I urge my colleagues to do so as well.

Mr. Chairman, I reserve the balance of my time.

8:43 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself 20 seconds.

Mr. Chairman, I would say to my friend, the gentleman from New Jersey (Mr. FRELINGHUYSEN), that the New Jersey legislature has failed to yet appropriate its match for this project because of the very concerns that I made reference to.

Mr. Chairman, I yield 2 minutes to the gentleman from Maryland (Mr. GILCHREST), my friend and coauthor. The gentleman from Maryland is one of the leading environmentalists of this Congress who will reflect some of the reasons that the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, National Wildlife Federation and others so strongly support this amendment.

8:43 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself 20 seconds.

Mr. Chairman, I would say to my friend, the gentleman from New Jersey (Mr. FRELINGHUYSEN), that the New Jersey legislature has failed to yet appropriate its match for this project because of the very concerns that I made reference to.

Mr. Chairman, I yield 2 minutes to the gentleman from Maryland (Mr. GILCHREST), my friend and coauthor. The gentleman from Maryland is one of the leading environmentalists of this Congress who will reflect some of the reasons that the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, National Wildlife Federation and others so strongly support this amendment.

8:43 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself 20 seconds.

Mr. Chairman, I would say to my friend, the gentleman from New Jersey (Mr. FRELINGHUYSEN), that the New Jersey legislature has failed to yet appropriate its match for this project because of the very concerns that I made reference to.

Mr. Chairman, I yield 2 minutes to the gentleman from Maryland (Mr. GILCHREST), my friend and coauthor. The gentleman from Maryland is one of the leading environmentalists of this Congress who will reflect some of the reasons that the League of Conservation Voters, the Sierra Club, the U.S. Public Interest Research Group, National Wildlife Federation and others so strongly support this amendment.

8:43 PM EDT

Wayne Gilchrest, R-MD 1st

Mr. GILCHREST. Mr. Chairman, I thank the gentleman from New Jersey (Mr. ANDREWS) for yielding me the time.

Mr. Chairman, I will make a comment about the State of Delaware and the State of New Jersey supporting this project. There are numerous agencies within each of those States, and the State of Delaware has a problem with this dredging from the governor to the two senators, to the Member of Congress from that State.

The issues that they have had are environmental issues, and those environmental issues deal with the toxins that are in these regions of the river that is going to be dredged. They have a problem with the dredged spoil that is supposed to be considered clean, which, in fact, when we move tiny particles of dredged material, each of those grains of sand, because of the physical nature of that structure, when it is moved, exposed to air, deposited someplace else, releases nitrogen and phosphorus.

Those are concerns.

Delaware does not want this project to go forward, because of the environmental concerns that the Corps of Engineers have been asked to address, and they have not addressed those issues.

[Time: 20:45]

The other issue my colleague from New Jersey talked about, when they dredge this channel in the river from 40 to 45 feet, it is going to cost the taxpayers millions of dollars. Well, what good is that dredged deeper channel going to do when we do not dredge the equivalent depth to the berths where the ships are going to dock? And almost all of those ships are owned by somebody. Whether it is an oil company or a foreign steamship company, they have intimated that they are not going to dredge from

the channel to the berths.

Now, why are we dredging? I think that is the question that needs to be asked. What are we dredging? We are dredging for fundamentally two reasons. One so that we can get a 6-pack of Heineken for a couple of pennies less. That is what it amounts to.

Mr. Chairman, I strongly urge support for the Andrews amendment.

8:43 PM EDT

Wayne Gilchrest, R-MD 1st

Mr. GILCHREST. Mr. Chairman, I thank the gentleman from New Jersey (Mr. ANDREWS) for yielding me the time.

Mr. Chairman, I will make a comment about the State of Delaware and the State of New Jersey supporting this project. There are numerous agencies within each of those States, and the State of Delaware has a problem with this dredging from the governor to the two senators, to the Member of Congress from that State.

The issues that they have had are environmental issues, and those environmental issues deal with the toxins that are in these regions of the river that is going to be dredged. They have a problem with the dredged spoil that is supposed to be considered clean, which, in fact, when we move tiny particles of dredged material, each of those grains of sand, because of the physical nature of that structure, when it is moved, exposed to air, deposited someplace else, releases nitrogen and phosphorus.

Those are concerns.

Delaware does not want this project to go forward, because of the environmental concerns that the Corps of Engineers have been asked to address, and they have not addressed those issues.

[Time: 20:45]

The other issue my colleague from New Jersey talked about, when they dredge this channel in the river from 40 to 45 feet, it is going to cost the taxpayers millions of dollars. Well, what good is that dredged deeper channel going to do when we do not dredge the equivalent depth to the berths where the ships are going to dock? And almost all of those ships are owned by somebody. Whether it is an oil company or a foreign steamship company, they have intimated that they are not going to dredge from

the channel to the berths.

Now, why are we dredging? I think that is the question that needs to be asked. What are we dredging? We are dredging for fundamentally two reasons. One so that we can get a 6-pack of Heineken for a couple of pennies less. That is what it amounts to.

Mr. Chairman, I strongly urge support for the Andrews amendment.

8:46 PM EDT

Ron Packard, R-CA 48th

Mr. PACKARD. Mr. Chairman, I thank the gentleman for yielding me this time.

Funding should not be withheld, and this project should not be delayed.

Issues raised by the opponents to the project have been adequately addressed during the planning stages and appropriate analyses and project modifications have been made to ensure the environment is protected. This project is included in the President's budget request; it is supported by the governors of both States, New Jersey and Pennsylvania, as well as numerous Members of this body.

The project will deepen the Delaware main shipping channel from the existing 40 feet to 45 feet and will provide substantial benefits. I urge all of the Members to support the project and to oppose the amendment.

8:46 PM EDT

Ron Packard, R-CA 48th

Mr. PACKARD. Mr. Chairman, I thank the gentleman for yielding me this time.

Funding should not be withheld, and this project should not be delayed.

Issues raised by the opponents to the project have been adequately addressed during the planning stages and appropriate analyses and project modifications have been made to ensure the environment is protected. This project is included in the President's budget request; it is supported by the governors of both States, New Jersey and Pennsylvania, as well as numerous Members of this body.

The project will deepen the Delaware main shipping channel from the existing 40 feet to 45 feet and will provide substantial benefits. I urge all of the Members to support the project and to oppose the amendment.

8:47 PM EDT

Michael N. Castle, R-DE

Mr. CASTLE. Mr. Chairman, I thank the gentleman for yielding me this time.

I would point out to my colleagues than there are three States involved in this. The State of Delaware actually runs the whole length of this Delaware River and our State, at this moment, at least, opposes this particular measure to dig this channel deeper, and we support the Andrews amendment.

There are various reasons for that. One could argue waste or whatever it may be, because this is an expensive project. But in Delaware, we are trying to determine the environmental impact, as has been stated by several speakers here, whether it will cause undue harm to Delaware's natural resources. [Page: H5264]

Last year I supported funding because it moved the process forward and we could find out more. Then we tried to work with the Army Corps of Engineers in the course of this year, and the Army Corps of Engineers and our Department of Natural Resources and Environmental Control began negotiations about how the environment would be guaranteed: would it be through a State permit or some memorandum of agreement. It is my opinion that the forum is not as important as the substance. Any agreement needs

to be mutually acceptable, legally enforceable, and allow for meaningful public participation.

Mr. Chairman, I had hoped that I would be able to come to the floor tonight saying these conditions have been met, but I cannot do that; they have not been met. Given the lack of assurances from the Corps to my State's environmental agency, I cannot support funding for this project this year, and that is exactly what the gentleman from New Jersey's amendment does, it delays it for a year. I think the wiser course of action today is to delay funding for actual dredging until this issue is resolved.

In fact, many in my State thought that that was the Corps' position too. This spring, a Corps spokesman stated to the Delaware press that the Corps had all the necessary permits, and it had addressed all of the environmental concerns created by the dredging project. The very next day the Corps reversed itself and stated that we are not going to start dredging without resolving the permit issues first, admitting they did not have it resolved. Sadly, a few weeks ago when I gave the Corps the opportunity

to support my efforts to put their promise in writing and delay actual dredging funds, they declined.

Mr. Chairman, it is no wonder citizens in Delaware do not trust the economic justifications and environmental propositions the Corps makes. It is no wonder our Department of Natural Resources insists on a legally enforceable agreement with the Corps. I know we all hope the DNREC, our environmental people and the Corps can reach a mutually acceptable, legally enforceable agreement before the fiscal year 2001 begins; but until that time, I urge the House to withhold funding for this project.

8:47 PM EDT

Michael N. Castle, R-DE

Mr. CASTLE. Mr. Chairman, I thank the gentleman for yielding me this time.

I would point out to my colleagues than there are three States involved in this. The State of Delaware actually runs the whole length of this Delaware River and our State, at this moment, at least, opposes this particular measure to dig this channel deeper, and we support the Andrews amendment.

There are various reasons for that. One could argue waste or whatever it may be, because this is an expensive project. But in Delaware, we are trying to determine the environmental impact, as has been stated by several speakers here, whether it will cause undue harm to Delaware's natural resources. [Page: H5264]

Last year I supported funding because it moved the process forward and we could find out more. Then we tried to work with the Army Corps of Engineers in the course of this year, and the Army Corps of Engineers and our Department of Natural Resources and Environmental Control began negotiations about how the environment would be guaranteed: would it be through a State permit or some memorandum of agreement. It is my opinion that the forum is not as important as the substance. Any agreement needs

to be mutually acceptable, legally enforceable, and allow for meaningful public participation.

Mr. Chairman, I had hoped that I would be able to come to the floor tonight saying these conditions have been met, but I cannot do that; they have not been met. Given the lack of assurances from the Corps to my State's environmental agency, I cannot support funding for this project this year, and that is exactly what the gentleman from New Jersey's amendment does, it delays it for a year. I think the wiser course of action today is to delay funding for actual dredging until this issue is resolved.

In fact, many in my State thought that that was the Corps' position too. This spring, a Corps spokesman stated to the Delaware press that the Corps had all the necessary permits, and it had addressed all of the environmental concerns created by the dredging project. The very next day the Corps reversed itself and stated that we are not going to start dredging without resolving the permit issues first, admitting they did not have it resolved. Sadly, a few weeks ago when I gave the Corps the opportunity

to support my efforts to put their promise in writing and delay actual dredging funds, they declined.

Mr. Chairman, it is no wonder citizens in Delaware do not trust the economic justifications and environmental propositions the Corps makes. It is no wonder our Department of Natural Resources insists on a legally enforceable agreement with the Corps. I know we all hope the DNREC, our environmental people and the Corps can reach a mutually acceptable, legally enforceable agreement before the fiscal year 2001 begins; but until that time, I urge the House to withhold funding for this project.

8:49 PM EDT

Bob Borski, D-PA 3rd

Mr. BORSKI. Mr. Chairman, I rise in opposition to the amendment from the gentleman from New Jersey and in strong support of the Delaware River main channel deepening project. This project was included in the President's fiscal year 2001 budget and is supported by Governor Ridge and Governor Whitman.

In the early 1980s, Congress directed the Army Corps to study the viability of modifying the channel. We authorized this and funded it in 1992. The final Environmental Impact Statement was filed by the Corps in 1997; and it was approved by EPA, U.S. Fish and Wildlife, and the U.S. Geological Survey.

The Corps has spent $7 million on numerous studies over the past 6 years. Reports have been submitted on salinity, shellfish, sediments, wetlands, groundwater, and oil spills; and all of these reports have shown no significant impact on these areas of concern.

As for economic benefits, the Army Corps cost-benefit ratio is $1.40 for every dollar invested. There is also an unprecedented level of involvement by beneficiaries. It is not only the oil companies who will benefit, even though Sunoco and Valero have expressed support for this project and are ready to take advantage of a deeper tier channel. Additionally, there are almost 1,200 groups that support the deepening of the Delaware River to 45 feet. They range from labor to shippers to port groups.

Virtually every facet of the community that benefits from port commerce is supportive of this project.

Why does the Port of Philadelphia need to go to 45 feet? Because the trend in the world is towards bigger ships. If we do not deepen the Delaware, the region will be severely affected. We will lose jobs and our port will become less competitive.

In addition to benefiting labor, oil companies, and shippers, deepening only 5 more feet can potentially benefit consumers from Maine to Maryland. Because of reduced transportation costs associated with the deepening, oil companies could very well pass these lower costs on to consumers in order to stay competitive. These savings by oil companies can translate into reduced home heating oil and gas prices for consumers.

As to the environmental issues associated with this project, first, less lightering gives less of a chance for oil spills. Second, this project provides for wetland restoration and beach fill projects built with clean sand.

Finally, Mr. Chairman, the gentleman from New Jersey has requested a GAO report. He has asked that the money for this project be delayed until a report is finished. However, my experience with the GAO as a former chairman of the Subcommittee on Investigations and Oversight leads me to believe that this is beyond the purview of the GAO. Typically, the GAO conducts more broad-based reviews which are requested by committees of jurisdiction or mandated by law. The GAO does not have the resources

to respond to individual Member requests; and it is highly unlikely, in my view, that a report would be available within a year.

Mr. Chairman, I oppose the amendment offered by the gentleman from New Jersey, and I offer my strong support for this important project.

8:53 PM EDT

Pete Visclosky, D-IN 1st

Mr. VISCLOSKY. Mr. Chairman, I yield myself such time as I may consume.

I would simply conclude our side of the debate, Mr. Chairman, by indicating that I respect the gentleman from New Jersey and those who have spoken on his side very much, both in terms of their intelligence, their passion on the issue, and their commitment for their constituents. I happen, in this instance, however, to seriously disagree with them. I believe that we have an authorized program, the procedures and laws of this country have been followed; and I do think that we ought to proceed.

I do oppose the Andrews amendment.

Mr. Chairman, I yield back the balance of my time.

8:54 PM EDT

Robert Andrews, D-NJ 1st

Mr. ANDREWS. Mr. Chairman, I yield myself the remainder of my time.

The bill as it presently is constituted is spend first, think later. I think we should do the opposite, think first and then maybe spend later.

We are being asked to invest nearly $30 million into a project that is not economically proven, that is environmentally risky, and that is fundamentally unfair to the people of southern New Jersey. Think first, then maybe spend later. Join with us and join with the League of Conservation Voters, Citizens Against Government Waste, Republicans and Democrats in support of this amendment.

Mr. Chairman, at this point I will insert into the RECORD reports from the GAO which study other similar projects.

Report by the Comptroller General of the United States: Montana's Libby Dam Project: More Study Needed Before Adding Generators and a Reregulating Dam

The U.S. Army Corps of Engineers has not shown that its proposed project to add more generators to the Libby Dam and a reregulation dam downstream is economically justified or the best alternative for meeting Pacific Northwest electricity peaking needs:

GAO questions the Corps method of calculating the project's benefits. The Corps plans to reassess the benefit-cost ratio using a better method and submit the results to the Congress by early 1980.

Neither the Corps nor the Bonneville Power Administration has adequately studied other was of meeting forecasted peak power shortages. Combustion turbines, cogeneration, power exchanges, load management, and peak pricing options should be evaluated before the proposed project proceeds.

This report responds to a request from Senator Baucus.

--

Report to the Congress by the Comptroller General of the United States: The Tennessee Valley Authority's Tellico Dam Project--Costs, Alternatives, And Benefits

In January 1977 the nearly completed $116 million Tellico Dam project was stopped because it would harm the habitat of the snail darter--an endangered species of fish. Several alternatives to the project have been proposed. However, neither the current project nor alternatives are supported by current benefit-cost analyses.

The Tennessee Valley Authority should update the remaining benefit-cost data for the Tellico project and alternatives to it. The Congress should prohibit the Authority from [Page: H5265]

further work on the project and should not act on the proposed legislation to exempt the project from the Endangered Species Act until more current information is received.

--

Report by the U.S. General Accounting Office: Information on Corps of Engineers' Clarence Cannon Dam and Mark Twain Lake Project

This report discusses the 1981 flooding along the Salt River in northeast Missouri and the resulting damages above and below the Corps of Engineers' Clarence Cannon Dam project. It further discuses the potential impact hydropower operations of the dam will have on downstream landowner, and the current cost and schedule estimates for completing the project.

--

Report to the Honorable George Miller, United States House of Representatives by the U.S. General Accounting Office: Proposed Pricing of Irrigation Water From California's Central Valley New Melones Reservoir

The New Melones Reservoir in California is the latest addition to the Bureau of Reclamation's vast network of dams, reservoirs, canals, and pumping stations known as the Central Valley Project. Since New Melones is part of the CVP, the Bureau adds its irrigation construction, operation, and maintenance costs to other CVP costs. The entire irrigation costs are then used in calculating rates for water repayment.

As a result, New Melones irrigation rates are lower than they would be if its water users had to repay construction and operating costs of the reservoir. Costs associated with New Melones will eventually cause the rates of other CVP users to increase. Because of existing long-term contracts, however, the increased rates cannot be passed on to other users until their contracts expire or are amended.

--

Report to the Honorable James H. Weaver House of Representatives by the Comptroller General of the United States: Corps of Engineers Should Reevaluate the Elk Creek Project's Benefits and Costs

The Corps of Engineers' fiscal year 1982 estimates of benefits and costs for the Elk Creek project, under construction in Jackson County, Oregon, show an excess of benefits over costs.

This report questions most of the Corps' estimates of benefits to be obtained from the project's flood control, water supply, recreation, irrigation, and area redevelopment purposes. It also questions some of the Corps' project cost estimates. These issues affect the benefit cost value reported to the Congress in support of the project's economic feasibility.

GAO recommends that the Corps resolve these matters and recalculate project benefits and cost.

REPORT TO THE CONGRESS OF THE UNITED STATES BY THE COMPTROLLER GENERAL: CONGRESSIONAL GUIDANCE NEEDED ON FEDERAL COST SHARE OF WATER RESOURCE PROJECTS WHEN PROJECT BENEFITS ARE NOT WIDESPREAD

Many water resource projects provide benefits to large segments of the country; however, the Corps of Engineers and the Soil Conservation Service have built some projects that primarily benefit only a few landowners or businesses.

For Corps and Service projects, the non-Federal entity is seldom required to share a larger portion of project cost to compensate for these special benefits, such as land enhancement or increased local taxes. The Congress needs to clarify its intent regarding cost sharing on such projects.

Non-Federal entities provide land, easements, rights-of-way, and relocate utilities. The estimated costs of such items are shown as the non-Federal cost share in project feasibility studies. GAO found that the estimated non-Federal cost share for Service projects usually contained extraneous cost items which are not actual project costs. Such costs inflate the total project cost and also make the non-Federal ``share'' appear much higher than it actually is. GAO says this practice should be stopped.

--

CHAPTER 3: SOME WATER RESOURCE PROJECTS DO NOT PROVIDE WIDESPREAD BENEFITS

The Corps and SCS, after congressional approval, finance, construct, and often maintain water resource projects. In some instances, these projects have only one primary beneficiary or provide special localized benefits--such as increased earning potential or extraordinary land enhancement--to certain groups, businesses, or individuals primarily at the expense of the U.S. taxpayer. However cost sharing between Federal and non-Federal entities for these projects is generally the same as for other

projects providing more general widespread benefits.

Legislation and procedures generally require local project sponsors to provide the necessary land, easements, rights-of-way, and utility relocations for most projects except flood control reservoirs. For projects providing benefits such as beach erosion control, the local sponsor is also required to contribute a designated percentage of the total project construction cost. If the land, easements, and rights-of-way do not fulfill the required non-Federal contribution, cash contributions are required.

The traditional formulas establishing the required non-Federal share have evolved over the years as new agencies, programs, and project purposes have been authorized by the Congress.

Although many variations in the traditional cost-sharing formulas exist, the requirements are reasonably well defined and are usually met.

However, when the projects benefit only a small group or yield significant secondary or special localized benefits, the Federal Government rarely requires a larger percentage of project cost from local sponsors. Corps policies and procedures (as discussed in ch. 2) address limited beneficiary situations, but their requirements are vague and inconsistently applied at the various districts. Although SCS recognizes that these situations occur, their policies and procedures do not address these issues.

Consequently, some project beneficiaries have reaped significant special localized benefits at the Federal tax-payers' expense. The following synopses briefly identify and discuss several water resource projects which we believe provide significant special or localized benefits to identifiable beneficiaries. Additional information concerning each project is included in appendix I.

SOME PROJECTS HAVE ONLY A FEW BENEFICIARIES

In 4 of the 14 cases we reviewed a high percentage of project benefits went to only a few people or businesses. Estimated project costs ranged from about $7 million to $111 million.

Project name/; purpose and location

Total cost (thousands)

Federal Cost (thousands)

Number of beneficiaries

Blue River Channel Flood control, Missouri

111,000

94,100

(\1\) 281

Hendry County Flood control, Florida

17,719

13,190

(\2\) 21

Southern Branch of Elizabeth River Navigation, Virginia

7,634

5,282

2

York and Pamunkey Rivers Navigation, Virginia

50,500

47,200

(\3\)3

\1\ One company will receive 55 percent of total project benefits.

\2\ Four landowners have control over 61 percent of benefited area.

\3\ One company will receive 86 percent of total project benefits.

York and Pamunkey Rivers Navigation Project

The York and Pamunkey Rivers Navigation Project in Virginia is an example of a proposed project which will benefit a limited number of identified users. (See p. 61). The project was internally approved by the Corps in 1973, but has not yet been authorized by the Congress. Although it is expected to provide transportation savings to only three users, additional non-Federal contributions were not recommended.

The recommended plan provides a two-lane navigation channel. The estimated total project cost is $50.5 million of which the non-Federal share is estimated at $3.3 million (6.5 percent). The non-Federal share is for lands, levees, spillways, relocations, berthing areas, and access channels.

The project has only three identified users, two of which are expected to receive 98.5 percent of the total project benefits. It provides a more economically efficient method of transporting oil to the American Oil Company and the Virginia Electric and Power Company. It is also expected to maintain depth in the York River entrance channel sufficient for present and future use by the Navy.

The estimated annual benefits for each project beneficiary are shown below.

Beneficiary

Amount

Percent

American Oil Company

$17,013,800

86.4

Virginia Electric and Power Company

2,386,200

12.1

U.S. Navy

300,000

1.5

Total

19,700,000

100.0

Additional non-Federal contributions were not recommended by the Corps despite the fact that the project is expected to benefit only three users and one user is expected to receive 86 percent of the estimated annual savings. One of the beneficiaries, American Oil Company, could completely repay the project cost in 3 years with its annual transportation savings. Instead, the Nation's taxpayers, if this project is approved, would have to pay for 98.5 percent of the project.

IDENTIFIABLE BENEFICIARIES SHOULD MAKE ADDITIONAL CONTRIBUTIONS

Some projects built by the Corps and SCS provided significant special localized benefits to direct, identifiable beneficiaries. These benefits can accrue in the form of increased earning potential, land enhancement, or in the case of a State or local entity, increased local real estate and income tax bases.

In these situations, the Federal Government is subsidizing individuals or groups of individuals who often have the ability (because of increased earnings) to make additional contributions.

Pohick Watershed Flood Prevention Project

The SCS Pohick Watershed project in Fairfax County, Virginia, provides significant increased income to housing

developers and increased tax revenue to Fairfax County. (See p. 69.) The project is creating choice lakefront property within 17 miles of Washington, D.C. SCS did not require any additional non-Federal contributions for these benefits.

The Pohick Watershed was the first SCS flood prevention project undertaken in a watershed being totally converted from rural to urban land use. It was authorized in 1968 because of the anticipated rapid change in land use. The plan was to supplement an overall development plan for an area rapidly converting from nearly natural cover conditions to an area of intensive urbanization.

In June 1970, SCS estimated the project construction and installation would cost [Page: H5266]

$1,878,520 with the Federal share being $904,142 and the non-Federal share $974,378. The project consists of seven floodwater retarding structures and is about 70 percent complete.

The project provides special local benefits to a small number of housing developers. After the SCS project was authorized and construction started, developers began building large subdivisions in this formerly undeveloped area. In addition to the homesites surrounding the lakes, many sites are directly on the lakeshores. At project completion, the seven lakes formed by the floodwater retarding structures will create 571 choice lakefront homesites. Subdivisions have already been completed around

four of the seven lakes. According to local real estate agents and county officials, homes in Fairfax County with a lake view sell at a $2,000 premium; therefore, the developers could receive additional income of $1,142,000 because of the lakefront sites. One development company building a subdivision around one of the lakes paid $104,000 to increase the lake size. The subdivision has 150 lakefront homesites, and as a result of the sites, the company received additional gross income of $300,000.

The Fairfax County real estate tax base has increased greatly during the period 1970 to 1979. Overall, the total county assessed value has increased 146 percent while the value in the Pohick Watershed area has increased about 1,800 percent. County officials did not know how much the project contributed to the 1,800-percent increase in value. However, with the advent of the SCS project and a county sewage system the project area developed rapidly. Real estate values in the project area increased

$1.1 billion from 1970 to 1979 resulting in additional annual county tax revenues of approximately $17 million.

SCS has not required additional non-Federal contributions to compensate for these special localized benefits. We believe the local sponsor should have contributed more because there were readily identifiable beneficiaries who receive significant secondary benefits because of the project.

Hendry County Flood Control Project

In Hendry County, Florida, the Corps has planned a $17.7 million flood control and water supply project which will benefit a total of 21 local farmers/corporations--four owners control 61 percent of the benefited land (See p. 46.) Although the Corps considers this project a flood control project, it will also provide major drainage benefits to vast amounts of marginal grassland which can then be used for more intensified ranching and farming operations (land enhancement). It also will increase

the county's tax revenue. Even though the project had identifiable beneficiaries and may result in substantial land enhancement, the Corps did not request additional non-Federal contributions.

Special localized benefits will accrue to identifiable beneficiaries

The Corps analysis of future land use acknowledges that the project will permit 5,400 acres--presently used for pasture, rangeland, woodland, and truck crops cultivation--to be upgraded for sugarcane production. The four largest landowners have stated that once the project is complete, they plan to grow sugarcane on land that was previously less productive. The largest landowner, a corporation that owns 34 percent of the project land, stated that the project will greatly improve its economic

potential because an additional 3,200 acres of sugarcane could be grown on land previously used for a less productive purpose. A large sugar company, the second largest landowner, plans to move current cattle operations to its 17,846 acres in the water supply area. This move will allow them to develop their present ranch near Clewiston,

Florida, into sugarcane, which they indicated would be more profitable. The largest family farm landowner also plans to convert 960 acres of land from cattle to sugarcane when the project is completed. Another rancher indicated plans to produce sugarcane on land currently used as pasture but has not determined the exact acres involved.

In addition, the project could provide a large land development company an estimated additional $18 million gross income from sales. In 1975 the company transferred 2,560 .....

* * * * *

CONCLUSIONS

When Federal Water resource developments were first authorized, the programs were designed to encourage transportation, settlement, and economic development of the Nation. As early as 1920 the Congress recognized that some water resource projects provided a high percentage of ``special local benefits,'' and in the 1920 River and Harbor Appropriation Act voiced its intent to require a higher non-Federal cost share for projects with a high percentage of special local benefits.

Conditions have since changed. Much of the Nation is now highly developed and new national concerns and priorities have surfaced (energy and the environment) and there is increasing competition for the Nation's resources. Because of these changing priorities it is even more important that the Federal agencies carefully evaluate the local versus the national benefits provided by each proposed project and consider this when recommending to the Congress the non-Federal cost share.

Both the Corps and SCS have financed, constructed, and sometimes maintained water resources projects which benefit a very few individuals or businesses or provide a significant special or localized benefits to an identifiable group of beneficiaries.

Although both agencies recognize these situations, they have rarely required additional non-Federal contributions (over and above established standard cost-sharing formulas) as compensation. Consequently, the Federal taxpayer, most of whom will receive no direct project benefit, pays for most of the associated project cost. We believe the Corps and SCS should have required additional non-Federal funds for each of the projects discussed in this report.

As discussed in chapter 2, the law requires that the Corps identify and discuss the national project benefits vs. limited special benefits and recommend appropriate non-Federal cooperation.

While section 2 of the 1920 River and Harbor Appropriation Act literally only requires that the Federal agency include its findings of local versus national benefits and recommend what the local cost share should be on the basis of these benefits, its purpose is to secure a higher non-Federal contribution under certain circumstances. We believe that the Corps' multiple use policy (discussed in ch. 2) does not fully conform with the intent of section 2. Further the Corps did not specifically compare

local versus national benefits in each of the studies we reviewed. We believe that a separate discussion of these benefits should be included in each feasibility study to fully inform the Congress of the nature of the project benefits and any additional non-Federal contributions which should be required.

The Secretary of Agriculture also has discretionary authority under the Watershed Protection and Flood Protection Act of 1954 to require additional non-Federal contribution for projects with limited benefits. (See p..13.)

We believe that the Federal agencies should require local sponsors to share a larger percentage of project cost when significant special local benefits (secondary benefits) accrue to project beneficiaries.

In our draft report we proposed that the secretary of the Army direct the Corps to provide the Congress more detailed information concerning the nature of project benefits as required by section 2 of the River and Harbor Appropriation Act. We also proposed that the Corps clarify its procedures and establish more specific criteria to help the District offices determine when a larger non-Federal share of project cost should be required.

Further, in our draft report we proposed that the Secretary of Agriculture use his discretionary authority under the Watershed Protection and Flood Prevention Act of 1954 and collect additional non-Federal funds for projects with limited benefits. We recommended that the secretary direct the SCS Administrator to prepare regulations which recognize ``special beneficiary situations,'' and ensure that each office applies these regulations when preparing future studies.

AGENCY COMMENTS AND OUR EVALUATION

On August 7, 1980, we met with Corps officials to obtain oral comments because the agency could not respond within the 30 days allowed for submitting written comments. However, in a September 8, 1980, letter (see app. II), the Corps provided written comments on our draft report. The Corps did not concur with out recommendations, providing the following overall comments.

The Corps stated that:

``The Flood Control Act of June 22, 1936, recognized that fact that flood damages destroy portions of the national wealth and adversely affect national

productive capacity. That recognition has been followed by all studies since that time. Flood damages to anyone in the nation are measured and counted as benefits in this national program. The present term for these types of benefits as approved by the United States Water Resources Council, is ``National Economic Development Benefits'' (NED). Your report does not follow this definition for national benefits, and thus gives rise to considerable confusion. It also suggests implicitly the allocation

of costs to beneficial outputs which are not now recognized in the computation of benefit-cost ratios or in the Federal decision process.''

We are familiar with the Water Resources Council's terminology but chose not to use it for several reasons.

First, many of the ``National Economic Development'' benefits discussed in the report are secondary type benefits which directly accrue to individuals, businesses, or communities around a project, such as land enhancement and intensified or changed land use. Granted, such benefits also tend to increase the economic value of the national output, but the impact of such benefits is much greater for those beneficiaries whose land or income is directly affected or improved.

We believe that the report message is more clearly communicated to most readers by stressing the immediate impact these benefits have on the direct beneficiaries. Therefore, the report addresses these as special localized or secondary benefits (benefits which go beyond project purposes). For example, the Corps letter points out that flood damage destroys portions of the national wealth and adversely affects national wealth and national productive capacity. Projects are authorized and built to

prevent such damage. However, in addition to flood damage prevention, the same projects often provide substantial secondary benefits which go beyond [Page: H5267]

the authorized project purpose. In addition to flood damage prevention (a NED benefit which is related to the project purpose), secondary benefits such

as significant land enhancement and changed or intensified land use accrue to individuals, businesses, and communities located around a project. These benefits also contribute to increased national productivity; however, the impact of the benefit is much greater to the individual whose income or property is directly affected or improved.

Secondly, many of those who read our reports are not necessarily familiar with the Council's precise definitions which Federal agencies use in their planning.

Mr. Chairman, I urge a yes vote; and I yield back the balance of my time.