Review of the U.S. Army Corps of Engineers Restructured Upper Mississippi River-Illinois Waterway Feasibility Study: Second Report (2004)

The Corps’ feasibility report concludes with a Preferred Plan, which consists of a series of proposals that reflect the results of the more than ten years of planning and investigations. The Plan’s principal features are the following:

• Dual purpose authority. Although the Upper Mississippi River system has been designated by Congress as a nationally significant ecosystem as well as a nationally significant commercial navigation system, the feasibility study has been conducted thus far for a single, authorized purpose: inland navigation. In order to obtain project authorizations and appropriations and proceed with implementation of the study’s recommendations, the Corps requests that ecosystem restoration be added as a second, coequal project purpose. Given the many important relationships among flood management, navigation, and ecosystem restoration, Chapter 2 of this report presents a recommendation that supports the Corps’ request for a multipurpose project authority.

• Small-scale measures. The plan recommends authorization and immediate implementation of mooring facilities at seven locks and the establishment of federally funded switchboats at five locks, as well as associated mitigation. The $218 million cost of these measures would be borne equally between the Inland Waterways Trust Fund and general funds.

• Lock construction. The plan proposes authorization and immediate implementation of seven new 1200-foot locks, plus associated mitigation measures. The $1.66 billion cost of these measures would be shared equally between the Inland Waterways Trust Fund and general funds. The

plan also proposes the later authorization of lock extensions at five additional locations, subject to a favorable feasibility report (see discussion of adaptive implementation).

• Navigation study and monitoring. Authorization is recommended for a continuing program of studies and monitoring, to include the further development of inland navigation economic models, increased collection of data on global grain markets, and so forth. The costs of these studies would be borne equally between the Inland Waterways Trust Fund and general funds.

• Adaptive implementation of navigation improvements. The Corps proposes to continue monitoring and analyzing river traffic and markets and to incorporate improved economic models whenever they become available. At the completion of design for each new lock expansion project, a notification report will be prepared that provides the latest data on traffic and markets. If new economic models are developed and accepted, an evaluation report will be prepared that concludes with recommendations to Congress on whether lock construction should proceed or be delayed. Finally, an updated feasibility report will be completed before authorization is sought for the final five lock extensions.

• Authorization of specific ecosystem restoration projects. Project-specific authorization is sought for construction of fish passages at four dams and for engineering and design of a fifth passage. Project-level authorization is also sought for dam point control at two locations. The estimated cost is $250 million in federal funds.

• Request for program authority for ecosystem restoration projects. Program authority is requested to allow a variety of ecosystem restoration projects to be pursued, subject to favorable project implementation reports. The costs of individual projects will not exceed $25 million, and the total program cost will be limited to $935 million. All initial construction costs are to be borne by the federal government; operation and maintenance, repair, replacements, and related costs will be funded by the federal, state, or local government, depending on project location.

• Land acquisition. The plan proposes authorization for the acquisition, from willing sellers, of up to 35,000 acres of land for purposes of improving floodplain connectivity, protecting or enhancing wetlands, protecting and restoring riparian habitat, and other measures. The estimated $277 million cost will be shared 65:35 between the federal government and local sponsors.

• Adaptive management of ecosystem restoration projects. The feasibility study identifies the need for adaptive implementation and man-

agement and discusses a number of elements of an adaptive management program. All ecosystem restoration projects after the first 15 years will require a new feasibility study, which would incorporate the experience and knowledge developed in the first 15 years. For the projects and program proposed for immediate authorization, however, adaptive management would apparently be accomplished through the mechanism of project implementation reports, although details of this process are not provided.

Altogether, the Corps proposes a navigation improvement-ecosystem restoration program that is forecast to cost at least $3.34 billion. Costs of future studies, evaluations, or adaptive management, are not specified separately. Total estimated costs would be borne by the Inland Waterway Trust Fund ($939 million), general federal funds ($2.3 billion), and local sponsors ($97 million).

This committee was not requested to provide a recommendation to Congress regarding whether the Preferred Plan should be adopted. This report’s focus is not the Preferred Plan per se, but on the feasibility study that led to it. The question addressed herein is thus not whether this plan is the best strategy for the nation, but whether elements of the plan flow logically from the findings of the feasibility study and whether those findings are supported by the data and analyses employed by the Corps. Chapter 3 of this report focuses on technical dimensions of the feasibility study’s two primary components: environmental restoration and commercial shipping and economics. This final chapter comments on some issues that do not fit neatly into those two categories, but that will nonetheless affect implementation of the study and progress toward achieving navigation, ecologic, and related goals.

This committee’s first report (NRC, 2004a) expressed concern regarding the way in which federal cost-sharing rules would apply to the ecosystem restoration components of the project and recommended that the Corps direct its attention to possible restrictions or constraints that may arise from these rules. In the Preferred Plan, the Corps has argued that most restoration projects are federal responsibilities and eligible for 100

percent federal funding. Only land acquisition is proposed to utilize cost sharing (35 percent local share), with a total of $97 million in estimated cost allocated to local sponsors.

One purpose of federal cost-sharing policies is to ensure that projects proposed by federal agencies are subjected to a “market test,” whereby state and local beneficiaries confirm the value of a project by agreeing to share in the cost. In the case of a complex, integrated, basin-level ecosystem restoration plan, however, this “market test” may not be fully appropriate. A particular project, or class of projects, may have little value to potential local sponsors, yet be essential to the success of the overall restoration program. It is also clear that the history of navigation-related modifications to the river system is the primary cause of the ecosystem degradation addressed by the Preferred Plan. In this context, the Corps’ proposal for full federal funding for most restoration projects is reasonable.

Since passage of the Water Resource Development Act of 1986, the cost of navigation improvements and major rehabilitation has been shared with the Inland Waterways Trust Fund. The trust fund receives revenue from the Inland Waterways User Tax, a $0.20 per gallon fuel tax applicable to commercial navigation. The Inland Waterways User Board meets triennially to make recommendations to the Secretary of the Army regarding disbursement of trust fund revenues. In accordance with existing policy, the Preferred Plan assumes that 50 percent of the cost of navigation improvements, both structural and nonstructural, will be funded by the Inland Waterways Trust Fund. In the Preferred Plan, this amounts to a total projected expenditure of $939 million from the trust fund. The feasibility study contains no analysis of the feasibility or impact of this level of disbursement from the trust fund.

The Corps faces a set of complex problems in integrating the various federal programs connected with the Upper Mississippi River into a cohesive whole and in developing a navigation and ecosystem restoration plan that would consider the diversity of these programs. Many flood protection levees along the Illinois and Mississippi Rivers were built before the 9-foot navigation project and, when the navigation project was built, served

as dikes to contain the navigation pool (see Box 4-1). Other levees were constructed as part of federal and local flood control programs and separated the river from the floodplain. Over time, the U.S. Fish and Wildlife Service was authorized to create wildlife refuges along the banks of the Upper Mississippi, and these have been operated independently of the navigation project. In 1986, the Congress authorized the Upper Mississippi River System Environmental Management Program to monitor ecology and to rehabilitate river system habitat.

As proposed, the ecosystem restoration effort represents the summation of many individual projects, each contributing to restoration but not necessarily linked to neighboring projects. This may represent the state of the art, but as project development continues, the Corps may wish to seek methods not only to more closely integrate navigation and ecosystem restoration projects, but also to link them to flood management projects, the refuge system, and efforts to improve water quality in the basin.

This review of the evolving feasibility study has the nature of a critical appraisal, attempting to uncover deficiencies and weak points. A complete reading of this report will reveal many compliments, as well as criticisms and differences of opinion. If these various reactions are considered together and placed in perspective, it is clear that considerable progress has been achieved and equally clear that much more needs to be done. Table 4-1 may help place some of this report’s main points in this larger perspective.

As this report has made clear, designing and conducting a comprehensive and credible feasibility study that incorporates the engineering, economic, environmental, and other dimensions of proposed Upper Mississippi River-Illinois Waterway lock extensions represents a major analytical challenge. The Corps of Engineers has put forth a sustained and considerable effort in conducting its UMR-IWW feasibility study, and the agency is to be credited for broadening and deepening the study in many useful ways. Despite these efforts and advances, however, the April 2004 draft version of the Corps’ restructured feasibility study contains some crucial analytical flaws. Several of them are inherited from earlier versions of the feasibility study, and they limit the credibility and value of the study as a useful input into the policymaking process.

The UMR-IWW system supports a variety of economic, ecological, and recreational uses. Many of these uses have important impacts on one another, and many, if not most, of the significant UMR-IWW management decisions made today entail trade-offs between different users. The feasibility study focuses on two key UMR-IWW sectors, commercial navigation and ecosystem restoration. Analyses within these sectors proceed essentially on separate tracks. The feasibility study thus provides little information on how operations in these two sectors affect one another or how future operations in either sector might be constrained in having to accommodate other users of the system. Having said this, however, it bears noting that ecosystem restoration is not an explicitly authorized UMR-IWW project purpose, while the maintenance of a reliable 9-foot channel on the UMR-IWW dates back to the 1930 project authorization. The Corps thus deserves credit for broadening its feasibility study in an effort to accommodate both commercial navigation and ecosystem restoration. The feasibility study also recognizes that the 1930 authorization may lack clarity with regard to twenty-first century management preferences and priorities. The Corps’ efforts to seek broader authority for managing the multiple resources of the UMR-IWW are appropriate. The Corps should seek a multiple-purpose planning and operations authority for

the UMR-IWW that would allow it to consider and integrate flood management, commercial navigation, and ecosystem restoration.

The economic analysis of commercial navigation also contains flaws. The purpose of economic analysis should be to identify the most efficient strategies for reducing congestion on the river and to determine whether the most efficient strategy provides net benefits to the nation. As acknowledged in the feasibility study, candidate strategies to reduce shipping costs include both structural and nonstructural (including small-scale) measures. Although the restructured feasibility study includes and explores some nonstructural elements for managing waterway congestion, the evaluation of nonstructural measures is incomplete and does not include any adequately analyzed examples. Several promising alternatives are not considered at all. As a result, the study offers little guidance regarding whether nonstructural measures can provide cost-effective reductions in congestion levels.

The economic benefits of lock extensions or replacements were estimated on the basis of five alternative scenarios of future barge traffic, using both the Tow Cost Model (TCM) and the ESSENCE model. The Corps deserves credit for adopting the suggestion from the NRC (2001) Phase I committee report to use scenarios rather than point forecasts. However, the barge traffic scenarios incorporate (1) inadequate treatment of non-grain shipments and (2) grain shipment scenarios that, taken together, are biased in the direction of future growth. The non-grain shipments are of particular interest since they account for approximately half of all barge traffic today; yet forecasts are based on data more than a decade old and do not consider recent or plausible future trends. To predict grain traffic shipment levels reliably, alternative uses of land, demands for grain, and destinations and shipping routes have to be analyzed; little of this was done. The limitations of the economic models (TCM and ESSENCE) are described herein and in this committee’s first report (NRC, 2004a). Although application of the TCM produces an approximate upper bound on benefits of proposed lock extensions, no credible lower bound is presented in the study. The ESSENCE model provides no useful output. The upshot of these shortcomings is that economic justification of proposed lock extensions on the UMR-IWW has not been established by these models.

The ecological portion of the restructured study—although representing a large advance over earlier versions of the feasibility study—does not define a clear, science-based framework for implementation, monitoring, and evaluation. The feasibility study includes an extensive list of possible restoration measures, many of which could help promote restoration. Theories of river science and research, conducted on the UMR-IWW and elsewhere, point to the overriding importance and priority of restoring

some degree of fluvial processes in order to promote ecosystem restoration. Rather than focusing on how they can help restore natural processes, however, the principal measure for ranking alternatives is “area affected”—a metric that is not well correlated with ecosystem function. Proposed restoration measures should be related more clearly to overarching scientific theories of river science and restoration.

Although the flaws and weaknesses summarized in this report are serious and of concern, they must be weighed in light of the challenges posed by this study. River science theories and research from the Environmental Management Program (EMP) provide useful guidance, as do river management efforts conducted elsewhere, but ecosystem restoration on the scale of the UMR-IWW is essentially unprecedented. Progress toward adaptive management on the UMR-IWW will require support and participation from parties beyond the Corps, including the U.S. Congress, other agencies, and river system users. The Corps has devoted a considerable effort to expanding and improving the study, especially in the last several years. One helpful outcome of this effort has been the development of a Preferred Plan that explicitly incorporates incremental implementation, based on continuing data collection, improved modeling techniques, and evaluation. If this plan is carried out as proposed in the restructured feasibility study, some of the problems noted in this report could be addressed through the application of methods of adaptive management. If so, the long-term prospects for the UMR-IWW could be a system that is managed and balanced in a way that provides even greater benefits to the nation.