Corps of Engineers Water Resources Infrastructure: Deterioration, Investment, or Divestment? (2013)

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2 U.S. Federal Water Project Planning, Authorization, and Appropriations The standard process for federal water resources project authorizations since 1974 has been via federal Water Resources Development Acts (WRDAs). The U.S. Congress has passed ten WRDAs, beginning with the first in 1974 (see Table 2-1). WRDAs are used by the U.S. Congress to authorize the Corps to perform a wide range of activities, starting with the authority to study the fea- sibility of a given water resources project, then on to a detailed study of the op- tions and costs for the project if it meets the test of benefit to cost and federal in- terest in the feasibility study. If those studies continue to show that the project meets the required criteria, a subsequent WRDA may authorize construction. Water projects authorized by WRDAs include those for flood risk management, navigation, recreation, infrastructure maintenance and repairs, and ecological restoration. The WRDA process is used primarily for authorization of new wa- ter projects, with project appropriations decisions generally addressed in the federal budget process. Authorizations represent congressional approval for a project to begin feasibility studies, planning, and construction. Appropriations are allotments of federal resources for actual project con- struction. Project authorization does not necessarily lead to project appropria- tions; there are many authorized water projects that are awaiting appropria- tions. Authorized projects that have not received appropriations often are re- ferred to as a “backlog.” The current backlog of authorized, but unfunded, projects is estimated as needing approximately $60 billion to complete (NRC, 19 

20 Corps of Engineers Water Resources Infrastructure TABLE 2-1 History of U.S. Water Resources Development Acts Date Enacted Public Law Other Acts Included number March 7, 1974 93-251 Streambank Erosion Control Evaluation and Demon- stration Act; River Basin Monetary Authorization Act October 22, 1976 94-587 Lake Ontario Protection Act; Alaska Hydroelectric Power Development Act November 17, 99-662 Harbor Development and Navigation Improvement 1986 Act; Upper Mississippi River System Management Act; Dam Safety Act November 17, 100-676 1988 November 12, 101-640 1990 October 31, 1992 102-580 National Contaminated Sediment Management and Assessment Act October 12, 1996 104-303 August 17, 1999 106-53 December 11, 106-541 Missouri River Protection and Improvement Act; 2000 Charles M. Russell National Wildlife Refuge En- hancement Act; Missouri River Restoration Act November 8, 2007 110-114 2011).1 In some instances, small amounts of money may be authorized through WRDAs for planning of specific projects. Congress also sometimes includes appropriations directly in WRDA bills for specific projects, such as post-Katrina construction on the New Orleans hurricane protection system. Only infre- 1 There is no similar, generally accepted figure for a backlog of deferred OMR costs. Those es- timates would entail diverse maintenance and rehabilitation costs and be subjected to much more judgment and expert opinion. There thus is no single credible estimate of deferred OMR costs for all Corps water infrastructure. 

Federal Water Project Planning, Authorization, and Appropriations 21 quently are funds for maintenance and upgrades of existing infrastructure in- cluded in WRDAs. National water management needs increasingly are for the operations, maintenance, and rehabilitation (OMR) of existing projects, with few new water resources infrastructure project starts (NRC, 2011). A continued strong empha- sis on the WRDA process may affect the ability of the Corps to cope with the stresses of maintaining existing water infrastructure in an era of declining fed- eral funding available for new construction and major rehabilitation. This chapter reviews the WRDA process and how it might affect both the Congress and the Corps in managing water resources infrastructure and related OMR challenges. CORPS OF ENGINEERS AUTHORITIES The Corps of Engineers builds infrastructure for military and civilian pur- poses. The civilian, or civil works, arm of the Corps derives its authority from individual congressional statutes and from plans approved by the U.S. Con- gress and the President that authorize planning, construction, and operations of individual projects. The Corps of Engineers carries out projects and activities specified by the U.S. Congress that are approved in the federal budget passed by the Congress and signed by the President. The executive branch of the U.S. federal government plays an important role in oversight of the Corps of Engi- neers, especially through the Office of Management and Budget (OMB) and fis- cal guidelines recommended by the President. These two branches of govern- ment play important roles in providing guidance and direction to the Corps of Engineers, and any lasting solutions to national water challenges require some degree of collaboration between them. Unlike federal agencies that have broad authorizations, such as the Bureau of Reclamation through the Reclamation Act of 1902, and the National Park Service through the Organic Act of 1916, the Corps has relied on specific legislation to authorize specific projects. For exam- ple, the Corps was given broad authority in the 1936 and 1944 Flood Control Acts to investigate possible flood control projects. However, the Chief of Engi- neers is required to seek separate congressional authorization for each specific project by submitting a feasibility report (except in the case of some small pro- jects). A recent example of the limits of Corps authority and the level of con- 

22 Corps of Engineers Water Resources Infrastructure gressional and judicial involvement in Corps decision making is the case of wa- ter allocation in Lake Lanier, Georgia (see Box 2-1). Congress changed its approach to water project funding in 1974 with pas- sage of the first WRDA. Prior to 1974, Corps of Engineers projects were author- ized in federal Rivers and Harbors Acts and in Flood Control Acts. Since 1974, the Corps has relied on WRDA bills to provide authorizations for specific pro- jects. In the context of this report, it is important to note that the WRDA process and resultant legislation provide no prioritization for construction of new pro- jects for the nation as a whole, nor does it identify project maintenance and re- habilitation priorities. BOX 2-1 EXISTING CORPS AUTHORITIES AND CHANGING WATER DEMAND: THE CASE OF LAKE LANIER AND ATLANTA Lake Lanier is a U.S. Army Corps of Engineers reservoir on the Chattahoochee River in north-central Georgia. It is impounded by Buford Dam, and is operated along with the four other federal projects in the Apalachicola-Chattahoochee-Flint (ACF) River system to achieve multiple purposes authorized by Congress, including flood damage reduction, hy- droelectric power generation, navigation, fish and wildlife conservation, recreation, water quality, and water supply. Buford Dam and the ACF system of projects regulate flows on the Chattahoochee River that affect numerous downstream uses, including water supply and water quality in the Atlanta metropolitan area and, farther downstream, threatened and endangered species conservation in the Apalachicola River. The ACF river basin is shared by Alabama, Georgia, and Florida, and empties into Apalachicola Bay. Disagreements among the states and other entities over the use of these waters and the Corps’ operations of the federal ACF system resulted in multiple lawsuits beginning in the 1990s. Despite years of negotiations, including a congressionally-approved interstate com- pact, the three states have been unable to agree on an apportionment of waters that could have led to a resolution of the tri-state dispute. In the early 2000s, the region was in the midst of a multiyear drought, and the Corps of Engineers, Georgia, water supply providers, and the Southeastern Federal Power Customers (SeFPC) agreed to a settlement that could have resulted in a reallocation of water storage in Lake Lanier to accommodate water sup- ply needs of the Atlanta metropolitan area. The settlement agreement contemplated that the Southeastern Power Administration would apply a credit to the hydropower rates 

Federal Water Project Planning, Authorization, and Appropriations 23 SHIFTING EMPHASIS OF CORPS ACTIVITIES Throughout its lengthy history, the Corps of Engineers has had to operate among competing visions of water resource development. Some of the agency’s pressing current challenges, including limited resources for important infra- structure OMR needs, often stem from a gap between a vision of comprehen- sive river basin management and the political realities regarding individual project construction. From administrations of Theodore Roosevelt to Lyndon Johnson, the idea of comprehensive, rational federal development of river ba- sins through multiple purpose projects has been promoted by many water charged to power customers in conjunction with the reallocation of storage from hydro- power to water supply. Alabama and Florida intervened to challenge the settlement agreement, and a 2008 court decision [SeFPC v Geren, 515F.3d 1316 (D.C. Cir. 2008)], held that the settlement exceeded the Corps’ authority under the Water Supply Act, which requires congressional approval for reallocation of storage that involve “major operational changes.” The reallo- cation constituted over 22 percent of the reservoir’s conservation storage capacity, which the court noted would have been the largest reallocation undertaken by the Corps without congressional approval. Following vacatur of the settlement agreement, the SePFC case was consolidated with the other ACF litigation. A district court ruled in 2009 that the Corps’ then-current operation of Lake Lanier violated the Water Supply Act because it represented a de facto reallocation of storage exceeding the 22 percent threshold. However, the Eleventh Circuit reversed the district court, holding that water supply was an author- ized purpose of Lake Lanier, and directed the Corps of Engineers to reconsider its author- ity to accommodate Georgia’s request for increased withdrawals from Lake Lanier and Downstream in light of the authorizing legislation, the Water Supply Act, and other appli- cable authority [Tri-State Water Litigation, 644 F.3rd 1160 (11th Cir. 2011)]. The Corps completed its legal and technical analysis on remand in June 2012, resulting in a legal opin- ion concluding that the Corps has the combined authority under the ACF authorizing leg- islation, a 1956 statute, and the Water Supply Act to accommodate the additional water supply withdrawals that Georgia has requested. The Corps is currently proceeding to up- date the water controls plans and manuals for the ACF system, taking into account the principles established in the June 2012 legal opinion. 

24 Corps of Engineers Water Resources Infrastructure policy experts (see White, 1957; United Nations, 1970). Although many local and state interests supported federal dam, lock, levee, and canal construction, efforts to create independent, executive authorities to develop river basins gen- erally were resisted by both Congress and the states. Origins of the river basin planning concept in the United States date back to observations and ideas of John Wesley Powell and his studies in the western United States, as well as President Theodore Roosevelt, who, when transmitting the Inland Waterways Commission preliminary report of 1908, stated, “Each river system from its headwaters in the forest to its mouth on the coast, is a unit and should be treated as such” (White, 1957). The concept of integrating water development plans and projects across a river system was brought to focus in basin scale for rivers such as the Allegheny and Monongahela, the Columbia, and the Missouri. The basin program that commanded the most attention in this era was for the Tennessee River. Development of the Tennessee Valley re- gion, via the Tennessee Valley Authority established in 1933, was promoted as a model of unified river basin development, both domestically and abroad. Pres- ident Roosevelt planned to apply the concept in the Missouri River basin, but the states and Congress blocked efforts to create a similar federal authority for the Missouri in the 1944 Flood Control Act and the “Pick Sloan” legislation (Ferrell, 1993; NRC, 2002). Following the New Deal era, federal support for large dam construction began to wane in the 1950s. The Eisenhower Admin- istration (1952-1960) followed a “no-new starts” policy and stressed increased local responsibilities for smaller projects. A new era of dam building was initiated by the Kennedy administration, and new Corps dams were built in the 1960s in the southeastern and midwest- ern United States. The Johnson Administration placed a high priority on river basin planning, and the Water Resources Planning Act of 1965 created seven river basin commissions coordinated by a federal Water Resources Council (WRC). However, because Congress was funding fewer dams, levees, and ca- nals, these commissions had no clearly defined role, as noted by the National Water Commission (NWC), which operated between 1968 and 1973 (NWC, 1973). The NWC also looked ahead to the changing roles of the Corps of Engi- neers. The NWC 1973 report identified many of the problems with trying to adapt a new project construction model to changing water demands that the Corps was facing. For example, the commission noted that “The Corps . . . is not likely to exist as an agency specializing in the construction of great engi- 

Federal Water Project Planning, Authorization, and Appropriations 25 neering works; it seems virtually certain that in the future the United States will need relatively few major navigation, flood control, or water projects” (NWC, 1973). Since the 1973 NWC report, there have been few efforts to revive the idea of strong federal water planning and development institutions. Large-scale water resources planning for both the Bureau of Reclamation and the Corps effective- ly ended in late 1960s. For example, the 1968 Colorado River Basin Project Act authorized both the Central Arizona Project and effectively took large-scale pro- jects, such as interbasin transfers, off the Colorado River Basin water resources agenda. Instead, beginning in 1974, larger-scale river basin development acts (or general mission acts) such as the Flood Control Acts of 1936 and 1944 were replaced with WRDAs that contained many locally focused projects. THE CORPS OF ENGINEERS AND THE WRDA PROCESS Communities and local and state governments with water resources infra- structure needs often engage simultaneously with congressional representa- tives and the Corps to discuss potential projects. The level of Corps engage- ment in these preliminary discussions typically entails an advisory role to an- swer technical questions about potential projects. Potential projects are initiated with a study authority, typically as part of a WRDA. This authority allows the Corps to determine whether the project war- rants federal investment under the benefit-cost criteria established in the 1983 Principles and Guidelines (see Box 2-2). This study then is conveyed to Con- gress through a Chief of Engineers Report with either favorable or unfavorable recommendations. Results of these evaluations are submitted to the executive office of the Office of Management and Budget, which reviews the Corps eval- uations. The OMB applies its own criteria that are consistent with executive branch objectives, including a benefit-cost test, to evaluate projects. Selected projects, reflecting results of the Corps and OMB evaluations (see Box 2-2), then are submitted to the relevant congressional appropriations committees as part of the President’s budget for a given fiscal year. Congress then decides whether to appropriate funds to construct specific projects (for further details on the au- thorization and appropriation process, see Carter and Hughes, 2010). 

26 Corps of Engineers Water Resources Infrastructure BOX 2-2 FEDERAL PRINCIPLES AND GUIDELINES FOR WATER RESOURCES PROJECT PLANNING The federal document, Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies, was issued in 1983 by the federal Water Resources Council (WRC). That document provided a series of steps for the planning of new projects for four federal agencies: the Corps of Engineers, the Bu- reau of Reclamation, the Soil Conservation Service (today the Natural Resources Conservation Service), and the Tennessee Valley Authority. The “Principles and Guidelines” (or P&G) document lays out a screening pro- cess for new project plans and is used to determine if planning for water project proposals meets a benefit-cost test, and if expected project benefits will exceed costs. The P&G and its predecessor Principles and Standards (P&S) document were designed to consider not just economic benefits but also environmental, social, and other factors. Since the P&G document was issued in 1983, the national landscape of water project planning has changed markedly. Cost-sharing requirements for federal projects have changed, respective roles of the federal government and local beneficiaries, sponsors, and the number and influence of stakeholders have changed, and the extent of new water project construction has been reduced. Further, the P&G document never was intended to consider and compare multiple water project proposals or existing projects, or to set relative priorities or rankings. These changing circumstances prompted many entities and individuals, including National Research Council committees (e.g., NRC, 2004b) to call for the P&G document to be revised and updated. In 2007, the U.S. Congress mandated the Army Corps of Engineers to review and update the P&G document. That mission was eventually assumed by the White House Council on Environmental Quality (CEQ). The CEQ team issued a draft revision in 2009. More recently, the 111th U.S. Congress, elected in 2010, prohibited the Corps (and effectively the administration) from spending further Fiscal Year 2012 funds to implement the 2007 WRDA congressional instructions to revise the P&G. The WRDA process is oriented to individual project authorization, with limited considerations regarding how individual projects fit into larger, basin- wide plans or operations.2 This focus on local projects may have been strength- 2 The U.S. Congress still occasionally mandates basin-wide activities. For example, In P.L. 111- 11, Subtitle F (“Secure Water”), Congress in 2009 directed the Secretary of the Interior to assess risks to water supply of each major reclamation river basin, analyze the extent to which changes 

Federal Water Project Planning, Authorization, and Appropriations 27 ened by passage of the 1986 WRDA, which created a variety of cost-sharing formulas for new projects between the federal government and its local part- ners. An earlier National Research Council committee that considered the ef- fects of the 1986 WRDA on Corps planning and projects concluded (NRC, 1999): A general result of WRDA ’86 was to increase the funding re- sponsibilities of local sponsors. With these greater financial requirements, local sponsors requested and have received a greater voice in project planning and design considerations… The emphasis on local projects and cosponsors may be pull- ing the Corps in opposite directions, however. On one hand, WRDA ’86 mandates the Corps to work closely with local co- sponsors, effectively providing a service to local communi- ties. On the other hand, the Corps is charged to promote the national interest in its water planning activities. Promoting this national interest may require integrating plans and pro- grams throughout a large river basin system (especially an in- terstate basin), which may be incompatible with providing specific water projects tailored to local—not basinwide— interests. Appropriated funding in any year for a particular project often is not for the entire project amount. Projects authorized in WRDA bills that do not receive timely appropriations for construction can be kept alive for long pe- riods of time, as local governments and their congressional representatives can ensure that small amounts of money are appropriated for continued planning. This practice may not lend itself to efficient and systematic water resources planning. For example, the Congressional Research Service (CRS) has observed that “appropriated funds for an individual study or project . . . [may be] insufficient to permit the optimum programming of work by the Corps” (Carter and Hughes, 2006). This process of piecemeal funding, be- in water supply will impact basin resources, and consider and develop strategies to mitigate im- pacts of water supply changes. “Major reclamation river basins” in this case are defined to in- clude the Columbia, Colorado, Missouri, and Sacramento/San Joaquin river basins. 

28 Corps of Engineers Water Resources Infrastructure low total project costs, has become an increasingly common procedure, re- sulting in long project schedules, inefficiency in project delivery, and higher project costs (NRC, 2011). Box 2-3 provides an example of how delays can affect the appropriations process and result in increased costs. Projects authorized in a WRDA bill represent a wide spectrum of small to large projects, with no system for prioritizing among them. There is no formal, federal interagency task force, nor any systematic process, to determine nation- al water resources priorities. Through the legislative process, Congress selects projects for appropriation and decides upon proper levels of appropriation. Consequently, the process of individual project appropriations represents a de facto process for national water project prioritization. Although WRDAs have a strong emphasis on new project authorization, OMR projects also can be authorized within them. Table 2-2 lists some OMR projects authorized in WRDA 2007. Unlike the systematic federal-state-local cooperation on highway transportation projects, which involves a system of prioritization for determining federal support in a project (NCHRP, 2007), no similar process for water projects exists (napa, 2007). WRDA AND WATER RESOURCES INFRASTRUCTURE OPERATIONS, MAINTENANCE, AND REHABILITATION The focus on new water project construction was part of an earlier era of national expansion and settlement. At that time, the nation was seeking a greater degree of water control or “development” for commercial naviga tion, floodplain settlement, and hydroelectric power development. Over time, how- ever, the need for individual project authorization, now embodied in WRDA legislation, and appropriation, became less relevant. Today, the United States is not expanding into undeveloped territory; rather, an increasingly important issue is the OMR of an extensive, existing national water infrastructure, much of which was built and is operated by the Corps of Engineers. As shown in Figure 2-1, Corps operations and maintenance budgets have in- 

Federal Water Project Planning, Authorization, and Appropriations 29 BOX 2-3 PROJECT AUTHORIZATION AND EXTENDED APPROPRIATION: LOWER MONONGAHELA RIVER LOCKS AND DAMS 2, 3, AND 4 The Monongahela River, which flows from West Virginia to Pittsburgh, where it joins the Allegheny River to form the Ohio River, was one of the nation's first inland waterways to have a lock and dam infrastructure installed to aid river navigation. Con- struction of the first locks and dams was initiated in 1837 by the Commonwealth of Pennsylvania. The federal government also constructed locks and dams in the Mo- nongahela, and in the late nineteenth century the federal government took over the en- tire system. The present navigation system comprises nine locks and dams and was constructed by the Corps of Engineers beginning in 1902. Locks and Dams 2, 3, and 4 in the Lower Monongahela River, just south of Pittsburgh, are the three oldest current- ly operating navigation facilities on the river and experience the largest volume of commercial traffic for the river. The Water Resources Development Act of 1992 authorized a major rehabilitation and reconstruction project involving Locks and Dams 2, 3, and 4. The project includ- ed replacement of the fixed crest dam at Locks and Dam 2 (Braddock) with a gated dam, removal of Locks and Dam 3 (Elizabeth), and construction of two larger locks at Locks and Dam 4 (Charleroi). For Locks and Dam 2, original construction was com- pleted in 1906 and major rehabilitation was performed in 1953. Detailed design and construction planning for the Lower Monongahela project com- pleted in 1995 yielded a cost estimate of $750 million and an expected completion date of 2004, both of which assumed higher levels of annual project funding than were sub- sequently appropriated. The replacement of the Braddock Dam at Locks and Dam 2 (which employed an innovative in-the-wet construction technique) was completed in 2004. Work on the Charleroi Locks at Locks and Dam 4 was initiated in 2002. Based on expected levels of annual funding, the Charleroi Locks are scheduled to be com- pleted in 2021. Although the Lower Monongahela project received $84 million in stimulus funding from the American Recovery and Reinvestment Act in 2009, this was a modest amount relative to the total project scope, and the completion date was not affected substantially. When one new operational lock chamber is completed at the Charleroi Locks, work on removal of Locks and Dam 3 at Elizabeth will begin. The current estimate for project completion is 2024 and the current total cost estimate is $1.5 billion. The project is cost shared 50-50 with the Inland Waterways Trust Fund and the General Treasury. The current projected $1.5 billion cost and 2024, completion date for the Lower Monongahela project reflect estimates of future congressional funding that are uncer- tain. It has been estimated that if Congress provides only minimum annual funding, the project will extend into the 2030s and the cost will increase to at least $1.7 billion (Boselovic, 2012a). 

30 Corps of Engineers Water Resources Infrastructure TABLE 2-2 Examples of Operation, Maintenance and Rehabilitation Projects and Studies in the Water Resources Development Act of 2007 Section Title Description 3057 Little Wood River, Gooding, Ida- rehabilitate the Gooding Channel pro- ho ject for the purposes of flood control and ecosystem restoration 3061 Chicago Sanitary and Ship Canal upgrade and make permanent Barrier dispersal barriers project, Illinois I; construct Barrier II; operate and maintain Barrier I and Barrier II as a system to optimize effectiveness 3071 Hickman Bluff stabilization, Ken- repair and restore the Hickman Bluff tucky project 3084 West bank of the Mississippi Riv- operation, maintenance, rehabilitation, er (East of Harvey Canal), Louisi- repair, and replacement ana 3156 Dam remediation, Vermont remediation of a number of dams in Vermont 3178 Upper Ohio River and Tributaries establish a pilot program to evaluate navigation system new technology new technologies applicable to the pilot program Upper Ohio River and Tributaries navigation system. 4035 Herbert Hoover Dike supple- study to evaluate existing conditions at mental major rehabilitation re- the Herbert Hoover Dike system; port, Florida identification of additional risks asso- ciated with flood events at the system 4096 Elliott Bay Seawall, Seattle, Wash- primary study for rehabilitation of the ington Elliott Bay Seawall creased, slightly, while construction budgets have experienced significant decreases (except for specific occasions such as appropriations for post- Katrina construction activities on the New Orleans hurricane protection sys- tem, and ‘stimulus’ funding in 2008-09). Decreases in construction budgets entail declining resources available for project rehabilitation. Thus, despite 

Federal Water Project Planning, Authorization, and Appropriations 31 FIGURE 2-1 Corps of Engineers Appropriations 1960-2012. Prices adjusted to 2012 dollars. Spike at 2009 reflects American Recovery and Reinvestment Act. SOURCE: U.S. Army Corps of Engineers. modest increases in operations and maintenance funds, the level of federal resources available to the Corps has been inadequate to meet OMR needs and maintain all projects at acceptable levels of performance and efficiency. The U.S. Congress and the executive branch Office of Management and Budget are the de facto national water planners. There is no defined dis- tribution of responsibility between Congress and the Executive Branch, including the Corps and OMB, for national-level prioritization of OMR needs for existing water infrastructure. Further, neither Congress nor the administration provides clear guiding principles and concepts that the Corps might use in prioritizing OMR needs and investments. The WRDA process has been developed over many decades. Congress is familiar with the process and it has proven useful in authorizing numer- ous water projects of importance to the nation and its citizens. The process has survived challenges from administrations of both national parties (Frisch and Kelly, 2008). However, because current and future national water priorities increasingly are for water infrastructure maintenance and rehabilitation, there is a need to reorient some of the strong focus on WRDA toward a greater focus 

32 Corps of Engineers Water Resources Infrastructure on maintenance, rehabilitation, and even decommissioning of existing infra- structure. A revised WRDA process potentially could facilitate investment pri- ority decisions as part of appropriations. The federal WRDA process was developed in a previous era of water management during which new water project construction was of high prior- ity. The WRDA is a familiar process to Congress and will continue to be used as a means for authorizing new federal water projects. WRDA was not designed to identify and establish OMR priority actions and investments for existing Corps of Engineers water infrastructure. The process of individual project appropriations thus represents a de facto process for national water project prioritization. Higher congressional and administration priority on OMR issues for Corps infrastructure will entail some reorientation away from the present strong focus on WRDA.