ENERGY AND WATER DEVELOPMENT THURSDAY, MAY 3, 1990 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 2:05 p.m., in room SD-192, Dirksen Senate Office Building, Hon. J. Bennett Johnston (chairman) presiding. Present: Senators Johnston, DeConcini, Hatfield, McClure, Domenici, and Specter. DEPARTMENT OF THE ARMY CORPS OF ENGINEERS-CIVIL STATEMENT OF HON. ROBERT W. PAGE, ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS) ACCOMPANIED BY: LT. GEN. HENRY J. HATCH, CHIEF, CORPS OF ENGINEERS OPENING REMARKS Senator JOHNSTON. This afternoon we will receive testimony on the fiscal year 1991 budget for the civil works program of the Army Corps of Engineers. We will hear from the Assistant Secretary of the Army for Civil Works, Mr. Robert Page, assisted by the Chief of Engineers, Lt. Gen. Henry J. Hatch, the Director of Civil Works, Maj. Gen. Patrick J. Kelly, and Mr. Donald B. Cluff, the Chief of the Civil Works Programs Division. Gentlemen, we welcome all of you. We are pleased to have you with us. So, if you have formal written statements, those will, of course, be submitted for the record and you may proceed to summarize those statements. Mr. Page, you may proceed. SUMMARY OF BUDGET REQUEST Mr. PAGE. Thank you, Mr. Chairman. You have introduced our principals here, so, I will dispense with that, along with requesting that our formal statements be submitted for the record. The President's 1991 civil works budget, as recently amended, totals $3.50 billion, representing a 6-percent increase over the postsequestration level of 1990. The work funded for initiation in fiscal year 1990 places substantial demands on fiscal year 1991 resources. It includes more than 30 new construction starts, 63 new reconnaissance studies, and 41 preconstruction engineering and design projects. Since November 1986, local cooperation agreements have been signed with sponsors for 115 projects, representing a total investment of over $4.5 billion. We are all familiar with the Alaskan oil spill, Hurricane Hugo, the California earthquake, and recent floods in various parts of the country. The Corps' response to these disasters was commendable. The budget for the proposed construction program for 1991 is $1.43 billion including $224 million for the MR&T project. The budget for the operation and maintenance program is just under $1.4 billion. For maintenance of the MR&T project, it is $120 million. We are placing emphasis on wetlands protection. The budget request for our regulatory program is $75 million. The 1991 budget is based on several proposed user fee changes. Those requiring authorization include an increase in harbor maintenance user fees and expansion of recreation user fees. I am sure you will want to cover that. Mr. Chairman, we have had a hiring freeze since January, as you know, which was about to impact our civil program severely. To prevent this, we prepared a reclama for our civil program. This has gone through a rather tortuous review process, having cleared all of the bureaucratic hurdles, and is now sitting on Dick Cheney's desk. We should have it signed very shortly. I am pleased to make that statement, because much of our work on the Mississippi and in other endeavors, as you know, is done by temporary workers. Senator JOHNSTON. What will the impact be of the hiring freeze? Mr. PAGE. If Mr. Cheney signs the reclama, the hiring freeze will be lifted for the civil program. The Defense Department put the freeze on all operations. We stated that it should not apply to our civil works program. It has taken us, now, I would say, better than 4 months to make the point that the civil works program does not, in fact, impact upon the defense budget. Senator JOHNSTON. That will be very good news up and down the Mississippi River. Mr. PAGE. Yes, sir; it will be. PREPARED STATEMENT That concludes my summary, Mr. Chairman. It is a pleasure to be here today. [The statement follows:] STATEMENT OF ROBERT W. PAGE INTRODUCTION Mr. Chairman and members of the subcommittee, I am pleased to be testifying before this Subcommittee today on the proposed fiscal year (FY) 1991 budget for the Civil Works program of the Army Corps of Engineers. Assisting me are the Chief of Engineers, Lieutenant General Henry J. Hatch; the Director of Civil Works, Major General Patrick J. Kelly; and the Chief of the Civil Works Programs Division, Mr. Don B. Cluff. My statement covers the following topics: Overview of the President's fiscal year 1991 Civil Works budget; items of Special Interest, fiscal year 1989 and fiscal year 1990; and specifics of the fiscal year 1991 Civil Works budget, including: construction program, operation and maintenance program, regulatory program, changing priorities of the civil works budget, extensions of the beneficiary pay principle, and support for others. The Chief of Engineers also has a statement which provides additional details on the President's budget for the Civil Works program. OVERVIEW OF THE PRESIDENT'S FISCAL YEAR 1991 CIVIL WORKS BUDGET The proposed fiscal year 1991 budget for the Civil Works program, as recently amended, totals $3.50 billion, a 6 percent increase over the post-sequester level for fiscal year 1990. This is a sound and responsible budget. The budget reflects the Administration's continued support for development of the Nation's water resources for commercial navigation and flood control and for efficient management of Corps of Engineers operated and maintained navigation systems and reservoirs. The budget places new emphasis on maintaining and restoring the environment. A number of important and high priority initiatives that demonstrate our commitment to the environment are budgeted which will mitigate environmental losses at previously constructed projects: $16 million is proposed for juvenile fish mitigation on the Columbia and Lower Snake Rivers; $20 million is proposed to initiate acquisition of 88,000 acres of land to mitigate the adverse environmental effects caused by construction of the Tennessee-Tombigbee Waterway; and funds are proposed for mitigation of completed segments of the Yazoo Backwater project and preconstruction engineering and design (PED) for mitigation of the impact of the Richard B. Russell Dam and Lake project and the Missouri River navigation project. The budget also proposes innovative approaches to improving the Nation's infrastructure, including the Magnetic Levitation Transportation Pilot program. The proposed fiscal year 1991 budget of $3.50 billion includes $3.29 billion in Federal funds and $207 million in non-Federal contributions. These non-Federal cash contributions are supplemented by the provision of lands, easements, rights-of-way and relocations for authorized projects, which are estimated to cost $243 million. The Federal budgeted amount includes $2.67 billion in General Treasury appropriations and $618 million from the Inland Waterways and Harbor Maintenance Trust funds ($133 million from Inland Waterways Trust Fund and $486 million from the Harbor Maintenance Trust Fund, which includes $193 million under existing legislation and $293 million under proposed legislation). Harbor maintenance user fees would be increased to a level that would be sufficient to cover all commercial harbor maintenance costs. The General Treasury appropriations will be offset by some $33 million in receipts from currently authorized recreation use fees, payments for lease of Federal lands, and tolls collected by the St. Lawrence Seaway Corporation. Under proposed legislation, the General Treasury amount would be further offset by $20 million for special recreation use fees. By administrative action, some $17 million in governmental fees will be collected for processing permit applications and other requests under the Regulatory program. Table A, which is attached, summarizes the amended fiscal year 1991 budget by appropriation account. The fiscal year 1991 Civil Works budget is reflective, to a considerable extent, upon directions established, and challenges confronted, in prior years. Accordingly, it is appropriate to mention a number of items of special interest in fiscal year 1989 and fiscal year 1990 Civil Works programs before presenting specifics of the fiscal year 1991 Civil Works budget. ITEMS OF SPECIAL INTEREST, FISCAL YEAR 1989 AND FISCAL YEAR 1990 NEW STARTS AND OTHER NEW WORK Mr. Chairman, the large number of projects and studies funded for initiation in fiscal year 1990 present a challenging new starts and new work program. It is a program that places substantial demands on fiscal year 1991 resources. The total Federal commitment reflected in the work added to the fiscal year 1990 program exceeds $1 billion. In addition to funding 10 new construction projects requested in the President's budget, final action on fiscal year 1990 appropriations provided for the initiation of construction on more than 20 other projects, as well as for a substantial level of other new work, such as the reconstruction of the Sacramento River levees in California. Appropriations for fiscal year 1990 also funded the initiation of 63 new reconnaissance studies, twice the number requested, and 41 preconstruction engineering and design (PED) projects, 9 more than requested. CONTROLLING COSTS AND MAINTAINING SCHEDULES The cost estimates and schedules presented in the fiscal year 1991 budget justifications have been adjusted since presentation of the fiscal year 1990 budget. This includes adjustments to authorized project costs enacted by Congress in the 1990 Energy and Water Development Appropriations Act and in the Dire Emergency Supplemental Appropriations Act of 1989. Approximately half of the projects budgeted for construction last year and funded under the new cost sharing rules now have cost estimates higher than a year ago and a comparable number of schedules for these projects also have slipped. Most of these projects were formulated without the discipline of having a cost sharing partnership and well before our management changes were put in place. Nevertheless, we are not satisfied with this performance and are resolved to improve it. This resolve is reflected in the significant changes in management proceduresidentified as Initiative 1988-that have been put in place. Sufficient time has elapsed to permit us to not only identify projects having cost and schedule changes, but to apply improved estimating discipline to projects under the new system and to redirect existing personnel to positions which can most effectively support our commitment to the construction of sound projects on time and within budget. Project managers have been assigned to all major Civil Works projects. These managers are responsible for maintaining costs and schedules from the study phase through construction, and serve as the primary point of contact for the cost sharing partner. In addition, monthly meetings of top management are held at the Districts, Divisions, and Washington Headquarters to identify issues and get them resolved quickly. In each District, a permanent Deputy District Engineer for Project Management has been installed. In addition, Divisions have been authorized to reorganize to strengthen their performance and in the Headquarters, key management positions in the Project Management Division have been filled. We also are eliminating time consuming, sequential reviews wherever possible, so that the project manager can proceed, knowing that the district, division, Headquarters, and the Office of the Assistant Secretary share a common perspective. We have put emphasis on measuring and controlling overhead and on the importance of a thorough cost estimate early in the planning process, so that the estimates we present more accurately reflect the complete cost of the project. Finally, project managers will have sufficient authority to justify their accountability for results. LOCAL COOPERATION AGREEMENTS We are pleased with the progress made in fiscal year 1989 in executing Local Cooperation Agreements (LCAs) for construction new starts. Since cost sharing reforms went into effect in November 1986, LCAs have been signed with sponsors of 115 specifically authorized projects. Of these LCAS, 32 were executed during fiscal year 1989 and 13 have been executed so far this year. The total investment represented by these 115 LCAS is in excess of $4.5 billion, of which more than 35 percent is to be provided by non-Federal sponsors. Additional LCAs are scheduled to be signed during FY 1990 with sponsors of 23 major projects. CONTINUING DROUGHT EFFORTS Drought conditions continue to affect Corps projects in some areas of the Nation. Projects are plagued by low reservoir storage volumes and low river levels which, in turn, cause negative impacts on all the purposes for which the projects were authorized. A short assessment of the most significantly affected areas follows. Responding to these events will require careful management of financial and personnel re sources. Missouri River Basin.-After 3 successive drought years, the six main stem Missouri River reservoirs, which comprise the Corps largest single water storage system, are at their lowest volume since the system was first filled in 1967. Diminished project releases have affected hydropower generation, navigation depths, water supplies for municipalities and power plants, and river-based recreation, and lower lake levels have affected lake-based recreation and some municipal and agricultural water supplies. Although the current volume of stored water should be suf ficient to meet project purposes generally even if the drought were to continue for several more years, it still would take 6 successive years of normal runoff to refill the reservoirs to their normal operating levels. Middle Mississippi River.-Below-normal runoff from the Upper Mississippi River and the Missouri River basins caused the flow rates and stages of the Mississippi River between St. Louis, Missouri, and Cairo, Illinois, to be well below normal throughout 1989. At times, these conditions required reduction in the size and draft of the commercial barge tows navigating this reach of the Mississippi River and, during the ice-impacted period last December, caused the closure of navigation for several days. Conditions have improved somewhat since the beginning of the year. Increased precipitation and runoff have resulted in higher river stages along the middle Mississippi River. The stage at St. Louis, Missouri, has been equal to or greater than the stage at the same time last year. California's Central Valley.-The third successive year of drought in central California caused low storage levels to be reached at 2 Corps reservoirs in the southern portion of the Central valley during 1989. Storage volumes now are at 18 percent and 44 percent of the respective historical average amounts at the 2 Corps projects. This shortage of storage principally affects the irrigation districts that bought the storage capacity and own the rights to the water therein. Similar situations are encountered at other Federal and State reservoirs in the region. Central and Southern Florida.-Lake Okeechobee, the principal source of water for the Central and Southern Florida region, dropped in volume for the second year in a row and is now more than 2 feet below normal. Also, the water conservation areas are at their lowest levels ever. Water deliveries from the Corps Central and Southern Florida project through Shark Slough to the Everglades National Park have been stopped, and only minimum deliveries are being made to the park through Taylor Slough. Water restrictions have been imposed on residential and commercial users within the South Florida Water Management District, the local sponsor for this project. Water Management During Drought Study.-We appreciate this Subcommittee's support for initiation in fiscal year 1990 of a wide-reaching study of water management during drought. The fiscal year 1991 budget includes $2.5 Million to continue this important effort. We recognize that the value of project outputs change over time and that project operations should change with those values. It is our expectation that this study will increase the contribution which existing projects make to the Nation's economy by developing a consensus on this and other issues regarding the management of the Nation's waters during drought. CORPS RESPONSE TO DISASTERS The past year saw a series of events that challenged the Corps' ability to respond to multiple disasters, both natural and man-made. The Corps met these challenges admirably, and we are proud of all of the personnel involved. We would like to summarize for the record our involvement in those major disasters. When the Exxon Valdez grounded on March 24, 1989, it created a crisis that the oil industry and the Nation were not prepared to handle. In support of the Department of Defense, the Corps provided two seagoing hopper dredges, the Essayons and the Yaquina, which were successful in skimming 6,900 barrels of oil out of a total of 51,000 barrels recovered. This spill response demonstrated the capabilities of Corps hopper dredges and potentially those of industry to respond to such events. In addition, scientific teams from two Corps R&D laboratories provided on-site technical support to the Alaska oil spill cleanup effort. To improve its ability to respond to oil spills in the future, the Corps has initiated several actions. These actions include an engineering study to identify retrofits and modifications that can be made to Corps hopper dredges to enhance oil recovery operations in a safe manner; a survey of industry-owned hopper dredges and industry's capability to respond; use of latest techniques in remote sensing to locate and track oil; coordination with other agencies relative to shore cleanup; and management strategies to ensure a timely, efficient and cost effective response on the part of the Corps. Hurricane Hugo struck in mid-September. Before Hugo made landfall, the Corps dispatched personnel to potential target areas, such as the Virgin Islands, Puerto Rico and the South Atlantic Coast of the mainland. The Corps worked with local and State authorities in reviewing an evacuation plan that enabled 130,000 people to safely leave the Charleston area. After Hugo struck on September 18, the Corps initiated immediate response activities. In the Carolinas, the Corps provided survey |