[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
AMERICA'S WATER RESOURCES INFRASTRUCTURE: APPROACHES TO ENHANCED
PROJECT DELIVERY
=======================================================================
(115-33)
HEARING
BEFORE THE
SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 18, 2018
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
U.S. GOVERNMENT PUBLISHING OFFICE
33-621 PDF WASHINGTON: 2018
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
(ii)
Subcommittee on Water Resources and Environment
GARRET GRAVES, Louisiana, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio LOIS FRANKEL, Florida
DANIEL WEBSTER, Florida FREDERICA S. WILSON, Florida
THOMAS MASSIE, Kentucky JARED HUFFMAN, California
RODNEY DAVIS, Illinois ALAN S. LOWENTHAL, California
MARK SANFORD, South Carolina EDDIE BERNICE JOHNSON, Texas
ROB WOODALL, Georgia JOHN GARAMENDI, California
TODD ROKITA, Indiana DINA TITUS, Nevada
JOHN KATKO, New York SEAN PATRICK MALONEY, New York
BRIAN BABIN, Texas ELIZABETH H. ESTY, Connecticut
DAVID ROUZER, North Carolina CHERI BUSTOS, Illinois
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas BRENDA L. LAWRENCE, Michigan
DOUG LaMALFA, California PETER A. DeFAZIO, Oregon (Ex
A. DREW FERGUSON IV, Georgia Officio)
BRIAN J. MAST, Florida, Vice Chair
BILL SHUSTER, Pennsylvania (Ex
Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vi
TESTIMONY
Major General Ed Jackson, Deputy Commanding General for Civil and
Emergency Operations, U.S. Army Corps of Engineers............. 5
James C. Dalton, Director of Civil Works, U.S. Army Corps of
Engineers...................................................... 5
Mike Inamine, Executive Director, Sutter Butte Flood Control
Agency......................................................... 5
Leah F. Pilconis, Senior Counsel, Environmental Law and Policy,
The Associated General Contractors of America.................. 5
Jill Jamieson, Managing Director, Jones Lang LaSalle............. 5
Nicole T. Carter, Specialist in Natural Resources Policy,
Congressional Research Service................................. 5
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Major General Ed Jackson and James C. Dalton, joint statement.... 56
Mike Inamine..................................................... 64
Leah F. Pilconis................................................. 69
Jill Jamieson, including addendum entitled, ``Tapping Private
Financing and Delivery to Modernize America's Federal Water
Resources''
Nicole T. Carter................................................. 171
SUBMISSIONS FOR THE RECORD
Executive summary to report entitled, ``40 Proposed U.S.
Transportation and Water Infrastructure Projects of Major
Economic Significance,'' Fall 2016, prepared by a team led by
AECOM under contract for the U.S. Department of the Treasury on
behalf of the Build America Investment Initiative; submitted by
Hon. Grace F. Napolitano, a Representative in Congress from the
State of California............................................ 182
Report, ``The Benefits of NEPA: How Environmental Review Empowers
Communities and Produces Better Projects,'' January 16, 2018,
by Kevin DeGood, Director of Infrastructure Policy, Center for
American Progress; submitted by Hon. Alan S. Lowenthal, a
Representative in Congress from the State of California........ 186
Major General Ed Jackson, Deputy Commanding General for Civil and
Emergency Operations, U.S. Army Corps of Engineers and James C.
Dalton, Director of Civil Works, U.S. Army Corps of Engineers,
joint responses to questions for the record issued by the
following Representatives:
Hon. Garret Graves of Louisiana.............................. 59
Hon. Mark Sanford of South Carolina.......................... 62
Hon. Mike Bost of Illinois................................... 63
ADDITIONS TO THE RECORD
Written statement of the National Association of Clean Water
Agencies....................................................... 196
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AMERICA'S WATER RESOURCES INFRASTRUCTURE: APPROACHES TO ENHANCED
PROJECT DELIVERY
----------
THURSDAY, JANUARY 18, 2018
House of Representatives,
Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m. in
room 2167, Rayburn House Office Building, Hon. Garret Graves
(Chairman of the subcommittee) presiding.
Mr. Graves of Louisiana. The subcommittee will come to
order. Good morning, and thank you all for being here.
I ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions. Is there any objection?
Without objection, so ordered.
I want to welcome everyone to our hearing today on
America's water resources infrastructure and approaches to
enhance project delivery.
The numbers speak for themselves when you look at the
challenges that we are facing. Right now we have an estimated
$100 billion in Corps of Engineer-authorized projects, a
backlog of approximately $100 billion. Yet the appropriations
process yields somewhere in the $5 to $6 billion range on an
annual basis, with less than $2 billion of that for
construction. It doesn't take a mathematician to recognize that
you are not ever going to keep up with even inflation on these
projects, much less be able to authorize new projects and ever
truly yield the benefits or see the true cost-to-benefit of
these projects under the current implementation regime.
Right now we have lock systems in the United States that
average 60 years old. We have dams and levees in the United
States that average approximately 50 years old. In my home
State of Louisiana, one of the most important locks we have
there is approaching 100 years old, and has been somewhere in
the authorization process--in fact, has had an authorization,
as I recall, since the 1960s for refurbishment, but has not
been updated.
It is also important to keep in mind the role that this
infrastructure plays in our Nation. This isn't just some
project that may be an option, an alternative, or some type of
luxury investment. These projects are integral to our Nation.
Ninety-nine percent of our products that are exported and
imported into the United States come through our seaports, 99
percent. There is not an alternative.
Certainly you look at what has happened just last year, in
the last several months, last few months, with Hurricanes
Harvey, Irma, and Maria. There are projects in some of these
cases that would have helped to protect, or would have reduced
the impact of these awful hurricanes on these communities in
Texas and Florida and Puerto Rico, Virgin Islands, and others,
in some cases authorized projects. In my home State of
Louisiana, in August of 2016, we had a flood that had a project
that dates back to 1986 that has had only one small component
of construction.
Now, you can look at the implementation process right now,
and right now it takes, on average, about 6 years for the Corps
of Engineers to go through the environmental impact statement
process--6 years. It takes, on average, according to the
Council on Environmental Quality, approximately 4.7 years to go
through the environmental permitting process.
These statistics are unacceptable when you look at the
urgency of these projects that we are trying to build. Whether
it is keeping up with trends in the maritime industry related
to the post-Panamax vessels, the larger, wider vessels that, in
many cases, don't fit in our rivers and our harbors and port
systems in the United States, or, once again, the urgency of
our hurricane protection, our flood protection, and our
ecological restoration projects, some of which have been
sitting in authorized posture now for not years, but decades
with little to no progress.
It is important to note that you can look at implementation
models of local governments, of State governments, and even
other Federal agencies and, incredibly, of the Corps of
Engineers, when given different authorities or different
financial structures. The efficiency of delivering these
projects can be much, much greater. And as I think we will hear
from some of our witnesses today, we will hear statistics or
perhaps examples of where project cost and project timeframes
can be reduced by 50 percent or less.
So, recognizing the urgency of the projects that we are
trying to build, recognizing the fact that the backlog of
projects, the funding stream that we are currently utilizing is
not ever going to get us to resolution, or get us to completion
of these projects, we are very happy to have representatives
from the Corps of Engineers, from local government sponsors,
from contractors, and from the Library of Congress, the
Congressional Research Service, to share their perspective and
expertise with us on alternative project development and
implementation processes.
So I look forward to hearing from our expert witnesses
today, and turn to our ranking member for an opening statement.
Mrs. Napolitano. Thank you very much, Mr. Chairman, for
holding the formal hearing on the development of the new Water
Resources Development Act of 2018.
Let me first start by congratulating the chairman of the
committee, Mr. Shuster, for his efforts to return to Congress
the practice of approving a new water resources development act
every 2 years. This, combined with significant project delivery
changes within the Corps itself, has started to break the
logjam for communities to benefit from the expertise of our
Nation's premier water resource agency, the Army Corps of
Engineers.
Yes, many challenges remain. But I am hopeful that we will
continue to improve and expand the Corps' ability to address
water-related infrastructure challenges faced by each of our
communities.
And today's hearing highlights two of the challenges. How
can local communities afford to pay for necessary navigation,
flood control, water supply, and environmental recreation
projects; and who gets to decide what projects are to be
funded?
On the latter point I am pleased that the President has
opened the discussion on eliminating the moratorium on
congressionally directed spending requests. This moratorium did
not curtail spending, nor did it increase transparency. It
simply transferred decisionmaking authority from locally
elected individuals to executive branch employees in
Washington, DC. Like you, my constituents elected me to be
their voice in Congress, and I know better what my communities
need than the head of OMB.
When this committee under former Chairman Oberstar moved a
bill and congressionally directed project requests, we did so
in the light of day, with Members' names associated with the
request. Today, when similar decisions on project funding are
made at the Corps, there is no transparency on how those
decisions are made. I welcome continued discussions on the
point and hope we can restore greater local control and, of
course, more transparency into funding decisions than we have
today.
On the issue of funding, we know that our communities
constantly struggle to afford critical infrastructure
investments, including water-related infrastructure, to address
their local needs. Yet year after year Congress fails to
adequately fund--help our communities with their critical
infrastructure investments, in essence telling our communities,
``You are on your own.'' This lack of predictability and
sufficient infrastructure funding is the lead reason why
projects take so long to complete.
In fact, in December 2016 the U.S. Department of the
Treasury released a commissioned report that concluded a lack
of public funding--a lack of public funding--is by far the most
common factor hindering the completion of transportation and
water infrastructure needs, affecting 39 of the 40 projects
reviewed. I ask unanimous consent that an executive summary of
this report be included in today's hearing record.
Mr. Graves of Louisiana. Without objection.
[The executive summary of the report referenced by
Congresswoman Napolitano is on pages 182-185.]
Mrs. Napolitano. Today we will discuss alternative project
delivery approaches, presumably under the guise that these
alternative approaches will result in a great number of
projects being constructed without a significant increase in
Federal funding.
We will also discuss the option of public-private
partnerships, one of these alternative project delivery
approaches. I welcome the discussion, because I suspect that
P3s will make up a significant portion of the President's
forthcoming infrastructure plan.
However, a good starting point for the discussion picks up
the work that this committee has already done in a special
Panel on Public-Private Partnerships in 2014. I highlight one
of the points of the panel's final report, which concluded
that--and I quote--``regardless of the method of delivery or
the source of financing, the cost of infrastructure projects
are borne by the public--there is no free lunch.''
Why is it relevant? Because there appears to be a
widespread misperception that public-private partnerships
increase access to financing available to local communities.
Simply not the case. There is not an infrastructure gap in this
country due to lack of access to financing. There is an
infrastructure gap because State governments are constrained by
the lack of revenue needed to pay for the investment, and
public-private partnerships do not alone solve the problem.
Public-private partnerships are indeed a good tool. And
again, it is simply a tool like many other financing tools that
can be used to help finance infrastructure investment. Some of
these tools work for certain types of communities, others do
not. Yet it is incumbent that local communities--potential
trade-offs in using various methods to finance their local
needs.
Similarly, if the President is going to make the use of P3s
an integral part of the infrastructure plan, Congress must
undertake a similar analysis of potential trade-offs. These may
include the consequences of blocking off future appropriation
to repay private lenders, or allowing other mechanisms, such as
taxing authority to repay the cost of financing provided by the
private entity. Again, there is no free lunch.
I welcome our initiation of this broader discussion and
look forward to hearing from all our witnesses.
Thank you, Mr. Chairman.
Mr. Graves of Louisiana. Thank you. And I want to thank my
friend for always working together with us, and looking forward
to putting together a good bipartisan proposal.
Mrs. Napolitano. It is my pleasure. Thank you.
Mr. Graves of Louisiana. Before I begin introducing our
witnesses this morning, allow me to dispense with some of the
unanimous consent requests.
I ask unanimous consent that the record remain open for 15
days for additional comments and information submitted by
Members or witnesses, and that this material be included in the
record of today's hearing.
Without objection, so ordered.
I ask unanimous consent the record of today's hearing
remain open for such time as our witnesses provide answers to
any questions that may be submitted to them in writing.
Without objection, so ordered.
Thank you. Our first witness today is Major General Ed
Jackson, who is Deputy Commanding General for Civil and
Emergency Operations at the United States Army Corps of
Engineers.
General Jackson, thank you for being here. You are
recognized for 5 minutes.
TESTIMONY OF MAJOR GENERAL ED JACKSON, DEPUTY COMMANDING
GENERAL FOR CIVIL AND EMERGENCY OPERATIONS, U.S. ARMY CORPS OF
ENGINEERS; JAMES C. DALTON, DIRECTOR OF CIVIL WORKS, U.S. ARMY
CORPS OF ENGINEERS; MIKE INAMINE, EXECUTIVE DIRECTOR, SUTTER
BUTTE FLOOD CONTROL AGENCY; LEAH F. PILCONIS, SENIOR COUNSEL,
ENVIRONMENTAL LAW AND POLICY, THE ASSOCIATED GENERAL
CONTRACTORS OF AMERICA; JILL JAMIESON, MANAGING DIRECTOR, JONES
LANG LASALLE; AND NICOLE T. CARTER, SPECIALIST IN NATURAL
RESOURCES POLICY, CONGRESSIONAL RESEARCH SERVICE
General Jackson. Chairman Graves, Ranking Member
Napolitano, and distinguished members of the subcommittee, on
behalf of Lieutenant General Semonite and the U.S. Army Corps
of Engineers, I thank you for the opportunity to testify today.
Since Congress first authorized our navigation mission in
1824, the Corps has worked hard to develop and implement
solutions to our Nation's water resources challenges. We are
able to do this because we have a world-class workforce of
talented and dedicated professionals who are passionate about
what we do.
None of our work is done alone, but with the full
participation and hard work of many others. We appreciate,
value, and depend upon the support of the administration, the
Congress, and our partners at every level to succeed in our
mission.
Our most important message to you today is that the Corps
is open to thinking and operating differently than we have in
the past. We sincerely appreciate the efforts of Chairman
Graves in bringing the Corps together with members of this
subcommittee over the past 6 months, helping us to see
ourselves better as an organization, and offering opportunities
to improve the way we deliver solutions for those to whom we
all answer: the American people.
The Corps faces a multitude of challenges, some old and
some new. Much of our infrastructure is well beyond its design
life, yet the requirements have never been greater. The demands
on the Federal budget continue to grow. And, as our
infrastructure ages, we find more and more of our annual
appropriation going to operation and maintenance at the expense
of investments in both investigations and construction. This is
a challenge we will continue to face together in the years to
come.
Today we have $96 billion in construction requirements,
calculated in fiscal year 2016 dollars, representing the
Federal share on a multitude of projects. These include $15
billion in authorized but unconstructed work, $51 billion in
projects that have been given new-start authority and provided
with some funding, and $20 billion in high-risk dam safety
requirements.
We also have 97 ongoing feasibility studies which, if
authorized, will simply add to the Federal budget requirement.
As you know, our feasibility studies are formulated with the
assumption of efficient funding, and most all projects require
multiple years to implement. Yet we budget on an annual basis
with no assurances that adequate or consistent funding will be
available from year to year. This creates uncertainty for our
sponsors, drives up project costs, and delays the realization
of benefits. At the current rate, it will take us over 100
years to address the current construction backlog, and that is
simply unacceptable.
Together we must find a way to incentivize and encourage
increased State, local, and private investment in our
infrastructure portfolio. We must target Federal investments,
encourage innovation, streamline project delivery, and help
transform the way infrastructure is designed, built, and
maintained. We need to optimize the tools currently at our
disposal, such as contributed funds, to address project
requirements that exceed the Federal Government's ability to
pay.
The Corps is now working with the EPA to leverage their
established institutional capacity as we explore implementation
options for a water infrastructure finance and innovation
program authorized by this subcommittee and modeled on the
successes they have experienced with their Water Finance
Center. We are currently developing a Memorandum of
Understanding with the EPA, and crafting policy guidance, in
concert with the administration, to support implementation of
this program.
Together we must remove barriers to the development and
improvement of our water resources infrastructure. We must
encourage and incentivize alternative project delivery
approaches, streamline Federal procedures for delivering
projects, and reduce unnecessary Federal oversight to
facilitate timely delivery of projects.
We recognize the Corps' role in the future may be different
than it has been in the past, and that our level of involvement
in project delivery may vary from project to project, location
to location, or sponsor to sponsor. It could include no
involvement at all, permitting and/or technical assistance
only, or the standard cradle-to-grave Corps delivery model.
Whatever works best to deliver worthwhile projects faster and
cheaper is the goal.
The Corps is fully engaged in support of multiple
administration objectives aimed at streamlining our regulatory
processes. Currently, the Corps is addressing topics such as
establishing discipline and accountability in the environmental
review and permitting process for infrastructure projects. We
are reviewing the nationwide permit program to identify
modifications that will increase the efficiency and timeliness
of decisionmaking, and we are working with the EPA in reviewing
the 2015 ``waters of the United States'' rule.
Our goal is intended to simplify the process for gaining
infrastructure permits while protecting the environment in
accordance with the law.
The Corps wants to be part of the solution, not part of the
problem. We recognize the need to address internal policies,
regulations, processes, and cultural impediments in order to
remain relevant into the future. We want to be value-added in
delivering solutions, whatever role we may have in that
endeavor. Our Director of Civil Works, Mr. James Dalton, has
championed a number of initiatives which he will address in his
remarks. I fully support his efforts, and believe they are
already making a difference across our organization.
The Corps is a critical player in the future of water
resources development, a very complex mission to which we bring
incredible capability, expertise, and experience. We are
committed to looking at old problems in a different way, and
remain well-postured to be value-added to the overall effort.
Thank you, Mr. Chairman and members of the subcommittee.
This concludes my testimony, and I look forward to answering
any questions that you might have. Thank you.
Mr. Graves of Louisiana. Thank you very much. Perfect
timing. We are next going to go to Mr. James Dalton, who is the
Director of Civil Works, and the top career civilian for the
Corps of Engineers.
Mr. Dalton, again--I told you privately and I want to say
it publicly--I want to thank you for some of the continued
efforts to reform the section 408 process. As you know, it is
not where I am comfortable, and I think I can speak for a lot
of the committee members at the same time in saying that we
want to see additional progress there, and concerned about how
we believe it has deviated from the 100-plus-year-old law.
But I do appreciate your January 12th memo that does
additional reforms on top of the ones that you did last year.
So thank you.
Mr. Dalton, you are recognized for 5 minutes.
Mr. Dalton. Thank you, Mr. Chairman and Ranking Member
Napolitano, for the opportunity to be here to discuss ways to
enhance project delivery by the Corps of Engineers.
I have worked for the Corps of Engineers for a number of
years, worked in districts and divisions, and I am extremely
proud of the work that the Corps accomplishes. But, as just
discussed by General Jackson and mentioned by the chairman, we
are equally aware that the organization can improve. And I have
been and remain committed to instituting changes in the Corps
delivery process to make us more effective and efficient.
And so, I would like to discuss a few of those things that
we are undertaking right now to try to make us a better
organization.
I think many of you have heard us talk about flattening the
organization. Flattening the organization is simply looking at
how we actually delegate decisionmaking authority closer to the
problem, closer to the project, closer to the issue, rather
than have decisions made at the Washington headquarters level.
This is an effort that we have a lot of work ongoing. We have
identified several authorities that we need to delegate, and we
are diligently working to make that happen. So flattening the
organization is one.
The second is we are transforming and transitioning to a
more risk-informed decisionmaking organization. This is
intended to help us to use professional and engineering
judgment to make decisions, rather than relying on lengthy
analysis and modeling when that might not be needed or
necessary. Often our technical experts can make decisions based
on their knowledge, experience, and competence in a specific
area or a specific project, and they should be free to do that
without having to follow rigid processes that dictate more
lengthy analysis. Risk-informed decisions, or professional
judgment decisions, should be made and documented without
having to be subjected to numerous reviews after those
decisions are made.
The third thing we are looking at is how we actually put
our guidance together. We are recognizing the fact that our
guidance needs to be jointly developed, so that one part of the
organization is absolutely aware of what is happening in
another part of the organization. For years we have operated in
stovepipes, and we are trying to eliminate that in terms of how
we produce guidance.
We are also looking at how to best capture total value of
our projects. Many communities already have a massive plan or a
road map that they are following to try and determine how
projects best fit within their community. They consider things
like life safety risk, economic value, resilience to the
community or other communities, things that we need to make
sure we capture in our project reports. I believe, if we
capture such factors, one of the things it would help us to do
is make those projects better candidates for non-Federal
funding because you see the overall massive plan for a
community.
We are also reviewing existing authorities that we already
have, but have not fully utilized. WRDA 1986 had two sections,
section 203 and section 204, very similar, except section 203
is for studies and section 204 is for construction.
Specifically, section 203 authorizes a non-Federal interest to
undertake a feasibility study without Corps involvement, but
allows the Corps to provide technical assistance during the
conduct of this study, if requested by the non-Federal
interest. Again, section 204 is very similar, except that is
for construction.
Another authority we are looking at is section 1043 of
WRRDA 2014, which establishes a pilot program that allows a
non-Federal sponsor to provide full management control for
construction of water resource development projects. Similar to
what General Jackson mentioned with WIFIA [Water Infrastructure
Finance and Innovation Act]--that is an existing authority that
we are looking at to see how can we better utilize it, as well.
One final issue I will mention, and that is the section 408
issue that the chairman mentioned. We recognize that there is a
lot of angst about that and a lot of things that we need to do
to try to improve. There are a number of actions that we have
taken, and I would be glad to discuss that, given time, or if
there are questions. We are also trying to finalize the changes
that we have in place already and those that we are trying to
actually put in place by a formal Engineer Circular within the
next several months.
The Corps stands ready to help in addressing water resource
challenges of the 21st century, and you certainly have my
commitment to continue to look at ways to improve. And thanks
again for the opportunity to be here today.
Mr. Graves of Louisiana. Thank you, Mr. Dalton. And I
failed to mention you also did the June 17th project redundancy
or expediting memo, as well, and something worth pointing out
to committee members, those efforts to continue to reform the
process.
Our next witness is Mr. Mike Inamine. No, I didn't get that
right. Inamine. And I remember last time I thought we had
changed your name to Smith.
[Laughter.]
Mr. Graves of Louisiana. He is the executive director of
the Sutter Butte Flood Control Agency.
I want to thank you for being back, and look forward to
your testimony. You are recognized for 5 minutes.
Mr. Inamine. Thank you. Good morning, Chairman Graves,
Ranking Member Napolitano, and members of the subcommittee.
Again, my name is Mike Inamine, executive director of the
Sutter Butte Flood Control Agency, or SBFCA, as it is known.
Thank you for this opportunity to update this committee on our
efforts to manage flood risk on the Feather River, just below
Oroville Dam in northern California.
Before beginning my testimony, I wish to acknowledge
Congressmen LaMalfa and Garamendi on this committee, true
partners who have supported our region's efforts from day one
and throughout this remarkable past year. I would also like to
thank Chairman Graves for his personal interest in the U.S.
Army Corps of Engineers project delivery process.
SBFCA is responsible for local implementation and non-
Federal sponsorship for flood projects in the Sutter Butte
Basin, located 40 miles north of Sacramento. There are 95,000
residents and $7 billion worth of assets protected by Corps
project levees. SBFCA has benefitted from recent changes
implemented by the Corps and a locally driven 21st-century
financing approach that will hopefully support a new-start
construction designation in the forthcoming 2018 Corps
workplan.
In 2014 and amended in 2016, Congress authorized the Sutter
Basin flood risk management project for construction. In 2016
SBFCA had already completed, or largely completed, a project
that improved 36 of the 41 miles of levee improvements
authorized by Congress in 2014, all at non-Federal expense.
However, two issues arose in 2016. First, deficiencies were
identified in a Yuba City levee previously declared safe. The
second issue was that section 408 permission to repair the most
critically damaged levee in the basin near Laurel Avenue was
delayed due to cultural resource issues.
Against this backdrop our nearly completed Federal project
faced the ultimate test in the 2017 flood event. Unimproved
levees started to unravel. Oroville Dam spillways started
failing. And 188,000 residents from both sides of the Feather
River were given, quote, ``1 hour to evacuate.'' A large State-
local flood fight ensued.
To end the flood season on a somewhat happier note, all of
the recently improved levees performed well. The unimproved
levees were held together with flood fights, and the Oroville
emergency spillway did not fail. But now we faced a years-long
section 408 permission process to improve and repair severely
damaged levees in less than 5 months before the next flood
season. The pending section 408 permission was finally approved
and 1 mile of levee was repaired. The adjoining 5 miles of
badly compromised levees await completion through the Federal
project.
And then regarding the new section 408 permission for the
Yuba City levee, we received section 408 permission in about 5
weeks, a record time for a major repair with a number of
complexities. There are three reasons I believe this occurred:
Director of Civil Works James Dalton's recent guidance to
delegate and streamline certain section 408 permissions;
district and division commanders' prioritization of resources;
and the simple fact that SBFCA was already on the ground doing
the work.
All major construction is complete. This section 408
project has now been fully delivered. This leaves 5 miles of
deficient and damaged levees. And this is where our story ties
in to a 21st-century Corps partnership sometimes referred to as
innovative financing.
Non-Federal interests fund and build 88 percent of the
project that was federally authorized in 2014, or 80 percent of
the NED project, leaving the Federal Government with an
investment of just $49 million to complete a $689 million
project authorized in 2014. With 80 percent of the NED project
already delivered and in the ground, there is a tremendous
opportunity to leverage non-Federal investment, complete the
project, and reduce the massive backlog of the Corps' unfunded
authorized projects.
Moreover, our economically disadvantaged, largely rural
community has taxed itself to capacity and simply has nothing
left to spare.
Let me close with a few thoughts on Corps project delivery
and the lessons of a remarkable past year. Oroville was a
wakeup call for engineers around the world. Just because a
structure performs well for 50 years is no indication it will
perform tomorrow without ongoing thoughtful investment.
We cannot rely on emergencies to get work done. But when
they inevitably occur, emergency section 408 procedures are
sorely needed. Local initiative should be leveraged to deliver
Corps Civil Works projects. Many Civil Works projects can be
delivered sooner and less expensively by non-Federal interests.
We look forward to delivery of a 2014 WRRDA pilot project that
explores local agency construction, as well as other project
delivery proposals outside the existing paradigm.
Public safety has already benefitted from recent direction
from Civil Works Director James Dalton to delegate and
streamline section 408 authorities. We appreciate this
attention to real-world difficulties, and look forward to this
guidance being expanded and codified.
And finally, Corps resource allocation should be
prioritized based on risk reduction, not who does the work.
Thank you for your continued attention to this most
important issue, and I look forward to your questions.
Mr. Graves of Louisiana. Thank you, Mr. Smith.
[Laughter.]
Mr. Graves of Louisiana. I am going to move on to our next
witness, Ms. Leah Pilconis, who is the senior environmental
counsel for The Associated General Contractors of America.
Thank you very much for being here today, and you are
recognized for 5 minutes.
Ms. Pilconis. Thank you. Chairman Graves, Ranking Member
Napolitano, and members of the subcommittee, thank you for
providing AGC with the opportunity to offer its recommendations
on ways to speed up the completion of America's critical water
infrastructure projects.
My name is Leah Pilconis. I am AGC's senior environmental
counsel. I have spent the last 17 years establishing and
directing AGC's environmental program. I have represented AGC's
more than 26,000-member companies in dozens of environmental
rulemakings by preparing comments, testifying at hearings, and
sharing the industry's perspective at meetings with the Army
Corps of Engineers, U.S. EPA, and other Federal agencies.
I work closely with the in-house environmental managers of
many of the Nation's leading construction firms. I also support
AGC's efforts to maintain up-to-date free resources on
environmental compliance and sustainability that are open to
the entire U.S. construction industry. AGC applauds this
committee for its environmental streamlining work in WRRDA 2014
and WRDA 2016, as well as the last two long-term transportation
reauthorizations, MAP-21 and the FAST Act. We encourage you to
build on this groundwork to further enhance efficiencies and
tie up loose ends.
Contractors find the Federal permitting process to be
cumbersome and uncertain. This uncertainty is driving up
project costs because it is being priced into bids, and it is
causing construction delays, even after the contract is
awarded.
[Slide]
Ms. Pilconis. AGC's flowchart, seen on the monitors,
diagrams the dozens of Federal environmental approvals needed
before a construction contractor can break ground on most large
infrastructure projects. The chart shows that critical projects
are getting caught on a NEPA [National Environmental Policy
Act] treadmill. It also shows that time and money is being
wasted on redoing various interagency consult studies and
analyses.
NEPA is triggered at the outset of major Civil Works
projects. Each project normally requires an environmental
impact statement that, on average, takes 4.6 to 6 years to
complete. Each project also requires a Clean Water Act section
404 permit, a process that carries on after the initial NEPA
review. A section 404 permit also triggers a NEPA evaluation.
It can take another 2.16 years to obtain an individual section
404 permit. And the list of required approvals goes on from
there, as illustrated by AGC's chart.
AGC recommends that Congress require Federal agencies to
follow a one-Federal-decision process, so there is just one
NEPA review per project that ends with a single record of
decision issued by the lead agency. In addition, Congress
should require a nationwide merger of the NEPA and Clean Water
Act section 404 permit processes. To reduce duplication, the
environmental planning work performed during NEPA must satisfy
the section 404 permit requirements.
There should not be do-overs of the Endangered Species Act
section 7 consults or the National Historic Preservation Act
authorizations or the Coastal Zone Management Act consistency
determinations, which are already a part of the initial NEPA
review process. By realigning and enhancing engagement on the
front end, Federal agencies will meet their statutory
responsibilities more efficiently in the long run. This will
ultimately reduce costs and get projects underway faster.
But Congress also must limit the scope of reevaluations.
There must be clear standards for when a previously approved
environmental document needs to be redone. Otherwise, projects
face a continued threat of shutdown. And overall, Congress
should enact a specific deadline for completing the entire
approval process.
The construction industry also has great concerns regarding
the frivolous and obstructive litigation that is delaying and
sometimes defeating proposed projects. AGC urges Congress to
consider a reasonable approach to citizen-suit reform to
prevent the misuse of environmental laws. It is one thing to
have a legitimate environmental legal concern; it is another to
oppose a project based on not-in-my-backyard issues.
AGC provides more specifics on all of these opportunities
in its written statement, as well as additional recommendations
on ways to expedite the section 404 permitting process without
sacrificing environmental protections.
Thank you again for the opportunity to testify, and I look
forward to answering your questions.
Mr. Graves of Louisiana. Thank you. Our next witness is
Jill Jamieson, managing director from Jones Lang LaSalle.
Thank you. You are recognized for 5 minutes.
Ms. Jamieson. Chairman Graves, Ranking Member Napolitano,
members of the committee, thank you so much for the opportunity
today to address you on approaches to enhanced project delivery
for water resources.
My name is Jill Jamieson. Although I am not here today to
represent my company, I have over 25 years of experience
advising public authorities at the Federal, State, and local
level on complicated project implementation. So I am purely in
the area of infrastructure delivery, public-private
partnerships, and traditional delivery.
Over the past few years I have had the opportunity to
advise a number of Federal agencies on the implementation of
water resource infrastructure, including our good friends here,
the Army Corps of Engineers, the Bureau of Reclamation, and
others, as well as many of your own districts from local and
non-Federal shareholders. So I advise both the Federal, State,
and the local shareholders on a wide variety of projects.
Before diving into the specifics of project delivery,
though, I did just want to make one statement. There has been a
lot of talk lately about the $1 trillion infrastructure bill,
if that comes or not. I just want to put that in context. The
McKinsey report just came out and said that we need about $7.7
trillion in infrastructure investment by 2030 in the United
States. So really--and excuse the pun--$1 trillion is a drop in
the bucket, relative to the needs we have.
A one-time cash infusion is not going to be the solution to
America's infrastructure problems. We need a long-term strategy
for building and maintaining this great Nation's
infrastructure. We must also introduce reforms aimed at
ensuring that our infrastructure is delivered and maintained in
the timeliest and most cost-effective manner. It is bang for
buck that we need to concentrate on in the magnitude of our
infrastructure needs.
In this sense allow me to set the record straight, or
perhaps just reiterate what was said by the ranking member.
Enhanced delivery models such as public-private partnerships
are not a funding strategy. They are an infrastructure delivery
tool. P3 does not equate to free money. Infrastructure,
regardless of the delivery model, needs to be paid for, one way
or the other, through taxes or through user fees or some
combination thereof.
But by linking funding to outputs and life-cycle asset
performance, instead of to the black hole of ``let's feed more
money into a project that may or may not be done,''
infrastructure can be delivered in a timely and more cost-
effective manner, maximizing the benefit for taxpayers. As a
nation, we can no longer afford business as usual when it comes
to our infrastructure. Our present delivery model subsidizes
inefficiency, while rewording cost overruns and scheduled
delays, and this cannot continue if we hope to address our
infrastructure needs.
With regards specifically to water resources, with 25 years
of experience in only project delivery, I can assert
categorically and without reservation that our current
infrastructure delivery system is fundamentally flawed. Even
when funding is made available, as you know, protracted
appropriations, coupled with uncertainty about timing and the
amount of funding, unnecessarily and exponentially escalates
the cost of projects. Projects that should be done in 3 to 4
years are taking three to four decades.
Whether it is the Grand Prairie irrigation project, Olmsted
Dam, we can talk for hours about examples--it should not take
Americans a century to build a ditch, it simply should not. We
can do this more efficiently. An estimated 9 out of 10 of our
mega-projects, which are estimated at over $1 billion, are
delayed, they are over budget, and they fail to deliver the
public benefits that they were anticipating, 9 out of 10.
Ninety percent, that is not a great track record.
So the value proposition of enhanced delivery models such
as public-private partnerships is that they provide greater
security in terms of cost and schedule risk, in particular,
through performance incentive by putting private capital at
risk. You don't get paid until you deliver the infrastructure.
That changes behavior. It definitely changes behavior. Things
get done on time and on budget more frequently that way.
Moreover, by linking design and construction with operation
and maintenance, we build in a life-cycle management approach.
Let's build these things to last and figure out how to fund
them over the life of the asset, instead of hoping for future
funding when we don't have it.
Now I recognize some people, when they hear public-private
partnerships, think privatization. That is not the case. This
is not privatization. That is a ill-informed opinion. It is--or
perhaps other things. But you own the asset. This is simply
partnering and reallocating risks so that it can be better
allocated.
In my very wordy written submission I suggested a number of
very specific legislative fixes. One thing I would say. To
enable P3 or any enhanced delivery at the Federal level we need
to address two things. One are fully federally owned
infrastructure, such as inland waterways. The other are the
costs shared.
In 2014, through WRRDA, the Corps was given P3-enabling
legislation, but it was a bit of a legislative head fake. It
really didn't give them the appropriate authorities they needed
to move forward. I think that would be helpful, if that was
rectified.
I know I am out of time, so I will cease here, but thank
you so much for the opportunity to speak to you today, and I
look forward to your questions.
Mr. Graves of Louisiana. Thank you. You raised a number of
excellent points and I enjoyed your testimony, so thank you.
The next witness is Nicole Carter, specialist in natural
resources policy from the Congressional Research Service.
And I want to thank you again for your excellent testimony,
very informative, and I look forward to your oral testimony.
You are recognized for 5 minutes.
Ms. Carter. Chairman Graves, Ranking Member Napolitano, and
members of the subcommittee, my name is Nicole Carter, I am a
specialist in natural resources policy at the Congressional
Research Service. Thank you for inviting CRS to testify.
I will start by providing context for concerns regarding
Army Corps of Engineers project delivery, and then describe
existing Corps authorities for alternative project delivery and
financing.
Each fiscal year only a subset of authorized Corps
activities is federally funded. Ninety-six billion dollars of
authorized Corps construction and dam safety projects are
eligible for annual Corps construction appropriations, which
have averaged $1.8 billion in recent years. The Corps
construction account has declined as a percentage of the
agency's discretionary appropriations from above 40 percent in
the mid-2000s to 31 percent in 2017.
Mr. Graves of Louisiana. Ms. Carter, I am sorry, would you
mind pulling your microphone a little bit closer?
Ms. Carter. Under standard project delivery, the Corps
functions as a study and construction manager. Corps staff
typically are responsible for completing the feasibility study
and contracting for the project's construction, rather than
non-Federal project sponsors leading these efforts.
The Water Resources Reform and Development Act of 2014 and
WRDA 2016 attempted to address frustrations among some
stakeholders with the pace of work on Corps projects by
allowing non-Federal entities, including private interests, to
have greater roles in project development, construction, and
financing. Under these authorities, additional non-Federal
public and private investments may in the near term achieve
progress on water resource projects, thereby potentially making
Federal funding available for other projects.
However, achieving these benefits through some of these
authorities may commit or create expectations for Federal
appropriations which have potential trade-offs for the Federal
Government, including reduced future Corps budget flexibility
and reduced Federal influence over the studies and construction
projects receiving, expecting, and eligible for Federal
support.
Non-Federal project sponsors are now able to advance and
contribute funds to Corps-led activities and lead authorized
studies and projects. The cost of non-Federal-led activities
are shared by the Federal Government as if the Corps had led
the work. The entity leading the project or advancing the funds
typically is eligible for Federal credit or reimbursement,
subject to the availability of appropriations, for what would
have been the Federal portion of project cost.
GAO, in 2016, identified $4 billion worth of non-Federal-
led Corps studies and projects. GAO did not report on the total
remaining potential reimbursement amount to cover the Federal
share for these studies and projects.
Regarding alternative financing, WRRDA 2014 directed the
Corps to establish a pilot program for public-private
partnerships, P3s, for 15 authorized Corps projects. In the
explanatory statement for appropriations for fiscal year 2017,
concerns were raised that the Corps was developing project-
specific P3 arrangements. The statement directed the Corps to
develop a comprehensive P3 policy. A draft comprehensive P3
policy is reportedly under agency review.
Multiple reports, the Corps, and other observers have noted
not only beneficial opportunities for P3s, but also various
challenges in establishing a path for direct Corps
participation, including Federal commitments to budget-based P3
payments are scored as a capital lease or a lease purchase,
which means that the full Federal cost of the agreement is
scored when the P3 obligation occurs.
The Corps currently lacks the authority to redirect or
assess project-specific user fees to raise the revenues to
commit to a long-term P3. It is unclear how many Corps projects
could sustain or increase their user base if converted to a P3
that required increased user fees or contributions.
WRRDA 2014 also authorized a program for the Corps to
provide direct loans and loan guarantees for navigation, flood
risk reduction, and ecosystem restoration, as well as other
infrastructure through the Water Infrastructure Finance and
Innovation Act, WIFIA. To implement a Corps WIFIA program, an
appropriation of funds is needed to cover the program's subsidy
cost, which represents the presumed default rate on those
loans.
The use of the WIFIA approach by the Corps and for water
resource projects faces various challenges, including the Corps
has little experience with operating a loan program; project-
based revenue streams may be insufficient to repay WIFIA loans;
in the past, similar loan programs for water resource-type
projects reportedly have been held up due to relatively high
subsidy cost requirements.
This concludes my statement.
Mr. Graves of Louisiana. Thank you, Ms. Carter. I again
appreciate your testimony and appreciate you being here.
I am going to first recognize the leader in water
resources, who was the author of the last two WRDA bills and
kept us on a good schedule--and I want to thank you very much--
the gentleman from Ohio, Mr. Gibbs.
You are recognized for 5 minutes.
Mr. Gibbs. Thank you, Mr. Chairman.
General Jackson, we know the Corps is undergoing economic
reevaluation of the Soo locks to build an additional lock in
that complex. Due to the lack of alternative transportation
modes for moving iron ore and other cargo in the Soo locks
area, the Corps is analyzing alternatives. This includes a rail
connection from the Minnesota mines to Lake Michigan.
The Corps submitted costs to be less than $2 billion,
although earlier estimates of this cost were three to four
times higher than that amount. Could you provide me a
description of how the Corps developed the $2 billion cost
estimate?
General Jackson. Sir, first of all, thank you for the
question. We recognize the significant strategic importance of
Soo locks. A major rehab report and a validation report were
required for us to move forward on Soo locks. The major
rehabilitation report was signed in December of this past year,
so just 30 days ago. So we are on schedule with that.
The validation report is running a little bit behind. That
is the economic update that helps us determine what the
economic value is, and helps us increase the benefit-cost ratio
which will improve the budgetability of the project.
So what we have done--I don't have the specifics of all the
different calculations we have used, but I know that what we
have tried to do is better understand the uniqueness of the
material and the economic value that transits through the Soo
locks that may not have been captured in our normal process,
and that is why we are working to do subsequent work on the
economics side, to make sure we capture that.
We believe that a higher benefit-cost ratio will increase
the budgetability, which gives us a better chance of getting
the funding we need to do the work required there. And the
major rehab report will also allow us to make a good case for
what we believe are two of the larger size locks, which is what
we want to have as an end state, going forward with Soo locks.
James, do you have anything else you want to add to Soo
locks?
Mr. Dalton. No. With regard to the cost estimate, I was
there at the site about a month ago. And I asked to get the
details on it, which I am waiting to take a look at.
But what we are trying to do is expedite, as General
Jackson said, the validation report, which is looking at the
economics. I think that we could probably do a little better
than what the current schedule----
Mr. Gibbs. When do you expect that to be completed?
Mr. Dalton. Well, right now I think we are looking at next
year for that. What I was trying to do is see if we can get
that done within the next few months. And so that really is the
long pole, if you will, in the tent of moving forward on this.
Mr. Gibbs. Yes, because it has been an issue with me, as
you know. And I know the cofferdam was built years ago and, you
know, still going through all these studies.
General Jackson, WIFIA, you know, was reauthorized. I have
been working with my colleagues from Florida--Representative
Mast--on the reauthorization of that. But can you elaborate how
the Army Corps put into action goals laid out in WIFIA 2017,
you know, so we can get going on that? I know there are some
other comments that were made in testimony on this. So can you
just elaborate how you are trying to move forward for the Corps
to implement WIFIA provisions?
General Jackson. Congressman, yes, sir. Thank you. We are
taking an active role now in trying to develop--we have been
working with the EPA on a potential Memorandum of
Understanding.
We recognize that the Water Finance Center that they have
is tested, it works. They have competencies that we don't have.
And what we want to do is try to figure out a way to use the
competencies that they have to jumpstart our program and then
help us better shape a program very similar that we can then
incorporate into the Army Corps of Engineers and run.
I appreciate the discussion on the extension of the WIFIA
authority. I think that is key. I am not sure why it has taken
us so long to take advantage of the opportunity that Congress
has given us. But certainly in our discussions across the Corps
and within the administration there is support for us to move
forward on that. We are developing policy guidance right now
with the administration, as I mentioned in my remarks, to try
to help us administer this and do this right.
So we are working harder than ever to try to get that
sorted out, and----
Mr. Gibbs. OK.
General Jackson [continuing]. We will continue to need help
from Congress----
Mr. Gibbs. Quickly, I want to just touch on the project
acceleration, you know, section 1005. And I know, with the
delays there, the NEPA and then I know Ms. Jamieson, in her
testimony, commented about, you know, the delays and the NEPA
and working together. And I guess one question is the 3x3x3
program that was supposed to be implemented, has that been
helping or not? I mean what is--go ahead. I mean--I had the
wrong person, I guess, sorry.
Ms. Pilconis. Well, I had--I commented on the NEPA delays,
but I am not sure I am familiar with the 3x3x3 program.
Mr. Gibbs. OK. The 3x3x3 program was a program instituted
by the Corps, where studies would be done in 3 years or less,
no more than $3 million, and at different levels, a district
level, a regional level, and a DC level would be working in
conjunction, not consecutively, but concurrently. And that was
supposed to speed up projects----
Ms. Pilconis. OK, feasibility studies?
Mr. Gibbs [continuing]. By about 50 percent, I believe.
Ms. Pilconis. Feasibility studies?
Mr. Inamine. Chairman Gibbs, if I may, I think we could--as
a local project implementer, we were the pilot project for what
later became 3x3x3--in order to address your question.
Mr. Graves of Louisiana. Quickly, please.
Mr. Inamine. And that is the planning component of the
execution of a Civil Works project. We were probably--because
we were a pilot project--and this is for the Sutter Butte
Basin--we were probably an example of where it did work, where
a project, a feasibility study that literally would have taken
decades--and in our case, this thing, this feasibility study,
was going forwards, it was going backwards, it got stalled for,
literally, a decade. When this pilot project came out, which
later became 3x3x3, the Corps delivered.
Mr. Gibbs. OK.
Mr. Inamine. They got it out.
Mr. Gibbs. OK, thank you.
I yield back, Mr. Chairman.
Mr. Graves of Louisiana. Thank you. I am going to turn to
Mrs. Napolitano. You are recognized for 5 minutes.
Mrs. Napolitano. General Jackson, as you know, in July
2017, Ranking Member DeFazio submitted several questions to the
Corps and the Assistant Secretary of the Army in relation to a
subcommittee hearing from that month. It is now January of
2018, 6 full months, and after those questions were submitted
we haven't gotten an answer. It is not really acceptable.
I understand you--we take our oversight role very
seriously. And the lack of a timely response by the Corps and
the ASA's office call into question this administration's
commitment to transparency and congressional oversight.
Do you agree that 6 months is too long? What steps will you
take to ensure that the congressional questions, both of the
majority and minority, are answered in a timely basis?
General Jackson. Congresswoman, I want to tell you that
answering questions from this subcommittee and any Member of
Congress is of top importance to the Army Corps of Engineers
and the administration.
I am not exactly sure what the status of those are, but I
will find out and get them moving and get a response back to
your staff right after this hearing.
Mrs. Napolitano. Would you, please? I would appreciate it,
and I am sure the chairman would appreciate it.
Also, the central theme of today's hearing is alternative
project delivery mechanisms, especially pertaining to funding
of Corps' projects and studies. As you know, I have made a
point of the lack of consistent available appropriations to the
Corps, which has resulted in fewer Corps-led projects being
undertaken. Communities are struggling.
In response, Congress provided new or revised authorities
to allow local sponsors to contribute or accelerate funds to
the Corps for projects and studies, or take over planning and
construction altogether from the Corps.
And in your current portfolio, what percentage of the Corps
projects and studies are being pursued under traditional models
of appropriated statutory cost-related Federal funds?
And then, of course, it begs the question: What percentage
of projects are being pursued with advanced or contributed
funds? We need a breakdown. And what projects are being pursued
under section 203 or 204 of WRDA 1986?
We have had concerns using alternative methods for
addressing Federal share of Corps projects that can skew the
priorities of the Corps, in essence allowing projects from
wealthier communities to proceed because contributed funds were
made available. How does the Corps safeguard against allowing
contributed funds to change the Corps' priorities? That is a
mouthful.
General Jackson. Those are a lot of questions,
Congresswoman. I don't have the answers to the specific numbers
of section 203, section 204, contributed funds, accelerated,
and advanced funds. I can get that, and we will respond to that
as quickly as we can to you and your staff, and then the
members of the subcommittee.
As both James and I mentioned in our testimony, we believe
that those are authorities that need to be used more, and we
need to spend more time to execute those and incentivize folks
to use those capabilities more than we do today.
So we are committed to moving forward and trying to make it
easier for project sponsors to engage with the Corps and use
those authorities to get the projects delivered.
Mrs. Napolitano. Thank you.
Ms. Jamieson, some outside groups are being critical of the
P3 model because it can entail a potential loss of local
control. And it could result in decreased labor standards for
long-term maintenance concessions, could result in what might
currently be public information being transformed into
confidential and proprietary information that would no longer
be available.
The committee has also issued a report on P3s that noted
that this policy should not be viewed as a new funding stream,
but, more realistically, as an alternative financing mechanism
paid for, in one way or another, by the taxpayer. Maybe even
twice.
Do you agree that these are valid concerns?
Ms. Jamieson. Thank you for the question. It is very hard
to generalize when you talk about P3, because every contract is
very different. And so, it would be incumbent on the
administration, I think, or the Federal agencies, if they were
to engage in P3, to make sure that those concerns are
addressed.
So often--and in California, University of California,
Merced--it is not a water project--a very large P3 that was
recently done, labor concerns were paramount in structuring the
deal, using project labor agreements, making sure the unions
were engaged in part of the solution. So P3 does not need to
come into conflict with labor. And, if done right, it will not.
In fact, it will enhance them.
In terms of transparency, again, it is how you write the
contract and the arrangement. And in that case you do need to
ensure that there is sunshine into what the deal terms are. And
again, we use open-book often, which is much more transparent
often than other things. It can be done that way.
But you are right to express concern, because if done
poorly, these are dangerous instruments. If done well, they can
be a surgical tool that can be very useful.
Mrs. Napolitano. Thank you, Mr. Chair. I have another
question, but it will wait.
Mr. Graves of Louisiana. Thank you. We are going to go to
the next Member, but we are actually going to give you five
times more time than anyone on the subcommittee had initially
agreed to, so we are going to go to the gentleman from
Illinois. You are recognized for 5 minutes.
Mr. Davis. Five minutes? Does that mean 25 minutes, Mr.
Chairman?
Mr. Graves of Louisiana. No, because everyone had agreed
you initially were going to get 1 minute.
Mr. Davis. Well, I would ask unanimous consent to take 25.
Mr. Graves of Louisiana. Object.
Mr. Davis. I see no objection.
Mr. Graves of Louisiana. No, seriously, I want to turn to
the gentleman from Illinois----
Mr. Davis. I hear no objections. Thank you, Mr. Chairman.
Mr. Graves of Louisiana. And you are recognized for 5
minutes.
Mr. Davis. Mr. Dalton, I will start with you, since now I
am limited to 5 minutes, instead of 25 minutes.
This is an issue I brought up to many at the table and to
this committee numerous times, the Navigation and Ecosystem
Sustainability Program, NESP. At its confirmation hearing late
last year, President Trump's nominee for ASA [Assistant
Secretary of the Army] for Civil Works, R.D. James, testified
that he would work with Congress to ensure there is a path
forward on NESP.
Mr. Dalton, will you make that same commitment today?
Mr. Dalton. Absolutely I will. In fact, we have been
looking at that and will do what we can to pursue that with the
administration, considering the current BCR [benefit-to-cost
ratio].
Mr. Davis. And I think all of you at the table are well
aware that both the House and the Senate put language in
disagreeing with the need to invest, I would think, $7 million
in 3 years to restudy the economics on this issue. So I would
hope that we can continue to work together to address those
concerns that obviously, in a bipartisan way in the House and
the Senate, we have. So thank you for that.
I got another question, too, on the ongoing problems many
of us on this subcommittee are aware of in regards to section
408. While some on the subcommittee argue that the issues
dealing with section 408 are due to a lack of funding, I would
argue they have to do with an expansion of the Corps' authority
in its implementation of section 408 permissions. And I
appreciate the Corps' recognition of the need to address the
many concerns with section 408. Evidenced in the recent memo
signed by you on January 12th, the memo intends to provide
interim guidance on changes to section 408 implementation while
a final Engineer Circular is completed.
But after reading it, unfortunately the memo does little to
effectively help local flood protection project sponsors who
have been impacted by the Corps' implementation of section 408
in recent years. And in my opinion, it is due to that misguided
perception of authority by the Corps in applying section 408 to
local flood control projects.
In recent years the Corps has sought to change the
decisionmaking role of non-Federal sponsors of local flood
protection projects by requiring them to comply with the
agency's relatively new section 408 process, instead of the
relevant flood control regulations under the Federal flood
control regulations in 33 CFR Sec. 208.10.
Can you explain the reasoning behind the Corps' expansion
of authority under section 408 over the past decade to include
non-Federal sponsors of local flood protection projects?
Mr. Dalton. Thank you, Congressman. First of all, I would
like to say that we are also looking at that authority and if
we have expanded it or what we need to do to try to have a
better process in place.
One of the things that I am trying to do to address all of
the section 408 frustrations is get to those individuals that
have gone through it to see what we can do, first of all, to
improve the process. Recently on a Missouri River levee, there
was a complaint about that. A gentleman said that it has taken
us 6 years and $6 million to get to the same point. And so my
intent there is to conduct an AAR [after action report] with
that individual to find out where we went astray with the
process.
That just addresses the fact that we are looking at the
process to see what can we do to improve the process.
As part of the conversation I had with him was very similar
to what you asked, and that: did the Corps extend section 408
beyond navigation into flood risk, et cetera? I committed to
him as I commit to you that that is what we will take a look
at, just to make sure, and verify that we are within the
authority, but more importantly to try to find ways to
streamline and get to a decision much faster with less cost.
Mr. Davis. Well, thank you, Mr. Dalton. I think all we are
asking for at this subcommittee, it is the same thing I have
talked to General Jackson about and others within the Corps,
and to the ASA nominee, Mr. James: we want consistency. Our
local sponsors need consistency out of the Corps of Engineers
when it comes to section 408 implementation. And retroactively
asking for things to be done when permits had already been
issued, I think, is something that the Corps seriously needs to
take a look at.
Again, I characterize these changes as misguided. And I
would hope that we would continue to be able to work together
to make these changes necessary to have that consistency that I
think we all want on all sides of the aisle. And frankly, I
think it is what the Corps districts want and deserve.
So thank you, Mr. Dalton. Thank you to the panel. And Mr.
Chairman, thank you. I now yield back my 4 seconds.
Mr. Graves of Louisiana. Thank you. We now go to the
gentleman from California, Mr. Garamendi, for 5 minutes.
Mr. Garamendi. Thank you, Mr. Chairman.
First, Mr. Inamine, thank you so very much for the
exceptional work that your team has accomplished on the Sutter
Basin. I see my colleague, Mr. LaMalfa, here. And he and I get
to share this 39-mile section of the Feather River.
I would draw the attention of the committee to the map on
the back of Mr. Inamine's testimony. And if you will notice, 90
percent of this project has been completed without any Federal
money, a project that started in 2014. We have 5 miles
remaining, and we need a new start.
Mr. Dalton, we have talked to you about this. General
Jackson, we have talked to you about it. And I intend to
continue talking about this until we do get a new start, or
maybe we will just get ourselves something called an earmark,
and we can get things done quickly. That would be very
convenient.
I would point out that this project, thus far, 90 percent
of it, 100 percent local funding. This is innovative financing
to the fullest extent. The remaining 5 miles we need a new
start and about 49 million Federal dollars, 25 million local
dollars. So we ought to get this thing finished, because we
have another 22,000 people at risk. And if it is a really big
flood, it may get to 100,000.
Mr. Inamine, thank you so very much for your work on this.
If you had a new start in this fiscal year, when would you be
able to complete this project?
Mr. Inamine. Well, this would be a Corps project. We
believe it could be completed within 2 Federal fiscal years, by
2019.
Mr. Garamendi. One and done. All of it within 5 years?
Mr. Inamine. This--we believe--we are not the experts on
this, but we believe this is a great candidate for a one-and-
done project, yes.
Mr. Garamendi. Great. Thank you very much. I want to now
turn to the disaster supplemental and bring the attention of
the full committee to the disaster supplemental. This is the
third supplemental--this is a $10 billion Corps of Engineers
program in the disaster supplemental. We have just heard what
local people are willing to do, at least in California, and I
suspect in other parts of the Nation.
However, the disaster supplemental has a very special
opportunity for certain parts of the Nation. The bill, as
presented, waives cost-sharing requirements for ongoing Corps
projects, ongoing Corps studies, and new Corps studies, and
ongoing construction projects. That is $10 billion with no
local participation.
We just heard about a local participation in California,
which will be 90 percent local. What does this mean to other
projects around the Nation? I am quite sure that Puerto Rico
probably could not provide any local. But I am quite sure that
Houston, Texas, could. But the bill does not require any local
participation. The question that I am concerned about is what
does this mean for the rest of the Corps projects?
So this is a question to General Jackson. If we appropriate
the $10 billion for the Corps projects in hurricane-impacted
areas, can you explain to me what this impact will have on the
Corps' fiscal 2019 budget?
I think all of us ought to be curious about this. So do you
have any indication what it would mean as you prepare for the
2019 proposal?
General Jackson. Specifically, I would say, Congressman,
that the projects where we are able to align supplemental
dollars against to repair that might be in the fiscal year 2019
budget would therefore not need the funding that was previously
contemplated for them in fiscal year 2019, and we can then use
those funds for other projects that are not designated for
funding in fiscal year 2019.
In my mind, any additional authority or funding that we get
from Congress to address Corps projects just means that we can
then address significantly more projects that are out there
with the extra funding that is provided.
Mr. Garamendi. So you anticipate that this supplemental
additional $10 billion for the Corps of Engineers, there will
be no local participation, funding participation? We will have
no impact on the normal and ongoing Corps of Engineers request
for funding from the Congress?
General Jackson. Congressman, I would say that it wouldn't
have any negative impact whatsoever. All it does is allow us to
address current needs that were impacted by the storm, and then
it allows whatever funding we would get under our budget
authority to be able to apply that against other projects that
didn't qualify for the supplemental appropriation.
Mr. Garamendi. Very good. And may I remind you that we are
looking for a new start to complete a $689 million Corps-
authorized project and get it done within 2 years--5 years,
start to finish? So let me just remind you we are looking for a
new start.
General Jackson. Acknowledge all, sir.
Mr. Garamendi. Thank you. I yield back.
Mr. Graves of Louisiana. Thank you. I go to the gentleman
from Kentucky. Mr. Massie is recognized for 5 minutes.
Mr. Massie. Thank you, Mr. Chairman, and thank you for this
wide array of witnesses that are very relevant to the topic.
I want to thank Ms. Carter from CRS. I think we should have
a witness from CRS at every hearing, because they are a very
reliable and consistent source of information for us. The
people on the dais here change over the years, but the policy
remains consistent a lot of times. And when you try to go and
find out what happened before we got here, the CRS report is a
great resource. They are also a good reminder of what was in
the bills we passed when we were here.
And your testimony actually informs my question, Ms.
Carter. And my question is going to be for the Corps, actually.
In your testimony, Ms. Carter, you point out that we directed
in prior WRDAs that the Corps should revise their section 408
regulations, guidance, and that the existing guidance was set
to expire on September 30, 2017, and that the Corps will have
further regulations published on section 408 soon. When can we
expect the section 408 regulation, the updated versions that
implement the things that were prescribed in WRDA 2016?
Mr. Dalton. Thank you, Congressman. We intend to have that
Engineer Circular published no later than summer of this year.
And I am working to try to get that out sooner.
The memorandum that the chairman referenced was just to lay
out and make sure that we knew what we wanted to include in
that circular. There are a few pieces that we need to pin down,
but the intent is to get it done this year by the summer.
Mr. Massie. Ms. Pilconis, I was fascinated by your
flowchart here. As an engineer myself, I realize these things
can get pretty complicated. But I just want to ask you in
general. How do we simplify this flowchart that you showed us?
Because hopefully, simplification would mean quicker
approvals----
Ms. Pilconis. Yes, absolutely. Thank you for that question.
We offer several recommendations in our written testimony,
but to just cite a few, we are looking for ways to reduce
duplication and overlap without sacrificing environmental
protection. So one of the main things that we think would
really streamline the process would be a nationwide merger of
the NEPA and the section 404 permitting processes, because
those two processes take the longest time and are the most
costliest.
So with a merger of those two processes, when the agency--
so the Corps--is engaged in the NEPA process, they would be
ensuring that the information that is collected--so the
environmental documentation, the studies that are being done,
the analyses, the mitigation that is being decided--that it
will be sufficient to satisfy the permitting requirements, so
that you don't have a lot of what I had said were do-overs with
the interagency consults related to ESA [Endangered Species
Act], coastal zone determinations, historic and cultural
property issues when you go to do the permitting process.
But then, what is very important also is for Congress to
determine what is a material change that warrants relooking at
approved environmental documents, because there are a lot of
reevaluations that are being done for changes that are really
very small and not significant changes to the construction
project. And that causes a lot of duplication.
Mr. Massie. Ms. Jamieson, I appreciate your realistic
appraisal of P3s. They are not a panacea, money doesn't
magically appear just because you have P3 funding. But their
intended purpose, I think, is to align the incentives correctly
and in the right timeframes.
So, I am interested in the fact that in WRRDA 2014 we
prescribed, as Ms. Carter pointed out, 15 pilot projects. And
it doesn't seem like we are getting very far on those pilot
projects. To use a river term, I think we hit a snag.
Again, I want to ask the Corps--either General Jackson or
Mr. Dalton--where are we on those P3 projects? Was there going
to be--I know Congress--I think we are at the point now where
Congress is looking for more guidance. And so where are you in
that process of providing us guidance?
General Jackson. Congressman, I will answer that one. We
have one P3 project. That is Fargo-Moorhead project up in North
Dakota.
Mr. Massie. Is that out of 15?
General Jackson. Pardon me?
Mr. Massie. One out of the fifteen?
General Jackson. It is 1 out of the 15, right.
Mr. Massie. OK.
General Jackson. We have evaluated a number of other
projects. And for whatever reason, we are not able to develop a
project that would meet all the P3 parameters, didn't have the
right funding mechanisms or sponsors that were available to be
able to do a project under a P3 construct.
But Congress also came back to us and said, ``Hey, look,
you need to develop a P3 policy.''
The Fargo-Moorhead project has been approved and funded in
the workplan. We don't really have any policy guidance that the
administration has approved that allows us to really discuss
and frame up how we will actually select and then fund in the
future P3 projects. That is a work in progress, something we
are working with the administration right now, and that is what
is left to be done to move forward on P3s.
Mr. Massie. All right. We will anxiously await that. I
yield back.
Mr. Graves of Louisiana. Thank you. The gentlewoman from
Texas, Ms. Eddie Bernice Johnson, is recognized for 5 minutes.
Ms. Johnson. Thank you, Mr. Chairman. And let me thank the
witnesses for being here, and express my appreciation for the
work that the Corps does do. And I know that the work is
getting further and further behind.
There was a recent U.S. Department of the Treasury
commissioned study that found--and I quote--``a lack of public
funding is, by far, the most common factor hindering the
completion of transportation and water infrastructure projects,
affecting 39 of the 40 projects reviewed.''
In the beginning of 2017, the Harbor Maintenance Trust Fund
had an excess balance of more than $9 billion. I really have a
question as to why you have that much money with such massive
backlog of water projects. Could you give me some explanation
as to why that is?
General Jackson. Yes, Congresswoman. Let me give you a
start. The 2018 President's budget allowed a distribution from
the Harbor Maintenance Trust Fund for the Corps of $965
million, which is the highest distribution that we have ever
had in history.
As you know, the Harbor Maintenance Trust Fund is a
revolving fund. It is managed by the Department of the
Treasury. And the administration allows us to use those funds
to address the maintenance requirements in our harbors across
the Nation.
In fiscal year 2017--just some statistics--receipts went
into the Harbor Maintenance Trust Fund of $1.47 billion based
upon the taxes that were assessed. We had an end-of-the-year
balance in fiscal year 2017 of $9.1 billion. We do have a
significant balance that remains. I think the industry has been
very emphatic that we use all the money that is collected.
I think, from the Corps' perspective, we have requirements
to be met, but there are very difficult parameters that the
administration uses to allow the use of Harbor Maintenance
Trust Funds, and I don't have all the answers for why that is,
and I can't really address what our strategy is to bring that
backlog down.
Ms. Johnson. Is there anyone else with any comment on that?
Mr. Dalton. No, ma'am. What we will do is provide a
explanation back to you with the details of what you are asking
for. But I don't have a complete answer to your question right
now.
Ms. Johnson. OK, thank you. And we have heard a lot about
streamlining the Federal processes and tapping into new and
creative funding streams as a means of funding public
infrastructure projects. I heard the comments about the public-
private partnerships. How realistic does that seem to you in
this area of these types of projects?
General Jackson. Congresswoman, I am optimistic. I think
there is a lot of opportunity for us to take advantage of
different funding sources. I mean this is a math problem. The
bottom line is we have more requirements out there in
infrastructure than the Federal budget can support today. So we
must look at other sources: State, local, private investments.
But there are a lot of things that we have to do to incentivize
folks that want to do that. And the Corps of Engineers, we have
a role in that, and I think one of the things that we are
looking at is trying to streamline the way we can deliver
projects, streamline the way we can partner with others.
And we are working with the administration and the Congress
to develop the incentivisation piece that allows this to be a
good business proposition. Because, at the end of the day, the
projects that the Nation requires must be paid for, they must
be delivered, they don't need to be on the books for decades.
They are not doing anybody any good. And we just can't do that
with the Federal budget today, there are just too many demands
on it. So we have to look outside the Federal appropriation.
Ms. Johnson. Do you have a quick example of which you can
share where you think it would work?
General Jackson. Well, I think there are opportunities for
specific projects around the country where they--we have
sponsors that----
Ms. Johnson. Could you just name one? I mean I--be as
specific as you can.
General Jackson. I will take the Charleston Harbor, for
instance. Charleston Harbor has already--or Jacksonville
Harbor, two harbors on the east coast who have stepped up and
recognized that the Federal appropriation is not going to get
their projects delivered as fast as they would like, and so
they have entered into advanced funds agreement with the Army
Corps of Engineers to put forth funding to accelerate the
completion of their project.
Under the advanced funds agreement, they are eligible for
reimbursement, so the administration will work to do that, and
that is the commitment that the administration makes. But that
is an example of an alternative funding arrangement that has
been executed that today is in the works, and two projects will
get done as a result.
Ms. Johnson. Thank you. My time is up.
Mr. Dalton. Could I just make a comment to that? One of the
things that we are looking at now is to see how we can actually
get some of our projects executed without necessarily requiring
the Corps of Engineers to be the lead on them, or to be the one
that manages the construction or that conducts the studies. We
think that will leverage private industry in a different way
than just private financing. It actually takes advantage of any
difference in execution methods that we may not have
considered. And that is under section 203 and 204.
And, for whatever reason, section 203 is one of those
authorities out there that we hadn't fully implemented, or
really hadn't implemented. We are developing guidance for that
right now, so I don't think we have a lot of projects out
there. But I can tell you that we have identified a project for
section 203, we have several in section 204, and we are looking
at an authority of section 1043, which allows a non-Federal
entity to manage the construction of projects. So that is one
way we think we can leverage private support.
Mr. Ferguson [presiding]. Thank you. Next the gentleman
from Texas, Mr. Farenthold, is recognized for 5 minutes.
Mr. Farenthold. Thank you very much. And, Major General
Jackson, along the Texas coast there are dozens, if not more,
authorized but unfunded Army Corps projects, like reservoirs,
levees, many of which fell within the hurricane disaster area.
Had these projects been fully funded and completed in a timely
manner, would the amount of property damage and possible loss
of life been less?
General Jackson. I think the answer to that, Congressman,
is yes. All these projects are designed, in many cases have
life-health-safety components to them. Without going into very
specifics, I wouldn't know how to actually quantify that per
project. But I think that projects that we recommend to
Congress for an investment decision have all the components
that you just described.
Mr. Farenthold. And how do you think the current backlog of
Corps projects--you know, $96 billion of projects waiting to be
done across the country, I mean, that has got to be stuff you
guys stay awake and worry about and keep you busy.
Is the fact that there is so much stuff undone in the
normal course of business--is that going to interfere with the
disaster recovery efforts and emergency repairs made necessary
not only by Harvey in Texas, but by Irma and Maria in other
parts of the country?
General Jackson. Congressman, the answer to that is no. We
are fully funded under the Stafford Act right now to address
the requirements that we have been asked to perform under
mission assignments from FEMA in Texas, Florida, the U.S.
Virgin Islands, and Puerto Rico. That work will go on, and it
goes on with the support of a multitude of Corps of Engineer
employees from across the country. We leverage our whole
workforce, all----
Mr. Farenthold. All right, but what about availability of
assets to do that, be they Corps assets or, in the case of
reopening waterways, the availability of dredges?
General Jackson. Sir, the industry has been very, very
responsive on the dredging, specifically. When we have had a
natural disaster come up, we have worked with industry using
very nimble contracts to be able to get them into the fight and
get them where the dredging needs to be.
And so, it is just an opportunity to applaud the industry
for their responsiveness, and our ability to work with them and
NOAA and the Coast Guard to put them in the places where they
need to be.
Mr. Farenthold. And so you all make a lot of funding
decisions on what projects to recommend through the OMB and to
Congress for funding. I know there is a traditional cost-
benefit analysis associated with that. How does safety come in?
For instance, I have a project that is very important to
me, the widening and deepening of the Port of Corpus Christi.
It is going to have a huge economic impact on the area that I
grew up in and live in. But it is probably not going to save
anybody's life. Fixing some of the Houston area reservoirs
might actually save lives. How does that factor in you all's
decision for funding?
General Jackson. Congressman, I believe that when we make
project recommendations or budget recommendations to the
administration, it includes due consideration of all the life-
health-safety issues. And certainly, even if a project doesn't
have a benefit-cost ratio that we believe, based on budget
guidance that we receive, makes it a budgetable candidate, we
still recommend these projects, based upon the need of the
people and the location where they are proposed to be built.
So I think we do consider that, we do make those
recommendations as part of our budget submission for the
administration to consider with all other factors.
Mr. Farenthold. And then, General, I have got one more for
you that I am going to also ask a couple other members of the
panel. What effect do you think would repealing the ban on
earmarks--how would it affect the Army Corps' effectiveness and
efficiency and the timely delivery of projects?
General Jackson. Well, Congressman, I think the only thing
that I am qualified to answer is the timely delivery of
projects. So, for instance, if there was an earmark ban lifted
and you made an earmark for one of the particular projects that
you just mentioned and gave me full funding so that I could
finish it, then we would be able to deliver that project, and
it would not necessarily compete, as projects do today, across
the full spectrum of the portfolio that we manage that is
represented in the $96 billion that we reference.
So, in that particular case, you know, for a unique spot on
the globe, that is----
Mr. Farenthold. I am running out of time, and I appreciate
that, but I did want to get Ms. Pilconis and Ms. Jamieson's
answer to that question, as well.
Microphone, please.
Ms. Jamieson. Sorry about that. In terms of--if full
funding were provided earmarks, yes. I mean it certainly--it is
earmarked whether it is spread out over many years or upfront.
But it can be integrated into a P3 through availability
payments and other things. So yes, it could be helpful in
delivery.
Mr. Farenthold. Ms. Pilconis, did you have anything you
wanted to add?
Ms. Pilconis. For our members it is just important to see
the full use of the trust funds being put for their intended
purpose, and that the funds aren't diverted for other uses.
Mr. Farenthold. All right. Thank you very much. I see my
time has expired.
Mr. Ferguson. OK, next we recognize Mr. Lowenthal for 5
minutes.
Dr. Lowenthal. Thank you, Mr. Chair, and I thank you, the
chair also, for holding this hearing. And I think we can all
agree that the Army Corps and Congress should look for better
ways to make sure that needed projects are delivered to our
communities without added delays and without additional
expense, and that we look for ways of creative financing.
But I want to return to one of the focuses of this
committee, and that is on the issue of regulatory streamlining.
And first I would like to ask permission to enter into the
record a recently completed paper by the Center for American
Progress entitled ``The Benefits of NEPA,'' if I may enter that
into the record.
Mr. Ferguson. Without----
Dr. Lowenthal. Thank you----
Mr. Ferguson. Without objection.
Dr. Lowenthal. Thank you, Mr. Chair.
[``The Benefits of NEPA'' report referenced by Congressman
Lowenthal is on pages 186-195.]
Dr. Lowenthal. You know, as we engage in the issue of
regulatory streamlining, we must make sure that these efforts
do not erode the landmark protections and the processes that
ensure that large infrastructure projects are planned and
constructed with care for our environment and protection of our
local communities.
For example, in my district I hear quite frequently how
NEPA and other environmental laws have enabled better
decisionmaking, and how these processes have often saved a
project time or money and have helped to find innovative
solutions to difficult problems.
So, for example, in the Everport project, which is a port
expansion at the Port of Los Angeles, which is just immediately
adjacent to my district, during the NEPA review, the EPA
expressed concerns about the project's air quality and the
human health impacts, particularly on low-income and minority
communities that happened to be immediately surrounding the
port.
In the final EIS, the Army Corps strengthened an air
quality mitigation measure to specify that all the dredging
equipment be electric, a provision that reduced the project's
construction emissions, while still allowing the project to
move forward.
You know, this certainly can't be the only example of how
NEPA has produced a win-win for both the economy and the
environment. So my question is to Ms. Carter, to General
Jackson, or to Mr. Dalton. In your experience, how does the
NEPA process work on the ground? If some critics are to
believe, worthwhile projects are delayed for years by fringe
activists who have no attachment to communities. I would like
to know if that is really true or not.
And I want to follow, especially in the answer from Ms.
Carter, that a recent review by the Congressional Research
Service--this follows up on a question from my colleague from
Texas--that said that you have investigated the cause for delay
of project development, and you found that of the 40 projects
reviewed--or this may have been the Department of the Treasury-
commissioned study, both CRS and the Department of the Treasury
have commissioned a study--that 39 of the 40 projects that were
reviewed, the real delay is funding, not NEPA.
So I would like to ask your--you know, here. What happens
on the ground? Is NEPA a major cause of project delay? And what
are your experiences on the ground with how NEPA actually
works? I would like to hear.
And what recommendations would you make to us about that?
Ms. Carter. Thank you for the question. As you know, CRS
does not take a position or make recommendations. The study
that you identify is the AECOM study, the commission for the
Build America Investment Initiative. It reviewed 40 projects
and identified, through that review, what were some of the
principal elements that were affecting the project being able
to be delivered. And the first one identified was Federal
funding. Consensus was another one. And a fourth one was
regulatory issues. But that is relevant to those 40 projects.
Additional analysis on a broader set of projects was not
available from that study.
Specifically regarding Army Corps of Engineers projects and
NEPA, it is an integrated process that the Corps uses for
developing the feasibility study with the NEPA analysis. So you
can't really parse out how long certain pieces take.
I am not the NEPA expert at CRS. If there are additional
questions specifically regarding NEPA writ large, we can take
those questions for the record. Thank you.
Dr. Lowenthal. Any other comment? I know I just have a
minute, very----
Mr. Dalton. Congressman, I would say that, one, we are not
looking at NEPA as the bad thing causing bad things to happen
to projects. I think what we are all talking about and looking
for when we talk about a regulatory streamlining for looking at
our environmental compliance is with the one Federal decision,
we are just looking to try and have more collaboration, earlier
collaboration, and do everything to identify all the
requirements one time and go down that road once, as opposed to
doing it in phases.
I think we are trying to do that better within the Corps of
Engineers. But certainly there are areas of improvement. But by
no means are we looking to eliminate the departmental
requirements----
Mr. Ferguson. Mr. Dalton, the gentleman's time has expired.
Dr. Lowenthal. Thank you. Thank you, and I yield back.
Mr. Ferguson. Thank you. So next I would like to recognize
the gentleman from Texas, Mr. Weber.
Mr. Weber. Thank you, Mr. Chairman. I want to address some
comments that were made earlier by our friend across the aisle
from California about the recovery of Hurricane Harvey and the
Army Corps funding. I think he said $10 billion. He said there
was no cost share. Well, I wanted to remind everyone that, you
know, there was a lot of lives lost.
Even in Hurricane Ike on the gulf coast of Texas, and we
didn't get hardly any FEMA help then, and it is a huge area. We
have been asking for, as the gentleman here knows, some barrier
protection from the hurricanes. It is not a question of if
Texas gets a hurricane, it is only a matter of when that is
going to be.
So we would like to be proactive and get what is known as
the Ike Dike funded, where we protect lives. There are about
6\1/2\ million people that live on the upper Texas gulf coast.
We produce--estimates vary--from 60 to 80 percent of the
Nation's gasoline, jet fuel. So it is a huge, major economic
driver, and there is a lot of lives, families, homes, and, of
course, industry there, and jobs associated with that.
So, you know, if we can be proactive, we can keep that from
happening again, and that is one of the reasons I am glad we
are having this hearing.
Ms. Pilconis--is that how you say it? I want to come to
you. I am fascinated with your list of 10 items that you say
could make things better. You say in your testimony the 10 main
opportunities for Congress to minimize delays during project
planning. Have you shared this list with anybody prior to
today?
Ms. Pilconis. We have shared these concepts with others,
yes. Not necessarily in that exact form.
Mr. Weber. Going back how far, how long?
Ms. Pilconis. We have been talking about these things for
about a year now.
Mr. Weber. About a year. OK. So you had 10 main
recommendations, if you will. It is almost like this is the
bible, right?
Were there other recommendations that you had that you
could share with us in written form later?
Ms. Pilconis. Yes. And actually, I should add to what I
said. More broadly, AGC has been working on the streamlining
initiative of trying to expedite project delivery for critical
infrastructure projects, dating back to the last three
administrations.
Mr. Weber. OK.
Ms. Pilconis. But this current effort of trying to really
take a close look at the entire environmental approval
process----
Mr. Weber. Sure.
Ms. Pilconis [continuing]. Before you can break ground on a
project.
Mr. Weber. Right.
Ms. Pilconis. And, you know, coming up with a list of those
10 items in that document has been circulated for about the
past year.
Yes, we would be pleased to provide additional information
on it----
Mr. Weber. Well, I am going to get my staff with you to do
that.
I served on the Texas Legislature Environmental Regulation
Committee. And regarding Mr. Lowenthal's comments about NEPA,
we learned that sue-and-settle, what is known as sue-and-
settle, was a detriment to a lot of projects, and it put it
off, and it cost the project more money, and often at the
taxpayer's expense. So we will discuss that.
And number 5 you say establishing and enforcing an interior
deadline for completing the environmental approval process for
critical infrastructure projects. Who decides the criticality
of those projects?
Ms. Pilconis. Well----
Mr. Weber. Have you thought through that?
Ms. Pilconis. Our focus has been, as of late, on what has
been included in a lot of the recent Executive orders.
Mr. Weber. OK. So criticality from the executive----
Ms. Pilconis. So projects that are important to public
health and welfare, safety----
Mr. Weber. Sure.
Ms. Pilconis [continuing]. Providing----
Mr. Weber. That is the component that the general was
talking about.
Ms. Pilconis. Exactly.
Mr. Weber. I got you, OK.
Ms. Pilconis. But also looking at projects that are
restoring and rehabilitating the environment, so----
Mr. Weber. Well, sure, sure. And then, in number 7 you say
establishing more certainty upfront regarding the requirements
for an availability of suitable compensatory mitigation. Could
you elaborate on that?
Ms. Pilconis. Sure. So that has to do with expediting the
permitting process, and how quickly contractors can actually
get their permits. So----
Mr. Weber. Oh, I got you.
Ms. Pilconis. If the contractor is responsible for
securing, say, section 404 permit coverage, and jurisdictional
determinations are uncertain, they are not able to determine
what their mitigation responsibilities are going to be.
Mr. Weber. OK.
Ms. Pilconis. And so this uncertainty is driving up the
cost----
Mr. Weber. I got you.
Ms. Pilconis [continuing]. Really, of their bids. And they
don't know how much they are going to have to pay for
mitigation.
Mr. Weber. So what did you think about Mr. Dalton's comment
earlier about maybe it is a fact that the Army Corps wasn't in
charge of the study, and they didn't have to manage the
project? Would that be an advantage?
Ms. Pilconis. I don't have an----
Mr. Weber. Mr. Dalton, in listening----
Ms. Pilconis. That question--I have to think about that----
Mr. Weber [continuing]. You can go ahead and level with me.
Ms. Pilconis [continuing]. And get back to you.
[Laughter.]
Mr. Weber. OK, OK. And you didn't respond--and I have got
about 30 seconds--or nobody asked you, of course. The Harbor
Maintenance Trust Fund, you did not list that in your 10
suggestions here. So if we got the Harbor Maintenance Trust
Fund to be used for actually what it was designed to be, that
would help?
Ms. Pilconis. Absolutely.
Mr. Weber. OK.
Ms. Pilconis. So yes, we would very much like to see the
Harbor Trust Fund----
Mr. Weber. All right.
Ms. Pilconis. And Inland Waterway Trust Fund, those funds
used for their intended purpose, not diverted----
Mr. Weber. One last question. We have got Sabine-Neches
Waterway in our district. It is the second largest waterway in
the country--only to the Mississippi River--and it exports 95
percent of the LNG. It is responsible for sending it out across
the country, so a huge economic benefit. We would like to see
these projects done a lot quicker, a lot more quickly, somebody
making decisions as to what that takes.
Representing business contractors, would you agree that any
time all of these delays and all this uncertainty is inherently
in a project, that it drives the cost up?
Ms. Pilconis. Oh, absolutely. That is one of our main
fundamental points----
Mr. Weber. OK. Well----
Ms. Pilconis [continuing]. That uncertainty is driving up
the price of the bids, and the delay in getting the project
done is also driving up the cost.
Mr. Weber. Well, we have had that project authorized, we
would love to get the Sabine-Neches Waterway dredged. And it is
a huge economic benefit, and it would help, you know, get some
of the water out of the system when we have another hurricane.
Mr. Chairman, I appreciate your indulgence, I yield back.
Mr. Ferguson. Thank you. Next we recognize the gentlelady
from Illinois, Mrs. Bustos.
Mrs. Bustos. Thank you, Mr. Chairman. And I want to thank
our witnesses for being here today.
General Jackson and Mr. Dalton, I especially want to thank
you and your staff for your commitment to everything you are
focusing on that is so beneficial to our locks and dams.
And I know--we have talked about this before, but my
congressional district, the entire western border of my
district, is the Mississippi River. And the Illinois River runs
to the southern part of my congressional district. So this is
an issue that is extremely important. And people from across my
district would line up to tell you something that you already
know, the usefulness, the lifetime design life has outlived
itself. It is at risk of failure at this point.
And just as an example, lock and dam 15 on the Mississippi
River on Rock Island--I see the Mississippi River every day I
wake up when I am at home, because that is my frontyard. But as
you know, it was completed in 1934, it is one of the oldest
parts of the Upper Mississippi navigation system. And this
summer the Corps began emergency maintenance because the
concrete guide wall was literally falling into the river.
And so, this fix-as-fail approach to the locks and dams
have put our growers, our manufacturers, and the navigation
industry in a guessing game as to whether they will be able to
deliver their goods to consumers on time. And so I know we have
to do better than that.
Before I get into my question, I also want to--I know
Congressman Davis--who I don't see here right now--I know he
addressed NESP earlier, and I want to thank you for your
commitment to working with us on that. Congressman Davis and I
have worked together in a bipartisan way to make sure that we
are focusing on that, as well.
So my first question is to General Jackson, also to Mr.
Dalton. As we just talked about lock and dam 15, we have a lot
of locks and dams that are at risk of literally crumbling into
our waterways. A recent study found that an unscheduled closure
of one lock and dam on the Illinois River would immediately
affect commerce in 18 States and cost the shipping public
nearly $1.7 billion annually in additional transportation
costs.
So my question is do you believe the current process--that
the Corps adequately accounts for the risks of failure on
inland waterways? And part two of that is how does that factor
in the cost-benefit calculation? And that might also--Ms.
Carter might be able to answer that, as well.
Mr. Dalton. Yes. Congresswoman, the answer to that
question, I believe, is that we look at each one of the
projects that we have and do an assessment of risk associated
with that project. And we have combined all of that into what
we call our asset management approach or process.
We do our best to identify where we think we need to invest
to avoid those failures. We look at components now of locks and
dams, rather than just say we need to go out and fix an entire
lock and dam. We look at what components we think would affect
the performance of that lock and dam. And that is where we try
to make the investments.
That is not necessarily to say that we get them all
covered, because there is, of course, the limit on funding. But
that is our approach, to try and make sure that we address
those worst kind of conditions first.
Mrs. Bustos. Ms. Carter, if you have anything to add to
that.
Ms. Carter. So, regarding construction of inland waterways,
just with other navigation as well, the main factor that is
considered is transportation cost savings. So that is usually
the main economic driver of whether something is calculated as
an economic benefit. And that is something that was originally
established by Congress, to say that it is transportation
savings.
Regarding long-term operation and maintenance, the
administration has been using ton-miles, as well as criticality
of sites or safety, and closure. So those are the budget
metrics that are used.
Mrs. Bustos. OK. General, anything else to add to what was
already spoken?
General Jackson. Nothing of significance to add,
Congresswoman, other than to say that this is something that we
look at very closely.
We also work very closely with industry. Marty Hettel,
sitting behind me, with the Inland Waterways Users Board, and
Mike Toohey from Waterways Council, Inc., and a lot of others
are working with us to help us really understand the
significance of the impact of the degradation of these locks
and dams to industry in general. So we feel pretty well
informed that we know.
As we continue to champion these projects for funding and
for future repair, rehabilitation, or replacement altogether,
we feel very well informed on what the impact to industry is,
and the associated economics.
Mrs. Bustos. Thank you, General. All right, thank you. My
time has expired, and with that, I yield back. Thank you.
Mr. Ferguson. I will now recognize myself for 5 minutes.
First I want to start by thanking Chairman Graves for
hosting this meeting and thank all of you for your time today
and your expertise.
One of the things that I have--my experience at the local
level as a mayor, really got me involved with water issues. One
of the major rivers in the State of Georgia flows through my
district. That is the Chattahoochee River. And that is
important for the State of Georgia. But there are several
important Corps projects that are along that waterway, as well.
One of the most important projects, though, that affects
the western side of the State of Georgia, where I am, is
actually on the eastern side of the State, and that is the
Savannah Harbor deepening project. And we know firsthand how
important that project is. And you may say, well, why is a
project on the coast of Georgia so important to the opposite
side of the State, and it has everything to do with economic
development, and making sure that we have a tremendous economic
opportunity, not only for Georgia and the Southeast, but the
entire Nation.
So, understanding that deepening the Savannah Harbor from
42 feet to 47 feet to be able to accommodate the larger ships
for more efficient transport is really, really important, not
only to the State of Georgia, but also to the entire Nation.
Currently, this has an extraordinary cost-to-benefit ratio
of 7.3 to 1. And when it is completed, it will generate an
annual economic benefit to the Nation of more than $282 million
a year of ongoing economic success and impact on the Nation.
The current project is only about 35 percent complete. And I
know that it is vitally important that we go ahead and complete
this project, and that we want to see the recurring $282
million a year of economic impact, job creation, and, quite
candidly, the most efficient way to move product into the
Southeast and through the city of Atlanta into the Midwest. And
I know that we are going to continue to work diligently on that
to make sure that that funding is in place.
I do have a couple of questions after that statement. And,
Ms. Jamieson, I was very curious and really want to know a
little bit more about the performance-based delivery system
that you talked about. Instead of being bogged down in the
prescriptive regulation process, can you talk a little bit more
about that and the benefits that that would have?
Ms. Jamieson. Yes. The idea is to realign incentives. The
traditional way that we deliver infrastructure is a pay-go
basis, where we pay as we go, and we hope against all hope that
the project will eventually be finished, which is what has led
to a lot of our cost overruns and a lot of our efficiencies.
The cost of mobilizing and demobilizing equipment, the cost
of maintaining insurance, that is what starts to escalate the
cost of these projects above and beyond.
So when we refer to performance-based infrastructure, there
is a whole series of different models out there. There is no
one-size-fits-all, which is why you need to be very careful in
how you craft this. But as an example, if you can allow a
contractor to come in, design, build, finance, just say that,
they come in with all of the capital upfront.
You don't begin to pay them until they have completed the
Savannah Harbor, or they have completed the project that you
are after. Then the taxpayer starts to pay as the benefits are
being--accruing back to the taxpayer. It realigns their
incentives. They don't get paid until they finish, so they act
differently, very differently. They are very aggressive in
getting through some of the regulatory structures.
Now, those also need to be addressed. It is not one or the
other. You also need to address regulation in line with this.
But that is really the premise of it. When you add in operation
and maintenance, you also tend to incentivize to build things
to last. We have seen this in a number of projects with
bridges, where you have two bridges side by side, one done
through incentivize-based performance contract and the other
not, and they use new paints that are regenerative, so they can
lower the maintenance cost over time.
But we lock in, when we are engaging in the infrastructure,
the lifetime asset management. And that is really important.
But it is used very commonly. It is not a new thing, it is just
the Federal Government has been prohibited from using it, which
is trying to address our infrastructure crisis with one arm
tied behind our back. It makes no sense, from a practical
sense, not to allow it. But then you have to be very--you have
to use discretion and be careful when you actually implement
it.
Mr. Ferguson. Thank you. We are just about out of time, and
I will yield and now call on the gentleman from California, Mr.
Huffman, for 5 minutes.
Mr. Huffman. Thank you, Mr. Chairman.
General Jackson, it is good to see you. And I appreciated
the testimony earlier about the efforts to move some projects
along. We all want to see critical water infrastructure funded
and permitted efficiently. But I want to ask you about some
things that this committee and this Congress have done in
recent years toward that end, and see if you can give me an
update.
I know in section 1046 of WRRDA 2014 we directed the Corps
to assess management practices, priorities, and authorize
purposes of Corps reservoirs in arid regions. As of May 2016, I
know the Corps hadn't still moved forward, hadn't yet moved
forward on that assessment. Is there any update on that
assessment today?
General Jackson. Congressman, I think we are still working
on that. Let me get back to you with some more detailed
information.
Mr. Huffman. All right. And if appropriated funds is still
the holdup, I hope you will let us know that, as well.
I know section 1117 of WRDA 2016 also directed the Corps to
work with States with drought emergencies to update water
control manuals for Corps reservoirs. This is moving toward
what many of us want to see forecast-informed reservoir
operations incorporating satellite technology and modern
science into these age-old manuals that have dictated how Corps
dams are operated in the arid West, because we can do a lot
better stretching our water supplies and providing flood
control.
The GAO issued a report in July 2016 recommending that the
Corps needed to address its inconsistent method for reviewing
these control manuals. So you have got an act of Congress, you
have got a GAO recommendation. Have we seen any action from the
Corps since these developments on updating these old manuals?
General Jackson. Sir, for section 1117 for drought
emergencies, was that the implementation for 2016? I want to
make sure I got that right.
Mr. Huffman. To update the operating manuals, yes, the
water----
General Jackson. Right, yes, sir. We issued our
implementation guidance for that back in July. We are working
across the Corps to identify which of the operation manuals are
the oldest or in most critical need of being updated.
All the technologies that you have talked about, the new
ways of looking at water management, whether it is forecast-
informed reservoir operations or the like, I know those new
technologies and new ways of thinking about operating projects
are being incorporated into our updated operations manuals.
Let me let Mr. Dalton, who was our previous engineering and
construction chief and was very much involved in that, talk
just a little bit about that, if I can.
Mr. Dalton. Thank you. We have two efforts ongoing to
incorporate that new technology into our operating manuals. The
first is the forecast-informed reservoir operations that you
mentioned, FIRO. We look at that more as an R&D effort. And
that takes longer because that mostly is looking at the rivers
coming out of the Pineapple Express or atmospheric rivers in
California.
But where we are actually making more progress is on what I
call forecast-based operations manuals, and that is actually
taking the data that we have today of 5-day forecasts, and
using that to incorporate into our manuals. And we look at that
if we do it today, then we look at it tomorrow, we go back and
look at what the accuracy of that fifth day--now we are at the
fourth day. So it is kind of a constant thing to take a look at
and adjust, but we are incorporating that into our manual
updates.
Mr. Huffman. So we are seeing new updates that reflect that
forecast data?
Mr. Dalton. The one that I know of for certain is out at
the Folsom project, and we were trying to make sure that we all
understood that well enough before incorporating that into
other manuals.
Mr. Huffman. Will you prioritize O&M funds to make sure
that this actually gets completed?
Mr. Dalton. Without a doubt as funding is available, we
have a list of the reservoir or the operations manual that we
would need to update. And so we will prioritize that, along
with the other requirements--
Mr. Huffman. OK, thank you. I know I am running out of time
and I had a bunch more questions for you.
But Ms. Jamieson, your testimony really caught my eye when
you said that attempts by Congress to push P3s and even P4s,
which I am very interested in, were sort of a legislative head
fake because they didn't provide the full authorization and
make it happen. Can you explain a little more what you mean by
that?
Ms. Jamieson. Yes, I can. And yes, that is a technical
term, ``legislative head fake.''
So in my written testimony I go into great detail, but in
order to be able to--for a Federal agency to be able to engage
in a P3, there are two categories. We have fully Federal
projects and we have our cost-shared project. Let's talk about
fully Federal.
They need one of two things. They need the ability to enter
into long-term performance-based contracts. That would be
multiyear appropriations for a project to pay it back after it
is complete. The primary restriction on that is really more on
budget scoring, which is archaic, by accounting standards. And
we recommend some solutions to that.
But likewise, for the ability to leverage the trust funds,
to raise revenues and then to reinvest them into the same
project. Right now all the money goes back to Treasury.
Consequently, they are stuck with only budget-based payments,
which then they fall into the black hole of OMB scoring. So
right now they are effectively prohibited on every level from
doing it.
There are also a couple of other tweaks that I will talk
about--well, I won't talk about. So I will cede, thank you.
Mr. Graves of Louisiana [presiding]. Thank you. Next we
have the gentleman from California, Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman, I appreciate it. And
thank you, panelists, for your time and travel.
Mr. Inamine--I just pretend that is an Italian name. It
gets a lot easier, as I am Italian. But, hey, thanks for being
here, too.
Again, great work has been done along the Feather River
there. Butte County, my home county, as well as the Yuba, I
used to represent in the State legislature. And my colleague,
Mr. Garamendi, does now in the House, as--so it has been a good
partnership to see to this getting done. We had great success.
So--and I think this is really a great example for Mr. Dalton
and General Jackson also, as we are talking about these
partnerships and these new ways of doing things, that we are
already seeing that happening in the way that the Sutter Butte
Flood Control Agency has really taken the bull by the horns
with getting so much of this done just since 2014, and in a way
that was self-funded for a lot of it.
So now we are down to the last bits, you know, waiting for
the Army Corps. So, Mr. Inamine, we are talking about a project
split into two different sections, 36 miles of a non-Federal
piece, and now we are down to the last bit, the 5-mile Federal
piece. How long did it take, really, to get the 36 miles done
that----
Mr. Inamine. We started construction in August of 2013.
Mr. LaMalfa. August 2013. So here we are, OK. And then,
again, how long has been the approval process for getting the 5
miles, the very last bit of this project, done?
Mr. Inamine. Well, right now it is--there is really no
``approvals.'' We just need the new-start designation.
Mr. LaMalfa. I will let--Mr. Garamendi, we need the new
start, OK? So we got a bipartisan--opposite ends of the room
here asking for that, as well.
So, as was mentioned earlier, the project was authorized by
the Federal Government for $689 million back in the day, and
the Federal Government portion of that would be the 65 percent?
Mr. Inamine. Yes.
Mr. LaMalfa. And so the Federal Government, for this first
36 miles has paid how much?
Mr. Inamine. That would be zero.
Mr. LaMalfa. Zero. And so now, for the last 5-mile portion
of it, for a total price of $74 million, $25 million will come
from locally, the Federal Government will get, instead of 65
percent of $689 million, they will get off for $49 million to
do this project, to finish the whole 41 miles.
Mr. Inamine. Correct.
Mr. LaMalfa. So that is a tiny percentage. I think the
number was used--12 percent instead of 65 percent because of
the innovation, because of the ability for Sutter Butte Flood
Control Agency and the Federal Government, to that extent, to
be able to partner on this thing. So this looks like the type
of ground-breaking modernization of the process that we are all
looking for and talking about.
So I think, again, if we are looking for new examples of
doing things, and the idea of what will be coming up in the new
WRDA--let me jump over to Mr. Dalton for a moment.
You talked about earlier the section 408 guidance that
might be ready by mid-2018. And that is good, we appreciate
your effort on this streamlining, on making this process work a
little bit better.
Are we talking also in that, in combining that perhaps with
a streamlined NEPA and section 404, as well as the section 408
guidance that--we are talking about an existing levee, an
existing project that isn't being changed in much of a way,
other than just being upgraded, just being rebuilt, just
being--you know, having the slurry wall put in. Isn't there an
argument to say that this would be a much more streamlined
process? Again, you are not building a new structure, you are
not adding to the height of it. Is that part of the thinking on
that?
Mr. Dalton. Congressman, it absolutely is part of that. In
fact, some of the things that are not necessarily identified
that we are looking at is for routine O&M, you don't need a
section 408 permission for that.
What you talked about is if the footprint doesn't change,
we are going in and we are putting in a slurry wall, certainly
that is something we can look at a lot faster to come to a
decision than what we have done in the past.
The other thing we are looking at is taking advantage of
other NEPA or requirements that have been done, say for a
section 404 permit, so that we can take that information and
use that for the section 408. So we are looking at as much as
we can to try and trim down that process.
Mr. LaMalfa. Right. I appreciate your good effort on that,
Mr. Dalton. And as we push forward this year, hopefully in this
year's WRDA, we can get the pilot program. And I know that is
something you have been driving for. So we appreciate that.
And also some things Ms. Pilconis was talking about too,
with the NEPA and the section 404 merger, these are things we
need to get done because I know, where I come from--I live in
the--at the edge of the inundation zone, where that issue with
Lake Oroville and the impending possible failure of the
emergency spillway, and so not just for me and my family, but,
more importantly, the 188,000 people that were evacuated in
that whole zone, and the levee system that still isn't complete
at the south end, you know, they want this, they need it, they
pay for it, and we need to have a process where we don't have
to study the same bug and the same shrub over and over again
with the NEPA and a section 404 and ta da ta da and ta dee ta
dee. Let's just get it done, because we are wasting the
people's money and endangering them.
So, Mr. Chairman, I thank you for the time.
Mr. Graves of Louisiana. Thank you. Next we have the
gentlewoman, Mrs. Lawrence, for 5 minutes.
Mrs. Lawrence. Thank you. To the panel, in September 2016
the U.S. Government Accountability Office released a study on
water infrastructure for selected mid-size and large cities
with declining population, cities that have the exact same
makeup as the city of Flint, Michigan, which you know is a
poster child for the lack of investment in water
infrastructure.
It is alarming what the GAO found. Many mid-size and large
cities throughout the United States, including the Midwest and
the State of Michigan have lost a substantial percentage of
their population. The loss in population results in declining
revenues to address infrastructure needs.
The cities are facing numerous infrastructure barriers. I
would like to ask Mr. Dalton and then Ms. Pilconis. Can you
comment on what extent do you believe regulations are the
reasons we have a crisis in our water infrastructure system?
Mr. Dalton first.
Mr. Dalton. Congresswoman, I am not real sure I understand
the question.
Mrs. Lawrence. My question is that we have repeatedly
addressed that regulations is one of the challenges we have in
investing in our infrastructure. I want you to articulate----
Mr. Dalton. Yes.
Mrs. Lawrence [continuing]. When we look at these mid-size
cities, and we are looking at the current crisis we have, what
part of that do you believe is on the back of regulations that
we have when it comes to investing in our water infrastructure?
Mr. Dalton. One of those things that we need to take a look
at with regard to our regulations is that the way we actually
justify projects has an impact on how we invest in
infrastructure.
One of the things that I said we wanted to look at is how
do we expand and consider the total value of a project? And
what I mean by that, for instance, related to your question, is
that if a community out there has a master plan, and we look at
that and we say this is a regional benefit, not a national
benefit, I think what we are saying there is that it is
national because if people don't have a job locally or
regionally, they will move to another location.
But I think what that is doing to us is kind of choking out
small and midtown or mid-city areas, because what happens is,
when people leave small town U.S.A. or midtown U.S.A. and go to
large cities, that creates other problems that we have that we
are not really accounting for. I mean you go to a bigger city,
you get bigger traffic problems. You go to a bigger city, you
get more unemployment, et cetera.
One of the things that we are looking at now that I think
will help us, is how do we account for the value that we lose
or that we gain by trying to help those smaller communities,
rather than just looking at the larger communities?
Ms. Pilconis. Even if a project is fully funded, it cannot
move forward unless it has all of the necessary environmental
approvals. So if you look at the American Recovery and
Reinvestment Act, effectively all of those projects were even
exempt from NEPA through categorical exclusions. And still,
none of those funded projects were shovel-ready, because they
still needed to go through a whole host of environmental
approvals.
And so, a funded project could take a decade or more to
break ground because of the regulations and the environmental
approval process. And even another important consideration is
even after that project breaks ground, it is subject to being
stopped throughout the cycle because of reevaluations, or
because of citizen suits being brought, because of the very
long statute of limitations. Like, for example, with--WRDA
projects can go on for 3 years.
Mrs. Lawrence. So my question is--no one has brought this
up--we continuously talk about regulations. No one has talked
about staffing. So when you say the amount of time it takes to
get environmental approval on a project, no one has addressed
staffing. And I know that there has been a concerted effort to
defund these departments that would handle that.
So I would like a truthful statement. Is part of the
problem with the regulations the lack of staffing to perform
the required analysis?
Mr. Dalton. The answer to that question, I believe, is
absolutely it does impact our ability to process and execute
the permit actions or the environmental actions. In fact, what
we said earlier is that if you shut down one organization, pick
one up, or reduce it, the organization such as EPA or others,
then that is going to affect our ability to actually work with
that organization to try and have a timely approval of a permit
action. So it does affect.
Mrs. Lawrence. As I wrap up I just want to be real clear. I
understand the impact regulations has, but I am a very firm
believer in that, to do it right, it is worth the checks and
balances. But if you defund and don't have the staffing to do
it, and we don't update as we move through with technology,
then the onus is on us to ensure we are staffed, that we are
efficient, we are utilizing technology. And P3s are very
important. The water infrastructure is critical, as we look at
our transportation bill to move forward.
Thank you, I yield back.
Mr. Graves of Louisiana. Thank you very much. I yield to
myself. We have heard many Members talk about different
parochial project priorities and talk about different steps in
the process that perhaps add time or other types of delays and
expense. I am not sure that we have necessarily fully pivoted
to what I hope we can talk about to some degree, and that is
what does an efficient process look like?
Ms. Jamieson, you talked a little bit about incentivizing
the right type of behavior. I couldn't agree with you more. I
think the current process--as you very well-articulated in your
testimony, it actually incentivizes inefficiency. And I think
it is an incredibly flawed process. But I do want to make note
even the Corps of Engineers, under their own devices, have
operated in a much more efficient posture than they do in their
regular construction general program. And I will give a couple
of examples.
Number one is looking at timelines and dollars associated
with some of their overseas projects, associated with perhaps
rebuilding and other Civil Works efforts in Afghanistan and
Iraq and in other countries.
Secondly--and I know that Mr. Garamendi made comment
earlier on the hurricane disaster funding through the Corps of
Engineers for the aftermath of Hurricane Harvey--but after
Hurricane Katrina, where, literally, projects weren't even
conceived, weren't even authorized, but you were given an
objective and given full funding.
General, Mr. Dalton, could you comment on what you view as
comparing and contrasting your existing CG authority, as
compared to some of these alternative means of implementation
or project delivery that you, your own organization, has
carried out?
General Jackson. Mr. Chairman, I will take the first swing
at that, and then I will pass it to Mr. Dalton, who will
probably give a much more eloquent response.
All of the examples that you cited all gave us upfront
funding. I have been part of the work that we have done in Iraq
and Afghanistan. I had all the money that I needed. I had all
the permissions and approvals that I needed. All I had to do
was to execute the work. So if we had projects that we didn't
deliver, that was on the Corps of Engineers, and that was in
areas that we internally could look at how we awarded contracts
and how we administered those and how we managed quality
assurance, and the like.
As I mentioned in my opening statement, with the
construction account that we have now, $96 million in
requirements, we get funded 1 year at a time. We don't have the
ability to forecast out to know how much we are going to get
over any period of time. It makes it very difficult in a
construction program that spans multiple years to be able to
award contracts in an efficient manner that allows us to get
the work done as efficiently as we possibly can at the least
cost that we possibly can, because we can award a contract for
the full duration of all the work that needs to be done, and we
don't play multiple years of mobilization and demobilization
costs, as we build projects in increments over the period of
time that it takes to build a project. So that is, to me, the
biggest change and the biggest difference.
In New Orleans, we did our NEPA process in parallel with
the construction. We didn't have to do it sequentially, so we
were given the ability to deliver the projects much quicker,
because we did all these things as part of a much more
holistic, comprehensive schedule. And that allowed us to
deliver much, much more quickly than the process that we go
through for a normal project, where we have to ask year after
year for enough money to do the study this year, the next year,
then the following year, then--to get all the new start and the
construction authorization that are needed to deliver a
project.
James, over to you----
Mr. Graves of Louisiana. Before we go to Mr. Dalton,
General, just real quick, you did mention the environmental
that was done in a parallel process, or largely after the fact.
Do you recall, or are you aware of any opposition or litigation
that has been filed by environmental groups or others as a
result of that alternative NEPA compliance process?
General Jackson. Mr. Chairman, I am personally not aware
that there was significant opposition, or that there has been
any significant litigation. I may be wrong, but that is just my
personal----
Mr. Graves of Louisiana. Well, I got to--I don't, either.
And I am not going to sit and defend the current NEPA process,
but I do want to make note that I am not aware of any
environmental groups, of any activist groups, or anyone who
came out and said that this is inappropriate, that it is not
properly quantifying impacts.
I will say that I don't like that the way that the Corps
ultimately quantified the environmental impacts--I think that
you undershot what the true wetlands impacts were, and I have
been very clear on that. But that is not a result of the
alternative arrangements, it is a result of the way that you
quantified the process using the WVA versus the modified
Charleston that you later implemented. So a whole other
discussion.
But, Mr. Dalton, quickly.
Mr. Dalton. Yes, Mr. Chairman, I don't have a lot more to
add to what General Jackson said, because I do think the
funding is the key.
I think the other thing that happens in a situation like
that is both the contractor and the Government understand and
can see the risk out in front of them and they can manage those
risks because we have upfront funding. When we don't have that
upfront funding, then contractors add in the risk of if I have
to shut down or if you slow me down, et cetera, and then the
costs of materials and goods go up. So all of that plays into
it.
I think the other thing is everybody has an attitude in
something like post-Katrina that we have got to get it done. I
mean there is a single focus, let's go out, let's get it done.
And so risk, something I talked about earlier, I think it is
something that everybody recognizes and is willing to take more
of to get to that end state.
Mr. Graves of Louisiana. Thank you, Mr. Dalton. I am going
to turn to Ms. Esty.
I recognize you for 5 minutes.
Ms. Esty. Thank you, Mr. Chairman, and I want to thank our
witnesses for enduring with us through a long, but very
important hearing.
In addition to being vice ranking member of this committee,
I am also part of a bipartisan working group, including a
number of members of this committee. And we just released a
report last week on rebuilding America's infrastructure. And we
focused on both ports and inland waterways, as well as on water
infrastructure. And it is, in part, through that lens of 4
months of pretty intense work, including some of the
organizations represented at the table and others. And we came
to a number of conclusions.
One, there needs to be real funding, and it needs to be
sustainable. All of you have talked about how the shortfall in
funding has delayed projects, and that ends up costing the
taxpayers more. And in some cases, delayed funding and failure
to invest actually is harming lives, as it was in Flint. So we
have a collective need to do that.
One is streamlining and, in part, what Chairman Graves was
talking about right now, that if we can more effectively
deliver results for the American people, that will save money
and allow us to get more projects done, get them done faster.
Another is innovation.
And another is on the use of funds for which they are
dedicated. And of that I am speaking in specific of the Harbor
Maintenance Trust Fund, which is supposed to be a dedicated
user fee and is not being used to dredge our ports or our
inland waterways. Money is sitting in that account and being
used for other purposes or not being used at all. And that is
harming our economy, and it is actually, I would argue,
endangering our national security by forcing more cross-border
traffic, particularly with Mexico, that can be a conduit for
drugs, guns, and other illegal activity. That is not good for
us. And when we make a commitment we need to be accountable and
transparent about how those funds are spent.
So, on the innovation front, I would like you to think
about it and I will follow up and make sure you have got copies
of this report. One of the things we are calling for is the
creation of an ARPA-H2O [Advanced Research Projects Agency-
Water], to have an advanced research agency within the Federal
Government to assist localities such as Flint, trying to figure
out how are they going to repair and upgrade their water
systems and keep them safe. We now believe that water--we know
that water, traditionally drinking water and wastewater, is a
local responsibility, funded in part through the State
revolving funds.
But we need to empower and support our local governments in
making smart decisions, cost-effective decisions, and, frankly,
relining of pipes from the inside. Perhaps shrinking the size
so that you can get waterflow could be one of those things. So
I would welcome your thoughts and input on supporting that
proposal, which we think could be cost-effective and an
appropriate role for the Federal Government to take on that
research responsibility, which no locality can or should have
those water experts doing that.
I would like to follow up a little bit on the--and real
funding, I think we can get agreement about the importance of
real funding. And that has to happen, because the shortfall, as
estimated by the American Society of Civil Engineers, is to be
$126 billion by 2020. And even by Washington terms, that is
real money. So we need to get collective responsibility here to
do that.
I would like to turn with my remaining time to P3s. We
expect the White House to be focusing on this as part of its
proposal. I have met several times with the White House, and
trying to figure out what is an appropriate role for P3s,
number one, in the water realm, particularly for Federal
projects, existing Federal projects as well as new, and what
are things that would need to change in terms of congressional
authority.
And, Ms. Jamieson, I know you have written on this and
studied this, so I would like to ask you to flag where is it
appropriate and not--and what would we need to do differently
because, frankly, we are going to need more money than we are
going to get directly funded out of this place. And there are
local partners and outside groups that need to be at the table,
but we understand there need to be things that change. So thank
you.
Ms. Jamieson. So it is a tough question to answer in 40
seconds, but I am going to try. So let me start with what you
didn't ask, and that is about the non-Federal infrastructure.
And I would like to point out--and there has been some
comments about poor and rural communities--if P3 is to be
pursued, you also need to enable those poor and rural
communities to leverage the benefits of it. That means we have
to create some mechanisms like viability gap funding and other
things that will help them make economically advantageous
projects financially viable from this point of view. And so,
there are tools, and I have mentioned a number of them in my
writings to you.
From the Federal side, we have identified--many people have
identified the constraints against using P3 for federally owned
and operated infrastructure. Primarily it goes back to revenue.
You need a source of repayment. So if we are going to the
Treasury, then we need the authority to allow the Corps to make
long-term budget commitments and have that not scored in a
prejudicial manner, or we need the ability for the Corps to
assess fees, collect them, and rededicate them back into the
project purposes, as you have rightly pointed out, which is the
whole purpose of our trust funds. But they need that
flexibility to be able to do it.
Additionally, they need long-term contract authority. Many
things you have already given to military and to others for
military housing, for energy savings, performance contracts,
Congress has done this before. I would submit that water
resources deserve the same consideration.
Ms. Esty. I see I am out of time, but I think you have a
lot of interest on this committee in pursuing those kinds of
innovations that will allow more money and better
decisionmaking. Thank you.
Mr. Graves of Louisiana. Thank you.
Mr. LaMalfa?
Mr. LaMalfa. Thank you again, Mr. Chairman.
Ms. Pilconis, on the--on your top 10 here that, you know,
Mr. Weber had alluded to also, a lot of, I think, really wise
thinking on here as far as you--you mentioned merging the
section 404 and the NEPA process, concurrent use of the process
of section 408 and section 404 permits, giving the Corps
greater authority to run the section 404.
Could you elaborate just a little bit on how these can be
accomplished with really no detriment to the environmental
questions that are being asked and, indeed, how the duplicative
process for several agencies or several processes are just
harmful to the cost and do cause delay?
Ms. Pilconis. OK, sure. So with regard to duplication, when
the Corps is issuing its section 404 permit, or when it is
undergoing the section 408 authorization, it is required to
assess impacts to endangered and threatened species, and
potentially undergo a section 7 consultation, look at coastal
zone impacts, look at impacts to historic and cultural
resources. So that is also being assessed during the NEPA
process.
So potentially, you could be doing that three times, if you
are doing it in NEPA, doing it in section 404, doing it in
section 408. We are not suggesting that you are cutting back on
your environmental assessment, nor are we saying that any of
the environmental agencies should be cutting back on meeting
their statutory obligations.
What we are suggesting with our top 10 is that there be a
little bit more work put in upfront in realigning the way that
the agencies are coming together, the way that they are
engaging, the way that they are coordinating in a more
productive and cooperative manner, so that during the initial
NEPA process, the information is being collected that will
satisfy section 404, that will satisfy section 408.
There was another top 10 that you asked me to touch on,
and, I am sorry, I forget.
Oh, with regard to EPA. So with the section 404 process, it
is really jointly administered in many respects between the
Corps and EPA, where EPA has authority over jurisdiction,
jurisdictional determinations. EPA has authority to veto a
permit decision, even after the fact. EPA has the authority to
elevate disputes when the Corps is making decisions on whether
or not the section 404(b)(1) guidelines have been met. And so
this really does and can slow down the process.
And so we ask that----
Mr. LaMalfa. So we really need one-stop shopping, and we
should be able to entrust Army Corps to do that.
Ms. Pilconis. Correct, thank you.
Mr. LaMalfa. Yes.
Ms. Pilconis. You just succinctly put together what I was--
--
Mr. LaMalfa. Well, thank you. I----
Ms. Pilconis. My mind----
Mr. LaMalfa. I got to have succinct around here. So thank
you.
Mr. Inamine, elaborate a little bit on how--on that portion
next to Yuba City, where a previously repaired levee some years
ago used a different process and different--it wasn't a SBFCA
piece. How were you able to get to that 5-week section 408
process?
I mean, obviously, the urgency was there because it was
right next to the city, and you had the--how were you able to
move that to a 5-week, instead of a--such a long, drawn-out
process?
Mr. Inamine. Well, as I said in my prepared testimony the
three reasons. But--including the recent guidance from the
Corps of Engineers to delegate all of these processes to
division and district. Normally, these kinds of projects go up
and down with headquarters, and you get in this endless loop
that just takes forever.
In addition, you know----
Mr. LaMalfa. So maybe we entrust the district, where the
knowledge is, and the----
Mr. Inamine. Absolutely.
Mr. LaMalfa. Yes, OK.
Mr. Inamine. But, you know, like most of these projects--
and I concur with Ms. Pilconis's comment about some of the
redundant permitting that is often done. We have some projects
where we are going through two serial review periods. All of
that goes away under the emergency declaration. So we are just
taking advantage of an emergency, quite frankly.
But what it really boils down to is you really have to
have--like all of these projects, like everything that we are
talking about here, there is so much regulation, particularly
associated with the old section 408, you really have to have a
champion within the Corps, just to shove these projects
through, and to run it through, dedicate resources, remove
these redundancies.
There is plenty of discretion to remove these redundant or
serial processes----
Mr. LaMalfa. Well, let me ask this, then. If--I hear on
this committee sometimes it is a matter of funding, not a slow-
down of regulatory process. So if we had $49 million or $689
million, a stack of $100 bills here, how long from that until
you could actually, you know, start a project? You know,
because, you know, Congress authorized this thing years ago,
and yet here we still are with part of it not done.
Mr. Inamine. So if I understand, the question is why are
we----
Mr. LaMalfa. Well, we are told it is funding. But really,
how much of it is regulatory slow-down?
Mr. Inamine. Well, all of the regulatory work has been--the
really--the time-consuming regulatory work has been done
through the authorization process. But it is true that we are
going to revisit, as in Ms. Pilconis's testimony, we are going
to have to redo some of this work. You have to redo some of
these consultations. And there is really--oftentimes there is
just no need to do that.
We have a little project, by the way, nothing by anybody's
accounting, in the Feather River. And we are doing a section
408 review, 45-day review period. And that is going to be
followed by another 45-day review period by FERC. It is going
to be sent to the same agencies, same thing, and that is
holding things up.
Mr. LaMalfa. Same bug, same shrubs.
Mr. Inamine. Yes.
Mr. LaMalfa. Yes. All right, thank you.
I appreciate the indulgence, Mr. Chairman.
Mr. Graves of Louisiana. I yield to the ranking member,
Mrs. Napolitano.
Mrs. Napolitano. Thank you, sir.
General Jackson, in a few weeks we expect the President to
send up his fiscal 2019 budget for the Corps. Members of this
committee on both sides are frustrated by the lack of
transparency by which the administration identifies which
projects to fund--and a process that is all the more important,
since it is the only way a project can receive funding under
the Republican earmark moratorium.
Do you believe the process by which the administration
identifies projects for inclusion is fully transparent and
predictable to both local sponsors and the public?
General Jackson. I think the process that is used is about
as fair as it can be, given all the different demands on the
system. We get very specific guidance on what makes a project
eligible for consideration, whether it has a signed sponsorship
agreement, whether it has achieved certain milestones that make
it eligible for consideration, based on where it is in the
project life cycle.
We try as best we can in the Corps to communicate that with
sponsors, so they know what the parameters are that make a
project eligible for consideration. But at the end of the day
the administration has to make tough choices, based upon all
the different demands that they have. And until such time that
the budget is released, we in the Corps of Engineers don't even
know what that is going to be, although we have provided
significant amount of input into it. We get a budget back that
the administration feels represents the priorities of the
administration, the President, and has taken all of our input
into consideration in making those tough choices.
Then we work with sponsors after the fact to help them
understand what the significance is of what has happened. What
does that mean for their project, in terms of do they get
enough funding, not enough funding, or no funding at all? And
what is our strategy?
We have to continually redevelop the funding strategies
with our sponsors, based upon all the different competing
demands that go into that budgeting process. That is about the
only thing we can do to be more transparent, is just continue
to communicate more effectively with sponsors, and help them
understand, based upon benefit-cost ratio and all the things
that historically have been considered to make projects
budgetable, where they stand and where the likelihood of
funding will be into the future.
Mrs. Napolitano. Thank you. Yet yesterday the Chief of
Engineers, your boss, testified on the process in the Senate
and noted that the way to get a project to the top was for the
local sponsors to pay more than their statutory cost share.
This is very troubling to us, or at least to me, because less
affluent communities may be unable to pay for them, yet they
have great needs.
Even more troubling is, since the administration again
holds all the cards and winners and losers in the budget
process, under the current system, OMB can refuse to help a
community that can only afford normal statutory cost share,
because it is simply not enough. If the administration position
is that communities pay for more, can jump to the front of the
line, how are the less affluent, or poorer communities, being
able to compete?
General Jackson. You raise a great question. I know the
question that you refer to that General Semonite was asked in
the hearing yesterday. I think it kind of goes back to the
testimony and to my opening statement, and that the math
problem is we don't have enough Federal appropriations. So how
do we incentivize and encourage other folks to come forward,
whether that is the State, locals, whether it is private
investment, how do we rank the relative value of a project?
The benefit-cost ratio has typically been what we have
used. But if you are a smaller, less affluent community, where
the benefits monetarily are not as great, your benefit-cost
ratio might not be as high as one in a more affluent area. I
think that is a real challenge that I think we need to work
together to figure out how to characterize the relative
importance of a project. How do we define what is in the
Federal interest? What does the Federal Government need to be
more involved in, or less involved in? Where can we bring more
funding to bear, based upon availability, or ability to pay?
And at the end of the day, how do we incentivize, as a
Federal Government, all of this to be considered, and how do we
reduce costs and make project delivery more effective, so it
incentivizes locals to want to be more involved in getting
projects delivered more quickly? Those are some of the thoughts
that I have.
Mrs. Napolitano. Have you started developing any
guidelines?
General Jackson. We have been having a lot of discussions,
Congresswoman, about how we might be able to do that. The
administration has reached out to us and asked us for some of
our technical input into some things that----
Mrs. Napolitano. Would you share that with us?
General Jackson. We will when we are able to, we will
definitely share that with you. Yes, ma'am.
Mrs. Napolitano. Thank you. The administration position is
that water resources needs of the wealthy communities are more
important than smaller communities and rural communities. That
could be a problem, and that is something that--we need to be
sure it gets into the equation.
General Jackson. Congresswoman, that is a discussion that
we have had a lot within the administration and also with
Congress. We recognize that there must be a fair way of
evaluating these projects, and making sure that the right
funding is brought to bear to deliver.
We recognize that the risk to smaller or less affluent
communities is just as important as the risk to more affluent
communities, and we have just got to figure out the right way
to be able to assess that and get those projects delivered for
all folks who are at risk.
Mrs. Napolitano. Well, I represent several communities with
small commercial harbors that are frequently overlooked for
maintenance dredging dollars. Is there a reason why the
administration chooses not to fund the dredging needs of those
communities, despite the fact that $10 billion in Harbor
Maintenance Trust Funds currently sit in a trust fund?
General Jackson. Congresswoman, that is another great
question. There are more--as you know, more dredging
requirements that are out there. We don't dredge all the
harbors that we are responsible for, too. And so we need to
reassess and relook at all the forms of funding available, and
make good informed decisions on how we can optimize all the
funding that is available to get all the harbors that are
eligible, open.
Mrs. Napolitano. Thank you.
Mr. Graves of Louisiana. Mr. Huffman?
Mr. Huffman. Thank you, Mr. Chairman. So Major General
Jackson, continuing the discussion that I was starting earlier
on P3s and P4s, we know that 2014 WRRDA put together a
framework for a pilot program in this area. I am interested in
seeing movement because I think I have a--the poster child of
opportunity in my district involving dredging in the Petaluma
River, where you have got a lot of local governments and even
private-sector partners ready to step up, partner with the
Corps in a way that would save the Government money and work
for everyone involved in a wonderful way. But we just can't
seem to get moving.
Now, Ms. Jamieson is suggesting that the authorities that
we have provided in the past to try to move these ideas forward
aren't meaningful enough. And I think, if I am understanding
her correctly, that unless we fundamentally reform the way the
Harbor Maintenance Trust Fund works, for example, so that it is
not subject to the annual appropriations shortfalls that--I am
very sympathetic of the problem you face there.
Do you agree that, without those kind of big, fundamental
reforms, we are really not going to get anywhere with these P3s
and P4s? Or do you think there are some things you can do
within the current system?
General Jackson. Congressman, I think there are some things
that we need to do. But Congress has been very clear. We need
to get an administration policy that helps the P3s that we do
develop to be able to be effectively funded and administered
through the system.
One of the challenges that I found, personally, with the
one P3 that we have, is that we didn't have the policy guidance
to support it, we did it just through brute force to get it
through, because we wanted to demonstrate that P3s work. And we
have had a lot of help from Jill and other folks to help craft
that.
But at the end of the day, you know, there is still a
Federal obligation at the tail end of that particular P3, and
it is a large amount of money still, all things considered. And
it is hard to figure out how to assess that with the benefit-
cost ratio that it has, in terms of how it competes with other
projects in the budget cycle.
I think there is more work that needs to be done. I think
that P3s and P4s are definitely part of the arsenal that we
need to employ into the future. I think there are some details
that we need to work out. I think these are details that we
obviously need to work out with the folks that are advising us
who have experience in this.
We certainly need to work out with Congress if there is any
legislative tweaks that need to occur to address some of the
challenges that Ms. Jamieson talked about, and we certainly
need to get the administration on board with a good, solid
policy that they support that allows us to consummate these
deals into the future, because I think P3s and P4s are part,
again, of the arsenal that we have to employ if we are going to
move forward on delivering these projects.
Mr. Huffman. Ms. Jamieson, back to you, if I could. So, you
know, my interest in this is I have got a shallow draft
dredging project that is way behind in the cycle. It was
supposed to be dredged. It is starting to shut down commerce
and even recreation on the Petaluma River, and I have got a
bunch of other shallow draft situations around the North Bay
and the San Francisco Bay area, very similar. We would like to
come together as a region, partner with the Corps, and find a
way to get this done.
They have talked about creative ways to maybe go in on
buying some equipment together that would save the Corps a lot
of money over time, and the local Corps folks seem really
interested in this. But we can just never get it going. What is
your opinion of a project like that?
Do we need more changes in the way OMB scores these things,
in the way the Harbor Maintenance Trust Fund works, or, you
know, if we are stuck with the current framework kind of
project like--that would still have a chance without an act of
Congress?
Ms. Jamieson. It is a great question. I think this is a P4
example, right?
Mr. Huffman. Yes.
Ms. Jamieson. And so the benefit that you have there is
that you don't have some of the same Federal constraints, like
OMB scoring, if it was a federally owned asset.
Mr. Huffman. Right.
Ms. Jamieson. California has its own legislation, you have
enabling legislation to pursue P3.
The real issue becomes one of the funding stream from the
Corps and their commitment to that, and how that would be
budgeted. And this goes back to, I think, what the general was
just saying. The request from Congress was a budget
prioritization, amongst other things. We recommend in our
written testimony some ways to address that, and that includes
return on Federal investment, which can also take into account
the poorer communities, those who need more money.
But ultimately, because Congress does not allow for
multiyear appropriations, or to forward commit, your local
sponsors will be going at this under the assumption that the
Federal Government will be able to stand up when it is time,
when they may not.
Mr. Huffman. Yes.
Ms. Jamieson. And that is what we need--that is the big
disconnect----
Mr. Huffman. Well, I think they are--as local governments,
they are more willing to do that than a private concessionaire
might be, for example.
Ms. Jamieson. Absolutely. And don't get me wrong, a P3 is
not always the right solution. I have actually talked to some
of the folks about this particular project, so I am a bit
familiar with it.
You know, it ultimately comes down to is there the local
capacity to execute the project in the way that you can
mitigate against your own construction risks, and those sorts
of things. But it comes down to where the role of the Corps is.
And it is not a one-size-fits-all, but I do think that there
needs to be some relief and some broader thinking of the
strategies to allow for those sorts of projects to go through.
Mr. Huffman. Thank you.
Mr. Chairman, thank you for your indulgence.
Mr. Graves of Louisiana. Absolutely. Thank you. All right,
I am going to go off on a diatribe. I got a few last questions
and just sort of some feelings that have been bottled up here
for the last few hours. But I do want to thank you all for your
patience and endurance.
Mr. Dalton, a few questions before I do. Number one, I made
reference to your section 408 memo, and I do want to piggyback
on Mr. Davis's comments. I don't agree with the revision in
authority that the Corps has come up with there, and we have
discussed this at length, so I am not going to go into detail.
But in your memo you eliminate the 60-percent design
threshold. I just want, for the record, that it is your intent
that that doesn't mean--because you mentioned giving discretion
to the districts--that doesn't mean that they can now come in
and do 80 percent, that the intent was you are eliminating that
and that gives them the discretion to go down. Could you please
clarify?
Mr. Dalton. Mr. Chairman, that is absolutely the intent.
The intent is that if we thought before we needed 60 percent
design, but because you are working with folks locally, that
they understand and know their project well enough to where we
can probably make a decision with less than 60 percent design.
And so it may be 30 percent on one project, 20 percent on
another. It might be 50 percent on a project, it just depends.
But the intent is not to require more than the 60 percent.
Mr. Graves of Louisiana. All right, districts, you hear
that?
[Laughter.]
Mr. Graves of Louisiana. Thank you very much.
Ms. Pilconis, could you clarify something? We have talked
about NEPA a good bit here. If you have a project where a non-
Federal entity--a State, a county, parish, what have you, a
water board--is carrying out a project, and they are using only
non-Federal funds, would NEPA apply in that case, in most
instances?
Ms. Pilconis. NEPA is triggered if there is a ``Federal
action.'' So it would be Federal funding, on Federal lands, or
a Federal permit.
Mr. Graves of Louisiana. And so----
Ms. Pilconis. So if there is no Federal funding, NEPA would
be triggered then if the project requires section 404 approval
or section 408 approval, section 404 permit. So it is permit,
license, or approval by the----
Mr. Graves of Louisiana. And----
Ms. Pilconis [continuing]. Federal Government----
Mr. Graves of Louisiana. And so if Federal actions are
triggered through the permitting process or through the use of
Federal funds, then NEPA is triggered.
Ms. Pilconis. Or Federal lands.
Mr. Graves of Louisiana. But the reality is--and that is
another reason why the section 408 guidance, which suddenly
triggered NEPA, was additionally problematic. But in any case,
the reality is that most projects that are done by non-Federals
don't actually trigger a NEPA analysis.
Based on your experience, and Mr. Smith--I am sorry, I--is
it--I think that--I serve on this committee, I serve on the
Natural Resources Committee. I often hear Members of Congress
talk about how, you know, we have got to ensure that NEPA
applies, or environmental reviews are applied, because
otherwise the environment is going to be trashed.
Look, you run a waterboard. You work with non-Federal
clients, I am sure, through your contractors around the United
States. Is it your belief that local and State governments just
inherently have a desire to trash or pave the environment?
Mr. Inamine. Absolutely not. No, we live here. And so we
are not only motivated by the existential threat of flooding,
in our example, but we also live in that same environment that
is so assiduously protected by environmental interests. So----
Mr. Graves of Louisiana. In an instance where NEPA didn't
apply, would you have an alternative environmental review
process that you would utilize?
Mr. Inamine. Yes----
Mr. Graves of Louisiana. Or again, even if it is not
formal----
Mr. Inamine. You know, many of our--to sort of cut to the
chase, many of our issues are with redundant permissions. And I
brought up an example of, frankly, an ecorestoration project.
We are partnered with environmental NGOs, and what an awkward
partnership that is. Flood control agency and an environmental
NGO partner, trying to do an ecorestoration project that also
happens to provide flood control. And yet we have to do these
two same reviews out of the Federal Register, going to the same
resource agencies. There is no point to this.
So it is, just within even existing law, to use a little
discretion. Use a little bit of common sense to remove many of
these redundancies and serial reviews that are----
Mr. Graves of Louisiana. Thank you.
Mr. Inamine [continuing]. Killing projects.
Mr. Graves of Louisiana. Ms. Pilconis, do you have any
experience or any thoughts on just, again, the fact that, in
many cases, NEPA is not triggered, and some of the non-Federal
entities you have worked with or your members have worked with,
do you believe that there is an underlying intent to trash the
environment?
Or have you seen--I mean I will be honest, I have heard
folks come complain to us about California is more stringent.
In cases, the CEPA environmental laws----
Ms. Pilconis. And that is actually true. No, absolutely, of
course not. NEPA is just one part of the process, also. And you
know, our big flowchart, NEPA is just one part at the top, like
one-third. The rest of it is representing the permitting
process. And our chart is only representing the Federal
permitting process. So you have got State environmental laws,
you have got local ordinances. So there is an entire large,
large, overlapping framework of environmental protections in
place, aside from NEPA.
Mr. Graves of Louisiana. Thank you. I am going to move this
gavel, because Mrs. Napolitano is about to use it on me.
[Laughter.]
Mr. Graves of Louisiana. But let me change gears before I
get myself in trouble.
Ms. Jamieson, thank you again for being here. You made a
number of comments about P3s, and indicated that they were not
the silver bullet solution to everything, which I certainly
agree with. I do want to make a point, though, that I think
is--where I think P3s may be helpful.
I think there are a number of instances where there are
inefficiencies that could be monetized in a way that would
actually not cause additional revenue streams or tolls or other
things. And I will give you a couple of examples.
Number one, we have dealt with the flood insurance program
here, and I think in a flawed way, through the House of
Representatives. But if you look at the instance where
someone's actuarial rate--and we will make up numbers--is $100
million, cumulatively, in a community, per year, and you could
make an investment of $50 million, and cut the actuarial rate
in half, it is idiotic that we are continuing to pay $100
million a year in premiums, when we can make such a fractional
investment at actually reducing actuarial rates. There is no
connectivity between those. And it is incredibly frustrating.
Whether it is the Corps coming in and building something,
FEMA, HUD, anyone, or the local community, do you believe that
there are situations like that where you are not necessarily
coming in and triggering additional tax or revenue stream?
Ms. Jamieson. Absolutely. Performance-based contracting
is----
Mr. Graves of Louisiana. Is your mic on?
Ms. Jamieson. I will get closer. Performance-based
contracting--that is what that refers to--is where you
capitalize savings in order to pay the contractor. And that is
very common. We do that--they did it in New York City with
their water utility. It is a very common modality, very similar
to energy savings performance contracts, right? It is the exact
same concept, but it should be more broadly enabled to allow
for----
Mr. Graves of Louisiana. And I will give another example,
because we have an awful interstate bottleneck problem in my
home town of Baton Rouge. You look at the amount of time that
cars are sitting in traffic--as I recall, an average of 47
hours a year in Baton Rouge, Louisiana, and I think they
spend--I believe, as I recall, it is over $900 in extra
gasoline.
So, if you can improve the efficiency of that
transportation system, you are reducing gasoline payments, you
are reducing emissions into the environment, which, of course,
cause health and other adverse consequences--get a little props
there--and of course, you are saving time. And so, if you can
monetize those efficiencies and examples like the two that I
gave--and, of course, there are thousands of others--I think
that P3s can play a role in some of our infrastructure
solutions. Would you concur?
Ms. Jamieson. Absolutely, Absolutely. And I would even go
so far that even when you are using traditional funding, the
ability to monetize and commercialize and find ancillary
revenues, whether it is air rights over existing highways and
other things, that is what certain contractors are much better
at than the Government, itself. And so that helps buy down the
cost.
But savings-based contracts are very common, and we should
be capitalizing savings and looking for those innovations.
Mr. Graves of Louisiana. All right. Lastly, before I close
up, Ms. Carter, thanks again for being here. This committee, in
December, I believe it was, passed H.R. 4460. It allowed for,
basically, eliminating a policy obstacle whereby FEMA Hazard
Mitigation Grant funds are prohibited from being used for a
Corps-authorized project. So if you get an authorization
through the Corps, you are suddenly prohibited from using these
hazard mitigation dollars to advance community resilience in
the aftermath of a disaster.
I want to make sure I phrase this question right to where I
get an actual answer. Do you believe that there are
efficiencies where we could better utilize existing revenue
streams to achieve some of these resiliency goals, and perhaps
reduce disaster spending over the long term?
Ms. Carter. So, in terms of opportunities to try to
consolidate projects, there may be multiple approaches to flood
risk management and resiliency. That would be one area where
you might have some benefits of trying to get multiple Federal
authorities to essentially work together.
So, for instance, the Corps does not do stormwater
management, but yet that can be part of your flood control
solution, right? The Corps does not necessarily often do buy-
outs, but yet you can do that with HMGP funds. So at times the
ability to be able to consolidate authorities and then funding
from those authorities within a single, more comprehensive
project is an example of how sometimes there may be
efficiencies.
Mr. Graves of Louisiana. Thank you. And I want to make note
that the Corps actually does have authority to do buy-outs in a
project, or relocations or nonstructural solutions, because we
implement those in Louisiana all the time. And there has been a
lot of misinformation related to that.
So I will say it again, thank you very much. I think that,
as we move forward, I look forward to working with Mrs.
Napolitano and Members on both sides of the aisle on
fundamental change. I said at the beginning that these projects
that we are talking about today have extraordinary urgency.
Whether it is perhaps strangling the economy and some of our
trade opportunities through ports and waterways, whether it is
significantly increasing the cost of disaster response--and
just looking at the hurricane season we had last year.
Folks often say we can't afford to build these projects. I
will say we can't afford not to. We are spending exponentially
more dollars responding to disasters than we would if we were
proactive in moving these projects aggressively forward.
But I don't want to in any way absolve the Corps. I have
often been a strong critic of the Corps processes. And General
and Mr. Dalton, you both talked about some efficiencies. And
certainly it is the right direction, but I can't overstate how
much redoubling and tripling of those efforts needs to occur to
get to a point to where it resembles anything that is
reasonable.
I agree that Congress is somewhat complicit in this, in
terms of funding and other things. But I will also say, as Mr.
Inamine--I am trying--has noted, if the Corps is going to cost
a project at $100 million, and you can turn around and build it
for $20 million, we are dealing with inflated cost, we are
dealing with, in some cases, prohibitive implementation,
because we are never going to appropriate those kinds of
dollars.
Or it makes more sense to zipper together with your non-
Federal sponsor and figure out how can he or she use their
capabilities to move things faster, cheaper, better, what have
you, and the Corps come in and do the components that they are
better equipped to do. And that doesn't happen today. Those are
things that we need to be considering, as we move forward.
I want to make note in Louisiana that, under Executive
Order 13807 that was mentioned earlier, we have been frustrated
by the lack of this MOU moving forward and getting signed that
they are working on. And I also want to urge you, as we move
forward on LCA and other large-scale projects, that we look at
programmatic-type permitting, as opposed to doing these
individual approaches. I think we can see greater efficiencies.
And let's keep in mind these projects are designed to
restore the environment, rather than causing environmental
harm.
So, with that, I might have gone a minute over, and I just
want to see if you have anything----
Mrs. Napolitano. A slight minute. Well, I certainly think
you are right, but we also need to look at increasing the
funding. There is, without a doubt, that need.
Mr. Graves of Louisiana. All right. Well, thank you all
very much. And I have no further questions.
The hearing is adjourned.
[Whereupon, at 12:48 p.m., the subcommittee was adjourned.]
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