Mr. Chairman and distinguished Members of the Committee: It is an honor and a pleasure to testify before the Committee on the President's Army Civil Works budget priorities for the year 2000, and on the 1999 Water Resources Development bill.
Accompanying me today is Mr. Michael Davis, my Deputy Assistant Secretary for Policy and Legislation.
Let me begin by noting that the large differences between the Administration's budget proposal last year and what was appropriated in both FY 1998 and FY 1999 are now reconciled in the FY 2000 budget I am about to outline.
The President has consistently stressed two major themes that I think are particularly important to the way we should formulate and implement Civil Works policy. First, it must be based on building strong partnerships with our states and local communities as well as among our sister federal agencies. Second, we must strive to help our economy grow and prosper by combining sound infrastructure management and development with environmental protection and ecosystem restoration. I believe our program excels in both of these mandates and that the budget I will present today reflects their importance and priority.
I am pleased to say that funding in the President's FY 2000 Budget supports a strong Civil Works Program. It is consistent with levels enacted by Congress in recent years, and with the President's overall domestic priorities, his commitment to a balanced budget, and his goal of protecting Social Security and meeting the challenges of the 21st Century.
My statement covers the following subjects:
-- the FY 2000 Civil Works Program Budget,
-- Water Resources Development Acts of 1999 and 2000,
-- Civil Works Program Performance,
-- the Harbor Services Fund Proposal,
-- the Economy and Environment,
-- New Investments, and
-- Highlights of the FY 2000 Continuing Program.
FY 2000 CIVIL WORKS PROGRAM BUDGET
The President's budget for the Civil Works Program for FY 2000 includes $3.9 billion for the discretionary program, comparable to the amount appropriated for the program in FY 1999, and significantly above last year's budget request. Details are presented in Table A.
The Administration appreciates the significant commitments made by our partners, the non-federal sponsors who cost-share studies and projects of the Civil Works Program. These commitments demonstrate the value of the program to the sponsors. With cost-sharing contributions and other funding, total funding for the FY 2000 program is $4.2 billion. In FY 2000, we will be asking non-Federal sponsors to contribute over $251 million as their cost share of projects throughout the nation. They are our partners in this program and we are committed to a very responsive and timely allocation of resources to meet their efforts. I look forward to working with both Houses of Congress to meeting the challenges of this partnership.
WATER RESOURCES DEVELOPMENT ACTS OF 1999 AND 2000
I also want to emphasize our commitment to water resources development and the biennial authorization cycle. A strong water resources development program is a sound investment in our Nation's economic future and environmental stability. Communities across the country benefit from water resource projects to reduce flood damages, compete more efficiently in world trade, provide needed water and power, and protect and restore our rich aquatic resources. In this regard, we will work with the Congress to complete a Water Resources Development Act (WRDA) in 1999 - building on the progress that we made last fall on the proposed WRDA 1998.
As you know, the Army, on behalf of the Administration, submitted to Congress a WRDA proposal in 1998. We believe this proposal should serve as the basis for a WRDA 1999. The Senate version of WRDA 98 included important Administration policy initiatives such as our Challenge 21 program, changes to shore protection policy, and improvements to our recreation program. We hope that, based on our bill, and the with the assistance of the authorizing Committees, we can come to closure on a responsible WRDA 1999 early this year that includes important policy initiatives and vital projects, while recognizing the continuing budget constraints. This would put us in a better position to address new policy and project needs in a WRDA 2000 bill that will include such important initiatives as the restoration of the Everglades.
We appreciate your commitment to a WRDA 1999. The Administration, however, has concerns about the total cost of S.507 and the impacts of authorizing a sizable number of new projects at this time in view of the existing backlog and continuing budget constraints. Each new project authorization adds to the already large existing backlog of Corps projects under or awaiting construction. Therefore, we urge this Committee to limit the number of new project authorizations in its legislation, as we have done in our proposal, to reflect only those additional costs that one might expect to be able to fund within a reasonable time frame.
We are particularly concerned about authorizations which bypass the existing project planning and review process by authorizing and preauthorizing projects upon the issuance of a report by the Chief of Engineers. These provisions weaken the review responsibilities of the Secretary of the Army and the Administration, and for those authorizations which are "contingent" on a report of the Chief of Engineers weaken the study and review responsibility of the Army Corps of Engineers itself. Such authorizations would undermine the biennial WRDA process that has been the goal of Congress and every Administration since 1986. While there may be a compelling reason, on rare occasion, to expedite the authorization of an individual project, as the Administration proposed and the Congress accepted in the case of Grand Forks, ND and East Forks, MN, we believe that projects generally should await the completion of review by the Chief of Engineers, the Army, and the Administration before authorization.
In addition, we are concerned about other provisions in S.507, including those that would provide special exemptions from cost-sharing requirements, authorize projects based upon what may be outdated studies, or authorize projects that either are not economically justified or fall outside of the traditional missions of the Army Corps.
The Administration appreciates this Committee's support for those projects that have completed the normal planning, review, and approval process and the inclusion of some of our initiatives. We are optimistic that we can work with your Committee to resolve our concerns in a manner that allows us to fully support S.507.
CIVIL WORKS PROGRAM PERFORMANCE
The Government Performance and Results Act of 1993 (GPRA) requires that the Army Corps of Engineers show how improvements in its business processes impact the quality and delivery of our products and services to the Nation.
The Corps is improving its business processes by streamlining decision document review procedures, eliminating duplication of functions at different levels; intensively monitoring policy review to reduce review times; extending the use of standardized project cooperation agreements; continuing to strengthen partnerships with local sponsors; and intensively managing program execution, for more efficient and timely production and greater customer satisfaction. In particular, the Chief of Engineers has developed a process to streamline project planning and I look forward to working with him on this.
The Corps is currently implementing the first annual performance plan required by GPRA on its FY 1999 program. The Corps is testing an initial set of results-oriented program performance measures to assess the benefits of process improvements made at the project level. The Corps will evaluate the initial set of results-oriented program performance measures during FY 1999 program execution and will extend successful applications of the measures into the FY 2000 program and continue to develop improved performance measures in the future.
HARBOR SERVICES FUND PROPOSAL
A key component of the President's FY 2000 Budget for the Army Civil Works program is the proposal for a new Harbor Services Fund and Harbor Services User Fee. This proposal will provide a reliable source of funding for important navigation needs including construction, operation, and maintenance. It results in significantly greater funding for these port and harbor activities. The President's Budget for FY 2000 includes $951 million to be derived from the Harbor Services Fund, an overall increase of $382 million over the President's FY 1999 Budget for harbor related activities. This level of funding will allow us to proceed at an optimal rate on nearly all operation and maintenance and construction activities related to ports and harbors, using funds contributed by the users.
In March 1998, the U. S. Supreme Court ruled that the Harbor Maintenance Tax (HMT) was unconstitutional, as applied to exports. In that ruling, the Court concluded that the HMT, which imposed a charge based on the value of the commercial cargo being shipped, constituted a tax on goods in export transit and therefore violated the Export Clause of the Constitution. Because of this ruling, the HMT stopped being collected on exports on April 25, 1998. The new Harbor Services User Fee being proposed avoids the constitutional infirmities of the HMT. The assessment is a user fee, not a tax: it fairly approximates the harbor benefits and services vessels in each vessel category receive through port use. It is not imposed based on the cargo of a vessel. The user fees will generate funds sufficient to pay the Department of the Army's annual costs of developing, operating, and maintaining the Nation's ports. The legislative proposal will make the total amount of the user fees collected pursuant to this proposed legislation in one year available the next fiscal year for appropriation to fund the projected total annual expenditures of the Department of the Army for harbor development, operation, and maintenance.
Thus, this proposal will address all of the biggest problems associated with the existing Harbor Maintenance Tax and Trust Fund (HMTF). First, we will stop collections on imports, domestic shippers, and passengers collected under the existing HMT, eliminating the uncertainties involved with our foreign trading partners.
Second, we would institute a new fee mechanism based on vessel type linking the fee with the level of service provided to certain types of vessels, which will meet the Supreme Court's test for constitutionality. Those fees would be placed in the new Harbor Services Fund (HSF), along with remaining balances from the old HMTF. A portion of those balances will be used to fund the program in the first year, FY 2000.
And third, the proposal will directly link the amount of fees collected with the funds appropriated, thus avoiding a build up balances in the HSF. For budget purposes, the user fees will be treated as offsetting collections.
We are coming to completion on details of the proposal in light of discussions and comments from interested groups. We plan to present a legislative proposal to Congress in the near future. Our plan is to pursue the HSF legislative proposal separately from WRDA 1999.
ECONOMY AND THE ENVIRONMENT
The Administration is committed to the traditional mission areas of improving our navigation and transportation system, protection of our local communities from flood damages and other disasters, and maintaining and improving hydropower facilities across the country. In addition, the protection and restoration of the environment are an important and integral part of the Civil Works mission portfolio. The President has strongly advocated linking economic growth with protection of the environment. To help meet this objective, we will support projects that feature strong economic benefits, as well as projects that incorporate environmental restoration and enhancement. Of course, individual environmental restoration projects are also an important part of the Civil Works mission. These environmental objectives make the Army Corps an important participant in advancing the goals of the President's Clean Water Action Plan.
An example of a program that will integrate environmental concerns into more traditional Civil Works missions is our Challenge 21: Riverine Ecosystem Restoration and Flood Hazard Mitigation Initiative. Like last year, this year's budget includes $25 M to begin the Challenge 21 program. It is designed to accomplish both flood hazard mitigation and ecosystem restoration and emphasizes nonstructural measures as a means to accomplish these objectives. Challenge 21 was proposed for authorization last year, and came close to becoming a reality in the proposed WRDA 1998. In fact, the Senate version of WRDA 1998 included a Challenge 21 program. We will continue to work with Congress to pass this much-needed legislation. The key to this program is that it will be implemented at the request of local communities and not imposed as a solution by the Federal government. To date, over 50 communities have expressed interest in participating in Challenge 21.
Environmental programs make up about 18% of the FY 2000 Army Civil Works budget, and are integrated into all of the major areas of work. Some environmental programs of note are in the following areas. There is $100 million in construction funding for the Columbia River Fish Mitigation program in the Pacific Northwest. There is $129 million in overall funding for the ongoing effort in south Florida to restore, preserve and protect the Everglades. We have also budgeted $14 million to fund our ongoing environmental restoration continuing authorities programs (Section 204, the Beneficial Uses of Dredged Materials program, Section 206, the Aquatic Ecosystem Restoration program, and Section 1135 Project Modifications for Improvements of the Environment). This funding will allow us to implement projects to create and restore aquatic habitats and to modify Civil Works projects to improve the environment.
The Formerly Utilized Sites Remedial Action Program, FUSRAP, is an environmental cleanup program that was transferred by Congress from the Department of Energy (DOE) to the Army Civil Works program in the FY 1998 Appropriations Act. We are continuing the smooth implementation of needed cleanup of contaminated sites, with no slippage of the program during the transition from DOE to the Civil Works program. In fact, we have exceeded the DOE schedules for the Middlesex, Maywood, and Wayne sites in New Jersey, and surpassed DOE's planned quantities of soil removed and disposed. This year's budget includes $150 million for this program, an increase of $10 million over the past two years. This will help improve the rate of cleanups of the sites.
NEW INVESTMENTS
The FY 2000 Budget for the Army Civil Works program provides a strong program of new work. Details are presented in Table B.
Our program of new work includes one new survey and 19 new construction projects, 5 new operation and maintenance new starts, and 6 new Plant Replacement and Improvement Program (PRIP) major acquisitions, and the Challenge 21 program.
The Budget includes $80 million in FY 2000 for the new investments in the construction account, including $55 million for new construction starts, and $25 million for Challenge 21. Capital costs for these new investments total $1.8 billion. Of that, $1.3 billion will be provided by the federal government. The balance, covering costs of lands, easements, rights-of-way, and relocations, will be financed directly by non-federal sponsors.
The 19 new construction projects include:
-- 5 for commercial navigation,
-- 3 for flood damage reduction,
-- 2 for environmental restoration,
-- 7 for major rehabilitation, and
-- 2 for dam safety assurance.
HIGHLIGHTS OF THE FY 2000 CONTINUING PROGRAM
Operation and Maintenance, General
The FY 2000 Budget for the Civil Works Operation and Maintenance, General (O&M;) Program is $1.84 billion. This level of funding is very strong, demonstrating the Administration's commitment to maintaining our existing infrastructure, much of which is aging and requires greater upkeep. Of the $1.84 billion, $693 million would be for port and harbor activities, derived from the proposed HSF, including $75 million to maintain small boat harbors, important to the economies of local communities. In addition, operation and maintenance of hydropower facilities in the Pacific Northwest will be financed by a transfer of approximately $107 million from the Bonneville Power Administration, pursuant to an agreement signed two years ago.
The budget also provides $226 million to continue the operation and maintenance of recreation areas at Civil Works projects.
Construction, General
The FY 2000 Budget for the Civil Works Construction, General Program is $1.24 billion, of which $1.16 billion is for the continuing program. Of the total, $258 million would be for port and harbor construction projects derived from the Harbor Services Fund, allowing port related projects to proceed at optimal rates. This will enhance the competitiveness of our Nation's ports and harbors.
Following are highlights of the Continuing Program.
South Florida Ecosystem Restoration
The Everglades is an ecosystem of international importance. It is also one that has dramatically deteriorated since the turn of the century. It is very important that we aggressively continue the work that we have underway to start the process of restoring this treasure that is so important to the Nation. Construction funding for these projects is $110 million for restoration of the Everglades and South Florida Ecosystem, a major environmental activity to which we are strongly committed. This amount includes $49 million for the Central and Southern Florida project to continue construction work at West Palm Beach Canal, South Dade County, and manatee pass-through gates, as well as planning, engineering and design work on the Comprehensive Restoration Plan, also known as the "Restudy"; $40 million to continue construction on the Kissimmee River Restoration project; and $21 million for critical restoration projects authorized under the Everglades and South Florida Ecosystem Restoration program.
Pacific Northwest Salmon
The budget includes $100 million for Army Corps construction activities associated with the Columbia River Fish Mitigation project at 8 Corps dams on the Columbia and Snake rivers and to continue the mitigation analysis which evaluates additional measures to increase fish survival at those dams. This includes $59 million for studies of surface bypass facilities, drawdown of Lower Snake Reservoirs, John Day drawdown and hatchery mitigation, turbine passage, gas abatement, adult passage, and Lower Columbia configuration.
Montgomery Point Lock and Dam
The budget includes $20 million for the Montgomery Point Lock and Dam project on the McClellan-Kerr Arkansas River Navigation System to continue construction of the lock and dam. The project is programmed to be financed entirely from the Construction account.
Kentucky Lock and Dam, Kentucky
The budget includes $7.75 million for the Kentucky Lock and Dam project on the Tennessee River to continue detailed design of the new lock and to relocate the Tennessee Valley Authority's power transmission towers at the project site. The addition of a new lock will greatly reduce delays at the existing lock which is too small to handle modern 15 barge tows without 2 lockages.
Olmsted Locks and Dam, Illinois and Kentucky
The budget includes $28.6 million to continue construction of 2 new locks on the Ohio River near Olmsted, Illinois, to replace Locks 52 and 53 which are over 60 years old. Virtually all waterway traffic moving between the Ohio and Mississippi Rivers passes through the project area, and both of the existing locks have temporary lock chambers that are inefficient. Projected increases in waterway traffic demands in combination with the limited capacity of the existing locks will result in increased lockage delays without the new locks.
New York and New Jersey Harbors, New York and New Jersey
The budget includes $60 million for the Kill Van Kull and Newark Bay, New York and New Jersey, project to continue construction of the deepening of 5 miles of Kill Van Kull channels and 3 miles of Newark Bay channels from 40 to 45 feet. The deeper project will accommodate larger, fully loaded, more modern containerships. The budget also includes $2 million for the New York Harbor and Adjacent Channels, Port Jersey Channel, New Jersey, project. Deepening Port Jersey channel from 35 feet to 41 feet will accommodate larger, deeper draft, cargo ships.
Los Angles County Drainage Area, California
The budget includes $30 million for up grading the existing system, raising channel walls and converting the trapezoidal channel to a rectangular channel, and bridge modifications. These improvements would protect residential, commercial, and industrial properties in Long Beach by accommodating the increased runoff resulting from urbanization over the past 40 years.
Southeast Louisiana
The budget includes $47 million to continue construction activities for the Southeast Louisiana project including Canal 3, Suburban Canal, Elmwood Canal, Railroad Canal, Whitney Barataria Pumping Station in Jefferson Parish, and Napoleon Avenue Canal, Dwyer Road Pumping Station, and Broad Street Pumping Station in Orleans Parish.
Continuing Authorities Program
The budget includes $57 million for a full program of continuing and new work under the 9 activities in the Continuing Authorities Program. This amount includes $2.5 million for beach erosion control projects (Section 103), $8.5 million for emergency streambank and shoreline protection projects (Section 14), $26.9 million for flood damage reduction projects (Section 205), $0.5 million for navigation mitigation projects (Section 111), $4.5 million for navigation projects (Section 107), $0.1 million for snagging and clearing projects (Section 208), $4.5 million for aquatic ecosystem restoration (Section 206), $8.5 million for project modifications for improvement of the environment (Section 1135), and $1 million for beneficial uses of dredged material (Section 204).
General Investigations
The Budget for the Civil Works General Investigations (GI) Program is $135 million. While this is a lower level than usual, it is a key element of our plan to stabilize the Civil Works budget in the future. The study program feeds the pipeline of construction work. There is a large amount of construction work already waiting for funding - far more than the funds we can reasonably expect in the future. This budget cuts back on project study funding, in order to reduce the backlog of potential construction projects that are beyond our capacity to budget within a reasonable time frame. Once the backlog of costly projects is reduced, then we would be able to resume funding for studies at a higher level.
We believe that cutting back on study funding on a temporary basis is the right thing to do for our local sponsors, who expect timely construction of projects, once studies are completed and the projects are authorized.
Regulatory Program
The FY 2000 Budget for the Civil Works Regulatory Program is $117 million, an increase of $11 million over the enacted level of FY 1999 funding. This will ensure that we continue to provide for effective and equitable regulation of the Nation's waters, including wetlands. Through the Regulatory Program the Corps is committed to protecting the aquatic environment and serving the public in a fair and reasonable manner. In FY 1998, the Regulatory Program authorized 90,000 activities in writing, the most in any year, and nearly 95% of all actions were authorized in less than 60 days.
One of the goals of the Army Corps is to help people find solutions to their problems. In this program, we are proud that we not only protect our vital aquatic resources, but we try to help people, within the law, to find environmentally sustainable solutions to their problems. This budget will ensure that this level of service is maintained and improved, even with an increasing volume of work. The proposed increase would also enable the Corps to broaden its partnerships with States and local communities through watershed planning efforts.
We will also continue to pursue important initiatives as part of the Regulatory Program. For example, under the Regulatory Program, we are also active in the preparation of Special Area Management Plans (SAMPs) to address development in environmentally sensitive areas. We will build on existing relationships with Federal and state resource agencies through our consultation responsibilities to minimize habitat losses and mitigate unavoidable wetland losses. With the amount included in the President's Budget, we will establish a full administrative appeals process that will allow the public to challenge permit decisions and jurisdiction determinations without costly, time-consuming litigation.
Again this year, we are proposing a reasonable increase in the permit application fees for commercial applicants as a means to offset a portion of the costs of the Regulatory Program. We are prepared to work closely with this Committee and the public to ensure that any revisions that we may adopt are reasonable.
CONCLUSION
In summary, the President's FY 2000 budget for the Army Civil Works Program is a good one. It demonstrates a commitment to Civil Works missions, with strong support for all programs, a plan to solve the constitutional problem with the existing Harbor Maintenance Tax, an especially strong program of new construction, a firm commitment to maintaining existing water resource management infrastructure, and increased application of Civil Works Program expertise to environmental protection and restoration.
Thank you Mr. Chairman and Members of the Committee. This concludes my statement.
Table A FY2000 Direct Programs. President's Program.
Table B FY2000 Direct Programs. President's New Starts and New Work Program.
Table C FY2000 Direct Programs. President's Environmental Programs.