Editorial – Corps Updates House Subcommittee on WRRDA 2014 Implementation as Committee Prepares for Future WRDA Bill

The Water Resources Reform and Development Act (WRRDA) of 2014 did a lot to legislate how the process for choosing water resources projects and awarding funding would take place. In the post-earmark era Congress is looking to the U.S. Army Corps of Engineers to help them better identify the best projects for funding and assist the Corps in cleaning up its own authorization and back log process. Much of the focus for future projects is also on leveraging private funds in the form of public-private partnerships.

WRRDA 2014 also made efforts to accelerate the project delivery process with things like the 3-3-3 rule (which limits feasibility studies to three years and $3 million and all three levels of the Corps – district division and headquarters – review the study concurrently) and repealing the requirement for a reconnaissance study to be done before a feasibility study.

The bill also attempted to increase transparency accountability and congressional oversight in reviewing and prioritizing future investment. To establish a new process for projects to be considered by Congress for authorization the bill requires an annual report from the Corps to Congress. Section 7001 of WRRDA 2014 required that the Corps provide information about each proposal that is in the annual report meant to guide Congress in setting proprieties for which proposed studies projects and modifications will receive authorization in future legislation. A provision of Section 7001 also requires an appendix containing descriptions of those projects requested by non-federal interests that were not included in the annual report. The first annual report was delivered in February 2015 and the second in February 2016.

In guiding the WRRDA process and implementation the House Subcommittee on Water Resources and Environment of the Committee on Transportation and Infrastructure (T&I) chaired by Rep. Bob Gibbs (R-OH) has held two hearings with the Corps to discuss the progress so far. The subcommittee was very critical of the Corps in its initial hearing held June 10 2015 on the one-year anniversary of the enactment of WRRDA 2014.

Part of WRRDA required the Corps to develop guidance documents related to the legislative changes. The law required some 200 pieces of implementation guidance. At the time of the first June hearing about 40 percent of the implementation guidance had been issued – not enough Congress thought.

Chairman Gibbs said in his opening statement “While the WRRDA law is transformative and in some places complicated we remain disappointed at the pace and the prioritization at which the U.S. Army Corps of Engineers is carrying out the drafting of the implementation guidance.”

His criticism too was that much of the guidance issued by June 2015 pertained to the less complex provisions of the law not the most important guidance needed to improve the process. Gibbs was particularly vocal about the need for guidance with regard to public-private partnerships.

While guidance on the 3-3-3 process and the reconnaissance study repeal had been issued by the Corps at the time very little guidance had been issued on non-federal contributions. Implementation guidance related to the sections on the Harbor Maintenance Trust Fund and project deauthorization had not been issued yet either.

In response the Honorable Jo-Ellen Darcy assistant secretary of the Army for Civil Works testified that “Implementation guidance is prepared in a thoughtful manner which takes time.” She thought a 40 percent turnaround on the WRRDA requirements in one year was pretty good for the Corps. In fact after the WRDA 1986 bill only 50 percent of the implementation guidance had been documented a year later not bad for WRRDA 2014 considering the sweeping changes it made. I think the criticism about the speed at which the Corps has finished the implementation guidance is a bit short sighted by Congress given the breadth of change and Congress’ own inability to legislate effectively and efficiently in recent sessions. Secretary Darcy also pointed out that because WRRDA significantly changed the way the Corps operates it sought public input in developing some of the guidance.

THE NEW PROCESS: SECTION 7001 ANNUAL REPORT

In the first hearing the brunt of Congressional frustration with the Corps’ implementation of WRRDA 2014 focused on the annual report which the subcommittee said contained projects based on Administration priorities rather than on the criteria required in WRRDA.

Per Section 7001 if a project meets the following criterion it should appear in the annual report: 1. related to the mission and authorities of the Corps; 2. requires specific congressional authorization; 3. has not been congressionally authorized; 4. has not been included in a previous annual report; and 5. if authorized could be carried out by the Corps.

Sounds simple right? I thought so too. But Congress was sorely disappointed with the first report.

In violation of the five criteria for the annual report the subcommittee in the first hearing pointed out that as example two of the nine pending feasibility reports included in the annual report were listed in the appendix for the stated reason that those reports had yet to clear administration review which was not one of the five criteria. Similarly other project authorizations studies and modifications were listed in the appendix because it was “not a primary mission” of the Corps.

While some of that seems almost a bit petty I do understand and can see value in Congress’ attempt to make the process more transparent but with the enormous backlog of projects and the consistent lack of funding to complete all the needed Corps of Engineers projects it seems like there’s a bit of a battle going on over who gets to prioritize those projects. There will never be funding for all the projects needed so how does the government distribute what’s available most effectively? Not sure anyone has that answer exactly.

By including projects that did not meet the “primary” Corps mission in the appendix rather than the full report the Corps was somewhat prioritizing those projects. While Congress wants the annual report to provide transparent guidance in that respect one might also argue that it still needs more guidance from the Corps in distributing those funds effectively because they are so limited and so needed.

Chairman Gibbs who testified that he was “concerned about the administrative review process that the Corps is holding to” also clarified with some concern that under the current rules if a project appears in the appendix rather than the report Congress cannot act on it. He went so far as to say that “the job of the Corps under Section 7001 is primarily an administrative one.” Congress wants that task of prioritizing projects so I hope it’s ready for the duty.

SECOND CONGRESSIONAL HEARING ON WRRDA IMPLEMENTATION

After the June hearing the Corps had another six months before the next annual report and a lot work to do and criticism to consider. After the 2016 annual report was issued earlier this year the Subcommittee on Water Resources and Environment held another hearing on February 24.

Here I would like to detail some of the important statements and back and forth discussion between the committee members and Corps leaders.

In his opening statement Chairman Gibbs was quick to point out that 40 percent of the implementation guidance still needed to be issued and accused the Corps of “slow-walking” the process. However in terms of the annual report Gibbs said the newest report this year indicated “that the Corps heard our message and the 2016 Annual Report is an improved product.”

Gibbs also reiterated that the intent behind the hearing was to improve the process as the committee moved forward with developing a WRDA bill for 2016 – a smaller bill Gibbs said which will address several clarifying and technical changes to WRRDA 2014 and hopefully authorize some of the projects that are included in the 2015 and 2016 Annual Reports. He did again heed with a warning to the Corps about its project planning and prioritization process saying “the planning process addresses the nation’s water resources needs by exploring a full range of alternatives in developing solutions that meet both national and local needs.” In other words Congress still has some criticism about what projects made the list and what projects didn’t.

Rep. Ann Kirkpatrick (D-AZ) sitting in for senior member of the House T & I committee Rep. Grace Napolitano (D-CA) said that while the 2016 Annual Report was improved “the fact is many projects and studies requests were not included by administration priority calls rather than using the exact criteria in Section 7001 of WRRDA 2014.”

She said there are communities that are still confused by or do not know about the new process particularly areas that have fewer economic resources. “We should not have a process so complicated that communities are forced to hire outside help to run the traps of both congressional committees and administration officials” Kirkpatrick said.

She thinks communities need more reasonable direction to address their local needs. But even so how well will these small projects fare in a tight budget against projects with more economic benefit she asked?

Aside from the annual report process and what projects Congress will or will not consider for appropriations Rep. Peter DeFazio (D-OR) highlighted what he thought was the real issue with the process: “Congress is not adequately funding the Corps” he said citing the enormous backlog of Corps projects and WRRDA’s efforts to fully realize the Harbor Maintenance Trust Fund (HMTF) for its intended purpose. He was critical of the Administration’s 2017 budget which didn’t meet the goal of 71 percent of HMTF for water resources. He said the .125 cents taxed on the value of goods moving through U.S. ports collects about 1.25 billion a year and much of those funds go elsewhere. In the next WRDA process DeFazio would like to progress further on using HMTF dollars for their intended purpose.

DeFazio also echoed Kirkpatrick’s concern on the difficulty of the application process pointing out that only 61 communities submitted proposals where as in 2007 they had 3000 project and policy proposals that were vetted as they developed WRDA 2007.

DeFazio closed his statement with a criticism about the “whacky ban on earmarks” arguing that it takes the decision-making process out of the hands of those that are familiar with the projects. DeFazio would like the next WRDA bill to also consider “some of our own in-house crippling that has been put in place under misbegotten rules and that we could challenge that in the next WRDA bill.”

The intent to stop party politicking with taxpayer money and the negative rhetoric associated with earmarks gained a lot of momentum for good measure. And when it first happened (and compounded by the lack of annual spending bills getting passed) many in the dredging industry were struggling to see how dredging projects would get funded. Earmark wasn’t such a bad word in this industry. But since that hurdle and the development of a new more transparent process I hope more in the industry are seeing a light at the end of the tunnel especially now after the second annual report. With any luck WRDA 2016 will refine the process even more.

THE CORPS RESPONSE: WORKING WITH NONFEDERAL SPONSORS

In her opening statement Secretary Darcy first addressed the process for developing the annual report which included a notice published in the federal register for potential non-federal partners (done May 26 2015). The deadline for proposals by non-federal interests was September 23 2015.

Darcy also clarified the Corps’ interpretation of the five criteria. Of interest she noted that the types of proposals that are not considered eligible under criterion #2 (specific congressional authorization) included proposals for modifications to non-federal activities where the Corps has provided previous assistance; and proposals for the construction of a new water resources development project that are not the subject of a complete or ongoing feasibility study.

She also noted that the federal register notice included two other important considerations for non-federal sponsors preparing proposals. “First if Congressional authorization of a new feasibility study results from inclusion in this report it is anticipated that such authorization would be for the study only and not for construction. Second a PACR is required to be completed to support potential project modifications and increases to the maximum cost of a project” Darcy said. Post Authorization Change Reports (PACRs) are used where a change in the project’s authorization is needed due to a significant change in the cost or scope of work.

Darcy said of the 61 proposals received 25 were for new feasibility studies 34 for modifications to existing projects or changes to legislation and two proposals for a study modification. Of the proposals Darcy said 30 met the criteria and were included in the Annual Report. She said projects that appeared in the appendix were there primarily because the projects were either authorized already to perform the work or “the proposal did not fit within the identified Corps core mission areas.” Darcy also clarified that for projects included in the 2016 appendix (because authority already exists to perform the work) this does not preclude the Corps from funding and carrying out the work. Of the 95 proposals that were not eligible in the 2015 Annual Report 21 resubmitted for 2016 and seven were included in the most recent report. Still not super impressive numbers.

In his opening statement U.S. Army Corps of Engineers Lieutenant General Thomas Bostick highlighted the funding challenges that the Corps faces especially with aging infrastructure which he noted was rated at a D+ by the American Society of Civil Engineers. The Corps he said manages $225 billion dollars of that infrastructure. To complete the projects that the Corps is currently budgeting Bostick said the Corps would need $19.7 billion whereas construction funding comes in at a little more than $1 billion a year. He highlighted the need for help outside of the government in the form of public private partnerships in order to complete these projects and support America’s infrastructure.

In his response to those statements Chairman Gibbs reiterated his concern that the Corps has not done enough to communicate to the regional and local authorities about the changes to the proposal process and asked about the process and how the Corps was communicating that to other agencies.

In response Sec. Darcy said that since the first report in 2015 the Corps has done a number of things to improve the process including outlining the entire process and what’s required in the federal register notice that goes out and the Corps also put it all online. She said headquarters has also directed districts to help local sponsors in their regions submit proposals.

In praise of what the Corps has accomplished Rep. Mark Sanford (R–SC) commented on the progress of the Charleston Harbor project so far. Although estimated to take seven years and $20 million to get where it is now those numbers have been cut in half Sanford said.

“You (the Corps) have worked in awfully cooperative ways with state and local agencies in some ways that maybe weren’t done in the past so I want to say thank you for what you’ve done on that front. As you look at the process going forward my question would be this: are there lessons learned that came out of what happened in Charleston that you might apply to other port projects around the country in terms of expedition the tax savings and the cooperation that we’ve seen thus far?” Sanford asked.

In response Secretary Darcy said this project will help in drafting reports for other projects. She also noted that the Charleston project was on President’s We Can’t Wait initiative which helped draw a lot of public attention to that project and was part of the impetus for the quick project approvals.

Gen. Bostick said in terms of some of the lessons learned the Corps had to work very closely with the National Oceanic and Atmospheric Administration (NOAA) and look at the priorities of both agencies and how to work together. He also mentioned the 3x3x3 rule in that it only applies to the Corps who has to interact with many other agencies. Charleston was a good example Bostick said of how those agencies could work together “to see what was the nation’s priority.”

Rep. Todd Rokita (R-IN) asked about funding for several projects where some were funding for 2016 but not 2017. He wanted to know what happened to those unfunded projects in 2017. Sec. Darcy and Gen. Bostick said the projects slow down and if they don’t receive funding eventually the projects are shut down. Rotika wanted to use his question to highlight a problem he sees with the budget process – funding over many fiscal years. He was also quick to point out Congress’ role in what he sees as a failed policy.

Prompted by a question by Rep. Garrett Graves (R-LA) about the status of dredging and draft restrictions on the Mississippi River Gen. Bostick said “this has been a major issue for the people in the Lower Mississippi Valley and our leadership has been focused on it on a daily basis. The current situation is we’ve exhausted all the dredges available in the Corps and the industry. So currently we have McFarland Newport Linholm Terrapin and the Morgan. These are all dredges doing work in this particular area and we’ve had to make tough decisions to bring dredges from other parts of the country but currently we’re doing the best that we can to manage it.”

LIVING UP TO THE VISION OF THE HARBOR MAINTENANCE TRUST FUND

The other big disappointment highlighted in the hearing revolved about the Harbor Maintenance Trust Fund (HMTF) as a big part of WRRDA directed the funds to be used for their intended purpose each year increasing the percentage that went to water resources.

Later in the hearing Rep. Rotika wanted to know if the Corps needed any clarification in the authorization law for the Harbor Maintenance Trust Fund to better help the Administration direct its money to meet the inland waterways needs as the fiscal year 2017 budget did not meet the WRRDA target for the HMTF at 71 percent going to water resource projects.

Darcy pointed out that in the last WRRDA bill Congress added some additional ways that it thought the HMTF should be used and she said in the past there are many that feel that the use of the trust fund should be expanded beyond O&M.

While Rep. Rotika was very vocal about the Corps’ inability or disregard to meet the 71 percent in the budget Darcy said “the $951 million that’s in the Presidents’ budget request for 2017 is what the Administration has determined is affordable from the overall trust fund for fiscal year 2017.” I have to agree with Rep Rotika here the Administration needs to step up for HMTF.

That was really just a highlight of the discussion during the two-hour-plus hearing. If you made it this far congratulations and thank you! You’re either a congressional junkie like me or just a determined reader. Either way I commend you! And if you’d like to watch the congressional hearings and Corps press conferences with popcorn like I do contact me and I’ll give you the web links.

There’s more in this issue on the President’s FY2017 budget the Congressional Research Service report which provides an objective look at the Corps’ progress on WRRDA 2014 and a historical look back at the evolution of the Corps Civil Works mission.