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demands will probably greatly increase the maintenance costs of projects maintained by dredging.

COMPARISON WITH FISCAL YEAR 1974 REQUEST

The request of $445 million, including $20 million for the Great Lakes diked disposal program for dredged material, compares with an appropriation for fiscal year 1974 of $426.6 million, which includes $17.5 million of fiscal year 1974 supplemental appropriation for damages caused by the floods on the Mississippi River and its tributaries in 1973. Manpower increases of $2.8 million associated with recently enacted legislation for the permit program are included in the budget request, as are increases of $9.3 million for GSA administered space.

DREDGING OPERATIONS

The question of the environmental impact of our dredging operations is still a troublesome one. The total impact of both the 1972 Water Pollution Control Act (Public Law 92-500) and the Marine Protection, Research and Sanctuaries Act of 1972 (Public Law 92-532) is not yet fully clear, but changes in dredging and disposal practices with significantly increased costs can be expected. There is as yet no conclusive evidence to indicate whether current dredging practices do, in fact, have a detrimental environmental impact. Pending the establishment of Federal guidelines and criteria by EPA for disposal of dredged material in inland waters, our budget request for fiscal year 1975 generally provides only those funds considered necessary to comply with established ocean disposal criteria and for the Great Lakes diked disposal program.

However, should decisions be reached that would result in much higher dredging costs, we will be faced with the problem of determining the extent to which Federal expenditures are justified for those projects where economic justification is questionable and which projects should be abandoned due to the lack of economic justification for further Federal maintenance.

Based on the foregoing, we consider it most important to continue studies into the environmental effects of our dredging operations. The corps' comprehensive program of research, study and experimentation relating to dredged material is making significant progress. Initial research work units under this program are nearing completion and final reports with some specific operational recommendations should be available to our districts by the end of the current fiscal year. Funds for this research program are included in the budget.

FEDERAL ROLE IN DREDGING

I am pleased to report that the national dredging study is now actively underway. The study is being accomplished under contract with a reputable management consulting firm (A. D. Little, Inc.) which is now gathering and evaluating data on the policies and practices of the corps in conducting its dredging work and on the dredging industries operations. The scope and general details of the study were developed by an advisory committee consisting of retired former corps top level employees who have had extensive experience in the dredging field, representatives of the dredging industry and representatives of the waterway users. The study is scheduled to be completed by the contractor in the second quarter of fiscal year 1975. It will then be reviewed by the advisory committee and the report with the corps' recommendations will be submitted to the Congress shortly thereafter.

EMERGENCY DREDGING,

SOUTHWEST PASS, MOUTH OF MISSISSIPPI RIVER

Of recent concern to the corps has been the unprecedented situation which we have been combatting in the Southwest Pass at the mouth of the Mississippi River. The flood in the spring of 1973 and continued high river stages that have prevailed during the past few months have carried tremendous quantities of material down the river resulting in an extremely high rate of shoaling in the Southwest Pass. The corps has been doing everything physically possible to alleviate the obstructive shoal conditions and trust that full channel dimensions will again be available in the near future. During this period traffic has been able to traverse this reach of channel but often with other than full loads.

A hydraulic model study of the Southwest Pass improvement and the present maintenance problems has been initiated. The model is currently being adjusted

and verified. It is estimated that this phase of the work will be completed during May 1974 and the model will then be ready for study of both the 40-foot approved channel and contemplated improvement of the project.

MAINTENANCE BACKLOG

The problem of O. & M. backlog has received considerable review during the past year. The bulk of this backlog lies in the areas of channel maintenance and structural maintenance and repair. In the former it is corps policy to provide channel dimensions adequate for the traffic utilizing the waterway. When required by funding constraints, the moderate shoaling along channel edges is allowed to remain and maintenance of low-priority projects may be deferred. In the case of structures, repair work may be deferred if such delays will not significantly endanger the integrity of the structure or seriously impair the operations. Of course, this deferred work must eventually be accomplished. However, we feel we have been accomplishing the most essential of our work to preclude a backlog of critical items that would seriously impair the functioning of our projects. We do face a very tight situation in dredging where we are faced with increased sedimentation from floods such as that on the Mississippi. On the Great Lakes the high-lake levels have reduced the necessity for maintenance dredging of many channels. As the lake levels go down we may face a serious problem in future years.

EFFORTS TOWARD ECONOMY

We recognize that the increase in magnitude and complexity of the civil works works operation and maintenance activities demands that the program be managed with maximum efficiency. Our efforts are being directed to achieve maximum economies in our operations so that increases in our annual funds requirements can be minimized. To this end we have underway an intensive program utilizing the most advanced state of the art of scientific and engineering knowledge to develop new systems, techniques, and improvements to assure maximum operational efficiencies. We have already realized significant benefits from this program and anticipate greater benefits in the future.

REGULATORY PERMIT PROGRAM

The laws for the preservation and protection of the navigable waters of the United States, administered by the Department of the Army-acting through the Corps of Engineers-were enacted at the turn of the century and were administered, historically, in the interest of navigation. In recent years, however, the permit program has been broadened to consider the effect on other aspects of the public interest.

Subsequent legislation such as the Fish and Wildlife Coordination Act, the National Environmental Policy Act of 1969, the Federal Water Pollution Control Act Amendments of 1972, the Marine Protection, Research, and Sanctuaries Act of 1972, have added significantly to the administrative burdens of evaluating proposed activities in navigable waters or ocean waters.

Traditionally, the corps regulatory authority was limited to "navigable waters of the United States." The corps has recently refined its definition of "navigable waters of the United States" and in so doing, has asserted regulatory jurisdiction over many heretofore unregulated waterbodies. This new regulation requires corps personnel to accumulate and review data on the Nation's waterways from a factual and legal viewpoint to determine which fall within this refined definition.

The 1972 laws provide for the issuance of permits for the disposal of dredge or fill material in navigable waters and ocean waters. Additionally, they require that an opportunity be given for public hearings which impose additional burdens on the corps. Limited experience to date indicates the hearings will be heavily attended. Preparation and analyses of transcripts will be an additional task. In order to instill and maintain public confidence in the Department of the Army's regulatory role, an aggressive program of regulation, inspection, and enforcement has been initiated. Establishment of such a program requires additional effort in:

(a) Processing and coordination.-Timely action on permit applications is vital to instill public trust in the program. Coordination requirements which were created by some of the recent legislation which I mentioned before are having

a significant impact on the program. The average processing time has increased from about 2 months in 1969 to almost 4 months in 1973.

(b) Environmental concerns.-The number of environmental impact statements prepared in connection with permit activities during fiscal year 1973 was more than double the number prepared in the previous years 1969 through 1972. Special consideration of permits in wetland areas will require studies of cumulative effects of activities on the complete and interrelated wetland areas.

(c) Supervision and enforcement.-A regulatory program cannot be maintained without a strong supervision and enforcement program. In fiscal year 1973, almost 9,000 permits and letters of permission were issued and we expect the number of applications to increase significantly in fiscal year 1975. An inspection staff must be made available to supervise this work. Additionally, detection of unauthorized, illegal activities must be accomplished. Following detection, accumulation of a detailed factual evidentiary data, and a legal review thereof of each individual case must be undertaken to determine whether there is sufficient evidence to substantiate criminal and/or civil decision to forward the case to the Department of Justice for appropriate prosecution.

In summary, we consider that the regulatory permit program is a program capable of assisting the corps in its continuing lead role in the orderly development and preservation of the Nation's water and other natural resources. However, to accomplish these objectives, the program must be adequately staffed, actively implemented, and vigorously enforced, and, at the same time, it must receive the public acceptance and response necessary to make it a viable program capable of adequately protecting the public interest. It is to this end that we intend to carry out the regulatory permit program.

SUMMARY STATEMENT

FOR

CONSTRUCTION AND PLANNING

OVERALL BUDGET REQUEST

The budget requests $927,500,000 for the "Construction, General" appropriation and $93,500,000 for our planning and construction activities under the "Flood Control, Mississippi River and Tributaries" appropriation. I believe that, consistent with the overall objectives of the administration to control inflation, minimize unemploymnt, and avoid a general increase in tax rates, the budget request for this phase of the Army civil works program will permit a well balanced program which will make reasonable progress toward fulfillment of the Nation's high priority water resource needs.

PROGRAM PRIORITIES

As mentioned by the Chief of Engineers in his opening statement, priority in allocation of funds, within the overall budget request, has been given to those projects which will provide hydroelectric power, urban flood control, and municipal and industrial water supply benefits. The need or upgrading recreation facilities at completed projects has received increased emphasis when compared with past years. Projects providing commercial navigation benefits continue to receive a higher priority than those which benefit recreational boating.

PROJECT DELAYS

The budget request will impose delays in completion of 67 of the 233 projects for which construction funds are requested under the "Construction general" appropriation. The amount requested for construction under the "Flood control, Mississippi River and tributaries" appropriation will result in completion delays on 9 of the 12 project features. In addition to those projects delayed due to funding, completion dates have been delayed on 78 other budgeted projects under the "Construction, General" appropriations and one project feature under the "Flood control, Mississippi River and tributaries” appropriation because of factors such as local cooperation problems, planning and coordination delays, and litigation.

NEW PLANNING AND CONSTRUCTION STARTS

As you know, the budget request includes funds for initiation of seven new construction starts and five new planning starts. Each of these projects underwent rigorous scrutiny prior to inclusion in the budget. For each of these projects, its benefit-to-cost ratio exceeds unity even if evaluated at a 6% percent discount rate, as proposed by the new principels and standards; there were no known serious unresolved environmental issues; the authorization was based on a report that has cleared the executive departments, review process and been transmitted to the Congress; and no local cooperation difficulties were anticipated. Additionally, for the seven new construction starts the draft environmental impact statement had been filed with the Council on Environmental Quality, and the final environmental impact statement was either on file or was scheduled for filing by the end of March 1974.

TRANSFERS IN CURRENT YEAR

I wish to express my appreciation to the committee for your assistance and cooperation in permitting us to achieve the maximum effective use of available funds through transfers. During fiscal year 1974, the committee has approved six transfers exceeding the transfer authority delegated by the committee to the Chief of Engineers. These transfers permitted reallocation of funds to 14 projects, and permitted the corps to effectively utilize $8,723,000 which might otherwise have been unobligated at the end of the fiscal year on the seven projects from which the funds were made available. I might also mention that, within the authority delegated to the Chief of Engineers, we have made transfers though the end of December 1973, to 47 projects totaling about $28 million. The funds for these transfers came from 62 projects on which we have experienced delays. This flexibility in utilization of available funds has minimized projects delays, and has permitted us to make maximum progress with available funds toward fulfillment of the Nation's water resource needs.

PROGRAMED CARRYOVER

The budget program for fiscal year 1975 does not include any plan for placing funds in budgetary reserve in fiscal years 1974 or 1975. Additionally, I am glad to be able to report that all funds previously placed in budgetary reserve, for fully authorized projects, have now been released, including those funds initially scheduled for release in the fourth quarter of fiscal year 1974 for initiation of fiscal year 1973 new planning and construction starts. Of course, some funds remain in budgetary reserve, in those cases where projects are not fully authorized.

MONETARY AUTHORIZATION

Although no funds are included in the budget for any projects not fully authorized by the Congress, the budget does include funds for projects in river basins subject to monetary limitations which require enactment of additional monetary authorization. At this time, we are deficient in monetary authorization to cover scheduled contractor earnings in fiscal year 1974 in three river basins. In fiscal year 1975 we will run out of monetary authorization in an additional eight basins. In all such cases, the increased monetary authorization included in the conference version of the River Basin Monetary Authorization Act of 1974 which was recently passed by the Congress is sufficient to cover the amounts requested in this budget.

ADVANCE ENGINEERING AND DESIGN

The sum of $18,260,000 is requested for advance engineering and design under the "Construction, general” appropriation. This amount will permit initiation of five new planning starts, including one on which planning will be completed with the budget amount, continuation of planning on 64 projects, and completion of planning on 27 additional projects: $285,000 is also included within the overall request for the "Flood control, Mississippi River and tributaries" appropriation for continuation of planning on two project features. The amounts requested, together with anticipated carryover balances at the end of fiscal year 1974, will provide about the same level of obligations for planning as we have had in the last several years.

SPECIAL CONTINUING AUTHORITIES

In fiscal year 1973, due to a variety of factors, primarily the longer planning period required because of environmental considerations, large unobligated balances developed in our special continuing authority programs for small flood control and beach erosion projects and for snagging and clearing. Available funds on these programs are adequate through fiscal year 1975. For this reason our requirements for funds under the special continuing authorities of the Chief of Engineers are limited to the need for $1 million for emergency bank protection, the current statutory limit, and $2,830,000 required for small navigation projects.

RECREATION AT COMPLETED PROJECTS

As mentioned by the Chief of Engineers in his opening statement, the request for recreation development at completed project is based on the new administration cost-sharing policy adopted last year. The overall request of $25 million, compared to $12.4 million appropriated last year, reflects the increased emphasis which this phase of our program is now receiving; $5 million within the overall request will provide for upgrading existing sanitary facilities to be consistent with current Federal and State pollution abatement laws. The remaining $20 million are requested for development of new recreation facilities for areas where local interests have indicated their willingness and ability to assume 50 percent of the construction cost and operate and maintain facilities after completion. The impact of the energy crisis on recreational attendance at corps projects is difficult to predict at this time. Generally, we anticipate a significant increase in attendance at those projects close to urban centers as people seek recreation opportunities closer to their homes. Conversely, we anticipate a reduction in attendance at the more remote projects that have been primarily used for vacation-type recreation. In this regard I should point out that about two-thirds of corps lakes are located within 50 miles of standard metropolitan statistical areas.

IMPACT OF ENERGY CRISIS ON CONSTRUCTION

As mentioned by the Chief of Engineers, the energy crisis has created two problems which are causing some difficulties for our construction program. The first is, of course, the problem associated with obtaining sufficient fuel for contractor operations. We have been working very closely with the regional Federal energy offices and have, thus far, been able to avert major disruptions due to fuel shortages. The second problem, an uncertain supply of construction materials, is less susceptible to control. However, to date, we have experienced only minor disruptions due to material shortages. Both of these factors can be expected to affect bid prices for our construction contracts. At this time, we do not have sufficient information available to predict just how severely our construction costs will be affected. We are attempting, where feasible, to minimize the effect of the energy crisis and possible material shortages on bid prices by packaging our work into smaller contracts with shorter completion periods. We will continue to keep the committee informed of major developments in this area as they occur.

BACKLOG OF UNSTARTED PROJECTS

The Army Corps of Engineers civil works backlog of specifically authorized active projects consists of 326 projects with a Federal cost of $11.7 billion for which Congress has not yet appropriated initial construction funds. Included in the total backlog are seven projects costing $483 million, on which only land acquisition funds have been appropriated.

STATUS OF PRECONSTRUCTION PLANNING

The status of preconstruction planning of the unstarted projects is as follows:

1. Fully funded for preconstruction planning.-We have 65 projects with a Federal cost of $1.794 million, on which all preconstruction planning funds have been provided.

2. No preconstruction planning required.-In addition, there are 19 projects costing $37.8 million, which will require no preconstruction planning and on which construction can be started when funds are appropriated for that purpose.

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