The Planning Process

          Projects to improve navigation of rivers and harbors are the business of the US Army Corps of Engineers. Such projects are funded by the Federal government with participation by a “non-Federal sponsor,” usually a state. The cost-sharing formula depends on the depth. For projects to increase the depth of a channel to more than 45 feet, as a channel for the North Carolina International Terminal would be, the state share is 60%.

          Nevertheless, the project would be designed and constructed by the Corps of Engineers.

          Any such project is preceded by a lengthy and complex planning process to determine the best solution for a perceived problem, to determine whether it is economically feasible, and to ascertain the environmental impacts. The process has two stages: the reconnaissance phase and the feasibility phase.

The Reconnaissance Phase

          The reconnaissance phase of the planning process is often characterized by the Corps as the determination of whether there is a “Federal interest” in pursuing a project. In the language of section 905(b) of the Water Resources Development Act of 1986, “Such reconnaissance study shall include a preliminary analysis of the Federal interest, costs, benefits, and environmental impacts of such project... .”

          Whether there is a “Federal interest” is generally a matter of whether the project lies within Federal authority and supports Federal objectives. In the Planning Guidance Notebook, Engineer Regulation 1105-2-100, which develops the requirements and the procedures for both the reconnaissance phase and the later feasibility phase of planning studies, the “Federal objective” is defined: “The Federal objective of water and related land resources project planning is to contribute to national economic development consistent with protecting the Nation’s environment, pursuant to national environmental statutes, applicable executive orders, and other Federal planning requirements.”

          The reconnaissance phase is fully funded by the Federal government. Normally, the study would take a year, and would cost about $100,000.

          Click here to see progress on the reconnaissance study.

The Feasibility Phase

          Should the Corps determine at the reconnaissance phase that there is a “Federal interest” in proceeding with the project, funding would be sought from Congress and from the “non-Federal sponsor” in equal proportion. For larger projects, such as a new channel in the Cape Fear River for the proposed container terminal at Southport, the cost of this study would be several million dollars, and it may take from three to a dozen years.

          The usual practice of the Corps in these studies is separate the project into two parts, the feasibility analysis and the environmental impact statement. The feasibility analysis is a quantitative exercise, which involves computation and comparison of benefits and costs over the life of the project, assumed to be fifty years. An excess of benefits over costs would mean the project contributes to national economic development. Of course, measuring the benefits and costs of something that has not yet happened, and will be in place for fifty years or more, is uncertain at best.

          The environmental part of the study is a greater source of mischief. This is an environmental impact statement prepared according to the National Environmental Policy Act. The Corps takes a compliance approach; legal requirements are determined and the project is measured against those requirements. If minimum standards are met, that is considered sufficient. If it is necessary to take some steps to mitigate environmental damage, such as establishing wetlands to replace wetlands lost to dredging, the cost of that mitigation is counted in the costs to be compared to benefits in the economic analysis; otherwise the environmental impacts, however extensive, are effectively assigned a value of zero so the feasibility analysis is unaffected.

The Council on Environmental Quality

          The Corps has come under criticism in recent years for inadequate attention to environmental matters in its studies. In the Water Resources Development Act of 2007, Congress stated a national policy of “protecting and restoring natural systems,” and mandated revision of the Corps’s Principles and Guidelines for studies to better address environmental issues by use of the “best available techniques.... .” Sec. 2031.

          The Corps did prepare a draft revision of the the Principles and Guidelines, but in early 2009 the project was preempted by a White House initiative to have the Council on Environmental Quality revise the Principles and Guidelines for applicability to the Corps and other government agencies involved in water resource projects, such as the Bureau of Reclamation.

          The CEQ project is now in a second draft. The draft contemplates valuing ecosystem services so that any benefits or detriments to the environment would be quantified and included in the benefit/cost analysis. The draft also requires a greater degree of public involvement in Corps studies. Unfortunately, the effective date of the revised Principles and Guidelines would be after completion of the reconnaissance study for the North Carolina International Terminal.

 Click here to see the draft CEQ Principles and Guidelines.