EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

September 20, 2000
(Senate)

Restoring the Everglades Provisions

S. 2796 would authorize ten interrelated water resources projects whose construction, operation, and maintenance is an essential first step toward achieving the bipartisan goal of restoring a national treasure, America's Everglades. The Everglades provisions are the product of hard work and negotiation among the Senate Committee on Environment and Public Works, the Administration, the State of Florida, and others. The Everglades provisions in the manager's amendment reflect an agreement with the Administration and the State of Florida on the key aspects of the bill. As so revised, the bill would authorize a near-term program for meeting nationally significant restoration objectives in this unique ecosystem while addressing the water supply concerns of the State of Florida.

Premature Project Authorizations

Unlike the proposed Everglades authorization, which has undergone extensive planning, interagency and State and local coordination, and review within the Executive Branch, nearly all of the significant new projects and most of the significant project modifications that S. 2796 would authorize still are in the planning stage or are undergoing review. The Administration objects strongly to these premature authorizations, such as the more than 20 projects in subsection 101(b), which would cost Federal taxpayers more than $1 billion to build, about one-third of the Federal costs of the entire bill according to Corps of Engineers estimates.

Until the Corps of Engineers has completed its project planning process (including National Environmental Policy Act compliance) and the Executive Branch has completed the review process established under Executive Order 12322, which has been required for all such water projects since 1981, neither the Executive Branch nor the Congress is likely to know which of these proposals may raise significant concerns regarding its scope, economic justification, environmental acceptability, cost-sharing, or other issues. The many provisions in S. 2796 that would short-circuit this process, such as those that would authorize a project based upon a report by the Chief of Engineers, are premature and inappropriate. The Chief's reports, which precede the recommendations of the Department of the Army and do not reflect a coordinated, complete review by the Executive Branch, often do not answer fully the significant questions that a proposed project may raise. For example, the proposal in the manager's amendment to authorize the repair and rehabilitation of New Savannah Bluff Lock and Dam (SC/GA) could prejudice the outcome of ongoing project planning and National Environmental Policy Act analysis, and potential measures to ensure fish passage.

The Army Corps of Engineers faces a large construction backlog under any reasonable budget scenario. At current funding levels, there would need to be a 25-year respite from further project authorizations just to finish the previously authorized work listed on its backlog of "active" projects. Budget constraints have already caused the delay of scheduled completion dates of most ongoing construction projects, and virtually all of the projects in WRDA 1999, enacted a year ago, and more than a hundred from WRDA 1996, enacted three and one half years ago, have not yet even started construction. Consequently, allowing the completion of the planning and review process for additional proposed projects and project modifications, and the submission of Executive Branch recommendations to Congress prior to its decision on their authorization, should not affect such projects unduly.

Missouri River Valley Authorization

The Administration supports the section 308 authorization of fish and wildlife studies, a pilot mitigation program on the Upper Missouri River, and further funding for other mitigation, but strongly objects to language in subsections (d) and (e) that could subordinate fish and wildlife conservation to other project purposes. These provisions would limit and complicate unreasonably ongoing Federal efforts to protect, enhance, and restore habitat for Missouri River fish and wildlife and also would narrow unreasonably the options available to avoid jeopardy to Federally listed, threatened, or endangered species. We understand that section 308(d) was intended to clarify that the Corps has the necessary authority to protect, enhance, and restore fish and wildlife habitat on the Missouri River. However, as drafted, the section would impair that authority. We strongly recommend that subsection 308(d) be amended to strike the language "to the extent consistent with other authorized project purposes", after "Missouri River", and that subsection 308(e) be stricken in its entirety.

Hydroelectric Power Project Financing

The Administration recognizes the need to maintain and to increase electric generating capacity at certain Federal water projects, but has serious concerns with a provision in the manager's amendment on this issue, as drafted, which would grant the Secretary of the Army broad authority to finance the costs of operating, maintaining, rehabilitating, and modernizing certain Federal hydroelectric facilities with funds paid directly by preference power customers. While the Secretary would be able to reject offers of, or establish conditions for, such financing under the manager's amendment provision, funds provided under this authority could create expectations that could undermine the existing authority of the Army Corps of Engineers to operate Federal dams and reservoirs in a manner that best would achieve a reasonable balance among the competing project purposes. The provision should be amended to establish more clearly that the facilities will remain under Federal ownership and control. To protect Federal taxpayer interests, it also should be amended to specify that the preference power customer investors must assume the economic risks associated with such investments, shall not receive any assurances regarding a likely rate of return, and may not make such investments with funds that they otherwise would have used to repay existing obligations to the Treasury. The Administration objects to the provision as drafted, but would welcome a clarifying amendment to resolve these concerns.

Additional Concerns

The Administration is pleased that S. 2796 includes several new policy and program authorities and changes to existing authorities proposed by the Administration, but is concerned that the bill does not include a much-needed increase in the local cost-share for structural flood damage reduction projects. The Administration proposed an increase from 35 percent to 50 percent, which would provide a truer picture of the need for and value of these projects than is now available. This proposed increase also would give local project sponsors an incentive to consider non-structural flood damage reduction alternatives that may be less environmentally harmful. The ability-to-pay reform proposed by the Administration and included in S. 2796 would ensure that justified projects can go forward regardless of a community's ability to finance the local share of construction costs.

The Administration also seeks the inclusion of its proposal to authorize limited Corps funding of brownfields cleanup work that would improve the quality, conservation, and sustainable use of streams, rivers, lakes, wetlands, or floodplains.

In addition, the Administration opposes provisions that would: (1) authorize economically unjustified projects or waive economic justification requirements; (2) authorize projects that fall outside the broad missions of the Army Corps of Engineers; or (3) authorize unwarranted special exemptions from cost-sharing or other requirements.

Pay-As-You-Go-Scoring

S. 2796 would affect direct spending and receipts; therefore, it is subject to the pay-as-you-go (PAYGO) requirement of the Omnibus Budget Reconciliation Act of 1990. OMB is currently developing its PAYGO estimate for S. 2796.

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