B-167941.OM,(1), MAR 16, 1981

B-167941.OM,(1): Mar 16, 1981

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RESPONSES TO THE QUESTIONS RAISED BY THE SECOND AND FOURTH ISSUES ARE NOW BEING PREPARED. IF THE TTW IS TERMINATED. APPARENTLY THE AMOUNT AND NATURE OF THE ACREAGE SUBJECT TO FLOWAGE EASEMENTS IS NOT COMMERCIALLY SIGNIFFICANT (ACCORDING TO THE CORPS. ISSUE I - NAVIGATION BENEFITS QUESTION: WHAT WERE THE PRINCIPLES AND CRITERIA APPLICABLE TO THE 1975/1976 KEARNEY ANALYSIS OF TTW NAVIGATION BENEFITS - THE 1973 PRINCIPLES AND STANDARDS INCLUDING THE CORPS" IMPLEMENTING REGULATIONS. OR IS THE CORPS OF ENGINEERS REQUIRED TO OBTAIN SPECIFIC CONGRESSIONAL AUTHORIZATION BEFORE UNDERTAKING ADDITIONAL NAVIGATION IMPROVEMENTS ON THE BWT. SEC. 5 (1976) PERMITS THE CORPS OF ENGINEERS TO REPLACE A LOCK OR DAM OR SIMILAR STRUCTURE WHICH HAS BECOME INEFFECTIVE OR DAMAGED WITHOUT CONGRESSIONAL APPROVAL (THAT IS.

B-167941.OM,(1), MAR 16, 1981

TENNESSEE-TOMBIGBEE WATERWAY PROJECT (CODE 080570; B-167941-O.M.)

DIRECTOR, CED;

BY MEMORANDUM OF DECEMBER 22, 1980, DON CLUFF, FORMER SENIOR GROUP DIRECTOR, CED, IN CHARGE OF THE TENNESSEE-TOMBIGBEE WATERWAY (TTW) AUDIT, ASKED FOR OUR OPINION ON FIVE LEGAL ISSUES GERMANE TO THE AUDIT. THIS MEMORANDUM RESPONDS TO THE QUESTIONS RAISED BY THE FIRST AND THIRD ISSUES. RESPONSES TO THE QUESTIONS RAISED BY THE SECOND AND FOURTH ISSUES ARE NOW BEING PREPARED.

THE FIFTH ISSUE CONCERNS THE VALUE, IF THE TTW IS TERMINATED, OF FLOWAGE EASEMENTS THE CORPS OF ENGINEERS ACQUIRED ON LAND SUBJECT TO POSSIBLE FLOODING UPON COMPLETION OF THE PROJECT. MR. KEPPLINGER OF MY STAFF DISCUSSED THIS MATTER AT SOME LENGTH WITH YOUR AUDIT STAFF. APPARENTLY THE AMOUNT AND NATURE OF THE ACREAGE SUBJECT TO FLOWAGE EASEMENTS IS NOT COMMERCIALLY SIGNIFFICANT (ACCORDING TO THE CORPS, THIS ACREAGE INCLUDES LESS THAN 2000 ACRES OF TIMBER) AND ANY VALUE ASCRIBED TO IT WOULD NOT MATERIALLY AFFECT THE COSTS OF TERMINATING WORK ON THE TTW. ACCORDINGLY, NO NEED EXISTS TO RESPOND TO QUESTION 5.

ISSUE I - NAVIGATION BENEFITS

QUESTION:

WHAT WERE THE PRINCIPLES AND CRITERIA APPLICABLE TO THE 1975/1976 KEARNEY ANALYSIS OF TTW NAVIGATION BENEFITS - THE 1973 PRINCIPLES AND STANDARDS INCLUDING THE CORPS" IMPLEMENTING REGULATIONS, SECTION 7(A) OF THE DEPARTMENT OF TRANSPORTATION ACT, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS, OR SENATE DOCUMENT 97, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS?

ANSWER:

(A) THE 1973 P & S, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - INAPPLICABLE;

(B) SECTION 7(A) OF THE DOT ACT, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - APPLICABLE;

(C) SD 97, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - AS DISCUSSED BELOW, APPLICABLE IN PRINCIPLE.

ISSUE III - IMPROVEMENT OF THE BLACK WARRIOR-TOMBIGBEE

QUESTION:

MAY THESE IMPROVEMENTS BE FUNDED WITH OPERATION AND MAINTENANCE (O&M) APPROPRIATIONS, OR IS THE CORPS OF ENGINEERS REQUIRED TO OBTAIN SPECIFIC CONGRESSIONAL AUTHORIZATION BEFORE UNDERTAKING ADDITIONAL NAVIGATION IMPROVEMENTS ON THE BWT, SOUTH OF DEMOPLIS, ALABAMA?

ANSWER: ALTHOUGH 33 U.S.C. SEC. 5 (1976) PERMITS THE CORPS OF ENGINEERS TO REPLACE A LOCK OR DAM OR SIMILAR STRUCTURE WHICH HAS BECOME INEFFECTIVE OR DAMAGED WITHOUT CONGRESSIONAL APPROVAL (THAT IS, WITH O & M FUNDS), CONGRESSIONAL AUTHORIZATION IS REQUIRED PURSUANT TO THE TERMS OF 33 U.S.C. SEC. 401 (1976) BEFORE THE CORPS OF ENGINEERS MAY REBUILD A STRUCTURE TO HANDLE "EXPECTED FUTURE INCREASES IN TRAFFIC." ATCHISON, TOPEKA & SANTA FE RY. CO. V. CALL AWAY, 382 F. SUPP. 610, 617 (P.D.C. 1974) (COPY ATTACHED). WITH RESPECT TO NAVIGATION IMPROVEMENTS ON THE BWT, WE UNDERSTAND THAT THE CORPS TAKES THE POSITION THAT CONGRESSIONAL APPROVAL IS REQUIRED BEFORE UNDERTAKING THE IMPROVEMENTS CONTEMPLATED BY PLAN C OF THE KEARNEY STUDY.

ATTACHED IS A DETAILED ANALYSIS OF THESE ISSUES.

ATTACHMENT

TENNESSEE TOMBIGBEE WATERWAY ISSUES

DIGESTS:

1. APPLICABLE GUIDANCE FOR 1975-1976 ECONOMIC REANALYSIS OF TENNESSEE-TOMBIGBEE WATERWAY, A POST-AUTHORIZATION STUDY, WAS SECTION 7(A) OF DEPARTMENT OF TRANSPORTATION ACT, 49 U.S.C. 1656(A), STATUTORY ENACTMENT OF OF METHOD FOR COMPUTING NAVIGATION BENEFITS CONTAINED IN SENATE DOCUMENT 97, AND NOT PRINCIPLES AND STANDARDS PROMULGATED BY WATER RESOURCES COUNCIL IN 1973 FOR APPLICATION TO WATER RESOURCES PROJECTS IN PLANNING STAGE.

2. CORPS OF ENGINEERS MAY NOT USE ITS OPERATION AND MAINTENANCE FUNDS FOR NAVIGATION IMPROVEMENTS ON BLACK WARRIOR-TOMBIGBEE WATERWAY IF IMPROVEMENTS ARE MADE TO ACCOMMODATE FUTURE INCREASES IN TRAFFIC, AND MUST SEEK CONGRESSIONAL AUTHORIZATION OF IMPROVEMENTS. CF. ATCHISON, TOPEKA AND SANTA FE RY. CO. V. CALL AWAY, 384 F. SUPP. 610, 617 (D.C.D.C. 1974)

I - NAVIGATION BENEFITS

BACKGROUND:

SINCE THE TTW'S AUTHORIZATION IN 1946, PUB. L. 79-525, 79TH CONG., 2ND SESS. (1946), THE PROJECT'S BENEFITS AND COSTS HAVE BEEN RESTUDIED ON SEVERAL OCCASIONS. IN 1951, AS A RESULT OF A REPORT BY THE INVESTIGATIVE STAFF OF THE HOUSE APPROPRIATIONS COMMITTEE, THE TTW WAS PLACED IN A "DEFERRED-FOR-RESTUDY" CATEGORY. HDF V. ALEXANDER, 467 F. SUPP. 885, 891 (N.D.MISS. 1979). THE PROJECT REMAINED IN A "DEFERRED FOR-RESTUDY" CATEGORY UNTIL 1957, WHEN CONGRESS DIRECTED A RESTUDY OF THE ECONOMIC JUSTIFICATION OF THE PROJECT. ID. AT 992. THE RESTUDY, KNOWN AS GENERAL DESIGN MEMORANDUM NO. 1 (CDM 1), WAS COMPLETED JUNE 30, 1960, SUBSEQUENTLY APPROVED BY THE CHIEF OF ENGINEERS IN APRIL 1962, AND TRANSMITTED TO CONGRESS. GDM 1 CONCLUDED THAT THE PROJECT HAD A POSITIVE BENEFIT/COST (B/C) RATIO OF 1.08 TO 1. ID. AT 893.

IN 1964, IN THE 1965 PUBLIC WORKS APPROPRIATION ACT, PUB. L. 88-511, 78 STAT. 682 (1964), CONGRESS AGAIN DIRECTED THE REEVALUATION OF PROJECT ECONOMICS. ON JUNE 30, 1966, THE STUDY WAS TRANSMITTED TO THE CHIEF OF ENGINEERS IN A DOCUMENT DESIGNATED AS SUPPLEMENT TO GDM 1. AS TRANSMITTED TO CONGRESS ON MARCH 30, 1967, THE PROJECT, ON THE BASIS OF 300' FOOT WIDTH, HAD A B/C RATIO OF 1.24 TO 1. TRANSPORATION SAVINGS WERE "REEVALUATED ON THE BASIS OF CURRENT CRITERIA," SUPP. TO GDM 1 AT PARA. 10, INCLUDING "A FREIGHT RATE ANALYSIS IN ACCORDANCE WITH CURRENTLY APPLICABLE PRINCIPLES IN EM 1120-2-101." ID. AT PARA. 21.

TWENTY-FOUR YEARS AFTER AUTHORIZATION, CONGRESS IN 1970 APPROPRIATED CONSTRUCTION FUNDS OF $1 MILLION FOR FISCAL YEAR 1971, PUB. L. NO. 91 439, 84 STAT. 890 (1970). BASED UPON A JULY, 1970, ECONOMIC ANALYSIS, THE PROJECT'S B/C RATIO WAS 1.6 TO 1. HDF V. CORPS OF ENGINEERS, 348 F. SUPP. 916, 924 (N.D.MISS. 1972), AFF'D HDF V. CORPS OF ENGINEERS, 492 F.2D 1123 (5TH CIR. 1974). FROM 1971 TO COMPLETION OF THE CORPS' MOST RECENT ECONOMIC REANALVSIS IN 1975-1976, THE TTW'S B/C RATIO WAS ANNUALLY UPDATED ON THE BASIS OF GENERAL ECONOMIC INDICATORS SUCH AS THE CONSTRUCTION COST ESCALATION INDICES OF THE ENGINEERING NEWS RECORD. PUBLIC WORKS FOR WATER AND POWER DEVELOPMENT AND ENERGY RESEARCH APPROPRIATION FOR FISCAL YEAR 1977: HEARINGS BEFORE THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, UNITED STATES SENATE, 96TH CONG., 2ND SESS., PART 1, AT 172 (TESTIMONY OF GENERAL LETELLIER).

IN 1975, HOWEVER, THE CORPS OF ENGINEERS RETAINED A. T. KEARNEY, MANAGEMENT CONSULTANTS (KEARNEY), TO CONDUCT A NEW FIELD TRAFFIC SURVEY AND ESTIMATE THE TRANSPORTATION BENEFITS TO BE DERIVED FROM THE WATERWAY. CHANGED CONDITIONS BOTH IN THE COST OF CONSTRUCTING THE PROJECT AND IN THE TYPE AND MAGNITUDE OF TRAFFIC THAT WOULD MOVE ON THE WATERWAY WERE GIVEN AS REASONS FOR THE UPDATE. SEE ID. AT 171-72; PUBLIC WORKS FOR WATER AND POWER DEVELOPMENT AND ENERGY RESEARCH APPROPRIATIONS FOR FISCAL YEAR 1976: HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, UNITED STATES SENATE, 84TH CONG., 1ST SESS. ON H. R. 8122, PART 1, AT 668 (TESTIMONY OF GENERAL LETELLIER). AS A RESULT OF THE 1975/1976 ECONOMIC REANALYSIS CONDUCTED BY THE CORPS, THE B/C RATIO FOR THE TTW PRESENTED TO THE CONGRESS DURING THE FISCAL YEAR 1977 BUDGETARY PROCESS WAS 1.1 INITIAL, AND 1.3 ULTIMATE. PUBLIC WORKS FOR WATER AND POWER DEVELOPMENT AND ENERGY RESEARCH APPROPRIATION BILL, 1977, HEARINGS BEFORE THE SUBCOMMITTEE ON PUBLIC WORKS OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, 94TH CONG., 2ND SESS., PART 1 AT PP. 622, 628.

IN THE MOST RECENT ROUND OF TTW LITIGATION, THE PLAINTIFFS URGE THAT THE CORPS MUST SUSPEND FURTHER CONSTRUCTION OF THE TTW PENDING A THOROUGH REEVALUATION OF PROJECT BENEFITS AND COSTS ON THE GROUND THAT THE CORPS HAS VIOLATED STATUTES AND REGULATIONS GOVERNING THE DEVELOPMENT OF THE TTW'S B/C RATIO. PLAINTIFFS' AMENDED COMPLAINT, COUNT III, SDF V. ALEXANDER, EC 77-53-M, EC-77-54-K (N.D.MISS. OPINION DATED OCTOBER 1, 1980). ONE SUBISSUE INVOLVED IN THIS ALLEGATION IS THE APPLICABLE GUIDANCE TO BE USED IN DEVELOPING AN ESTIMATE OF NAVIGATION BENEFITS. THUS, PLAINTIFFS HAVE CHARGED THAT WHILE WATER PROJECT GUIDELINES IN SENATE DOCUMENT 97 WERE BINDING ON THE CORPS' B/C ANALYSIS OF NAVIGATION BENEFITS FROM 1962 TO 1973, THE 1973 PRINCIPLES AND STANDARDS PROMULGATED BY THE WATER RESOURCES COUNCIL WERE APPLICABLE FROM 1973 TO THE PRESENT. ID. AT PARA. 157-158. PLAINTIFFS' ARGUMENT IS FURTHER DEVELOPED IN THE PLEADINGS:

"THE PRINCIPLES AND STANDARDS PROMULGATED BY THE WATER RESOURCES COUNCIL WERE ADOPTED BY THE CORPS, AS MODIFIED, AND PUBLISHED IN THE CODE OF FEDERAL REGULATIONS AS PARTS 290-295 OF TITLE 33 (NOV. 10, 1975). THE STATED PURPOSE OF THESE REGULATIONS IS TO 'ESTABLISH GUIDANCE FOR CONDUCTING FEASIBILITY STUDIES FOR WATER AND RELATED LAND RESOURCES, CONSISTENT WITH THE PLANNING REQUIREMENTS OF THE WRC PRINCIPLES AND STANDARDS (P & S) AND RELATED POLICIES.' 33 C.F.R. SEC. 290.1. THE 1976 ECONOMIC REANALYSIS OF THE TENNESSEE-TOMBIGBEE WATERWAY WAS JUST SUCH A FEASIBILITY STUDY.

"THE PRINCIPAL REQUIREMENT OF THE REGULATIONS IS TO ACHIEVE NATIONAL ECONOMIC DEVELOPMENT (NED) AND ENVIRONMENTAL QUALITY (EQ) AS 'EQUAL NATIONAL OBJECTIVES.' 33 C.F.R. SEC. 290.6(A). CONTEMPORANEOUS REGULATIONS PUBLISHED BY THE CORPS (33 C.F.R. SEC. 393.15) EFFECTIVE NOVEMBER 10, 1975, REQUIRE THAT THE NFD ACCOUNT HE SET FORTH IN 'DOLLAR TERMS' AND THAT 'TOTAL DOLLAR QUANTIFIABLE BENEFITS AND COSTS WILL BE DISPLAYED.' THE REGULATIONS PROCEED TO SET FORTH DETAILED REQUIREMENTS FOR THE DISPLAY OF NED BENEFITS (33 C.F.R. SEC. 393.15(A)-(3)). IN SECTION (D) THE REQUIREMENT IS SET FORTH THAT PROJECT COSTS WILL INCLUDE LOSSES IN LAND PRODUCTIVITY, MITIGATION COSTS, AND LOSS OF RECREATION OPPORTUNITIES. NONE OF THESE COSTS HAS BEEN CALCULATED BY THE CORPS FOR THE TENNESSEE-TOMBIGBEE PROJECT."

PLAINTIFFS' RESPONSE TO DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS OR SUMMARY JUDGMENT AT 33 (JULY 19, 1980).

THE DEFENDANTS DISPUTE THE APPLICABILITY OF THE 1973 P & S TO THE TTW IN THE FOLLOWING TERMS:

"*** THE 1973 'PRINCIPLES AND STANDARDS FOR PLANNING WATER AND RELATED LAND RESOURCES' ARE NOT APPLICABLE TO THE TTW. AS THE TITLE IMPLIES, THESE PRINCIPLES AND STANDARDS WHICH WERE PROMULGATED TWO YEARS AFTER THE TTW WENT INTO CONSTRUCTION, WERE INTENDED TO APPLY TO THE PLANNING OF WATER RESOURCES PROJECTS. THE 1973 GUIDELINES INDICATE THAT 'THESE STANDARDS APPLY TO ALL LEVELS OF PLANNING AS DEFINED BY THE WATER RESOURCES COUNCIL.' 38 FED. REG. 24790. THE LEVELS OF PLANNING ARE DEFINED BY THE WATER RESOURCES COUNCIL IMMEDIATELY THEREAFTER AS 'FRAMEWORK STUDIES,' 'REGIONAL OR RIVER BASIN PLANS,' AND 'IMPLEMENTATION STUDIES.' ID. AN EXAMINATION OF THE DEFINITION OF EACH OF THESE TYPES OF PLANNING REVEALS THE IMPLEMENTATION STUDIES ARE THE MOST SPECIFIC OF THE THREE LEVELS OF PLANNING, AND OCCUR LATEST IN THE PLANNING PROCESS. ID. YET EVEN IMPLEMENTATION STUDIES ARE PRE-AUTHORIZATION STUDIES WHICH 'LEAD TO ADMINISTRATIVE, LEGAL OR OTHER NONDEVELOPMENT ACTION PROGRAM.' WATER AND RELATED LAND RESOURCE PLANNING, ISSUED BY THE WATER RESOURCES COUNCIL ON JULY 22, 1970. SEE 38 FED. REG. 24790.

"SINCE THE TTW HAD NOT ONLY BEEN AUTHORIZED FOR 27 YEARS BUT ALSO UNDER CONSTRUCTION FOR TWO, THE 1973 GUIDELINES WERE CLEARLY NOT APPLICABLE."

QUESTION: WHAT WERE THE PRINCIPLES AND CRITERIA APPLICABLE TO THE 1975/1976 KEARNEY ANALYSIS OF TTW NAVIGATION BENEFITS - THE 1973 PRINCIPLES AND STANDARDS, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS, SECTION 7(A) OF THE DEPARTMENT OF TRANSPORTATION ACT, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS, OR SENATE DOCUMENT 97, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS?

ANSWER:

(A) THE 1973 P & S, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - INAPPLICABLE;

(B) SECTION 7(A) OF THE DOT ACT, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - APPLICABLE;

(C) SD 97, INCLUDING THE CORPS' IMPLEMENTING REGULATIONS - AS DISCUSSED BELOW, APPLICABLE IN PRINCIPLE. DISCUSSION:

1973 PRINCIPLES AND STANDARDS

IN RESPONSE TO THE ARGUMENTS NOTED ABOVE, JUDGE KEADY NOTED IN DICTA THAT THE 1973 P & S "APPLY ONLY TO PROJECTS IN THE PLANNING STAGES, AND NOT TO THOSE SPECIFICALLY AUTHORIZED BY CONGRESS." EDF V. ALEXANDER, EC 77-53-K, EC 77-54-K AT 27, N. 21 (OCTOBER 1, 1980) APPEAL DOCKETED, NO. 80-3915 (5TH CIR. OCT. 31, 1980). BESIDES THE TERMS OF THE 1973 P & S, WE ALSO WISH TO POINT OUT THAT THE WATER RESOURCES COUNCIL SPECIFICALLY "GRANDFATHERED" THE APPLICATION OF THE 1973 P & S IN PROCEDURE NO. 1 - SCHEDULE AND APPLICATION OF PRINCIPLES AND STANDARDS TO IMPLEMENTATION STUDIES IN PROCESS, 39 F. R. 26952 (JULY 24, 1974). THIS PROCEDURE MAKES CLEAR THAT THE 1973 P & S WOULD NOT APPLY TO PREVIOUSLY AUTHORIZED PROJECTS UNDER CONSTRUCTION AT THE TIME OF ISSUANCE OF THE 1973 P & S. CONTRARY TO PLAINTIFFS' CONTENTION, THE 1975-1976 ECONOMIC REANALYSIS OF THE TTW DOES NOT APPEAR TO BE A "FEASIBILITY STUDY" BUT SIMPLY A POST- AUTHORIZATION STUDY. FN1 GENERALLY, A "FEASIBILITY" STUDY IS UNDERTAKEN TO IMPLEMENT THE FINDINGS OF A PRELIMINARY SURVEY TO PROVIDE A BASIS FOR PROJECT AUTHORIZATION. SEE 16 U.S.C. SEC. 4601-21 (1976). THE 1975-1976 REANALYSIS WAS DESIGNED TO UPDATE BENEFIT AND COST DATA ON AN AUTHORIZED PROJECT UNDER CONSTRUCTION. THIS IS CLEARLY AT A DIFFERENT POINT IN TIME THAN A "FEASIBILITY" STUDY AND MAY ARGUABLY BE SAID TO SERVE A MORE LIMITED FUNCTION.

SENATE DOCUMENT 97 AND SECTION 7(A) OF THE DEPARTMENT OF TRANSPORTATION ACT

ON MAY 15, 1962, PRESIDENT KENNEDY APPROVED POLICIES AND STANDARDS PREPARED BY THE WATER RESOURCES COUNCIL, THAT WERE PRINTED BY THE SENATE AND USUALLY REFERRED TO AS SENATE DOCUMENT 97. THE NEW POLICIES AND STANDARDS WERE MADE APPLICABLE TO THE CORPS' PREPARATION OF ECONOMIC BENEFIT-COST STUDIES BY ORDER OF THE CHIEF OF ENGINEERS ON JUNE 15, 1962, REPLACING BUREAU OF THE BUDGET CIRCULAR A-47, DECEMBER 31, 1952. THEY WERE INCORPORATED INTO CORPS ENGINEERING MANUAL, EM 1120-2-101, PARA. 1- 51, "SURVEY INVESTIGATIONS AND REPORTS," GOVERNING THE CALCULATION OF A NAVIGATION PROJECT'S COSTS AND BENEFITS EITHER IN A PRE- OR POST AUTHORIZATION STUDY OF PROJECT ECONOMICS. AFFIDAVIT OF ROBERT H. HAVEMAN AT 2, EDM V. ALEXANDER, EC 77-53-K, 77-54-K (N.D.MISS. DATED NOVEMBER 13, 1978). IN GENERAL, SD 97 EMPLOYED THE "CURRENT RATE" (ACTUAL EXISTING RATES) THEORY TO ESTIMATE A PROJECT'S NAVIGATION BENEFITS. HOWEVER, IN NOVEMBER 1964, THE BUREAU OF THE BUDGET (BOB) DIRECTED THAT THE B/C RATIO FOR NAVIGATION PROJECTS BE DEVELOPED ON A "COMPELLED RATE" (RATES REDUCED TO MEET WATER COMPETITION) THEORY AND THE CORPS MODIFIED EM 1120-2-101 ACCORDINGLY. SEE CHANGE 16, 12 OCTOBER 1964, TO EM 1120-2-101. HENCE, THE CORPS' INITIAL B/C PROJECTIONS CONTAINED IN THE 1966 SUPPLEMENT TO CDM 1 WERE BASED ON THIS LATTER THEORY.

AS A RESULT OF THE BUREAU OF THE BUDGET'S DIRECTIVE THAT NAVIGATION BENEFITS BE COMPUTED ON A "COMPELLED RATE" THEORY, CONGRESS THROUGH THE ENACTMENT OF SECTION 7(A)'S DEFINITION OF "DIRECT NAVIGATION BENEFITS," FN2 RETURNED THE COMPUTATION OF NAVIGATION BENEFITS TO THE STATUS QUO ANTE THE BOB'S CHANGE. ONE OF THE SECTION'S CO-SPONSORS EXPLAINED THE NEED FOR A STATUTORY CODIFICATION OF THE DEFINITION OF "NAVIGATION BENEFITS" AS FOLLOWS:

"BEFORE NOVEMBER 1964, AS THE SENATOR WELL KNOWS, THE BUREAU OF THE BUDGET USED WHAT WAS CALLED THE 'CURRENT RATE' THEORY ON CRITERIA FOR NAVIGATION PROJECTS. AFTER THAT, THEY WENT TO A 'COMPELLED RATE' THEORY, SO THAT AFTER NOVEMBER 1964, WE HAVE BUILT NO NEW NAVIGATION PROJECTS; NO NEW ONES HAVE BEEN AUTHORIZED.

"SINCE WE HAVE BEEN CONSIDERING TITLE VII IN THE COMMITTEE ON GOVERNMENT OPERATIONS, THE BUREAU OF THE BUDGET HAS NOW ISSUED ANOTHER LETTER IN WHICH THEY HAVE GONE BACK TO THE 'CURRENT RATE' THEORY. THAT IS, COST-BENEFIT RATIO WOULD BE BASED UPON THE SAVINGS ON FREIGHT ON THE BASIS OF CURRENT FREIGHT RATES, WITH THESE TWO EXCEPTIONS.

"FIRST THE BUREAU OF THE BUDGET LETTER SAYS THAT THE BUREAU INTENDS TO CONTINUE TO STUDY THE MATTER WHICH SOUNDS VERY OMINOUS, BECAUSE WHAT THEY DID BY LETTER THEY CAN CHANGE BY LETTER. FURTHERMORE, WHEN THEY DEFINE 'CURRENT RATE,' THEY CAN GO OFF AS FAR AS THEY WANT TO, TO ANOTHER PART OF THE COUNTRY AND USE RATES BEING CHARGED A LONG WAY FROM WHERE THE PROJECT IS TO BE BUILT. WE THINK IT SHOULD BE WRITTEN INTO THE STATUTE THAT COST-BENEFIT RATIO WILL BE BASED ON CURRENT RATES, AND CURRENT RATES SHOULD BE DEFINED TO BE THOSE RATES IN THE ACTUAL AREA WHERE THE NAVIGATION PROJECT IS PROPOSED. THAT IS WHAT THIS WOULD DO." 112 CONG. REC. 24379 (SEPTEMBER 29, 1966). SEE GENERALLY 112 CONG. REC. 24375-80 (SEPTEMBER 29, 1966).

AS A RESULT OF THE FOREGOING, THE CORPS' TRADITIONAL THEORY OF CALCULATING PROJECT BENEFITS AS CONTAINED IN SD 97 AND INITIALLY IMPLEMENTED IN EM 1120-2-101 WAS CODIFIED IN SECTION 7(A) OF THE DOT ACT. SEE 112 CONG. REC. 26564, 26648 (OCTOBER 13, 1966) (REMARKS OF SENATOR JACKSON AND REPRESENTATIVE HOLIFIELD, RESPECTIVELY). HENCE, THE CORPS, PRIOR TO SUBMITTING THE SUPPLEMENT TO CDM 1 TO CONGRESS, RECOMPUTED THE NAVIGATION BENEFITS THEREIN ACCORDING TO THE TRADITIONAL SD 97 METHOD, NOW THE STATUTORY DEFINITION IN SECTION 7(A). SEE LETTER FROM GENERAL W. R. LEBER, DIRECTOR, CIVIL WORKS DIVISION, CORPS OF ENGINEERS, TO SENATOR SPARKMAN, DATED SEPTEMBER 9, 1966.

THE DENOUEMENT OF THIS STORY IS THE AMENDMENT OF PARAGRAPH 1-51 OF EM 1120-2-101 BY SR 1120-2-114, "WATERWAY IMPROVEMENT STUDIES - NAVIGATION BENEFITS," DATED JUNE 1, 1968, TO IMPLEMENT SECTION 7(A), OF THE DOT ACT. BY ITS OWN TERMS, THIS REGULATION IS SPECIFICALLY MADE APPLICABLE TO THE "RESTUDIES OF THE ECONOMIC JUSTIFICATION OF AUTHORIZED NAVIGATION PROJECTS." SINCE SECTION 7(A) AS IMPLEMENTED BY ER 1120-2-114, REMAINS IN EFFECT, THIS SHOULD HAVE BEEN THE APPLICABLE GUIDANCE USED BY KEARNEY TO ESTIMATE NAVIGATION BENEFITS.

III - IMPROVEMENT OF THE BLACK WARRIOR - TOMBIGBEE

BACKGROUND:

THE SOUTHERN TERMINUS OF THE TTW IS LOCATED AT THE TOWN OF DEMOPOLIS, ALABAMA, WHERE THE TTW FLOWS INTO THE WARRIOR-TOMBIGBEE WATERWAY, ALSO KNOWN AS THE BLACK WARRIOR-TOMBIGBEE (BWT). THE BWT IS A SEPARATE NAVIGATION PROJECT THAT THE CORPS OF ENGINEERS CONSTRUCTED IN THE 1940S.

THE BWT, HAS A 200' AUTHORIZED CHANNEL WIDTH VERSUS A 300' CHANNEL WIDTH ON THE TTW. IT ALSO HAS LIMITED LOCK CAPACITY AT THE EXISTING COFFEEVILLE AND DEMOPOLIS LOCKS AND DAMS. SEE EDF V. ALEXANDER, 467 F. SUPP. 885, 894 (N.D.MISS. 1979). HENCE, TO ACHIEVE OPTIMUM BENEFITS ON THE TTW, ADDITIONAL NAVIGATION IMPROVEMENTS DOWNSTREAM ON THE BWT WILL BE REQUIRED. THE POSSIBLE EXTENT OF THESE IMPROVEMENTS AND THEIR IMPACT ON TTW ECONOMICS ARE OUTLINED AS PLAN B AND PLAN C IN THE EXECUTIVE SUMMARY TO THE KEARNEY REPORT.

"(D) PLAN B

"RECENT CORPS STUDIES REVEALED A NEED FOR SELECTED IMPROVEMENTS DOWNSTREAM FROM DEMOPOLIS ON THE PRESENT TOMBIGBEE RIVER. IT WAS FOUND THAT THE CONSTRUCTION OF ABOUT 21 MILES OF CUTOFFS, SELECTED BEND EASINGS, AND BRIDGE IMPROVEMENTS WOULD REDUCE TRAVEL DISTANCES FOR TTW AND BLACK WARRIOR-TOMBIGBEE RIVER (BWT) TRAFFIC, ELIMINATE CERTAIN NAVIGATIONAL DIFFICULTIES, AND GENERALLY IMPROVE TOW OPERATIONAL EFFICIENCIES IN THIS SEGMENT OF THE WATERWAY. THE ABOVE IMPROVEMENTS ARE INCLUDED WITH THE IMPROVEMENTS IN PLAN A TO FORM PLAN B. OVERALL, PLAN B WOULD REDUCE THE TOTAL WATER DISTANCE BETWEEN DEMOPOLIS AND MOBILE FROM 217 MILES TO 196 MILES. THIS REDUCES THE NAVIGATION DISTANCE BETWEEN THE TENNESSEE RIVER AND MOBILE ABOUT 5 PERCENT FROM THE PLAN A DISTANCE.

"(E) PLAN C

"DUPLICATE LOCKS AT THE EXISTING COFFEEVILLE AND DEMOPOLIS LOCKS AND DAMS WERE PRESENTED IN THE 1967 SUPPLEMENT GDM, BUT WERE NOT SPECIFICALLY APPROVED. PLAN C PROVIDES FOR THE CONSTRUCTION OF THESE LOCKS ALONG WITH THE IMPROVEMENTS OF PLAN B. THE PURPOSE OF DUPLICATE LOCKS IS TO ELIMINATE CAPACITY CONSTRAINTS EXPECTED TO RESULT FROM FUTURE TRAFFIC FLOWS. THIS SEGMENT OF THE WATERWAY IS MUTUALLY USED BY BARGE MOVEMENTS ON THE BWT AS WELL AS THE TTW. DUE TO THE COMBINED TRAFFIC OF THESE RIVERS, THE CAPACITY OF THE COFFEEVILLE AND DEMOPOLIS LOCKS IS REACHED WELL BEFORE THE CAPACITY OF THE OTHER TTW LOCKS ABOVE DEMOPOLIS. THE DUPLICATE LOCKS WOULD BE INSTALLED AT A FUTURE DATE WHEN TRAFFIC FLOWS FROM THE TTW AND BWT SYSTEMS COULD NOT BE ACCOMMODATED BY THE EXISTING LOCKS." DEPARTMENT OF THE ARMY, MOBILE DISTRICT, CORPS OF ENGINEERS, FINAL REPORT: AN EVALUATION OF THE TRANSPORTATION ECONOMICS OF THE TENNESSEE-TOMBIGBEE WATERWAY, VOL. 1 - EXECUTIVE SUMMARY 8-9 (FEBRUARY 1976).

THESE IMPROVEMENTS ARE ESTIMATED TO COST $1 BILLION.

QUESTION: MAY THESE IMPROVEMENTS BE FUNDED WITH OPERATION AND MAINTENANCE (O&M) APPROPRIATIONS, OR IS THE CORPS OF ENGINEERS REQUIRED TO OBTAIN SPECIFIC CONGRESSIONAL AUTHORIZATION BEFORE UNDERTAKING ADDITIONAL NAVIGATION IMPROVEMENTS ON THE BWT, SOUTH OF DEMOPOLIS, ALABAMA?

ANSWER: ALTHOUGH 33 U.S.C. SEC. 5 (1976) PERMITS THE CORPS OF ENGINEERS TO REPLACE A LOCK OR DAM OR SIMILAR STRUCTURE WHICH HAS BECOME INEFFECTIVE OR DAMAGED WITHOUT CONGRESSIONAL APPROVAL (THAT IS, WITH O&M FUNDS), CONGRESSIONAL AUTHORIZATION IS REQUIRED PURSUANT TO THE TERMS OF 33 U.S.C. SEC. 401 (1970) BEFORE THE CORPS OF ENGINEERS MAY REBUILD A STRUCTURE TO HANDLE "EXPECTED FUTURE INCREASES IN TRAFFIC." ATCHISON, TOPEKA & SANTA FE RY. CO. V. CALL AWAY, 302 F. SUPP. 616, 617 (F.D.S. 1974) (COPY ATTACHED). WITH RESPECT TO NAVIGATION IMPROVEMENTS ON THE BWT, WE UNDERSTAND THAT THE CORPS NOW TAKEN THE POSITION THAT CONGRESSIONAL APPROVAL IS REQUIRED BEFORE UNDERTAKING THE IMPROVEMENTS CONTEMPLATED BY PLAN C OF THE KEARNEY STUDY.

DISCUSSION:

AT ISSUE IN ATCHISON, TOPEKA AND SANTA FE RY CO. V. CALL AWAY, ABOVE, WAS THE QUESTION OF THE CORPS OF ENGINEERS' AUTHORITY TO BUILD NEW LOCKS AND A DAM TO REPLACE LOCKS AND DAM 26 ON THE MISSISSIPPI RIVER, NEAR ALTON, ILLINOIS. IN RECOGNITION OF THE DETERIORATED CONDITION OF LOCKS AND DAM 26, THE CORPS OBTAINED AN APPROPRIATION IN 1970 FOR PLANNING WORK. SURVEY REPORT AND A GENERAL DESIGN MEMORANDUM WERE PREPARED AND AFTER HEARINGS IN BOTH THE HOUSE AND THE SENATE, $22 MILLION WAS APPROPRIATED FOR THE PROJECT. DURING THESE AND OTHER HEARINGS BEFORE CONGRESS AND IN ALL THEIR PUBLIC DOCUMENTS, THE CORPS MAINTAINED THAT THE LOCKS AND DAM 26 PROJECT WAS AUTHORIZED BY 33 U.S.C. SEC. 5 AND DID NOT REQUIRE SPECIFIC CONGRESSIONAL AUTHORIZATION.

CONTRARY TO THE CORPS' CLAIM OF AUTHORITY UNDER 33 U.S.C. SEC. 5, PLAINTIFFS ALLEGED THAT 33 U.S.C. SEC. 401 WAS APPLICABLE TO LOCKS AND DAM 26, REQUIRING SPECIFIC CONGRESSIONAL AUTHORIZATION PRIOR TO CONSTRUCTION. THE DISTRICT COURT AGREED WITH THE PLAINTIFFS, HOLDING, INTER ALIA, THAT CONGRESSIONAL CONSENT IS REQUIRED WHERE THE CORPS PROPOSES TO REBUILD A STRUCTURE "TO MEET EXPECTED FUTURE INCREASES IN TRAFFIC." ATCHISON, TOPEKA & SANTA FE RY CO. V. CALL AWAY, 382 F. SUPP. AT 617. THE TEST BETWEEN "REBUILDING," REQUIRING CONGRESSIONAL APPROVAL UNDER 33 U.S.C. SEC. 401 (1976), AND "RECONSTRUCTING" UNDER THE CORPS' DISCRETIONARY MAINTENANCE AUTHORITY IN 33 U.S.C. SEC. 5 (1976), IS "WHETHER THE PROPOSED STRUCTURE REPRESENTS A MATERIAL CHANGE IN THE CHARACTER AND CAPACITY OF THE EXISTING STRUCTURE." ID. SINCE THE PROPOSED NEW LOCKS AND DAM 26 WOULD INCREASE THE PRACTICAL CAPACITY OF THE EXISTING STRUCTURE FROM 46 MILLION TONS TO 190 MILLION TONS, THE COURT FELT THAT THE PLAINTIFFS HAD ADDUCED SUFFICIENT EVIDENCE TO PREVAIL ON THE MERITS AT TRIAL AND ACCORDINGLY ENJOINED FURTHER CONSTRUCTION PENDING PROJECT APPROVAL BY CONGRESS. ID. AT 618-619.

ALTHOUGH, AS DISCUSSED BELOW, THE CORPS OF ENGINEERS APPEARS TO HAVE ACQUIESCED TO THE LOCKS AND DAM 26 DECISION INSOFAR AS IT IMPACTS ON ITS AUTHORITY TO "REBUILD" THE BWT WITHOUT CONGRESSIONAL APPROVAL, THE CORPS COULD HAVE AND MAY IN THE FUTURE CONTEST THE LOCKS AND DAM 26 DECISION IN ANOTHER DISTRICT COURT WHERE IT IS NOT BINDING PRECEDENT. UNDER THE DOCTRINE OF STARE DECISIS AS IT HAS EVOLVED IN THE UNITED STATES, A DECISION OF ONE DISTRICT COURT IS NOT BINDING UPON ANOTHER DISTRICT COURT, BUT RATHER IS IN THE NATURE OF PERSUASIVE AUTHORITY. SEE 1B MOORE'S FEDERAL PRACTICE 80.402(1) AT 61, N. 28 (1980, 2ND ED.)

AS NOTED ABOVE, HOWEVER, THE CORPS OF ENGINEERS APPEARS TO HAVE ACQUIESCED TO THE LOCKS AND DAM 26 DECISION. INDEED, IN THE TTW LITIGATION, JUDGE KEADY NOTED:

"MUCH HAS BEEN SAID ABOUT THE CORPS' ERRONEOUS ASSUMPTION THAT IT HAD GENERAL STATUTORY AUTHORITY, UNDER 33 U.S.C. SEC. 5, TO MAKE NAVIGATION IMPROVEMENTS TO THE BWT, WHICH IS A HISTORICALLY DIFFERENT NAVIGATION PROJECT EXTENDING SOUTHWARD FROM DEMOPOLIS TO MOBILE. THE BWT HAS BEEN IN OPERATION FOR MANY YEARS AND ANTEDATES THE 1946 AUTHORIZATION OF THE TTW. THE FACT IS THAT THE CORPS, IN THE FACE OF THE 1974 CALL AWAY LOCKS AND DAM 26 DECISION, HAS READILY ACKNOWLEDGED THAT IT IS WITHOUT AUTHORITY TO ELIMINATE THE CONSTRAINTS PRESENTLY EXISTING IN THE BWT PROJECT AND, AFTER PROPER STUDIES, MUST SECURE CONGRESSIONAL APPROVAL TO INCREASE THE CHANNEL WIDTH, ELIMINATE NUMEROUS CUTOFFS, INCREASE LOCKAGE CAPACITY AND REMOVE OTHER HINDRANCES NOW EXISTING IN THE BWT IN ORDER TO EFFICIENTLY ACCOMMODATE 2-WAY NAVIGATION FOR 8-BARGE TOWS. NOT ONLY DO THE DEFENDANTS CONCEDE THE NECESSITY FOR CONGRESSIONAL APPROVAL FOR MAKING THESE MODIFICATIONS TO THE EXISTING BWT BUT THEY FURTHER ACKNOWLEDGE THAT, ASSUMING THE FUTURE GRANT OF SUCH AUTHORIZATION, THE DUTY WILL REST UPON THEM TO COMPLY WITH NRPA AND ALL OTHER APPLICABLE LAWS BEFORE SUCH NAVIGATION IMPROVEMENTS COULD BE MADE. SUFFICE IT TO SAY THAT THESE DEVELOPMENTS, THOUGH OF RECENT ORIGIN, HAVE NO BEARING UPON THE CORPS' LAWFUL PROSECUTION OF THE TTW PROJECT IN ACCORDANCE WITH THE CURRENT DESIGN." EDF V. ALEXANDER, 467 F. SUPP. AT 912, 913.

FN1 AT THIS POINT WE OBSERVE THAT THE LANGUAGE OF BOTH THE 1973 P & S AND SD 97 SUGGESTS THAT THEY ARE ONLY APPLICABLE TO PREAUTHORIZATION STUDIES, COMMONLY REFERRED TO AS "FEASIBILITY" OR "SURVEY" REPORTS. TECHNICALLY, ONE CAN ARGUE THAT THE APPLICATION OF THE PRINCIPLES CONTAINED IN EITHER THE 1973 P & S OR SD 97 TO POST-AUTHORIZATION ANALYSES OF PROJECT COSTS OR BENEFITS CONDUCTED BEFORE OR AFTER THE "INITIATION" OF CONSTRUCTION, WOULD BE APPLICABLE BY SPECIFIC ADMINISTRATIVE DIRECTIVE MAKING THEM BINDING THERETO, BUT NOT BY THE EXPRESS TERMS OF EITHER DOCUMENT.

FN2 SECTION 7(A) PROVIDES IN PERTINENT PART:

"THE STANDARDS AND CRITERIA FOR ECONOMIC EVALUATION OF WATER RESOURCE PROJECTS SHALL BE DEVELOPED BY THE WATER RESOURCES COUNCIL ESTABLISHED BY PUBLIC LAW 89-80. FOR THE PURPOSE OF SUCH STANDARDS AND CRITERIA, THE PRIMARY DIRECT NAVIGATION BENEFITS OF A WATER RESOURCE PROJECT ARE DEFINED AS THE PRODUCT OF THE SAVINGS TO SHIPPERS USING THE WATERWAY AND THE ESTIMATED TRAFFIC THAT WOULD USE THE WATERWAY; WHERE THE SAVINGS TO SHIPPERS SHALL BE CONSTRUED TO MEAN THE DIFFERENCE BETWEEN (A) THE FREIGHT RATES OR CHARGES PREVAILING AT THE TIME OF THE STUDY FOR THE MOVEMENT BY THE ALTERNATIVE MEANS AND (B) THOSE WHICH WOULD BE CHARGED ON THE PROPOSED WATERWAY; AND WHERE THE ESTIMATE OF TRAFFIC THAT WOULD USE THE WATERWAY WILL BE BASED ON SUCH FREIGHT RATES, TAKING INTO ACCOUNT PROJECTIONS OF THE ECONOMIC GROWTH OF THE AREA." 49 U.S.C. 1656(A).