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109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-474

======================================================================



 
         ENERGY AND WATER DEVELOPMENT APPROPRIATIONS BILL, 2007

                                _______
                                

  May 19, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Hobson, from the Committee on Appropriations, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5427]

    The Committee on Appropriations submits the following 
report in explanation of the accompanying bill making 
appropriations for energy and water development for the fiscal 
year ending September 30, 2007, and for other purposes.

                              Introduction

    The Energy and Water Development Appropriations bill for 
fiscal year 2007 totals $30,017,000,000, $545,773,000 above the 
President's budget request, and $172,000,000 below the amount 
appropriated in fiscal year 2006.
    Title I of the bill provides $4,983,803,000 for the 
programs of the U.S. Army Corps of Engineers, a decrease of 
$345,367,000 below the fiscal year 2006 enacted level (adjusted 
for one-time emergency spending) and $250,803,000 over the 
budget request. The fiscal year 2007 budget request for the 
Corps of Engineers totals $4,733,000,000, which is composed of 
entirely of new budget authority.
    The fiscal year 2007 budget request for the Corps' Civil 
Works program continues the performance-based ranking system 
instituted in fiscal year 2006 with two major modifications to 
the guidelines. The first allows risks to human life to be 
considered along with economics for flood and storm damage 
reduction projects. The second changes the prioritization 
process for environmental restoration projects. This 
performance-based system is intended to focus limited federal 
resources on the efficient completion of high economic-value 
projects while suspending or terminating work on other projects 
found not to be of as high an economic value and on 
congressionally mandated projects that have been included in 
prior Administration requests. The Committee supports the 
concept of focusing limited resources on completing high-value 
projects already under construction, and the Committee 
recommendation is based in large part on the Administration's 
performance-based approach. The Committee bill and report 
retains changes to improve the Corps' project management and 
execution, particularly in the areas of reprogrammings, 
continuing contracts, and five-year budget planning.
    Title II provides $940,934,000 for the Department of 
Interior and the Bureau of Reclamation, $17,198,000 over the 
budget request, and $113,939,000 below the fiscal year 2006 
enacted level. The Committee recommends $900,779,000 for the 
Bureau of Reclamation, 17,198,000 above the budget request and 
$120,087,000 below the fiscal year 2006 enacted level. The 
Committee recommends $40,155,000 for the Central Utah Project 
including $965,000 for deposit into the Utah Reclamation 
Mitigation and Conservation Account, both the same as the 
budget request.
    Title III provides $24,373,489,000 for the Department of 
Energy, an increase of $326,717,000 over fiscal year 2006 and 
$298,772,000 over the budget request of $24,074,717,000.
    The Energy Supply and Conservation account, which funds 
renewable energy, energy efficiency, nuclear energy, non-
defense environment, safety, and health programs, and energy 
conservation, is funded at $2,025,527,000, an increase of 
$102,166,000 over the request and $212,900,000 above the 
current year enacted level. The Committee recommends 
$4,131,710,000 for the Office of Science, an increase of 
$30,000,000 over the budget request and $535,317,000 over the 
current year.
    Environmental management activities (i.e., non-defense 
environmental cleanup, uranium enrichment decontamination and 
decommissioning fund, and defense environmental cleanup) are 
funded at $6,441,126,000, a decrease of $595,614,000 below the 
fiscal year 2006 enacted level and an increase of $161,088,000 
over the budget request.
    The Committee recommends a total of $574,500,000 for the 
Yucca Mountain repository. This includes $186,420,000 for 
Nuclear Waste Disposal, an increase of $30,000,000 over the 
request, and $388,080,000 for Defense Nuclear Waste Disposal, 
the same as the request. The additional funds are provided for 
the Department to begin to move spent nuclear fuel away from 
reactor sites to interim storage.
    Funding for the National Nuclear Security Administration 
(NNSA), which includes nuclear weapons activities, defense 
nuclear nonproliferation, naval reactors, and the Office of the 
NNSA Administrator, is $9,199,811,000, an increase of 
$95,314,000 over fiscal year 2006. The Committee recommendation 
includes $1,593,101,000 for Defense Nuclear Nonproliferation, a 
decrease of $21,738,000 over the current year and $133,112,000 
below the budget request.
    Title IV provides $227,774,000 for several Independent 
Agencies, a decrease of $40,652,000 from fiscal year 2006 and 
$21,000,000 below the budget request of $248,774,000. The 
requested funding is provided for the Defense Nuclear 
Facilities Safety Board, the Delta Regional Authority, the 
Nuclear Regulatory Commission Inspector General, and the 
Nuclear Waste Technical Review Board. The request for the 
Nuclear Regulatory Commission is increased by $40,000,000, of 
which $36,000,000 is offset by license fees and annual charges. 
An additional $5,000,000 is provided for the Denali Commission. 
The request for the Appalachian Regional Commission is reduced 
by $30,000,000, and no funds are provided for the Office of 
Inspector General for the Tennessee Valley Authority.
                                TITLE I

                      DEPARTMENT OF DEFENSE--CIVIL

                         Department of the Army

                       Corps of Engineers--Civil

                              INTRODUCTION

    The United States Army Corps of Engineers traces its 
history to 1775, when Congress established the Continental Army 
with a provision for a Chief Engineer to oversee the 
construction of fortifications for the Battle of Bunker Hill. 
An Act of Congress permanently established the Corps in 1802. 
The Corps' Civil Works role and mission is grounded in a series 
of laws enacted since 1824. A brief legislative history of the 
Corps follows.
     The General Survey Act of 1824 authorized the 
President to have surveys made of routes for roads and canals 
of national importance, in a commercial or military point of 
view, or necessary for the transportation of public mail. The 
President assigned responsibility for the surveys to the Corps 
of Engineers. A second act, also signed in 1824, appropriated 
$75,000 to improve navigation on the Ohio and Mississippi 
rivers by removing sandbags, snags and other obstacles, and was 
subsequently amended to include other rivers such as the 
Missouri. This work was also given to the Corps of Engineers. 
Subsequent Acts of Congress expanded the Corps' 
responsibilities for navigation.
     The Rivers and Harbors Act of 1909 expanded the 
Corps' Civil Works authority by authorizing the consideration 
of hydroelectric power generation in the planning, design and 
construction of water resource development projects.
     The 1917 Flood Control Act established a role for 
the Corps in flood damage reduction, which became a national 
flood protection role for the Civil Works program in the 1936 
Flood Control Act. The Flood Control Act of 1944 gave the Corps 
a recreation role that was added as part of flood control at 
Corps reservoirs. The 1962 River and Harbor Flood Act expanded 
that role by authorizing the Corps to build recreational 
facilities as part of all water resource development projects.
     The environmental role to protect, restore and 
manage the environment emanates from the Rivers and Harbors Act 
of 1899 that assigned the Corps the mission to prevent 
obstacles in navigable waterways. As concerns over the 
environment grew in the late 20th Century, the Clean Water Act 
of 1972 broadened this responsibility by giving the Corps the 
authority and direction to regulate dredging and activities 
that result in fill being placed in the ``waters of the United 
States,'' including many wetlands. Additional legislation 
passed in the 1986 Water Resources Development Act further 
expanded the Corps' environmental role to include enhancing and 
restoring natural resources at new and existing projects, and 
the Water Resources Development Act of 1990 made environmental 
protection one of the Corps' primary water resources 
development missions.
     The Water Supply Act of 1958 gave the Civil Works 
Program the authority to include water storage in new and 
existing reservoir projects for municipal and industrial uses.
     The Flood Control and Coastal Emergency Act (P.L. 
84-99) and the Stafford Disaster and Emergency Assistance Act 
gave the Civil Works program direct authority to help the 
nation in times of national disaster. P.L. 84-99 directed the 
Corps to provide emergency assistance during or following flood 
events to protect lives, public facilities and infrastructure. 
The Stafford Act authorized the Corps to support the Federal 
Emergency Management Agency in carrying out the Federal 
Response Plan (now the National Response Plan), which requires 
26 federal departments and agencies to provide coordinated 
disaster relief and recovery operations.
     Title 10 of the U.S. Code, (Navigation and 
Navigable Waterways), as further outlined in Title 33, enables 
the Civil Works program to provide services to other federal 
entities, states, or local governments on a reimbursable basis. 
This work includes flood control, the improvement of rivers and 
harbors, research, and support to private engineering and 
construction firms competing for, or performing, work outside 
the United States. The Support for Others program engages the 
Corps in reimbursable work that is determined to be in 
America's best interests.

                          MAJOR MISSION AREAS

    Currently, the Corps accomplishes the Civil Works mission 
through the following major business programs:
    Navigation.--The role of the U.S. Army Corps of Engineers 
with respect to navigation is to provide safe, reliable, and 
efficient waterborne transportation systems, such as channels, 
harbors and waterways, for movement of commerce, national 
security needs and recreation. The Corps seeks to accomplish 
this mission through a combination of capital improvements and 
the operation and maintenance of existing projects. Capital 
improvement activities include the planning, design, and 
construction of new navigation projects. In fiscal year 2004, 
the Corps operated and maintained 12,000 miles of commercial 
inland navigation channels; owned and/or operated 257 
navigation lock chambers at 212 sites; and maintained 926 
coastal, Great Lakes and inland harbors.
    Flood damage reduction.--Section 1 of the Flood Control Act 
of 1936 declared flood control to be a proper Federal activity 
since improvements for flood control purposes are in the 
interest of the general welfare of the public. The Act 
stipulated that for Federal involvement to be justified, ``the 
benefits to whomsoever they may accrue (must be) in excess of 
the estimated costs, and the lives and social security of 
people (must be) otherwise adversely affected.'' In fiscal year 
2004, the Corps managed 383 major lakes and reservoirs; and 
constructed or controlled 8,500 miles of federal levees. Over 
the last ten years, the average annual damages prevented by 
Corps projects totaled $21.1 billion.
    Ecosystem restoration.--The Corps of Engineers incorporated 
ecosystem restoration as a project purpose within the Civil 
Works program in response to increasing national emphasis on 
environmental restoration and preservation. Historically, Corps 
involvement in environmental issues focused on compliance with 
National Environmental Protection Act requirements related to 
flood protection, navigation, and other project purposes. More 
recent efforts have involved pro-active restoration measures to 
damaged ecosystems, and the provision of local environmental 
infrastructure.
    Hurricane and storm damage reduction.--Congress authorized 
Federal participation in the cost of restoring and protecting 
the shores of the United States, its territories and its 
possessions. Under current policy, shore protection projects 
are designed to reduce damages caused by wind-generated and 
tide-generated waves and currents along the nation's ocean 
coasts, Gulf of Mexico, Great Lakes, and estuary shores. 
Hurricane protection was added to the erosion control mission 
in 1956 when Congress authorized cost-shared Federal 
participation in shore protection and restoration of publicly 
owned shore areas. Federal assistance for periodic nourishment 
was also authorized on the same basis as new construction, for 
a period to be specified for each project, when it is 
determined that it is the most suitable and economical remedial 
measure.
    Water supply.--National policy regarding water supply 
states that the primary responsibility for water supply rests 
with states and local entities. The Corps may participate and 
cooperate in developing water supplies in connection with 
construction, operation and modification of Federal navigation, 
flood damage reduction, or multipurpose projects. Certain 
conditions of non-federal participation are required.
    Hydroelectric power generation.--Congress, through various 
statutes, has directed the Corps to consider the development of 
hydroelectric power in conjunction with other water resources 
development plans. The Corps owns and operates nearly one-
quarter of the United States' hydropower capacity, with 75 
projects in operation.
    Recreation.--The Corps is one of the nation's largest 
providers of outdoor recreation opportunities, and ranks first 
among federal providers of outdoor recreation. Although known 
primarily for the opportunities managed at its lake projects, 
the Corps also participates in the planning, design and 
construction of recreation facilities at a wide variety of 
other types of water resource projects. Such facilities might 
include hiking and biking trails associated with a stream 
channel or levee primarily designed for flood damage reduction. 
There is no general authority for Corps participation in a 
single purpose recreation project.

                     CONTINUING AUTHORITIES PROGRAM

    The continuing authorities program (CAP) establishes a 
process by which the Corps of Engineers can respond to a 
variety of water resource problems without the need to obtain 
specific congressional authorization for each project. The CAP 
program is comprised of individual programs for nine different 
types of projects, each with its own program authority and 
strict limits on the federal contribution, which are as 
follows:
          Section 14 Emergency streambank and shoreline 
        erosion.--Authorized by section 14 of the 1946 Flood 
        Control Act, work under this authority allows emergency 
        streambank and shoreline protection for public 
        facilities, such as roads, bridges, hospitals, schools, 
        and water/sewage treatment plants, that are in imminent 
        danger of failing. The cost share is 65% federal and 
        35% non-federal; and the federal share cannot exceed 
        $1,000,000 per project.
          Section 103 Hurricane and storm damage reduction.--
        Authorized by section 103 of the 1962 River and Harbor 
        Act, work under this authority provides for protection 
        or restoration of public shorelines by the construction 
        of revetments, groins, and jetties, and may also 
        include periodic sand replenishment. The cost share is 
        65% federal and 35% non-federal; and the federal share 
        cannot exceed $3,000,000 per project.
          Section 107 Small navigation improvements.--
        Authorized by section 107 of the 1960 River and Harbor 
        Act, work under this authority is intended to provide 
        improvements to navigation including dredging of 
        channels, widening of turning basins, and construction 
        of navigation aids. The cost share is 80% federal and 
        20% non-federal; and the federal share may not exceed 
        $4,000,000 for each project.
          Section 111 Storm damage attributable to federal 
        navigation works.--Authorized by section 111 of the 
        1968 River and Harbor Act, work under this authority 
        provides for the prevention or mitigation of erosion 
        damages to public or privately owned shores along the 
        coastline of the United States when these damages are a 
        result of a federal navigation project. This authority 
        cannot be used for shore damages caused by riverbank 
        erosion or vessel-general wave wash. It is not intended 
        to restore shorelines to historic dimensions, but only 
        to reduce erosion to the level that would have existed 
        without the construction of a federal navigation 
        project. Cost sharing may not be required for this 
        program. If the federal cost limitation of $2,000,000 
        per project is exceeded, specific congressional 
        authorization is required.
          Section 204 Beneficial uses of dredged material.--
        Authorized by section 204 of the Water Resources 
        Development Act of 1992, work under this authority 
        provides for the use of dredged material from new or 
        existing federal projects to protect, restore, or 
        create aquatic and ecologically related habitats, 
        including wetlands. The cost sharing (25% non-federal, 
        75% federal) would be applied to the incremental cost 
        above the least cost method of dredged material 
        disposal consistent with engineering and environmental 
        criteria.
          Section 205 Small flood control projects.--Authorized 
        by section 205 of the 1948 Flood Control Act, work 
        under this authority provides for local protection from 
        flooding by the construction or improvement of flood 
        control work such as levees, channels, and dams. Non-
        structural alternatives are also considered and may 
        include measures such as installation of flood warning 
        systems, raising and/or flood proofing of structures, 
        and relocation of flood prone facilities. The cost 
        share is 65% federal and 35% non-federal; and the 
        federal share may not exceed $7,000,000 per project.
          Section 206 Aquatic ecosystem restoration.--
        Authorized by section 206 of the Water Resources 
        Development Act of 1996, work under this authority may 
        carry out aquatic ecosystem restoration projects that 
        will improve the quality of the environment, are in the 
        public interest, and are cost-effective. There is no 
        requirement that a Corps project be involved. The cost 
        share is 65% federal and 35% non-federal; and the 
        federal share per project cannot exceed $5,000,000 
        including studies, plans and specifications, and 
        construction.
          Section 208 Snagging and clearing for flood 
        control.--Authorized by section 208 of the 1954 Flood 
        Control Act, work under this authority provides for 
        local protection from flooding by channel clearing and 
        excavation, with limited embankment construction by use 
        of materials from the clearing operation only. The cost 
        share is 65% federal and 35% non-federal; and the 
        federal share may not exceed $500,000 for each project.
          Section 1135 Project modifications for improvement of 
        the environment.--Authorized by section 1135 of the 
        Water Resources Development Act of 1986, work under 
        this authority provides for modifications in the 
        structures and operations of water resources projects 
        constructed by the Corps of Engineers to improve the 
        quality of the environment. Additionally, the Corps may 
        undertake restoration projects at locations where a 
        Corps project has contributed to the degradation. The 
        primary goal of these projects is ecosystem restoration 
        with an emphasis on projects benefiting fish and 
        wildlife. The project must be consistent with the 
        authorized purposes of the project being modified, 
        environmentally acceptable, and complete within itself. 
        A non-federal sponsor is required to provide 25% of the 
        cost of the project; and the federal share of each 
        separate project may not exceed $5,000,000, including 
        studies, plans and specifications, and construction.

                        FY 2007 Budget Overview

    The fiscal year 2007 budget request for the Corps of 
Engineers totals $4,733,000,000. The Committee recommends a 
total of $4,983,803,000 for the Corps of Engineers, a decrease 
of $345,367,000 from fiscal year 2006 enacted levels (adjusted 
for one-time emergency spending) and $250,803,000 above the 
request. The budget request represents a continuation of the 
performance-based system based on the ratio of remaining 
benefits-to-remaining costs initially proposed in the fiscal 
year 2006 budget request. This performance-based system is 
intended to focus limited federal resources on the efficient 
completion of high economic-value projects while suspending or 
terminating work on other projects found not to be of as high 
an economic value and on Congressionally mandated projects that 
have been included in prior Administration requests.
    The Committee has recommended a rescission of unobligated 
balances from construction projects in Louisiana that have been 
fully funded through completion, at full federal expense, in 
supplemental appropriations. In recognition of the continuing 
and very real needs in the region for water resource projects, 
the majority of this funding is allocated to projects in the 
area not funded under the Administration's budget request.
    The budget request also contains $20,000,000 in the 
Investigations account to continue the effort, initiated with 
$30,000,000 in supplemental appropriations, to create a 
national inventory and database of flood and storm damage 
reduction projects and for assessing project structural and 
operational integrity and their associated risks. The Committee 
supports this effort; however, it is concerned with the Corps 
proposal for the execution of this activity. Given the 
uncertainty associated with the scope and process for this type 
of national inventory, the Committee believes the Corps should 
reevaluate its approach. The Committee therefore directs the 
Corps to execute a pilot project to determine the nature and 
extent of the task and further define the necessary parameters 
prior to initiating the inventory across the nation. The 
Committee further directs the Corps to give priority 
consideration to the Sacramento area for the pilot project as 
the region has a clear and pressing need for such an inventory 
and assessment.
    Until such time as the Committee is satisfied the Corps has 
a executable plan and direction for this activity, no 
additional funds are provided. Further, the Committee notes 
there is no explicit authorization for this activity in the 
Investigations account.
    The Committee has recommended funding for the major 
rehabilitations at Markland Locks and Dam and Locks No. 27, 
Mississippi River, critical elements of the Ohio and 
Mississippi River systems. The Committee does not view the 
rehabilitaiton of existing infrastructure as a new construction 
start, but rather a necessary investment to ensure adequate 
functioning of the Nation's water resource infrastructure.
    A summary table illustrating the fiscal year 2006 enacted 
appropriation, the fiscal year 2007 budget request and the 
Committee recommended levels is shown below:

                                                [Dollars in 000s]
----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year     Fiscal Year      Committee
                             Account                               2006 Enacted    2007 Request   Recommendation
----------------------------------------------------------------------------------------------------------------
Investigations..................................................        $162,360         $94,000        $128,000
Hurricane disasters assistance..................................          37,300  ..............  ..............
Construction....................................................       2,348,280       1,555,000       1,929,471
Hurricane disasters assistance..................................         101,417  ..............  ..............
Rescission......................................................  ..............  ..............         -56,046
Mississippi River and tributaries...............................         396,000         278,000         290,607
Hurricane disasters assistance..................................         153,750  ..............  ..............
Operation and maintenance, general..............................       1,969,110       2,258,000       2,195,471
Hurricane disasters assistance..................................         327,517  ..............  ..............
Regulatory program..............................................         158,400         173,000         173,000
FUSRAP..........................................................         138,600         130,000         130,000
Flood control and coastal emergencies...........................  ..............          81,000          32,000
Hurricane disasters assistance..................................       2,277,965  ..............  ..............
General expenses................................................         152,460         164,000         156,300
Hurricane disasters assistance..................................           1,600  ..............  ..............
Office of Assistant Secretary of the Army (Civil Works).........           3,960           (\1\)           5,000
Total, Corps of Engineers.......................................       8,228,719       4,733,000       4,983,803
Appropriations..................................................       5,329,170       4,733,000       4,983,803
Emergency Appropriations........................................       2,899,549  ..............  ..............
----------------------------------------------------------------------------------------------------------------
\1\The budget proposes to fund this office from within the General Expenses account. For purposes of comparison,
  the budget request includes $6,000,000 for these activities in fiscal year 2007.

                  FISCAL YEAR 2007 BUDGET PRESENTATION

    The Corps of Engineers has proposed several changes to the 
manner in which the civil works program is presented and 
appropriated. The most significant is the movement of four 
categories of projects and programs from the Construction 
account into Operation and Maintenance. Additionally, the 
budget request aggregates Operation and Maintenance projects 
into geographical regions and provides only a top line 
appropriation for all projects contained within each of the 21 
regions.
    The Committee supports a more systematic approach to the 
funding of the Operation and Maintenance account and 
understands the dynamic nature of the project needs within this 
account. The Committee is concerned that this method of 
budgeting provides little transparency of the proposed 
expenditures by project for Congress and for local and regional 
partners of the Corps of Engineers. We note, however, that the 
accountability of the Corps under this scenario differs little 
from that of past years, when the Corps interpreted its 
reprogramming authority to be 50 percent of the entire 
Operation and Maintenance account. In that case, while funding 
amounts were assigned to each project within the Act, there was 
no assurance that this amount of funding would be provided to 
the individual projects as identified.
    The Committee retains Endangered Species Act (ESA) 
compliance and beneficial use of dredged material in the 
Operation and Maintenance account with the exception of the 
Section 204 program. ESA compliance and dredged material 
facilities are a necessary and required cost of the nation's 
waterway system and are appropriately considered an operation 
and maintenance cost. The Section 204 program is retained in 
the Construction account with the remaining Continuing 
Authorities.
    The Committee recommends that the Operation and Maintenance 
account be appropriated based on the geographic regions 
contained in the budget request with the following 
stipulations:
           The Corps will provide, under signature 
        within 30 days of enactment, to the House and Senate 
        Committees on Appropriations the planned funding 
        allocations by project for this account, including a 
        detailed accounting of activities previously funded 
        under the Columbia River and the Missouri River Fish 
        Mitigation projects;
           The Corps will maintain this information on 
        its website;
           The Corps will not deviate from this 
        allocation of funds without a clearly articulated 
        management plan outlining the circumstances under which 
        a reprogramming between individual projects is 
        justified and the process by which these decisions will 
        be made;
           This management plan shall be provided to 
        the House and Senate Committees on Appropriation for 
        approval;
           As part of the management plan, the Corps is 
        instructed to develop a communication plan for how this 
        process will be coordinated with, and justified to, the 
        impacted Members of Congress, water system users, and 
        other interested parties.
    Further, the Corps is instructed to reevaluate the 
management of this account. At a minimum, the Corps shall 
consider: the proper level of decentralization versus 
centralized command and control; internal controls to ensure 
funds are spent appropriately; minimum standards of reporting 
for financial management purposes; and the method by which 
funds are allocated and shifted among specific projects. The 
Corps shall submit a report, with findings and recommendations, 
to the House and Senate Committees on Appropriations within 60 
days of enactment of this Act.
    The proposed movement of projects from the Construction 
account into Operation and Maintenance obfuscates that the 
Administration's budget request reduces the level of funding 
allocated to operation and maintenance of our nation's 
waterways by $52 million from the fiscal year 2006 request. The 
following table provides a comparison.

----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year
                     Account                        Fiscal Year        2006         Fiscal Year     Fiscal Year
                                                   2006 Request     Enacted\1\     2007 Request    2007 Adjusted
----------------------------------------------------------------------------------------------------------------
Operations and Maintenance......................      $1,979,000      $1,969,000      $2,258,000      $1,927,000
Construction....................................       1,637,000       2,348,000       1,555,000      1,886,000
----------------------------------------------------------------------------------------------------------------
\1\Reflects 1% rescission.

    Last year, the Gulf Coast hurricanes showed in stark relief 
examples of the inadequacy and neglect of our nation's water 
resource infrastructure. Given the lessons of last year, the 
level of Operations and Maintenance funding proposed by the 
Administration is inadequate. The Committee has reallocated 
funding to bring the account to approximate parity with last 
year's funding. The Committee has also provided an additional 
$10,000,000 to the Ohio River and tributaries navigation system 
to implement the improvements as outlined in the Great Lakes 
and Ohio River Division's Five Year Development Perspective. 
Though inadequate to address all identified needs, the 
additional funding is provided to support the efforts of the 
Division and stakeholders in the development of this 
perspective. This plan is discussed below in more detail under 
the heading Five-Year Development Plans.

                    Program Management and Execution

    Over the past two years, the Committee has embarked on a 
concerted effort to improve general budgeting and project 
execution by the Corps. This effort was precipitated, in part, 
by a progressively tighter fiscal environment, the enormous 
backlog of Civil Works projects, and the realization that the 
Civil Works program has become an agglomeration of individual 
projects of interest to the Congress and the Administration, 
with little or no systematic approach to the Nation's water and 
coastal infrastructure underlying the selection of which 
projects received funding.
    The Committee maintains the Civil Works program must be 
managed as a program rather than a collection of individual 
projects. The Committee supports the Corps mission and believes 
the Nation's water resource infrastructure is a critical 
element of our transportation system. Nevertheless, it is 
essential the Corps takes a more sophisticated, business-like 
approach to project execution. The Corps must restore this 
Committee's confidence in its ability to execute the 
appropriations provided by Congress as well as provide 
technical assessments of the Nation's water resource 
infrastructure needs. The Gulf Coast hurricanes of 2005 have 
resulted in enormous pressures on the Corps; its ability to 
execute projects and critically assess its own performance, 
both past and present, are now at the forefront of the Nation's 
consciousness.
    The Committee remains concerned that the Corps cannot 
provide the Congress with accurate accounting of its financial 
commitments, both in terms of contractual obligations and 
promises to repay past reprogrammings. The Committee supports 
the creation of a Chief Financial Officer for the Corps of 
Engineers and supports additional headquarters personnel to 
staff such a position. The level of decentralization versus 
command and control should be reevaluated in light of the 
Corps' inability to provide timely and accurate accounting of 
financial information. In addition, the Corps should examine 
revising the reporting requirements in its financial accounting 
system to ensure that critical information is collected and 
reported upward.
    Last year, the Committee directed the Corps to give 
immediate attention to several program management issues 
including: five-year plans, conservative use of reprogramming 
and continuing contracts, performance based budgeting and 
Congressional justification materials. The Corps and the 
Administration have made progress in each of these areas, but 
much work remains. Collectively, the Congress, the 
Administration and the Corps of Engineers must work together to 
ensure that constrained federal resources are spent 
effectively, commitments to local sponsors are honored, 
projects are completed in an efficient manner, and taxpayers 
receive the greatest return on their investment.
    Five-year comprehensive budget planning.--In response to 
growing concern that the Civil Works program lacks a clear set 
of priorities to guide either development of the annual budget 
request or annual appropriations bills, the Committee directed 
the Corps over the last two years to prepare and submit a 
comprehensive five-year plan for the Civil Works program. Such 
a plan, in the view of the Committee, would begin to allay the 
concern that the Civil Works program has become nothing more 
than an assortment of individual projects lacking a coherent 
focus.
    The Committee reiterates its strong belief in the value of 
developing five-year plans and longer-term strategic visions to 
help guide budget requests and Congressional spending 
decisions. Such plans force discipline and regional integration 
in making budgetary decisions and encourage stability from year 
to year. By providing the Congress and the Executive Branch a 
view of what lies ahead in the Civil Works program, a 
comprehensive five-year plan may alleviate some of the pressure 
to fund every project in each fiscal year. The development of a 
plan will also require the Corps to make the necessary 
tradeoffs to integrate individual projects into a coherent 
Civil Works program for future years. In the absence of a 
rational strategy, the long-term vitality of the Corps is 
placed at risk and scarce federal resources will be squandered 
on projects of limited national benefit.
    The Committee is pleased with the ASA(CW)'s and OMB's 
willingness to pursue a more robust five-year plan for the 
Corps of Engineers Civil Works Program. The version of the plan 
provided in fiscal year 2006 was an improvement over the last 
submission and the Committee looks forward to further 
refinements to the plan.
    The Committee is, however, disappointed in the decision 
made by the ASA(CW) to instruct the Great Lakes and Ohio River 
Division to remove the Ohio River and Tributaries Navigation 
System Five-Year Development Perspective from the Division's 
website because it is not consistent with the Administration's 
policy. This plan is the most comprehensive and informative 
report that has come to the attention of the Committee. In it, 
the Corps attempts to assess the current status and 
``acceptable'' level of performance for projects under its 
jurisdiction. The Committee rejects the view that this plan 
would in any way require the Administration or the Congress to 
fund these projects at the level recommended in this plan, nor 
does the existence of the plan insinuate that the 
Administration or Congress agrees with the assessment. The 
report is, however, an attempt from a technical perspective to 
assess the current state of the Ohio River's navigation 
infrastructure. As such, the Committee applauds the efforts of 
the Great Lakes and Ohio River Division and other interested 
parties in the development of this ``perspective.''
    Misplaced emphasis on expenditures.--The Committee 
continues its direction that the Corps adhere to a fiscal 
management practice that fully honors congressional direction 
and accepts a higher level of carryover funds in order to 
achieve greatly increased transparency into project costs and 
multiyear funding commitments.
    The management changes initiated last year have resulted in 
higher levels of carryover as predicted. However, the estimates 
of carryover of available funding, after adjusting for Act 
language, total 13 percent, of which only 5 percent is 
unobligated. In the Committee's view this is an acceptable 
level of carryover and significantly less than other agencies 
that execute major public infrastructure projects. In a time of 
limited discretionary spending, it is the Committee's belief 
that the Corps must execute its program in a fiscally 
responsible manner. This will require more attention and effort 
on the part of the Corps in developing project estimates, but 
should result in a lower level of unobligated carryover in the 
future as the transition to the new business model is fully 
executed through the budgeting process.
    As noted in last year's report, prior to fiscal year 2006, 
the Corps operated with a formal strategy to expend 99 percent 
of annual appropriations. While this strategy had a justifiable 
basis and sounds reasonable in theory, the Corps became 
inordinately focused on the 99-percent expenditure goal. The 
strategy ignored project financial requirements in future years 
and congressional project allocations for the current year. The 
consequence of this policy, perhaps unintended, is the creation 
of significant payback requirements that are not currently 
budgeted.
    Reprogrammings.--In fiscal year 2006, the Committee 
recommended changes to the reprogramming authorities allowed 
the Corps of Engineers. For the first year, these reprogramming 
requirements were carried in Act language rather than in the 
report. This change was based, in large part, on a report by 
the Government Accountability Office (GAO) which found that the 
Corps had come to rely on reprogramming as its primary 
instrument to manage funds. It no longer reprogrammed funds in 
cases of unforeseen need or changed circumstances but as a 
substitute for an effective and fiscally responsible financial 
planning, management and priority-setting system for the Civil 
Works program. GAO findings show that funds where moved into 
and subsequently, out of, projects on the same day or within a 
matter of days.
    The Committee recognizes that there are legitimate 
instances where reprogramming is necessary and desirable, and 
has endeavored to work with the Administration and the Corps to 
ensure those instances are addressed expeditiously. The 
flexibility to move funds among projects is a necessary tool to 
adjust to changing project conditions and needs; the guidelines 
imposed by the Committee are simply a method to exercise 
Congressional oversight to ensure that the Civil Works program 
is being executed consistent with Congressional intent. The 
Committee reminds the Administration that once a project is 
provided funding in this, or any other Act, and signed by the 
President, all projects are of equal merit. The Committee will 
not accept differential treatment of projects based on whether 
they are contained in the bill or in report language nor on 
whether the Administration considers a project to be 
``budgetable.''
    One of the reasons given to allow the Corps broad 
reprogramming authority is that budgets are developed and 
submitted to the Congress months prior to the start of the 
fiscal year. The Committee is well aware that project 
circumstances may change in that timeframe, and has therefore 
offered the Corps and the Administration the opportunity to 
provide the Congress updated estimates for this subset of 
projects prior to the House and Senate conferencing their 
respective bills. This conference occurs only months prior to 
the start of the fiscal year and such changes can be 
accommodated as necessary. The Committee therefore no longer 
has patience for this argument. While there will likely still 
be changed circumstances to individual project needs during the 
year, these may be addressed through the reprogramming 
authorities and processes.
    The change to a new business model within the Corps has 
resulted in a transition period; however, the accountability 
and reliability of the program will improve as Members of 
Congress, local sponsors, and contractors can be certain that 
appropriated funds will be expended on those projects for which 
they were intended. It is this Committee's intent that past 
commitments to Members and local sponsors be met. To this end, 
the Committee has provided funding in the Construction and 
Investigations accounts to address a subset of the projects 
that will require payback in fiscal year 2007.
    Past practices have resulted in a cumulative financial 
obligation that is significant, a undefined, and in large part, 
unbudgeted. In an era of limited Federal budgets and increasing 
needs for our Nation's infrastructure, this practice cannot be 
maintained. The Committee remains concerned that neither 
Congress nor the Corps knows the full extent of the payback 
required. Accordingly, and for the second year, the Corps is 
directed to submit a report to the House and Senate Committees 
on Appropriations within 30 days of enactment of this Act 
summarizing, by project, the total cumulative amount of 
repayments owed to the donor projects. As a result of this 
Committee's extreme frustration in the Corps inability to 
provide such critical information, the Act contains general 
provisions which transfer $10,000,000 from the Expense account 
and $1,000,000 from the Office of the Assistant Secretary for 
Civil Works into the Operations and Maintenance account to meet 
unbudgeted critical needs of the nation's water resource 
infrastructure in the event the report is not received in the 
timeframe required.
    To ensure that the expenditure of funds in fiscal year 2007 
is consistent with congressional direction, to minimize the 
movement of funds, and to improve overall budget execution, the 
bill incorporates by reference the projects identified in the 
report accompanying this Act into statute. In addition, the 
bill again includes a section prohibiting the obligation or 
expenditure through a reprogramming of funds that:
          (1) creates or initiates a new program, project or 
        activity;
          (2) eliminates a program, project or activity;
          (3) increases funds or personnel for any program, 
        project or activity for which funds have been denied or 
        restricted by this Act;
          (4) reduces funds that are directed to be used for a 
        specific activity by this Act;
          (5) increases funds for any existing program, project 
        or activity by more than $2,000,000 or 25 percent, 
        whichever is less; or
          (6) reduces funds for any program, project or 
        activity by more than $2,000,000 or 25 percent, 
        whichever is less.
    This provision shall not apply to the initiation of new 
projects or activities under the continuing authorities 
programs. However, new projects under the continuing 
authorities program not identified in the conference agreement 
to accompany this Act must be submitted to the House and Senate 
Committees on Appropriations for approval. Reprogramming 
approvals shall also be required for changes in a project's 
scope and cost relative to what was submitted in the 
justification sheets. These guidelines vitiate all other 
reprogramming guidance provided in previous appropriations Acts 
or their accompanying reports and shall be applied to all 
accounts within the Corps of Engineers.
    Not later than 60 days after the date of enactment of this 
Act, the Corps of Engineers shall submit a report to the 
Committees on Appropriations of the Senate and the House of 
Representatives to establish the baseline for application of 
reprogramming and transfer authorities for the current fiscal 
year. The report shall include:
          (1) a table for each appropriation with a separate 
        column to display the President's budget request, 
        adjustments made by Congress, adjustments due to 
        enacted rescissions, if appropriate, and the fiscal 
        year enacted level;
          (2) a delineation in the table for each appropriation 
        both by object class and program, project and activity 
        as detailed in the budget appendix for the respective 
        appropriations; and
          (3) an identification of items of special 
        congressional interest.
The Corps of Engineers shall not reprogram any funds received 
as a non-Federal share for project costs.
    Continuing contracts.--When entering into such contracts, 
the Corps obligates the federal government to pay certain costs 
from future appropriations. Contractors may perform more work 
than is budgeted in any fiscal year, but when available 
appropriations for the current fiscal year are exhausted, work 
continues at the contractors' risk, with an expectation that 
payment will be made from subsequent appropriations. Simple 
interest may be added to any delayed payment that the 
contracting officer determines was actually earned under the 
terms of the contract and would have been made but for 
exhaustion of funds. The Rivers and Harbors Appropriations Act 
of 1890 first authorized the Corps to award continuation 
contracts. Later, section 10 of the Rivers and Harbor Act of 
1922 provided general authority to award continuing contracts 
for any public work on canals, rivers, and harbors adopted by 
Congress. These specific authorizations for continuing 
contracts save the Corps from being in violation of the Anti-
Deficiency Act.
    Last year, the Congress limited the Corps' ability to use 
continuing contracts. This action was the result of several 
years of increasing concern with the Corps' liberal use of and 
inadequate budgeting for continuing contracts. The Committee 
recognizes the Corps has taken significant steps to curb the 
inappropriate use of this contracting mechanism, but believes 
additional action is necessary to define the scope of out-year 
obligations on these contracts.
    Last year, the Committee requested that the Government 
Accountability Office (GAO) review the Corps' use of continuing 
contracts during fiscal years 2003 to 2005. The results of this 
review, though preliminary, only confirm the Committee's belief 
that the Corps had turned to this unique contracting authority 
as the rule and not the exception. Combined with the drive to 
expend virtually all of its annual appropriations, abuse of the 
continuing contract authority drove the massive merry-go-round 
of reprogramming.
    For the period of fiscal years 2003 to 2005, GAO found that 
the Corps had no real basis or rationale for the use of the 
continuing contract clause in most of the contracts reviewed. 
In the sample of continuing contracts reviewed, GAO found that 
over 50 percent were less than 12 months in duration and valued 
at less than $5 million. These findings only validate the 
Committee's concern over excessive use of the clause. In one 
case, the Corps even issued a continuing contract for 
janitorial services. The most disturbing finding of the GAO 
review was that the Corps was unable to identify the total 
number of contracts awarded that included the continuing 
contract clause. This was due to the fact that the Corps did 
not track information on continuing contracts, despite the fact 
that the Corps' financial management database had a field that 
identified contracts with a continuing contract clause.
    The Committee remains concerned that the Corps does not 
have an accurate accounting of existing continuing contracts. 
Therefore, the Corps is directed to hire a national accounting 
firm, utilizing General Expense funding, to audit its 
contracting records and provide a full accounting of all 
existing continuing contracts, and their corresponding 
obligations by fiscal year for the planned duration of the 
contract. The findings of this audit should be provided to the 
Committees on Appropriations by August 1, 2007.
    The Committee reminds the Corps that Congress determines 
how much funding is to be available for a particular project in 
any given fiscal year, and the Corps must ensure that it 
manages its program within the funds provided each year. The 
Corps abrogates its management responsibilities and improperly 
intrudes upon congressional prerogatives in determining annual 
appropriation levels when the Corps reserves insufficient funds 
to cover the work performed each fiscal year through the 
duration of the contract or when, through reprogramming, it 
makes available funds in excess of the amounts reserved in such 
contracts in any fiscal year because of unbudgeted accelerated 
contractor earnings. The Federal government, not the 
contractor, must determine how much will be spent on each 
project each year.
    The bill includes a provision that prohibits the use of 
funds provided in title I of this Act to execute any new 
continuing contract (or modifications to any existing 
continuing contract) that commits an amount for a project in 
excess of the amount appropriated for such project in this Act. 
In addition, the Committee continues its direction from last 
year that the Corps shall:
          (1) discontinue the practice of reserving 
        insufficient funds to cover the work to be performed 
        each fiscal year through the duration of the contract;
          (2) discontinue the practice of reprogramming funds 
        to satisfy contractor earnings in excess of the amounts 
        reserved in the contract for the current fiscal year;
          (3) discontinue the practice of issuing continuing 
        contracts for small-scale projects that are limited in 
        scope, schedule, construction and funding requirements;
          (4) issue continuing contracts only when it is 
        determined that such a contract is the preferred means, 
        demonstrated by an alternative analysis, and only after 
        the approval of the House and Senate Committees on 
        Appropriations;
          (5) budget fully the out-year costs of all existing 
        and new continuing contracts (or, if the budget year 
        policy is to eliminate the authority to execute such 
        contracts, fund fully the termination costs of such 
        contracts in the budget year);
          (6) provide to the House and Senate Committees on 
        Appropriations within 30 days of enactment of this Act 
        a report identifying all existing continuing contracts 
        and the amount, by project, of the out-year funding 
        requirements of those contracts; and
          (7) provide a quarterly update to the report 
        identified above in item (6).
In addition, any new continuing contract shall be submitted by 
the Assistant Secretary of the Army (Civil Works) for approval 
to the House and Senate Committees on Appropriations, 
consistent with the reprogramming guidelines contained in this 
Act.
    Congressional justification materials.--The congressional 
justifications submitted by the Corps in support of the annual 
budget request, while vastly improved from last year, continue 
to be inadequate for an appropriation request of nearly $5 
billion. For the first year, the Administration presents the 
budget estimate by mission area and presents information on 
projects funded in the current year but for which no funds are 
requested. The Committee continues to believe the materials 
must include a clearly articulated overview and discussion of 
policy proposals included in the annual budget request beyond 
that which is included in the annual summary of the President's 
budget request. The Committees on Appropriation should not be 
required to consult multiple documents to gain a semi-complete 
accounting of the Corps' budget request. The Committee 
reiterates this information shall include, but not be limited 
to, an analysis of appropriations language provisions and 
changes; comparative amounts available for obligation; 
comparative amounts showing obligations by object class; 
summary of changes from the enacted level; a delineation of 
responses to significant items included in the reports 
accompanying annual appropriations Acts; appropriations and 
authorizing histories; explanations of how individual projects 
fit in the context of larger regional objectives, and narrative 
and tabular summaries of program requests.
    The Committee recognizes that continued improvements 
required in the budget justifications will need to be developed 
over time; however, the Committee expects major changes in the 
fiscal year 2008 budget submission and pledges to work with the 
Corps to develop implementing instructions to its program 
offices.
    Performance-based budget.--Last year, the OMB proposed 
seven performance guidelines for funding Corps construction 
projects in order to generate greater benefits. The current 
budget request supports a major change to the guidelines 
proposed in 2006 to ensure funding for flood and storm damage 
reduction projects that address a significant, ongoing risk to 
human safety. The Committee applauds the inclusion of this 
consideration and appreciates the continued efforts of the 
Administration in refining the rationale for focusing limited 
federal resources on finishing the most important projects in a 
timely manner.
    Based on concerns that the ranking system, the ratio of 
remaining benefits-to-remaining costs, has several inherent 
biases, in fiscal year 2006 the Congress directed the Corps to 
contract with the National Academy of Public Administration to 
study and recommend factors which should be used in determining 
the allocation of limited resources for the construction of 
water resource projects. In determining the projects identified 
in this report, the Committee used the Administration's ranking 
system as a guide but not as a final determinative in the 
allocation of funds and awaits the results of the above study 
to further consider project allocations.
    Savings and slippage.--In fiscal year 2006, the Committee 
discontinued the practice of assuming an estimate for savings 
and slippage within the Corps of Engineers civil works program. 
As noted in last year's report, the practice had devolved into 
a method to reduce projects in order to fund more projects than 
an appropriation would support. This practice led to confusion, 
and in some cases, allocations to projects in excess of 
appropriated funding through reprogramming. As savings and 
slippage occurs on any project in the Corps civil works 
construction and investigations programs and the investigations 
and construction elements of the Flood Control, Mississippi 
River and Tributaries account in fiscal year 2007, resources 
excess to a project's total needs shall remain available for 
two years after the date of enactment of the Act making 
appropriations for that particular project, after which time 
unobligated balances may be transferred to other ongoing 
projects, consistent with the reprogramming guidelines 
contained in this Act. The Corps shall submit to the House and 
Senate Committees on Appropriations an annual report detailing 
project execution relative to stated capability and enacted 
appropriations.
    Continuing Authorities.--The Fiscal Year 2006 Act contained 
direction for the Corps to provide the Committees on 
Appropriations a management plan and delineation of all ongoing 
projects and out-year funding requirements; this plan has yet 
to be received though the Act directed it be submitted by 
January 7, 2006. The Committee is aware that much ado has been 
made with regard to Congress's inclination toward directing 
funding to specific projects. The Committee has repeatedly 
requested detailed information on this program. In response, 
the Corps has not been able to provide information useful in 
decision-making nor has it demonstrated a thorough knowledge 
and accounting of the existing commitments or out-year program 
requirements.
    Until such time as the Corps can establish that it has a 
firm grasp of the program, Congress has no reason to give the 
Corps discretion. In light of the quality of information 
provided to date, the Committee believes it has given more than 
sufficient latitude by providing programmatic funding in excess 
of Congressionally directed projects.
    In an effort to reduce the backlog of projects, the fiscal 
year 2006 Act placed a moratorium on the execution of new cost 
sharing agreements. The Committee continues this direction with 
the following exception: where sufficient funds are 
congressionally directed or otherwise available to complete the 
current phase, the Corps may execute the cost sharing 
agreement. This exception does not obviate the need for the 
Corps to meet all Congressionally directed project requirements 
prior to executing any new agreements.
    Funding provided for Continuing Authorities projects in 
this Act shall not be available to initiate construction unless 
construction can be completed within the funds provided. 
Unobligated funds carried forward from previous years may not 
be used to initiate any new projects unless submitted to the 
House and Senate Committees on Appropriations and approved by 
them.

                             Investigations





Appropriation, 2006...................................   \1\$162,360,000
Budget estimate, 2007.................................        94,000,000
Recommended, 2006.....................................       128,000,000
Comparison:
    Appropriation, 2006...............................       -34,360,000
    Budget estimate, 2007.............................      +34,000,000

\1\Excludes emergency appropriations of $37,300,000.

    This appropriation funds studies to determine the need, the 
engineering and economic feasibility, and the environmental and 
social suitability of solutions to water and related land 
resource problems; and funds preconstruction engineering and 
design, data collection, interagency coordination, and 
research.
    The Committee recommends an appropriation of $128,000,000, 
a decrease of $34,360,000 from the fiscal year 2006 enacted 
level, and $34,000,000 over the budget estimate. The budget 
request and the approved Committee allowance are shown on the 
following table: