Friday, April 11, 2008

How the Army Corps Is Swindling Americans

How the Army Corps Is Swindling Americans

By Michael Grunwald

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Imagine the Pentagon had been caught red-handed concocting its justification before launching the invasion of Iraq in 2003. Imagine that after the scandal died down, the Pentagon admitted Saddam didn't really have WMDs -- but proposed an even larger invasion, because there was a remote possibility things might change someday. Then imagine Congress had rewarded this logic with overwhelming bipartisan support.

It's a silly thought experiment, because Congress -- for all its flaws -- takes war at least somewhat seriously. But there's still one part of the Pentagon that can count on overwhelming bipartisan support no matter what it proposes. In 2000, the Army Corps of Engineers was caught red-handed concocting its justification before launching a $1 billion project on the upper Mississippi River system. After the scandal died down, the corps admitted there wasn't really enough barge traffic to justify construction -- but proposed a $4 billion project, because there was a remote possibility things might change someday. And yes, the project recently sailed through a united Congress, where water projects are a time-honored form of political currency that steer jobs and money to the constituents and contributors of powerful members.

By corps standards, pouring thousands of tons of concrete into the Mississippi and Illinois Rivers to relieve nonexistent barge congestion with seven new locks is no environmental disaster; those rivers are already highly engineered and degraded. But it is a stark example of the dysfunction of the corps -- its dishonest analyses, anachronistic priorities, predilection for makework, and desperation to please its congressional patrons and special-interest clients. And that dysfunction is itself an environmental disaster -- not only because some of the porky boondoggles it produces destroy pristine rivers and enormous swaths of wetlands, but because an honest corps with better priorities could help revive America's ravaged ecosystems.

The upper Mississippi scandal was the start of my morbid fascination with the corps and its enablers in Congress. I was a Washington Post reporter then, and I had stumbled into America's bumbling water resources agency after hearing that it was spending billions of dollars damming and dredging rivers with little barge traffic. Soon leakers were sending me a stream of hilarious internal corps memos about "getting creative" with economic analyses in order to "grow the program" with ginned-up projects. I remember my editor saying the corps bureaucracy reminded him of covering communist Czechoslovakia. And I remember thinking -- after independent investigations by the Government Accountability Office, the National Academy of Sciences, and even the Pentagon inspector general confirmed that the corps was an unholy mess -- that since the mess had become public, it would have to be cleaned up.

I thought wrong. Since 2000, corps leaders have repeatedly promised more environmental sensitivity and better economic analyses. But they keep rubber-stamping the same wasteful and destructive pork that soured their reputations in the first place. As I have written in Grist, the dysfunction of the corps and America's water resources system drowned the city of New Orleans and killed more than 1,000 people in 2005. And not even that catastrophe has prompted change. So I was pretty naïve to expect the debacle on the upper Mississippi to lead to reform.

Situation Normal: All Porked Up

My first corps story was about the Red River, where the agency had spent $2 billion building dams (named after Louisiana congressmen) to create a liquid highway (named after a Louisiana senator) for barges that never came. My second was about the Missouri River, where the corps was flouting the Endangered Species Act to maintain a reliable waterway for barges that rarely came. And with that I figured I had given more than enough attention to an obscure public works agency with an addiction to concrete.

Then I got a pile of documents from a corps economist named Don Sweeney.

In 1993, the corps had begun a $60 million study of navigation improvements on the upper Mississippi, its largest study ever. Sweeney was tapped to lead the study team. His task was to calculate whether the economic benefits that private shipping interests would receive from larger locks would exceed the costs to the public. If so, the corps would recommend the project, and Congress would approve it.

Sweeney knew the corps tended to overestimate the need for giant navigation projects with powerful congressional sponsors. The agency had predicted 27 million tons of barge traffic for the first year of the Tennessee-Tombigbee Waterway, 25 million tons too high. He realized the corps was using a hopelessly primitive economics model that assumed shippers would use barges at any cost. So he developed a more sophisticated model that was hailed inside and outside the corps as a supermodel. And in 1998, he concluded there was no need to spend a billion dollars on larger locks; the river's occasional barge delays could be eased with decent scheduling.

But this was not the answer his bosses wanted. The barge industry -- dominated by influential conglomerates like CSX, ConAgra, Cargill, and Archer Daniels Midland -- wanted bigger locks. So their friends in Congress, led by Sen. Christopher Bond (R-Mo.), were pushing as well. Corps generals disbanded Sweeney's team and ordered a new team to come up with a "reasonably plausible" rationale for the project.

The No. 2 corps general ordered the team "to develop evidence or data to support a defensible set of capacity enhancement projects." In an email summarizing the orders, one corps economist wrote: "If the demand curves, traffic growth projections and associated variables ... do not capture the need for navigation improvements, then we have to figure out some other way to do it."

Eventually, the team managed to inflate enough benefits, ignore enough costs, and skew enough data to produce a positive benefit-cost ratio. It made just one mistake: It kept copying Sweeney on its emails. And Sweeney's lawyers relayed them to me. I also got a copy of a secret "Program Growth Initiative" that corps military leaders had developed to try to boost their agency's budget, as if they were dot-com executives trying to expand market share. "We have been encouraged to have our study managers not take no for an answer," one corps official wrote. "The push to grow the program is coming from the top down." When I read excerpts to Joseph Westphal, the assistant Army secretary who was supposed to be overseeing the corps for the Clinton administration, this was his response: "Oh my God. My God. I have no idea what you're talking about." Good times! Army Secretary Louis Caldera, who once told me he wished it could be the Navy Corps of Engineers, promptly announced some gentle "management reforms" reminding the corps brass to obey its civilian overseers. He might as well have sent the 101st Airborne to storm Capitol Hill. Congress considers itself the only true overseer of the corps, and Caldera was promptly forced to retract his reforms. It was clear that I had stumbled into the journalistic equivalent of a full-employment program.

I spent six more months investigating how the corps had twisted its analyses to justify billions of dollars worth of white elephants, from a flood-control pump in the Mississippi Delta that would have drained 200,000 acres of wetlands to a dredging scheme for the Port of Baltimore that was so preposterous it became a subplot on HBO's The Wire. My final article was supposed to be about the corps redeeming itself by restoring the damage it had done to the Florida Everglades, but the story turned out to be a lot more complex and interesting than that -- so complex and interesting that I ended up writing a book. Let's just say that the corps is a lot better at draining wetlands than it is at fixing them.

In December 2000, the Pentagon wrapped up its internal investigation of the corps, concluding not only that the Mississippi study was rigged, but also that the agency had a systemic bias in favor of large-scale construction. It was a shocking admission, but by then no one was paying much attention. A few corps officers were reprimanded, a new commander renounced the Program Growth Initiative, and the Mississippi study went back to the drawing board. Otherwise, it was business as usual. In fact, after a National Academies report that trashed the corps for cooking its books also included a few caveats acknowledging that even Sweeney's model couldn't always predict the future -- the economic equivalent of acknowledging that evolution is a theory -- corps officials tried to blame the whole controversy on Sweeney and resurrect their discredited model.

"It was surreal," says Sweeney, who filed a successful whistleblower complaint with the Office of Special Counsel, and is now a professor at the University of Missouri at St. Louis. "But facts don't count for much at the corps."

Gaining the Upper (Mississippi) Hand

These days, the Bush administration's environmental reputation is about as good as Eliot Spitzer's marital reputation, but credit where it's due: The Bushies have tried to rein in the corps. All administrations talk about reining in the corps, but Bush's has consistently proposed zero funding for the worst corps oinkers, although it's been just as consistently overruled by Congress. Corps projects hate to die, but the Bushies somehow managed to kill a ridiculous $108 million jetty scheme in North Carolina in 2003, and they're about to kill that $220 million pump nonsense in the Mississippi Delta. And Bush's budget office delved deep into the details of the upper Mississippi study, publicly trashing that discredited corps model, forcing the agency back to the drawing board yet again.

The prospects for larger locks were starting to look bleak. In 2000, the project's rationale had depended on an agribusiness consultant's study predicting huge increases in grain shipments, even though shipments had been declining slightly for over a decade. Since 2000, grain shipments have continued to slow, and the rise of the corn ethanol industry should mean fewer grain exports in the future. "You'd need significant growth to justify a project," the new corps study leader, Denny Lundberg, admitted to me in 2003. Right now, the seven locks are in use less than half the time, and barge traffic is so light that Sweeney says there's not even a need for a schedule, much less a megaproject. But the corps wasn't about to let 20 years of no-growth experience trump its big-growth dreams. "You've got to think about the potential for growth," Lundberg explained. "If you only made these judgments based on past history, you'd never do anything."

Sounds like a plan!

Unfortunately, the corps can't stand to do nothing -- its motto is essayons, French for "let us try" -- so it decided instead to adopt a new approach, basing its recommendations on "scenarios" instead of forecasts. For example, under a mildly optimistic flat-growth scenario, it calculated that the costs of new locks would be five times the economic benefits. And under a highly optimistic modest-growth scenario, the costs would be 2.5 times the benefits. But under an outlandishly optimistic high-growth scenario, the benefits would slightly exceed the costs. That was good enough for the corps, which liked the high-growth scenario so much it recommended expanding the original $1 billion plan to expand seven locks into a $2.2 billion plan to build seven new locks. A triumphant Sen. Bond called it "a plan that gets the corps back in the business of building for the future rather than haggling about predicting it."

Corps boondoggles thrive because they provide benefits to a few -- in this case, barge interests, farm interests, and unions -- at the expense of the many. You pay for this foolishness, but you probably won't come to Washington to fight it. There are a few corps reformers on the Hill, such as Sen. John McCain (R-Ariz.) and especially Sen. Russ Feingold (D-Wis.), but most members of Congress consider it bad form to oppose another member's water project. Usually, the strongest voices in opposition are environmentalists. And the corps devised a brilliant strategy for dealing with them on the upper Mississippi: It bought them off.

In addition to the $2.2 billion in navigation improvements, the corps proposed $1.7 billion in environmental improvements. Groups like the Audubon Society and The Nature Conservancy were delighted with the green pork, especially after Congress included toothless language pledging "comparable" spending on restoration and navigation. (My house is "comparable" to the Sears Tower; it's smaller.) And the project's supporters got to brag about saving the earth as well as bringing home jobs. "The funding for ecosystem restoration will keep the land around these mighty rivers clean and beautiful," crowed Sen. Barack Obama (D-Ill.).

The entire $4 billion bonanza was stashed into the Water Resources Development Act of 2007. Most environmental groups ended up supporting the bill, because it also included $5 billion for the Everglades and the devastated Louisiana coast, along with $14 billion worth of more traditional pork. But as I have already whined at length on this website, there was nothing in the bill to reform the troubled corps for the 21st century. Obama supported some proposed reforms, such as independent reviews of corps projects, but he didn't fight for them because he "didn't want to slow the process down." That's an understandable sentiment for an Illinois senator. But the water resources bill had pork for every state; that's why it was so popular. And that's why, once again, nothing is going to change.

Some corps projects are true ecological nightmares, like the pump in the Delta, or this flood-control fiasco on the Mississippi. But the real ecological nightmare of the corps is the opportunity cost. If it didn't have to spend another $2.2 billion pouring concrete into the Mississippi, maybe it really would spend $1.7 billion restoring the Mississippi. And if it wasn't the kind of agency that spent its time finagling ways to pour concrete, maybe it would be the kind of agency we could actually trust to restore the Mississippi properly -- along with the Everglades, Louisiana's coastal marshes, and so many other ecosystems the corps has helped to destroy in the first place.

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