Fraud in Corps Study Revealed!
by Mark N. Beorkrem
Sierra Club Midwest Regional Representative
Mississippi River Protection Project
The $50 million study justifying expanding commercial navigation on the Upper Mississippi and Illinois Rivers was nearing completion with the US Army Corps of Engineers expected to announce an Initial Recommended Plan to representatives of the five Upper Mississippi River Basin states February 15th. However, a mere ten days away from the meeting the Corps announced that Headquarters in Washington, DC had put a hold on the results pending a review at top levels. Then on February 13, the Washington Post broke a story that sent shudders through the entire Corps hierarchy. Don Sweeney, former lead economist on the study, had submitted an affidavit to the Office of Special Counsel detailing actions by Corps’ managers to manipulate study results to justify building 1200 foot locks. Internal memos and emails outlining and directing study economists to “cook the books” accompanied the affidavit.
The latest news breaking on this fast–evolving story is that on February 28th, the Office of Special Counsel (OSC), in an unusually fast pace, referred the whistle–blower report to Secretary of Defense William Cohen for an investigation which the Pentagon must report the results to Congress in 60 days. “Special Counsel Elaine Kaplan determined that there exists a substantial likelihood that officials in the Corps have engaged in violations of law, rule, or regulation, and a gross waste of funds,” according to the release from the OSC.
The OSC in 1999 only referred 3% of some 413 cases for further action, dramatizing the serious nature of Sweeney’s whistle–blower complaints. Following the OSC referral were new calls for congressional hearings by Congressman Lane Evans (D–IL), requests for a General Accounting Office investigation by Senator Charles Grassley (R–IA), and for reviews of the study work by outside experts. Army Secretary Louis Caldera had already announced an agreement with the National Academy of Science to review the Corps study.
In review, the Corps is studying whether to build new or expand or modify existing 600 foot locks on the Upper Mississippi and Illinois Rivers to accommodate the maximum tow–barge configuration of 1200 feet of 15 barges and towboat. Presently such configurations require 90 minutes or more to split up the barges and move 600 feet of the rig through at a time; requiring two lock operations and then reattaching the split.
During some high traffic periods on locks between Alton, Illinois and Keokuk, Iowa, where traffic is highest on the Upper Mississippi system, these delays can cause substantial backups of traffic during peak shipping times, costing the tow industry many hours of idling while waiting to pass through the locks. The Corps and the tow industry has also forecast that traffic on the rivers should grow considerably over the next fifty years due to projected increase in demand of Midwest corn and soybeans for the overseas market.
The controversial Corps’ study continues to draw criticism from all directions. Since its inception in 1992, the study has been under attack by the environmental community for failing to address critical questions related to the impacts of the locks and dams themselves on the natural resources and whether that impact combined with the current level of traffic has put the ecosystem in jeopardy in some critical areas. Natural resource agencies, such as the US Fish and Wildlife Service and the Environmental Protection Agency, along with several state agencies, told the Corps in 1992 that the study design itself called for too little field work over too short a period to answer some of the questions that were pertinent to navigation impacts. The Corps approach to studying environmental impacts from navigation was to restrict the study to looking at just the incremental impacts from an increase in navigation traffic; in other words, would one or two more barges per day really make much difference on the ecosystem. All natural resources agencies and the environmental community have criticized this approach vigorously.
In 1998, the barge industry and the farming lobby began to question the study as the preliminary economic study began to reveal that it might not be possible to justify expanding locks under National Economic Development guidelines. The preliminary economic study was confirming other economic research that showed that, except for farmers within about 50 miles of the river, there was minimal or no economic gain to shipping by barge versus rail to New Orleans or other ports. Early cost figures for building new 1200 foot locks were beyond the savings attributable to decreasing lockage delay times to the tow industry and cost savings presumably attributable to barge shipping rates savings to shippers versus using alternative shipping such as rail
In a stunning reversal of preliminary economic reports showing navigation expansion might not be justified, the Corps, after changing the lead economist and appointing a new Study Team leader in December 1998, began to modify the economic work. In June of 1999, the Corps revealed new preliminary net savings figures for several scenarios of navigation expansion that showed indeed, 1200 foot locks in some manner could be justified, if environmental mitigation costs were not too high.
It must be pointed out that to get to this point the Corps has made three major decisions affecting the economics of the project. First, the Corps has made major modifications to its construction plans. Instead of brand new locks, with major concrete work and extended shutdowns of river traffic, the Corps has borrowed a construction technique not used on the river before in building lock walls. The proposal is now to build up the strength of existing guidewalls so they can perform as lock walls and float in sections to complete a section that meets the 1200 foot lock needs.
Second, and most significant, the Corps now states that rehabilitation work on the lock system is likely needed every 25 years rather than lasting the 50–60 years as it has without rehab work. This manipulation of timing for rehab work allows the Corps to claim it can eliminate one complete rehab cycle requirement supposedly planned for the next fifty years, saving the navigation project millions of dollars. This benefit now shows up on the Nav Expansion Economic plan and interestingly enough becomes a major positive dollar benefit for the lock expansion. On the scenario shown above, rehab cost savings amount to 89% of the net annual benefit.
Third, slight of hand being done by the Corps in connection with the economic results are highly questionable projections of growth within the agricultural industry of the Upper Midwest. Corps’ projections for barge traffic and benefits to the nation based upon the economic activity of the barge traffic depend upon several faulty assumptions:
1) FULL PRODUCTION developing within the agricultural lands of the US over the next fifty years by increasing acreage planted by 22 million acres. This is accomplished mostly by a forecast of over 16 million acres being withdrawn from the highly valued Conservation Reserve Program which puts highly erodible land aside and out of production. The conservation community has been pushing for just the opposite — more acreage in CRP.
2) YIELD INCREASES will follow a high growth trend seen over the last twenty–five years lead by biotechnology crops. The Corps claims that this is where the majority of new export tonnage would come from. However, current genetic crop research is not directed towards increasing yields by wide margins, but in developing cost reductions per crop through use of Roundup–Ready hybrids as well as developing high–oil varieties to increase value as livestock or industrial feedstock. These manipulations have had minor impact on yields.
3) ALL SURPLUS US GRAIN WILL BE EXPORTED! Obviously they haven’t been reading the Department of Agriculture bulletins lately. In a recent review of production prospects for the new year, The Farm Journal reports that Ag experts believe that 14.8 million corn acres and another 10 million acres of soybeans could be withheld from planting without hurting US exports. The facts are that the export market for US grain is decreasing, not increasing, and there is not projected to be an unlimited demand for US crops abroad.
4) THE MISSING LINK of the cumulative and system environmental costs of a system already degraded not being included within the economic plans.
The Sierra Club has repeatedly made the lack of cumulative environmental costing quite clear to the state representatives and cautioned them on proceeding with reviewing Corps’ proposals without having those figures available. The Club’s position was bolstered by a statement from both the US Fish and Wildlife Service (USFWS) as well as the Upper Mississippi Conservation Committee (regional association of river biologists) who reemphasized their criticism of the Corps’ environmental work related to navigation expansion. The USFWS statement in part read: “Based on the results of the studies thus far, we do not believe there is sufficient information to determine the significance of increased navigation traffic upon UMR fish and wildlife resources. Since study implementation, the Service and the five UMR state natural resource agencies have argued that the cumulative effects of the existing navigation project’s operation and maintenance (O & M) activities must be quantified and compensated.”
Interestingly enough, all of the environmental groups’ complaints mirror the charges contained in the Sweeney affidavit. The close attention paid to the Corps’ study since its inception in 1992 resulted in a clearer picture of Corps’ practices than had ever been obtained before by the Upper Midwest environmental community and played a key role in the exposure of this Corps’ fraud. Support from foundations such as the McKnight Foundation and Joyce Foundation were pivotal in supporting attendance at key meetings and reviews by outside experts of the Corps’ work as it was in process.
Complete details on the whistle–blower issue are available at the following web site:http://www.environmentaldefense.org