CECW-AR (1110-2-1150a) 14 July 1999

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MEMORANDUM FOR CHIEF, PLANNING DIVISION, ATTN: CECW-PW

SUBJECT: HQUSACE Policy Compliance Review Comments--San Joaquin River Basin, Arroyo Pasajero (Fresno County), California, Feasibility Investigation, Draft Feasibility Report, Draft Environmental Impact Statement, Draft Environmental Impact Report (March 1999)

1. References:

a. Memorandum, CESPK-PD-J, 10 October 1997, subject: San Joaquin River Basin, Arroyo Pasajero (Fresno County), CA, Alternatives Formulation Briefing (AFB) Read Ahead Documentation.

b. Memorandum, CECW-AR, 26 November 1997, subject: HQUSACE Policy Compliance Review Comments--San Joaquin River Basin, Arroyo Pasajero (Fresno County), California, Feasibility Investigation, Alternatives Formulation Briefing (AFB) Document.

c. Memorandum, CESPK-PD-J, 9 February 1998, subject: San Joaquin River Basin, Arroyo Pasajero (Fresno County), CA - Alternatives Formulation Briefing Supplemental Read Ahead Documentation.

d. Memorandum, CESPK-PD-A, 11 May 1999, subject: San Joaquin River Basin, Arroyo Pasajero (Fresno County), CA, Draft Feasibility Report and Draft Environmental Impact Statement/ Environmental Impact Report.

2. Reference 1. a. provided read-ahead AFB documentation for policy compliance review. Reference 1. b. transmitted policy compliance review comments on the read ahead material. Reference 1. c. provided CESPK responses to policy compliance review concerns and supplemental AFB documentation. The AFB was held 8 April 1998 at the South Pacific Division offices in San Francisco, California. Reference 1. d. transmitted the draft feasibility report for policy compliance review.

3. A primary policy compliance review concern relates to the damage and benefit estimates used in the economic evaluation of alternatives. The assumptions and detailed methodology employed in the derivation of the damage estimate are not well documented in the draft report. The report does not document that damage estimates derived by others satisfy applicable policy and standards for use in Corps economic evaluations of alternatives. There are significant shortcomings apparent in the real estate plan presented in the draft report. Additional review concerns involve compliance with environmental policy and use of Federal funds to pay a portion of the non-Federal share of project costs.

4. The greatest potential for damages in the study area involves the breaching of the San Luis Canal by flood flows from the Arroyo Pasajero. The San Luis Canal is a portion of the California Aqueduct that is jointly owned by the U.S. Bureau of Reclamation (USBR) and the

California Department of Water Resources (DWR). The document indicates that construction, and operation and maintenance of the San Luis Canal are cost shared 45 percent by the USBR and 55 percent by the DWR. The report also states that it is anticipated that the DWR and the USBR will jointly provide the non-Corps funding requirements for the project. Thus, it is possible that the USBR may contribute as much as 45 percent of the 35 percent non-Federal share (i.e., 15.75 percent of project costs). If this is the case, the total Federal funding (Corps plus USBR) may be 80.75 percent of total project costs. Separate Federal appropriations for the Corps and USBR may be required to implement the project in a timely manner. The policy compliance review team believes that it may be appropriate to apprise senior Corps managers, OASA(CW), and perhaps, OMB of the potential cost sharing implications associated with this project.

5. The HQUSACE policy compliance review concerns are enclosed. Questions concerning the review team comments may be discussed with review manager, Jay Warren, at 703-428-6465.

/s/

Encl DOUGLAS W. LAMONT

as Chief, Policy Review Branch

Policy Division

Directorate of Civil Works

CF:

CECW-A (2 cys w/encl)

CECW-PD (1 cy w/encl)

CECW-AR file (profile #16421/js)

Electronically:

Warren/McIntyre/Bellinger/SmithL/Murphy

Lamont/Cone/Einarsen/Ragon

Warren, CECW-AR-M--------------

McIntyre, CECW-AR-M---e-mail chop

Bellinger, CECW-AR-E-----e-mail chop

Heide, CECW-B-----e-mail chop

Bayert, CERE-AP----e-mail chop

SmithL, CECW-EP—e-mail chop

Murphy, CECC-J---e-mail chop

Einarsen, CECW-AR-E--------------

Cone, CECW-AR-M-------------

Lamont, CECW-AR--------------RETURN TO Planning Guidance Page    Top of Page

1. BACKGROUND

a. Location. The Arroyo Pasajero study area is located in Fresno County, California, about 50 miles southwest of the City of Fresno and 150 miles southeast of San Francisco, California. The Arroyo Pasajero study area includes the cities of Coalinga and Huron, large agricultural areas of the west central San Joaquin Valley in Fresno and Kings counties, and the California Aqueduct below Check Structure No. 19. The Arroyo Pasajero is an ephemeral stream located in the west San Joaquin Valley near the city of Coalinga. Its upper watershed, in the Diablo Mountains, has four major tributaries: Los Gatos Creek, Warthan Creek, Jacalitos Creek, and Zapato Chino Creek. Below the confluence of Los Gatos Creek and Warthan Creek, the stream is known as Arroyo Pasajero. Where the arroyo leaves the mountain range and enters the San Joaquin Valley, it has formed a broad alluvial fan stretching from the mountains to the valley floor. The defined channel of the arroyo ends approximately 1.5 miles northwest of the city of Huron near the existing sediment retention basin west of the California Aqueduct.

b. Study Authorization. The feasibility study is being completed under authority of a House Resolution adopted May 8, 1964. This resolution requested a review of reports on the Sacramento-San Joaquin Basin Streams, California, to determine the need for coordinated development of water resources of the San Joaquin River.

c. Problem. The greatest potential for damages in the study area involves the breaching of the San Luis Canal (California Aqueduct) by flood flows from the Arroyo Pasajero. The San Luis Canal (SLC) is a major water transport feature jointly used by the California State Water Project (SWP) and the Federal Central Valley Project (CVP). For all floods less frequent than about the 2-percent chance event, the total single-event damages associated with breaching the Aqueduct are estimated as $877 million based on existing (1996) conditions. These damages would result from an interruption of water deliveries to the San Joaquin Valley, central coastal area, and southern California. SWP water contractors would experience about 90 percent of the damages associated with a disruption of water deliveries. Water contractors of the Federal CVP would suffer the remaining 10 percent of the damages associated with a disruption of water deliveries. Aqueduct-related damages constitute over 95 percent of the total estimated damage associated with all floods less frequent than about the 2-percent chance event. Other flood-related problems in the study area include potential damages from inundation of structures in the urban areas of Coalinga and Huron, and flood damages to extensive agricultural areas. There are 256 structures in the 1-percent chance event floodplain and 1,413 structures in the 0.2-percent chance event floodplain. The total value of all structures and contents in the 0.2-percent chance event floodplain is $169.2 million (FY 96 prices). Without-project urban and agricultural damages for the 0.2-percent chance event flood are estimated as $47.2 million at FY 1998 price levels. Structure and agriculture damages for the 0.2-percent chance event flood account for $20.4 million and $16.7 million, respectively. Damage to roadways and autos account for most of the remaining damages. Based on a 6.875 percent discount rate and a 50-year period of economic evaluation, total equivalent annual without-project damages are reported as $42,806,000. Equivalent annual damages associated with the Aqueduct account for $41,749,000, or 97.5 percent of the total without-project damages.

d. Candidate Flood Damage Reduction Plans. The draft feasibility report does not recommend a preferred alternative for implementation. Instead, the report presents details of two alternatives (in addition to the no action alternative). The report states that a recommended plan will be selected during preparation of the final feasibility report. The report describes the apparent NED plan as the West Side Retention Basin with Overchute Structure alternative. This alternative has a first cost of $237.8 million. A second plan, currently supported by the non-Federal sponsor, is described as the Pasajero Gap Dam alternative with a first cost of $225.3 million. The two candidate plans differ in first cost by about 5.5 percent ($12.5 million) but are widely disparate in terms of net benefits, damage reduction efficiency, and level of protection (LOP) each is anticipated to provide. The West Side Retention Basin alternative has annual costs of $20.5 million, annual benefits of $35.8 million, and net benefits of $15.3 million. The Pasajero Gap Dam has reported annual costs of $19.0 million, annual benefits of $22.2 million, and net benefits of $3.2 million. The report indicates that the West Side Retention Basin alternative would reduce expected damages by 83.6 percent and the Pasajero Gap Dam alternative would reduce expected damages by 51.9 percent. According to the report, the West Side Retention Basin alternative would increase the LOP of the San Luis Canal from the current 1 chance in 43 of being breached in any year to 1 chance in 500. The Pasajero Gap Dam alternative would increase the LOP of the San Luis Canal from 1 chance in 43 of being breached in any year to 1 chance in 115 in the project base year (2004). However, with this alternative the LOP would decrease from 1 chance in 115 in the project base year to 1 chance in 80 by the end of the 50-year period of economic evaluation (2054).

2. REVIEW SUMMARY. A primary policy compliance review concern relates to the damage and benefit estimates used in the economic evaluation of alternatives. The assumptions and detailed methodology employed in the derivation of the damage estimate are not well documented in the draft report. The report does not document that damage estimates derived by others satisfy applicable policy and standards for use in Corps economic evaluations of alternatives. There are significant shortcomings apparent in the real estate plan presented in the draft report. Additional review concerns involve compliance with environmental policy and use of Federal funds to pay a portion of the non-Federal share of project costs.

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3. ALTERATIVE FORMULATION BRIEFING (AFB) GUIDANCE MEMORANDUM COMPLIANCE. In the opinion of the policy compliance review team CESPK has adequately addressed previous review comments on the AFB documentation, with the exception of the following.

AFBGM Comment 4. Damages Attributed to the Metropolitan Water District of Southern California and Others. Damages attributed to the Kern County Water Association, Westlands Water District and the Metropolitan Water District of Southern California account for about 89 percent of the total "Aqueduct Outage" damage estimate. The draft report should include tabulations showing the distribution of the aqueduct damages, by category, for these distributors so reviewers can assess whether the aggregate damage estimate is reasonable. About 74 percent ($479 million to $699.6 million) of the "Aqueduct Outage" damage is attributed to MWD of Southern California. The document provides mostly summary information on the aqueduct outage damage estimate produced by the MWD simulation model. The draft report should provide additional details of the derivation of this damage estimate. The AFB document indicates that a 3,000 per acre-foot value was assigned to expected unmitigated water shortages. What percentage of the total MWD estimate results from use of the $3,000 per acre-foot value?

CESPK Response: The Economic Appendix will be reviewed and additional detailed data provided where available. The economic appendix contains a description of the MWD model, although not specifically as it is used for this study. If feasible, additional descriptions of the MWD damages will be provided.

Discussion: HQ representatives indicated that the response was not responsive to the concern raised. It was determined that additional documentation to support dollar ranges assigned to unmitigated water shortages is required. It was agreed that supplemental information, not necessarily included in the report, will be prepared to clearly document the basis for the per acre-foot cost for the largest municipal and agricultural customers. This supplemental information will be provided to Headquarters along with the draft report.

Action: The supplemental information indicated in the discussion will be provided to Headquarters along with the draft report.

Action Taken: To check that $3,000 was reasonable, the going rates for various water districts in the Los Angeles area were researched on the Internet. Attachment 1 provides a list of water districts in the City of Los Angeles and their per acre-foot charges. This information was taken off the Internet, 13 February 1997.

Review Team Assessment: ER 1105-2-100, paragraph 2.8.k states " Adequate supporting documentation to allow reviewers to understand the models and assumptions used to estimate benefits and costs is to be provided." The action taken does not address the review concern nor provide the information requested. The referenced Attachment 1 simply lists rates charged by some local water districts.

a. The report defines "unmitigated" water shortages as water deficits that would not be met by alternative sources. Thus, the $3,000 per acre-foot valuation is supposed to account for damage, the nature of which is not described in the report, which would be sustained by primarily residential customers. Page 24 of the February 1999 Economic Appendix states "the $3,000 per acre-foot was estimated using data from a 1994 report from the California Urban Water Agencies titled "The Value of Water Supply Reliability: Results of a Contingent Valuation Survey of Residential Customers." The report does not make apparent the relationship between damages that would be suffered by residential customers due water deficits and an estimate of those customers’ willingness to pay for reliable water supply. Also generally, the Corps discourages use of the contingent valuation technique to determine willingness-to-pay. Exceptions are recreation and possibly environmental project outputs. Consequently, use of the technique to estimate indirect flood damages has no precedent. Use of a non-standard benefit estimation technique requires pre-approval by CECW-PD. CESPK should provide details of the derivation of the $3,000 per acre-foot damage estimate to CECW-P for review and assessment, and request approval for use in the present study.

b. The review comment requested information on what percentage of the total MWD estimate results from use of the $3,000 per acre-foot value. Neither the CESPK response nor the draft report provides this information. It can not be determined if the $3,000 per acre-foot value makes a large or insignificant contribution to the total damage estimate. The requested information should be furnished so the robustness of the outage damage estimate can be assessed.

c. The review comment requested that the draft report include tabulations showing the distribution of the aqueduct damages, by category, for the water districts that would sustain the greatest damages. Neither the CESPK response nor the draft report provides this information. The requested information should be shown in the final report so readers can assess whether the aggregate damage estimate is reasonable.

4. POTENTIAL FUTURE DAMAGES / EXPECTED ANNUAL DAMAGES. The policy compliance review team is concerned that potential future damages and total expected annual damages may be over-estimated.

a. Metropolitan Water District of Southern California Damage Estimate. It is not clear that expected damages reported by the Metropolitan Water District of Southern California (MWD) have been properly treated in the economic evaluation. Page 22 of the February 1999 Economic Appendix states that the economic impact of an Aqueduct breach was performed using MWD’s Integrated Resources Planning simulation model. The report states that this model accounts for future State Water Project improvements, MWD’s projected future water demands, and the annual probability of aqueduct failure caused by an Arroyo Pasajero flood. Similarly, in response to comment 5 of the AFBGM CESPK states "Their [MWD] model took into account the increasing failure rate over time of the aqueduct using probabilities supplied by the Corps."

These statements raise two concerns. First, the MWD damage estimate incorporates the projected effects of future activities and water demands. As such, it is not appropriate to use this estimate as an existing-conditions or base year damage estimate in the economic evaluation. The presentation of existing conditions should not involve projections of any kind. The MWD estimate appears to be representative of year 2020 conditions with both projected future water demand and increased hydrologic risk of an Aqueduct breach accounted for. Second, page 23 of the February 1999 Economic Appendix states that CESPK used the MWD damage estimate in a risk-based analysis program that accounted for annual probability of aqueduct failure caused by an Arroyo Pasajero flood. It appears that this latter action by CESPK may have incorporated hydrologic risk into the damage estimate a second time. If so, this treatment would improperly inflate the MWD damage estimate. If the MWD damage estimate already reflected future demand and hydrologic risk through the year 2020, any additional modifications to that number should have only reflected increasing demand and hydrologic risk between 2020 and the end of the 50-year period of economic evaluation. CESPK should reassess the derivation of the MWD damage estimate to ensure proper treatment in the economic evaluation of alternatives. The reassessment should include a determination of whether the derivation of the damage estimate involved techniques, such as use of cost escalation factors, which do not conform to Corps standard NED evaluation procedures (note page 58 of Attachment 1 to Appendix C). The MWD damage estimate should be adjusted as necessary prior to use in the economic evaluation of alternatives. The estimates of equivalent annual damages and benefits should be revised as appropriate.

b. Assumed Increasing Unmitigated Water Shortages. ER 1105-2-100 paragraph 5-6. a. (2) states "The most likely future condition without a plan should be used for evaluating the effects of alternative plans." Chapter 2, paragraph 2-8. k., Table 2-1, states: ". . . key assumptions . . . will be documented and justified as the most likely without project parameters." The assumption of increasing unmitigated water shortages over the next 35 years may not represent the most probable future conditions. Page 22 of the Economics Appendix states that SWP water supply impacts were divided into two categories: mitigated losses and unmitigated losses. The damage estimate uses a cost of $795 per acre-foot for mitigated water losses—the cost of replacement supplies. As indicated previously, unmitigated losses were assigned a damage value of $3,000 per acre-foot. The report states that future unmitigated water shortages were assumed to increase through the year 2035 until mitigated and unmitigated shortages would be roughly equal. This increases both expected damages and benefits by assuming the MWD would tolerate an increasing dependence on a single source of water supply in the face of a recognized increasing water demand. This may not be an appropriate assumption given the water supply reliability goal adopted by the MWD Board of Directors in 1992 (page 52 of Attachment 1 of the Economics Appendix). The stated reliability goal is as follows: "Metropolitan will provide 100 percent of the full service wholesale water demands to its member agencies at least 90 percent of the time, and under no circumstances will provide less than 80 percent of it full service demands—even under the most severe hydrologic conditions." Given the projected increasing water supply demand and MWD commitment to supply reliability, it is most probable that MWD will develop alternative supplies as demand increases in the future. MWD should verify that the assumption of increasing unmitigated water shortage over the next 35 years is appropriate. Additionally, the report should document that the forecasted increase in water supply demand can be, and is likely to be, met using the San Luis Canal and not via some other water delivery system. The estimates of equivalent annual damages and benefits should be revised as appropriate.

c. Expected Annual Damages. Expected annual damages are shown on Table 11 in the February 1999 Economics Appendix (draft report). These damages are about 43 percent greater than reported in the AFB document (Table 14 of the April 1999 Economics Appendix). This is primarily the result of future damages increasing by about 98 percent over those reported in the AFB document. Essentially all of the increase in potential future damages is attributed to the MWD. CESPK should verify that potential future damages and total expected annual damages have not been over-estimated due to the various manipulations of the original MWD damage estimate.

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5. PRELIMINARY REPORT RECOMMENDATION. The preliminary recommendation of the District Engineer on page VIII-2, states: "I intend in the final feasibility report to recommend the locally preferred plan for implementation as a Federal project, . . ." ER 1105-2-100, paragraph 5-16.b. states: "The alternative with the greatest net economic benefits (NED plan) is required to be recommended for Federal action, unless an exception is granted by the ASA(CW), or unless a study would qualify for the categorical exemption explained in Chapter 4 paragraph 4-3a." The Pasajero Gap Dam alternative does not appear to satisfy the requirements for a categorical exemption. Consequently, if the Pasajero Gap Dam is selected as the locally preferred plan a secretarial exception will be required for it to be recommended for Federal implementation. ER 1105-2-100, paragraph 5-16.c. lists additional report requirements for recommending a deviation for the NED plan. If appropriate, documentation seeking an ASA(CW) exception should be forwarded to CECW-P as soon as possible to avoid delays in processing the final report.

6. ENVIRONMENTAL POLICY COMMENTS

a. Ecosystem Restoration Opportunities. There is no assessment of ecosystem restoration opportunities for the study area in the draft feasibility report or EIS. The report clearly points out that there are a number of species (both plant and animal) of special concern, including State and Federally-listed threatened and endangered species, in the study area. Ecosystem restoration is a major Corps of Engineers mission with high budgetary priority. The district should address why no ecosystem restoration opportunities and possible solutions were identified and whether any potential cost-sharing partners (in addition to the potential non-Federal sponsor for the flood damage reduction plan) were sought out for possible ecosystem restoration projects in the area.

b. Endangered Species Coordination. The draft feasibility report states that there would be significant adverse impacts to a number of Federally-listed endangered plants and animals for both alternatives. The report does not, however, contain a formal "Biological Assessment" for the impacts and potential mitigation for these species. ER 1105-2-100, paragraph 7-33.b., requires that a Biological Assessment be prepared early in the feasibility study and be sent to the U.S. Fish and Wildlife Service for their review and comment. If the Biological Assessment concludes that there will be adverse impacts on listed species, formal consultation is to be requested. The district should identify whether or not the information presently in the draft feasibility report constitutes a Biological Assessment under the Endangered Species Act and whether or not formal consultation with the Fish and Wildlife Service has been initiated. Because of the potential impacts on endangered species, the district should be expected to have a formal Biological Assessment, identified as such, in the draft feasibility report and/or EIS. This should have been accomplished prior to circulation of the report for public review and comment and filing of the draft EIS with the U.S. Environmental Protection Agency for publication in the Federal Register.

c. Incremental Cost Analysis. The report does not contain a cost effectiveness and incremental cost analysis for the mitigation plans for endangered species or general mitigation for other significant resources. An incremental cost analysis is required for all mitigation plans (including those for species of special concern, such as threatened or endangered species) by paragraph 7-35.h., ER 1105-2-100. A cost effectiveness and incremental cost analysis should be conducted for the mitigation plans prior to circulation of the draft for public review and comment.

7. SPONSOR USE OF FEDERAL FUNDS. The report indicates that the sponsor anticipates paying for a portion of its costs using funds provided by the Bureau of Reclamation. Per Policy Guidance Letter Number 13, the sponsor must obtain written documentation from the Bureau stating that use of Federal funds as part of its non-federal share of construction costs is authorized by statute. The revised report should reflect this policy. If available, the written statement from the Bureau should be included in the final report. The written statement must be obtained prior to development and submission of the draft Project Cooperation Agreement and associated documentation.RETURN TO Planning Guidance Page    Top of Page

8. FINANCIAL ANALYSIS.

a. Financial Capability. The report should include a letter from the sponsor indicating its financial capability and willingness to participate in the project and a preliminary financial plan as required by ER 1105-2-100 paragraphs 6-169 and 6-170.

b. U. S. Bureau of Reclamation Financial Participation. The report indicates that USBR’s commitment to financial participation is contingent on resolution of negotiations with the DWR regarding the USBR contribution to the non-Federal share of project costs. Per ER 1105-2-100, paragraph 2-8 k., Table 2-1, the preliminary financial analysis must show "The steps that the sponsor will take to ensure it will be prepared to execute its project-related responsibilities at the time of project implementation." Clear resolution of the nature and amount of USBR’s financial commitment should be demonstrated in the final report and the non-Federal sponsor’s financing plan.

9. LOCAL COOPERATION. Pages VI-7 to VI-10 of the report provide an incomplete list of local cooperation requirements for the project. A complete list is required by ER 1105-2-100 paragraph 2-12.h.(1).(h). The District, in consultation with its office of counsel, should consider revising the list as follows, subject to any changes recommended by the District Counsel as needed to reflect the project’s special needs:

· Provide 35 percent of total project costs allocated to nonstructural flood control and at least 35 percent but no more than 50 percent of total project costs allocated to structural flood control, as further specified below:

(1) Enter into an agreement which provides, prior to execution of the project cooperation agreement, 25 percent of design costs;

(2) Provide, during construction, any additional funds needed to cover the non-federal share of design costs;

(3) Provide all lands, easements, and rights-of-way, including suitable borrow and dredged or excavated material disposal areas, and perform or assure the performance of all relocations determined by the Government to be necessary for the construction, operation, and maintenance of the project;

(4) Provide or pay to the Government the cost of providing all retaining dikes, wasteweirs, bulkheads, and embankments, including all monitoring features and stilling basins, that may be required at any dredged or excavated material disposal areas required for the construction, operation, and maintenance of the project; and

(5) Provide, during construction, any additional costs as necessary to make its total contribution equal the percent of total project costs allocated to nonstructural flood control and at least 35 percent but no more than 50 percent of total project costs allocated to structural flood control.

· Give the Government a right to enter, at reasonable times and in a reasonable manner, upon land which the local sponsor owns or controls for access to the project for the purpose of inspection, and, if necessary, for the purpose of completing, operating, maintaining, repairing, replacing, or rehabilitating the project.

· Assume responsibility of operating, maintaining, replacing, repairing, and rehabilitating (OMRR&R) the project or completed functional portions of the project, including mitigation features without cost to the Government, in a manner compatible with the project’s authorized purpose and in accordance with applicable Federal and State laws and specific directions prescribed by the Government in the OMRR&R manual and any subsequent amendments thereto.

· Comply with Section 221 of Public Law 91-611, Flood Control Act of 1970, as amended, and Section 103 of the Water Resources Development Act of 1986, Public Law 99-662, as amended, which provides that the Secretary of the Army shall not commence the construction of any water resources project or separable element thereof, until the non-Federal sponsor has entered into a written agreement to furnish its required cooperation for the project or separable element.

· Hold and save the Government free from all damages arising from the construction, operation, maintenance, repair, replacement, and rehabilitation of the project and any project-related betterments, except for damages due to the fault or negligence of the Government or the Government's contractors.

· Keep and maintain books, records, documents, and other evidence pertaining to costs and expenses incurred pursuant to the project to the extent and in such detail as will properly reflect total project costs.

· Perform, or cause to be performed, any investigations for hazardous substances that are determined necessary to identify the existence and extent of any hazardous substances regulated under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 USC 9601-9675, that may exist in, on, or under lands, easements or rights-of-way necessary for the construction, operation, and maintenance of the project; except that the non-Federal sponsor shall not perform such investigations on lands, easements, or rights-of-way that the Government determines to be subject to the navigation servitude without prior specific written direction by the Government.

· Assume complete financial responsibility for all necessary cleanup and response costs of any CERCLA regulated materials located in, on, or under lands, easements, or rights-of-way that the Government determines necessary for the construction, operation, or maintenance of the project.

· Agree that, as between the Federal Government and the non-Federal sponsor, the non-Federal sponsor shall be considered the operator of the project for the purpose of CERCLA liability, and, to the maximum extent practicable, operate, maintain, repair, replace, and rehabilitate the project in a manner that will not cause liability to arise under CERCLA.

· Prescribe and enforce regulations to prevent obstruction of or encroachment on the Project that would reduce the level of protection it affords or that would hinder operation or maintenance of the Project.

· Comply with the applicable provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, Public law 91-646, as amended by title IV of the Surface Transportation and Uniform Relocation Assistance Act of 1987 (Public Law 100-17), and the Uniform Regulations contained in 49 CFR part 24, in acquiring lands, easements, and rights-of-way, and performing relocations for construction, operation, and maintenance of the project, and inform all affected persons of applicable benefits, policies, and procedures in connection with said act.

· Comply with all applicable Federal and State laws and regulations, including Section 601 of the Civil Rights Act of 1964, Public Law 88-352, and Department of Defense Directive 5500.11 issued pursuant thereto, as well as Army Regulation 600-7, entitled "Nondiscrimination on the Basis of Handicap in Programs and Activities Assisted or Conducted by the Department of the Army," and Section 402 of the Water Resources Development Act of 1986, as amended (33 U.S.C. 701b-12), requiring non-Federal preparation and implementation of flood plain management plans.

· Provide the nonfederal cost share of that portion of total cultural resource preservation mitigation and data recovery costs attributable to structural and nonstructural flood control that are in excess of one percent of the total amount authorized to be appropriated for structural and nonstructural flood control.

· Inform affected interests, at least annually, regarding the limitations of the protection afforded by the project.

· Publicize flood plain information in the areas concerned and provide this information to zoning and other regulatory agencies for their guidance and leadership in preventing unwise future development in the flood plain and in adopting such regulations as may be necessary to ensure compatibility between future development and protection levels provided by the project.

· Do not use Federal funds to meet the non-Federal sponsor’s share of total project costs unless the Federal granting agency verifies in writing that the expenditure of such funds is authorized.

· Agree that any part of the project identified as approved for proposed advanced work for credit under Section 104 of Public Law 99-662 must be compatible with recommended flood control project, and that any credit granted shall not relieve the non-Federal sponsor of its requirement to pay, in cash, 5 percent of total project costs allocated to structural flood control.

10. REAL ESTATE PLAN. Paragraph 12-16 of ER 405-1-12 sets out in detail the scope and content requirements of a Real Estate Plan (REP) for decision documents like the subject feasibility report. Given the clarity of these requirements as stated by regulation, and given the numerous occasions where policy compliance review of REPs for CESPK civil works projects has produced specific detailed comments on issues similar to those contained in this draft report, we do not believe that specific comments relative to the significant shortcomings of the REP contained in this report are necessary.

The REP should be completely redrafted so as to present a real estate plan that is clear on its face, that is thorough in its description of real estate issues, and that is consistent with policy. Particular emphasis should be directed to the identification of the non-Federal sponsor, performance of railroad bridge work, facility/public utility relocations, plan for provision of USBR lands and credit implications, HTRW implications, valuation conclusions (CERE-E reports that the amount of the approved Gross Appraisal is approximately $75M) as well as matching the estate and acreage requirements to each major project feature or component including mitigation. Finally, we note that the "Assessment of Non-Federal Sponsor’s Real Estate Acquisition Capability" checklist that is required to be completed and submitted was apparently completed by a sponsor representative in that the following appears as item IV.a: "Has the sponsor performed satisfactorily on other USACE projects? Yes, but isn’t this actually a question for USACE?" Although input from and coordination with our partner is necessary to complete the assessment, it must present the conclusions of the Government.

/s/

JAMES E. WARREN, PE

Policy Compliance Review Manager

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