Army Corps of Engineers: An Assessment of the Draft Environmental Impact
Statement of the Lower Snake River Dams (Letter Report, 07/24/2000,
GAO/RCED-00-186).

Pursuant to a congressional request, GAO reviewed the Army Corps of
Engineers' environmental impact statement (EIS)of the Lower Snake River
dams, focusing on: (1) extent to which the Corps followed applicable
procedures and guidelines in preparing the draft EIS; and (2)
reasonableness of the methodology the Corps used to analyze and present
the effects of breaching the dams, specifically with respect to
electricity costs, transportation costs, and air quality.

GAO noted that: (1) the Corps generally adhered to the procedural
requirements of the National Environmental Policy Act (NEPA), the
Endangered Species Act (ESA), and other relevant guidelines in preparing
the EIS; (2) as required by NEPA, the Corps coordinated with other
federal agencies and affected stakeholders, obtained comments from other
agencies and the public, and reported on the environmental impacts of
proposed alternatives; (3) similarly, the Corps followed the procedural
requirements of ESA, which required the Corps to consult with the
National Marine Fisheries Service and the Fish and Wildlife Service; (4)
the scope of the Corps' draft EIS is comprehensive, in that it considers
a range of effects, including those on the environment, the economy, and
wildlife; (5) while the Corps' actions in developing the EIS appear
consistent with procedural requirements, the substance of the agency's
analyses and conclusions has been challenged; (6) in GAO's view, the
Corps' analysis and presentation of the effects of breaching on
electricity costs is reasonable, however GAO could not determine the
reasonableness of the Corps' estimated effects on transportation costs
and air quality; (7) the net effect on electricity costs, estimated to
be $245 million a year, has been reviewed by various stakeholders and
subject matter experts, as well as by GAO, and found to be reasonable;
(8) in the case of transportation costs, some concerns regarding the
Corps' assumptions make the reasonableness of the transportation
estimate to be uncertain; (9) for example, the Corps estimated that as
much as $532 million in infrastructure would be needed for road, rail,
and storage facilities if barge shipments were discontinued on the Snake
River; (10) however, the Corps assumed that these infrastructure
improvements would be made without affecting the transportation cost
estimate; (11) the Corps did not sufficiently analyze the validity of
this assumption or measure the sensitivity of the transportation
estimate to this assumption; (12) likewise, the reasonableness of the
Corp's analysis and presentation is questionable because of an
incomplete analysis of air quality effects, including the Corp's failure
to consider air quality effects from breaching on certain local
populations; and (13) Corps officials said they did not believe the
level of emissions would pose a significant impact and lacked enough
time or money to study the matter in more detail.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-00-186
     TITLE:  Army Corps of Engineers: An Assessment of the Draft
	     Environmental Impact Statement of the Lower Snake River
	     Dams
      DATE:  07/24/2000
   SUBJECT:  Anadromous fishes
	     Hydroelectric powerplants
	     Dams
	     Environmental policies
	     Endangered species
	     Marine transportation costs
	     Environmental law
	     Environmental impact statements
	     Cost analysis
	     Energy costs
IDENTIFIER:  Snake River (ID)
	     Columbia River Basin

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GAO/RCED-00-186

Appendix I: Description of the Corps' Analysis for Electricity
Costs, Transportation Costs, and Air Quality

30

Appendix II: Scope and Methodology

35

Appendix III: GAO Contacts and Staff Acknowledgments

37

Table 1: Alternatives Considered Under the Corps' Snake River EIS 10

Table 2: Annual Electricity System Costs of Breaching the Four
Lower Snake River Dams 18

Table 3: Examples of Concerns Identified in the Corps'
Transportation Analysis 23

Table 4: Additional Emissions From Dam Breaching 24

Figure 1: Map of Columbia Basin and Lower Snake River Dams 7

Figure 2: Lower Granite Dam, Snake River 8

Figure 3: Lower Snake River Barge 21

BPA Bonneville Power Administration

EPA Environmental Protection Agency

EIS Environmental Impact Statement

ESA Endangered Species Act

GAO General Accounting Office

NEPA National Environmental Policy Act

NMFS National Marine Fisheries Service

Resources, Community, and
Economic Development Division

B-284386

July 24, 2000

The Honorable Slade Gorton
Chairman, Subcommittee on Interior
and Related Agencies
Committee on Appropriations
United States Senate

The Honorable Gordon Smith
Chairman, Subcommittee on Water and Power
Committee on Energy and Natural Resources
United States Senate

Hydropower dams on the Columbia River and its main tributary, the Snake
River, provide electric power, inland navigation, irrigation, flood control,
and recreation to the Pacific Northwest region. The Columbia and Snake
rivers and their tributaries are also home to salmon and steelhead that each
year migrate from the Pacific Ocean to spawn in fresh water before dying. As
juveniles, their young later swim back downstream to the ocean, before
eventually repeating the cycle. These salmon were once abundant but have
dwindled from up to 16 million a century ago to less than 1 million today.
Federal agencies--the Corps of Engineers, Forest Service, Fish and Wildlife
Service, Bureau of Reclamation, and Bureau of Land Management--and
electricity ratepayers, through the Bonneville Power Administration, are
spending about $400 million annually in the region to reverse this decline.
The decline has been attributed to many causes, among them overfishing,
destruction of habitat, the introduction of hatchery-bred fish, and the
presence of hydropower dams. The dams restrict the passage of salmon
returning to spawn and may be especially harmful to juvenile salmon as they
migrate downstream.

The precipitous decline of salmon has caused the National Marine Fisheries
Service (within the Department of Commerce), the agency charged with
protecting marine species, to list four different species of salmon and
steelhead native to the Snake River as endangered or threatened under the
Endangered Species Act (ESA). That act requires federal agencies whose
actions affect the survival of endangered or threatened (listed) species to
manage their activities to avert the species' extinction. In response, the
U.S. Army Corps of Engineers, which operates four hydropower dams on the
Lower Snake River, began a feasibility study in 1995 of how to improve
migration conditions for juvenile salmon. The Corps is evaluating four
alternatives, one of which involves breaching four dams (removing the
earthen portion of the dams and allowing the river to course around the
remaining concrete structures). The other alternatives are to (1) maintain
current operations, (2) increase the transportation of juvenile salmon
around the dams, or (3) make improvements to the dams' systems for
collecting juvenile salmon and barging or trucking them past the dams.
Because substantial changes in the dams' operations could have significant
environmental consequences, the Corps must also adhere to the National
Environmental Policy Act (NEPA) and prepare an environmental impact
statement--or EIS--as part of the feasibility study.1 NEPA's guidelines
provide a roadmap for decision-making in cases where major federal actions
may have environmental consequences, such as significant changes in dam
operations. Breaching the dams is the alternative that would have the
greatest impact on the region and is highly contentious. It could help
salmon, but it would also eliminate a source of hydroelectric power and a
waterway for barge transportation to ports 140 miles upstream.

In December 1999, the Corps released its draft EIS assessing the biological,
environmental, economic, and social consequences of breaching the four dams,
as well as three other alternatives. The draft EIS made no recommendations
about which alternative to adopt, as directed by the Assistant Secretary of
the Army, who wanted the region to consider the issues addressed in the
draft EIS in light of other regional recovery efforts. The Corps is now
considering thousands of public comments; the final EIS is not expected
until 2001 and will include a recommendation. If breaching were recommended,
the Congress would have to authorize and fund the dams' deconstruction.
Concerned whether the Corps' EIS adequately considered the economic and
environmental effects of breaching the dams, you asked us to determine the
following:

ï¿½ the extent to which the Corps followed applicable procedures and
guidelines in preparing the draft EIS and

ï¿½ the reasonableness of the methodology the Corps used to analyze and
present the effects of breaching, specifically with respect to electricity
costs, transportation costs, and air quality.

As agreed with your offices, we reviewed the content, analysis, and
conclusions of the Corps' draft EIS for the effects on electricity,
transportation, and air quality. We did not review other aspects of the
draft EIS, such as the impact of breaching on salmon recovery, water
quality, or recreation effects and, therefore, we cannot comment on the
adequacy of the entire draft EIS or which alternative the Corps should
eventually recommend. To determine the reasonableness of the Corps' analysis
and presentation of the effect of breaching on electricity costs,
transportation costs, and air quality, we reviewed the draft EIS and
appendixes, underlying technical reports and analysis, expert reviews, and
public comments. We also met with the principal analysts and other
participants in the EIS process, other stakeholders, and outside experts to
obtain their views.

The Corps generally adhered to the procedural requirements of the National
Environmental Policy Act, the Endangered Species Act, and other relevant
guidelines in preparing the EIS. As required by NEPA, the Corps coordinated
with other federal agencies and affected stakeholders, obtained comments
from other agencies and the public, and reported on the environmental
impacts of proposed alternatives. Similarly, the Corps followed the
procedural requirements of ESA, which required the Corps to consult with the
National Marine Fisheries Service and the Fish and Wildlife Service. The
scope of the Corps' draft EIS is comprehensive, in that it considers a range
of effects, including those on the environment, the economy, and wildlife.
While the Corps' actions in developing the EIS appear consistent with
procedural requirements, the substance of the agency's analyses and
conclusions has been challenged. For example, the Environmental Protection
Agency has disagreed strongly with the adequacy of the Corps' analyses for
both air and water quality.

In our view, the Corps' analysis and presentation of the effects of
breaching on electricity costs is reasonable; however, we could not
determine the reasonableness of the Corps' estimated effects on
transportation costs and air quality. The net economic effect on electricity
costs, estimated to be $245 million a year, has been reviewed by various
stakeholders and subject matter experts, as well as by us, and has been
found to be reasonable. In the case of transportation costs, however, some
concerns regarding the Corps' assumptions make the reasonableness of the
transportation estimate uncertain. For example, the Corps estimated that as
much as $532 million in infrastructure would be needed for road, rail, and
storage facilities if barge shipments were discontinued on the Snake River.
However, the Corps assumed that these infrastructure improvements would be
made without affecting the transportation cost estimate. The Corps did not
sufficiently analyze the validity of this assumption or measure the
sensitivity of the transportation estimate to this assumption. Likewise, the
reasonableness of the Corps' analysis and presentation is questionable
because of an incomplete analysis of air quality effects, including the
Corps' failure to consider air quality effects from breaching on certain
local populations, and of the effect of exposing potentially contaminated
river sediments. Corps officials said they did not believe the level of
emissions would pose a significant impact and lacked enough time or money to
study the matter in more detail. The Corps is currently considering public
and agency comments on the draft EIS before revising it.

The entire Columbia River Basin, including the Snake River Basin, drains
over 259,000 square miles of the Pacific Northwest and includes over 150
dams--31 operated by the federal government. The 1,040-mile Snake River is a
major tributary of the Columbia River, the fourth longest river in North
America. The Snake River runs from Yellowstone Park in Wyoming across
southern Idaho to its confluence with the Columbia River in Pasco,
Washington; its basin drains 109,000 square miles. The Corps of Engineers
operates four dams along a 140-mile stretch of the Snake River in
southeastern Washington. The four dams--Ice Harbor, Lower Monumental, Little
Goose, and Lower Granite--were placed in service between 1961 and 1975 to
provide hydropower, irrigation, recreation, fish and wildlife, and upriver
navigation as far as Lewiston, Idaho (see fig. 1).

The four Lower Snake River dams are very similar. In total, they produce
about 1,250 average megawatts per year, which is about 5 percent of the
total energy generated in the Pacific Northwest. The dams do not provide
flood control and provide only limited irrigation. Each of the four dams is
about 100 feet high and between 2,655 and 3,791 feet wide. Each consists of
an earthen embankment that would be removed, and a concrete structure
consisting of the locks, spillway, and powerhouse that would be mothballed,
if the dam is breached (see fig. 2). The Corps has estimated the total
construction cost to breach the four dams to be about $900 million. All four
have fish ladders for upriver migration for salmon returning to spawn and a
bypass system for the downriver migration of juvenile salmon.

Source: Corps of Engineers.

The historic decline of salmon in the Columbia River Basin led to the
listing of Snake River sockeye salmon in 1991 by the National Marine
Fisheries Service (NMFS) as endangered under the ESA.2 The following year,
NMFS listed Snake River spring/summer Chinook salmon and fall Chinook salmon
as threatened.3 As a result of these listings, NMFS issued rulings (called
biological opinions) in 1993 and 1994 that the federal dams in the Columbia
River Basin did not jeopardize the salmon species' continued existence. The
Idaho Department of Fish and Game challenged the 1993 biological opinion
and, in 1994, a federal court found aspects of the opinions to be "arbitrary
and capricious".4 After restudying the matter, NMFS issued a new opinion in
1995 that the dams were likely to jeopardize salmon. As a result, the Corps
began a consultation process with NMFS to identify the options, including
breaching, that should be considered.

In December 1999, after 4 years and $22 million in study costs, the Corps
released the draft EIS, which evaluates alternatives for improving juvenile
salmon's passage through the Corps' four Lower Snake River dams. These four
alternatives, winnowed from many other alternatives considered and rejected
during earlier studies, range from maintaining current operations (base
case) to breaching the four dams (see table 1).

 Dollars in millions

 Alternative             Description                       Annual net
                                                           economic effecta
 1. Existing
                         Maintain the existing hydrosystem
                                                           None
 conditions              operations.
                         Maintain the existing hydrosystem
                         operations with maximum
 2. Maximum transport of transportation of juvenile salmon
 juvenile salmon         around the dams but without       $14.1
                         improving systems that collect
                         the juvenile salmon for barging
                         or trucking them past the dams.
                         Improve the existing systems for
 3. Major system         collecting juvenile salmon for
 improvements            transportation by barge or truck  $4.8
                         downstream past the dams.
                         Remove the dams' earthen
                         embankments to draw down the four
 4. Dam breaching        Lower Snake River reservoirs to   ($246.5)
                         create a free-flowing 140-mile
                         stretch of river.

a These values represent net changes in the value of the national output of
goods and services as compared to the base case alternative 1 and are
presented in 1998 dollars as average annual amounts over the period 2005 to
2104 discounted at 6.875 percent.

The Corps' final recommendation for the Snake River EIS will be part of a
comprehensive response to reverse the decline of salmon throughout the
Columbia River Basin. NMFS has also listed eight other salmon and steelhead
stocks in the Columbia River Basin, fish that do not have to pass through
the Snake River dams. Therefore, the Corps and other agencies with an
interest in salmon recovery are seeking to develop a coordinated and
comprehensive response for the entire Columbia River Basin. NMFS is expected
to release its 2000 biological opinion for the operation of all federal dams
in the Columbia River Basin later this year. The Corps' eventual decision
regarding the Snake River EIS has also become the focus of media attention,
and organized campaigns both for and against dam breaching have generated
considerable interest in the issue.

Guidelines

The Corps of Engineers generally followed procedural requirements and
guidelines in developing its draft EIS. Procedural requirements for the
development of an EIS are contained in NEPA and accompanying regulations.
NEPA provides a framework for decision-making in cases where major federal
actions may have environmental consequences. In addition, in accordance with
the ESA, the Corps consulted with NMFS and the Fish and Wildlife Service in
developing biological information on the impact of the dams on salmon
survival. While the Corps adhered to these broad requirements and guidelines
in preparing its draft EIS, the substance of its analyses and conclusions,
specifically regarding water and local air quality, has been challenged by
the Environmental Protection Agency (EPA) and others.

Under NEPA regulations, federal agencies are required to compile and develop
accurate scientific information on a range of alternatives, obtain expert
advice from other agencies, and allow public comment on the alternatives
before making decisions with environmental consequences. NEPA lays out a
general process for achieving these goals but leaves agencies with
considerable latitude in deciding exactly how to develop an EIS.

While NEPA does not dictate the scope of an EIS, the scope of the Corps'
draft EIS is substantial. The geographic scope of the draft EIS generally
focuses on the 140-mile long stretch of the Lower Snake River between
Lewiston, Idaho, and the Tri-Cities area (Pasco, Richland, and Kennewick) in
southeastern Washington. Within this area, the draft EIS examines the impact
of each of the four alternatives across a comprehensive range of possible
effects, including

ï¿½ migratory and resident fish (biological analysis of salmon and steelhead);

ï¿½ electric power generation and facilities;

ï¿½ transportation via navigation, railroads, and highways ;

ï¿½ air quality;

ï¿½ water quality and hydrology;

ï¿½ geology and soils;

ï¿½ vegetation, wildlife, and protected species;

ï¿½ cultural resources;

ï¿½ Native American Indian harvest and land use;

ï¿½ water uses by agriculture, municipalities, and industry ;

ï¿½ land ownership and uses;

ï¿½ recreation and tourism;

ï¿½ regional demographics, employment, communities, and low-income and
minority populations;

ï¿½ aesthetics, such as landscape characteristics; and

ï¿½ cumulative effects.

The Corps' procedures for preparing the draft EIS were consistent with NEPA
and the agency's implementing guidance. In accordance with NEPA's
requirements, the Corps has involved other federal agencies, affected
stakeholders, and the general public. The following represents examples of
actions taken:

ï¿½ Involvement of other federal agencies. The Corps, as lead agency, formally
involved the Bonneville Power Authority (BPA), EPA, and the Bureau of
Reclamation as "cooperating agencies," because they have legal jurisdiction
over some aspect of the draft EIS. These agencies helped the Corps scope and
develop the draft EIS. Other federal agencies--notably NMFS, which prepared
the biological analysis of salmon impacts, and the U.S. Fish and Wildlife
Service, which assessed the impact on other species--also contributed to
sections of the EIS or commented on them.

ï¿½ Consultation with affected Indian tribes. The Corps identified 14 tribes
potentially affected by its proposed actions and discussed the EIS process
with them. The Corps also contracted with a tribal representative to assess
tribal rights and circumstances for inclusion in the draft EIS.

ï¿½ Involvement by other stakeholders and the public. The Corps held numerous
workshops and community forums, developed technical workgroups, and held a
series of 15 public hearings throughout the Pacific Northwest region. The
Corps' workgroups involved outside stakeholders possessing diverse views on
the alternatives under consideration. The Corps also made the draft EIS and
underlying information available to the public through the Internet. The
Corps has received more than 200,000 public and agency comments on the draft
EIS, which were the result of the public hearings and organized campaigns
both for and against dam breaching.

ï¿½ Outside technical review. The Corps invited outside technical review of
the biological, engineering, and economic analyses. The biological analyses
were reviewed by the Independent Scientific Advisory Board, a body of
scientists under the auspices of the Northwest Power Planning Council
(Council). Outside engineers reviewed technical aspects of the Corps'
engineering study and found the Corps' analysis, including assumptions,
methods, and procedures, to be appropriate. In addition, the draft EIS'
economic analysis was reviewed by the Independent Economic Analysis Board, a
group of independent regional economists also under the auspices of the
Council.

The absence of a recommended alternative in the draft EIS has been a concern
expressed in several comments. NEPA does not require agencies to specify a
preferred alternative in a draft EIS.5 According to the Deputy Commander of
the Corps' Northwestern Division, the Corps' Walla Walla District Office,
which is managing the EIS, initially intended to recommend alternative 3
(major system improvements). When the Northwestern Division forwarded the
draft EIS for headquarters' review, however, the Assistant Secretary of the
Army for Civil Works ordered the removal of a preferred alternative. The
Assistant Secretary's letter to the Corps explained that it was important
for all affected parties to consider the issues and information in the draft
EIS within the broader context of information being developed for other
regional recovery efforts. Among these other recovery efforts is NMFS'
preparation of a new biological opinion for the Federal Columbia River Power
System, to be issued later this year. It is not unusual that a draft EIS
would be issued without a preferred alternative. For example, the draft EIS
prepared by the Corps, BPA, and Bureau of Reclamation concerning the
operation of the federal power system in the Columbia River Basin was issued
in 1995 without a preferred alternative, in part, because the agencies were
waiting for NMFS' 1995 Biological Opinion.6

Relevant Guidelines

The Corps' preparation of the draft EIS also complied with the procedures
outlined in the ESA and with other relevant guidance for considering the
economic effects of the proposed alternatives. The ESA requires federal
agencies whose activities are likely to jeopardize the continued existence
of listed marine species to consult with NMFS to avert the species'
extinction. Agencies do this by preparing a biological assessment of their
activities' impact on the listed species. NMFS then responds with a
biological opinion that identifies reasonable and prudent alternatives the
agency needs to follow to avoid jeopardizing the listed species or to
minimize the impact of its actions on the species. In general, if an agency
chooses not to implement a reasonable and prudent alternative, it must seek
an exemption from the requirement to avoid jeopardy.7

For Lower Snake River salmon, NMFS' 1995 Biological Opinion, which found
jeopardy from dam operations, reopened the consultation process between NMFS
and the Corps. The Corps and the NMFS coordinated the preparation of the
draft EIS, and NMFS drafted the EIS' biological study of the four
alternatives' effect on marine species. The Corps, in tandem with BPA and
the Bureau of Reclamation, also submitted in December 1999 a multispecies
biological assessment of the Federal Columbia River Power System, including
an assessment of the Lower Snake River dams' effect on salmon.

To assess the economic effects of the alternatives, the Corps followed the
Water Resources Council's Economic and Environmental Principles for Water
and Related Land Resources Implementation Studies (1983), which specifies
guidelines for evaluating national and regional economic effects. The
Principles provides a standardized approach for assessing and presenting the
costs and benefits of water projects. The Corps generally adhered to the
requirements of the Principles --for example, presenting economic effects in
terms of changes in the national output of goods and services, discounted
and on an annual basis. The draft EIS also presents regional economic
effects on income, employment, and population, as recommended by the
Principles .8

Controversy About the Draft EIS' Analysis or Conclusions

Although the draft EIS followed broad procedural requirements, it has been
challenged by other agencies and affected parties that disagree with the
analysis or conclusions. EPA is the most noteworthy of these critics because
of its responsibilities under NEPA and the Clean Air Act.9 In comments
provided to the Corps in April 2000, EPA rated the draft EIS as inadequate
because the draft EIS did not adequately assess potentially significant
impacts on water and air quality. EPA faulted the Corps' analysis of the
dams' effect on water temperature and the amount of dissolved gas the dams
produce.10 EPA also faulted the draft EIS' failure to provide a strategy for
complying with water quality standards or to estimate the costs to meet
water quality standards under alternatives 1 through 3. In addition, EPA
does not consider the draft EIS' assessment of the air quality effects of
breaching to be adequate. EPA and the Corps have discussed their differences
in hopes of resolving them, but if the discussions are not successful, the
EIS will be referred to the President's Council on Environmental Quality for
final resolution.

in Quality

The Corps' analysis and presentation of the effects of breaching on
electricity costs is reasonable; but its transportation cost estimate and
its air quality analysis are insufficiently developed to determine whether
they are reasonable. Breaching the dams would mean losing hydroelectric
power generated by these dams as well as shipping on the Lower Snake River.
The Corps adhered to guidelines and accepted practices in developing the
electricity cost estimates, and independent reviewers and outside
stakeholders are generally satisfied with the approaches used. While we
identified some concerns with the electricity cost estimates, they would not
have a material effect on the Corps' estimates. The Corps' transportation
analysis also followed appropriate guidelines but did not fully consider the
effect of some of its assumptions and has not corrected some known errors.
Finally, breaching would also affect air quality by increasing dust in the
air and adding airborne pollutants from substitute sources of power and
transportation. The Corps' analysis estimated the total increase in
emissions from these sources, but not how they might affect local
populations.

The Corps' estimates of the costs associated with losing hydropower from the
four dams are reasonable and are supported by multiple analyses and outside
reviewers. The Corps generally adhered to accepted guidelines, economic
principles, industry practices, data sources, and modeling techniques. The
process was also open to public participation, and stakeholders representing
widely divergent views on the future of the dams generally were satisfied
with both the process and quality of the estimates.

The four dams on the Lower Snake River all generate hydroelectric power and
currently account for about 5 percent of the total annual power production
in the Pacific Northwest.11 Collectively, their average annual production is
enough to power a city of 700,000. The electricity they produce is marketed
by BPA, mainly on a wholesale basis to public and investor-owned utilities.
These utilities, in turn, resell the electricity to retail customers
primarily in western North America.

Breaching Would Increase Electricity Costs by an Estimated $245 Million
Annually

Breaching the four dams on the Lower Snake River would raise the net cost of
electric power supplies in the western United States by $245 million
annually (see table 2). According to the draft EIS, this could increase the
average electricity bill for households in the Pacific Northwest by $1.20 to
$6.50 per month, while large users, such as aluminum companies, could see
monthly increases approaching $1 million. These rate increases assume that
BPA is able to recover increased power system costs from its customers.
However, the draft EIS also notes that if the electric industry becomes more
competitive, BPA may not be able to raise rates to recover higher costs. The
largest effect of breaching would be replacing the lost hydropower
production, primarily with new gas-fired power plants. The draft EIS
reported that breaching the four dams would raise the cost of meeting demand
for electricity in the western United States by $217 million to $260 million
annually, depending on future conditions and the method of estimation, with
$238 million per year as a midpoint estimate.12 Breaching the dams will also
require modifying the electric power transmission system that moves bulk
power throughout western North America, adding an average of $25 million per
year to the electricity costs. The replacement power sources would also have
less operating flexibility, which also has an associated cost. Changing the
amount of electricity produced at hydroelectric plants is relatively easy
and inexpensive, making them highly valued for their ability to provide
"peaking" and "ancillary"services.13 The draft EIS estimates an $8 million
loss in value of ancillary services as a result of breaching the dams.
However, these cost increases would be partially offset by reductions in
operating and capital expenses if the dams were no longer operating. These
"avoided costs" are estimated at $26 million per year. Therefore, the net
increase in costs after including these avoided costs is about $245 million
annually.

 Dollars in millions
 Cost category                        Annual costs
 Replacement power                    $238
 Transmission costs                   25
 Ancillary value losses               8
 Total power system costs             $271
 Avoided operating and capital costsa (26)
 Net power costs                      $245

a Total avoided costs are allocated 90 percent to hydropower and 10 percent
to transportation, in keeping with the purposes specified in the dams'
original authorizing statutes.

Estimates Are Supported by Multiple Analyses

The power system cost estimates are supported by multiple analyses that
yielded similar results. Three different organizations--the Corps, BPA, and
the Council--conducted parts of the analysis, using different approaches to
estimate the impact of breaching the four dams on the cost of electric power
supplies (see app. I).14 The organizations recognized that the estimates are
highly dependent on future conditions, such as changes in water flows,
growth in the demand for electricity, fuel prices, and changes in the
efficiency and costs of power plants. The analyses considered such effects
and reported a range of cost estimates. The major difference in the
approaches are that the Corps and BPA used an approach based on estimating
the costs of meeting electric power demand, while the Council used an
approach based on estimating the forecast market prices for electricity.
However, both the cost approach employed by the Corps and BPA, and the
market value approach employed by the Council are consistent with the Water
Resources Council's Principles .

Stakeholders and Reviewers Were Generally Satisfied With the Electricity
Cost Estimates

The Corps' electricity cost estimate resulted from an open process with
active participation by stakeholders representing a spectrum of views on the
question of the dams. The results of the analysis generally met with the
approval of these stakeholders. The planning and design of the electricity
cost estimate was part of an open process, with the active participation of
widely divergent groups, such as environmentalists, Native Americans, and
other advocates of free-flowing rivers, as well as industrial users that are
heavily dependent on inexpensive hydropower from dams. Each of these groups
participated on the team that developed and reviewed the initial estimates.
Representatives of these groups with whom we spoke were generally satisfied
with both the process followed and the quality of the cost estimates. The
Council's Independent Economic Analysis Board also reviewed the Corps'
methodology and analysis. The Board found that the Corps used sophisticated
models and accepted methods and that the results can be relied on as a
reasonable representation of the economic effects.

Identified Concerns Are Not Material to the Results

There are two concerns with the cost estimation and presentation of the
effect of breaching on power costs, but these are not material to the Corps'
estimate. The primary shortcoming with the power estimate is that it assumes
that the demand for power will not be affected by higher rates charged for
electricity.15 An earlier study developed by the Corps, BPA, and the Bureau
of Reclamation reported that a rate increase necessary to cover increased
costs for replacement power would reduce the demand for electricity. The
resulting drop in demand could reduce the electricity cost estimates
associated with breaching by less than 10 percent because less replacement
power would be needed. However, Corps, BPA, and Council officials told us
that they did not model the relationship between electricity rates and the
demand for electricity because it would have required considerable cost and
effort without having a significant effect on the results.

The second concern is presentational. The draft EIS does not clearly show
the net estimate of the $245 million discussed above. Avoided costs were
excluded from the draft EIS' estimate of the increased power system costs
that would result from breaching the dams. Avoided costs are the operation
and maintenance costs, including the cost to collect and transport juvenile
salmon past the dams, and future capital costs associated with the dams and
their powerhouses. These costs would be saved if the dams are no longer
operational. While the draft EIS' annual estimate of $29 million for total
avoided costs appears reasonable, this estimate is presented in a separate
section of the EIS and is not reported in relation to the electricity
analysis. According to the Corps' estimate, about 90 percent of the avoided
costs at these four dams are attributable to electricity generation.
Therefore, if the dams are breached, about $26 million of avoided costs
would be saved.16 By not linking these savings to electricity costs, the
draft EIS conveys a greater effect on electricity costs than may actually
occur. Corps officials said that the overall net cost for all economic
effects is more important than understanding the net power system costs and
that is why they presented avoided costs as a single amount.

The draft EIS' overall approach to computing the costs of breaching the dams
on the current river transportation system is generally reasonable. However,
the Corps' analysis and presentation did not fully consider the effect of
changes in some key but uncertain assumptions. Furthermore, the Corps did
not correct for certain errors in its data. We could not determine whether
further investigation of the validity of its assumptions and correcting the
known errors would materially affect the Corps' final estimate.

Each of the four dams has a lock system, creating a river navigable to barge
traffic for 140 miles from near Pasco, Washington, to Lewiston, Idaho.17
Barge traffic originating on the Snake River largely carries agricultural
goods to ports in and around Portland, Oregon, for export overseas (see fig.
3). Generally, barging is the least costly mode of transportation for bulk
commodities. From 1987 to 1996, barges transported an average of about 4
million tons annually on the Snake River. About 77 percent of this total was
grain; 18 percent, wood chips and logs; and 5 percent, petroleum and other
products. About 96 percent of all shipments are moving downriver, with most
barges returning empty. If the dams are breached, barge shipments on the
Snake River will end because the river will be too shallow. Commodities will
then have to be shipped via rail or trucked to ports on the Columbia River.

Source: Corps of Engineers.

Annual Net Cost Is Estimated to Be About $21 Million

As computed in the draft EIS, the estimated net increase in shipping costs
for all commodities if the dams are breached is $21 million per year over
100 years, less than 10 percent of the net economic effect of breaching
estimated by the Corps. Shipping costs of $24 million would be offset by
reductions of about $3 million per year, which represents the portion of
avoided costs of operating and maintaining the dams allocated to
transportation. Of the total increase in shipping costs, about $20 million
per year is associated with grain shipments and $4 million per year with
nongrain commodities. According to the draft EIS, this equates to an average
cost increase by 2007 of about $0.17 per bushel of grain shipped and about
$3.78 per ton for other commodities--an increase of 18 and 5 percent,
respectively.

Corps' Transportation Analysis Is Generally Valid, but Some Assumptions Are
Questionable

To estimate the additional costs of shipping if the dams are breached, the
Corps modeled the cost to ship grain both under current conditions and
without barge shipments on the Lower Snake River. This required the Corps to
estimate the future growth in grain and other shipments, model
transportation patterns with or without the dams, and estimate shipping
costs under the current approach and under the least-cost alternative if
barging is no longer available. (See app. I for more details on the Corps
modeling approach.) Except for its treatment of uncertainty, the Corps'
approach generally conforms to the Water Resources Council's Principles for
estimating economic effects.

Several reviewers and stakeholders question the Corps' assumption that
making the infrastructure improvements necessary to replace barge
transportation would not add to the transportation cost estimate. The draft
EIS estimates that the infrastructure improvements--including such things as
new grain elevators farther downstream on the Columbia River, highway
improvements, new rail cars, and track improvements--needed to replace barge
transportation will cost between $207 million and $532 million. However, the
draft EIS assumes that these infrastructure improvements can be absorbed by
the transportation sector without affecting their long-run costs. Several
stakeholders contend, however, that making these improvements will increase
transportation costs, perhaps significantly. In addition, in reviewing the
draft EIS, the Washington State Department of Transportation commented that
the infrastructure estimates used by the Corps are incomplete because all
necessary highway improvements have not been identified. The Independent
Economic Analysis Board, a group of independent regional economists that
reviewed the Corps' economic analysis, generally supported the Corps'
overall methodology but commented that the analysis had not been adequately
tested for the impact of increased infrastructure costs. The Board stated
that making infrastructure investments could increase the cost of breaching
but also suggested that some offsetting cost savings may result from better
railroad utilization and technological improvements. The Board concluded
that, because of this uncertainty, the Corps should analyze the data to see
how sensitive the model results are to the changes in the cost of
infrastructure improvements.

Another uncertainty arises from the Corps' assumption that estimated
shipping costs provide a better estimate of actual costs than do published
shipping rates. The Water Resources Council's Principles recommends using
published rates to estimate transportation costs unless these rates are not
competitively established. Corps officials stated that published rates were
not used because barge operators have limited competition and can charge
higher than competitive rates. Barge representatives told us that their
rates are competitive and have been used in other studies of Columbia and
Snake River shipping. The Corps did not test the sensitivity of its
transportation cost estimate to using published rates instead of estimated
costs.

Other Concerns About the Corps' Estimates

In addition to the uncertainty created by certain assumptions, other
concerns affect the Corps' analysis and presentation of transportation
costs. The effect of these concerns on the Corps' transportation estimate is
not fully known. Table 3 lists three other concerns with the current
estimate and the potential impact of those concerns.

 Area of
 concern        Description                  Expected effect on estimate
                Projected shipping volume
                may be overstated. The Corps
                developed its estimate of
                shipping volume for grain
                and other commodities on the
                basis of the historical
                average for 1987 to 1996.    If projected quantities to be
 Shipping       The Corps is projecting      shipped are overstated, then
 forecasts      continued shipping growth up the effect of breaching on
                through 2017--an overall     shipping costs is
                increase of 26 percent from  overestimated.
                the historic average.
                However, the draft EIS
                acknowledges that 1997
                shipping volumes, the most
                recent year analyzed, are 20
                percent less than in 1996.
                The Corps adjusted its model
                results to eliminate
                instances where the model
                estimates that shipping      The Corps reports that these
                without barges is less       model adjustments add $800,000
 Model bias     costly than shipping with    annually to the transportation
                barges. The Independent      cost estimate as a result of
                Economic Analysis Board      breaching.
                stated that the Corps should
                not have made these
                adjustments.
                                             Because these errors are
                                             fairly consistent between
                The Corps' model contains    current conditions and
                some errors in the costs of  breaching, the difference
 Uncorrected    handling and shipping grain  between the two scenarios is
 errors         for some locations. The      not likely to change
                results have not been        significantly if the model
                recalculated with the errors results are recalculated.
                corrected.                   However, they substantially
                                             increase the total shipping
                                             revenues.

In addition to the concerns discussed above, the Corps' draft EIS does not
present a net transportation estimate. Instead, as with the hydropower
estimate, the $3 million estimate of savings in the current cost of
operation and maintenance of the locks is presented in a separate section of
the draft EIS.

The Corps' air quality analysis is indeterminate because it did not assess
how local air quality or human health would be affected if the dams are
breached and did not consider the effects of all relevant pollutants. EPA
considers the draft EIS to be inadequate, in part, because of its incomplete
air quality analysis. EPA is charged under NEPA and the Clean Air Act with
reviewing and commenting on all environmental impacts of federal activities.
EPA also regulates air quality standards established under the Clean Air
Act.18 If EPA's concerns are not satisfactorily addressed, it can refer the
EIS to the Council on Environmental Quality for further review. The draft
EIS' air quality analysis estimated the gross increase in air emissions
resulting from replacement power generation, increased truck and rail
transportation, and airborne dust for the entire region. The Corps concluded
that the combination of these air quality components would not have a
significant regional effect. However, the Corps did not examine certain
pollutants, such as chemicals in the reservoir sediments. The Corps also
assumed the emissions that were studied would be equally distributed across
the region, instead of being concentrated in specific locations, possibly
impairing local air quality and human health. To identify these more
localized effects, EPA has requested that the Corps complete a more thorough
analysis.

Corps Estimated Increase in Emissions of Selected Pollutants

The Corps' draft EIS reported that breaching the dams would have some
effects on air quality during the breaching process, as well as from changes
in the river level and transportation and power generation practices after
the dams are breached. For example, as shown in table 4, the draft EIS
reports that replacement power generation would increase emissions of carbon
monoxide and carbon dioxide, while deconstruction and the exposed river
sediment would contribute to an increase in particulate matter.

 Tons per year
                                                                Volatile
 Source        Carbon    Carbon    Nitrogen ParticulateSulfur   organic
               monoxide  dioxide   dioxide  mattera    dioxide
                                                                compoundsb
 Demolition                                 304
 Transportation(15)                (20)     9          (71)     90
 Windblown dust                             6,292
 Power
 generation    4,134     4,186,804 174      196        1,813    2
 Total change  4,119     4,186,804 154      6,801      1,742    92

a Particulate matter refers to solid and liquid particles in the air.
Sources include burning and airborne dust. Particulate matter is very small
and, if breathed into the lungs, causes health problems.

b Volatile organic compounds are chemicals containing hydrogen and carbon
that are produced by burning fossil fuels. In the presence of sunlight,
volatile organic compounds react to form ground-level ozone, a component of
smog.

Source: Corps of Engineers Environmental Impact Statement, Table 5.2-6.

The Corps' air quality assessment estimated emissions from four potential
sources. First, the Corps used emission equations from EPA to estimate the
amount of dust produced by deconstruction. Second, the Corps computed
average emissions for the trucks and trains that would replace barge
transportation. Third, the Corps estimated windblown dust from the exposed
sediments using wind data and an EPA methodology for predicting the amount
of particulate matter resulting from wind erosion. And, fourth, the Corps
estimated the emissions from replacement electricity, primarily from new
gas-fired power plants. Emissions from each of these sources were then
totaled across the region (see app. I).

Air Quality Assessment Is Incomplete

The Corps' air quality assessment was incomplete because it did not consider
the impact of breaching on local air quality and human health, and because
it omitted from study certain pollutants, such as chemical contaminants in
reservoir sediments, that would be exposed as a result of breaching. In some
cases, the Corps compared the changes in emissions across a wide geographic
area but did not consider concentrated local impacts. For example, the draft
EIS estimated that the loss of barge transportation would lead to a decrease
in total emissions from carbon monoxide, nitrogen dioxide, and sulfur
dioxide. However, this summary view masks increased emissions from
grain-hauling trucks likely to occur in certain areas of eastern Washington
State. According to the draft EIS, the elimination of barging is expected to
result in an additional 223 trucks per day and their accompanying emissions
in the Tri-Cities area.

The Corps' air quality analysis did not adequately identify the following
effects on local communities from each of the pollution source areas if the
dams are breached and did not study certain pollutants that would be
released:

ï¿½ Deconstruction. Airborne emissions from deconstruction were not calculated
for specific locations that are near the dams and thus most likely to be
affected. In addition, the Corps did not consider vehicle engine, tire, and
brake emissions from construction equipment. EPA stated that modeling or
some alternative techniques are needed to determine the effects of these
emissions.

ï¿½ Loss of barge transportation. Emissions from increased use of trucks and
trains instead of barges were not adequately assessed for specific
localities. Such an analysis should also look at the potential effect on
human health. EPA has also commented that vehicle emission modeling is
needed to adequately assess the effect of changes in vehicle movements on
specific locations. In addition, EPA and BPA commented that the draft EIS
should present a range of potential emissions rather than merely averaging
the results of two different studies.

ï¿½ Exposed sediments. Estimates of windblown dust emissions from exposed
reservoir sediments did not include estimates of chemical contaminants that
have accumulated in sediments and that could become airborne when the
sediments are exposed. The Corps' draft EIS reported that reservoir
sediments contain heavy metals and DDT, but dispersion modeling would be
necessary to determine whether they pose a threat to human health.19 For
example, the effect of these windblown particles on downwind communities,
such as Clarkston, Washington, or Lewiston, Idaho, is not known. Both EPA
and BPA have recommended that the Corps analyze the potential effect of
these airborne sediments.

ï¿½ Replacement power production. Estimates of increased air emissions from
replacement power did not consider the effect on nearby communities. This
type of analysis is typically done by modeling the dispersion of emissions
around a power plant. EPA stated that this modeling should have been done to
assess compliance with state and local air standards and plans. Corps
officials told us that they did not do additional analysis because they were
unsure where, and if, additional plants would be constructed. However, the
draft EIS lists the most likely number and location of plants to meet power
demand and transmission reliability needs, as well as the locations of power
plants with submitted or approved permit applications. The Corps could have
used this information to estimate the effect on local communities. EPA also
commented that the effect of replacement power emissions on global warming
was not adequately addressed. In addition, the draft EIS did not examine the
potential for alternative energy sources--such as wind and solar--and
conservation as a means to avoid increased emissions from replacement power.
Conservation groups have concluded that it is possible to replace lost
hydropower with conservation and alternative energy, under certain
scenarios, without higher power costs.20

The Corps Limited Its Air Quality Analysis

Difficulties with the Corps' air quality analysis can be attributed, in
part, to getting a late start on the analysis. Initially, the Corps did not
include an air quality assessment within the scope of the EIS. Corps
officials stated that they did not believe it was a significant issue for
this EIS and planned to incorporate an earlier air quality assessment from a
1995 system operating review.21 This 1995 study identified the potential
toxicity of river sediment but did not report significant increases in air
pollutants from replacement power emissions if the dams are breached.
However, in April 1998, following discussions with BPA and others, the
Corps, using input from EPA as a cooperating agency, initiated a new air
quality segment as part of the Corps' scope of work.

The Corps did not complete significant portions of its original air quality
scope of work, which included an assessment of the direct and cumulative
effects on air quality of the four alternatives studied. The Corps' original
scope of work also detailed plans to evaluate how each of the four
alternatives would affect state plans for limiting air pollutants. In 1998,
the Corps contracted for a work plan for the air quality assessment based on
the scope of work prepared by EPA. Corps officials advised us that, during
negotiations with the contractor on the proposed work plan, it became
apparent that the existing budget and study time frames would not allow the
original scope of work to be carried out. Several of the tasks included in
the scope of work could not be done for the cost or time allotted. In order
to meet budget and time constraints, the Corps reduced the work plan.
Modeling the effect of replacement power on air quality, including health
effects, was deleted, as was modeling of dust emissions from the exposed
riverbed. While the work plan did include modeling of the increase in
vehicle emissions from the loss of barge transportation, the contractor
never completed any vehicle emission modeling. The contractor stated that
the amount of money provided by the Corps was not sufficient to support any
type of modeling of the effects on air quality. The Corps is considering EPA
and others' comments and has not determined whether additional analysis is
needed.

We provided the U.S. Army Corps of Engineers with a draft of this report for
review and comment. While the Corps did not indicate whether it agreed or
disagreed with the overall message of our report, it did comment that the
scope of our review was limited and that we should have assessed the
importance of our concerns in relation to the Corps' decision process and
the "value-added" of having the Corps correct its analysis. However,
precisely because the scope of our review was limited, we could not estimate
the value of resolving problems with the Corps' estimates. For this reason,
our report does not make any recommendations regarding whether the Corps
should address the concerns discussed in this report. Instead, the Corps
must determine whether improving the reasonableness of its estimates in
these and other areas warrants the additional time and expense required. In
addition to this general comment, the Corps provided technical comments,
which we incorporated as appropriate.

We are sending copies of this report to appropriate House and Senate
Committees and Subcommittees; the Honorable William S. Cohen, Secretary of
Defense; Lt. Gen. Joe N. Ballard, Chief of Engineers and Commander, U.S.
Army Corps of Engineers; and other interested parties. We will also make
copies available to others upon request.

If you or your staff have any questions about this report, please call me at
(202) 512-3841. Key contributors to this report are listed in appendix III.
Jim Wells
Director, Energy, Resources,
and Science Issues

Description of the Corps' Analysis for Electricity Costs, Transportation
Costs, and Air Quality

The U.S. Army Corps of Engineers used different methodologies and analyses
for each of the three impact areas--electricity, transportation, and air
quality--that we assessed. The following are short descriptions of these
different approaches and the participants who contributed to them.

The Corps' estimate of the net economic development costs from the loss of
hydropower produced by the four Lower Snake River dams includes three
components--replacement power, improvements to transmission systems, and
ancillary services.

ï¿½ Estimation of replacement power costs. The Corps, Bonneville Power
Administration (BPA), and the Northwest Power Planning Council (Council)
each used its own procedures to estimate the cost of meeting electric power
demand with and without the four dams. BPA and the Corps each used its own
hydrology and hydropower models, which simulate on a month-by-month basis
the entire Columbia River Basin with respect to river flows, dam operations,
and hydroelectric production. The models use mathematical programming
techniques that take into account not only the hydrologic conditions of the
basin, but also the various goals of flood control, navigation, hydropower
production, fish protection, and recreation. The two models are conceptually
very similar. Next, the Corps and BPA used power supply models to translate
the difference in hydropower production with and without the four dams into
power system costs. The resulting cost and market valuation estimates were
similar: The Corp's estimate was $252 million per year, while BPA's
medium-case scenario was $255 million per year. The Council's analysis was
based on the Corps' and BPA's estimates of how much hydropower would be lost
by breaching the four dams. However, instead of calculating the cost of
replacing the power, Council's analysis placed an economic value on the
estimated hydropower losses, using forecast wholesale market prices for
power. Using this analysis, the Council estimated the value of the lost
hydropower from the four dams at about $225 million annually.22

ï¿½ Estimation of transmission system costs. To determine the potential
effects of breaching on the reliability of the electric power transmission
system in the Pacific Northwest, BPA used electric transmission models and
extensive information about generation, transmission, and load (demand)
throughout western North America. Using 1998-99 conditions as a baseline,
BPA's analysts developed modeling simulations that identified the locations
and types of adverse transmission impacts stemming from the loss of the four
dams. Using a discount rate of 6.875 percent, BPA estimated the annual costs
on the transmission system to be between $22 million and $28 million. These
costs included various mitigation measures that might be taken to deal with
the transmission problems, such as upgrading the intertie between
transmission systems in the Northwest and Southwest, building a new
transmission line, and constructing new generating capacity.

ï¿½ Estimation of ancillary services costs. To determine the impact of
breaching on ancillary services, BPA used actual transaction prices and made
certain assumptions regarding the frequency and level of utilizing the Lower
Snake River dams for the provision of such services. Deregulation in the
power industry has made it possible to create a separate market for
ancillary services that previously were part of the "bundled" service that
power suppliers provided at no charge.23 Starting in 1998, BPA began to
unbundle ancillary services and sell them separately. Breaching would affect
two types of ancillary services. First, it would decrease reserves required
for the federal power system, which would cost $7,183,000 annually to
replace.24 Second, breaching would diminish automatic generation control,
which allows for small but very frequent changes in electric power
generation to balance supply and demand. BPA estimated lost generation
control services at an average annual value of $465,000. The total of
decreased reserves and automatic generation control is $7,648,000 annually.

To estimate the net economic development costs from breaching the four Snake
River dams and the attendant loss of barge shipping, the Corps used a
three-stage analytical approach. First, the Corps forecast future shipments.
Second, using these forecasts, the Corps modeled the movement of these
shipments, first assuming river transportation is available, and second
under a least-cost alternative assuming river transportation is not
available. Finally, the Corps estimated shipping costs under both scenarios
and computed the difference.

ï¿½ Forecasting growth in shipments. The Corps relied on its Institute for
Water Resources to assist in developing commodity growth estimates. This
Institute was used for earlier Columbia River studies and has forecast
shipping on other waterways. These forecasts were based on forecasts
originally developed for another study, The Columbia River Channel Deepening
Feasibility Study. To forecast commodity growth, the Institute separated the
shipments into five distinct groupings--grain, wood products, petroleum,
paper and pulp, and other commodities. For grains, the Institute estimated
that about 23 percent of the Lower Columbia River area export grains are
shipped on the Snake River and assumed that this proportion would stay
constant in the future. Using the average of Columbia River grain shipments
for 1987 through 1996, the Institute projected Snake River grain shipments
through 2017 and assumed level shipments thereafter. For the nongrain
commodities, the Corps used information from the earlier study to reflect
projected changes in the quantities of commodities shipped. For example,
wood chips and logs are assumed to remain constant while petroleum products
are tied to projected population increases. Overall, the Corps estimated a
total increase in shipments of 26 percent, to 5 million tons by 2017.

ï¿½ Modeling transportation patterns. One of the key elements in determining
transportation costs is identifying origins and destinations of product
movements. For grain (primarily wheat and barley), the Corps used an
established model to determine the current path by which grain is trucked to
the river and barged to the export port in the Portland, Oregon, area. The
Corps then modeled the least-cost alternative routing. For some grain, the
alternative involved a longer drive to ports on the Columbia River for barge
transport to Portland. For other grain, the alternative involved transfer to
railroad hopper cars and shipment by rail to the export port. For nongrain
commodities, the Corps used the same approach, but only modeled the path
from the origin to the destination port under current conditions and under
the least-cost alternative.

ï¿½ Estimating cost effects. Using the modeled shipping pattern information,
the Corps estimated the cost of shipping under current conditions and if the
dams are breached. For each shipment, the Corps estimated the shipping cost
on the basis of the estimated cost to the carrier (barge, railroad, or
truck). For example, for a shipment of grain via truck and barge, the Corps
estimated the per-ton costs of the trucker and barge operator to move that
grain. In its approach, the Corps assumed that the (1) unit costs for rail
and truck operators would not change if competition from barge operators
ceases and (2) necessary infrastructure investments in rail lines and
highways will be made. The Corps then compared the total costs of shipping
under current conditions and the least-cost alternative without river
navigation. The incremental cost of breaching, before considering avoided
costs, totaled $24 million annually.

The Corps' air quality assessment estimated emissions from four sources if
the Lower Snake River dams are breached.

ï¿½ Airborne emissions from deconstruction. The estimated 2-year
deconstruction of the four Lower Snake River dams would produce airborne
dust. The primary source would be material-handling activities, such as
bulldozing, hauling, dumping, and grading. The deconstruction dust emission
estimates were based on construction-related dust emission factors from EPA.
These factors were then used to estimate particulate emissions from each dam
on the basis of the volume of material to be moved, road lengths, hours of
operation, and average weight of the haul trucks. The effects of dust
emissions were not quantified.

ï¿½ Air emissions from the loss of barge transportation. If the four Lower
Snake River dams are breached, grain and goods that are currently
transported by barge would have to be trucked to rail cars or to river ports
downstream. The Corps estimated emissions by averaging the results of two
different approaches that converted transportation data for grain into
vehicle emissions using EPA emission factors and extrapolated that data for
other commodities.

ï¿½ Windblown dust emissions from exposed reservoir sediments. Eastern
Washington is relatively arid and subject to considerable windblown dust.
The study concluded that until vegetation cover becomes established, the
dust emissions from the dry reservoirs would be between 0.4 and 13 percent
of the total emissions from eastern Washington agricultural areas during
individual windstorms. Emissions were estimated using an EPA methodology for
predicting the amount of particulate matter because of wind erosion. The
analysis used 1984 through 1991 wind data for selected cities in the region.

ï¿½ Increased air emissions from replacement power generation. Breaching the
four Lower Snake River dams would require 1,550 megawatts of replacement
power generation. The Corps assumed that the replacement power would come
primarily from new thermal power plants, most likely gas-fired. These plants
would produce such pollutants as carbon dioxide, nitrogen dioxide, and
sulfur dioxide. Amounts for these substances were estimated on the basis of
the BPA model used to estimate electricity costs and then extrapolated to
other pollutants, such as carbon monoxide, using EPA emission factors.

Scope and Methodology

To assess the extent to which the Corps followed requirements and accepted
practices in preparing the draft environmental impact statement (EIS), we
reviewed the draft EIS in comparison to individual requirements of the
National Environmental Policy Act, the Endangered Species Act, the Water
Resources Council's Economic and Environmental Principles for Water and
Related Land Resources Implementation Studies (1983), and Corps and
Department of Army implementing guidance for the preparation of an EIS. To
the extent we found variances, we discussed these with Corps officials,
other agencies, and outside experts. We also reviewed the scope and content
of the Corps' draft EIS, including the Corps' assessment of compliance with
applicable federal environmental statutes and regulations. We also spoke
with interested stakeholders, both pro-dam and conservation groups; other
agencies; and outside experts. Finally, we attended public hearings,
reviewed hearing transcripts, and reviewed public and agency comments
submitted to the Corps.

To determine the reasonableness of the Corps' analysis and presentation of
the effect of breaching on electricity costs, we reviewed and assessed the
Corps' draft EIS and technical background reports and spoke with outside
experts and interested stakeholders. In addition to current and earlier
drafts of the EIS and relevant appendixes, we reviewed and analyzed numerous
technical reports and studies that underlay the Corps' analysis. We examined
the depth and quality of the reports' analyses and the consistency of the
reported results across the studies. These reports include the Hydro Impact
Team's Technical Report on Hydropower Costs and Benefits, the Northwest
Power Planning Council's Analysis of the Bonneville Power Administration's
Potential Future Costs and Revenues, and BPA's Transmission Impacts of
Breaching the Lower Snake and John Day Dams. We conducted interviews with
the principal analysts responsible for the cost estimation from three public
agencies, the Corps, BPA and the Council. We also interviewed stakeholders
representing diverse views on the Lower Snake River dams, and various
independent reviewers and hydropower experts. We also reviewed the detailed
comments of the Independent Economic Analysis Board regarding the EIS and
discussed them with several members of the Board. Through these efforts, we
developed an understanding of the various modeling exercises that the Corps,
BPA, and the Council used for estimating increases in power system costs in
the western United States because of the breaching of the four Lower Snake
River dams or changes in their current operations. Finally, we assessed the
extent to which the data and estimation models employed had been reviewed by
internal or external reviewers or used for other operational or planning
purposes.

To determine the reasonableness of the Corps' analysis and presentation of
the effect of breaching on transportation costs, we reviewed and assessed
the Corps' draft EIS and technical background reports and spoke with outside
experts and interested stakeholders. In addition to current and earlier
drafts of the EIS and relevant appendixes, we reviewed and analyzed studies
that underlay the Corps' analysis, including studies by Corps consultants.
To understand the Corps' analysis and conclusions, we assessed underlying
studies prepared for a Washington State Legislature Transportation
Committee, the Eastern Washington Intermodal Transportation Study, a study
by the Port of Portland, and documents prepared by various stakeholders,
such as American Rivers and the Pacific Northwest Waterways Association. We
also reviewed the Corps' transportation model for its completeness and
accuracy, especially as compared to the Water Resources Council's
Principles. We interviewed officials from the Corps in Portland, and Walla
Walla, Washington, and in Northern Virginia who had contributed to the
analysis and the consultant with primary responsibility for the
transportation section of the draft EIS. To understand the limitations of
the Corps' analysis, we looked at the assumptions, inconsistencies, and
uncertainties identified by the Corps and others. We assessed the extent to
which the data and estimation models employed had been reviewed by internal
or external reviewers or were consistent with other transportation modeling
efforts. Finally, we reviewed the comments of various stakeholders submitted
to the Corps and discussed the implication of their comments with the
appropriate Corps officials.

To determine the reasonableness of the Corps' analysis and presentation of
the effect of breaching on air quality, we reviewed and assessed the draft
EIS and its underlying documents. We compared the Corps' early work plans
with the scope of work later negotiated with the Corps' contractors and with
the draft EIS. We also reviewed existing air quality standards and
requirements and assessed the extent to which the Corps analyzed and
reported the impact of breaching on these standards and requirements. We
also met with, and obtained documentation from BPA, the Corps, EPA and the
Corps' prime and subcontractors for the air quality work. Finally, we
reviewed and evaluated agency and public comments received by the Corps.

We performed our work in accordance with generally accepted government
auditing standards from December 1999 through June 2000.

GAO Contacts and Staff Acknowledgments

Derek Stewart, (202) 512-3841
Bill Swick, (503) 235-8500

In addition to those named above, Chris Abraham, Paul Aussendorf, Margaret
Armen, Philip Farah, William Hanson, Mehrzad Nadji, Tim Schindler, and Stan
Stenersen made key contributions to this report.

(141397)

Table 1: Alternatives Considered Under the Corps' Snake River EIS 10

Table 2: Annual Electricity System Costs of Breaching the Four
Lower Snake River Dams 18

Table 3: Examples of Concerns Identified in the Corps'
Transportation Analysis 23

Table 4: Additional Emissions From Dam Breaching 24

Figure 1: Map of Columbia Basin and Lower Snake River Dams 7

Figure 2: Lower Granite Dam, Snake River 8

Figure 3: Lower Snake River Barge 21
  

1. Hereafter, for ease of presentation, the Corps' study and draft report,
Lower Snake River Juvenile Salmon Migration Feasibility Report/Environmental
Impact Statement , will be referred to as the EIS.

2. The ESA defines endangered as any species that is in danger of extinction
throughout all or a significant portion of its range and threatened as any
species that is likely to become an endangered species within the
foreseeable future throughout all or a significant portion of its range.

3. In 1994, the NMFS proposed changing the Snake River Chinook salmon's
status from threatened to endangered, but in 1998 that proposal was it
withdrew that proposal. In 1997, Snake River Steelhead were also listed as
threatened. The Steelheads lifecycle is similar to salmon's.

4. Idaho Department of Fish and Game v. National Marine Fisheries Service,
850 F. Supp. 886 (D. Or. 1994).

5. Army regulations in effect since 1980 permit a draft EIS to be issued
with no preferred alternative specified. 32 C.F.R. Parts 650, 651 Appendix
D, paragraph 5.

6. Columbia River System Operation Review, Final Environmental Impact
Statement, U.S. Army Corps of Engineers, Nov. 1995.

7. Corps legal officials expressed the concern that if the biological
opinion recommends dam breaching as the reasonable and prudent alternative
to conserve listed Snake River salmon, the Corps would not be able to
implement that recommendation consistent with its current statutory
authority. Because removing an existing dam would require statutory
authorization and funding, legislative action would be required before that
recommended alternative could be carried out. It is not clear whether an
exemption would be required in such a case.

8. Breaching may also have regional effects on income, employment, and
population. The Corps' study includes regional economic impact analysis. The
Corps' regional impact analysis uses the estimated national economic effects
to determine regional effects on spending, income, and employment. We did
not assess these regional impacts in our review.

9. Section 309 of the Clean Air Act directs the EPA to review and comment in
writing on the environmental impacts associated with major federal actions.
EPA has the authority to refer an EIS to the Council on Environmental
Quality for further review. 40 C.F.R. 1504.1 (1999).

10. The issue of the Corps' compliance with water quality standards for
temperature and dissolved gas is currently in litigation. National Wildlife
Federation v. U.S. Army Corps of Engineers , No. 99-442 FR (D. Or., Mar. 21,
2000) (cross motions for summary judgement denied).

11. The four dams collectively account for about 7 percent of the Pacific
Northwest's "installed production capacity"--the maximum sustained amount of
power that can be produced by a plant measured at a moment in time. However,
they account for a somewhat smaller portion of average production.

12. The power impact estimates assume that current dam operations (base
case) result in electric power output from the four Lower Snake River dams
averaging about 1,250 megawatts per year. However, this assumption does not
take into consideration additional constraints on hydropower operations of
the dams resulting from NMFS' 1998 Biological Opinion. According to the
Northwest Power Planning Council's analysis, these additional constraints
are likely to reduce power output by about 5 percent. Such a change in power
production from the four dams is not likely to have a significant effect on
the power cost estimates. In addition, NMFS officials told us that the new
biological opinion will further constrain hydropower operations and reduce
the power cost estimate.

13. Peaking refers to the ability to provide power at times of relatively
high levels of demand. Ancillary services are defined as those services that
are necessary to support the transmission of power from power plants to
customers while maintaining the reliable operation of the transmission
system in accordance with good utility practice.

14. The Corps' and the Council's analyses spanned the interconnected western
power system, which comprises all or part of 14 western states, two Canadian
provinces, and northern Mexico, while BPA's analysis was limited to the
Pacific Northwest and California. All three made forecasts for 100 years,
starting with 2005, and used similar assumptions regarding the future growth
in demand for electricity.

15. The Corps' draft EIS assumes zero price elasticity of demand. Price
elasticity of demand is the relative change in quantity demanded divided by
the relative change in price. In this case, zero price elasticity of demand
means that a rate increase will not change the quantity demand.

16. This $26 million is shown in our earlier presentation of the power
system's annual costs and is the amount that reduces the costs from $271
million per year, as shown in the Corps' draft EIS, to the net amount of
$245 million per year (see table 4).

17. From Lewiston downstream to the Pacific Ocean, the waterway is 465
miles.

18. EPA has established fixed standards for particulate matter, ozone,
nitrogen dioxide, sulfur dioxide, carbon monoxide, and lead. In addition,
another 188 hazardous air pollutants known or suspected to cause cancer or
other serious health effects are controlled.

19. According to the Corps' 1995 Columbia River System Operation Review EIS,
chemical concentrations were found in Lower Snake River reservoir sediments
that, if they became airborne, could exceed state standards.

20. An April 2000 study by the Northwest Energy Coalition, Going With the
Flow: Replacing Energy From the Four Snake River Dams , concluded that power
lost from breaching the dams could be replaced through conservation and
nonpolluting power generation, such as solar and wind power. The study
recognizes that this strategy would require government intervention and
higher nonpower costs. BPA is working to estimate the cost of such a
strategy, but this estimate will not be available until later this year.

21. The Corps' 1995 System Operating Review EIS assessed the various
impacts, including air quality, from various changes in the way federal dams
are operated in the Columbia River Basin.

22. The forecast market prices were obtained from a 1998 analysis done by
the Power Planning Council using an electric power pricing model called
Aurora. This analysis was a major modeling effort that received the approval
of various groups with diverse views on hydropower in the Pacific Northwest.

23. "Bundled" service refers to the grouping of separate services into one
product "bundle" that a supplier provides uniformly to a class of customers.

24. To ensure reliable service to customers, electric power suppliers
maintain emergency power production capacity. Reserve capacity is needed to
replace unexpected power generation losses or to meet unexpectedly high
demand.
*** End of document. ***