Army Corps of Engineers: An Assessment of the Lower Snake River Dams'
Draft Environmental Impact Statement (Testimony, 09/12/2000,
GAO/T-RCED-00-294).

Pursuant to a congressional request, GAO discussed its assessment of the
Army Corps of Engineers' draft Environmental Impact Statement (EIS) for
the Lower Snake River dams, focusing on whether the Corps: (1) followed
applicable procedures and guidelines in preparing the draft EIS; and (2)
used a reasonable methodology to analyze and present the effects of
breaching, specifically with respect to electricity costs,
transportation costs, and air quality.

GAO noted that: (1) the Corps conducted a comprehensive EIS process that
generally adhered to the procedural requirements of the relevant federal
laws and other guidelines for conducting an EIS; (2) however, doing so
did not eliminate controversy about the EIS' analysis or conclusions,
even though the draft EIS made no recommendations about whether the dams
should be breached; (3) in GAO's judgment, 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; (4)
for example, because breaching the dams would make the river too shallow
for barge shipments, the Corps estimated that as much as $532 million in
infrastructure improvements would be needed for road, rail, and storage
facilities if barge shipments ceased on the Snake River; (5) however,
the Corps assumed that these new investments would not affect the
transportation cost estimate without testing the validity of this
assumption or measuring the sensitivity of the transportation cost
estimate to this assumption; and (6) likewise, the Corps did not
consider air quality effects from breaching on certain local populations
or the effect of exposing potentially contaminated river sediments.

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

 REPORTNUM:  T-RCED-00-294
     TITLE:  Army Corps of Engineers: An Assessment of the Lower Snake
	     River Dams' Draft Environmental Impact Statement
      DATE:  09/12/2000
   SUBJECT:  Dams
	     Environmental impact statements
	     Cost analysis
	     Environmental policies
	     Energy costs
	     Transportation costs
	     Air pollution
IDENTIFIER:  Snake River (ID)
	     Columbia River Basin (WA)

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GAO/T-RCED-00-294

ARMY CORPS OF ENGINEERS

An Assessment of the Lower Snake River Dams' Draft Environmental Impact
Statement

Statement of Derek B. Stewart, Associate Director, Energy, Resources, and
Science Issues, Resources, Community, and Economic Development Division

United States General Accounting Office

GAO Testimony Before the Subcommittee on Water and Power, Committee on
Energy and Natural Resources, U. S. Senate

For Release on Delivery Expected at 2: 30 p. m. EDT Tuesday September 12,
2000

GAO/ T- RCED- 00- 294

Page 1 GAO/ T- RCED- 00- 294

Mr. Chairman and Members of the Subcommittee: We are pleased to be here
today to discuss our recent assessment of the Corps of Engineers' draft
Environmental Impact Statement (EIS) for the Lower Snake River dams. The
Corps initiated its EIS in 1995 as a result of the listing of Snake River
salmon as a threatened or endangered species under the Endangered Species
Act. The Corps, which operates four dams on the Lower Snake River, evaluated
the feasibility and impact of four different alternatives for improving
migration conditions for salmon. These alternatives ranged from maintaining
current operations to breaching the four Lower Snake River dams. This latter
alternative attracted considerable attention because of the implications
that breaching could have for salmon and the region.

In December 1999, the Corps released its draft EIS assessing the biological,
environmental, economic, and social consequences of breaching the four dams
and of the other three alternatives. The draft EIS, which cost more than $22
million to prepare, made no recommendations about which alternative to
adopt. The final EIS, which will include a preferred alternative, is not
expected until 2001.

Our statement today is based on our July 2000 report, which we prepared at
the request of this Subcommittee. 1 Our report addressed whether the Corps
(1) followed applicable procedures and guidelines in preparing the draft EIS
and (2) used a reasonable methodology to analyze and present the effects of
breaching, specifically with respect to electricity costs, transportation
costs, and air quality. As agreed with the requesters, we did not review
other aspects of the draft EIS, such as the impact of breaching on salmon
recovery, water quality, or recreation. Therefore, we cannot comment on the
adequacy of the overall EIS, which alternative the Corps should eventually
recommend, or the actions of other agencies active in salmon recovery in the
Columbia River Basin.

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

Page 2 GAO/ T- RCED- 00- 294

In summary, we found the following:

ï¿½ The Corps conducted a comprehensive EIS process that generally adhered to
the procedural requirements of the relevant federal laws and other
guidelines for conducting an EIS. However, doing so did not eliminate
controversy about the EIS' analysis or conclusions, even though the draft
EIS made no recommendations about whether the dams should be breached.

ï¿½ In our judgment, 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. For example, because breaching the
dams would make the river too shallow for barge shipments, the Corps
estimated that as much as $532 million in infrastructure improvements would
be needed for road, rail, and storage facilities if barge shipments ceased
on the Snake River. However, the Corps assumed that these new investments
would not affect the transportation cost estimate without testing the
validity of this assumption or measuring the sensitivity of the
transportation cost estimate to this assumption. Likewise, the Corps did not
consider air quality effects from breaching on certain local populations or
the effect of exposing potentially contaminated river sediments.

Background

Hydropower dams on the Columbia River and its main tributary, the Snake
River, provide electric power, inland navigation, irrigation, and recreation
to the Pacific Northwest region. The Columbia and Snake rivers and their
tributaries are also home to the 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- including the Corps of Engineers, Forest Service, and Fish and
Wildlife Service- and electricity ratepayers, through the Bonneville Power
Administration (BPA),

Page 3 GAO/ T- RCED- 00- 294

are spending about $400 million annually in the Columbia River Basin to
reverse this decline. Salmon's 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 (NMFS), (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. 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 a response to a
determination by NMFS that the Corps of Engineers' hydropower operations
jeopardize salmon's survival, the Corps, 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. Under the EIS, the Corps
is evaluating four alternatives, one of which involves breaching the 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 EIS as part of the
feasibility study. 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.

Page 4 GAO/ T- RCED- 00- 294

The four Lower Snake River dams (Ice Harbor, Lower Monumental, Little Goose,
and Lower Granite) are very similar. In total, they produce about 1,250
average megawatts per year, which is about 5 percent of the total
electricity generated in the Pacific Northwest. The dams do not provide
flood control and 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. 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.

The Corps' recommendation in the final Snake River EIS will be part of a
comprehensive plan to reverse the decline of salmon throughout the Columbia
River Basin. For example, 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. In July of this year, NMFS released a new
draft biological opinion for the Federal Columbia River Power System. 2 The
draft opinion is part of federal agencies' proposed long- term strategy for
salmon recovery in the region. This strategy does not envision breaching the
dams at this time, though agencies will undertake engineering and other
studies for potential breaching in the event other recovery efforts do not
meet pre- established recovery goals.

Development of Corps' Draft EIS Followed Procedural Requirements and
Guidelines

The Corps of Engineers generally followed procedural requirements and
guidelines in developing its draft EIS. These requirements are contained in
NEPA and accompanying regulations, which provide a framework for decision-
making in cases in which major federal actions may have environmental
consequences. While the Corps adhered to

2 Under the Endangered Species Act, federal agencies, such as the Corps,
whose activities could affect the survival or recovery of endangered and
threatened species or their critical habitat are required to prepare a
biological assessment of the impact their actions may have. The Secretary of
the agency responsible for conservation of the species, (NMFS in the case of
marine species) responds with a biological opinion that identifies
reasonable and prudent actions that the agency needs to take to protect the
listed species.

Page 5 GAO/ T- RCED- 00- 294

these broad requirements and guidelines in preparing its draft EIS, EPA and
other affected parties have challenged some aspects of its analyses and
conclusions. In particular, the Environmental Protection Agency (EPA) has
challenged the Corps' findings in regard to water and local air quality.

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 biological analyses of salmon and steelhead;
electric power generation and facilities; transportation via navigation,
railroads, and highways; air quality; water quality and hydrology; and other
physical and economic effects.

The Corps' procedures for preparing the draft EIS were generally consistent
with NEPA and the agency's implementing guidance. In accordance with NEPA's
requirements, the Corps involved other federal agencies, consulted with
affected Indian tribes, involved other stakeholders and the public, and
sought outside technical review.

Procedural adherence to NEPA and other guidance by the Corps has not been
sufficient to ensure agreement with the EIS by others. The draft EIS 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 to review
and comment on all environmental impact statements. In comments provided to
the Corps in April 2000, EPA rated the draft EIS as inadequate

Page 6 GAO/ T- RCED- 00- 294

because it did not adequately assess potentially significant impacts on
water quality and was incomplete in its review of air quality.

Corps' Analyses of Electricity, Transportation, and Air Quality Vary in
Quality

Breaching the dams would mean losing both the hydroelectric power generated
by the dams and barge shipments on the Lower Snake River. 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 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.

Estimated Effects on Electricity Costs Are Reasonable The Corps' estimates
of the costs associated with losing hydropower from the four dams are
reasonable and are supported by multiple analyses and by 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.

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. 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. However, the EIS also notes that if the
electric industry becomes more competitive, BPA, which transmits and markets
power created by the dams, may not be able to raise rates to recover higher
costs.

The power system cost estimates are supported by multiple analyses that
yielded similar results. Three different organizations- the Corps, BPA, and
the Northwest Power

Page 7 GAO/ T- RCED- 00- 294

Planning 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.

The 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. These stakeholders included
environmentalists, Native Americans, and other advocates of freeflowing
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.

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. First, the power cost estimate assumes that the demand for power
will not be affected by higher rates charged for electricity. 3 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 power and thereby reduce the cost estimate
for power by less than 10 percent. 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 subtract $26
million of avoided costs of operating and maintaining the dams if they are
breached from its annual power cost estimate. Instead, the draft EIS

3 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.

Page 8 GAO/ T- RCED- 00- 294

reports an annual power cost estimate of $271 million and, elsewhere in the
EIS recognizes the avoided costs of not operating the dams. However, by not
including avoided costs in the power cost estimate, 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 did not
subtract the avoided costs from their estimate.

Transportation Cost Estimate Needs Further Development 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 possible
changes in some key but uncertain assumptions. We could not determine
whether further investigation of the validity of its assumptions would
materially affect the Corps' final estimate.

The Corps estimated that breaching would increase shipping costs for all
commodities by $21 million each year over the next 100 years. A key
assumption the Corps made in arriving at this estimate is that
infrastructure improvements needed to replace barge transportation would not
add to the transportation cost estimate. However, the Corps did not
sufficiently test the sensitivity of the transportation cost estimate for
this assumption. The draft EIS estimates that the infrastructure
improvements needed to replace barge transportation- including such things
as new grain elevators farther downstream on the Columbia River, highway
improvements, new rail cars, and track improvements- 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. The Washington State Department of
Transportation and the Independent Economic Analysis Board contend, however,
that making these improvements could increase transportation costs, perhaps
significantly. Corps officials are considering these and other comments and
have not completed their responses.

Page 9 GAO/ T- RCED- 00- 294

Another uncertainty arises from the Corps' assumption that estimated
shipping costs provide a better estimate of actual costs than do published
shipping rates. Applicable guidelines recommend using published rates to
estimate transportation costs unless these rates are not competitively
established. 4 Corps officials stated that published rates were not used
because barge operators have limited competition and can charge rates that
are 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.

Estimated Effects on Air Quality Are Incomplete The Corps' air quality
analysis is incomplete because it did not assess how local air quality or
human health would be affected if the dams were breached and did not
consider the effects of all relevant pollutants. 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 from dam deconstruction and exposed reservoir sediments across
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 affecting local air quality and
human health. To identify these more localized effects, EPA, the agency
responsible for reviewing and commenting on all environmental impacts of
federal activities, has requested that the Corps complete a more thorough
analysis.

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

4 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

Page 10 GAO/ T- RCED- 00- 294

example, the draft EIS reports that replacement power generation would
increase emissions of carbon monoxide and carbon dioxide, while
deconstruction of the dams and the resulting exposed reservoir sediment
would contribute to an increase in particulate matter.

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 the 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 trucks
hauling grain that is likely to occur in certain areas of eastern Washington
State. According to the draft EIS, the elimination of barging is expected to
result in 223 additional trucks per day and their accompanying emissions in
the Tri- Cities area. The draft EIS also reported that reservoir sediments
contain heavy metals and DDT, but the Corps did not perform the dispersion
modeling necessary to determine whether they could pose a threat to human
health.

Difficulties with the Corps' air quality analysis can be attributed, in
part, to the Corps' 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 a 1995 air quality assessment.
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. Nevertheless, the Corps
did not complete significant portions of its original air quality scope of
work, including an assessment of the direct and cumulative effects on air
quality, because several of the tasks included in the scope of work could
not be done for the cost or time allotted, according to Corps and

national and regional economic effects.

Page 11 GAO/ T- RCED- 00- 294

contractor officials. In order to meet budget and time constraints, the
Corps reduced the work plan. The Corps and EPA are currently negotiating the
additional analysis that the Corps will perform for its final EIS.

The Corps is currently revising its draft EIS in consideration of public
comments and assessments of its draft EIS performed by us and others. It is
essential, given the controversy and importance of this issue, that the
Corps provides sufficient analysis and information to support its
recommended alternative to policymakers and the public.

--- Mr. Chairman, this concludes our prepared statement. We would be pleased
to respond to any questions you or the Members of the Subcommittee may have.

Contact and Acknowledgement For future contacts regarding this testimony,
please contact Derek B. Stewart on (202) 512- 3841. Individuals making key
contributions to this testimony include Paul Aussendorf and Bill Swick.

(141495)

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