Free Memorandum of Contentions of Fact and Law - District Court of Federal Claims - federal

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CECW-IN Circular No. 11-2-187

DEPARTMENT OF THE ARMY U. S. Army Corps of Engineers Washington, D. C. 20314-1000

EC 11-2-187

FINAL DRAFT EXPIRES 31 MARCH 2007 Army Programs CORPS OF ENGINEERS CIVIL WORKS DIRECT PROGRAM PROGRAM DEVELOPMENT GUIDANCE FISCAL YEAR 2008

10 May 2006

1. Purpose. This Engineer Circular (EC) provides guidance for development and submission of the Corps of Engineers direct Civil Works Program for Fiscal Year 2008(FY08). This guidance is consistent with FY07 guidance in that we will continue developing our program by eight business lines: Emergency Management (EM); Environment (EN); Flood and Coastal Storm Damage Reduction (F&CSDR); Hydropower (H); Navigation (N); Recreation (RC); Regulatory (RG); and Water Supply (WS), and three functions Expenses (E); Revolving Fund (RF) (Plant Replacement and Improvement Program (PRIP)); and Automation Program (AP). Specifically excluded from coverage are mandatory program activities, such as those funded by Permanent Appropriations (PA) and the Coastal Wetlands Restoration Trust Fund (CWRTF). Appendices I - VIII provide guidance for program development by each of the eight business lines within the Civil Works Program. Annexes A - C provide generic guidance on 1 (Investigations); C (Construction); and O&M Program matters, cutting across all business lines, as applicable. Annexes D - F provide guidance for program development for each of the three functional programs. This EC supersedes draft EC 11-2-187 31 Mar 04 and draft EC 11-2-187 29 Apr 05

Exhibit 2

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EC 11-2-187 10 May 06 2. Applicability. This EC applies to all headquarters elements, major subordinate commands (MSCs), districts, and field support activities having Civil Works Program responsibilities. 3. References. a. Public Laws: (1) PL 84-9o (2) PL 85-5(10 (3) PL91-190 (4) PL 92-500 (5) PL 93-251 (6) PL 97-348 (7) PL 99-662 (8) PL 100-676 (9) PL 101-508 (10) PL 101-591 (11) PL 101-601 (12) PL 101-640 Flood Control and Coastal Emergencies Water Supply Act of 1958 National Environmental Policy Act of 1969 Federal Water Pollution Control Act Amendments of 1972 Water Resources Development Act of 1974 Coastal Barrier Resources Act Water Resources Development Act of 1986 Water Resources Development Act of 1988 Revenue Reconciliation Act of 1990 Coastal Barrier Improvement Act of 1990 Native American Graves Protection and Repatriation Act Water Resources Development Act of 1990 Water Resources Development Act of 1992 Government Performance and Results Act of 1993 Water Resources Development Act of 1996 Balanced Budget Act of 1997 Water Resources Development Act of 1999 Water Resources Development Act of 2000 Energy and Water Development Appropriation Act, 2004 Consolidated Appropriations Act, 2005 Energy and Water Development Act, 2006

(13) pL 102480

(14) PL 103-62 (15) PL 104-303 (16) PL 105-33 (17) PL 106-53 (18) PL 106-541 (20) PL 108-137 (21) PL 108.-447 (22) PL 109-103 b. Executive Orders: (1) EO 11514 (2) EO 12088 (3) EO 1251:2 (4) EO 1289:3 (5) EO 12906 (6) EO 13148

Protection and Enhancement of Environmental Quality Federal Compliance with Pollution Control Standards, 1978 Federal Real Property Management, 1985 Principles for Federal Infrastructure Investment Coordinating Geographic Data Acquisition and Access: The National Spatial Data Infrastructure Greening the Government through Leadership in Environmental Management

c. Office of Management and Budget (OMB) documents: (1) Budget of the United States Government, Fiscal Year 2007, Analytical Perspectives

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EC 11-2-187 10 May 06 (2) Budget of the United States Government, Fiscal Year 2007, Appendix (3) OMB Circular A-11 Preparation and Submission of Budget Estimates d. Department of the Army regulations: (1) AR 11-2 (2) AR 385-10 Management Control Army Safety Program

e. Corps of Engineers Engineer Circulars, Manuals, Pamphlets, Regulations, and policy announcements and letters (1) EC 11-1-4 (2) EC 11-2-180 (3) EC 200-1-2 (4) EM 1110-1-2909 (5) EP 1130-2-500 (6) ER5-1-11 (7) ER 11-1.-320 (8) ER 11-2.-220 (9) ER 11-2.-240 (10) ER 11-2-290 (11) ER 37-2-10 (12) ER 200-2-3 (13) ER 110_';-2-100 (14) ER 1110-1-8156 (15) ER 1110-2-100 (16) ER 1110-2-1302 (17) ER 1130-2-500 (18) ER 1130-2-510 (19) ER 1130-2-540 (20) ER 116-';-2-119 (21) ER 1165-2-131 (22) ER 1165-2-400 USACE Manpower - Corps of Engineers - Manpower Requirements Systems Army Programs - Availability, Obligation and Use of General Expenses and Other Civil Funds in Fiscal Year 2001 FUSRAP Policy Geospacial Data and Systems Partners and Support (Work Management Guidance and Procedures) Program and Project Management Civil Works Emergency Management Programs Civil Works Activities General Investigation Civil Works Activities - Construction & Design Civil Works Activities, General Expenses Accounting and Reporting Civil Works Activities Environmental Compliance Policies Guidance for Conducting Civil Works Planning Studies Policies, Guidance, and Requirements for Geospacial Data and Systems Guidance for Conducting Civil Works Planning Studies Civil Works Cost Engineering Partners and Support (Work Management Policies) Hydroelectric Power Operations and Maintenance Policies Environmental Stewardship Operations and Maintenance Policies Modifications to Completed Projects Local Cooperation Agreements for New Start Construction Projects Recreational Planning, Development, and Management Policies

(23) Policy Announcement - Chief of Engineers announcement, 26 Mar 02, subject: USACE Environmental Operating Principles (24) Policy Letter - Policy Guidance Letter 61, 27 Jan 99, subject: "Application of Watershed Perspective to the Corps of Engineers Civil Works

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EC 11-2-187 10 May 06 Program and Activities" f. Other. 2002 Federal Personnel Guide, Key Communications Group, Inc. 4. Distribution. This information is approved for public release. Distribution is unlimited. 5. Conventions. The following designations are used for selected one-year periods: CCY = current calendar year CFY = current fiscal year (extending from 1 October CCY to 30 September CCY+l before 1 January, latest, and 1 October CCY-I to 30 September CCY thereafter) PY = program year (CFY+2 before 1 October, next, and CFY+I thereafter) - FY08 PY - 1 = one year before PY - FY07 PY - 2 = two years before PY (CFY before 1 October, next, and CFY-1 thereafter) = FY06 PY - 3 = three years before PY (CFY-1 before 1 October, next, and CFY-2 thereal~er) = FY05 PY + N = program year plus N fiscal years. Note that 1 October of PY-I is 1 October of CCY, until 1 January, next, when it becomes l October of CCY.-I. 6. Program Development. a. Government Performance and Results Act Guidance. (1) Guidance Development Status. The "Government Performance and Results Act of 1993" (GPRA), PL 103-62 is the foundation for present-day program development within the federal government. GPRA requires that agencies develop strategic plans and annual performance plans for serving the nation, and reports on how effective and efficient performance actually was for any period just completed. This has led to establishment of results-oriented performance planning, measurement, and reporting throughout the Federal government. The current Civil Works Strategic Plan was released in Mar 04, with the understanding that Army and OMB would continue to work on performance measures and targets tied to the strategic goals and objectives. A summary of the Civil Works strategic goals are as follows: (a) Provide sustainable development and integrated management of the Nation's water resources. (b) Repair past environmental degradation and prevent future environmental issues. (c) Ensure that projects to meet authorized purposes and evolving conditions. (d) Reduce vulnerabillties and losses to the Nation and the Army from natural and manmade disasters, including terrorism.

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EC 11-2-187 10 May 06 (e) Be a world-class public engineering organization. Meanwhile, Army is developing its program based on projected merit of program investment increments. Guiding principles of its performance-based program development are presented below, under "Army Policy." (2) Civil Works Five Year Development Plan. a. The Civil Works Five Year Development Plan purpose is to present an overview on how the funding for the Civil Works program over a five-year period will produce results that contribute to achievement of the strategic goals and objectives in the Civil Works Strategic Plan. The fiveyear plan focus is to undertake projects and activities that provide the highest net economic and environmental relurns on the Nation's investment. Each MSC will provide the expected fiveyear regional results quantified for each strategic objective that could be achieved with the available funds, i.e. what will be implemented and produced with the level of funding provided, as well as which strategic objectives will not be achieved due to insufficient funds. The sum of the expected results will show projected performance over the five-year period using approved performance measures. b. In preparing the 2008-2012 five-year plans, each MSC/division will develop five-year funding streams for each project. The funding streams will be the basis for the PY budget and the 2008-2012 Five-Year Development Plan (FYDP) which will be submitted to Congress and Office of Management and Budget along with the budget submission. After the Divisions submit their five-year plans, a CW five-year plan will be prepared which will contain three scenarios. The three scenarios are, a) the low scenario, this scenario will be the five-year ceiling program, b) the "medium" scenario will be the based on the PY budget and OMB's out-year targets, and c) the high scenario will be based on PY-1 appropriations levels and adapted from the recommended program. Divisions' five-year programs must be included in the 30 June 2006 submission to avoid delays and ensure that disagreements, changes are addressed and allow for timely approval before a final five-year plan is prepared for final submission to Congress and OMB in August 2006. (3) Initial Guidance. The Operation and Maintenance, Program successfully established results-oriented business program development procedures for six business programs in 1996 as a Pilot GPRA Project for OMB. The business programs include EM, EN, F&CSDR, H, N, and RC. The development procedures were further evolved into today's procedures - models - and served as examples for development of models for the two other business lines - RG and WS. The program development procedures are presented in Appendices I - VIII. b. Presidential Policy. (1) Presentation of Programming Results. Congress established its appropriation accounts by program function, such as investigations, construction, and operation and maintenance. Consistently, OMB programs by program function. To this end, it maintains lO-year planning

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EC 11-2-187 10 May 06 estimates, or ceilings, for each appropriation account of the Civil Works Program. The ceilings reflect long-term effects of the President's policies for the various programs, projects, and activities (PPAs) funded by each account, and serve as benchmarks for use in evaluating Congressional actions. The 10-year period accommodates adequate definition of long-term resource requiren'tents. These ceilings are presented, for all accounts, in OMB's MAX database. (2) Economic Assumptions. Economic assumptions underlying Presidential policy of reference 3.c.(1), Budget of the United States Government, Fiscal Year 2007, Analytical Perspectives, are reflected in Table 1. These assumptions, along with related factors presented in the Federal Personnel Guide of Key Communications Group (KCG), Inc., and Civil Service Retirement System (CSRS) - to - Federal Employees Retirement System (FERS) workforce conversion data of HQUSACE Human Resources Office, are shown for PY-3 through PY+19. The assumptions and related data cover base rates for federal civilian permanent workers, reflecting pay and burden factors; pay raises for these workers applicable to both changing and fixed base rates; and inflation for "goods and services" of federal civilian temporary and nonfederal workers, and nonpay items. (a) Pay and Burden Rates. Base rates (against which pay raises apply) reflect assumed pre-raise pay and burden rates. Pre-raise pay rates are 1.000, by definition, for regular pay, and assumed to be 0.02 for awards. Assumed burden rates reflect assumed government contributions for worker benefits. The rates comprise two parts - one part for government contributions under the CSRS; the other, under the FERS. The first part (including contributions for retirement, health insurance, Medicare, and life insurance) is shrinking, while the second part (including contributions for regular, "Thrift Savings," and Old Age Survivors Disability Insurance (OASD1) retirement; health insurance; Medicare; and life insurance) is growing. This results from permanent force "attrition" and subsequent "turnover" through the hiring of more workers under FERS. With an annual permanent force attrition of 7 % and associated turnover initially representing a considerable share of that, the CSRS part is expected to become negligible by FY21. Class 1 "updating factors" reflect the year-over-year change in base (resulting from change in burden), the associated year-over-year raises, and whatever raise absorption may pertain. (b) Pay Raise Assumptions. Pay raise assumptions for federal civilian permanent workers are shown in reference 3.c.(1), Table 11-1, "Economic Assumptions." Assumed pay raise rates include base and locality components. (The base component is different from the base rate, discussed above, against which the base component applies.) Base components, reflecting the Employment Cost Index (ECI), apply nationally. Locality components, reflecting conditions of local markets, apply locally. Allocation of pay raise rates to base and locality components is based on the number and distribution of workers eligible for locality pay. For PY-2, the national allocation to these components was 0.021 and 0.017, or 55 % and 45 % of the 38% total raise rate. The national allocation for PY-1 has yet to be determined, therefore, the composite raise rate is used without refinement. Class 1 rates in Table 1 are based on composite raises for all years.

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EC 11-2-187 10 May 06 Appendix V NAVIGATION V-l. Background. The Corps has had the mission of navigation since 1824. Today we plan, design, operate and maintain projects that support 2.47 billion tons of commerce. Many of the projects provide other outputs such as flood damage reduction, hydropower, water supply, ecosystem restoration and recreation. The Corps operates and maintains 926 projects ranging from shallow-draft harbors, inland navigation systems with 240 locks at 195 sites, to major deepdraft ports. V-2. Purpose. The Corps Navigation goal is to provide safe, reliable, efficient, effective and environmentally sustainable waterborne transportation systems for movement of commerce, national security needs, and recreation. V-3. Civil Works Program Objectives. Table V-1 displays the Navigation Program objectives and Performance Measures published in the March 2004 Civil Works Strategic Plan. The CW Strategic Plan was developed with an explicit assumption of an unconstrained resource environment to encourage an unconstrained assessment of the nation's water resources needs and potential Corps response. Preparation of the Program Year (PY) for FY 2008 Budget Request requires the recognition of a constrained budget environment and the ongoing effort to evolve better budget linked performance measures. Table V-2 displays the program objectives, performance measures and/or performance ranking and rating criteria which support and/or supplement Table V-1 program objectives and performance measures to reflect the near term realities of a constrained PY budget environment. TABLE V-1 Navigation Objectives and Performance Measures Performance Measures Program Obiectives Remaining BCR (project specific measure) Obj.1: Invest in navigation infrastructure when the Annual net benefits benefits exceed the costs. Obj. 2: Support sustainable regional, basin-wide, or watershed planning and activities in partnership with others. Obj. 3: Fund high-priority O&M. Obj. 4: Operate and manage the navigation infrastructure so as to maintain justified levels of service in terms of the availability to commercial traffic of high-use navigation infrastructure (waterways, harbors, channels). Percent of projects recommended in Chiefs reports that apply watershed principles Percent change in dollar amount of essential backlo~l at key facilities. Percent of time navigation infrastructure with high levels of commercial traffic sustains its functional purpose.

V4. Performance Measures. a. Competition for Federal funds is very keen and getting tighter each year. In recent years, we have had to make some very hard choices in distributing scarce Federal dollars. In a V-1

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EC 11-2-187 10 May 06 constrained funding environment, we must prioritize the many worthwhile investment opportunities and ongoing maintenance needs across the entire spectrum of projects. This means that we have to concentrate available resources on the highest priority projects in terms of reducing risk and providing optimal reliability to maximize benefits. In the Navigation program, we are directing funds primarily to those harbors and waterway systems and segments that provide the highest return from commercial navigation. The Corps Navigation program is well established and valued, however our ability to continue to provide navigation to our ports, waterways and harbors to meet the needs of current and future generations is dependent upon adequate investments. Such investments provide for the necessary investigations of problems, and development elf solutions, timely implementation of authorized projects, reliable operation and availability of our infrastructure, preventative maintenance, facility modernization or improvement, and adequate data management information systems, which are all directed at increasing operational capabilities and efficiencies. The purpose of this budget guidance is to ensure the development of convincing rationale and justification of the budget request. b. Accordingly, a nationwide perspective must be maintained to assure that available funding provides the greatest public benefit for the investment. The safety, security, and reliability of our existing infrastructure must be maintained; new investigations to assure high yield navigation investments are advanced; and projects that are under construction must be brought on line quickly so that benefits may be achieved as soon as possible. Inland navigation has been and continues to be a significant contributor to the national and international movement of bulk commodities, and it is evident that these waterways will also be called upon to handle containerized movements currently taxing the capacity of coastal ports and adding to congestion on the nation's highways and rail lines. As stewards of the nation's inland navigation assets, the U.S. Army Corps of Engineers, in partnership with stakeholders, strives to maintain an inland waterway system capable of handling transportation demands in an efficient and reliable manner. A cursory review of the Corps inland navigation assets reveals that on a nationwide basis over half of all projects have or will soon exceed their original 50-year design life. In response, the Corps must pursue an on-going program to rehabilitate, modify, or replace structures and components exhibiting a deteriorating ability to meet system demands. c. To achieve the Navigation objectives in Table V-l, the following budget strategies and performance measures are established for the PY budget development. Each of the budget strategies and measures are designed to demonstrate that each budget item makes sense and contributes to the Navigation goals and supporting objectives. V-5. Budget Screening Criteria. a. New Start Definition - A New Start is defined as an active authorized study or project which has not received an initial work allowance and that fits into at least one of the following Business Lines: navigation; flood and storm damage reduction; environmental restoration, water supply, hydropower, or recreation. b. The New Start definition will apply to Reconnaissance, Pre-construction Engineering and Design (PED), and Construction Projects, as well as any new efforts under the Remaining Items category. Any PED which has not been funded in the Conference Report for the past three years will also be considered a New Start. For Feasibilities, see New Phase definition.

V-2

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EC 11-2-187 10 May 06 d. Major Rehabilitation Construction will be included as unique line items, not hidden under the parent project. For example, the major rehabilitation items for Markland Locks and Dam will not be included in the Ohio River project maintenance items. These items migrated to O&M from Construction in the FY 07 cycle and need to remain identifiable. Major Rehabilitations characterized as repairs to restore capability are to be included in O&M e. Major Rehabilitation studies will be included as unique line items, not hidden in a general Operation line item for the parent project, marked with the appropriate Phase code. f. Dredged Material Disposal Facilities (DMDFs) will be included as unique line items, with the appropriate Phase code. These items migrated to O&M from Construction in the FY 07 cycle and need to remain identifiable. g. There will be a navigation sub-program: operation and maintenance of low-use harbor channels and operation and maintenance of low-use waterway segments. Each element of the sub-program will have its own minimum funding level, performance indicators, and aboveminimum funding increments. (See Table V-4) Low-use sub-program elements will be reflected as budget increments. Ensure that data in the worksheet are included for tonnage and system ton-miles and code the increment as either a low-use waterway segment or low-use harbor channel (see Paragraph V-10). h. Projects Previously Budgeted in Ecosystem Restoration Construction Account. Eight projects in part or in whole previously budgeted in the Ecosystem Restoration Business Line for Construction were moved to O&M in FY 2007. Beginning in the PY, these projects will ultimately be budgeted in the O&M account of the business line of the original project (navigation, flood and coastal storm damage reduction, hydropower) following the instructions in Appendices Ill, IV, and V. However, initially these projects and features will be entered in the environment business line, following the rules for ecosystem restoration construction. Use the O&M appropriation code and CCS, the E-'NR Business line code and a funding level/increment code of 7 (for information only). The projects included in this category are: Assateague, Poplar Island and Lower Cape May in NAD; and Columbia River Fish Mitigation, Chief Joseph, Howard Hanson, Willamette Temperature Control and Missouri River Fish and Wildlife Recovery in NWD. For projects responding to mandatory BiOp requirements: Increment 7 is the amount required to maintain minimum progress on BiOp and avoid jeopardy and limited to 75% of the FY 2007 President's Budget; Increment 7.1 is the remaining amount above the 75% limit required to maintain planned progress on BiOp and avoid jeopardy; Increment 7.2 is the capability increment for priority items required by the BiOp. For projects not in response to mandatory BiOp requirements, follow rules for Construction. V-10. DEFINITIONS, The following definitions refer to the O&M criteria. a. High-Use Projects- those deep- and shallow-draft navigation projects with one million tons or greater, and those waterways with both one million tons or greater and one billion system ton-miles or greater. V-8

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EC 11-2-187 10 May 06 b. Project Condition Surveys - those hydrographic surveys needed to determine the program year conditions of projects in caretaker status or that are not funded separately. This work does not include testing, sampling or any other activity that should be included in a specific project funded budget package. The PCS items will be by state and will indicate the total number of projects that could be surveyed and the number of projects that will be performed as part of the line item. All PCS will not be included in a single line item. b. Water/Environmental Certification - those activities needed to acquire certification in the PY to allow dredging to proceed that are not funded separately. This work does not include any activity that sheuld be included in a specific project funded budget package. The Certification items will be by state and will indicate the total number of projects that could be certified and the number of certifications that will be performed as part of the line item. This will be handled like the PCS line items. All Certifications will not be included in a single line item. c. Subsistence Harbors - those harbors that are dependent upon the navigation project as there principal means of receiving goods and services, and for which alternative means of delivery are not practicable. An example would be Tangier Island off the coast of Virginia or the Channel Islands off the California coast. d. Critical Harbors of Refuge - those harbors that offer safe haven to boaters that represent the sole site for' protection based on a public safety based regional distance criteria. Authorization as a Harbor of Refuge does not automatically make a harbor critical. e. Caretaker Activities - There are inland navigation systems and projects that will not be funded. Some minimal level of funding will be required to place these projects in a caretaker mode. We should address concern for the public's health and safety, environmental impacts resulting from full cessation of operations and how best to address them, review legal requirements placed on that project and ensure that litigation issues are addressed in a caretaker plan, review any unintended consequences on other waterways, and establish a communication plan to include messages, FAQ, roll out strategy, web site information, and draft media release, Caretaker status is an extremely low level of funding for minimal effort. V-11. Low-Use Navigation Sub-Program. a. The performance indicators include three indicators that flag work on low-use navigation features. These are: (1) Waterway project has less than 1 billion system ton-miles of commercial cargo annually; (2) activity is for a waterway segment, upstream of which less than 1 million tons of cargo move annually; and (3) harbor projects have less than 1 million tons of commercial cargo annually. Activities meeting both criteria (1) and (2) will be included as a low-use waterway segment. Activities meeting criterion (3) will be included as a low-use harbor channel. For this sub-program, use the additional performance criteria provided in Table V-4 for assisting in the evaluation of activities and projects.

V-9

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EC 11-2-187 10 May 06 TABLE V-4 Low-Use Navigation Channels and Low-Use Waterway Segments Subprogram Low-Use Nav channels Low-Use Waterway segments SCREEN SCREEN Indicators Minimum <1 million tons <1 million tons on systems with < 1 billion system ton-miles 5-Year Avg cost perton 5-Year Avg cost per ton commercial fishery outputs Indicators Return on investment Indicators Public health and safety Indicators Indicators

Purpose Public transportation Caretaker investment issues

Multipurpose Public BCR health and based on values savings per safety ton table

Low-Use Harbor Channels Minimum: Supports some, commercial fishery output; Supports public transportation (ferries, tour boats); Ensures boater safety (inlet dredging to reduce breaking wave hazards); Project costs yield outputs / benefits exceeding costs; Purpose should reflect results of investment (so what). Low-Use Waterway Segments Minimum: Compute BCR based on transportation savings (average tons per year table); Supports other business line purposes (flood damage reduction, recreation, environmental, water supply, etc.); Port investment status (recent or planned port expansion/investments); Commercial tonnage trends upward; Ensures basic public health and safety; Caretaker costs for non-budgeted segments. b. Regional Navigation Needs Funding. For those low-use navigation projects that do not compete well on an individual basis and so are a lower priority, but combined together provide significant benefits to a region, each MSC where appropriate will link the individual projects together in a regional item to combine the merits of those projects for a region. For example, the South Oregon Coast Ports could "pool" their funding requirements to be treated as a single item. Thus, although all individual ports on the Oregon will not be funded for all their needs, a minimum amount could be provided to address the most critical needs for the region in the PY and issued to the most critical needs at the time of execution. Port A, B and C may be funded in PY while Ports D, E and F would anticipate funding in BY+I. The linkage of individual projects in a regional-type evaluation must be done in a rational way. This is not a gambit to get additional funds for projects that do not merit it. Other examples are the Great Lakes ports, the New England coastal harbors, the Gulf coast harbors, and the South Atlantic coast. The association of the projects into regions should be included in the Purpose, Consequences and Remarks columns so HQUSACE can make a proper evaluation. V-12. Joint Costs. See Annex C, Paragraph C-2.3.b. for Joint Activities - Joint Costs. V-lO