Authority of Water Resources Council to Adopt Standards and Criteria for Calculation of Primary Direct Navigation Benefits of Water Resources Project

Opinion

December 21, 1979

79-88 MEMORANDUM OPINION FOR THE DIRECTOR, UNITED STATES WATER RESOURCES COUNCIL Department of Transportation Act of 1966 (49 U.S.C. § 1656(a))—Water Resources Council— Calculation o f Primary Direct Navigation Benefits o f a Water Resources Project (§ 7(a) of the Act)

This responds to your request for our opinion whether the factors set forth in the formula for determining the primary direct navigation benefits o f a water resource project, second paragraph o f § 7(a) o f the Department o f Transportation Act o f 1966, 49 U.S.C. § 1656ta) (1976), are exclusive. Your question, as we understand it, is whether the W ater Resources C oun­ cil (Council) may provide in its standards and criteria for economic evalu­ ation o f water resource projects that factors in addition to those specific­ ally set forth in the formula may be considered in the determination of primary direct navigation benefits. With the caveats that the formula does not address costs or benefits other than primary direct navigation benefits, we believe that its factors are exclusive. Therefore, the Council may not adopt standards and criteria directing such benefits to be calculated in a manner different from that dictated by the formula.

Section 7(a) provides, in relevant part:

The standards and criteria for economic evaluation o f water resource projects shall be developed by the Water Resources Council established by Public Law 89-80. For the purpose o f such standards and criteria, the primary direct navigation benefits o f a water resource project are defined as the product o f the savings to shippers using the waterway and the estimated traffic that would use the waterway; where the savings to shippers shall be construed to mean the difference between (a) the freight rates or charges pre­ vailing at the time o f the study for the movement by the alternative means and (b) those which would be charged on the proposed waterway; and where the estimate o f traffic that would use the waterway will be based on such freight rates, taking into account projections o f the economic growth of the area.

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The language concerning primary direct navigation benefits is clear. The benefits “ are defined as” and the definition that follows is set out in a for­ mula precise enough to be reduced to a mathematical statement. Thus, “ Primary Direct Navigation Benefit = Traffic (Prevailing Nonwater Rates minus Projected W ater Rates).” 1 We do not know o f any principle o f statutory construction permitting the Council to vary so unambiguous a definition by adding to it, unless its legislative history were to show un­ equivocally a contrary intent on the part o f Congress. The legislative history shows the opposite.

The definition o f primary direct navigation benefits was added to S. 3010, 89th Cong., 2d sess. (1966) by amendment o f the Senate Committee on Government Operations, after its hearings on that bill. As introduced, S. 3010 and the corresponding House bill H .R. 13200, 89th Cong., 2d sess. (1966), would have allowed the Secretary o f Transportation, after con­ sultation with the W ater Resources Council, to establish the standards and criteria for economic evaluation o f the transportation aspects o f water resource projects.2 The proposal, placing such authority in the Secretary rather than the Council, and permitting the executive rather than the C on­ gress to establish the standards and criteria for economic evaluation o f navigational benefits, encountered a hostile reception at both the House and Senate hearings from interested witnesses and communicants and also

'T he term “ estimated traffic” is not precisely defined by the statute. It is an estimate that must take into account both the water rates and the projected economic growth in the area to be served by the water project. In addition, it must apparently also include the projected useful life for the transportation facilities o f the project. During the Senate hearings some dissatisfaction was expressed concerning a then-recent decision o f the Corps o f Engineers to reduce from 100 years to 50 years the life expectancy o f transportation-related water resource projects for the purpose o f calculating cost-benefit ratios. Hearings on S. 3010 before the Senate Committee on Government Operations (Part 4), 89th C ong., 2d sess. 654 (1966) (Statement o f Senator M undt). However, section 7(a) itself does not establish a lifespan for water transportation facilities.

JAs originally presented, S. 3010, an Adm inistration bill, provided in its § 7(a), inter alia, that:

The standards and criteria for economic evaluation o f the transportation features o f multipurpose water resource projects shall be developed by the Secretary after consulta­ tion with the W ater Resources Council, and shall be compatible with the standards and criteria for economic evaluation applicable to nontransportation features o f such pro j­ ects. [Senate Hearings, supra (Part 1) at 21.]

The House version, as introduced as H .R . 13200, 89th Cong., 2d sess. (1966), contained identical language. Creating a D epartm ent o f Transportation: Hearings on H.R. 13200 before the House Com mittee on Governm ent O perations (Part 1), 89th Cong., 2d sess. 20 (1966). The bill H .R . 15963, as reported out by the House committee, contained no m ention o f standards and criteria for economic evaluation o f m ultipurpose water resource projects, except to exempt such projects from the jurisdiction o f the Secretary o f T ransportation for such purposes. Am ong the stated reasons for striking the language, was that “ [tjhe com m it­ tee has been inform ed that the Com mittee on Public W orks o f the House o f Representatives is now considering whether to hold hearings dealing with the evaluation o f benefits in con­ nection with inland waterway projects.” H . Rept. 1701, 89th C ong., 2d sess. 18 (1966) (House Report).

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from a num ber o f Members o f Congress. Hearing on S. 3010 before the Senate Committee on Government Operations, 89th Cong., 2d sess. passim (1966) (Senate Hearings); Creating a Department o f Transporta­ tion: Hearings on H.R. 13200 before the House Committee on Govern­ ment Operations, 89th Cong., 2d sess. passim (1966) (House Hearings). The Senate Committee took cognizance o f these objections.

At the Senate hearings a num ber o f witnesses and several Senators pointed out that on November 20, 1964, the Corps o f Engineers, at the direction o f the Bureau o f the Budget, had modified the existing formula for computing primary direct navigation benefits. Previously, the Corps o f Engineers determined savings to shippers by comparing the anticipated water rate to the prevailing rates charged on other modes o f transportation at the time o f the determ ination. The new m ethod involved comparing the water rate to projected rates which the competing modes o f transportation could be expected to adopt to meet the com petition from the water proj­ ect. It was pointed out to the Senate committee, and noted, e.g., 112 C o n ­ g r e s s i o n a l R e c o r d 24375 (1966) (remarks o f Senator McClellan), that no proposed water project had met the test o f the new formula since its is­ suance in 1964. Although the committee was informed, during the pen­ dency o f the hearings (see Senate Hearings (Part 3) at 474 (remarks of Senator Harris)), that the Bureau o f the Budget had reconsidered and reinstated the pre-1964 formula, it decided, in the words o f its report, to “ establish a definition o f primary direct navigation benefits o f water resource projects, thus restoring the criteria followed by the Corps of Engineers prior to November 1964, when the Bureau issued new criteria for the evaluation o f such projects.” S. Rept. 1659, 89th Cong., 2d sess. 13 (1966) (Senate Report). The committee “ deemed” such a definition “ necessary in order to insure that future projects will be evaluated on the same basis as those which have resulted in the development o f this N ation’s outstanding system o f inland navigation which has served so well in peace and w ar.” Senate Report at 14. The intent o f the committee and the Senate is best summed up by a statem ent made during the floor debate by Senator Jackson, a member o f the Senate Committee on Government Operations and a supporter o f the committee amendment:

We have not only negated the 1964 directive o f the Bureau o f the Budget but we have, by statute, also written into section 7 what the criteria are, should be, and must be, in connection with water navigation projects. Much o f that, in the past, has been o f a policy nature. We have now, by statute, made clear that we insist the policy be that o f the executive branch prior to the directive o f the Bureau o f the Budget o f 1964. [112 C o n g r e s s i o n a l Re c ­ o r d 24380 (emphasis added).]

Nothing else in the legislative history o f the definition indicates that the Senate intended it to be interpreted differently. Rather, the hearings, the debate, and the Senate report all confirm that Senator Jackson’s interpreta­ tion o f the Congressional intent underlying the definition is the correct one.

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The version o f the Transportation Act that passed the House did not contain a definition o f primary direct navigation benefits.3 The conference committee, however, adopted the Senate definition without modification. H. Conf. Rept. 2236, 89th Cong., 2d sess. 27 (1966). Nothing further in the conference report, or in the House debate, indicates that the House in­ terpreted the definition any differently than the Senate.

In sum, the legislative history demonstrates that Congress intended to establish by statute the pre-1964 method for computing primary direct navigation benefits so that the executive could not vary it. Congress be­ lieved that the formula set forth in § 7(a) specified this method. Thus, any attem pt to vary that formula by adding extraneous factors would violate not only the text o f § 7(a), but also its intent—that o f freezing the defini­ tion of primary direct navigation benefits as it existed (in Congress’ inter­ pretation) prior to November 1964.

The definition speaks only to primary direct navigation benefits and it is silent concerning the m ethod for determining other benefits of m ultipur­ pose water resource projects and for determining costs. It is clear from the legislative history that Congress realized that primary direct navigation benefits were not the only benefits associated with most water resources projects.4 Thus, the definition in the second paragraph o f § 7(a) does not prevent the Council from considering, in establishing its overall standards and criteria for economic evaluation o f water resource projects, other benefits in addition to primary direct navigation benefits.5

Leon U lm an

D eputy Assistant A ttorney General Office o f Legal Counsel

1See n. 2, supra. 'W e have reviewed the legal m em orandum prepared by the National Wildlife Federation in 1977 which you made available. We believe that the cited evidence does not support an o p ­ posite conclusion but only establishes that Congress recognized other types o f benefits.

’For examples o f recognized benefits o f water resource projects that are not classified as primary direct navigation benefits, see S. Doc. 97, 87th C ong., 2d sess. 8-10 (1962), a docu­ ment entitled “ Policies, Standards, and Procedures in the Form ulation, Evaluation, and Review o f Plans for Use and Development o f W ater and Related Land Resources.” This docum ent, prepared by the President’s W ater Resources Council, was m entioned frequently during both the House and Senate hearings and is alluded to in the House Report.