Is the $300 million cost of deepening the Delaware River shipping channel five feet worth it?
A new 62-page report by the Government Accountability Office does not conclusively settle the question and has left both sides in the dispute claiming that their positions have been validated.
The GAO said the U.S. Army Corps of Engineers had addressed many "limitations" and corrected errors identified in 2002 about deepening the channel to 45 feet.
But, the report added, "several issues" remain. Sen. Frank Lautenberg (D., N.J.), chairman of a U.S. transportation and Merchant Marine subcommittee, requested the report, which was posted late last week on the GAO's Web site.
Lautenberg and other top elected New Jersey officials have opposed the deepening, citing environmental and economic concerns.
Lautenberg's office said Saturday "it's good news" the Army Corps corrected problems the GAO initially had identified with the project.
But the report also pointed out that "market conditions have changed and suggests that Army Corps figures may need to be updated to provide the best cost analysis," Lautenberg spokesman Caley Gray said. "The math is still not crystal clear on the economics, but on the environmental side, the senator remains strongly opposed to potentially toxic dredge material being sent to New Jersey."
"There is nothing in the GAO's final report that even approaches a deal breaker," countered Corps spokesman Ed Voigt. "We plan to continue forward with the channel deepening, absent of court intervention and subject to congressional funding."
Delaware RiverKeeper Maya van Rossum said the GAO had confirmed the project was "still flawed" and the corps had "not provided an accurate picture" of the ramifications for the region. "We are all left with a lot more questions than answers."
Work on deepening the channel began March 1 and continues in a 12-mile section in Delaware. The 102.5-mile project will end in Philadelphia.
The corps' economic analysis shows a $1.35 return on investment for every $1 dollar spent, with average annual benefits of $24.2 million over 50 years. The benefits come from transportation cost savings associated with importing commodities: crude oil, containerized cargo such as refrigerated meat, and dry bulk commodities such as steel slabs and blast-furnace slag used to make cement.
Crude-oil savings account for about half the benefits, with containerized cargo accounting for an additional one-quarter, the report said.
The GAO recommended that the corps take another look at "relevant market and industry changes" on the "net-benefit estimate." It also recommended the corps "develop guidance" for improving the public notice and comment process for future controversial projects.
In a letter attached to the report, Jo-Ellen Darcy, assistant secretary of the Army for civil works, said the corps would update its assessment of "relevant market and industry trends" on the project benefits.
The GAO criticized the corps' economic updates, saying they did not analyze recent changes in Delaware River crude-oil refining, as well as lower long-term forecasts for East Coast refinery capacity and U.S. imports of crude oil.
In the fall, two major refinery facilities closed on the river, and steel imports have been down since 2006 because of the weak economy.
Despite the downturn, crude-oil refineries remain "strong supporters of the deepening project," the GAO said.
Jane Nogaki of the New Jersey Environmental Federation said the report confirmed "what environmentalists have said all along" - the benefits are not substantiated, and the "risks to drinking water and the environment remain."
Said Voigt, the corps spokesman: "Just as with the first GAO report in 2002, project opponents are claiming that the GAO has once again exposed the project as flawed. And just as before, they're wrong."