US engineers seek private funds to plug infra gap

With a $500 million annual budget meant to tackle an authorised $60bn pipeline of projects, the US Army Corps of Engineers is contemplating new funding models.

There may be no shortage of privates in the US Army Corps of Engineers (USACE), but the body is faced with is a serious lack of funding to meet its infrastructure investment mission.

According to Steve Stockton, director of civil works at USACE's headquarters in Washington DC, authorised projects currently represent roughly 120 years' worth of corps capacity, with only about $500 million per year in the Corps' budget set aside for new investments into water infrastructure.

“We have about $60 billion in authorised projects chasing half a billion dollars,” he told a crowd of developers at a recent industry forum. As a result, he said, America's competitiveness is eroding. 

He noted that on a recent visit to China, he toured the 2.5 gigawatts (GW) Three Gorges Dam, a project with more capacity than the combined portfolio of 75 USACE hydro assets. What's more, Stockton said, China plans to invest $268 billion over the next seven years into 172 different water projects.

“It's absolutely amazing the work they're doing and the investments they are making, and coming back to the US, we think we're kind of an exceptional society, we've got the best of everything. Well, tell you what […] we're falling way behind.”

That isn't to say that the corps is fully floundering, however. Stockton said that with a total budget of about $5 billion per year – $500 million for new investments, $500 million for major rehab projects, and roughly $3.5 billion in operations and maintenance costs – about $112 billion in economic development benefit is created, with about $34 billion of that making its way back to the US Department of the Treasury. 

“The numbers are just staggering in terms of the value that we provide the economy and to the Treasury, but we don't get to keep any of the money that we produce; we have to compete for it from the federal appropriations process,” Stockton said. “And that is why we're looking at a 21st century model to fund 21st century infrastructure, because the 20th century model that we've been using, it's not working.”

Stockton said USACE is responsible for overseeing roughly 13,000 miles of navigable waterways, over 1,000 ports, 700 dams, 242 lock chambers, 59 major harbours, and 75 hydro plants. And while the corps is currently working with Congress in order to remove 14 projects worth a combined total of $23 billion from the authorised list, there's still a huge need for alternative funding sources in order to shore up America's aging water infrastructure. 

One major step taken to help tackle the problem is the Water Resources Reform and Development Act (WRRDA), passed into law in 2014. WRRDA created a 3-3-3 method limiting project pre-construction review to three years and $3 million with a requirement that at least three separate agencies are concurrently, rather than sequentially, performing their evaluations. This after years of horror stories, such as one project that racked up more than $40 million in pre-construction costs, taking more than 20 years to reach a conclusion.  

Currently, USACE is involved in a handful of pilot projects that work within its limited authorities, including a flood risk reduction project that Stockton did not name but said could benefit from $400 million in savings and a six-year delivery timeframe. This would be achieved through the use of a public-private partnership, non-federal sponsorship or a cost-sharing programme. 

“It has a lot of merit to it but it's trying to get people to see things differently, and how to leverage non-federal investment with federal investment-private investment for contribution to public good,” Stockton said. 

While there is currently little appetite to develop hydro assets in the US, due to the oil price slump, Stockton said that he was recently told by Federal Energy Regulatory Commission (FERC) chairman Cheryl LaFluer that there is currently about 12 GW of hydro in the US available for exploitation. He also said that the Corps currently owns about 12 million acres of land adjacent to its projects that could be better utilised.

“We're trying to create a resilient, reliable, sustainable 21st century water resources infrastructure, and we need all of your help.”