THE SECRETARY OF THE ARMY

1. I submit for transmission to Congress my report on navigation improvements for the Sabine-Neches Waterway (SNWW) in Southeast Texas and Southwest Louisiana. It is accompanied by the report of the Galveston District Engineer and the Southwestern Division Engineer. These reports are in response to a Congressional resolution adopted on 5 June 1997 by the Senate Committee on Environment and Public Works. The committee requested a review of the reports on the SNWW and other pertinent reports to determine the feasibility of modifying the channels serving the ports of Beaumont, Port Arthur, and Orange, Texas in the interest of commercial navigation. Pre-construction engineering and design activities for this proposed project, if funded, would be continued under this authority. The existing SNWW 40-Foot Navigation Project was authorized by the River and Harbor Act of 1962 and construction of the project was completed in 1968.

2. The report recommends a project that will contribute to the economic efficiency of commercial navigation. The SNWW is a system of navigation channels that have been superimposed upon the Sabine-Neches estuary in Texas and Louisiana. The study evaluated navigation and environmental problems and opportunities for the entire estuarine system, which is defined as the study area. The study area encompasses a 2,000-square-mile area, which contains the smaller project area that includes those areas that would be directly affected by the construction of the project (i.e. the dredging footprint, existing and proposed placement areas, and mitigation areas). The study area includes the following water bodies and adjacent coastal wetlands: Sabine Lake and adjacent marshes in Texas and Louisiana, the Neches River channel up to the new Neches River Saltwater Barrier, the Sabine River channel to the Sabine Island Wildlife Management Area, the GIWW west to Star Bayou, the GIWW east to Gum Cove Ridge, the Gulf shoreline extending to 10 miles either side of Sabine Pass, and 35 miles offshore into the Gulf of Mexico.

3. The reporting officers recommend the Locally Preferred Plan (LPP) to modify the existing SNWW. The LPP consists of the following improvements:
a. Deepen the SNWW from 40 to 48 feet and the offshore channel from 42 to 50 feet in depth from offshore to the Port of Beaumont Turning Basin;
b. Extend the 50-foot deep offshore channel by 13.2 miles to deep water in the Gulf, increasing the total length of channel from 64 to 77 miles;
c. Taper and mark the Sabine Bank Channel from 800 feet wide to 700 feet wide;
d. Deepen and widen Taylor Bayou channels and turning basins;
e. Ease selected bends on the Sabine-Neches Canal and Neches River Channel;
f. Construct new and enlarge/deepen existing turning and anchorage basins on the Neches River Channel.
Dredged material placement for this project would be provided in accordance with the Dredged Material Management Plan (DMMP) developed during the study. Deepening of the SNWW would generate approximately 98 million cubic yards of new work material and 650 million cubic yards of maintenance material over the 50-year period of economic evaluation. Material from the extension channel, Sabine Bank Channel, Sabine Pass Outer Bar Channel, and Sabine Pass Jetty Channel would be placed offshore, either in existing placement areas or newly designated sites. Material from the inland reaches would be placed in existing confined, upland placement sites adjacent to each reach. Expansion of some existing upland sites would also be required. Some dredged material from the inland reaches would be used beneficially to restore large degraded marsh areas on the Neches River and nourish the Gulf shoreline at Texas and Louisiana Points.

4. As discussed further in the report of the Galveston District Engineer and the Southwestern Division Engineer, the recommended plan includes preliminary conclusions that 41 pipelines located within the SNWW Channel must be relocated and are classified as utility relocations for which the non-Federal sponsor must perform or assure performance. In accordance with Section 101(a)(4) of the Water Resources Development Act (WRDA) of 1986, as amended, one-half of the cost of each such relocation will be borne by the owner of the facility being relocated and one-half of the cost of each such relocation will be borne by the non-Federal sponsor. All relocations, including utility relocations, are to be accomplished at no cost to the Federal Government. The recommended plan also includes preliminary conclusions that there are an additional 5 pipelines that must be removed but not replaced. The Government, in coordination with the non-Federal sponsor, will conduct further analysis and finalize its conclusions during the period of pre-construction engineering and design.

5. Environmental benefits of the Neches River beneficial use (BU) features would offset all environmental impacts in the state of Texas and on all Federal lands, by restoring 2,853 acres of emergent marsh, improving 871 acres of shallow water habitat, and nourishing 1,234 acres of existing marsh in Texas. After consideration of project impacts in Texas and on Federal lands in the project area, the Neches River BU features will provide a net increase of 316 Average Annual Habitat Units (AAHUs). The Gulf Shore BU features would offset minor erosion impacts to Gulf shorelines in Texas and Louisiana by periodically nourishing three miles of shoreline in each state. Unavoidable environmental impacts on non-Federal lands in Louisiana would be fully compensated by restoring 2,783 acres of emergent marsh, improving 957 acres of shallow water habitat, and stabilizing and nourishing 4,355 acres of existing marsh. These actions will provide 1,181 AAHUs to compensate for a loss of 1,159 AAHUs in Louisiana. Post-construction monitoring and adaptive management plans for the BU features and mitigation areas will be required until such time that the following performance criteria are met, as determined by the Division Commander: (1) Each mitigation site and the Neches River BU features have an aerial coverage of 60 to 80 percent native, typical, emergent marsh vegetation; and invasive noxious and/or exotic plant species comprise less than 4 percent of mitigation site marsh coverage; (2) Texas Point BU feature shows a decreased erosion rate averaging less than 44 ft/yr after two disposal events; and (3) Louisiana Point BU feature shows an accretion rate averaging more than 1.2 ft/yr after two disposal events.

6. There commended navigation project is not the National Economic Development (NED) plan. The recommended SNWW improvement is shallower and will be less costly than the NED plan and is the LPP supported by the non-Federal sponsor. The Sabine-Neches Navigation District is the non-Federal cost-sharing sponsor.

7. Project Cost Breakdown Based on October 2010 Prices.
a. Total First Cost of Constructing Project. The estimated total first cost of constructing the project is $1,053,000,000 which includes the cost of constructing the general navigation features and the value of lands, easements, rights-of-way, and relocations estimated as follows: $894,500,000 for channel modification and dredged material placement; $79,000,000 for environmental mitigation; $52,800,000 for bridge fender modifications; $1,270,000 Federal cost for cultural resources; $774,000 for additional Corps administrative costs; $3,690,000 for the value of lands, easements, rights-of-way, and relocations (except utility relocations) provided by the non-Federal sponsor; and $21,300,000 for the one-half of the cost of utility relocations borne by the non-Federal sponsor pursuant to Section 101(a)(4) of WRDA 1986, as amended.

b. Estimated Federal and non-Federal Shares. The estimated Federal and non-Federal shares of the total first cost of constructing the project are $707,000,000 and $345,990,000, respectively, as apportioned in accordance with the cost-sharing provisions of Section 101 of WRDA 1986, as amended, as follows:
(1) The costs for the deepening of the channel from 40 to 45 feet will be shared at the rate of 75 percent by the Government and 25 percent by the non-Federal sponsor. Accordingly, the Federal and non-Federal shares of the estimated $772,000,000 cost in this zone will be approximately $579,000,000 and $193,000,000, respectively, with the difference of $1,270,000 being the Federal cost for cultural resources.