At monthly meetings of the Southeast Louisiana Flood Protection Authority-East, the executive director conducts a surprising routine: He reports on the progress of construction of the $14.5 billion New Orleans levee system.

It’s remarkable because most people think the U.S. Army Corps of Engineers finished building the system almost two years ago, an impression the news media and the corps has helped spread.

But Bob Turner’s reports, which can run to several pages, often include items not finished, not working properly, or under repair in parts of the system that the corps says it has not only completed, but actually belong to the state.

This monthly exercise highlights a standoff between the state — the Flood Protection Authority and the Coastal Protection and Restoration Authority — and the corps over when ownership of the system transfers from the federal government to the state.

[module align=”right” width=”half” type=”pull-quote”]The Flood Protection Authority maintains that accepting a storm defense system one piece at a time would be like buying a car one part at a time. It won’t take ownership of anything until all the pieces of the system are working properly at the same time.[/module]The corps says the state becomes the owner of any single piece of the 133-mile system when the corps determines that it’s complete. Since July 2007 the corps has issued 92 notices of completion for pieces of the hurricane protection system. Another 55 are moving toward completion.

“When we issue the NCC [Notice of Contract Complete], we’re done — it’s theirs, they own it,” said Ken Holder, chief of public affairs for the corps’ New Orleans district. “It’s the way we have always done things. They knew that going in.”

The Coastal Protection and Restoration Authority, the state’s official partner with the corps on this project, disagrees.

The agency maintains that accepting a storm defense system one piece at a time would be like buying a car one part at a time. It won’t take ownership of anything until all the pieces of the system are working properly at the same time.

“We don’t want to accept one piece now, and by the time we accept the last piece, the first one isn’t working – and we’re on the hook for the repairs,” said Tim Doody, president of the Flood Protection Authority’s governing board.

“They’re being paid to build a system,” he said. “That’s what we’ll accept.”

92Pieces pieces of the system complete55More headed to completion

The debate is about more than semantics. Once the Flood Protection Authority has ownership, it will be responsible for an annual $34 million operation and maintenance tab. It could also be responsible for billions in repairs and levee lifts as the delta continues to subside in the decades ahead. And under the state’s current system for paying these bills, most of those costs would fall on the metro-area property owners the system protects.

The delaying tactic benefits the state; the longer it waits, the more money it saves. And those savings could add up for a project that likely won’t be finished for several more years.

The permanent pumping stations at the mouths of the outfall canals are part of the system; construction for those isn’t expected to be finished until at least 2017. So if the levee authority wins its argument, the corps could be on the hook for 10 years worth of repairs to some sections before the levee authority finally takes responsibility.

Each side claims the contract they signed in 2008, called the Project Partnership Agreement, supports its case.

The corps points to a section that states that when the corps determines even a “functional portion” of the project is complete, the local sponsor (in this case the state coastal authority) “shall operate, maintain, repair, rehabilitate, and replace the entire New Work, or the functional portion of the New Work as the case may be.”

But in a letter to the corps in June 2012, Garret Graves, head of the state coastal authority, claimed the partnership agreement must be read in conjunction with terms laid out in the federal law that funded the system. That law, Graves said, talks only about the “project,” not about sections or individual contracts.

Further, he said that because the project is a perimeter system designed to protect the entire metro area, no one part can be considered “functional” because that part alone would not provide complete protection.

When asked to respond to Graves’ points, Holder simply repeated the corps’ position. “The only thing I can say is, this is the way we have always done business; read the contract,” he said.

The contract allows for non-binding arbitration when partners have a dispute. However, in an email Graves said he the state has been disappointed in that process in the past, and would consider other avenues, including the courts.

Levee authority handling maintenance, but larger costs loom

Despite the standoff, the local levee authority is handling routine maintenance — cutting grass on levees and looking out for problems — on each section of the system that the corps says is complete.

“We want to do that because it’s our responsibility to keep the people in this area safe and, frankly, no one can do this better than us,” the flood authority’s Bob Turner said. “Our guys are trained to look for problems as they cut the grass and keep things in shape.”

The authority also has worked closely with the corps during storms to operate the more than 250 gates that seal the system from storm surge.

“When we issue the NCC [Notice of Contract Complete], we’re done — it’s theirs, they own it. … It’s the way we have always done things. They knew that going in.”—Ken Holder, U.S. Army Corps of Engineers

That’s the “O” and “M” — operation and maintenance — part of the OMRR&R that the contract calls for the owner to handle. But it’s the three R’s — repair, rehabilitation and replacement — that the state is trying to put off until the whole system is complete. That’s where the heavy costs will come in.

In fact, in the years that some sections have been finished, the corps has made a number of mostly minor repairs, dealing with everything from rusting metal to sinking parking lots. The corps was quick to rebuild a 4,000-foot stretch of earthen levee in eastern New Orleans this year that subsided below design height years sooner than expected.

That repair cost the corps $1.5 million, illuminating perhaps the gravest concern behind the state’s position in the ownership dispute: As the land sinks and the sea rises in the coming decades, who will pay to keep the system at design height?

System must be upgraded to deal with subsidence, sea-level rise

The contract specifically states that is not the state’s responsibility to restore the storm protection system “to the authorized level of protection to account for subsidence or sea level rise as a part of its responsibilities.”

But the agreement doesn’t say the corps must do that work, either.

More worrisome for the state, the legislation authorizing the hurricane protection system does not provide funding for the corps to deal with that issue, either — a departure from previous practice.

The state’s congressional delegation has been working to make sure the Water Resources Development Act, currently being written, instructs the corps to do that work. So far lawmakers have been unsuccessful.

If that doesn’t change, finding the hundreds of millions of dollars to repair the sinking levees and floodwalls in the future will fall to the state, or local property owners, by default. And that’s another reason the state and the local levee authority want to delay accepting ownership of the system as long as possible.