WASHINGTON (AP) _ The first independent review of a $1 billion proposal to expand locks on the upper Mississippi River finds the project is not needed and that the Army Corps of Engineers is using flawed assumptions in its study favoring the costly construction, according to a source familiar with the report.

The report, prepared by a panel of economists unrelated to players in the controversy over whether top military officials at the corps manufactured a case for the project, is to be released Thursday by the Northeast-Midwest Institute.

``It's critical of the corps,'' the Institute's George Dusenbury said Tuesday. He would not provide any other details.

But a source knowledgeable about the report, who spoke on condition of anonymity, said the economists concluded the corps' estimates for future grain exports _ which largely drive the amount of barge traffic on the river and thus the need for larger locks to reduce congestion _ were way too high.

``What it says is that the whole study is based on demand projections that are unsupportable,'' the source said.

The institute asked three economists _ Yale University's Steven Berry, Geoffrey Hewings of the University of Illinois, and Washington University's Charles Leven _ to review the corps' 7-year-old, $54 million study of what modernizations are needed on the aging upper Mississippi River navigation system. None is connected to the corps, the agribusiness industry which favors locks expansion or environmental groups that oppose it, Dusenbury said.

The report was commissioned months before a whistleblower alleged in February that top corps officials altered his original conclusions to favor doubling the length of seven barge locks on the upper Mississippi and Illinois rivers at a cost of $1 billion.

The sworn affidavit filed by corps economist Donald Sweeney prompted still-ongoing investigations by the Army inspector general, the National Academy of Sciences and several members of Congress.

Corps officials have repeatedly denied wrongdoing, saying new data _ not foul play _ has caused the study to change. The not-yet-finished study and its construction recommendations are due out this summer.

Shipping interests predict increasing traffic on the river means massive expansions to the navigation system are crucial to ensuring that barges have faster, cheaper trips and Midwestern grain is able to compete on the global market.

Environmentalists argue the corps is too attentive to the needs of politically connected agribusiness companies to the detriment of the river's fragile ecosystem. They say the region cannot handle more large-scale changes without serious losses in habitats and fish and bird populations.

Meanwhile, corps and Army officials told a Senate subcommittee Tuesday that Congress has given a green light to $38 billion worth of navigation, flood control and other water construction projects without providing the corps with the funding to do the work.

The enormous backlog _ the corps receives about $1.6 billion a year for civil works construction _ is only expected to increase as members of Congress approve more new projects. The shortfall involves about 500 projects.

``The needs are not going away,'' said Sen. George Voinovich, R-Ohio, chairman of the Senate Environment and Public Works subcommittee on transportation and infrastructure. ``It's obvious we need another billion at least.''


On the Net: Army Corps: http://www.mvr.usace.army.mil/pdw/nav_study.htm

Environmental Defense: http://www.edf.org/programs/Ecosystems/mississippi