Corps of Engineers Modernization and Improvement Act of 2005

Corps of Engineers Modernization and Improvement Act of 2005 - Amends the Flood Control Act of 1970 to require: (1) the Secretary of the Army to revise the planning guidelines, regulations, and circulars of the Corps of Engineers to comply with specified requirements, including encouraging ecosystem restoration through the restoration of hydrologic and geomorphic processes; and (2) the Corps to develop and at least every four years update an integrated national plan to manage, rehabilitate, and modernize inland waterway and port infrastructure to meet national economic and environmental needs.

Directs the Secretary to ensure that each feasibility report, general reevaluation report, and environmental impact statement of a water resource project is subject to review by an independent panel of experts if: (1) the project has an estimated total cost of more than $25 million; (2) the Governor of an affected State requests such review; (3) the head of a Federal agency charged with reviewing the project determines that it is likely to have a significant adverse impact; or (4) the Secretary determines that the project is controversial. Directs the Inspector General of the Army to appoint a Director of Independent Review to establish panels of experts to review water resources projects. Sets forth review guidelines and requirements.

Permits the Secretary to recommend a project for congressional authorization only if it has projected national benefits that are at least 1.5 times as great as the estimated total project costs. Requires the Secretary to identify for deauthorization those projects whose projected remaining benefits do not meet that threshold.

Sets forth revised provisions governing cost sharing for operation and maintenance of inland waterways.

Establishes requirements for: (1) full mitigation of losses of aquatic and terrestrial resources, fish, and wildlife for approval of water resources projects; and (2) a record-keeping system to track mitigation for each each project constructed, operated, or maintained by the Secretary.

Requires the Chief of Engineers, annually, to submit a fiscal transparency report on Corps expenditures and projects expected to be completed. Provides for deauthorization of projects for which federal funds have not been obligated over specified periods.