Wetlands Protection
Corps of Engineers Does Not Have an Effective Oversight Approach to Ensure That Compensatory Mitigation Is Occurring Gao ID: GAO-05-898 September 8, 2005Because wetlands provide valuable functions, the administration set a national goal of no net loss of wetlands in 1989. Section 404 of the Clean Water Act generally prohibits the discharge of dredged or fill material into waters of the United States, which include certain wetlands, without a permit from the U.S. Army Corps of Engineers (Corps). To help achieve the goal of no net loss, the Corps can require compensatory mitigation, such as restoring a former wetland, as a condition of a permit when the loss of wetlands is unavoidable. Permittees can perform the mitigation or pay a third party--a mitigation bank or an in-lieu-fee arrangement--to perform the mitigation. GAO was asked to review the (1) guidance the Corps has issued for overseeing compensatory mitigation, (2) extent to which the Corps oversees compensatory mitigation, and (3) enforcement actions the Corps can take if required mitigation is not performed and the extent to which it takes these actions.
The Corps has developed guidance that establishes two primary oversight activities for compensatory mitigation: requiring the parties performing mitigation to periodically submit monitoring reports to the Corps and conducting compliance inspections of the mitigation. However, parts of the guidance are vague or internally inconsistent. For example, the guidance suggests that the Corps place a high priority on requiring and reviewing monitoring reports when "substantial mitigation" is required, but it does not define substantial mitigation. Furthermore, one section of the guidance directs district officials to conduct compliance inspections of a relatively high percentage of compensatory mitigation sites, while another section designates these inspections as a low priority, leading to confusion by Corps officials. Overall, the seven Corps districts GAO visited performed limited oversight to determine the status of compensatory mitigation. The Corps required monitoring reports for 89 of the 152 permit files reviewed where the permittee was required to perform compensatory mitigation. However, only 21 of these files contained evidence that the Corps received these reports. Moreover, only 15 percent of the 152 permit files contained evidence that the Corps had conducted a compliance inspection. The Corps districts provided somewhat more oversight for mitigation performed by the 85 mitigation banks and 12 in-lieu-fee arrangements that GAO reviewed. For the 60 mitigation banks that were required to submit monitoring reports, 70 percent of the files contained evidence that the Corps had received at least one monitoring report. However, only 36 percent of the mitigation bank files that GAO reviewed contained evidence that the Corps conducted an inspection. For the 6 in-lieu-fee arrangements that were required to submit monitoring reports to the Corps, 5 had submitted at least one report. In addition, the Corps had conducted inspections of 5 of the 12 arrangements. The Corps can take a variety of enforcement actions if required compensatory mitigation is not performed. These actions include issuing compliance orders, assessing administrative penalties of up to $27,500, requiring the permittee to forfeit a bond, suspending or revoking a permit, implementing the enforcement provisions of agreements with third parties, and recommending legal actions. District officials rarely use these actions and rely primarily on negotiation to resolve any violations. In some cases, GAO found district officials may not be able to use enforcement actions after detecting instances of noncompliance because they have limited their enforcement capabilities. For example, because they did not always specify the requirements of compensatory mitigation in the permits, they had no legal recourse for noncompliance.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-898, Wetlands Protection: Corps of Engineers Does Not Have an Effective Oversight Approach to Ensure That Compensatory Mitigation Is Occurring
This is the accessible text file for GAO report number GAO-05-898
entitled 'Wetlands Protection: Corps of Engineers Does Not Have an
Effective Oversight Approach to Ensure That Compensatory Mitigation Is
Occurring' which was released on October 7, 2005.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to the Ranking Democratic Member, Committee on Transportation
and Infrastructure, House of Representatives:
September 2005:
Wetlands Protection:
Corps of Engineers Does Not Have an Effective Oversight Approach to
Ensure That Compensatory Mitigation Is Occurring:
GAO-05-898:
GAO Highlights:
Highlights of GAO-05-898, a report to the Ranking Democratic Member,
Committee on Transportation and Infrastructure, House of
Representatives:
Why GAO Did This Study:
Because wetlands provide valuable functions, the administration set a
national goal of no net loss of wetlands in 1989. Section 404 of the
Clean Water Act generally prohibits the discharge of dredged or fill
material into waters of the United States, which include certain
wetlands, without a permit from the U.S. Army Corps of Engineers
(Corps). To help achieve the goal of no net loss, the Corps can require
compensatory mitigation, such as restoring a former wetland, as a
condition of a permit when the loss of wetlands is unavoidable.
Permittees can perform the mitigation or pay a third party”a mitigation
bank or an in-lieu-fee arrangement”to perform the mitigation. GAO was
asked to review the (1) guidance the Corps has issued for overseeing
compensatory mitigation, (2) extent to which the Corps oversees
compensatory mitigation, and (3) enforcement actions the Corps can take
if required mitigation is not performed and the extent to which it
takes these actions.
What GAO Found:
The Corps has developed guidance that establishes two primary oversight
activities for compensatory mitigation: requiring the parties
performing mitigation to periodically submit monitoring reports to the
Corps and conducting compliance inspections of the mitigation. However,
parts of the guidance are vague or internally inconsistent. For
example, the guidance suggests that the Corps place a high priority on
requiring and reviewing monitoring reports when ’substantial
mitigation“ is required, but it does not define substantial mitigation.
Furthermore, one section of the guidance directs district officials to
conduct compliance inspections of a relatively high percentage of
compensatory mitigation sites, while another section designates these
inspections as a low priority, leading to confusion by Corps officials.
Overall, the seven Corps districts GAO visited performed limited
oversight to determine the status of compensatory mitigation. The Corps
required monitoring reports for 89 of the 152 permit files reviewed
where the permittee was required to perform compensatory mitigation.
However, only 21 of these files contained evidence that the Corps
received these reports. Moreover, only 15 percent of the 152 permit
files contained evidence that the Corps had conducted a compliance
inspection. The Corps districts provided somewhat more oversight for
mitigation performed by the 85 mitigation banks and 12 in-lieu-fee
arrangements that GAO reviewed. For the 60 mitigation banks that were
required to submit monitoring reports, 70 percent of the files
contained evidence that the Corps had received at least one monitoring
report. However, only 36 percent of the mitigation bank files that GAO
reviewed contained evidence that the Corps conducted an inspection. For
the 6 in-lieu-fee arrangements that were required to submit monitoring
reports to the Corps, 5 had submitted at least one report. In addition,
the Corps had conducted inspections of 5 of the 12 arrangements.
The Corps can take a variety of enforcement actions if required
compensatory mitigation is not performed. These actions include issuing
compliance orders, assessing administrative penalties of up to $27,500,
requiring the permittee to forfeit a bond, suspending or revoking a
permit, implementing the enforcement provisions of agreements with
third parties, and recommending legal actions. District officials
rarely use these actions and rely primarily on negotiation to resolve
any violations. In some cases, GAO found district officials may not be
able to use enforcement actions after detecting instances of
noncompliance because they have limited their enforcement capabilities.
For example, because they did not always specify the requirements of
compensatory mitigation in the permits, they had no legal recourse for
noncompliance.
What GAO Recommends:
GAO recommends that the Secretary of the Army direct the Corps to
establish an effective oversight approach that will ensure that
permittees and third parties are performing required compensatory
mitigation. In commenting on our report, the Department of Defense
generally agreed with GAO‘s recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-05-898.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Anu K. Mittal at (202)
512-3841 or mittala@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Corps Guidance for Oversight of Compensatory Mitigation Is Sometimes
Vague or Internally Inconsistent:
Corps Districts Perform Limited Oversight of Compensatory Mitigation:
Corps Districts Can Take a Variety of Enforcement Actions to Resolve
Violations but Rely Primarily on Negotiation:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Corps of Engineers Federal Guidance for Oversight of
Compensatory Mitigation:
Appendix III: File Review Results by Corps District:
Appendix IV: Comments from the Department of Defense:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Permit Files Reviewed at the Seven Districts, Fiscal Year
2000:
Table 2: Mitigation Banks Reviewed at the Seven Districts, November 28,
1995, through December 2004:
Table 3: In-Lieu-Fee Arrangements Reviewed at the Seven Districts:
Table 4: Results of Review of Corps Oversight of Individual Permits
Issued in Fiscal Year 2000 Where Permittees Are Responsible for
Compensatory Mitigation:
Table 5: Results of Review of Corps Oversight of Mitigation Banks
Approved from November 1995 through December 2003:
Table 6: Results of Review of Corps Oversight of In-Lieu-Fee
Arrangements Currently in Operation at the Time of Our Site Visit:
Figures:
Figure 1: Marsh in Michigan:
Figure 2: Bayou in Louisiana:
Figure 3: Wetlands Restoration Project in Washington, D.C. (Before and
After):
Abbreviations:
Corps: U.S. Army Corps of Engineers:
EPA: Environmental Protection Agency:
Letter September 8, 2005:
The Honorable James L. Oberstar:
Ranking Democratic Member:
Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Oberstar:
Wetlands such as bogs, swamps, and marshes support a number of valuable
functions--controlling floods, improving water quality, and providing
wildlife habitat, among other things. Given the value of these
functions, the administration set a national goal in 1989 of balancing
the losses and gains of wetlands to achieve no net loss of wetlands.
Each subsequent President has reaffirmed and expanded this goal to
achieve net gains of wetlands in the long term. The U.S. Army Corps of
Engineers (Corps) is responsible for processing permit applications
from individuals and businesses seeking to build driveways, houses,
golf courses, or commercial buildings or perform other activities that
could degrade or destroy wetlands on their property, and each year the
Corps approves thousands of these permit applications. The Corps'
decisions are to reflect the national concern for both the protection
and utilization of important resources.
Under section 404 of the Clean Water Act, the Corps and the
Environmental Protection Agency (EPA) regulate activities affecting
wetlands. Under related regulations and guidance issued by these
agencies, a permittee is expected to avoid deliberate discharge of fill
materials into wetlands or other federally regulated waters and then to
minimize discharges that cannot be avoided. If such discharges are
unavoidable, the Corps can require mitigation to compensate for the
loss and/or degradation of wetlands from permitted activities as a
condition of issuing the permit. Such compensatory mitigation could
involve (1) creating a new wetland, (2) restoring a former wetland, (3)
enhancing a degraded wetland, or (4) preserving an existing wetland.
Since 1993, the Corps has required such mitigation on more than 40,000
acres of land per year. Permittees may perform their own compensatory
mitigation, often on or near the project site, or they may pay another
entity to perform mitigation, usually at a location away from the
project site, but generally within the same watershed. This kind of
mitigation, known as third-party mitigation, is typically performed by
mitigation banks or sponsors of in-lieu-fee arrangements. Mitigation
banks are often private for-profit entities with land in areas where
they believe that they can successfully establish wetlands.[Footnote 1]
These areas include those that have the potential to become wetlands,
previously filled wetlands, wetlands that have been degraded by
invasive plant species,[Footnote 2] or wetlands that are threatened by
development. After the mitigation banks improve these areas as
wetlands, permittees required to perform compensatory mitigation pay
fees to the mitigation bank to fulfill their mitigation requirements.
In contrast to mitigation banks, in-lieu-fee arrangements are often
sponsored by public or nonprofit entities. Under agreements with the
Corps, in-lieu-fee sponsors receive payments from multiple permittees
required to perform compensatory mitigation. Then, at a later date, the
sponsors use these funds to establish wetlands.
The Corps is responsible for ensuring that permittees, mitigation
banks, and in-lieu-fee sponsors perform required compensatory
mitigation. However, the Corps historically has not emphasized
oversight of such mitigation activities. In 1988, we reported that the
Corps placed a high priority on issuing permits and did not routinely
inspect project sites to ensure that permittees were in compliance with
their permit conditions, which include any compensatory mitigation that
the permittee was required to perform.[Footnote 3] More recently, the
National Research Council, environmental groups, and others have raised
concerns that the Corps may not spend sufficient time on oversight to
ensure that permittees or third parties are performing the required
compensatory mitigation.
In this context, you asked us to review the (1) guidance the Corps has
established for overseeing compensatory mitigation, (2) extent to which
the Corps oversees compensatory mitigation, and (3) enforcement actions
the Corps can take if it determines that compensatory mitigation
requirements are not being met and the extent to which it takes such
actions.
In conducting our work, we selected 7 of the 38 Corps districts that
implement the section 404 program--Charleston, South Carolina;
Galveston, Texas; Jacksonville, Florida; New Orleans, Louisiana; St.
Paul, Minnesota; Seattle, Washington; and Wilmington, North Carolina.
We selected these districts because they represent different geographic
areas of the United States and collectively accounted for over two-
thirds of the compensatory mitigation required by individual permits
issued in fiscal year 2003.[Footnote 4] To identify the guidance the
Corps has established for overseeing compensatory mitigation, we
examined Corps documents and interviewed officials from Corps
headquarters, as well as from Corps' district offices.
To determine the extent to which the Corps oversees compensatory
mitigation, we reviewed a total of 249 files. We reviewed 152 permit
files issued in fiscal year 2000 where the permittee was responsible
for the mitigation. We selected this time frame because most of the
permits we reviewed were valid for 5 years or less, and sufficient time
would have passed for the permittee to begin work on the permitted
project and for the Corps to have received a monitoring report or
conducted a compliance inspection. We also reviewed files for 85
mitigation banks and 12 in-lieu-fee arrangements.[Footnote 5] The
mitigation bank and in-lieu-fee arrangement files we reviewed usually
provided data on the mitigation activities for multiple permittees, and
the mitigation conducted can encompass thousands of acres. While our
results cannot be generalized to all 38 Corps districts, according to a
Corps official responsible for managing the program nationally, our
findings would most likely represent program implementation by other
Corps districts. We also interviewed district officials to obtain
additional information on how they oversee compensatory mitigation.
To identify enforcement actions the Corps can take if it determines
that compensatory mitigation requirements are not being met and the
extent to which it takes these actions, we examined agency regulations
and documents that outline available enforcement actions, reviewed
agency data on noncompliance cases, and discussed levels of
noncompliance and actions taken with district officials. In addition,
we interviewed several sponsors of mitigation banks and a sponsor of an
in-lieu-fee arrangement to obtain their perspectives on the Corps'
mitigation program. A more detailed description of the scope and
methodology of our review is presented in appendix I. We performed our
work between June 2004 and September 2005 in accordance with generally
accepted government auditing standards.
Results in Brief:
The Corps has developed guidance that establishes two primary oversight
activities for compensatory mitigation. First, the Corps guidance
directs district officials to require the parties performing mitigation
to periodically submit monitoring reports to the Corps on the status of
compensatory mitigation. Second, the guidance calls for district
officials to conduct compliance inspections of the mitigation. However,
we found that parts of the guidance are vague or internally
inconsistent, thus limiting their usefulness. For example, the guidance
suggests that requiring and reviewing monitoring reports is a high-
priority activity for the Corps when "substantial mitigation" is
required, but it does not define substantial mitigation. Furthermore,
the guidance does not indicate what actions Corps officials should take
if permittees or third parties do not submit required monitoring
reports. The guidance is also internally inconsistent because, in one
section of the guidance, district officials are directed to conduct
compliance inspections on a relatively high percentage of compensatory
mitigation sites to ensure that permit conditions have been met, while
another section designates these inspections as a low-priority
activity, to be conducted only if the goals for other higher priority
work, such as issuing permits, have been achieved. As a result,
district officials told us that they are unsure of how many resources
to allocate to compliance inspections. The Corps is currently
developing new guidance, which it expects to issue by fall of 2005.
Overall, the Corps districts we visited have performed limited
oversight to determine the status of required compensatory mitigation.
For the 152 permit files that we reviewed where the individual
permittee was required to perform compensatory mitigation, we found
little evidence that required monitoring reports were submitted or that
the Corps conducted compliance inspections. The Corps required
monitoring reports for 89 of the files that we reviewed, but only 24
percent, or 21 permit files, contained evidence that the Corps had
actually received the report. Only 15 percent of the files contained
evidence that the Corps had conducted a compliance inspection. Although
Corps districts provided somewhat more oversight for mitigation
conducted by the 85 mitigation banks and 12 in-lieu-fee arrangements
that we reviewed, even in these cases oversight was still limited. For
the 60 mitigation banks that were required to submit monitoring
reports, 70 percent of the files showed that the Corps had received at
least one monitoring report. The percentage of the mitigation bank
files with evidence that the Corps conducted an inspection ranged from
a low of 13 percent to a high of 78 percent in the seven districts. For
the 6 in-lieu-fee arrangements that were required to submit monitoring
reports to the Corps, 5 had submitted at least one report. In addition,
the Corps had conducted a compliance inspection for 5 of the 12
arrangements. District officials told us that the Corps' conflicting
guidance, which notes that compliance inspections are crucial yet makes
them a low priority, as well as limited resources contribute to their
low level of oversight of compensatory mitigation. However, because
many projects that we reviewed did not receive oversight, the districts
cannot definitively assess whether compensatory mitigation has been
performed on thousands of acres. Without this information, it is
unclear how the Corps is assessing the effectiveness of its mitigation
program or assessing whether this program is contributing to the
national goal of no net loss of wetlands.
The Corps can take a variety of enforcement actions if required
compensatory mitigation is not performed. These actions include issuing
compliance orders, assessing administrative penalties up to $27,500,
suspending or revoking a permit, implementing the enforcement
provisions of agreements with third parties, and recommending legal
actions.[Footnote 6] According to fiscal year 2003 data provided by the
Corps, the seven districts did not take any enforcement actions to
obtain compliance with issued permits. Instead, district officials rely
primarily on negotiation with permittees and third parties, a first
step in the enforcement process, rather than enforcement actions to
resolve any violations. According to district officials, when they find
that required compensatory mitigation has not been performed, they
usually first contact the responsible parties to discuss options and
time frames for bringing the permittee or third-party sponsor into
compliance. District officials told us that typically no further action
is necessary because the desired action is subsequently taken. If
district officials are not able to resolve the noncompliance through
negotiation, they told us that they then notify the responsible party
in writing of the noncompliance and lay out potential enforcement
actions and time frames. District officials told us that they generally
resort to enforcement actions only after negotiation fails because
taking enforcement actions is usually more time-consuming and does not
necessarily result in the required mitigation being completed. For
instance, according to Corps district officials, while monetary
penalties are an effective tool that draws attention to compliance and
enforcement, the funds collected from assessing these penalties are
required by law to go into the general fund of the federal Treasury. We
found that, sometimes, district officials wanting to pursue enforcement
actions after detecting instances of noncompliance may be unable to do
so because they have limited their enforcement capabilities by not
specifying the requirements for compensatory mitigation in permits and
by not establishing agreements with third parties. For example, the
Corps does not always specify what mitigation activity should be
performed or the time frame for completing the mitigation in individual
permits. Similarly, some districts have not established agreements
called for in federal guidance with mitigation bank or in-lieu-fee
sponsors. Without such agreements, the Corps and the third-party
sponsors have not formally agreed to the penalties that may be imposed
and/or corrective actions that may be required if the mitigation
efforts are not performed. Therefore, the Corps does not have
sufficient legal recourse if third parties do not perform required
compensatory mitigation.
To address the concerns we have identified, we are recommending that
the Secretary of the Army direct the Corps of Engineers to establish an
effective oversight approach that will ensure that permittees and third
parties are performing required compensatory mitigation. In commenting
on our report, the Department of Defense generally agreed with our
recommendations.
Background:
Wetlands include swamps, marshes, bogs, and similar areas. They are
characterized by three factors: (1) frequent or prolonged presence of
water at or near the soil surface, (2) hydric soils that form under
flooded or saturated conditions, and (3) plants that are adapted to
live in these types of soils. Wetlands are found throughout the United
States. They may differ greatly in their physical characteristics; for
example, water may not be present on the wetland for part of the year
or it may be present year-round. Figures 1 and 2 show two different
types of wetlands--a marsh and a bayou.
Figure 1: Marsh in Michigan:
[See PDF for image]
[End of figure]
Figure 2: Bayou in Louisiana:
[See PDF for image]
[End of figure]
Wetlands provide many important functions for the environment and for
society. For example, wetlands:
* improve water quality by removing excess nutrients from sources such
as fertilizer applied to agricultural land and municipal sewage and by
trapping other pollutants in soil particles;
* reduce the harmful effects of weather events by storing flood waters
and buffering roads and houses from the storm surges caused by
hurricanes; and:
* provide important habitat for plants and wildlife--more than one-
third of threatened and endangered species, such as the whooping crane
and Florida panther, live in wetlands.
Over half of the estimated 220 million acres of wetlands in the
contiguous United States during colonial times have disappeared, and
many of the remaining wetlands have been degraded. This loss in
wetlands was primarily caused by agricultural activities and
development; significant wetland loss continued through the mid-1970s.
While the economic pressure to develop wetlands continues today,
according to the U.S. Fish and Wildlife Service, the rate of wetland
loss has decreased significantly over the past 30 years.[Footnote 7]
The decrease in the rate of wetlands loss stems from executive actions
and legislation, prompted by an increased recognition of the benefits
of wetlands. In 1977, the first executive order for the protection of
wetlands directed federal agencies to take action to minimize the
destruction of wetlands and to preserve and enhance wetlands' benefits
when carrying out responsibilities such as managing federal lands and
facilities or providing federally financed construction.[Footnote 8]
Subsequently, in 1989, the administration set a national goal of no net
loss of wetlands to ensure that these valuable resources are protected.
The Clean Water Act provides the primary legislative authority for
federal efforts to regulate wetlands and other waters of the United
States.[Footnote 9] The act's objective is to restore and maintain the
chemical, physical, and biological integrity of the nation's waters.
The section 404 program under the Clean Water Act is the principal
federal program that provides regulatory protection for wetlands.
Section 404 generally prohibits the discharge of dredged or fill
material in waters of the United States, which include certain
wetlands, without a permit from the Corps.[Footnote 10] Responsibility
for issuing these permits is delegated to 38 Corps district offices.
The Corps requires the permittee to first avoid discharges of dredged
or fill materials into wetlands and then to minimize discharges that
cannot be avoided. To replace lost wetland functions, the Corps can
require compensatory mitigation as a condition of issuing a permit when
damage or degradation of wetlands is unavoidable.
Compensatory mitigation can consist of creating a new wetland,
restoring a former wetland, enhancing a degraded wetland, or preserving
an existing wetland. According to Corps guidance, compensatory
mitigation should generally provide, at a minimum, one-to-one
functional replacement for a lost wetland.[Footnote 11] When
determining the type, size, and nature of compensatory mitigation to be
performed, district officials may consider factors such as the
wetland's location, the rarity of the ecosystem, water levels,
vegetation, wildlife usage, and the presence of endangered species. In
some cases, the loss of the functions of a certain wetland area may be
offset by either a larger or a smaller wetland area. For example, on an
acreage basis, the ratio should be greater than one-to-one when the
lost wetland functions are high and the replacement wetlands provide
lower functions.
In the absence of information about the functions of a certain site,
acreage may be used instead to determine the amount of compensatory
mitigation to help achieve the national goal of no net loss. Figure 3
shows land before and after a wetland restoration project.
Figure 3: Wetlands Restoration Project in Washington, D.C. (Before and
After):
[See PDF for image]
[End of figure]
Compensatory mitigation may be performed by permittees or third
parties. Third-party mitigation is typically performed by mitigation
banks, which are generally private for-profit entities that establish
wetlands under agreements with the Corps, or under in-lieu-fee
arrangements, which are often sponsored by public or nonprofit
entities. Under mitigation banking guidance issued in 1995 and in-lieu-
fee guidance issued in 2000, mitigation bank and in-lieu-fee sponsors
should have formal, written agreements with the Corps, developed in
consultation with EPA and other resource agencies such as the U.S. Fish
and Wildlife Service, to provide frameworks for how the mitigation bank
or in-lieu-fee arrangement will operate. According to Corps guidance,
these written agreements should include information on:
* the mitigation site, including the types of wetlands to be developed,
the conditions of any existing wetlands, and the geographic area; and:
* site management, such as:
* monitoring plans and reporting protocols on the progress of the
mitigation,
* remedial actions and the parties responsible for performing them if
the mitigation is not successful,
* accounting procedures for tracking payments received from permittees,
* performance standards for determining ecological success of the site,
and:
* provisions for long-term management and maintenance.
The Corps and EPA, which have joint enforcement authorities for the
section 404 program, established a memorandum of agreement allocating
enforcement responsibilities between the two agencies. According to
this agreement, the Corps is the lead enforcement agency for all
violations of Corps-issued permits, while EPA is the lead enforcement
agency when unpermitted activities occur in wetlands.[Footnote 12]
Historically, the Corps has not emphasized enforcement activities. In
1988, we reported that many Corps permits were not monitored for
compliance with permit conditions, the Corps districts we visited at
that time did not place a high priority on detecting unauthorized
impacts to wetlands, and the frequent lack of monitoring could result
in the loss of valuable wetland resources. Subsequently, in 1993, we
reported that the Corps continued to emphasize permit processing over
compliance and enforcement and that funding and staffing shortfalls had
inhibited the Corps' and EPA's compliance and enforcement
activities.[Footnote 13] More recently, the National Research Council,
environmental groups, and others have noted the same lack of emphasis
on monitoring and enforcement.
Corps Guidance for Oversight of Compensatory Mitigation Is Sometimes
Vague or Internally Inconsistent:
The Corps has developed guidance that establishes two primary
activities for oversight of compensatory mitigation performed by
permittees or third parties. The guidance directs Corps districts to
require that permittees performing compensatory mitigation periodically
submit monitoring reports that provide information on the status of
their mitigation efforts. For mitigation banks and in-lieu- fee
arrangements, the guidance directs Corps districts to require sponsors
to submit annual monitoring reports. The guidance also suggests that
district staff conduct annual on-site inspections of mitigation bank
activities but does not specify a frequency for inspections of
mitigation activities performed by permittees and in- lieu-fee
sponsors. However, we found that parts of the guidance are vague or
internally inconsistent, thus limiting their usefulness.
Corps Guidance Establishes Two Primary Oversight Activities for
Compensatory Mitigation:
The Corps has three primary guidance documents that establish
requirements for overseeing compensatory mitigation performed by
permittees, mitigation banks, or in-lieu-fee arrangements: (1) The 1999
Army Corps of Engineers Standard Operating Procedures for the
Regulatory Program; (2) The Federal Guidance for the Establishment, Use
and Operation of Mitigation Banks; and (3) The Federal Guidance on the
Use of In-Lieu-Fee Arrangements for Compensatory Mitigation Under
Section 404 of the Clean Water Act and Section 10 of the Rivers and
Harbors Act. The two primary oversight activities these guidance
documents establish are (1) Corps review of monitoring reports
submitted by permittees or third parties and (2) the conduct of
compliance inspections (field visits) that provide firsthand knowledge
of the status of the mitigation.[Footnote 14] The guidance documents
lay out the following requirements:
* 1999 Standard Operating Procedures for the Regulatory Program. This
document, which highlights current Corps policies and procedures and
provides guidance to the districts for setting priorities for their
regulatory program activities, calls for Corps districts to require
permittees to submit periodic monitoring reports and states that the
districts should review all monitoring reports. It also states that
compliance inspections are essential to ensure that compensatory
mitigation is performed and directs Corps districts to inspect a
relatively high percentage of compensatory mitigation performed by
permittees to ensure compliance with permit conditions. Districts are
to inspect all mitigation banks to ensure compliance with the banking
agreement.
* Federal Guidance for the Establishment, Use and Operation of
Mitigation Banks. Developed to provide guidance for establishing,
using, and operating mitigation banks, this federal guidance directs
the Corps to require that mitigation bank sponsors submit annual
monitoring reports to the Corps and other authorizing agencies, which
can include the EPA and the U.S. Fish and Wildlife Service, among
others. Typically, mitigation banks are to be monitored for 5 years;
however, according to the guidance, it may be necessary to extend this
period for mitigation banks that require more time to reach a stable
condition or that have undertaken remedial activities. In addition, the
guidance encourages members of the mitigation banking review team,
which the Corps chairs, to conduct regular (e.g., annual) on-site
inspections, as appropriate, to monitor bank performance.[Footnote 15]
* Federal Guidance on the Use of In-Lieu-Fee Arrangements for
Compensatory Mitigation Under Section 404 of the Clean Water Act and
Section 10 of the Rivers and Harbors Act. This federal guidance was
developed to ensure that in-lieu-fee arrangements can serve as an
effective and useful mitigation approach. The guidance specifies that
there should be appropriate schedules established for regular (e.g.,
annual) monitoring reports to document funds received, impacts
permitted, funds disbursed, types of projects funded, and the success
of projects conducted. Furthermore, the guidance calls for the Corps in
conjunction with other federal and state agencies to evaluate these
reports and conduct regular reviews to ensure that the arrangement is
operating effectively and is consistent with agency policy and the
specific agreement.
Corps Guidance Is Sometimes Vague or Internally Inconsistent:
Although Corps guidance documents establish monitoring reports and
compliance inspections as the two primary oversight activities for
compensatory mitigation, these guidance documents are sometimes vague
or internally inconsistent. Specifically, the guidance is vague on the
following key points:
* The circumstances under which monitoring reports should be required.
Although the Corps' standard operating procedures call for district
officials to require and review monitoring reports for mitigation banks
and "other substantial mitigation," it does not define substantial
mitigation. We found that Corps districts differed in how they defined
"substantial mitigation." For example, two districts require mitigation
reports when the mitigation involves restoring, enhancing, or creating
a wetland but not when the mitigation involves preserving a wetland.
Another district interpreted "substantial" mitigation to include
mitigation projects that generally involved more than one-half acre.
* The actions district officials should take if reports are not
submitted as required. Corps guidance does not address the issue of
noncompliance if monitoring reports are not submitted for review. For
the files that we reviewed, we found that monitoring reports were
provided for 44 percent, or 68 of the 155 cases in which these reports
were required. District officials told us that, because of budget
constraints, little time is spent on compliance activities, including
following up on the submission of monitoring reports. While three
districts that we visited have established a process for tracking due
dates for monitoring reports from either permittees or third parties,
none of the districts had a system for tracking reports from
both.[Footnote 16] Without such tracking systems, a district official
told us that Corps officials may not realize when monitoring reports
are due or that the reports were not submitted as required.
* The information that should be included in a monitoring report. The
guidance does not specify what information should be included in
monitoring reports submitted by permittees and mitigation banks,
despite the importance of these reports as a primary means of
overseeing compliance with mitigation requirements. We found that some
monitoring reports were only a few pages in length and provided limited
information about the site, while other reports were over 50 pages in
length, were more comprehensive, and included data on the water levels
at the mitigation site, the plants growing at the site, methods for
monitoring both the water levels and plant growth, documentation of
animals present at the site, and photographs of the site. The Chief of
the Regulatory Branch acknowledged that the information submitted in
monitoring reports varies significantly and may not always provide the
details needed to assess the status of the compensatory mitigation.
Furthermore, the guidance is internally inconsistent about the emphasis
districts should place on compliance inspections. The Corps' standard
operating procedures state that compliance inspections are essential,
and districts should inspect a relatively high percentage of
compensatory mitigation sites to ensure compliance with permit
conditions, although they do not define what high means. The mitigation
banking guidance states that districts should inspect all mitigation
performed by banks annually to ensure compliance with the banking
agreement.[Footnote 17] The in-lieu-fee guidance does not specify how
often compliance inspections should be conducted. However, the standard
operating procedures also designate all compliance inspections as a low-
priority activity, to be performed only if the goals for other higher-
priority work, such as issuing permits, have been achieved.
Furthermore, the guidance states that the degree to which districts
perform lower priority work would affect whether districts received
additional resources. District officials told us that in the past they
were instructed that if they spent too many resources on low-priority
activities, their budget would be reduced. Consequently, a number of
district officials told us that they are unsure of how much time to
spend on compliance inspections. According to officials in one district
we visited, for instance, the number of sites they were inspecting was
based on a target set in the 1991 guidance because the current guidance
is not as specific.[Footnote 18] Other districts do not have a specific
goal for the number of inspections that district officials will conduct
for mitigation activities. The Corps is revising its standard operating
procedures to include specific performance goals for compliance
inspections. Corps officials told us they expect to finalize the
revised standard operating procedures by fall of 2005.
Corps Districts Perform Limited Oversight of Compensatory Mitigation:
Overall, the Corps districts we visited have performed only limited
oversight of compensatory mitigation undertaken by permittees and third
parties. For the 152 individual permit files that we reviewed, we
frequently found little evidence that the required monitoring reports
were submitted or that the Corps conducted compliance inspections.
Although Corps districts provided somewhat more oversight for
mitigation performed by the 85 mitigation banks and 12 in-lieu-fee
arrangements that we reviewed, we found that oversight was still
limited even in these cases. Detailed results of our file review by
district are presented in appendix III.
Corps Districts Provide Little Oversight of Mitigation Performed by
Permittees:
According to our review of 152 permit files where the permittee was
responsible for performing the compensatory mitigation, the Corps
districts generally provided little oversight either through a
monitoring report or a compliance inspection.[Footnote 19] The Corps
required permittees to submit monitoring reports for 89 of the 152
permit files that we reviewed. This ranged from a low of zero in
Charleston to a high of 100 percent in Seattle. However, we found only
21 files contained evidence that the Corps actually received these
required reports, ranging from a low of zero in two districts to a high
of 69 percent in Jacksonville.[Footnote 20] Furthermore, only 15
percent, or 23 of the 152 permit files, showed that the Corps had
conducted a compliance inspection. The actual proportion of permits
receiving oversight may be less because several districts could not
locate some of the permit files that we requested for review.
The following cases illustrate situations in which the Corps required
compensatory mitigation as a condition of permit issuance, but the
files contained no evidence that the Corps had conducted oversight:
* In November 1999, the Corps issued a permit authorizing a permittee
to install two boat slips and dredge approximately 5,270 feet of a
canal in Louisiana, which would affect marsh and other wetland areas.
As a condition of issuing this permit, the Corps required the permittee
to use the dredge material and establish wetland plants to create a 710-
acre intertidal marsh. The Corps also required the permittee to submit
annual monitoring reports for 5 years. The file contained no evidence
that the Corps had received any monitoring reports or conducted
compliance inspections to determine the status of the required
mitigation.
* In May 2000, the Corps issued a permit authorizing a developer to
fill over 430 acres of wetlands to build a residential golf community
in Florida. As a condition of issuing this permit, the Corps required
the permittee to enhance over 1,000 acres of wetlands and to create 13
acres of wetlands. The Corps also required the permittee to submit
annual monitoring reports for 5 years. The file contained no evidence
that the Corps had conducted any compliance inspections or received any
monitoring reports to determine the status of the required mitigation.
* In May 2000, the Corps issued a permit authorizing a permittee to
fill 77 acres for a landfill in Texas. As a condition of issuing this
permit, the Corps required the permittee to create 122 acres of prairie
wetlands and to preserve 58 acres of wetlands on-site. The preservation
area also included lakes and uplands that were to be managed for
wildlife habitat. The Corps required the permittee to submit monitoring
reports after 6 months and annually for 5 years. The file contained no
evidence that the Corps had conducted any compliance inspections or
received any monitoring reports to determine the status of the required
mitigation.
Moreover, even when Corps officials conducted oversight, they did not
always perform suggested follow-up. For example, in one permit file we
reviewed, the Corps issued a permit in December 1999 that authorized
the excavation of an approximately 15-acre sand and gravel mining
project in a wetland area. The Corps required the permittee to restore
the mining area to a wetland plant community as the excavation occurred
and to submit annual monitoring reports on the progress of this
restoration effort. The permittee submitted one report to the Corps in
March 2000, which stated that the work authorized by the permit had
begun but that compensatory mitigation activities could not be
completed until excavation was completed. No other monitoring reports
were in the file, and the file did not contain any evidence that Corps
officials had followed up to determine if the compensatory mitigation
was performed. Another file indicated that, in December 2000, a Corps
official had inspected a project site to assess the status of the
required compensatory mitigation for a permit issued in August 2000.
This permit authorized filling about 6 acres of wetlands to build a
retail facility. The official's inspection indicated that construction
was almost finished, but the mitigation to enhance 4 acres of wetlands
was still under way. The official recommended that the site be
revisited at a later date. However, the file contained no evidence that
the Corps conducted a follow-up compliance inspection or contacted the
permittee to determine the status of the mitigation.
Corps Districts Perform Somewhat Greater Oversight of Mitigation
Performed by Mitigation Banks and In-Lieu-Fee Sponsors:
Corps districts provided somewhat more oversight for mitigation
conducted by third parties, although even in these cases oversight was
limited. Of the 85 mitigation banks that we reviewed, the Corps
required that 71 percent, or 60 of the 85 mitigation bank sponsors,
submit monitoring reports and 70 percent, or 42 mitigation bank files,
contained evidence that at least one monitoring report had been
received.[Footnote 21] However, only 31 of the 85 mitigation bank files
contained evidence that the Corps conducted a compliance
inspection.[Footnote 22] This ranged from a low of 13 percent in the
St. Paul district to a high of 78 percent in the Wilmington district.
The following cases illustrate situations where files contained no
evidence that the Corps had conducted oversight of the mitigation bank:
* In February 1999, the Corps approved a mitigation bank in Texas that
preserved and protected about 540 acres of swamp. The agreement between
the Corps and the mitigation bank sponsor included a requirement that
the sponsor submit an annual report on the mitigation bank's status of
operation and maintenance. The file contained no evidence of any
monitoring reports submitted by the sponsor or compliance inspections
conducted by the Corps.
* In August 1999, the Corps approved an approximately 360-acre
mitigation bank in Louisiana to reestablish a productive, coastal,
forested wetland ecosystem on previously converted agricultural lands.
The agreement between the Corps and the mitigation bank sponsor
included a requirement that the sponsor provide the Corps with annual
monitoring reports for at least 5 years and then reports once every 5
years. The file contained no evidence of any monitoring reports
submitted by the sponsor or compliance inspections conducted by the
Corps.
* In December 2001, the Corps approved a 2,100-acre mitigation bank in
Florida to restore native tree species and enhance the site's
hydrology. The agreement between the Corps and the mitigation bank
sponsor required the sponsor to submit annual monitoring reports to the
Corps for 4 years. The file contained no evidence of any monitoring
reports submitted by the sponsor or compliance inspections conducted by
the Corps.
For in-lieu-fee arrangements, the Corps required the sponsors of 6 of
the 12 in-lieu-fee arrangements that we reviewed to submit monitoring
reports. We found that five of the six files contained evidence that
the sponsor had submitted at least one report. We also found that the
Corps had received monitoring reports from one in-lieu-fee sponsor who
was not required to submit a report. In addition, the files contained
evidence that the Corps had conducted at least one compliance
inspection for 5 of the 12 arrangements.
Conflicting Guidance and Limited Resources Contribute to the Corps' Low
Level of Oversight of Compensatory Mitigation:
District officials told us that the Corps' conflicting guidance, which
notes that compliance inspections are crucial but makes them a low
priority, as well as limited resources contribute to their low level of
oversight of compensatory mitigation activities. According to the Chief
of the Regulatory Branch, historically, districts were to issue permits
within specified time frames. If those time frames were not met, work
in other areas, including compliance, was not to be performed. In
addition, funds were allocated primarily for permit processing, with
little remaining for other activities. However, Corps headquarters and
district officials recognize the importance of oversight. They stated
that without a comprehensive oversight program the Corps cannot ensure
that compensatory mitigation will occur. In the absence of additional
national guidance and resources, some of the districts we visited have
decided to take their own steps to improve oversight. For example,
Jacksonville district officials increased their compliance inspections
of compensatory mitigation performed by permittees; the number of
inspections more than tripled from 2003 to 2004 after several years of
decline. In addition, New Orleans district officials told us that, in
2003, they began tracking monitoring reports and compliance inspections
for mitigation banks, more aggressively followed up to ensure that the
mitigation banks submit required monitoring reports, and increased the
number of compliance inspections of the mitigation banks.
Corps Districts Can Take a Variety of Enforcement Actions to Resolve
Violations but Rely Primarily on Negotiation:
The Corps can take a variety of enforcement actions if required
compensatory mitigation is not performed.[Footnote 23] Possible
enforcement actions include issuing compliance orders and assessing
administrative penalties, requiring the permittee to forfeit a bond,
suspending or revoking a permit, and implementing the enforcement
provisions of agreements with third parties to perform mitigation on
permittees' behalf. In addition, the Corps may refer a case to the
Department of Justice to bring legal action in federal district court.
However, district officials rarely use these enforcement actions,
relying primarily on negotiation with permittees or third parties as a
first step in the enforcement process to resolve any noncompliance
cases they detect. In some cases, district officials want to pursue
enforcement actions after detecting instances of noncompliance, but
they may not be able to do so because they have limited their
enforcement capabilities by not including specific requirements in the
permits or third-party agreements.
A Variety of Enforcement Actions Are Available to Corps Districts:
When the Corps determines that required compensatory mitigation has not
been performed, the type of enforcement action taken would depend on,
among other things, whether mitigation is to be carried out by the
permittee or by a third party.
In cases where the permittee was to perform the mitigation, the Corps
may issue a compliance order, assess administrative penalties, require
the permittee to forfeit a bond, suspend or revoke a permit, and/or
refer the case to the Department of Justice for legal action. Under
section 404 of the Clean Water Act and Corps regulations, the Corps may
take the following actions:
* Issue compliance orders to permittees who violate any condition of
their permits. Each order must specify the nature of the violation,
which could include failure to implement mitigation requirements, and
specify a time by which the permittee must come into
compliance.[Footnote 24]
* Assess administrative penalties, in an amount of up to
$27,500.[Footnote 25]
* Require the permittee to forfeit a bond, if such a bond was a
condition of the permit. The Corps has the authority to require
permittees to post a financial bond to assure that they will fulfill
all obligations required by the permit, which could include
compensatory mitigation.[Footnote 26]
* Suspend a permit for, among other things, a permittee's failure to
comply with the terms and conditions of the permit.[Footnote 27] A
suspension requires the permittee to stop the activities previously
authorized by the suspended permit. Following the suspension, the Corps
may take action to reinstate, modify, or revoke the permit.[Footnote
28]
* Refer the case to the Department of Justice to bring an action in
federal district court seeking an injunction and civil
penalties.[Footnote 29] Cases that are appropriate for judicial actions
include violations that are willful, repeated, flagrant, or of
substantial impact.[Footnote 30] Civil penalties may be awarded by the
court in an amount of up to $25,000 per day for each
violation.[Footnote 31]
The enforcement actions available to the Corps for a mitigation bank or
in-lieu-fee sponsor's failure to carry out mitigation would depend on
the provisions that are incorporated into each permit (if applicable)
and mitigation bank agreement or in-lieu-fee agreement and would be
governed by the terms of the agreement with the Corps. For example,
once the Corps has agreed that a permittee's mitigation requirements
will be satisfied by a mitigation bank or in-lieu-fee arrangement, the
permittee satisfies these mitigation requirements by submitting the
required payment to the third-party sponsor. Federal guidance for
mitigation banks states, "it is extremely important that an enforceable
mechanism be adopted establishing the responsibility of the bank
sponsor to develop and operate the bank properly."[Footnote 32] The
guidance states that the bank sponsor is responsible for securing
sufficient funds or other financial assurances in the form of, among
other things, performance bonds, irrevocable trusts, escrow accounts,
and letters of credit. In addition, "the banking agreement should
stipulate the general procedures for identifying and implementing
remedial measures at a bank." Similarly, federal guidance states that
an in-lieu-fee agreement should contain, among other things,
"financial, technical and legal provisions for remedial actions and
responsibilities (e.g., contingency fund)"; "financial, technical and
legal provisions for long-term management and maintenance (e.g.,
trust)"; and a "provision that clearly states that the legal
responsibility for ensuring mitigation terms are fully satisfied rests
with the organization accepting the fee."[Footnote 33]
Corps Districts Rely Primarily on Negotiation:
While the Corps may take a variety of enforcement actions, the seven
districts did not take any enforcement actions in fiscal year 2003, the
latest year for which data is available.[Footnote 34] Instead, district
officials primarily rely on negotiation, a first step in the Corps'
enforcement process, to resolve noncompliance issues. In keeping with
Corps regulations, district officials told us that, when they find that
required compensatory mitigation has not been performed, they first
notify the responsible party and gather relevant information to better
understand the noncompliance case. They then attempt to negotiate by
discussing with the permittees or third parties available corrective
actions and time frames for voluntarily bringing the work into
compliance. For example, at one district, officials told us that
corrective actions by responsible parties could include working with an
environmental organization such as The Nature Conservancy to improve
wetlands or developing a traveling exhibit for local schools to educate
children about the value of protecting wetlands. According to Corps
officials, no additional action is needed generally because responsible
parties are willing to work with the Corps to get back into compliance.
If district officials do not succeed in voluntarily bringing the
responsible party into compliance, they notify the responsible party in
writing, laying out potential enforcement actions available to the
Corps and time frames for the party to respond to the letter--the next
step toward achieving compliance. District officials told us they
generally resort to such actions to achieve compliance only after
negotiation has failed because such actions usually take more time to
implement. For example, one district official estimated that when the
Corps refers a noncompliance case to the Department of Justice,
district officials may be occupied for several months. Similarly,
according to Corps officials, developers prefer to negotiate with the
Corps because it is less time-consuming than pursuing legal solutions.
In addition, use of enforcement actions does not always ensure that the
required compensatory mitigation will be completed. For instance, Corps
district officials told us, while monetary penalties are an effective
tool that draws attention to compliance and enforcement, the funds
collected from assessing these penalties are required by law to go into
the general fund of the federal Treasury.[Footnote 35]
Corps Sometimes Limits Its Own Enforcement Ability:
On occasion, district officials wanting to pursue enforcement actions
after detecting instances of noncompliance may not be able to do so
because they have limited their enforcement capabilities; that is, they
have not specified the requirements for compensatory mitigation in
permits and failed to establish agreements with third parties. In our
file review, we identified several permits that lacked this crucial
information about required mitigation.[Footnote 36] Both the Chief of
the Regulatory Branch and district officials stress the importance of
including specific mitigation information in permits so that the Corps
can take actions necessary to ensure required compensatory mitigation
occurs. However, some of the districts we visited acknowledged that the
lack of enforceable conditions included within a permit has been a
problem and they have efforts under way, such as permit reviews and
standardized permit conditions, to ensure that future permits are
issued with the conditions needed to ensure enforceability. Although a
review process for permit conditions may be a good idea, we found that,
even when a review process was in place in some of the districts we
visited, they still had issued permits with unenforceable conditions.
In addition, we found that three districts had not established formal
agreements with third parties to document the objectives and
implementation of mitigation banks or in-lieu-fee arrangements, as
called for in federal guidance. Of the 85 mitigation bank files we
reviewed, 21 did not have agreements with the Corps. These mitigation
banks were all located in Minnesota, one of two states with mitigation
banks that fall under the jurisdiction of the St. Paul District Office.
According to district officials, Minnesota had developed state
mitigation banking guidelines before the federal guidelines. Many of
the banks in Minnesota were approved by the state program and partially
developed before requesting Corps approval. Corps officials told us
they had decided not to take additional steps to develop agreements
with these mitigation banks. Currently, district officials issue a
letter approving all or a portion of the state bank for use in the
Corps compensatory mitigation program but do not develop a banking
agreement with the bank sponsor. At the time of our review, district
officials realized that the lack of mitigation banking agreements
limited their enforcement ability and, therefore, were developing
banking guidelines to provide more structure for the establishment of
mitigation banks in Minnesota. However, they had not yet begun to
consistently develop such agreements.
For the in-lieu-fee arrangements we reviewed, the Galveston and New
Orleans districts have not established formal agreements with in-lieu-
fee sponsors. Without such agreements, district officials may not know
how many permittees are using these arrangements to fulfill their
compensatory mitigation requirements. For example, for the arrangements
that he was responsible for monitoring, a Galveston district official
could not provide us with information about the number of permittees
using the arrangement to perform compensatory mitigation, the total
amount of payments the in-lieu-fee sponsor had received, or any
oversight activities conducted by the Corps to ensure that the sponsor
was performing the required compensatory mitigation. Before our visit,
Galveston district officials were unaware that their four in-lieu-fee
arrangements were not in compliance with federal guidance and are now
attempting to restructure these arrangements. In addition, a Galveston
district official told us the district will develop such agreements
with the sponsors of future arrangements. With regard to the in-lieu-
fee arrangement in New Orleans that did not have an agreement,
officials told us that resource constraints and other priorities had
prevented them from establishing a formal agreement with the in-lieu-
fee sponsor. This arrangement has collected approximately $1 million
since its inception in 1994, but district officials could provide no
other information regarding oversight of the arrangement.[Footnote 37]
Until the districts establish formal agreements with third-party
sponsors, the Corps does not have sufficient legal recourse if third
parties do not perform required compensatory mitigation because the
sponsors have not reached agreement with the Corps on what penalties
and/or corrective actions will be required to address any problems if
the mitigation efforts are not performed. The Corps' Chief of the
Regulatory Branch noted that he would encourage the districts to cease
using these in-lieu-fee arrangements to provide compensatory mitigation
until such agreements are established.
Conclusions:
The Corps' section 404 program is crucial to the nation's efforts to
protect wetlands and achieve the national goal of no net loss. Although
Corps officials acknowledge that compensatory mitigation is a key
component of this program, the Corps has consistently neglected to
ensure that the mitigation it has required as a condition of obtaining
a permit has been completed. The Corps' priority has been and continues
to be processing permit applications. In 1988 and 1993, we reported
that the Corps was placing little emphasis on its compliance efforts,
including compensatory mitigation, and little has changed. The Corps
continues to provide limited oversight of compensatory mitigation,
largely relying on the good faith of permittees to comply with
compensatory mitigation requirements. The Corps' oversight efforts have
been further hampered by vague and inconsistent guidance that does not
(1) define key terms, (2) specify the actions Corps staff should take
if required monitoring reports are not received, or (3) set clear
expectations for oversight of compensatory mitigation. Furthermore,
district officials have failed to establish agreements with third-party
sponsors that would ensure the agency has legal recourse if
compensatory mitigation is not performed. Until the Corps takes its
oversight responsibilities more seriously, it will not know if
thousands of acres of compensatory mitigation have been performed and
will be unable to ensure that the section 404 program is contributing
to the national goal of no net loss of wetlands.
Recommendations for Executive Action:
Given the importance of compensatory mitigation to the section 404
program and its contribution to achieving the national goal of no net
loss of wetlands, we recommend that the Secretary of the Army direct
the Corps of Engineers to establish an oversight approach that ensures
required mitigation is being performed throughout the nation. As part
of this oversight approach, the Corps should:
* develop more specific guidance for overseeing compensatory mitigation
performed by permittees, mitigation banks, and in-lieu-fee sponsors; in
particular, the guidance should define key terms such as "substantial
mitigation" and specify the actions Corps officials should take if
required monitoring reports are not received;
* clarify expectations for oversight of mitigation, including
establishing goals for the number of monitoring reports that should be
reviewed and the number of compliance inspections that should be
conducted; and:
* review existing mitigation banks and in-lieu-fee arrangements to
ensure that the sponsor has an approved agreement with the Corps, as
called for in federal guidance; if such agreements are not in place,
they should be developed and the Corps should ensure that future
mitigation banks and in-lieu-fee arrangements have these approved
agreements.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Secretary of the Department
of Defense for review and comment. The Department of Defense concurred
with the report's findings and recommendations. In its written
comments, the Department of Defense stated that the Corps is currently
revising its standard operating procedures. According to the
department, the revised guidance will provide details on mitigation
requirements as well as compliance and enforcement procedures. The
department also indicated that the Corps will issue a Regulatory
Guidance Letter that will clarify monitoring requirements for
compensatory mitigation and include an outline for standardized
monitoring reports. In addition, the Department of Defense provided
technical comments and clarifications that we incorporated, as
appropriate. The Department of Defense's written comments are presented
in appendix IV.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to interested congressional committees and Members of Congress; the
Secretary of Defense; the Secretary of the U.S. Army; and the Chief of
Engineers and Commander, U.S. Army Corps of Engineers. We also will
make copies available to others upon request. In addition, the report
will be available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov].
If you have any questions about this report, please contact me at (202)
512-3841 or [Hyperlink, mittala@gao.gov]. Contact points for our
Offices of Congressional Relations and of Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix V.
Sincerely yours,
Signed by:
Anu K. Mittal:
Director, Natural Resources and Environment:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
Our review focused on the compensatory mitigation activities at 7 of
the U.S. Army Corps of Engineers' (Corps) 38 districts that implement
the section 404 program: Charleston, South Carolina; Galveston, Texas;
Jacksonville, Florida; New Orleans, Louisiana; St. Paul, Minnesota;
Seattle, Washington; and Wilmington, North Carolina. We selected these
districts because they represent different geographic areas of the
United States, and they comprised over two-thirds of the compensatory
mitigation required by individual permits issued in fiscal year
2003.[Footnote 38] The Charleston, Galveston, Jacksonville, New
Orleans, St. Paul, and Wilmington districts were the top districts
nationwide in terms of mitigation required by individual permits. While
the Seattle district is not one of the top 7 districts nationwide, it
is one of the top districts in the western region in terms of required
individual permit mitigation, and we included it to provide geographic
coverage. To determine how much compensatory mitigation was required by
permits issued by each of the 38 districts, we used the Quarterly
Permit Data System data, which we examined and determined to be
suitably reliable for selecting the districts to be included in our
review.
To identify the guidance the Corps has established for overseeing
compensatory mitigation, we examined legislation, federal guidance on
mitigation banks and in-lieu-fee arrangements, Corps regulations, Corps
guidance, and supplemental guidance developed by the districts. We also
met with responsible Corps headquarters and district officials to
discuss the Corps' guidance on oversight of compensatory mitigation.
To determine the extent to which the Corps oversees compensatory
mitigation, we reviewed a total of 249 files. We reviewed 152 permit
files issued in fiscal year 2000 where the permittee was responsible
for the mitigation. We selected this time frame because sufficient time
would have passed for the permittee to begin work on the permitted
project, as most of the permits we reviewed were valid for 5 years or
less, and for the Corps to have received a monitoring report or
conducted a compliance inspection. We also reviewed files for 95
mitigation banks (including 10 mitigation banks approved in 2004), and
12 in-lieu-fee arrangements. The mitigation banks we reviewed had been
approved since the mitigation banking guidance was established on
November 28, 1995. For in-lieu-fee arrangements, we reviewed the
arrangements currently operating at the seven districts at the time of
our site visit. These mitigation bank and in-lieu-fee arrangement files
usually provided data on the mitigation activities for multiple
permittees, and the mitigation conducted can encompass thousands of
acres. Owing to the large number of permits and mitigation banks at
some of the districts, we selected a random sample of permit files at
Jacksonville and of mitigation banks at the Jacksonville, New Orleans,
and St. Paul districts. These samples were drawn so that the estimates
from the samples would have a precision margin of about plus or minus
15 percentage points at the 95 percent confidence level. However, we
decided not to project our estimates to the population of permits in
the seven districts because some districts were unable to find
information for our sampled units, and another district was unable to
provide a list of permits within the scope of our sample. Since we had
no information on the missing permits, we are only presenting estimates
for the permits and banks that we reviewed.
While our results are not representative of the activities of the 38
district offices nationwide, the Corps' Chief of the Regulatory Branch
told us that our findings would likely indicate program implementation
at the other districts not included in the scope of our review. Tables
1 through 3 detail the permit files, mitigation banks, and in-lieu-fee
arrangements reviewed at each of the districts.
Table 1: Permit Files Reviewed at the Seven Districts, Fiscal Year
2000:
District: Charleston;
Number of permits reviewed: 25.
District: Galveston;
Number of permits reviewed: 18.
District: Jacksonville;
Number of permits reviewed: 24.
District: New Orleans;
Number of permits reviewed: 26.
District: St. Paul;
Number of permits reviewed: 31.
District: Seattle;
Number of permits reviewed: 7.
District: Wilmington;
Number of permits reviewed: 21.
Total;
Number of permits reviewed: 152.
Source: GAO analysis of Corps data.
[End of table]
As listed in table 1, we reviewed all permits that met our criteria
(individual permits where the permittee was responsible for performing
mitigation issued in fiscal year 2000) with the following exceptions:
* Charleston. The district could not locate three permit files.
* Jacksonville. We selected a random sample of 55 the 167 individual
permits identified by Jacksonville officials. The district could not
locate complete permit files for 13 of the permits we requested. In
addition, 18 of the permits we requested did not meet our criteria; for
example, some permits were modified in fiscal year 2000 but were not
issued in that year.
* New Orleans. District officials could not identify the permits that
met our criteria from the district database. Therefore, we asked
district officials to select the permits issued in fiscal year 2000
where the permittee was responsible for performing compensatory
mitigation and reviewed all of the permits they identified.
* St. Paul. The district could not locate one permit file.
Table 2: Mitigation Banks Reviewed at the Seven Districts, November 28,
1995, through December 2004:
District: Charleston;
Number of banks reviewed: 10.
District: Galveston;
Number of banks reviewed: 4.
District: Jacksonville[A];
Number of banks reviewed: 19.
District: New Orleans[A, B];
Number of banks reviewed: 23.
District: St. Paul[A];
Number of banks reviewed: 28.
District: Seattle;
Number of banks reviewed: 2.
District: Wilmington;
Number of banks reviewed: 9.
Total;
Number of banks reviewed: 95[C].
Source: GAO analysis of Corps data.
[A] We randomly selected mitigation bank files for review at this
district.
[B] New Orleans could not locate files for two of the mitigation banks
that we requested for review.
[C] This total includes the 10 mitigation bank agreements that were
approved during 2004: Jacksonville - 4, New Orleans - 1, and St. Paul -
5.
[End of table]
Table 3: In-Lieu-Fee Arrangements Reviewed at the Seven Districts:
District: Charleston;
Number of arrangements: 2.
District: Galveston;
Number of arrangements: 4.
District: Jacksonville;
Number of arrangements: 4.
District: New Orleans;
Number of arrangements: 1.
District: St. Paul;
Number of arrangements: 0.
District: Seattle;
Number of arrangements: 0.
District: Wilmington;
Number of arrangements: 1.
Total;
Number of arrangements: 12.
Source: GAO analysis of Corps data.
Note: At the Galveston and New Orleans districts, we asked for
documentation of the in-lieu-fee arrangements. Because neither of these
districts has formal agreements for its arrangements, as called for by
federal guidance, the districts did not provide any documentation for
us to review. Therefore, any information about these districts' in-
lieu-fee arrangements was obtained through interviews with district
officials.
[End of table]
In addition to the file reviews, we spoke with district officials and
reviewed relevant documentation to gain a better understanding of the
districts' oversight programs and to gather any information that may
not have been available during our file reviews.
To identify the enforcement actions the Corps can take if it determines
that compensatory mitigation requirements are not being met and the
extent to which it takes these actions, we analyzed Corps data on how
the district offices resolved instances of noncompliance during fiscal
year 2003. In addition, we reviewed relevant regulations and
documentation obtained either from Corps officials or identified during
our file reviews. We also discussed with headquarters and district
officials the enforcement actions available to the Corps and the
frequency with which the districts used these actions.
In addition, we met with several sponsors of mitigation banks and in-
lieu-fee arrangements, as well as subject area experts, such as members
of the National Research Council, to gain their views on the Corps'
mitigation program. We conducted our review from June 2004 through
September 2005 in accordance with generally accepted government
auditing standards.
[End of section]
Appendix II: Corps of Engineers Federal Guidance for Oversight of
Compensatory Mitigation:
As noted earlier, the Corps has three primary guidance documents for
overseeing compensatory mitigation performed by permittees, mitigation
banks, and in-lieu-fee arrangements: (1) The 1999 Army Corps of
Engineers Standard Operating Procedures for the Regulatory Program
(Parts I and II); (2) The Federal Guidance for the Establishment, Use
and Operation of Mitigation Banks; and (3) The Federal Guidance on the
Use of In-Lieu-Fee Arrangements for Compensatory Mitigation Under
Section 404 of the Clean Water Act and Section 10 of the Rivers and
Harbors Act. These documents provide guidance for overseeing
compensatory mitigation as described in this appendix.
Standard Operating Procedures for the Regulatory Program (Parts I and
II):
The Corps' 1999 Standard Operating Procedures for the Regulatory
Program (Part I) highlights critical policies and procedures that are
major factors in administering a consistent program nationwide. It
specifies the following:
* For all compensatory mitigation,
* Compliance inspections are essential.
* For individual permitees,
* Districts will inspect a relatively high percentage of compensatory
mitigation to ensure compliance with permit conditions. This is
important because many of the Corps permit decisions require
compensatory mitigation to offset project impacts.
* To minimize field visits and the associated expenditures of
resources, permits with compensatory mitigation requirements should
require applicants to provide periodic monitoring reports and certify
that the mitigation is in accordance with permit conditions. Districts
should review all monitoring reports.
* Districts will require all permittees to submit a self-certification
statement of compliance. Districts should not be expending funds on
surveillance as a discrete activity. Surveillance should be performed
in conjunction with other activities such as permit or enforcement
actions.
* For mitigation banks,
* Districts will inspect all mitigation banks to ensure compliance with
the banking agreement.
* For in-lieu-fee arrangements,
* These are not mentioned in Part I of the standard operating
procedures.
The Corps' Standard Operating Procedures for the Regulatory Program
(Part II) lists the work that should be prioritized. Part II states
that it is not intended to dissuade districts from doing lower priority
work; however, all districts should perform the high priority work
before expending resources on the lower priority work. Part II
specifies the following for mitigation:
* High priority work consists of:
* requiring and reviewing monitoring reports on mitigation banks and
other substantial mitigation, including in-lieu-fee approaches to
assure success; and:
* Low priority work consists of:
* compliance inspections for all mitigation and multiple site visits to
a mitigation site.
Federal Guidance for the Establishment, Use and Operation of Mitigation
Banks:
The Federal Guidance for the Establishment, Use and Operation of
Mitigation Banks, issued in November 1995, provides policy guidance for
the establishment, use, and operation of mitigation banks for the
purpose of providing compensatory mitigation. Oversight guidance in
this document is as follows:
* Members of the mitigation banking review team, which the Corps
chairs, are encouraged to conduct regular (e.g., annual) on-site
inspections, as appropriate, to monitor bank performance.
* Annual monitoring reports should be submitted to the authorizing
agencies, which include the Corps. The period for monitoring will
typically be 5 years; however, it may be necessary to extend this
period for projects requiring more time to reach a stable condition or
where remedial activities were undertaken.
Federal Guidance on the Use of In-Lieu-Fee Arrangements for
Compensatory Mitigation Under Section 404 of the Clean Water Act and
Section 10 of the Rivers and Harbors Act:
The Federal Guidance on the Use of In-Lieu-Fee Arrangements for
Compensatory Mitigation Under Section 404 of the Clean Water Act and
Section 10 of the Rivers and Harbors Act, issued in November 2000,
clarifies the manner in which in-lieu-fee mitigation may serve as an
effective and useful approach to satisfy compensatory mitigation
requirements and meet the administration goal of no net loss of
wetlands. Related to oversight, it specifies the following:
* There should be appropriate schedules for regular (e.g., annual)
monitoring reports to document funds received, impacts permitted, how
funds were disbursed, types of projects funded, and the success of
projects conducted, among other aspects of the arrangement.
* The Corps should evaluate the reports and conduct regular reviews to
ensure that the arrangement is operating effectively and is consistent
with agency policy and the specific agreement.
[End of section]
Appendix III: File Review Results by Corps District:
This appendix presents the results of our file review at seven Corps
districts--Charleston, South Carolina; Galveston, Texas; Jacksonville,
Florida; New Orleans, Louisiana; St. Paul, Minnesota; Seattle,
Washington; and Wilmington, North Carolina. Results of our review for
individual permits issued in fiscal year 2000 where permittees were
responsible for the mitigation are presented in table 4. Results for
mitigation banks approved between the date of the mitigation bank
federal guidance (November 28, 1995) and December 31, 2003, are in
table 5 and in-lieu-fee arrangements currently operating at the
districts at the time of our site visits are in table 6.
Table 4: Results of Review of Corps Oversight of Individual Permits
Issued in Fiscal Year 2000 Where Permittees Are Responsible for
Compensatory Mitigation:
Number of permit files reviewed;
Charleston: 25;
Galveston: 18;
Jacksonville: 24;
New Orleans: 26;
St. Paul: 31;
Seattle: 7;
Wilmington: 21.
Permits requiring monitoring reports;
Charleston: 0;
Galveston: 11;
Jacksonville: 16;
New Orleans: 19;
St. Paul: 19;
Seattle: 7;
Wilmington: 17.
Permit files with evidence of at least one monitoring report;
Charleston: 1[A];
Galveston: 1[A];
Jacksonville: 11;
New Orleans: 0;
St. Paul: 2;
Seattle: 2;
Wilmington: 8[B].
Permit files with evidence of at least one compliance inspection;
Charleston: 3;
Galveston: 3;
Jacksonville: 4;
New Orleans: 0;
St. Paul: 1;
Seattle: 2;
Wilmington: 10.
Permit files with evidence of either monitoring reports or compliance
inspections;
Charleston: 4;
Galveston: 3;
Jacksonville: 13;
New Orleans: 0;
St. Paul: 3;
Seattle: 2;
Wilmington: 14.
Source: GAO analysis of Corps data.
[A] Monitoring report was received, but the Corps did not require the
permittee to submit it.
[B] Of the eight permit files with evidence of at least one monitoring
report in Wilmington, two of the permits did not require these reports.
[End of table]
Table 5: Results of Review of Corps Oversight of Mitigation Banks
Approved from November 1995 through December 2003:
Number of mitigation bank files reviewed;
Charleston: 10;
Galveston: 4;
Jacksonville[A]: 15[B];
New Orleans[A]: 22[C];
St. Paul[A]: 23[D];
Seattle: 2;
Wilmington: 9.
Mitigation banking agreements requiring monitoring reports;
Charleston: 5;
Galveston: 4;
Jacksonville[A]: 14;
New Orleans[A]: 22;
St. Paul[A]: 4;
Seattle: 2;
Wilmington: 9.
Mitigation bank files with evidence of at least one monitoring report;
Charleston: 4;
Galveston: 3;
Jacksonville[A]: 7[E];
New Orleans[A]: 16;
St. Paul[A]: 2;
Seattle: 2;
Wilmington: 9.
Mitigation bank files with evidence of at least one compliance
inspection;
Charleston: 5;
Galveston: 1;
Jacksonville[A]: 5;
New Orleans[A]: 9;
St. Paul[A]: 3;
Seattle: 1;
Wilmington: 7.
Mitigation bank files with evidence of either monitoring reports or
compliance inspections;
Charleston: 7;
Galveston: 3;
Jacksonville[A]: 8;
New Orleans[A]: 18;
St. Paul[A]: 5;
Seattle: 2;
Wilmington: 9.
Source: GAO analysis of Corps data.
[A] GAO reviewed a random sample of mitigation bank files at this
district.
[B] Four additional banks were approved in 2004. All of the banking
agreements require the sponsor to provide monitoring reports to the
Corps.
[C] One additional bank was approved in 2004. The banking agreement
requires the sponsor to provide monitoring reports to the Corps.
[D] Five additional banks were approved in 2004. Of these, one of the
banking agreements required the sponsor to provide monitoring reports
to the Corps.
[E] For one bank, a monitoring report was received, but the Corps did
not require the bank to submit it.
[End of table]
Table 6: Results of Review of Corps Oversight of In-Lieu-Fee
Arrangements Currently in Operation at the Time of Our Site Visit:
Number of in-lieu-fee arrangements reviewed;
Charleston: 2;
Galveston[A]: 4;
Jacksonville: 4;
New Orleans [A]: 1;
St. Paul: 0;
Seattle: 0;
Wilmington: 1.
Arrangements with agreements requiring monitoring reports;
Charleston: 2;
Galveston[A]: 0;
Jacksonville: 3;
New Orleans [A]: 0;
St. Paul: N/A;
Seattle: N/A;
Wilmington: 1.
Arrangements with evidence of at least one monitoring report;
Charleston: 1;
Galveston[A]: 0;
Jacksonville: 4[B];
New Orleans [A]: 0;
St. Paul: N/A;
Seattle: N/A;
Wilmington: 1.
Arrangements with evidence of at least one compliance inspection;
Charleston: 0;
Galveston[A]: 0;
Jacksonville: 4;
New Orleans [A]: 0;
St. Paul: N/A;
Seattle: N/A;
Wilmington: 1.
Arrangements with evidence of either monitoring reports or compliance
inspections;
Charleston: 1;
Galveston[A]: 0;
Jacksonville: 4;
New Orleans [A]: 0;
St. Paul: N/A;
Seattle: N/A;
Wilmington: 1.
Source: GAO analysis of Corps data.
[A] The Galveston and New Orleans districts do not have any formal
agreements or documentation regarding oversight for their in-lieu-fee
arrangements. As a result, district officials did not have any
monitoring requirements or provide files for us to review.
[B] For one arrangement, a monitoring report was received, but the
Corps did not require the arrangement to submit it.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Defense:
DEPARTMENT OF THE ARMY:
OFFICE OF THE ASSISTANT SECRETARY:
CIVIL WORKS:
108 ARMY PENTAGON:
WASHINGTON DC 20310-0108:
26 AUG 2005:
Ms. Anu Mittal:
Director:
Natural Resource and Environment:
U.S. General Accounting Office:
441 G Street, N.W.
Washington, D.C. 20548-1000:
Dear Ms. Mittal:
This is the Department of Defense (DOD) response to the GAO draft
report, WETLANDS PROTECTION: Corps of Engineers Is Not Providing the
Oversight Needed to Ensure That Compensatory Mitigation Is Occurring,'
dated August 12, 2005, (GAO Code 360490/GAO-05-898).
The GAO report was prepared to examine the: (1) guidance the Corps has
issued for overseeing compensatory mitigation; (2) extent to which the
Corps oversees compensatory mitigation; and (3) enforcement actions the
Corps can take if required mitigation is not performed and the extent
to which it takes these actions. The report acknowledges that the Corps
has existing guidance that establishes two primary oversight activities
for compensatory mitigation: requiring monitoring reports be submitted
by permittees and conducting compliance inspections of the mitigation
sites. In general, the report concludes that better oversight of
compensatory mitigation is completed for third-party mitigation than
for permittee-responsible mitigation. In addition, the report indicates
that the Corps prefers to negotiate with permittees over using
enforcement actions to bring them into compliance with permit
conditions, and for those infrequent circumstances where permittees
believe that enforcement actions have been overly severe they may
request review by the appropriate Division Commander. As a consequence
of this investigation, the GAO recommends that the Secretary of the
Army direct the Corps to establish an effective oversight approach to
ensure that permittees and third parties are accomplishing all required
compensatory mitigation as specified in their authorizations. On behalf
of the Department of Defense, I have enclosed specific comments on the
recommendations of the GAO.
Very truly yours,
Signed by:
John Paul Woodley, Jr.:
Assistant Secretary of the Army (Civil Works):
Enclosure:
GAO DRAFT REPORT - DATED AUGUST 12, 2005 GAO CODE 360490/GAO-05-898:
"WETLANDS PROTECTION: Corps of Engineers is Not Providing the Oversight
Needed to Ensure That Compensatory Mitigation Is Occurring"
DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:
RECOMMENDATION 1: The GAO recommends that the Secretary of the Army
direct the Corps of Engineers to develop more specific guidance for
overseeing compensatory mitigation performed by permittees, mitigation
banks, and in-lieu-fee sponsors. In particular, the guidance should
define key terms, such as "substantial mitigation"; and specify the
actions Corps officials should take if required monitoring reports are
not received. (p. 28/GAO Draft Report):
DOD RESPONSE: We concur with this recommendation. The Standard
Operation Procedures (SOP) procedures issued in 1999 do not adequately
address mitigation nor compliance and enforcement. The Corps recognized
this shortcoming prior to the GAO initiating this investigation and has
been working on a revised SOP to clarify existing discrepancies and
lack of specific guidance. The revised SOP will provide details on
mitigation requirements as well as compliance and enforcement
procedures in relation to all permit conditions, including compensatory
mitigation requirements. A revised draft SOP will be circulated in
October 2005 for review and comment by the Corps Divisions and
Districts.
RECOMMENDATION 2: The GAO recommends that the Secretary of the Army
direct the Corps of Engineers to clarify expectations for oversight of
mitigation, including establishing goals for the number of monitoring
reports that should be reviewed and the number of compliance
inspections that should be conducted. (p. 28/GAO Draft Report):
DOD RESPONSE: We concur. The Corps will issue a Regulatory Guidance
Letter (RGL) clarifying monitoring requirements for compensatory
mitigation projects. The RGL will state what is required to be
monitored and provide an outline for standardized monitoring reports.
This outline will ensure Corps resources are used to provide oversight
of the projects themselves rather than reports. In addition to the RGL,
the Corps has established performance measures (issued in 2003 and will
be tracked in 2006) that provide clear guidance to Corps districts on
the level of oversight that is expected for compensatory mitigation
projects. These performance measures were coordinated with the Office
of Management and Budget through the Program Assessment and Rating Tool
process (PART). Through a combination of the RGL and tracking of the
performance measures, the Corps will insure better oversight of
existing and future compensatory mitigation so that the
Administration's goal of no overall net loss of wetlands is achieved
within our Regulatory program. Additionally, the RGL will communicate
to the public, mitigation bankers, ILF providers, and the Federal and
State agencies what is expected of permittees who are required to
perform compensatory mitigation.
RECOMMENDATION 3: The GAO recommends that the Secretary of the Army
direct the Corps of Engineers to review existing mitigation banks and
in-lieu-fee arrangements to ensure that they have approved agreements
with the Corps, as called for in federal guidance. If such agreements
are not in place, they should be developed. Additionally, the Corps
should ensure that future mitigation banks and in-lieu-fee arrangements
have these approved agreements. (p. 29/GAO Draft Report):
DOD RESPONSE: We concur. In response to independent critiques of the
effectiveness of wetland compensatory mitigation projects, the Army
Corps of Engineers, the Environmental Protection Agency, and the
Departments of Agriculture, Commerce, Interior, and Transportation
released the National Wetlands Mitigation Action Plan (MAP) on December
26, 2002. The MAP includes tasks that will lead to improved ecological
performance and results of compensatory mitigation. On May 7, 2004, the
Corps issued guidance entitled "Mitigation for Impacts to Aquatic
Resources from Surface Coal Mining" to supplement existing guidance so
as to facilitate uniform implementation of compensatory mitigation
requirements and the implementation of successful compensatory
mitigation projects. In addition, Section 314 of the National Defense
Authorization Act for Fiscal Year 2004 directed the Corps to issue
regulations "establishing performance standards and criteria for the
use, consistent with section 404 of the Federal Water Pollution Control
Act (33 U.S.C. 1344), of on-site, off-site, and in-lieu fee mitigation
and mitigation banking as compensation for lost wetlands functions in
permits issued by the Secretary of the Army under such section." The
Corps has prepared a draft mitigation rule that establishes standards
and requirements for all forms of compensatory mitigation projects,
including wetland and stream projects. The Corps will implement this
new comprehensive mitigation rule in accordance with the interagency
vetting, coordination, and comment procedures stipulated by the
Administrative Procedures Act. The Corps will ensure district offices
follow these new requirements and procedures in concert with additional
follow-on supplemental guidance developed through the MAP process.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Anu K. Mittal (202) 512-3841 (mittala@gao.gov):
Staff Acknowledgments:
In addition to the individual named above, Sherry McDonald, Assistant
Director; Diane Caves; Jonathan Dent; Doreen Feldman; Janet Frisch;
Natalie Herzog; Cynthia Norris; Karen O'Conor; Anne Rhodes-Kline; Jerry
Sandau; Carol Herrnstadt Shulman; Lisa Vojta; and Daniel Wade Zeno made
key contributions to this report.
(360490):
FOOTNOTES
[1] According to the Environmental Law Institute, in the early 1990s,
most banks were sponsored by public entities, such as state highway
agencies, but now most mitigation banks are sponsored by private
entities.
[2] Invasive species are nonnative plants, animals, and microorganisms
that are found throughout the United States and that have a devastating
effect on natural areas, where they can take over wetland habitats and
strangle native flora.
[3] GAO, Wetlands: The Corps of Engineers' Administration of the
Section 404 Program, GAO/RCED-88-110 (Washington, D.C.: July 28, 1988).
[4] Individual permits are typically issued for projects that may have
substantial environmental impacts. For smaller impacts, Corps officials
generally issue either letters of permission, which are used when the
proposed work is minor and is not expected to receive appreciable
opposition, or general permits, which cover activities that have been
identified as being substantially similar in nature, such as
stabilizing stream banks. The Charleston, Galveston, Jacksonville, New
Orleans, St. Paul, and Wilmington districts were the top six districts
nationwide in terms of mitigation required by individual permits.
Seattle was among the top districts in the western part of the United
States.
[5] In those districts where it was not feasible to review all files,
we selected a random sample of files from the district's database for
review. We reviewed a random sample of permit files in the Jacksonville
district and a random sample of mitigation bank files in the
Jacksonville, New Orleans, and St. Paul districts. Because the New
Orleans district was not able to identify permits requiring the
permittee to perform mitigation from their database, we asked district
officials to select these permits, and we reviewed all of them.
[6] Under Corps' regulations, the Corps may refer appropriate cases to
the local U.S. attorney to file a criminal or civil action. Appropriate
cases include, but are not limited to, violations that are willful,
repeated, or of substantial impact. 33 C.F.R § 326.5.
[7] The Emergency Wetlands Resources Act of 1986, as amended, requires
the Fish and Wildlife Service to, among other things, assess the status
of wetlands in the United States and trends in wetland gains or losses
and to report the results to Congress each decade. 16 U.S.C. § 3931.
[8] Exec. Order No. 11990 (May 24, 1977).
[9] Other federal laws and programs regulating activities in wetlands
include the Swampbuster Provision of the Food Security Act of 1985, as
amended, which denies benefits to farmers who drain wetlands on their
property; the Wetlands Reserve Program, which offers payments to
farmers to restore and protect wetlands on their property; and the
Coastal Wetlands Planning, Protection and Restoration Act, which
authorized spending for coastal wetlands conservation and restoration
projects and created a task force to develop a comprehensive approach
for protecting and restoring coastal wetlands in Louisiana.
[10] These discharges result from activities such as construction or
mining and may include soil, rock, sand, or other materials. Section
404(g) of the Clean Water Act authorizes EPA-approved states to assume
responsibility for issuing section 404 permits in certain waters under
their jurisdiction (other than waters used to transport interstate or
foreign commerce); only Michigan and New Jersey have assumed this
responsibility.
[11] Even an acre for acre replacement of lost wetlands may not
translate into maintaining equal functionality. Questions remain about
whether created wetlands function as effectively as natural wetlands.
[12] The Corps refers to its actions in response to activities not in
compliance with issued permits as "compliance actions," as distinct
from EPA's "enforcement actions" in response to unauthorized activities
performed without required permits.
[13] GAO, Wetlands Protection: The Scope of the Section 404 Program
Remains Uncertain, GAO/RCED-93-26 (Washington, D.C.: Apr. 6, 1993).
[14] See appendix II for a summary of these guidance documents.
[15] A mitigation banking review team is an interagency group of
federal, state, tribal, and/or local regulatory and resource agency
representatives which are signatories to the mitigation banking
agreement and oversee the establishment, use, and operation of the
mitigation bank.
[16] The Jacksonville district office has a tracking system for permits
and is modifying the system to include mitigation banks. The New
Orleans district only has a system for tracking reports for mitigation
banks. The Seattle district has a system for tracking reports from
permittees, and officials stated that it does not currently need such a
system for mitigation banks because it has not had a problem with
receiving the reports since there are only two banks currently approved
by the district.
[17] This agreement is referred to as the mitigation banking instrument
in the federal mitigation banking guidance.
[18] In 1991, the Corps' numerical inspection goal was equivalent to 25
percent of the individual permits issued in the prior year. Permits
with required mitigation, including general permits if applicable, were
a high priority to inspect.
[19] The permit files in the Wilmington district contained evidence
that district officials had more consistently conducted oversight of
mitigation performed by permittees. There was evidence that district
officials had either received a monitoring report or conducted a
compliance inspection for 14 of 21 permit files, or 67 percent, that we
reviewed. See appendix III.
[20] Four permit files contained evidence that the Corps received
monitoring reports although the Corps did not require submission of
these reports.
[21] Only one district did not conduct oversight for a majority of the
mitigation banks that we reviewed. We reviewed an additional 10
mitigation bank files for banks approved during calendar year 2004. We
did not include these banks in our overall totals because monitoring
reports are typically required on a yearly basis and not enough time
had elapsed during our review to determine if the banks submitted
monitoring reports.
[22] One mitigation bank file contained evidence that the Corps
received a monitoring report even though the Corps did not require the
sponsor to submit monitoring reports.
[23] The Corps refers to its actions in response to noncompliance as
"compliance actions," as distinct from EPA's "enforcement actions" in
response to unauthorized activities performed without required permits.
[24] 33 U.S.C. § 1344(s); 33 C.F.R. § 326.4(d).
[25] The Corps has authority to assess Class I administrative penalties
in an amount of up to $11,000 per violation, not to exceed $27,500. 33
U.S.C. § 1319(g) and 33 C.F.R. § 326.6(a)(1). The current penalty
amounts were effective July 26, 2004. 69 Fed. Reg. 35518 (June 25,
2004). However, under the Corps' policy, once the Corps decides to
proceed with an administrative penalty, it cannot subsequently refer
the case to the Department of Justice for legal action. 33 C.F.R. §
326.6(a)(2).
[26] 33 C.F.R. § 325.4(d).
[27] 33 C.F.R. § 325.7(c).
[28] 33 C.F.R. § 325.7(d).
[29] 33 U.S.C. § 1344(s); 33 C.F.R. § 326.5.
[30] 33 C.F.R. § 326.5(a).
[31] 33 U.S.C. § 1344(s)(4).
[32] 60 Fed. Reg. 58605 (Nov. 28, 1995).
[33] 65 Fed. Reg. 66914 (Nov. 7, 2000).
[34] The fiscal year 2003 data provided by the Corps includes
information about litigation and penalties but does not provide
information on permit suspensions or revocations. According to a
headquarters senior project manager, the Corps rarely uses these
actions to obtain compliance.
[35] 31 U.S.C. § 3302(b), known as the miscellaneous receipts statute,
requires that, unless otherwise provided, a government agency must
deposit any funds received from sources other than appropriations into
the general fund of the Treasury.
[36] A National Research Council report also has noted that it is
important for permit requirements to contain clear and comprehensive
information about compensatory mitigation and that without such
information Corps officials may not be able to ensure that mitigation
replaces the functions and values of lost wetlands.
[37] According to a New Orleans official, although the majority of the
total is the result of compensatory mitigation requirements, some of
the monies were collected as a result of penalty assessments from the
state's coastal program.
[38] Individual permits are typically issued for projects that may have
substantial environmental impacts. For smaller impacts, Corps officials
generally issue either letters of permission, which are used when the
proposed work is minor and is not expected to receive appreciable
opposition, or general permits, which cover activities that have been
identified as being substantially similar in nature, such as
stabilizing stream banks.
GAO's Mission:
The Government Accountability Office, the investigative arm of
Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office
441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director,
NelliganJ@gao.gov
(202) 512-4800
U.S. Government Accountability Office,
441 G Street NW, Room 7149
Washington, D.C. 20548:
