Natural Resources and Environment:

Corps of Engineers' Acquisition of Fish Hatchery Proves Costly

CED-81-109: Published: Sep 18, 1981. Publicly Released: Oct 1, 1981.

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GAO reviewed the Corps of Engineers' purchase of the Crystal Springs Ranch fish hatchery in connection with the loss of steelhead trout due to dam construction on the lower Snake River. GAO reviewed the appraised value of the hatchery and whether the Corps should have considered contracting with private hatcheries to raise some of the fish.

GAO believes that the method used by the Corps to determine the value of the fish hatchery was deficient and that a more realistic value would have been approximately $2 million less, especially when conversion costs are considered. For example, another trout farm sold in the area for about half of Crystal Springs' selling price. This sale included more water, more land, a processing plant, a feed mill, and other assets not included in the Crystal Springs sale. The production capability on which the facility's value was based was not adequately supported. Thus, the Corps should not have relied on the appraisal because it contained many technical inaccuracies. GAO also believes that the rate of return on the investment in the hatchery was understated. Because of the controversy surrounding the purchase price, the Corps should have had a second appraisal made and should have required that a technical evaluation of production capability be made as part of the appraisal process. Commercial hatcheries could raise trout at substantial savings to the Government, but the Corps would need authority to contract with commercial fish hatcheries to supply the fish in the Lower Snake River. The Corps also has some reservation about the commercial hatcheries' ability to provide a continuous, long-term supply of healthy fish in a timely fashion.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: In future fish hatchery acquisitions where comparable sales are lacking, the Secretary of the Army should direct the Chief of the Corps of Engineers to require appraisers to obtain a technical evaluation to accurately determine the production capability of the facility, more information to support the capitalization rate and, if possible, accurate production records.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of the Army should direct the Chief of the Corps of Engineers to determine the cost effectiveness and capability of commercial hatcheries in the Lower Snake River area to raise steelhead trout comparable in quality to those raised in Federal and State hatcheries. As part of its determination process, the Corps may want to have commercial hatcheries demonstrate their capability to raise steelhead trout.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: If it is feasible for commercial hatcheries to supply steelhead trout, the Secretary of the Army should direct the Chief of the Corps of Engineers to promptly develop and submit to Congress proposed legislation which would authorize the Corps to contract with commercial fish hatcheries in the Lower Snake River area for steelhead trout.

    Agency Affected: Department of Defense: Department of the Army

 

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