Wetlands Protection:

Corps of Engineers Does Not Have an Effective Oversight Approach to Ensure That Compensatory Mitigation Is Occurring

GAO-05-898: Published: Sep 8, 2005. Publicly Released: Oct 7, 2005.

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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.

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.

Recommendations for Executive Action

  1. Status: Open

    Comments: On October 10, 2008, the Corps of Engineers issued a regulatory guidance letter (RGL-08-03) on minimum monitoring requirements for compensatory mitigation projects. According to the RGL, monitoring requirements, including the frequency for providing monitoring reports, will be determined on a case-by-case basis and specified in either the permit, mitigation banking instrument, or approved mitigation plan. The regulatory guidance letter also describes the required minimum content for monitoring reports.

    Recommendation: 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, the Secretary of the Army should 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.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Open

    Comments: The Corps modified its standard operating procedures (SOP)to emphasize the need for more mitigation compliance. The Corps provided the revised SOP the districts at the joint Corps/EPA conference on May 19, 2008.

    Recommendation: 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, the Secretary of the Army should 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 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.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: On April 10, 2008, the Corps and EPA issued a new rule to clarify how to provide compensatory mitigation for unavoidable impacts to the nation's wetlands and streams. The rule requires that all mitigation banks and in-lieu fee programs approved on or after July 9, 2008 have an approved instrument that governs the establishment, operation and use of these programs. The instrument must be signed by the sponsor and the district engineer prior to being used to provide compensatory mitigation for permits. Mitigation banks and in-lieu fee programs operating under instruments approved prior to July 9, 2008, may continue to operate under those instruments until April 10, 2008 (the effective date of the new rule). At that time, they must meet the requirements of the rule, unless the district engineer determines that an extension is warranted.

    Recommendation: 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, the Secretary of the Army should 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 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 Affected: Department of Defense: Department of the Army

 

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