Coastal Barrier Resources System:

Status of Development That Has Occurred and Financial Assistance Provided by Federal Agencies

GAO-07-356: Published: Mar 19, 2007. Publicly Released: Mar 19, 2007.

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In 1982, Congress enacted the Coastal Barrier Resources Act. The Coastal Barrier Resources Act, as amended (CBRA), designates 585 units of undeveloped coastal lands and aquatic habitat as the John H. Chafee Coastal Barrier Resources System (CBRS). CBRA prohibits most federal expenditures and assistance within the system that could encourage development, but it allows federal agencies to provide some types of assistance and issue certain regulatory permits. In 1992, GAO reported that development was occurring in the CBRS despite restrictions on federal assistance. GAO updated its 1992 report and reviewed the extent to which (1) development has occurred in CBRS units since their inclusion in the system and (2) federal financial assistance and permits have been provided to entities in CBRS units. GAO electronically mapped address data for structures within 91 randomly selected CBRS units and collected information on federal financial assistance and permits for eight federal agencies.

An estimated 84 percent of CBRS units remain undeveloped, while 16 percent have experienced some level of development. About 13 percent of the developed units experienced minimal levels of development--typically consisting of less than 20 additional structures per unit since becoming part of the CBRS, and about 3 percent experienced significant development--consisting of 100 or more structures per unit--since becoming part of the CBRS. According to federal and local officials, CBRA has played little role in the extent of development within the CBRS units that we reviewed because they believe that other factors have been more important in inhibiting development. These include (1) the lack of suitably developable land in the unit; (2) the lack of accessibility to the unit; (3) state laws discouraging development within coastal areas; and (4) ownership of land within the unit by groups, such as the National Audubon Society, who are seeking to preserve its natural state. In units that GAO reviewed where development had occurred, federal and local officials also identified a number of factors that have contributed to development despite the unit's inclusion in the CBRS. These include (1) a combination of commercial interest and public desire to build in the unit, (2) local government support for development, and (3) the availability of affordable private flood insurance. Multiple federal agencies have provided some financial assistance to property owners in CBRS units that is expressly prohibited by CBRA; some assistance allowed under CBRA; and hundreds of permits for federally regulated development activities within the unit. Specifically, four agencies--the Department of Housing and Urban Development, the Department of Veterans Affairs, the Federal Emergency Management Agency, and the Small Business Administration--provided financial assistance, such as flood insurance and loan guarantees, totaling about $21 million that is prohibited by CBRA to property owners in CBRS units. Although most of these agencies had processes in place to prevent such assistance from being provided, they cited problems with inaccurate maps as being a key factor leading to these errors. With regard to financial assistance allowed by CBRA, GAO found that three federal agencies have provided such assistance but did not track how much assistance they provided, so the total extent of this assistance is unknown. With regard to permits issued in CBRS units for federally regulated activities, GAO identified hundreds of permits issued by the Army Corps of Engineers and state agencies authorized to issue permits on behalf of the Environmental Protection Agency. These permits covered various activities such as the construction of piers, the discharge of dredged or fill material into federally regulated waters, and permits associated with water discharges from construction sites or wastewater treatment systems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: SBA obtained determinations that properties were within Coastal Barrier Resources System (CBRS) units and, therefore, in violation with CBRA. For these properties, the loan guarantees were cancelled or paid in full. SBA also examined its' policies and procedures to ensure that they are adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units. As a result of this review, SBA has increased the number of quality assurance reviews conducted by the agency in any disaster area that includes a CBRS unit.

    Recommendation: In light of the federal financial assistance that was provided in violation of CBRA, the Secretaries of the Department of Homeland Security, Housing and Urban Development, and Veterans Affairs, and the Administrator of Small Business Administration should direct their agencies to (1) obtain official determinations from the Fish and Wildlife Service (FWS) on whether the properties we identified as receiving federal assistance in violation of CBRA are in fact located within a CBRS unit and if they are, cancel all inappropriate loan guarantees and insurance policies that have been made to the owners of these properties and (2) examine their policies and procedures to ensure that they are adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units.

    Agency Affected: Small Business Administration

  2. Status: Open

    Comments: During fiscal year 2011, Fish and Wildlife Service (FWS) intends to complete the Digital Mapping Project--which will result in final digital maps for approximately 10 percent of the entire Coastal Barrier Resources System (CBRS). Given existing resources and other competing priorities, the agency has established a target date of September 30, 2016 to complete the digital mapping of all unit boundaries.

    Recommendation: Given the importance of digital maps to making accurate CBRS determinations, the Secretary of the Interior should direct FWS to place a high priority on completing its efforts to develop digital maps that more accurately depict unit boundaries.

    Agency Affected: Department of the Interior

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In light of the federal financial assistance that was provided in violation of CBRA, the Secretaries of the Department of Homeland Security, Housing and Urban Development, and Veterans Affairs, and the Administrator of Small Business Administration should direct their agencies to (1) obtain official determinations from the Fish and Wildlife Service (FWS) on whether the properties we identified as receiving federal assistance in violation of CBRA are in fact located within a CBRS unit and if they are, cancel all inappropriate loan guarantees and insurance policies that have been made to the owners of these properties and (2) examine their policies and procedures to ensure that they are adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Comments: HUD reviewed the properties we identified as receiving federal assistance in violation of CBRA and determined that the loan guarantees for those properties had been cancelled since issuance of our report. In addition, HUD examined its underwriting process to ensure that the policies and guidance were adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units. As a result of the review, HUD developed additional guidance regarding CBRA and provided it to all FHA lenders and providers.

    Recommendation: In light of the federal financial assistance that was provided in violation of CBRA, the Secretaries of the Department of Homeland Security, Housing and Urban Development, and Veterans Affairs, and the Administrator of Small Business Administration should direct their agencies to (1) obtain official determinations from the Fish and Wildlife Service (FWS) on whether the properties we identified as receiving federal assistance in violation of CBRA are in fact located within a CBRS unit and if they are, cancel all inappropriate loan guarantees and insurance policies that have been made to the owners of these properties and (2) examine their policies and procedures to ensure that they are adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units.

    Agency Affected: Department of Homeland Security

  5. Status: Closed - Implemented

    Comments: In response to GAO's report, the Veterans Benefits Administration's Loan Guaranty Service reviewed the 11 loan guarantees GAO identified to be in violation of CBRA. The loan guarantees have been terminated for 10 of the 11 loans. The agency also examined its existing policies, guidance in the Lender's Handbook, and training procedures to ensure they are adequate to prevent future loans from being made within a Coastal Barrier Resources System (CBRS) unit. Based upon the examination, the agency determined that CBRA regulations should be a greater focus during VA appraiser training and the agency will make CBRA regulations a mandatory item to be covered during future training sessions.

    Recommendation: In light of the federal financial assistance that was provided in violation of CBRA, the Secretaries of the Department of Homeland Security, Housing and Urban Development, and Veterans Affairs, and the Administrator of Small Business Administration should direct their agencies to (1) obtain official determinations from the Fish and Wildlife Service (FWS) on whether the properties we identified as receiving federal assistance in violation of CBRA are in fact located within a CBRS unit and if they are, cancel all inappropriate loan guarantees and insurance policies that have been made to the owners of these properties and (2) examine their policies and procedures to ensure that they are adequate to prevent federal assistance that is prohibited by CBRA from being provided to entities in CBRS units.

    Agency Affected: Department of Veterans Affairs

 

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