Army Corps of Engineers: Actions Needed to Improve Cost Sharing for Dam Safety Repairs
Highlights
What GAO Found
The U.S. Army Corps of Engineers (Corps) determined sponsors' (such as water utilities and hydropower users) share of costs for dam safety repairs pursuant to regulations, but did not apply a provision in a statutory authority that reduces sponsors' share. The Corps determined these cost shares based on analyses of the potential ways each dam could fail, and in consideration of statutory requirements regarding which type of cost sharing arrangement, or authority, would apply given these possible failure scenarios.
- The Corps applied its Major Rehabilitation authority at 11 of the 16 dam safety repair projects GAO reviewed for repairs associated with typical degradation of dams, such as embankment or foundation erosion through seepage. Under this authority, sponsors are to pay their full agreed-upon cost share of the repair.
- The Corps applied its Dam Safety Assurance authority at 5 of the 16 dam safety repair projects GAO reviewed for repairs that resulted from the availability of new hydrologic or seismic data. Under this authority, sponsors' agreed-upon cost share is reduced by 85 percent.
The Corps did not apply one provision of its Dam Safety Assurance authority—related to repairs needed due to changes in state-of-the-art design or construction criteria (state-of-the-art provision)—since the enactment of the enabling legislation in 1986. Since that time, the Corps has not provided guidance on the types of circumstances under which the state-of-the-art provision applies and has not had a consistent policy position regarding the provision. For example, the Corps' latest regulation states in one section that the state-of-the-art provision will not be applied because of the difficulty in defining terminology, while another section allows for consideration on a case-by-case basis. Without clarifying the circumstances under which the state-of-the-art provision applies, and implementing the policy consistently, the Corps is at risk of not applying the full range of statutory authorities provided to it, contributing to conditions under which, as discussed below, sponsors have taken actions opposing the Corps.
In GAO's review of 9 dams with sponsors, the Corps did not communicate with or effectively engage all sponsors. For example, a federal sponsor that markets hydropower generated at two dams disagreed with the Corps' decision to not apply the state-of-the-art provision of its Dam Safety Assurance authority, which, if used, would reduce this sponsor's cost share by about $410 million. This sponsor has proceeded to set its power rates in anticipation of paying the reduced cost share, creating uncertainty for the recovery of federal outlays for repairs. In addition, GAO found the Corps was not effective in reaching agreement with other sponsors on cost-sharing responsibilities at three dams because it did not have clear guidance for effectively communicating with sponsors. For example, the Corps did not engage a sponsor to ensure cost share payment at one dam and, at another dam, delayed executing agreements that would ensure sponsors' cost shares. Because the Corps did not effectively engage these sponsors, some are deriving benefits absent agreements with the Corps, while others that have agreements have not been notified of their final cost-sharing responsibility. As a result, these sponsors' cost share payments (about $3.1 million) are uncertain.
Why GAO Did This Study
The Corps operates over 700 dams, which are aging and may require major repairs to assure safe operation. At some dams, sponsors that benefit from dam operations share in the cost of operating and repairing these dams based on original congressional authorizations for dam construction or subsequent agreements with the Corps. Since 2005, the Corps initiated an estimated $5.8 billion in repairs at 16 dams with urgent repair needs; sponsors are to share repair costs at 9 of these dams.
GAO was asked to examine cost sharing for Corps dam safety repairs. This report examines how, over the last 10 years, the Corps (1) determined cost sharing and (2) communicated with sponsors regarding cost sharing. GAO reviewed relevant laws and Corps regulations; analyzed dam safety projects' documentation for the 16 dams the Corps selected for repairs since 2005; conducted site visits to a non-generalizable sample of three dams based on cost share determinations and range of sponsors; and interviewed Corps officials and sponsors.
Recommendations
GAO recommends that the Corps clarify policy guidance on (1) usage of the state-of-the-art provision and (2) effective communication with sponsors to establish and implement cost sharing agreements for all dams, including the three named in this report. The Department of Defense concurred with GAO's recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve cost sharing for dam safety repairs, the Secretary of Defense should direct the Secretary of the Army to direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to clarify policy guidance on the types of circumstances under which the state-of-the-art provision of the Dam Safety Assurance authority might apply to dam safety repair projects. |
The U.S. Army Corps of Engineers (Corps) operates over 700 dams, which are aging and may require major repairs to assure safe operation. At some dams, non-federal entities-including state, and local agencies as well as private entities-that benefit from dam operations share in the cost of operating and repairing these dams based on authorizations for dam construction or subsequent agreements with the Corps. However, the Corps' Dam Safety Assurance authority allows it to adjust an entities' share of costs under certain circumstances. In December 2015, GAO reported that the Corps had not applied one provision of this Dam Safety Assurance authority-related to repairs needed due to changes in state-of-the-art design or construction criteria (state-of-the-art provision)-since the enactment of the enabling legislation in 1986. When asked why the Corps had not applied this provision, officials said that they would consider applying the state-of-the-art provision on a case-by-case basis, but they have never been presented with a case that they determined to have merited it. The circumstances under which the state-of-the-art provision might apply have not been identified in the Corps regulations, and the Corps has not had a consistent policy position regarding when the state-of-the-art provision might apply. Thus, this lack of clarity coupled with the Corps' inconsistent policy position has hindered the Corps from applying the state-of-the-art provision in a manner consistent with other Dam Safety Assurance provisions. Therefore, GAO recommended that [the Secretary of Defense direct the Secretary of the Army to direct the Chief of Engineers and Commanding General of] the U.S. Army Corps of Engineers clarify policy guidance on the types of circumstances under which the state-of-the-art provision might apply to dam safety repair projects. In 2020, GAO confirmed that the Corps clarified its policy guidance on applying the state-of-the-art provision. Specifically, the Corps issued an Engineering and Construction Bulletin in December 2019 that provided guidance for deciding when dam safety repairs would qualify as changes in state-of-the-art design or construction criteria. The guidance includes categories of circumstances, with some examples, for which the state-of-the-art provision may be used. As a result of its actions, the Corps is now positioned to apply its full range of statutory authorities provided to it and, in turn, better able to ensure that it effectively implements its dam safety program.
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| Department of Defense | To improve cost sharing for dam safety repairs, the Secretary of Defense should direct the Secretary of the Army to direct the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers to clarify policy guidance for district offices to effectively communicate with sponsors to establish and implement cost sharing agreements during dam safety repair projects. For all dams, including the three dams named in the report, this would involve communicating estimated and final cost sharing amounts, executing agreements, and engaging sponsors to ensure cost share payment. |
The U.S. Army Corps of Engineers (Corps) operates over 700 dams in the United States. Non-federal entities-including state, and local agencies as well as private entities-that benefit from dam operations, such as irrigation districts or utility companies, share in the cost of operating and repairing some of the Corps' dams. However, the share of costs that an entity is responsible for varies by dam and depends on several factors-the initial congressional authorization for the dam's construction, subsequent cost-sharing agreements with the Corps, as well as the type of and need for repairs. In 2015, GAO reported that the Corps' existing guidance did not provide clear direction on how to effectively communicate with entities to establish and implement cost sharing agreements for projects. The Corps' Safety of Dams regulation requires Corps districts to: (1) engage sponsors by notifying them during the study phase about the dam safety repair project and their estimated financial responsibility and (2) communicate with sponsors throughout project design and construction as well as officially notify sponsors of their final cost share payment upon the project's completion. In GAO's review of 9 dams with non-federal entities, the Corps had generally established good relationship with these entities and communicated project status information; however, some Corps districts were not timely or effective in communicating and reaching agreement on cost sharing responsibilities. Because the Corps did not have clear guidance to ensure effective communications with sponsors, it did not adequately communicate or reach agreements on cost sharing responsibilities with these sponsors. Therefore, GAO recommended that the Corps clarify policy guidance for district offices to effectively communicate with entities to establish and implement cost sharing agreements during dam safety repair projects. In 2020, GAO confirmed that the Corps clarified its policy guidance on effective communication with non-federal entities regarding cost sharing agreements for dams. Specifically, the Corps issued a memo in October 2018 on changes to agreements for projects-including dam repair projects-requiring the Corps districts to send monthly reports on estimated costs to entities and updating deadlines for entities to pay their share of costs each year. In July 2018, the Corps also released its business process for projects requiring the Corps districts to interact with entities early in the project on costs and schedules and develop a communications plan for interacting with entities and others. As a result of its actions, the Corps' districts have greater clarity about how to effectively communicate with non-federal entities to implement cost sharing agreements and help ensure that the federal government receives expected cost share payments from these entities for dam safety projects.
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