Army Corps of Engineers: Communication with Users on Water Storage Fees and Cost Estimates Could Be Improved

Fast Facts

The Army Corps of Engineers stores water in its reservoirs for local water utilities and other municipal and industrial water users. These users pay annual fees to the Corps, which cover their share of operation and maintenance costs.

Corps officials say they communicate with users about these fees annually, but we found they often provide few details beyond the amount. Users told us it's unclear what their fees are covering, and that they have few opportunities to discuss fees with the Corps. Clearer communication from the Corps can help users plan for their annual fee more easily.

Our recommendations address these and other issues we found.

Army Corps operations and maintenance work includes erosion control and prevention

Highlights

What GAO Found

The U.S. Army Corps of Engineers (Corps) enters into agreements with municipal and industrial water users, such as local water utilities, for reservoir storage space. Users must annually reimburse the federal government for their portion of the reservoir's operations and maintenance (O&M) cost, and such reimbursements can be considered user fees. The Corps district offices GAO spoke with followed many key practices for setting user fees. For example, the Corps accounted for the total costs of providing the service and established user-specific fees.

However, these district offices did not follow a key practice related to sharing information with users to help assure them that the fees are set fairly and accurately. The 10 Corps district offices GAO spoke with communicated limited fee information and offered few opportunities for users to discuss the fee. For example, two districts did not provide users with any supplemental information beyond the fee amount and one user in these districts told GAO they regularly request supplemental information from the Corps to better understand their fee. The other eight districts provided users with some supplemental information, but multiple users in those districts told GAO that such information lacked key details on specific O&M costs and activities.

Example of Corps Operations and Maintenance Work

Replacement of riprap stone protection on the outlet channel bank.

Example of Corps Operations and Maintenance Work

Five of the 10 Corps districts GAO spoke with did not provide users with legally required 5-year O&M cost estimates, and the Corps does not yet have an oversight mechanism to ensure these estimates are provided. By law, the Corps is required to notify water users of anticipated O&M costs for the upcoming fiscal year and the following 4 years. Water users can review these estimates to be informed about future costs, such as dam safety risk assessments, which are scheduled every 10 years. All five of the users GAO spoke with who were not provided the estimates said they would be helpful for planning purposes. In December 2024, Corps officials told GAO that headquarters is in the early stages of developing and establishing a mechanism to oversee these estimates but did not provide documentation of this effort. Developing such a mechanism will help assure Corps headquarters that districts provide users with information needed to effectively plan and administer their water supply storage.

Why GAO Did This Study

Nationwide, the Corps oversees over 400 water storage agreements that collectively provide about 11 million acre-feet of storage in exchange for users sharing O&M costs with the Corps. Prior GAO work found user concern with certain aspects of the Corps' annual O&M user fee process, including variations in annual fees and a lack of detailed information about them. The James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 includes a provision for GAO to review the Corps' practices associated with O&M fees.

This report examines the extent to which the Corps has (1) managed its annual O&M user fee process consistently with selected key practices for federal user fees and (2) developed the 5-year O&M cost estimates as required by law.

GAO selected a nongeneralizable sample of 14 water storage agreements from 10 Corps districts according to criteria such as water storage capacity, reviewed agency documents, and interviewed Corps officials and municipal and industrial water users. GAO compared the Corps' current practices to GAO's federal user fee design guide and a 2014 legal requirement.

Recommendations

GAO is making three recommendations to the Department of Defense to improve how the Corps both communicates annual O&M fees and provides 5-year O&M cost estimates. The Office of the Assistant Secretary of the Army for Civil Works agreed with all three recommendations and described planned actions to implement them.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	The Assistant Secretary of the Army for Civil Works should ensure the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers develop a policy to help ensure effective communication of annual O&M fees to users. Such a policy could include provisions providing users information that explains, in plain language, what activities the fee pays for as well as providing users with a specific opportunity to discuss the fee. (Recommendation 1)	Open When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Defense	The Assistant Secretary of the Army for Civil Works should ensure the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers develop and implements an oversight mechanism to ensure that all non-federal users receive the legally required 5-year O&M cost estimates each year. (Recommendation 2)	Open When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Defense	The Assistant Secretary of the Army for Civil Works should ensure the Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers provide estimating instructions for the 5-year O&M cost estimates and consider including recapitalization costs in those estimates. (Recommendation 3)	Open When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.