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Senator JOHNSTON. Provide a table for the record which shows the budget request, congressional appropriation, and actual expenditures by fiscal year from inception through 1987.

General HEIBERG. The table below shows the regulatory budget over the last 15 years, from the inception of the expanded 404 program in 1975. The regulatory program has been in existence since 1890.

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**

Prior to FY 1988, the Regulatory budget was included as
part of the Operation and Maintenance, General, program.

* FY's 76, 77 and 78 increases were for phased-in expansion
of Section 404 programs to all waters of the United States
in accordance with Court order of March 1975.

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Includes $5 million reprogramming adjustment with committee
notification.

Amended Budget.

**** First Year as Separate Budget Request.

Senator JOHNSTON. What specific actions has the Corps taken to identify and control cost within the regulatory program?

General HEIBERG. We have recently implemented more detailed accounting procedures to better control the use of regulatory funds. Districts have also been given additional guidance on how they may use their funds. In addition, we have been working to improve cost management of environmental impact statements and to further insure they are done only when necessary. We recently convened a task force to develop some specific program revisions for cost savings through work reduction. Areas for cost savings we identified include having applicants handle more of the costs of their jurisdictional determination, returning more of the enforcement program to EPA, revising the inter-agency 404 (q) agreements, expanding the nationwide permit program, having permittees verify permit compliance, and reducing the length and cost of public notices. We also intend to provide a more consistent and uniform distribution of resources to our 38 field offices in current and future budgets.

Senator JOHNSTON. What has been done to establish effective auditing and cost accounting procedures which meet standards acceptable to GAO?

General HEIBERG. For the new regulatory appropriation we have established five accounting categories for management of the program. These categories, which are consistent with GAO standards are Permit Evaluation, Enforcement, Studies, Other Navigation Regulations, and Environmental Impact Statements (EISS). Appropriated funds are allotted to districts in each of these categories; districts will report to us monthly on their expenditures in these categories. Individual studies and EISS will be tracked by headquarters to ensure national consistency in the judicious use of funds. In addition, we have developed new guidance on how districts may use their resources.

Senator JOHNSTON. What is the current status of the Corps efforts to submit a plan to recover all regulatory expenses

General HEIBERG. The plan will be submitted to the Assistant Secretary of the Army for Civil Works on March 15 for his review.

Senator JOHNSTON.

What is the schedule for actually submitting the plan? General HEIBERG. I believe the Assistant Secretary expects to have it ready to submit to the committees by April 15.

Senator JOHNSTON.

Has the appropriation of only $55,262,000 for 1988 had any unacceptable adverse impacts on the General Regulatory Functions?

General HEIBERG. The immediate impact on the program is that we have been unable to fill some vacancies, including vacancies for personnel spaces shifted from other Corps programs to handle the regulatory workload. In the past, as part of the O&M appropriation, we could transfer funds from projects that experienced some savings or slippage. In addition, we have reduced contracting and cut back on important support expenses such as travel to permit sites and support from other Corps programs. With an abbreviated staff, workload pressures can cause delays for the regulated public, and there is increased potential for flawed decision making and litigation. Our application backlog is currently over 7,000, 40 percent higher than a year

ago.

Senator JOHNSTON. Has the average processing time been adversely impacted?

Our

General HEIBERG. Average time to review applications has increased. latest data from the first quarter FY 1988, showed that only 45 percent of all applications were given a decision within 60 days vs. 52 percent a year ago and 57 percent two years ago. The overall average is about 80 days per application vs. 72 days in FY 1986.

Senator JOHNSTON. Typically, how many permits does the Corps receive annually and how many of those have a financial benefit to the applicant or involve the sale of goods or services?

General HEIBERG. The Corps has received about 14,000 permit applications each year for the last several years. Many permits to individuals provide Some financial enhancement as in the form of protecting property or raising property values. We estimate that commercial applicants represent from one fourth to one third of the total. In addition, around 10 percent of all applicants are State or Federal agencies.

Senator JOHNSTON. Explain the nature of the "increasing pressure to provide improved service to the public" referred to in the justification material.

General HEIBERG. Delays in providing decisions on permit applications have increased the number of complaints to the Corps in the last two years. Although there are always some delays beyond Corps control, the number of decisions delayed because of inadequate resources has clearly affected the regulated public. The Northeastern offices in particular have had difficulty keeping up with their workload. Phone call complaints and letters from private individuals, companies and government agencies have all increased. Members of Congress frequently write to the Corps on behalf of their constituents about such delays. Delays are costly and frustrating for both builders and private individuals.

Senator JOHNSTON. Is it from the public or private, commercial or non-commercial, etc?

General HEIBERG.

All of these have complained. In the State of Maryland for example, local, state and Federal officials have complained because construction projects such as highways have been delayed. Most of the Congressmen and Senators in Maryland have written to the Corps on this matter. Recently the Maryland State Legislature sponsored a seminar for home builders who have become frustrated over the protracted regulatory process and want help in expediting their applications. I might add that there are also

pressures from the environmental community to ensure there are adequate ecological controls in our decision making.

Senator JOHNSTON. Specifically, what new responsibilities have been added over the past year or two which have increased the cost of the regulatory program?

General HEIBERG. The most significant new responsibility was the 1985 jurisdiction expansion to isolated waters. The addition of isolated waters indirectly resulted in over 10,000 site visits for jurisdiction determinations last year. A few years ago jurisdictional determinations were not a large workload factor. In addition, the new requirements for notification and intense review on some nationwide permits has added new work. Since FY 1985 we have also been operating under new 404 (q) coordination agreements with other Federal agencies which have added some steps to the coordination process. There is also an increasing emphasis on mitigation; the Congress has directed the Corps and EPA to develop a joint mitigation policy. Congress also added new work by providing the Corps a new administrative fine authority for permit non-compliance. Finally, recent court decisions have resulted in additional tasks and requirements for the Corps.

Senator JOHNSTON. From a policy point of view, is there any difference in applying a cost recovery program for General Regulatory Function of the Corps as it is to other Federal regulatory activities such as FERC, NRC, etc?

General HEIBERG. The activities regulated by the Corps of Engineers program are considerably more varied than those regulated by other Federal agencies. Those agencies usually have a specific charge, i.e., the Nuclear Regulatory Commission regulates nuclear power plants, the FERC regulates other power generating facilities, the FAA regulates airlines. The Corps regulates construction activities with a wide variety of purposes. The policy issues that the Corps must deal with can be more complex since the issues are more numerous. A fee system for the Corps would likely be more complex.

development.

INTERAGENCY RESOURCE DEVELOPMENT

Senator JOHNSTON. The budget justification for 1989 includes a new $1,000,000 request to support interagency water resources This appears to be mainly related to activities associated with working out new cost-sharing agreements. How have these activities been funded previously in light of the fact that the Corps has been engaged in these types of activities over the past several years?

General HATCH. The activities covered by the request for Interagency Water Resources Development include more than working out cost sharing agreements. The $1,000,000 will provide funding for meetings and other coordination with cities, counties and states on their water resource problems prior to budgeting for a study and includes activities such as determining whether the Corps has a program applicable to the problem, discussions of non-Federal responsibilities such as cost sharing, and obtaining an indication of their interest in participating in a future study. The meetings and coordination do not always result in a budgeted study. Historically, such costs were an overhead charge borne by all studies. With the advent of cost sharing we recognized that it would not be proper to have a sponsor share in an overhead cost not related to his project.

Can you provide

Senator JOHNSTON.
which supports this $1,000,000 request?

additional documentation

General HATCH. We have not made a detailed study of the costs of these activities, however we feel certain that they exceed the amount requested, and that the $1,000,000 is a conservative figure. As a years experience with this new account we will revise future requests to reflect actual charges.

SPECIAL INVESTIGATIONS

Senator JOHNSTON. The budget request for Special Investigations for fiscal 1988 was $3,650,000 and the FY 1989 request is for $4,500,000. This is a 23 percent increase over last year's request. What is the planned allocation for this activity in 1988?

Mr. PAGE. The planned allocation for the Special Investigations activities in fiscal year 1988 is approximately $400,000 for review of preliminary permit and license applications for non-Federal hydroelectric power development either at or affecting Corps water resources projects and $3,250,000 for special investigations and reports prepared pursuant to Congressional and other requests from outside the Corps and similar work of detailed scope specifically authorized by the Chief of Engineers.

Senator JOHNSTON. If more than the budget request, how will the funds be

used?

Mr. PAGE. The amounts budgeted and appropriated for Special Investigations for Fiscal Year 1988 are the same.

Senator JOHNSTON. What would be the impact if the activity was frozen at the 1988 appropriated level and do you believe that a freeze level would result in an acceptable adverse impact?

Mr. PAGE. If the Special Investigations activities for FY 1989 were frozen at the FY 1988 appropriation level of $3,650,000 most certainly a number of requests for special investigations and reports will have to go unanswered. If the freeze went into effect, we would have tightened even further the prioritization on requests upon which we can act. While I believe the impact would be acceptable, I am not sure it would be viewed as acceptable by those whose requests go unanswered.

FLOOD PLAIN MANAGEMENT SERVICES

Senator JOHNSTON. The Flood Plain Management Services program continues to grow just 3 years ago the program was funded at $6,800,000 and this was the average annual funding level between 1982-1986. Now, the FY 1989 budget request is $10,000,000. Briefly, what accounts for this continued program growth?

Mr. PAGE. Increasing use and development in the flood plains of the United States continue to increase demand for the flood hazard information, technical services, and planning guidance provided under the Flood Plain Management Services Program. We have tried to maintain a reasonable response capability based on a frugal balance between the growing demand for services and the level of Program funding as requested in the President's Budget.

Senator JOHNSTON. What efforts are being taken to hold the costs and growth of this program to a minimum?

Mr. PAGE. We are constantly seeking ways to minimize the cost and increase the productivity of this Program. One way has been to respond to more requests where we already have basic data on hand. Another way has been to undertake the more extensive and costly studies only when they have a very high potential for successfully avoiding significant unwise development in the flood plain. As a result, we have reduced the average cost of our responses from about $150 per response in 1982 to about $100 per response in 1986. Growth in the Program, however, is an entirely different issue. It represents an increasing willingness by the non-Federal public and private sectors to seek out and use our assistance to avoid the flood hazard. This not only helps to avoid future losses to life and property but also reduces the need for costly Federal flood control works as well as the demand for other flood-related Federal services such as providing disaster assistance during and following floods. In this sense, growth in the program may represent a reduction in demand for future Federal expenditures.

Senator JOHNSTON. How much of this funding has historically gone to support non-Federal requirements?

Mr. PAGE. On an average, around 80% of the Program funds have been used for non-Federal requirements.

Senator JOHNSTON. The justification for this item talks about the backlog of requests, yet the justification data for 1988 shows 82,000 requests compared to 77,000 indicated in this year's justification. How do you explain this apparent discrepancy?

Mr. PAGE. The numbers shown in the justification data are responses to requests. They represent program responsiveness rather than backlog. Because of the lower level of funding, the number of responses were less in 1987 than in 1986. This increased our current backlog.

Senator JOHNSTON: The justification material indicates "the growing number of high priority demands...". Could you be more Provide for the specific? list record a of specific high priority requests made during 1987 and to date in 1988.

Mr.

PAGE:

То qualify as a high priority demand a request must involve either a potential for loss of life, or property of

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