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Stimulus program to restore floodplains bungled by Agriculture Department

By John Solomon

Sunday - 3/31/2013, 10:21pm  ET

It was among the more obscure programs tucked into the 2009 stimulus law, a $145 million Agriculture Department effort to buy easements from landowners to help restore natural floodplains.

But four years later, investigators have found the program was marred by poor performance, as officials skipped land appraisals to speed the spending, overpaid some landowners, failed to stop some destructive activities on the properties and did not restore some lands to their natural state as promised. 

In fact, more than a sixth of the easements bought by the Agriculture Department’s National Resources Conservation Service (NRCS) – 14 of the 78 properties – did not get fully restored because officials “inconsistently interpreted the definition of ‘natural conditions,’” USDA’s inspector general reported.

“As a result, Recovery Act funds may have been better targeted to other easements that provided greater floodplain benefits for the funds expended,” the agency’s internal watchdog concluded.

USDA officials acknowledged their effort to implement the program was flawed and agreed to most of the recommendations for improved performance offered by the inspector general’s office. Official said they had already drafted updates to their operations manual to address the shortcomings.

The report provides a classic example of how a well-intentioned effort funded by the American Recovery and Reinvestment Act – President Barack Obama’s signature first-term economic effort -- was rushed into action without clear direction or safeguards. (Click here to read about other instances of problems with the stimulus law uncovered by the Washington Guardian.

The NRCS has long operated a program to buy from landowners the rights to property in floodplains to restore or preserve fish and wildlife habitat, improve water quality, and/or improve floodwater retention.

The goal is to restore the land’s natural ability to resist erosion and withstand flooding, hopefully saving taxpayers money in the long run when new disasters strike. Properties traditionally are targeted based on evidence of past damage.

The effort got a $145 million injection from the stimulus law passed in February 2009. And soon, NRCS was sending money out the door.

To save time, the agency skipped the normal process of getting lands appraised before buying easements from landowners.

NRCS decided “appraisals were not to be obtained for Recovery Act floodplain easement enrollment. This decision was made to facilitate timely distribution of Recovery Act
Funds,” the IG report found.

Instead, officials were supposed to pick the lowest price from one of three submissions: a market analysis, a spending cap set per region or a written offer from the landowner. And states were left to determine if the lands qualified for purchase because of past evidence of damage.

The ad hoc system, however, proved inadequate for picking the best easements to restore, the inspector general found. For instance, the report concluded:

• Seven of the nine states that participated in the stimulus program “did not always maintain evidence of flooding and damage, such as photographs or insurance documents, to support their eligibility decisions;”

• Properties that had been higher-ranked for action were skipped over for purchase in Oregon and Arkansas for lower-ranked properties;

• At least five landowners were given incorrect payments totaling $139,474 because of calculation and paperwork mistakes. The majority of the mistakes – more than $121,000 – were overpayments;

• Some properties selected for the program in later rounds of funding were inexplicably purchased with “zero restoration” plans, meaning the lands were purchased but not improved.

When landowners sold their easements to the government, they were also supposed to stop practices that might contribute to erosion, pollution runoff or other damage to the land.

But when investigators went out and spot-checked some of the properties, they found some troubling evidence.

“We observed that at least 9 out of 78 landowners were taking prohibited actions on easements, some of which may have impeded restoration efforts,” the inspector general reported. “For instance, we observed that landowners were … grading easement lands for a pond, removing top soil, mowing pathways, and burning debris.”

The landowners said they had not been told by NRCS they were prohibited from such actions, and agency officials had not detected any of the prohibited activities.

USDA officials acknowledged their implementation of the stimulus program was a “deviation” from the procedures they normally following in buying easements for floodplains restoration.

They said they are taking numerous corrective actions, including more training for field workers and better guidance to landowners who sell land and states that help pick the projects.