Forum Wrap Up: U.S. Army Corps of Engineers Must Implement Consistent, Clear, and Fair Fee Policies for Small Businesses
WASHINGTON – House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) traveled to Lake Cumberland in Jamestown, Kentucky to hold a congressional forum titled “A Burden to Business: The U.S. Army Corps of Engineers’ Assessment of Administrative Fees.” At the forum, Chairman Comer emphasized that a study conducted by the Government Accountability Office (GAO) found that the U.S. Army Corps of Engineers (the Corps) lacks centralized guidance on administrative fees. The Corps’ inconsistent and exorbitant fees hurt local marina operators and other small businesses nationwide. The Army Corps witness stated it will implement GAO’s recommendations and will standardize and improve transparency for fees charged to small business owners.
Key Takeaways:
Information obtained by the Committee, including a GAO study, suggests the U.S. Army Corps of Engineers is levying inconsistent, unexpected, and exorbitant fees and these unclear fee policies are jeopardizing the operations of local marinas and other small businesses.
- Chairman Comer: “Beneath the surface of Lake Cumberland’s scenic beauty lies a matter of concern that warrants our attention: the impact of real estate administrative fees imposed by the U.S. Army Corps of Engineers… GAO is the investigative arm of Congress and serves as a watchdog to improve the performance of the federal government. GAO recently completed their study on how the Corps manages these fees revealing concerns. These concerns centered on the often excessive, inconsistent, and inadequately justified nature of the fees. Such inconsistencies not only undermine confidence in the fairness and transparency of the fee-setting process, but also hinder the ability of stakeholders to plan and invest in the development of infrastructure.”
The U.S. Army Corps of Engineers must be transparent, share administrative fee information, and implement consistent, clear, and fair fee policies.
- Andrew Von Ah, GAO Director, Physical Infrastructure stated: “Our work has found that Corps divisions and districts do not consistently follow key considerations and practices for fees. We found that the Corps’ agencywide policies for administrative fees lacked detail or direction to divisions and districts on how to set, review, and share information on administrative fees. By developing policies that better align with key considerations and practices, the Corps could improve the perceived equity and transparency of its administrative fees.”
- The GAO published a report with six recommendations for the Corps, including recommendations to create a public facing website that explains fee schedules and policies.
- At the forum, Major General Mark C. Quander, Commander of the Great Lakes & Ohio River Division, stated the Army Corps plans to implement GAO’s recommendations and standardize and improve transparency for fees charged to small business owners.
To address the lack of transparency and unclear fee policies, Chairman Comer introduced the Maintaining Access to Recreational Industry and Necessary Adjustments (MARINA) Act in 2023.
- Chairman Comer: “I recently re-introduced the Maintaining Access to Recreational Industry and Necessary Adjustments Act, or the MARINA Act, to address concerns. This legislation standardizes the framework for calculating administrative fees. It also caps the amount of sales on items with a low profit margin that can be used to determine a marina operator’s annual rent to the Corps. This bill defines when administrative fees may be charged, ensures they are for non-routine Corps district functions, and extends initial lease terms to 50 years and renewals to 25 years. I look forward to working with my colleagues in the U.S. House of Representatives to see this important legislation across the finish line.”
Forum Highlights:
Chairman Comer highlighted examples of the inconsistent fees small business owners in the Lake Cumberland area face.
Chairman Comer: “The small business owners in this region have shared the exorbitant and seemingly trivial fee demands they’ve received from the corps. Small business owners have received $500 administrative fees for tasks such as obtaining an approval letter, approving a lease, and approving an event.
“Others have received two-thousand-dollar fees for review of a five thousand dollar total cost action and ninety five hundred dollars for review of a marina expansion. One received a whopping twenty-thousand-dollar fee for a review of a marina development.
“As the chief of real estate, what do you think of those fees I just mentioned there? Is that normal?”
Ms. Johnson-Muic: “It is typical that we have a range of fees in the lower category for more simple licenses, more simple transactions. Renewal is kind of in a medium-range fee. When we’re doing new out grants or full development reviews, the fees are generally larger. That’s because there are more requirements associated with getting to those approvals and those instruments.”
Major General Quander: “…We acknowledge the results from the GAO report on some of the inconsistencies. […] We’ve read the report, and we have actions that we’re going to do to address the findings from the GAO report.”
Mr. Von Ah: “…We are much more interested in the Corps having a consistent methodology for how they approach those fees…”
Chairman Comer noted examples of how other federal agencies are being more transparent with their fees. For examples, the National Park Service operates using a fee schedule based on the market price of the service provided, reviews fees every two years, and mandates that fee schedules be placed on the applicable park’s website.
Chairman Comer: “Should the Corps do something like these other agencies, specifically the National Park Service, in how they determine their fee schedule?”
Major General Quander: “Chairman, in terms of how we advertise our fee schedule. I’ll first acknowledge, the way we do it right now, it is mostly between the Corps and the person we’re working with via email. […] We’re uneven across the board, and we acknowledge the GAO report on that. Some districts are better than others.”
Chairman Comer: “Because the Corps is in the Department of Defense, does that change the way they have to administer fees?”
Mr. Von Ah: “The one requirement that DOD has that we found the Corps wasn’t abiding by necessarily was that DOD requires other services to put information about fees on their websites. That was one of the requirements we used to look at what the Corps was doing and determine that several of the districts and divisions didn’t have information on their websites.”
Chairman Comer: “Did your study find that this was a consistent issue across the United States?”
Mr. Von Ah: “Yes. It varied from district to district and division to division, but yes. In general, we found that the communication to the users or the folks that were paying the fees was often just here’s what the fee is, the amount, vs. what’s going into the fee, all of the calculations, or other information that might be useful to the user to understand sort of what they’re paying for.”
Chairman Comer: “In your report, GAO recommends that the Corps develop an agency-wide policy to provide details to divisions and districts on how to estimate costs to set real estate fees consistently. Based on your study of the Corps, can you speculate as to why this wasn’t already taking place?”
Mr. Von Ah: “Part of it was there are some differences from division to division and district to district in terms of the circumstances that they face, whether it be the environmental circumstances that they have in their districts or divisions, or the labor rates, or the makeup of the workforce that may be at different levels. We understand that there would be differences across the districts in terms of what the fees actually would be. As far as the methodology and the reason for the inconsistencies there, we attributed that mostly because the headquarters folks gave the districts and divisions leeway to set the fees how the deemed appropriate. […] What we’re looking for is a more consistent methodology that districts use and divisions use to determine what those rates should be.”
GAO’s report found that the Corps uses inconsistent inputs to set fees, does not regularly review and update its fees, and does not consistently share information with the public. Chairman Comer asked about the recommendations from GAO’s report and how they will be implemented by the Corps agency wide.
Chairman Comer: “Are there other policy changes that you believe would address the issues identified in your report?
Mr. Von Ah: “At this point I think that I would stick to the ones that we put in the report.”
Chairman Comer: “How much time would it take to implement the recommendations in your report for the Corps?”
Mr. Von Ah: “That’s hard to say. In terms of developing the policy that is consistent across all district and divisions I think there is going to be a process of gathering information about what all the districts and divisions do, what their circumstances are… […] I think also some time will be needed to get input from stakeholders about how they should be going about this.”
Chairman Comer: “Does the Corps plan to implement this recommendation agency wide?”
Ms. Johnson-Muic: “Yes sir.”
Chairman Comer: “How will you ensure divisions and districts are following proper policy guidance?”
Ms. Johnson-Muic: “It’s going to be those periodic reviews after the fact. Hopefully we get the guidance right and clear so there aren’t a lot of questions about how it needs to be implemented.”
Chairman Comer asked about what the Corps can do to be more transparent in communications with fee payers and stakeholders.
Chairman Comer: “Can we expect to see the Corps be more transparent and consistent on fee setting?”
Muic: “Yes, we are committed to trying to do that. The record shows we have done a better job of that when we’re charging more and it’s a fee tailored to a transaction that’s complex.”
Chairman Comer: “What do you recommend the Corps do to be more transparent with fee payers?”
Mr. Von Ah: “…In general, we’re hopeful that the Corps will engage with fee payers and stakeholders and other that are impacted by those fees, particularly when they are reviewing or considering changes to those fees.”
Chairman Comer: “How is the Corps implementing this strategic plan to improve communication with external stakeholders?”
Ms. Johnson-Muic: “I think that’s one of the six recommendations from GAO is that we develop a communications strategy before rolling out any changes on updates to the administrative fees and administrative fee methodology. I think we’re going to adhere to our strategic goal there by developing a communication strategy and plan so no one will be surprised once this comes online.”
Chairman Comer: “Would you all be open to more stakeholder input?”
Ms. Johnson-Muic: “Yes sir. That is part of our corrective action plan to try to come up with some methodology in our policy and how we’re going to collect that input.”