Audit Report

OIG-17-001

RESTORE ACT

Treasury’s Assessment of Environmental Compliance of 

RESTORE Act Programs

October 3, 2016

Office of

Inspector General

Department of the Treasury

Contents

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Audit Report................................................................................................ 1

Background................................................................................................ 2

Results of Audit.......................................................................................... 3

Appendices

Appendix 1: Objective, Scope, and Methodology........................................ 7

Appendix 2 Management Response ......................................................... 9

Appendix 3: Background on RESTORE Act................................................. 10

Appendix 4: Major Contributors to This Report........................................... 11

Appendix 5: Report Distribution................................................................ 12

Abbreviations

Centers of Excellence Centers of Excellence Research Grants Program

Final Rule Department of the Treasury Regulations for the Gulf

 Coast Restoration Trust Fund Final Rule

Interim Final Rule Department of the Treasury Regulations for the Gulf Coast

 Restoration Trust Fund Interim Final Rule

OFAS Office of the Fiscal Assistant Secretary

OIG Office of Inspector General

NEPA National Environmental Policy Act of 1969, as amended

RESTORE Act Resources and Ecosystems Sustainability, Tourist 

Opportunities, and Revived Economies of 

the Gulf Coast States Act of 2012

Treasury Department of the Treasury

Trust Fund Gulf Coast Restoration Trust Fund
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This Page Left Intentionally Blank.
OIG Audit

Report

The Department of the Treasury

Office of Inspector General

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October 3, 2016

David A. Lebryk 

Fiscal Assistant Secretary 

This report presents the results of our audit of the Department of 

the Treasury’s (Treasury) process to assess its responsibility and 

establish procedures for overseeing the environmental compliance 

of programs, projects, and activities funded by the Resources and 

Ecosystems Sustainability, Tourist Opportunities, and Revived 

Economies of the Gulf Coast States Act of 2012 (RESTORE Act).

1

We performed this audit as part of our ongoing oversight of 

RESTORE Act programs. The objective of our audit was to evaluate 

Treasury’s assessment of its responsibility for environmental 

compliance under the National Environmental Policy Act2(NEPA). 

NEPA was the first major environmental law enacted in the United 

States designed to support compliance with namely other Federal 

and State environmental laws and regulations. Appendix 1 provides 

more detail of our audit objective, scope, and methodology.

In brief, we concluded that Treasury appropriately assessed its 

responsibility for environmental compliance of RESTORE Act 

programs. Treasury concluded that NEPA does not apply to its 

duties as administrator of RESTORE Act programs since overall 

Treasury’s role is merely administrative and ministerial in nature. 

That said, we found that management’s process to reach its 

conclusions and establish related procedures for RESTORE Act 

programs addressed potential environmental compliance risks and 

was thoroughly documented. Furthermore, records of key 

deliberations and decisions related to the assessment complied 

with Treasury and other Federal requirements. As such, we make 

no recommendations in this report.

 

1 Pub. L. 112-141, 126 Stat. 588-607 (July 6, 2012)

2 42 U.S.C. § 4321 et seq.
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We caution that our audit was to evaluate Treasury’s assessment

of its responsibility for environmental compliance of RESTORE Act 

programs and not the legal analyses supporting its determination of 

NEPA applicability. As such, we make no conclusions on the legal 

analyses and our audit results should not be construed as 

agreement or disagreement with the legal determination of NEPA 

applicability.

In a written response, Treasury management concurred with the 

findings of this report in that it appropriately assessed its 

responsibility for environmental compliance of RESTORE Act 

programs; thoroughly documented its process to reach its 

conclusions; established procedures for RESTORE Act programs to 

address potential environmental compliance risks; and maintained 

records of key deliberations and decisions in compliance with 

Treasury and other Federal requirements. Management’s response,

in its entirety, is included as appendix 2 of this report.

Background

The RESTORE Act

The RESTORE Act established the Gulf Coast Restoration Trust 

Fund (Trust Fund) within Treasury to provide funds for 

environmental and economic restoration of the Gulf Coast region 

that was damaged by the 2010 Deepwater Horizon oil spill. 

Deposits into the Trust Fund will be comprised of 80 percent of all 

civil and administrative penalties paid after July 6, 2012, under the 

Federal Water Pollution Control Act (Clean Water Act).3 Treasury is 

responsible for 37.5 percent of the RESTORE Act funds as the 

administrator of the Direct Component (35 percent) and the 

Centers of Excellence Research Grants Program (Centers of 

Excellence) Component (2.5 percent plus 25 percent of interest 

earned on the Trust Fund). The RESTORE Act also requires that the 

five Gulf Coast States (Alabama, Florida, Louisiana, Mississippi, 

and Texas) and applicable local governments prepare a multiyear 

implementation plan that is reviewed and accepted by Treasury 

 

3 33 U.S.C. §1251 et seq.
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before being awarded a Direct Component grant.4 Additional details 

of the RESTORE Act are provided in appendix 3.

National Environmental Policy Act of 1969, as amended

The purpose of NEPA is to “encourage productive and enjoyable 

harmony between man and his environment; to promote efforts 

which will prevent or eliminate damage to the environment and 

biosphere and stimulate the health and welfare of man; to enrich 

the understanding of the ecological systems and natural resources 

important to the Nation; and to establish a Council on 

Environmental Quality.”

5 Under NEPA, Federal agencies are 

required to prepare an environmental analysis for Federal actions 

significantly affecting the quality of the environment. NEPA 

requires Federal agencies to consider the potential environmental 

consequences of their “proposed actions”, as well as a range of 

reasonable alternatives, before deciding whether and in what form 

to take an action.

Results of Audit

We found that Treasury appropriately assessed its responsibility for 

environmental compliance of RESTORE Act programs. That is, we 

found that management’s process to determine NEPA applicability 

and establish related procedures for RESTORE Act programs

addressed potential environmental compliance risks and was 

thoroughly documented. Furthermore, records of key deliberations 

and decisions related to Treasury’s assessment complied with 

Treasury and other Federal requirements.

Assessment of Treasury’s responsibility for environmental 

compliance was led by the Office of the Fiscal Assistant Secretary 

(OFAS) with assistance from Treasury’s Office of General Counsel; 

 

4 The RESTORE Act and Treasury regulations require applicants to submit a multiyear implementation 

plan that describes, among other things, activities to be funded, their location, a budget, milestones, 

and criteria for measuring success. Applicants must seek public review and comment on the plan before 

submitting to Treasury for review.

5 The Council on Environmental Quality coordinates Federal environmental efforts and works closely 

with agencies and other White House offices in the development of environmental policies and 

initiatives. It was established within the Executive Office of the President by Congress as part of NEPA 

and additional responsibilities were provided by the Environmental Quality Improvement Act of 1970.
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the Office of Management’s Safety/Health/Environmental 

Compliance; and, as of March 2014, the Office of Gulf Coast 

Restoration. OFAS determined that NEPA does not apply to its 

duties as administrator for RESTORE Act programs. This decision 

was made public in the “Department of the Treasury Regulations 

for the Gulf Coast Restoration Trust Fund Interim Final Rule”

(Interim Final Rule) on August 15, 2014, and was reaffirmed in the 

“Department of the Treasury Regulations for the Gulf Coast 

Restoration Trust Fund Final Rule” (Final Rule) issued on 

December 14, 2015.6In the preamble to the Interim Final Rule

Treasury noted that it is the Federal awarding agency for grants 

under the Direct Component and Centers of Excellence Component 

and that the RESTORE Act provided Treasury a very limited role in 

reviewing multiyear implementation plans and awarding grants

under these components. The preamble emphasized that Treasury 

has no role in project selection or design and provided Treasury’s 

conclusion that its duties are merely administrative and ministerial,

and therefore, an environmental analysis under NEPA is not 

required. The preamble to the Final Rule provided that “when an 

agency action is nondiscretionary under a statute, the information 

that a NEPA review provides would not assist the agency’s

decision-makers.”

To determine the applicability of NEPA for its RESTORE Act 

programs, OFAS officials consulted with the Office of General 

Counsel and the Office of Management’s 

Safety/Health/Environmental Compliance. We noted that the 

decision-making process and key deliberations were sufficiently 

documented. Additionally, Treasury consulted with other relevant 

Federal agencies, as well as the Council on Environmental Quality.

Treasury also reviewed NEPA case law and NEPA practices for 

existing Federal programs that are similar to the Direct and Centers 

of Excellence Components. Records documenting the procedures, 

policy decisions, and key deliberations during this process were 

maintained in compliance with the following requirements.

 The Federal Records Act of 1950 requires that agencies 

make and preserve records containing adequate and proper 

 

6 The Regulations for the Gulf Coast Restoration Trust Fund Interim Final Rule and Final Rule became

effective on October 14, 2014, and February 12, 2016, respectively.
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documentation of the organization, functions, policies, 

decisions, procedures, and essential transactions of the 

agency and that are designed to furnish the information 

necessary to protect the legal and financial rights of the 

Government and of persons directly affected by the agency’s 

activities.7

 Treasury Directive 80-05, Records and Information 

Management Program (June 26, 2002), requires that records 

be managed effectively and efficiently throughout their life 

cycle in order to facilitate accomplishment of the agency’s 

programmatic and administrative missions, to preserve 

official agency records in accordance with applicable 

statutory and regulatory requirements, and to ensure access 

to information by Treasury officials, and the public as 

appropriate.

Although Treasury concluded that its responsibility to administer 

the Direct Component and Centers of Excellence Component does 

not require a NEPA review, it also concluded that other Federal 

actions connected with activities funded through a RESTORE Act 

grant, such as the issuance of a permit, may require NEPA review 

by the Federal agency issuing the permit. Based on this conclusion, 

the Office of Gulf Coast Restoration established environmental 

compliance procedures in the form of an environmental checklist 

included in its application guidance for both the Direct Component 

and Centers of Excellence Component, which was made available 

in August 2014. The application guidance requires that applicants 

review the environmental laws in the checklist to determine if they 

apply to the proposed eligible activity. Applicants must review 

 

7 44 U.S.C. §3101 et seq.
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NEPA applicability for their proposed activity and answer the 

following questions:

1. Will the proposed activity be under the permitting authority 

of any Federal agency?;

2. Will the proposed activity receive Federal assistance (other 

than RESTORE Act funding)?; and

3. Will the proposed activity be subject to any Federal 

regulatory decision or approval?

The application guidance states that if any of those situations 

applies, the applicant must contact the relevant Federal agency for 

further guidance on environmental compliance. By adding this 

application requirement, Treasury ensures that NEPA applicability 

will be reviewed by the applicant prior to receiving a RESTORE Act 

grant under the Direct Component or the Centers of Excellence 

Component.

We caution that our audit was to evaluate Treasury’s assessment

of its responsibility for environmental compliance of RESTORE Act 

programs and not the legal analyses supporting its determination of 

NEPA applicability. As such, we make no conclusions on the legal 

analyses and our audit results should not be construed as 

agreement or disagreement with the legal determination of NEPA 

applicability.

* * * * *

We would like to extend our appreciation for the cooperation and 

courtesies extended to our staff during the audit. Major 

contributors to this report are listed in appendix 4. A distribution 

list for this report is provided as appendix 5. If you have any 

questions, please contact me at (202) 927-8782.

/s/

Cecilia K. Howland

Acting Director, Gulf Coast Restoration Audits
Appendix 1

Objective, Scope, and Methodology 

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As part of our oversight of programs, projects, and activities 

authorized by the Resources and Ecosystems Sustainability, Tourist 

Opportunities, and Revived Economies of the Gulf Coast States Act 

of 2012 (RESTORE Act), we initiated an audit of the Department of 

the Treasury’s (Treasury) process for determining environmental 

compliance of its RESTORE Act programs and projects. The 

objective of our audit was to evaluate Treasury’s assessment of its 

responsibility for environmental compliance under the National 

Environmental Policy Act (NEPA).

We conducted our audit between November 2014 and April 2016

at our office in Washington, D.C., which comprised the following 

steps.

 We reviewed applicable laws and regulations, including:

 RESTORE Act of 2012;

 NEPA of 1969, as amended;

 “Department of the Treasury Regulations for the Gulf 

Coast Restoration Trust Fund Interim Final Rule,”

31 CFR Part 34, October 14, 2014;

 “Department of the Treasury Regulations for the Gulf 

Coast Restoration Trust Fund Final Rule,” 31 CFR 

Part 34, February 12, 2016;

 Council on Environmental Quality NEPA Regulations, 

40 CFR Part 1500-1508, November 28, 1978; and

 Federal Records Act of 1950, as amended.

 We reviewed Treasury policies and procedures, including:

 Treasury Directive 75-02 and Directive 

Publication 75-02, Department of the Treasury 

NEPA Program, May 6, 2015; and

 Treasury Directive 80-05, Records and Information 

Management Program, June 26, 2002.

 We reviewed Treasury’s Gulf Coast Restoration website and 

available program guidance for Treasury’s RESTORE Act 

programs, including:

 Direct Component Guidance and Application to 

Receive Federal Financial Assistance, section 5.0 

Application Forms, Treasury RESTORE Act 

Environmental Checklist; and 
Appendix 1

Objective, Scope, and Methodology 

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 Centers of Excellence Research Grants Program 

Guidelines and Application to Receive Federal Financial 

Assistance, section 4.0 Application Forms, Treasury 

RESTORE Act Environmental Checklist.

 We interviewed key Treasury officials and staff 

responsible for NEPA applicability for Treasury RESTORE

Act programs.

We conducted this performance audit in accordance with generally

accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix 2

Management Response

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Appendix 3

Background on RESTORE Act

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As of April 2016, the Gulf Coast Restoration Trust Fund (Trust 

Fund) had received approximately $816 million as a result of the 

government’s settlement with the Transocean defendants and 

$127 million as a result of its settlement with Anadarko Petroleum 

Corporation.

1

In July 2015, BP Exploration & Production Inc. 

agreed to settle with the Federal government and the Gulf Coast 

States. A U.S. District Judge from the Eastern District of Louisiana 

approved the terms of the settlement on April 4, 2016, where BP 

Exploration & Production Inc. agreed to pay $20.8 billion. Of the 

$20.8 billion, $5.5 billion plus interest relates to civil and 

administrative penalties under the Federal Water Pollution Control 

Act (Clean Water Act). Of this amount, $4.4 billion (80 percent) 

will be deposited into the Trust Fund over 15 years beginning mid2017.

The RESTORE Act allocates money in the Trust Fund to five 

components, as follows: (1) 35 percent will be made available to 

the Gulf Coast States (Alabama, Florida, Louisiana, Mississippi, and 

Texas) in equal shares under the Direct Component; (2) 30 percent 

plus 50 percent of interest earned on the Trust Fund will be made 

available for grants under the Council-Selected Restoration

Component; (3) 30 percent will be made available for grants under 

the Spill Impact Component; (4) 2.5 percent plus 25 percent of 

interest earned on the Trust Fund will be made available to the 

Science Program Component; and (5) 2.5 percent plus 25 percent 

of interest earned on the Trust Fund will be made available to the 

Centers of Excellence Component. Treasury’s Office of Fiscal 

Assistant Secretary is responsible for administering the Direct 

Component and the Centers of Excellence Component. The 

National Oceanic and Atmospheric Administration is responsible for 

administering the Science Program Component. The Council is 

responsible for administering the Council-Selected Restoration 

Component and the Spill Impact Component.

 

1 On February 19, 2013, the civil settlement between the Department of Justice and Transocean 

defendants (Transocean Deepwater Inc., Transocean Offshore Deepwater Drilling Inc., Transocean 

Holdings LLC, and Triton Asset Leasing GmbH) was approved. Among other things in the settlement, 

the Transocean defendants paid a $1 billion civil penalty plus interest. Of this amount, $800 million plus 

interest was deposited into the Trust Fund. On December 16, 2015, the civil settlement between the 

Department of Justice and Anadarko Petroleum Corporation was approved. Anadarko agreed to civil 

penalties of $159.5 million. Of this amount, approximately $127 million has been deposited into the 

Trust Fund.
Appendix 4

Major Contributors to This Report

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John Gauthier, Audit Manager

Dionne Smith, Auditor-in-Charge

Kevin Guishard, Referencer

Gerald Kelly, Referencer 
Appendix 5

Report Distribution

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Department of the Treasury

Deputy Secretary

Under Secretary, Domestic Finance

Fiscal Assistant Secretary

Deputy Assistant Secretary, Fiscal Operations and Policy

Office of Management and Budget

OIG Budget Examiner
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