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EPA Needs to Clarify Its 

Claim of “No Net Loss”

of Wetlands 

Report No. 14-P-0191 April 16, 2014

U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL
Report Contributors: Stacey Banks

Charles Brunton

Dan Engelberg

Tim Roach

Gerry Snyder

Abbreviations

CFR Code of Federal Regulations

CWA Clean Water Act

EPA U.S. Environmental Protection Agency

OIG Office of Inspector General

USACE U.S. Army Corps of Engineers

Cover photo: Peat mining in a wetlands area in Region 8. (EPA photo)

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EPA Inspector General Hotline 

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Mailcode 2431T

Washington, DC 20460
 

 14-P-0191

April 16, 2014

Why We Did This Review

Our objective was to 

determine how the 

U.S. Environmental Protection 

Agency (EPA) verifies that the 

application of the wetlands 

protection and restoration 

guidelines achieves “no net 

loss” of wetlands. The Clean 

Water Act Section 404 

regulatory program addresses 

the discharge of dredged or fill 

materials in the waters and 

wetlands of the United States.

One of the EPA’s roles in this 

program is to review and 

comment on individual permit 

applications submitted to the 

U.S. Army Corps of 

Engineers. In its fiscal year 

2013 Annual Plan, under the

Section 404 regulatory 

program, EPA reported 

“no net loss” of wetlands for 

fiscal years 2009 through 

2011.

This report addresses the 

following EPA theme:

 Protecting water: A 

precious, limited resource.

For further information, 

contact our public affairs office 

at (202) 566-2391.

The full report is at:

www.epa.gov/oig/reports/2014/ 

20140416-14-P-0191.pdf

EPA Needs to Clarify Its Claim of 

“No Net Loss” of Wetlands 

 What We Found

The EPA needs to clarify that its claim of 

“no net loss” of wetlands is based on 

projections of future results from mitigation 

projects, because not all mitigation projects 

succeed. 

The EPA attempts to verify that the application 

of the wetlands protection and restoration 

guidelines furthers the goal of “no net loss” by comparing the total acres of 

wetland impacts to the total acres planned for mitigation in the U.S. Army Corps of 

Engineers’ Section 404 permits. However, performance reporting in the EPA’s 

2013 annual plan does not inform readers of the assumption that all mitigation 

projects meet performance standards. Performance standards are the 

ecologically-based standards that the U.S. Army Corps of Engineers personnel 

will use to determine whether a compensatory mitigation project is achieving its 

objectives. Not clearly communicating such assumptions hampers the public’s 

understanding of the EPA’s actual performance in protecting wetlands.

 

Recommendation and Planned Corrective Actions

We recommend that the Assistant Administrator for Water clarify on the wetlands 

measure definitions webpage and in future annual performance reporting that 

“no net loss” of wetlands is based upon an assumption that mitigation projects 

contained in Clean Water Act Section 404 permits will meet performance 

standards. The agency agreed with the recommendation and provided acceptable 

corrective actions. The recommendation is resolved. 

U.S. Environmental Protection Agency

Office of Inspector General

At a Glance

The EPA can improve 

performance reports by 

indicating that achieving 

“no net loss” is based on the 

assumption that all 

mitigation projects will meet 

performance standards.
April 16, 2014

MEMORANDUM

SUBJECT: EPA Needs to Clarify Its Claim of “No Net Loss” of Wetlands 

Report No. 14-P-0191

FROM: Arthur A. Elkins Jr. 

TO: Nancy K. Stoner, Acting Assistant Administrator

Office of Water

This is our report on the subject evaluation conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency (EPA). This report contains findings that describe the problems 

the OIG has identified and corrective actions the OIG recommends. This report represents the opinion of 

the OIG and does not necessarily represent the final EPA position. Final determinations on matters in 

this report will be made by EPA managers in accordance with established audit resolution procedures.

The EPA office having primary responsibility for the issues evaluated in this report is the Office of 

Water’s Office of Wetlands, Oceans and Watersheds.

Action Required

This report’s recommendation was agreed to and resolved. Therefore, no final response to this report is 

needed. If you wish to provide a final response to this report, it should be provided as an Adobe PDF file 

that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as 

amended. The final response should not contain data that you do not want to be released to the public; 

if your response contains such data, you should identify the data for redaction or removal along with 

corresponding justification. We will post this report to our website at http://www.epa.gov/oig. 

If you or your staff have any questions regarding this report, please contact Carolyn Copper, 

Assistant Inspector General for Program Evaluation, at (202) 566-0829 or copper.carolyn@epa.gov; 

or Dan Engelberg, Director, Water Evaluations, at (202) 566-0830 or engelberg.dan@epa.gov.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

THE INSPECTOR GENERAL
14-P-0191 1

Purpose

The purpose of this review was to determine how the U.S. Environmental 

Protection Agency (EPA) verifies that the application of the wetlands protection 

and restoration guidelines achieves “no net loss” of wetlands.

Background

The environmental and human health value of wetlands is significant. Wetlands 

provide ecosystem services such as reducing damage caused by flooding;

moderating global climate conditions; and functioning as natural filtration for 

sources of drinking water. The U.S. Fish and Wildlife Service estimates that up to 

43 percent of threatened and endangered species rely directly or indirectly on 

wetlands for survival. The Service’s most recent 5-year wetlands inventory report1

indicates that the United States lost approximately 62,300 acres of wetlands 

between 2004 and 2009. 

The Clean Water Act (CWA) Section 404 regulatory program addresses the 

disposal of dredged or fill materials in the waters and wetlands of the United 

States. In 1980, the EPA and the U.S. Army Corps of Engineers (USACE) issued 

wetlands guidelines2to provide the substantive environmental standards for 

evaluating Section 404 permit applications. The USACE implements the 

guidelines as part of its authority to issue or deny permits. Under the guidelines, 

the USACE is also responsible for monitoring compensatory mitigation plans

within Section 404 permits. As part of the permitting process, a permittee must 

obtain USACE approval of “performance standards” for mitigation projects 

before a Section 404 permit is issued. These are the ecologically-based standards 

that USACE personnel will use to determine whether a compensatory mitigation 

project is achieving its objectives.

The EPA may review the public notices issued by the USACE and provide 

comments, as appropriate, to the USACE. In 2008, the USACE and EPA issued 

revised regulations, establishing standards and criteria to be used for all types of 

compensatory mitigation. Compensatory mitigation refers to the restoration, 

establishment, enhancement, or in certain circumstances preservation of wetlands, 

streams or other aquatic resources for the purpose of offsetting unavoidable 

adverse impacts.

Since 1989, the EPA’s goal in this program has been to achieve “no net loss” of 

wetlands. In the fiscal year 2013 Annual Plan, the EPA reported “no net loss” of 

wetlands in the 404 regulatory program for fiscal years 2009 through 2011. 

 

1 U.S. Department of Interior, U.S. Fish and Wildlife Service, Status and Trends of Wetlands in the Conterminous 

United States 2004 to 2009, September 2011.

2 The guidelines are published in Title 40 of the Code of Federal Regulations (CFR), Part 230 - Section 404(b)(1), 

Guidelines For Specification Of Disposal Sites For Dredged Or Fill Material.
14-P-0191 2

The EPA office having primary responsibility for the issues evaluated in this 

report is the Office of Water’s Office of Wetlands, Oceans and Watersheds.

Scope and Methodology 

We reviewed Section 404 of the CWA, regulations, performance reporting under 

the EPA’s 2013 Annual Plan, and the EPA’s National Water Program Guidance. 

We also reviewed memorandums of agreement between the USACE and EPA to 

gain an understanding of how regulations and guidance are implemented. We also 

interviewed staff and managers from the EPA’s Office of Water and EPA 

Regions 2 and 5 about the EPA’s activities under Section 404. We selected these 

regions because they contain states that have a variety of wetlands and some of 

the highest percentages of wetland losses. We also interviewed managers in the 

USACE’s Section 404 program and staff from the Environmental Law Institute. 

We conducted our review from January 2013 to February 2014 in accordance 

with generally accepted government auditing standards. Those standards require 

that we plan and perform our review to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

objectives. We believe that the evidence obtained provides a reasonable basis for 

our findings and conclusions based on our objective.

Results of Review

The EPA attempts to verify that the application of the wetlands protection and 

restoration guidelines furthers the goal of “no net loss” by comparing the total 

acres of wetland impacts to the total acres planned for mitigation in the USACE’s 

Section 404 permits. However, this comparison is based on the EPA’s assumption

that all wetlands mitigation projects will meet performance standards. Not all 

mitigation projects meet these standards. For example, in a 2011 report about 

North Carolina wetlands mitigation projects3, it was reported that “... no single 

mitigation provider, mitigation type or geographic region achieved complete 

success according to the standards approved in mitigation plans.” Specifically, the 

report noted that 74 percent of the mitigation projects attained the mitigation goals 

established in the Section 404 permits. Because the EPA’s performance reporting4

does not inform readers of this assumption, the Office of Inspector General 

concluded that the EPA’s reporting of “no net loss” of wetlands hampers the 

public’s understanding of the EPA’s actual performance in protecting wetlands.

The EPA should indicate in its wetlands measure definitions webpage and in 

future annual plan performance reporting that achieving “no net loss” is based 

upon an assumption that wetlands mitigation projects meet performance 

standards.

 

3 Compensatory stream and wetland mitigation in North Carolina: An evaluation of regulatory success. 

North Carolina Department of Environment and Natural Resources Division of Water Quality, March 2011. 

4 United States Environmental Protection Agency, FY2013 Annual Plan, p. 107, Performance Measure 4E. 
14-P-0191 3

Recommendation

We recommend that the Assistant Administrator for Water:

1. Clarify on the wetlands measure definitions webpage and in future annual 

plan performance reporting that “no net loss” of wetlands is based upon an 

assumption that mitigation projects contained in CWA Section 404 

permits will meet performance standards.

Agency Response and OIG Comment

The agency agreed with our recommendation. The agency said it updated its 

National Water Program Guidance for the fiscal year 2015 Proposed Program 

Measure, so that the text now reads: “In partnership with the U.S. Army Corps of 

Engineers, states and tribes achieve 'no net loss' of wetlands each year under the 

Clean Water Act Section 404 regulatory program. (‘No net loss’ of wetlands is 

based on requirements for mitigation in CWA 404 permits and not the actual 

mitigation attained.).” In addition, the agency committed to clarifying the 

wetlands measure on the Office of Water’s performance webpage when the 2013 

End of Year report is posted on March 31, 2014. The Office of Water later revised 

the completion date to May 12, 2014. The recommendation is resolved.
14-P-0191 4

Status of Recommendations and 

Potential Monetary Benefits

RECOMMENDATIONS

POTENTIAL MONETARY 

BENEFITS (in $000s)

Rec. 

No.

Page 

No. Subject Status1 Action Official

Planned 

Completion 

Date

Claimed 

Amount

Agreed-To 

Amount

1 3 Clarify on the wetlands measure definitions 

webpage and in future annual plan performance 

reporting that “no net loss” of wetlands is based 

upon an assumption that mitigation projects 

contained in CWA Section 404 permits will meet 

performance standards.

O Assistant Administrator 

for Water

05/12/14

1 O = Recommendation is open with agreed-to corrective actions pending. 

C = Recommendation is closed with all agreed-to actions completed. 

U = Recommendation is unresolved with resolution efforts in progress.
14-P-0191 5

Appendix A

Agency Response to Draft Report

MEMORANDUM

 

SUBJECT: Response to Office of Inspector General Draft Report/Project 

No. OPE-FY13-0008

“EPA Needs to Clarify Its Claim of ‘No Net Loss’ of Wetlands,” dated March 3, 

2014

FROM: Nancy K. Stoner

Acting Assistant Administrator

TO: Arthur A. Elkins, Jr.

Inspector General

Thank you for the opportunity to respond to the issues and recommendation in the subject audit 

report. Following is a summary of the U.S. Environmental Protection Agency’s overall position, 

along with its position in agreement on each of the report recommendations. We have provided 

high-level planned corrective actions and estimated completion dates. 

AGENCY’S OVERALL POSITION

Factual accuracy of the Draft Report: The draft report is factually accurate. “No net loss” of 

wetlands is based upon an assumption that mitigation projects contained in CWA Section 404 

permits will meet performance standards. The Office of Water concurs with the finding.

Corrective actions already initiated or planned:

 A clarification was made under the National Water Program Guidance for FY2015 Proposed 

Program Measure, so that the text now reads: “In partnership with the U.S. Army Corps of 

Engineers, states and tribes, achieve 'no net loss' of wetlands each year under the Clean 

Water Act Section 404 regulatory program. (‘No net loss’ of wetlands is based on 

requirements for mitigation in CWA 404 permits and not the actual mitigation attained.)”

 Clarify measure on OW performance web page: Measure will be clarified when the 2013 End 

of Year report is posted on March 31, 2014 
14-P-0191 6

AGENCY’S RESPONSE TO REPORT RECOMMENDATIONS

Agreements

No

.

Recommendation High-Level Intended Corrective 

Action(s)

Estimated 

Completion by 

FY

1 Clarification under FY15 

NWPG

Add clarifying statement Complete

2 Clarification on OW 

performance web page

Add clarifying statement Mar. 31, 2014

CONTACT INFORMATION

If you have any questions regarding this response, please contact Jim Pendergast, Acting 

Director, Wetlands Division, Office of Wetlands, Oceans, and Watersheds on (202) 566-0398 or 

Sineta Brown on (202) 564-3666.

Attachments

cc: Michael H. Shapiro

 Gregory Peck

 Timothy Fontaine

 Macara Lousberg

 Marilyn Ramos

 Michael Mason
14-P-0191 7

Appendix B

Distribution

Office of the Administrator

Assistant Administrator for Water

Agency Follow-Up Official (the CFO)

Agency Follow-Up Coordinator

General Counsel

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for External Affairs and Environmental Education

Principal Deputy Assistant Administrator for Water

Audit Follow-Up Coordinator, Office of Water