OIG reviewed FSA’s program delivery of ECP for the 2017 hurricane-related disasters.
The mission of the United States Department of Agriculture’s (USDA) Farm Service Agency (FSA) is to serve the Nation’s farmers and ranchers professionally, efficiently, equitably, and in a manner that is friendly to customers, taxpayers, and employees. In pursuit of its mission, FSA works to ensure that the American agriculture industry is competitive by providing farmers and ranchers with financial capital, risk management assistance, and recovery support in times of economic distress or disaster.
The Emergency Conservation Program (ECP) is authorized by the Agricultural Credit Act of 1978, as amended by the Disaster Assistance Act of l989. ECP assists landowners in restoring land used in agricultural production when damaged by a natural disaster. This can include removing debris, restoring fences and conservation structures, and providing water for livestock in drought situations. The FSA county committee (COC) authorizes restoration practices (hereafter referred to as practices), with approval from FSA State committees (STC) and the FSA national office. In 2017, the Secretary of Agriculture announced special procedures, including ECP, to assist producers who suffered significant damage, including lost crops or livestock, or had other damage to their farms or ranches as a result of Hurricanes Harvey and Irma. In 2018, Congress appropriated $400 million to ECP to address damage caused by Hurricanes Harvey, Irma, and Maria; wildfires occurring in 2017; and other natural disasters.
The FSA national office oversees ECP in accordance with Federal regulations and establishes procedures, instructions, and forms, including handbooks and agency notices used in administering ECP. The ECP program manager provides this guidance to the State and county offices administering the program. The FSA State executive director is responsible for ensuring that county offices follow the ECP provisions and that the district director conducts a review of a sample of ECP applications before COC approval to ensure that ECP applications reviewed meet ECP requirements.
The FSA county offices, under the direction of the county executive director, are responsible for accepting and processing applications for ECP from producers. County executive directors are responsible for the day-to-day administration of the county ECP as directed by COC, according to national and State office policy and procedure. After a disaster occurs, the COCs assess the damage in the county and develop an estimate of the type and extent of damage prior to submitting an implementation request to the State office. Conservation problems existing before the applicable disaster event are ineligible for ECP assistance.
The COC will review and approve ECP applications for agriculture producers if producers meet criteria such as:
- the ECP applicant is eligible for cost-share,
- the estimated start date has been documented,
- the producer filed the ECP application before starting the practice,10 and
- an onsite inspection has been completed.
In certain instances, producers must take immediate action and initiate restoration measures before filing an ECP application. With the concurrence of STC or its representative (the district director), COC may waive the prior approval of an application before starting practice on a case-by-case basis. FSA will only waive onsite inspections in dire circumstances. These circumstances include when documentation shows the natural disaster damage:
- is of a magnitude that severely limits access or use of farmland,
- is so pervasive that the need for practices can be adequately assessed through subsampling or using geographic information system analysis,
- requires immediate action to prevent significant adverse loss to agricultural operations, or
- presents an immediate risk to public health or safety or environmental resources.
After FSA approves an application, the producer has 6 months to complete the approved practices. To be eligible for cost-share payments, participants who perform approved practices must report performance and provide any required supporting data by the practice completion date.
In all cases, FSA must obtain evidence to determine whether practice requirements were met and to determine proper payment. This includes necessary invoices, canceled checks, paid receipts, analysis tags, or other similar evidence to document the costs incurred. If the producer performed the practice with their own labor, equipment, or materials, the producer must submit signed, itemized statements that include, but are not limited to, dates of work performed, cost per hour charged for labor, and type of equipment used. Costs allowed in these cases shall not exceed the prevailing current commercial rates determined by the COC. FSA makes payments to individual producers based on a share of the producer’s cost of completing the practice. This can be up to 75 percent of the cost, or up to 90 percent of the cost if the producer is a limited-resource producer.
To assess the effectiveness of FSA’s program delivery of ECP for hurricane-related disasters.
Specifically, we reviewed the adequacy of FSA’s internal controls over approval and payment of ECP applications and determined whether funds were used for eligible purposes.
WHAT OIG FOUND
The Farm Service Agency’s (FSA) Emergency Conservation Program (ECP) assists landowners in restoring land used in agricultural production when damaged by a natural disaster. Congress
appropriated $400 million to ECP to address damage caused by Hurricanes Harvey, Irma, and Maria; wildfires occurring in 2017; and other natural disasters.
We found that FSA needs to strengthen its internal controls within the ECP. First, producers are
typically required to apply within the signup period to ensure eligibility and identify qualifying
damage. However, we found that FSA issued more than $700,000 in ECP payments for 15 of 40
applications without properly documenting concurrence or when FSA should not have concurred with waiving the prior approval rule.
Second, we found that, in all four counties we reviewed, district directors did not sufficiently
document or timely review ECP applications. Additionally, in three counties, county executive
directors did not perform spot checks to verify practice maintenance and cost documentation. As a result, the county committee may have been presented ineligible applications for approval.
Additionally, because FSA did not complete spot checks, FSA could not ensure producers completed restoration practices on applications totaling more than $1.9
Third, FSA processed cost-share payments for 14 of 40 applications using insufficient documentation, included ineligible costs, or calculated cost-share reimbursements incorrectly. As a result, we identified more than $557,000 potential improper payments.
FSA generally concurred with our findings and recommendations, and we accept management decision for 9 of the 10 recommendations.