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Forest Service Use of Settlement Funds

OIG reviewed FS use of settlement funds for damages to National Forest System lands.

Audit Report: 08601-0011-41
Published: 03/24/2021
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Fast Facts

The United States Department of Agriculture’s (USDA) Forest Service (FS) manages and protects 154 National Forests and 20 grasslands in 43 States and Puerto Rico for multiple uses. The agency’s mission is to sustain the health, diversity, and productivity of the Nation’s forests and grasslands to meet the needs of present and future generations. A part of sustaining the health of FS properties includes remediating and restoring lands damaged by mining activities and human-caused wildfires.

FS administers mining operations on National Forest System lands under the authority of the Mining and Minerals Policy Act of 1970. However, FS estimates that 13,597 of 38,991 (more than 34 percent) abandoned mines on FS property contain hazardous substances, pollutants, or contaminants left from prior mining operations, such as arsenic, cadmium, copper, lead, mercury, and zinc. These minerals can adversely impact human health and the environment. Thus, FS is faced with separate tasks: to make minerals from National Forest System lands available to the National economy and to minimize the adverse impacts of mining activities on other resources.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), also referred to as the Superfund, was enacted to enable selected Federal agencies to respond to or “clean up” sites that have releases or spills of hazardous substances, pollutants, or environmental contaminants. Executive Order 12580 delegated Presidential authority for enforcement of CERCLA response actions. The United States Department of Justice represents those Federal agencies by initiating litigation against those who violate CERCLA’s civil and criminal laws with the intent of reaching an agreement or negotiating a settlement for the cost of remediating the affected lands and properties. FS, along with the United States Department of Interior (DOI) and the United States Environmental Protection Agency (EPA), conducts remediation and restoration work on CERCLA settlements. Likewise, when fires caused by the negligent actions of individuals result in damage to FS property, FS officials work to identify responsible parties and hold them accountable.

When FS enters into a settlement agreement, the agency receives funding to conduct restoration and remediation actions on the affected lands. Typically, CERCLA settlements contain language that describes how the proceeds of the settlement will be distributed and used. FS is responsible for monitoring the balances in settlement accounts and ensuring that settlement funds are used as provided by the terms of the settlements. Accordingly, FS’ Albuquerque Service
Center handles accounting activities for settlement funds and transfers settlement funds,
generally, into Restoration of Forest Lands and Improvements accounts of FS field offices in the
regions where the settlement sites are located. FS’ Strategic Planning, Budget and
Accountability (SPBA) office gives budget authority (that is, executes the allotment action) to FS
units for the restoration accounts.


Our objectives were to determine if FS: (1) received and reallocated funds as intended; (2) used settlement funds for authorized purposes; (3) monitored settlement funds to ensure unused/unobligated funds were returned to the United States Treasury; (4) fire transfer authority impacted remediation projects; and (5) has the authority to invest settlement funds in interest-bearing accounts.


The Forest Service (FS) is responsible for overseeing the remediation and restoration of lands damaged by mining activities and wildfires. When the negligent actions of individuals result in damages to FS property, FS officials enter a settlement agreement with the responsible parties to hold them accountable. FS then uses the settlement funds to conduct restoration and remediation actions on the affected lands, pursuant to 16 U.S.C. § 579c.

We found that FS has the authority to invest and retain interest on some funds that are maintained in interest-bearing accounts; however, the agency does not have the authority to retain interest earned on settlement funds like other Federal agencies. Without legislation amending FS’ authority, the value of settlement funds diminishes over time, possibly resulting in budget shortfalls for restoration work. Considering that restoration projects can take years or even decades to complete, the loss of interest earnings can lead to long-term losses. For instance, had FS retained interest earned on the account balances from active settlements during fiscal years 2015–2019, FS could have received more than $7.6 million to supplement ongoing restoration efforts.

Additionally, in 2016, FS allotted $936,579 of funding and budget authority from an agency-level environmental settlement fund account to a Washington Office subaccount without a detailed work plan for use of the funds. The funds remained in the subaccount unspent and were not returned to the agency-level account to be made available to the units responsible for preforming environmental actions at covered sites. If these funds are not allotted back to the agency-level account, they cannot be used for their intended purpose, and FS risks using the funds for purposes that could violate the terms of the settlement agreement. FS officials concurred with our findings, and OIG accepts management decision on all three recommendations.