Ch. 7— The Effects of ttie 404 Program • 161 



Some costs are borne by taxpayers. IWR esti- 

 mated that the regulatory functions program of the 

 Corps had a budget of $41 mUHon in 1980. IWR 

 accepted an estimate that other agency support 

 totaled one-fourth of the Corps' effort, an additional 

 $10.25 miUion. These figures may be high, as they 

 encompass activities outside of 404 administration. 

 On the other hand, the budget may be understated. 

 For example, Corps employees from branches other 



than regulatory may work part time on permitting 

 matters but are not counted as regulatory branch 

 employees. It is difficult to get exact estimates, 

 because the Corps districts apparently do not keep 

 separate records for 404 expenditures. The fiscal 

 year 1982 Corps budget for 404 and section IV was 

 approximately $50 million, with 800 people on the 

 regulatory staff nationwide. 



CHAPTER 7 TECHNICAL NOTES 



1 . Much of the quantitative information presented in the 

 IWR report is of questionable quality. Where this infor- 

 mation is used in this report, the limitations of the data 

 are examined. In many cases better data were available 

 or collected for this study. For example, the IWR report 

 is quoted often as evidence that the 404 program is respon- 

 sible for "saving" about 300,000 acres of wetlands that 

 otherwise would be developed if the 404 program did not 

 exist. However, it is unclear how this IWR estimate was 

 made. Since the Corps now is regulating those activities 

 that were responsible for the conversion of about 1 75,000 

 acres of wetlands per year between the mid-1950's and 

 the mid-1970's, it is highly unlikely that the 404 program 

 could be saving almost twice this acreage, even if all per- 

 mits were denied. In fact, data recently collected from all 

 Corps districts and presented in this chapter suggest that 

 this IWR estimate is about six times too high. 



2 . Activities also may be altered to fall under nationwide per- 

 mits or exemptions, with benefits to applicants but with 

 less clear benefits in terms of wetland protection. 



3. Many districts did not separate estimates on a yearly basis, 

 instead giving totals for 1980 to mid- 1982. These were di- 

 vided by 2.5 to derive a yearly figure. 



4. OTA mailed surveys to 20 industry associations. The 

 following associations provided responses: American 

 Association of Port Authorities (AAPA), American Farm 

 Bureau Federation (AFB), American Mining Congress 

 (AMC), American Petroleum Institute (API), American 

 Paper Institute/National Forest Products Association 

 (API/NFPA), American Public Power Association (APPA), 

 American Waterways Operators, Inc. (A WO), The Fer- 

 tilizer Institute (FI), National Cattlemen's Association 

 (NCA), National Association of Conservation Districts 

 (NACD), and National Association of Home Builders 

 (NAHB). Not every association answered every survey 

 question. 



5. Sectors considered were: business-commercial-industrial, 

 agricultural, fishing, mining, construction, manufactur- 

 ing, transportation utilities, wholesale trade and retail 

 trade, residential development, land values adjacent to per- 

 mit areas, smjill businesses, general public, private indi- 

 viduals, government, and public service. 



6. The IWR report said that wholesale and retail trade also 

 benefited. However, OTA's examination of RIA responses 

 shows that a slight majority of districts believed that this 

 sector was negatively affected by the program. 



7. In its unpublished and quickly prepared report, the IWR 

 used what in effect were educated guesses by Corps per- 

 sonnel to calculate savings to applicants. These percent- 

 ages were applied to the number of permits processed 

 (18,939 in 1980) rather than the number of permits issued 

 (16,286) — a 16-percent difference (the number of sec. 404 

 and sec. 10/404 issued permits was 8,013; the remainder 

 were sec. 10 permits). It is possible that permit applica- 

 tions denied or withdrawn experienced similar amounts 

 of benefits as those submitted. For example, as a result 

 of discussions with agencies, projects could be reconfigured 

 to fall under general permits or be conducted on nonwet- 

 land areas with savings over original plans. On the other 

 hand, it is likely that at least some applications were 

 withdrawn, owing to the expense of complying with poten- 

 tial requirements, and that alternate projects were not initi- 

 ated or were more expensive than those originally envi- 

 sioned. 



Site development costs were assumed to be 25 percent 

 of the total costs of projects; no rationale was given for 

 this percentage. Further, no basis was given for the figure 

 of total costs ($217,619 million) of projects. Even if these 

 estimates were accepted, IWR calculations of benefits 

 almost certainly are overstated, due to two factors: 

 1 . Large projects represent an overwhelming share of the 

 total costs of projects (in the first IWR draft, 20 per- 

 cent of applications were said to account for 95 per- 

 cent of economic impact [1-7]), yet these are the least 

 likely to benefit from technology transfer. It is likely 

 that large firms planning large projects already will have 

 discovered the least expensive way (though not neces- 

 sarily the least environmentally damaging way) to de- 

 velop such projects without benefit of Federal advice. 

 2 . According to the IWR, report itself, at least some sec- 

 tors are negatively affected by the program. Based on 

 responses to the RIA questionnaire, these sectors in- 

 clude the business-commercial-industrial sector, the 

 mining, construction, and manufacturing industries, 



