Federal officials have rejected part of a plan by three south Fulton cities to offset the environmental damage caused by the proposed Bear Creek reservoir.

Environmental groups discovered late last year that the mitigation plan submitted by the South Fulton Municipal Regional Water and Sewer Authority rested in part on restoring a Heard County sod farm owned by Georgia Department of Natural Resources board member Aaron McWhorter.

At the time, both McWhorter and Tommy Craig, the Covington-based consultant hired by the authority to manage the project, said the deal was not a conflict of interest because it was made before McWhorter joined the board. Now the U.S. Army Corps of Engineers says the site, known as Pink Creek, is not suited to offset the environmental damage caused by the new reservoir. The Corps urged the South Fulton authority to abandon the site and its $170,000 investment.

Project spokesman Jeff Dickerson said Craig and the authority decided at a meeting Tuesday to challenge the ruling.

“That’s not the end of the world,” Dickerson said. “Tommy is convinced they didn’t test [the site] properly.”

The cities of Fairburn, Union City and Palmetto are funding the $100 million project with bond money and have already borrowed at least $42 million to build the 440-acre lake.

In a letter last month to authority chairman Brian Jones, Corps officials disputed Craig’s claims that the Pink Creek site was “environmentally preferable.” They also challenged Craig's assertion that there are not enough mitigation credits near Bear Creek to offset the damage caused by building the reservoir.

Dickerson said the Corps’ inspection was “rudimentary” and Craig has sent out a team to do a more thorough review.

Craig and the water authority have defended using the Pink Creek site, in part, because of the money already invested in the plan. But Corps spokeswoman Tracy Robillard said that money was spent “at the sole discretion of the authority and in reliance on representations made by private consultants.”

Dickerson said Craig relied in advice given by the Corps in selecting the site.

Sally Bethea, executive director of the Upper Chattahoochee Riverkeeper, said the Corps’ objections were “right on target.”

“Pink Creek is yet another example of consultant's failure to follow the law and provide adequate compensation for significant harm to waterways and downstream communities,” she said.