Lawmakers ask Interior Department to recover ‘misspent’ funds

December 16, 2017

Rep. Jared Huffman (D-San Rafael) has sent a letter to Interior Secretary Ryan Zinke, urging him to recover $84.8 million in taxpayer money that was identified in a recent inspector general report detailing how the funds were misspent, according to information released Friday by Huffman’s office.

The funds were to benefit a select few California water districts participating in the “WaterFix” planning process, according to a report titled “The Bureau of Reclamation Was Not Transparent in Its Participation in the [San Francisco] Bay Delta Conservation Plan.”

According to the letter, the Interior Department had approved these payments for the planning costs associated with the project, previously known as the Bay-Delta Conservation plan, and as the Delta Habitat Conservation and Conveyance Program, but failed to disclose them to Congress, as required by law, nor to other Central Valley Project water users, stakeholders and the public.

The letter, co-signed by Jerry McNerney (D-Stockton), Anna G. Eshoo (D-Atherton), Mark DeSaulnier (D-Concord), Mike Thompson (D-St. Helena) and Doris Matsui (D-Sacramento), asks that Zinke recover the missing funds and for the department to shed more light on the matter, including whether similar undisclosed subsidies were provided to any other parties, or if the water districts that benefited from this arrangement might still be reimbursed by taxpayers.

Specifically, the inspector general identified $84.8 million in funds as of June 30, 2016, that were spent on this project without authorization or rationale, all to benefit a few California water districts participating in the WaterFix planning process.

The inspector general’s report describes an unusual funding arrangement that the Bureau of Reclamation created and used to subsidize nearly two-thirds of these water districts’ share of the project cost.

Lawmakers noted that according to the Bureau of Reclamation’s May 2017 response to the inspector general, and in staff briefings in recent months, the Interior Department has made it clear that there are no plans to recover these funds, and has offered no explanation for why any of those expenditures would be “nonreimbursable.”

The Bureau of Reclamation appears to have “written off” federal funding that should have been reimbursed by the water contractors, requiring the taxpayers to cover those expenses instead, the lawmakers stated.

“These decisions by the Interior Department dating back to 2007 appear to violate multiple laws and policies,” wrote lawmakers, “including the state law requirement that the beneficiaries of a Sacramento-San Joaquin Delta conveyance facility must pay for ‘costs of the environmental review, planning, design, construction and mitigation’ of any new facility.

“We look forward to hearing how you intend to correct this situation, and to ensure that future work by your Department is conducted in a transparent manner that does not undermine the law and the Congressional appropriations process,” continued the members of Congress in Friday’s letter.

The lawmakers noted although the “scheme” began well before Zinke’s confirmation as secretary, they expressed concern that the department has not taken meaningful action in response to the “serious violations” unearthed by the inspector general.

Accordingly, Huffman and the other lawmakers stated they wanted a reply to a number of questions by Jan. 31, 2018 including:

  1. How does Zinke intend to ensure that the Bureau of Reclamation recoups the tens of millions of dollars that improperly subsidized water contractors’ participation in the WaterFix Project?
  2. Does the $84.8 million identified in the inspector general’s report represent the total amount spent on this project through this method?
  3. Of the total funds identified in the report, how much did the Bureau of Reclamation credit toward water contractors’ existing obligations including capital costs and operation and maintenance?
  4. Was this same funding mechanism used in, or is still being used in any other Interior Department planning processes?
  5. What changes have been made in the department in response to the inspector general’s recommendations, which included significant new procedures and controls to ensure federal funding could not be inappropriately recognized as “nonreimbursable” without cause?

“The revelations in this alarming report, which identifies numerous apparent violations of law and policy,” the legislators wrote, “contradict the Interior Department’s prior claims regarding the level of federal support for the project. We believe that the Department must recapture the tens of millions of taxpayer dollars that were misspent.”