House Democrats seek GAO Investigation into Federal Scheme to Fund Delta Tunnels Project

October 25, 2017

Washington, D.C.- Led by Reps. Jared Huffman (D-CA) and Raul Grijalva (D-AZ), the Natural Resources Committee’s Ranking Member, six House Democrats are calling on the Government Accountability Office (GAO) to open a new investigation into the misuse of taxpayer funds by the Interior Department’s Bureau of Reclamation, following last month’s revelations that tens of millions of dollars were secretly spent by the federal agency to subsidize private interests and help develop plans for a massive new California water project.

In its September audit, the Interior Department’s Inspector General found that the Bureau of Reclamation improperly subsidized the planning process for the California WaterFix project, also known as the “Delta Tunnels.” The audit identified at least $84 million in taypayer funds spent without disclosure to Congress as required by law, and kept hidden from other water users, stakeholders, and the public. According to the Inspector General, at least $50 million of this total should have been paid by the local water agencies that sought to benefit from the massive infrastructure project, such as the powerful Westlands Water District. Instead, those costs were secretly reassigned by the Bureau of Reclamation so that taxpayers would pay most of the water districts’ share.

With today’s letter, the lawmakers are asking the GAO, the federal watchdog agency that conducts investigations and audits on behalf of Congress, to issue a legal opinion about the Bureau of Reclamation’s funding scheme. The penalty for this type of misuse of public money can include removal from office.

The Inspector General’s audit found that the controversial funding plan was first launched in 2008, during the period when David Bernhardt was the department’s top lawyer. Upon leaving the department, Bernhardt became one of the top lobbyists for the Westlands Water District, the major beneficiary of this funding plan. He has now returned to the Interior Department as Deputy Secretary. In responses to the Inspector General, Interior Department staff have indicated that there are no plans to recoup these millions of dollars in taxpayer funds that were spent without authorization or rationale.

In addition to Rep. Huffman and Rep. Grijalva, the letter was also signed by Mike Thompson (D-CA), Jerry McNerney (D-CA), Mark DeSaulnier (D-CA), and Anna G. Eshoo (D-CA).

The full text of the letter below.

 

The Honorable Gene L. Dodaro

Comptroller General of the United States

U.S. Government Accountability Office

441 G Street, NW

Washington, DC 20548

Dear Comptroller General Dodaro,

The Department of the Interior’s Office of Inspector General, (DOI OIG), recently issued a report regarding the Bureau of Reclamation’s (USBR) spending on the Bay Delta Conservation Plan (BDCP) – a state-led effort involving the construction of new water diversion facilities benefitting select water contractors in the state of California.  See DOI OIG, Report No. 2016?WR?040, The Bureau of Reclamation Was Not Transparent in its Financial Participation in the Bay Delta Conservation Plan (Sept. 7, 2017) (DOI OIG Report).  In its report, the DOI OIG found that USBR “did not fully disclose to Congress and other stakeholders the $84.8 million cost of its participation in the BDCP efforts.”  DOI OIG Report, at 1.  The DOI OIG report (at 1) states further that:

[USBR] did not report [to Congress] $50 million derived from an appropriation, available for other general purposes, that it also used for the BDCP.  USBR obtained this $50 million over a 7?year span by using a complex, obscure process that was not disclosed in the annual congressional budget justifications, Office of Management and Budget Calfed Bay?Delta certified annual financial reports, or numerous briefing documents on BDCP issues and status prepared by USBR for senior management officials.

The complex, obscure process cited by DOI OIG report involved USBR altering its standard funding process for operation and maintenance activities which, according to the DOI OIG report, “obscured the source of its funding and the total cost of [USBR’s] participation in the BDCP.”  DOI OIG Report, at 8.  The DOI OIG report states that “USBR supplemented its BDCP activities with $50 million derived from funds appropriated for ‘water and related resources’ and authorized for application to reimbursable Federal [Central Valley Project Operation and Maintenance] activities and other purposes.”  DOI OIG Report, at 8.  That is, USBR may have “written off” reimbursable expenses and converted them to expenses borne by the taxpayer.

Given these troubling findings, we respectfully request a GAO legal opinion as to whether USBR’s actions with regard to the $50 million referenced above were consistent with, among other things, the rule against augmentation and the Miscellaneous Receipts Statute, 31 U.S.C. § 3302 (b).  For your convenience, please find the full OIG report enclosed. 

If you have any questions, please contact Matthew Muirragui and Vic Edgerton, of the House Natural Resources Committee, at (202)-225-6065.  Thank you for your attention to this important matter. 

Sincerely,

 

###