Audit of the Bureau of Reclamation’s Klamath Basin Water User Mitigation Program

The U.S. Department of the Interior (DOI), Office of Inspector General conducted an audit to determine whether the Bureau of Reclamation (USBR) had the legal authority to enter into a cooperative agreement with the Klamath Water and Power Agency (KWAPA) to administer the Water User Mitigation Program and whether related expenditures were allowable. We determined that USBR did not have the legal authority to enter into the cooperative agreement. Because the agreement was improper, the $32.2 million that KWAPA spent over a span of 7 years was a waste of funds. In addition, we identified KWAPA expenditures that were unsupported and unallowable and have provided this information for USBR’s consideration. 

 

Only two of the five legal authorities cited by USBR—the Fish and Wildlife Coordination Act (Coordination Act) and the Reclamation States Emergency Drought Relief Act of 1991 (Drought Relief Act)—provide USBR with authority to use financial assistance, but restrict the use of funds to specific activities. The Coordination Act authorized USBR generally to provide financial assistance for the development and protection of fish and wildlife, and the Drought Relief Act authorized USBR to provide financial assistance for the development of drought contingency plans. USBR’s cooperative agreement with KWAPA failed to explain how any of the assistance provided or work performed met the requirements of the Coordination Act and Drought Relief Act.

 

We determined that the benefits of the Water User Mitigation Program flowed primarily to irrigation contractors rather than fish and wildlife; of the $32.2 million expended under the cooperative agreement, $28 million was used to compensate irrigation contractors for using pumped groundwater to irrigate their lands or refraining from irrigation altogether. We also determined that none of the funds were used to develop a drought contingency plan. Finally, we determined that conflicting advice provided by the Office of the Solicitor facilitated USBR’s award of the cooperative agreement.

 

We made three recommendations to address the weaknesses that allowed USBR to improperly award this cooperative agreement. DOI did not concur with two of our recommendations. DOI concurred with our third recommendation by stating it was already in compliance with this recommendation. We consider all three recommendations unresolved and not implemented; therefore, we are referring them to the Assistant Secretary for Policy, Management and Budget for resolution.