House Democrats request GAO probe of federal scheme to fund Delta Tunnels

Six House Democrats yesterday asked the Government Accounting Office (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 of the Delta Tunnels project. The penalty for this type of misuse of public money can include removal from office, according to the Representatives.

Led by Representatives Jared Huffman (D-CA) and Raul Grijalva (D-AZ), the Natural Resources Committee’s Ranking Member, the six House Democrats called on the GAO to open a “new investigation into the misuse of taxpayer funds” by the Interior Department’s Bureau of Reclamation.

California Representatives Mike Thompson (D-CA), Jerry McNerney (D-CA), Mark DeSaulnier (D-CA), and Anna G. Eshoo (D-CA) also signed the letter sent to the Comptroller General of the United States, Gene L. Dodaro.

The request follows last month’s revelations that tens of millions of dollars were secretly spent by the federal agency to subsidize private agribusiness interests and develop plans for a massive California water project, the California WaterFix. The WaterFix project, considered by many to be a “legacy” project of California Governor Jerry Brown, aims to build two giant 35-mile long tunnels under the Delta to export Sacramento River water to agribusiness interests in the San Joaquin Valley and Southern California water agencies.

“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,” according to a statement from Huffman’s Office. “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,” the statement noted.

In the October 24 letter, the lawmakers are asking the GAO to issue a legal opinion about Reclamation’s funding scheme. The legislators cited the key lrole in the financial scandal of David Bernhardt, who, in a classic example of the revolving door, served as a top Interior official under the G.W. Bush administration, then became a Westlands lobbyist, and now is back as Interior’s Deputy Secretary.

“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,” according to the statement. “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 September, the Inspector General for DOI issued a 42-page report detailing the misuse of the money and the recommendations made to Reclamation to resolve the issue. The Inspector General determined that Bureau officials “did not fully disclose to Congress or other stakeholders that a total of $84.8 million in federal funds were used to pay for the planning costs of the State of California’s BDCP.”

In addition, the audit revealed:

• Reclamation did not disclose that it used these funds to subsidize 64% of the Central Valley Water Project (CVP) water contractors’ share of the state’s planning costs “and could not provide us with any explanation of why it did so.“

• Reclamation financed its participation in the tunnels project planning “by using a complex process that was not transparent to stakeholders.”

• USBR made a determination at the regional level, without suffIcIent analytical documentation, that $50 million in federal funds was not reimbursable, resulting in these funds not being repaid to the Treasury.

• Finally, USBR did not expend funds under its third financial assistance agreement with DWR in accordance with the authority delegated to the Commissioner under the Fish and Wildlife Coordination Act because the funds “were not used to plan, design or construct projects to create or improve instream habitat.”

The call for an investigation by the GAO also comes in the wake of State Auditor Elaine Howle’s release of an audit on the Delta Tunnels project revealing extensive mismanagement by the California Department of Water Resources, including the violation of state contracting laws, spending millions of dollars over anticipated costs, and failure to complete either an economic or financial analysis.

The 97-page report said the Department of Water Resources (DWR) broke state contracting laws when they replaced the program manager for the California WaterFix, formerly called the Bay Delta Conservation Plan (BDCP).

To read more about the audit, go here: https://www.dailykos.com/stories/2017/10/5/1704400/-State-Auditor-Reveals-DWR-Broke-the-Law-in-Delta-Tunnels-Planning

The Representatives' call for a further GAO investigation of Delta Tunnels, combined with the Inspector General’s audit and the State Auditor’s report on Delta Tunnels mismanagement, makes one wonder how any water district can still support the California Water Fix, whether it features one or two tunnels.

If there has been so much mismanagement and misspending of tax dollars in the planning phase of the project to date, what more mismanagement and misspending could we see if the project ever enters its construction phase?

The full text of the letter is 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.