Summary: Pursuant to a congressional request, GAO reviewed the repayment arrangements for various reclamation projects, and asked the Department of the Interior's Assistant Secretary for Water and Science to respond to several issues regarding the Central Utah Project's Bonneville Unit.
The Assistant Secretary stated that: (1) the 1965 supplemental repayment contract with the water district allowed for the use of the Water Supply Act of 1958 and provided that it would be applicable to the repayment of allocated costs of municipal and industrial (M&I) water when there is an anticipated demand; (2) the Bureau intended to allow a 10-year deferment of repayment costs for facilities already completed; (3) the Bureau decided to use ad valorem tax revenues from the district's property owners for M&I payments; and (4) a 1984 change in the cost allocation was not final and did not require formal congressional approval. GAO continues to believe that: (1) the Bureau's use of the act to defer portions of M&I costs was illegal and could result in the federal government losing millions of dollars in interest revenues; (2) the Bureau's use of ad valorem tax revenues from property owners to increase the Bonneville Unit's M&I repayment obligation under the 1965 contract was improper since that money was already dedicated to irrigation repayment; and (3) the Department of Energy Organization Act of 1977 requires congressional approval of the modified cost allocation, because it would reduce the interest collected on repayment since the cost allocated to electric power is repaid with interest and the cost allocated to irrigation is repaid without interest.
