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Inspector General says Reclamation Wasted $32.2 Million on Klamath irrigators

Federal auditors have found that the U.S. Bureau of Reclamation (USBR) wasted $32.2 million intended for fish and wildlife and drought relief in the Klamath Basin on subsidies for irrigators.

This scandal takes place as the Yurok, Karuk and Hoopa Valley Tribes, recreational anglers, commercial fishing families and river and coastal communities are suffering from the big cultural and economic loss caused by low numbers of returning salmon on the Klamath River this year, the result of decades of mismanagement by the state and federal governments.

The misspending is a revealed in a new audit report that confirms charges leveled last year by the Public Employees for Environmental Responsibility (PEER). In a news release, PEER described the arrangement between Reclamation and KWAPA as the “Klamath Irrigators’ Illegal Piggy Bank.”

“We found that USBR did not have the legal authority to enter into the cooperative agreement, resulting in $32.2 million in wasted funds spent by KWAPA (Klamath Water and Power Agency )under the agreement,” wrote Mary L. Kendall, Deputy Inspector General for the Office of Inspector General, in the audit report dated October 11, 2016.

The report found that the program had done little to help endangered coho salmon, Lost River suckers and shortnose suckers, as it was intended to do.

The IG report details how Reclamation diverted $32.2 million in federal funds intended for drought contingency planning and helping struggling fish populations:

* In a “waste of funds” wholly lacking in any legal authority;
* Paying for KWAPA salaries, fringe benefits, rent, travel and other expenses whose benefits flowed “primarily to irrigator contractors rather than fish and wildlife,” including $4.2 million for uses that could not be supported with documentation or were outright “unallowable”; and
* By modifying the KWAPA contract “19 times to expand the scope of activities” and extend the original payment program from 2008 through September 30, 2015.

Reclamation disputes the Inspector General’s findings. “Reclamation maintains that the reimbursement program has been an important tool in dealing with water issues in an over-allocated basin,” the Bureau claimed in a written statement.

The Klamath Water and Power Agency was a water and power authority in Klamath Falls, Oregon that received water from federal water projects in northern California and southern Oregon. KWAPA was forced to close its doors on March 31, 2006 due to “disorganization” and complaints filed by PEER.

The Klamath River watershed — and its precious salmon and steelhead populations — have been devastated by a series of droughts in recent years. Over the past several years, Reclamation, under pressure from Tribes, fishermen and environmentalists, has released supplemental cold water flows from Trinity Reservoir into the Trinity River to stop a massive fish kill on the lower Klamath like the one that ravaged the river in September 2002. During that fish kill, the largest of its kind in U.S. history, an estimated 35,000 to 68,000 salmon perished.

Since the Bureau rejected the audit report’s findings, the IG is kicking this intra-agency dispute upstairs in Interior to the Assistant Secretary for Policy, Management and Budget for resolution. “While the payments have ended, Reclamation refuses to change its practices to prevent future abuse or to recoup moneys illegally spent,” according to PEER.

“Basically, the Bureau of Reclamation became an illicit ATM for favored special interests,” stated PEER Senior Counsel Paula Dinerstein. “To add injury to insult, these improper subsidies were used to aggravate environmental damage by draining shrinking groundwater supplies to benefit irrigators.”

Dinerstein emphasized that these illegal payments would be continuing if Reclamation employees had not blown the whistle. The whistleblower complaint from two Reclamation biologists filed through PEER prodded the U.S. Office of Special Counsel to order Secretary of Interior Sally Jewell to address the illegal diversion of funds and how her agency would remedy identified these violations.

“That answer to the Special Counsel was due back in August of 2015 but Reclamation, on the Secretary’s behalf, has obtained extensions totaling 15 months,” added Dinerstein.

“Reclamation is circling its wagons to defend the potentially criminal conduct by its own managers,”said Dinerstein, pointing to the Anti-Deficiency Act that forbids expenditures not authorized by any appropriation and is enforced by criminal fines and/or imprisonment for up to two years. “We will keep pressing for some accountability to taxpayers from Reclamation’s multi-year, multi-million dollar illegal money-laundering operation.”

Jim McCarthy, Communications Director & Southern Oregon Program Manager for WaterWatch, pointed out that not only was this program apparently illegal and wasted millions, but the resulting lack of water on the Klamath’s wildlife refuges, which the program in question was created to provide, “actually killed huge numbers of wildlife in recent years.”

In fact, seventeen conservation groups sent a letter to Interior Secretary Jewell on October 13 asking for emergency water deliveries for the Klamath refuges to reduce the risk of yet another waterfowl die-off, said McCarthy.

The letter states, “As you are aware, since 2012, tens of thousands of birds on these refuges have died for lack of water resulting from allocation decisions made within the Department of the Interior. When few wetland acres are available on these refuges due to lack of water, large numbers of waterfowl pack together during migration periods, leading to lethal disease outbreaks. Refuge staff estimated that some 20,000 birds perished this way in 2014. Similar conditions on these refuges sparked massive waterfowl die-offs in 2012 and 2013.”

Mike Orcutt, Fisheries Director of the Hoopa Valley Tribe, said the water bank created under the agreement between Reclamation and KWAPA was supposed to improve water quality and the fishery in the Klamath Basin, but that didn’t happen, according to the IG report.

“Looking to the future, the Tribe receives their money for fish restoration from the same budget and the budget has been flatlined. We get the aftermath of that flatlined budget,” he said.

Another potential impact is that this scandal could impact the trust in the Bureau by Congress and make it harder for similar future agreements to be funded.

“You’re going to be hard-pressed to get the money if you don’t use the funds for what you were supposed to,” Orcutt told the Eureka Times-Standard.

On July 29, the Hoopa Valley Tribe filed a lawsuit against the Bureau of Reclamation and the National Marine Fisheries Service in the U.S. District Court in Oakland for violations of the Endangered Species Act (ESA) over management actions that have imperiled Coho salmon on the Klamath River. The Trinity River, the largest tributary of the Klamath, runs through the Hoopa Valley Indian Reservation.

The Yurok Tribe, Karuk Tribe and a coalition of groups, including the Pacific Coast Federation of Fishermen’s Associations (PCFFA), Institute for Fisheries Resources, Klamath Riverkeeper and Earthjustice, this summer also filed 60-day notices of intent to sue the two federal agencies over their failure to protect coho under the ESA. However, the Yurok and Karuk tribes have decided to hold off on suing the agencies as they discuss potential solutions to the parasite outbreaks that have devastated juvenile salmon populations in recent years.

Hopefully, this illegal spending of $32.2 million in federal funds to further subsidize already heavily-subsidized agribusiness interests will result in criminal convictions if the allegations by PEER are proven true.

This is not the first time that state and government officials have diverted millions of dollars designed to restore fish and wildlife for other purposes. For example, the Department of Interior’s Inspector General earlier this year opened an investigation into the possible illegal use of millions of dollars by the California Department of Water Resources (DWR) in preparing the Environmental Impact Statement (EIS) for Governor Jerry Brown’s controversial Delta Tunnels Plan.

The investigation resulted from a complaint PEER filed on the behalf of a Bureau of Reclamation employee on February 19, 2016. The complaint, made public in a statement from PEER on April 11, details how a funding agreement with DWR is “illegally siphoning off funds that are supposed to benefit fish and wildlife to a project that will principally benefit irrigators” under the California Water Fix, the newest name for the Delta Tunnels plan.

The Delta Tunnels project is deeply connected to the Klamath River watershed. The two 35-mile long tunnels under the Delta would hasten the extinction of Central Valley steelhead, Sacramento River winter-run Chinook salmon, Delta and longfin smelt, green sturgeon and other fish species. The project would also imperil the salmon and steelhead populations on the Trinity and Klamath rivers, a fishery that for thousands of years has played an integral part in the culture, religion and food supply of the Yurok, Karuk and Hoopa Valley Tribes.

More articles by:

Dan Bacher is an environmental journalist in Sacramento. He can be reached at: Dan Bacher danielbacher@fishsniffer.com.

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