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<br />APPENDIX II <br /> <br />APPENDIX II <br /> <br />WHY GAO CONDUCTED ITS <br />REVIEW <br /> <br />On November 8, 1984, Senator Howard M. Metzenbaum asked us <br />to evaluate whether the Bureau of Reclamation's water project <br />repayment policies will result in full and timely repayment to <br />the Treasury as required by law. He requested that we evaluate <br />the proposed new irrigation rate-setting policy for the Central <br />Valley project. Subsequently, we were requested to also evaluate <br />the CVP proposed new municipal and industrial water rate-setting <br />policy. <br /> <br />The Secretary of the Interior has not yet approved new <br />rate-setting policies for the project's irrigation and M&I water <br />ser<lice customers. The Bureau's Regional Director, Mid-Pacific <br />Region, considers the rate-setting policy proposals we reviewed <br />to be internal working documents subject to continual revision <br />until approved by the Secretary. <br /> <br />We interviewed Bureau officials and reviewed documents at <br />the Bureau's Mid-Pacific Regional Office in Sacramento, <br />California. To obtain background information on the CVP and data <br />on the status of repayment and identify steps being taken to <br />establish new water service rate-setting policies, we reviewed <br />the 1939 Reclamation project Act and the 1982 Reclamation Reform <br />Act, Federal Register notices, Bureau instructions, CVP financial <br />statements, cost data, water yield information, and repayment and <br />rate-setting documents, water service contracts between the <br />Bureau and CVP customers, congressional correspondence and <br />hearings; reports prepared by Interior's Office of Inspector <br />General, and public comments on the Bureau's proposal from the <br />National wildlife Federation, the Natural Resources Defense <br />Council, and various water districts and associations. <br /> <br />" <br />:! <br /> <br />We did not have time to verify water delivery and cost data <br />that the Bureau used for rate-setting and repayment analyses. <br />Nor did we assess the reliability of any computer-produced data <br />and analyses. with respect to cost allocations, we noted that <br />Bureau regional instructions require a major reallocation study <br />for CVP every 10 years to reflect changing accomplishments. <br />However, such a study has not been performed since 1970. The <br />Bureau's regional economist cited lack of funds as the reason for <br />not performing the required study. <br /> <br />~ I <br /> <br />, <br /> <br />During our review, we noted that a major certified public <br />accounting firm was conducting a financial audit of the CVP. The <br />scope of the audit includes a verification and reconciliation of <br />historical revenue and cost data. They expect to complete their <br />audit and provide the Bureau with their report in September 1985. <br /> <br />The information presented reflects the most current <br />information available at the time of our review--February to June <br />1985. <br /> <br />15 <br />