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, 0377 . . rather than identifying the extent of the Secretary's authori~y to implement the IO's recommendations. Given the substantial amount of gray area that exists in Reclamation law, the prevailing attitude toward the exercise of Secretarial discretion has meant that substantially fewer real dollars will be l."eturned to the Treasury from local water and power users. (See Chapters 4. 7. and 8.) 5. Too often. the Bureau of Reclamation has negotiated contracts with local water users that fail to fully protect the Federal taxpayer's interest. .fuether by inadvertence. miscalculation. or design. the regional BuRec officials entrusted with securing contractual commitments to repay the costs of Reclamation projects have come up short on numerous occasions. Those offices and officials who stand to benefit most in terms of budget and personnel resulting from major construction projects apparently have insufficient incentives to insist upon airtight repayment commitments from local interests. (See Chapters 3,5.7,8. and 9.) 6. The refusal of the Department to implement the recommendations of its own Inspector General -- even if reversed immediately -- has already produced a substantial windfall for water and power'users. The Treasury has had to borrow funds at interest rates of 7% to 14% during the past eight years, and private sector borrowing costs have been even higher. Meanwhile the water and power customers of the projects covered by the IG audits have been charged interest rates of 3-1/2% or less on balances owed to the ~reasury. Under such conditions. any deferral of repayment by local interests greatly increases the value of their interest subsidy. (See Chapters 3. 4. 5. 6. and 9.) 7. The repayment status of more than $5.6 billion in existing and proposed Federal investment in Reclamation prolects remains unaudited. with the attendant possibilities of waste, inefficiency, and abuse of fiscal and natural resources. Notwithstanding the unbusinesslike practices that mark the repayment status of the six projects audited to date. the Office of the Inspector General has simply stopped looking for similar instances of repayment mismanagement in other Reclamation project accounts. Under the Reagan Administration, the IG has diverted his audit resources -- both relatively and absolutely -- away from audit activities with the potential for increasing cost recovery from water and power users. (See Chapter 1.) 8. The Office of the Inspector General has failed to provide vigorous follow-up on its audit recommendations. Some Reclamation project audits were closed out. i.e., considered resolved, without any record of decision by the Inspector General. In other instances, audits were resolved on the basis 11