WSP06085

• File Number: 8141
• Description: Fryingpan-Arkansas Project
• State: CO
• Basin: Arkansas
• Water Division: 2
• Date: 5/22/1984
• Author: National Wildlife Fe
• Title: Shortchanging the Treasury--The Failure of the Department of the Interior to Comply with the Inspector Generals Audit Recommendations to Recover the Costs of Federal Water Projects--select chapters pr
• Water Supply Pro - Doc Type: Report/Study

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There are over 8,500 BuRec employees in \,ashington, D.C.
and in seven regiqnal offices.

Bureau of Reclamation Repayment Responsibilities

Most of the water projects built by the Bureau of
Reclamation are intended to serve more than one purpose. The
construction costs attributable to some purposes are to be
reimbursed by non-Federal interests, while the costs of other
purposes are non-reimbursable. Reimbursable purposes include
hydroelectric power, municipal and industrial water supply, and
irrigation. Non-reimbursable purposes include flood control,
water quality improvement, and fish and wildlife enhancement.
A limited portion of costs allocated to recreation is
reimbursable. Thus, only a fraction of the costs of a BuRec
dam are charged to the users of water and power. The costs
attributable to other purposes are never recovered by the
Treasury.

Generally, the Bureau seeks to secure the repayment of
reimbursable costs by entering into a repayment contract with
non-Federal interests -- typically, local irrigation districts
and municipal water agencies -- prior to the initiation of
construction. Since the establishment of the Department of
Energy in 1977, DOE has held the responsibility for marketing
the hydropower produced by BuRec projects, including the
setting of power rates.

~he Treasury recovers a relatively small amount of money
each year as a result of current repayment pOlicies. During
FY 82, total receipts, or operating income, for the Bureau
program amounted to $423 million, of which $390 million came
from power revenues. Moreover, most of this was eaten up by
operating expenses and interest, leaving a net of $48.6 million
going toward the repayment of Federal capital investment.

The laws governing the Reclamation program provide for a
number of explicit and implicit subsidies for water resource
development. Principally, these congressionally created
subsidies have been in the form of (1) interest-free repayment
of irrigation water costs; (2) partial repayment of irrigation
water costs through the use of revenues from power sales,
municipal and industrial water sales, and miscellaneous
receipts; (3) below-market interest rates for repayment of
power and municipal & industrial water costs; (4) long
repayment periods, e.g., 40 to 60 years; and (5) allocation of
project costs to non-reimbursable purposes.

However, critics have charged that the level of subsidy to
the beneficiaries of the Reclamation program has often exceeded
the already generous provisions in Reclamation law. This is

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