Water Resources:

Compensation to Water Users Did Not Reflect the Value of Rights and Interests

RCED-90-116: Published: Apr 18, 1990. Publicly Released: May 18, 1990.

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GAO reviewed the Bureau of Reclamation's compensation to the Strawberry Water Users Association (SWUA) for operation of the Strawberry Valley Project.

GAO found that: (1) SWUA was legally entitled to compensation when the United States removed its rights to obtain revenues from the project land, but the Bureau should have limited compensation to actual revenues lost from existing contracts; (2) the Bureau had no policy to guide compensation when the United States terminated SWUA rights and interests; (3) the $17.9 million the Bureau and Congress paid SWUA did not reflect the value of SWUA rights and interests; (4) $5.8 million of the $17.9 million payment was for projected future recreation and grazing revenue losses; (5) the compensation authorized in 1988 represented a congressional policy decision; and (6) SWUA was not liable for land rehabilitation costs.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Bureau recognized that it was critical for Congress to have information on which to base decisions regarding the compensation of organizations managing Bureau projects that would facilitate action by Congress on future compensation issues. There is no specific outstanding compensation claim at this time.

    Recommendation: To assist Congress when it deliberates on the just compensation for the termination of contractual rights of organizations managing Bureau projects, the Secretary of the Interior should direct the Commissioner of the Bureau of Reclamation to provide Congress with specific information on the: (1) legal rights and interests of the organization; and (2) remaining economic value of those rights and interests for which the organization should be compensated.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: The Bureau distributed its compensation policy to regional directors in an April 17, 1991 memorandum from the Assistant Commissioner of Resources Management.

    Recommendation: To ensure that the Bureau of Reclamation awards just compensation for the termination of contractual rights of organizations managing Bureau projects, the Secretary of the Interior should direct the Commissioner of the Bureau of Reclamation to develop a policy to guide the compensation of organizations.

    Agency Affected: Department of the Interior

 

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