Central Arizona Project:

Costs and Benefits of Acquiring the Harquahala Water Entitlement

RCED-95-102: Published: Jun 5, 1995. Publicly Released: Jul 5, 1995.

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Pursuant to a congressional request, GAO provided information on how the Harquahala Valley Irrigation District became a source of water for the Fort McDowell Indian Community, focusing on the: (1) federal government's costs to acquire the water; (2) benefits accrued to the parties involved in the acquisition; and (3) status of Department of Agriculture loans made to Harquahala landowners.

GAO found that: (1) economic conditions in the late 1980s led Harquahala landowners to sell their land and associated water rights, while the Central Arizona Water Conservation District and the federal government were seeking water to settle long-standing water rights claims; (2) the Harquahala water acquisition will cost the federal government $87.6 million to $124 million in foregone receipts over the project's 55-year repayment period, which includes the elimination of the Harquahala District's debt for its water distribution system and project construction costs; (3) the federal government settled the Community's Indian water claims, the Indian community obtained a firm water supply, the irrigation district reduced its repayments for project construction, and the Harquahala landowners received cash and debt relief from the sale of their water rights as a result of the water acquisition; (4) the Department of the Interior failed to adequately protect the federal government's interest with respect to federal farm loans held by Harquahala landowners; and (5) although seven Harquahala borrowers were eligible to receive $4.5 million from the water rights sale, these borrowers had delinquencies of $3.9 million in outstanding loans.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Departmental spokesperson informed GAO that the department considers the Memorandum issued on September 24, 1996 to all Indian Water Rights Settlement Negotiators, when read in conjunction with Federal Register Notice 55FR9223 dated March 12, 1990, to be responsive action for both recommendations. She particularly emphasized criteria 12 in that document.

    Recommendation: To ensure complete estimates of federal costs of future Indian water rights settlements that use Bureau of Reclamation project water, the Secretary of the Interior and the Directors of the Congressional Budget Office and the Office of Management and Budget should develop methodologies to ensure that all the known costs associated with any federal contribution of water are included in the estimates provided to Congress.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: According to the OMB Action Officer, the only action taken was to alert co-workers by telephone of the need to ensure that all known federal costs associated with Indian water rights settlements are included in the estimates provided to Congress. He believes this action was sufficient since there has been only one water rights settlement case during the current Administration.

    Recommendation: To ensure complete estimates of federal costs of future Indian water rights settlements that use Bureau of Reclamation project water, the Secretary of the Interior and the Directors of the Congressional Budget Office and the Office of Management and Budget should develop methodologies to ensure that all the known costs associated with any federal contribution of water are included in the estimates provided to Congress.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: CBO did not develop written methodologies to address this recommendation because the cases that fit the criteria are not standard but unique. The Action Officer, however, said that CBO has adopted the spirit of the recommendation in that, by virtue of the GAO report, it now considers both long- and short-term costs associated with water projects.

    Recommendation: To ensure complete estimates of federal costs of future Indian water rights settlements that use Bureau of Reclamation project water, the Secretary of the Interior and the Directors of the Congressional Budget Office and the Office of Management and Budget should develop methodologies to ensure that all the known costs associated with any federal contribution of water are included in the estimates provided to Congress.

    Agency Affected: Congressional Budget Office

  4. Status: Closed - Implemented

    Comments: Departmental spokesperson informed GAO that the department considers the Memorandum issued on September 24, 1996 to all Indian Water Rights Settlement Negotiators, when read in conjunction with Federal Register Notice 55FR9223 dated March 12, 1990, to be responsive action for both recommendations. She particularly emphasized criteria 12 in that document.

    Recommendation: Because of the common link between land and water rights in Harquahala-type acquisitions and the need to ensure that the federal government's overall interests are protected in future Indian water rights settlements, the Secretary of the Interior should identify other federal agencies' interests in these settlements and act to protect these interests in the negotiations.

    Agency Affected: Department of the Interior

 

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