Audit: US misuses taxpayer cash for California water project

SAN FRANCISCO (AP) - The U.S. Interior Department improperly contributed tens of millions of dollars in taxpayer money to help California and politically powerful state water districts plan for a massive project to ship the state's water from north to south, a new federal audit said Friday.

Federal officials contributed $85 million to help finance the water districts' plan, backed by Democratic Gov. Jerry Brown, to build two giant water tunnels to re-engineer the state's water system, according to the audit by the inspector general's office of the U.S. Interior Department obtained by The Associated Press.

By California law and by an agreement by the water districts, California water districts and not taxpayers are supposed to bear the costs of the $16 billion project, the audit said. Brown and the then-secretary of the Interior Department, affirmed that in a joint 2011 public statement supporting the tunnels plan.

The proposed tunnels are part of Brown's decades-long push for a project that would more readily carry water from green Northern California south, mainly for use by cities and farms in central and Southern California. Voters rejected an early version of the proposal in a statewide vote in the 1980s.

California water districts are making final decisions on whether to go ahead with the controversial project.

Federal authorities did not fully disclose to Congress or the public that it was supplying $84.8 million for the project planning, and waived reimbursement for $50 million of it, the audit said. The federal Reclamation Bureau did not disclose the arrangement in its certified financial reports, the audit said.

"USBR could not provide us with a rationale for its decision to subsidize (California) water contractors, other than the water contractors asked USBR to pay," the audit noted.

The actions by the Bureau of Reclamation, which is part of the Interior Department, mean that federal taxpayers paid a third of the cost of the project's planning up to 2016, the audit said.

Meanwhile, Central Valley water districts that were supposed to pay 50 percent of the tunnels' planning costs contributed only 18 percent, the audit found.

California officials have consistently said no taxpayer money was being spent on the project.

Asked if auditors wanted contractors to repay the money, Interior spokeswoman Nancy DiPaolo said, "We certainly hope so."

That decision was up to California, she said.

Thomas Birmingham, general manager of the sprawling Central Valley rural water district Westlands, which received one of the largest shares of the federal money, said he knew of nothing about the arrangement that was "inconsistent with either state or federal law."

"The state was aware of it," Birmingham said of the federal payments. "No one indicated this was somehow a violation of the letter or spirit of the agreement" guiding the costs of the project.

Under federal law, Birmingham said, water districts would be responsible for reimbursing the federal money only if the project went forward and benefited those districts.

Spokespeople for the Bureau of Reclamation, Brown's office and the state Department of Water Resources either had no immediate comment Friday or did not respond to requests for comment.

The audit's findings were "appalling," said Doug Obegi of the Natural Resources Defense Council environmental group, which has opposed the project on the grounds that it would speed up the extinction of endangered native species.

"The public is paying for what a private party is supposed to pay for," Obegi said, who argued that the audit raised questions overall whether water districts could afford to take on the costly water project. "That is taking the public's money, and that's not OK."

A former lobbyist for Westlands, David Bernhardt, has been a top official in the Interior Department under the George W. Bush administration and again under Trump. Critics long have said Westlands has benefited from its ties to the federal agency, which the water district and Interior deny.

"I wish I were surprised to learn that the Westlands Water District colluded with the Interior Department to hide millions of dollars in unauthorized payments from Congress, but this is typical of the longstanding and incestuous relationship between the largest irrigation district in the country and its federal patrons," said U.S. Rep. Jared Huffman, a California Democrat.

Separately, the state auditor's office disclosed on its website Friday that the release of its examination of California's financial management of the project has been delayed for at least a third time, to October.