Reclamation Fund and Western Area Power Administration, B-303180, July 26, 2004

B-303180 Jul 26, 2004 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights While the relationship between the Bureau of Reclamation (BOR) and the Western Area Power Administration (WAPA) is not a creditor-debtor relationship, WAPA is required to set rates to recover from its power customers amounts appropriated over the years from BOR's Reclamation Fund to finance construction, operation, and maintenance of federal power facilities, and to deposit power revenues into the Reclamation Fund. The statutory power marketing scheme was designed to ensure that power customers reimburse the federal government for the benefit they receive from the federal government. The statutory scheme requires WAPA to enforce reimbursement by WAPA's customers and to repay to the Reclamation Fund the amount it collects. View Decision B-303180, Reclamation Fund and Western Area Power Administration, July 26, 2004 Decision Matter of: Reclamation Fund and Western Area Power Administration File: B-303180 Date: July 26, 2004 DIGEST While the relationship between the Bureau of Reclamation (BOR) and the Western Area Power Administration (WAPA) is not a creditor-debtor relationship, WAPA is required to set rates to recover from its power customers amounts appropriated over the years from BOR's Reclamation Fund to finance construction, operation, and maintenance of federal power facilities, and to deposit power revenues into the Reclamation Fund. The statutory power marketing scheme was designed to ensure that power customers reimburse the federal government for the benefit they receive from the federal government. The statutory scheme requires WAPA to enforce reimbursement by WAPA's customers and to repay to the Reclamation Fund the amount it collects. DECISION The Department of the Interior (Interior) has requested an advance decision under 31 U.S.C. 3529 regarding the nature of the relationship between the Reclamation Fund and the Western Area Power Administration (WAPA). The annual appropriation acts for the Department of Energy (Energy) finance WAPA, one of Energy's power marketing administrations (PMA), by providing that most of WAPA's appropriations "shall be derived from the Department of the Interior Reclamation Fund." See, e.g., Energy and Water Development Appropriation Act for Fiscal Year 2004, Pub. L. No. 108-137, 117 Stat. 1827, 1858 (Dec. 1, 2003). Other laws address the reverse flow of money from WAPA to the Reclamation Fund. See, e.g., 43 U.S.C. 392a, 485h(c). In the request, Interior asked us whether the annual appropriation to WAPA is a "a transfer from one appropriation to another" or "a loan from the Reclamation Fund." Letter from Nina Rose Hatfield, Deputy Assistant Secretary for Budget and Finance of the Department of the Interior, to the Comptroller General, May 15, 2004. If a loan, Interior further asked "what recourse is available for Interior to enforce repayment of this liability between Federal agencies" and what is "the authority from which that recourse arises." Id. Interior submitted this request in the context of an ongoing dispute with Energy regarding the appropriate accounting treatment for the appropriation to WAPA from the Reclamation Fund, an account held in the Treasury for the Bureau of Reclamation (BOR), and the amounts that WAPA, by law, must deposit into the Fund. 43 U.S.C. 392a. Interior and Energy first sought guidance on this issue from the Office of Management and Budget (OMB), which in turn requested guidance from the Federal Accounting Standards Advisory Board (FASAB) and FASAB's Accounting and Auditing Policy Committee (AAPC). Office of Management and Budget, Memorandum from Linda M. Springer, Controller, to the Chief Financial Officers of the Departments of Energy and Interior, Re: Accounting for Certain "Appropriated Debt" Transactions , Sept. 15, 2003. While AAPC had this matter under review, Interior requested this decision. In this decision, we do not address the applicable accounting standards or the pertinent accounting treatment for the transactions at issue. We will defer to FASAB in that regard. In order to inform the discussion among the parties and AAPC and FASAB as they consider the proper accounting treatment for the intragovernmental activities at issue, we explain here the movement of funds between the Reclamation Fund and WAPA and the laws that govern the relationship between BOR and WAPA. BACKGROUND WAPA is one of four power marketing administrations in the United States today, [2] which were established between 1937 and 1977 in order to sell and transmit the power generated at various federal hydroelectric plants. See U.S. General Accounting Office, Power Marketing Administrations: Their Ratesetting Practices Compared With Those of Nonfederal Utilities , at 6, GAO/AIMD-00-114 (Washington, D.C.: Mar. 30, 2000).