Klamath River Basin Conservation Area Restoration Program: Limited Assurance Regarding the Federal Funding Requirements
Released: 2005-09-19T00:00:00

Letter

Background

Congress passed the Klamath River Basin Fishery Resources Restoration Act (the Act) in October 1986 to assist in restoring the Klamath River’s fish resources. The Act authorized $21 million to be appropriated to the Department of the Interior, and it charged the Secretary of the Interior with implementing a 20-year program to designate and restore a conservation area within the Klamath River Basin. The Secretary, in turn, delegated responsibility for implementing the Klamath River Basin Conservation Area Restoration Program (Restoration Program) to the Director of the U.S. Fish and Wildlife Service (FWS), a bureau-level unit within the Department of the Interior. To facilitate implementation and management of the Restoration Program, FWS established under its Portland, Oregon, Regional Office a new field office in Yreka, California.

The Act also established the Klamath Fishery Management Council (Management Council) to monitor the fish population and recommend annual fish harvest limits, and the Klamath River Basin Fisheries Task Force (Task Force) to advise and assist the Secretary regarding implementation of the Restoration Program. To implement these provisions in the Act, the Secretary chartered the Management Council and the Task Force as federal advisory committees. Neither the Management Council nor the Task Force receives or spends funds. Since their inception, the Fish and Wildlife Office (FWO) at Yreka, California, has provided the financial resources to cover the Management Council’s and the Task Force’s operational expenses. In addition, staff from the Yreka FWO, along with staff from the State of California’s Department of Fish and Game, have provided technical and administrative support to the Management Council and the Task Force as required by the Act.

Management Council

In accordance with its charter, the Klamath Fishery Management Council functions only in an advisory capacity and reports to the Secretary of the Interior. The Management Council is responsible for making recommendations to various federal, state, local, and Indian tribal authorities regarding fish-harvesting regulations. In addition, the Management Council was assigned responsibility to establish a comprehensive long-term plan and policy for the management of the in- river and ocean harvesting that affects or may affect Klamath and Trinity River Basin anadromous fish populations. The Management Council’s long-term plan, published in 1992, lays out goals and objectives for fish populations in the Conservation Area and strategic plans for meeting the goals and objectives.

As prescribed by the Act, the Management Council is composed of 11 members, including representatives appointed by the Governors of California and Oregon, Hoopa Valley Business Council, non-Hoopa Indians, the Secretary of the Interior, and the Secretary of Commerce. The term of a member is 4 years. The Management Council usually meets three or four times a year (usually in February, March, April, and October) at various locations in California and Oregon. The Management Council publishes notices of meetings in the Federal Register, posts its meeting agenda on the Yreka FWO Internet Web page 2 to 3 weeks before each meeting, and invites the public to attend its meetings.

From fiscal year 1987 through fiscal year 2004, the Management Council held 73 meetings. Each meeting lasts from 3 to 5 days. The members discuss ongoing fish population monitoring activities. They also discuss and make recommendations on the regulation of ocean harvesting, recreational harvesting, and harvesting in the Conservation Area by the Hoopa Valley Indian Tribe and by non-Hoopa Indians. The Management Council’s recommendations must be consistent with its long-term plan and policy and must pass the Management Council by unanimous vote. The public is invited to attend all Management Council meetings, and public comment periods are scheduled on the agenda throughout the meetings. Sometimes speakers are invited to the meetings to make presentations on fish population studies.

The Management Council is provided with biological and statistical expertise by the Technical Advisory Team, a subgroup created by the Management Council, whose membership consists of individuals from entities represented on the Management Council. The Technical Advisory Team advises the Management Council on the status of anadromous fish stocks and the impacts of fishery management options. This includes the development of annual projections of fish stock size and development of fishery models for use in the management of fish populations.

Task Force

The Act provides for a 16-member Klamath River Basin Fisheries Task Force to advise and assist the Secretary of the Interior in the development and implementation of the Restoration Program. The Task Force consists of members who represent a broad range of stakeholder interests from throughout the Klamath River area. Members are appointed by, and represent, the Governors of California and Oregon; the Secretary of the Interior, the Secretary of Commerce, and the Secretary of Agriculture; the California counties of Del Norte, Humboldt, Siskiyou, and Trinity; Klamath County, Oregon; the Hoopa Valley, Karuk, Yurok, and Klamath Tribes; in- river sport anglers; and commercial salmon fishermen.

According to its charter, the Task Force also functions only in an advisory capacity and reports to the Secretary of the Interior. The charter states that the Task Force has four objectives: (1) to assist the Secretary of the Interior in the formulation, coordination, and implementation of the Restoration Program; (2) to assist and coordinate its activities with federal, state, local government, and private anadromous fish restoration projects; (3) to conduct any other activity necessary to accomplish the objectives of the Restoration Program; and (4) to act as advisor to the Management Council. The Task Force works by consensus to coordinate restoration planning, recommend restoration project proposals for funding, and express opinions on issues affecting the Klamath River Basin. In 1991, in conjunction with an independent contractor, the Task Force developed the Long Range Plan for the Restoration Program.

The Task Force usually meets three times per year (in February, June, and October) at various locations in California and Oregon. Like the Management Council, the Task Force publishes notices of meetings in the Federal Register, posts its meeting agenda at the Yreka FWO Internet Web page 2 to 3 weeks before each meeting, and invites the public to attend its meetings. Each meeting session lasts from 2 to 3 days. The members discuss needs for managing Klamath River fish, ongoing and proposed Klamath River Basin restoration projects, and the technical information needs of the Management Council. They also discuss and make recommendations regarding the funding of restoration projects.

Each spring the Task Force, in conjunction with FWS, issues a Request for Proposals for restoration projects to be funded in the following fiscal year with Restoration Program funds. When the project proposals are received, they are evaluated for technical merit and scored by the Task Force’s Technical Work Group, using criteria published in the Request for Proposals. Then, using the amount of expected funding for the following year as a guide for determining how many new restoration projects can be funded, the Technical Work Group presents its analysis to the entire Task Force. At its June meeting, the Task Force considers the Technical Work Group’s analysis, and by unanimous vote, selects the project proposals it will recommend to the Secretary of the Interior for funding in the next fiscal year. Approximately 25 projects were funded annually for fiscal years 2000 through 2004.

Yreka FWO

The Yreka FWO was established in fiscal year 1987 to facilitate implementation and management of the Restoration Program. The Yreka FWO is involved in administering several other FWS programs and activities, but the Restoration Program comprises about one-half of the office’s annual funding. The Yreka FWO has 1 full-time contract employee who performs administrative functions and 15 employees: a field supervisor, an assistant field supervisor, 2 supervisory biologists, 6 staff biologists, 1 administrative supervisor, 2 administrative staff, and 2 part- time staff biologists.

Eight of these individuals provide technical and administrative services to the Management Council and the Task Force, perform restoration project management functions, or have Restoration Program administration duties. Two of the employees (a supervisory biologist and one part-time staff biologist) spend almost all of their time on Restoration Program activities. The Field Supervisor, three administrative employees, one staff biologist, and the contract employee spend part of their time on Restoration Program activities. The assistant field supervisor, a supervisory biologist, five staff biologists, and one part-time staff biologist do not spend any of their time on Restoration Program activities. Until fiscal year 2004, Yreka FWO was supervised by FWS’s Portland Regional Office, but it is now supervised by FWS’s California-Nevada Operations Office.

Funds Received by the Restoration Program

There are a number of uncertainties in determining the amount of funds received by the Restoration Program for fiscal years 2000 through 2004. First, FWS’s appropriations do not contain a discrete line item for the Restoration Program. This prevented us from doing any independent verification of the appropriated amounts. Second, FWS’s restoration project database does not distinguish between cash and noncash contributions provided to the restoration project by project participants. The restoration project database shows a single amount, called the cost- share amount, which is the sum of all contributions made by the project participant to the project. For some projects, we could determine the amount of cost share that consisted of cash and the amount that consisted of noncash by looking in the contract file at the project agreement, or at supporting documents, or even at the final report if the project had been completed. However, for some restoration projects, even those documents did not contain adequate information for us to make a distinction between cash and noncash contributions. As a result, we were unable to determine how much of contributions made by project participants was cash and how much was noncash. Third, Restoration Program officials did not routinely perform independent analysis to determine the value that should be assigned to noncash contributions as called for by good financial management practices. Rather, according to FWS officials, they typically accepted the values assigned by the project participant as long as the values appeared reasonable. They did this for various reasons, including their lack of formal criteria for making such evaluations, and their uncertainty about their authority to question the values. Therefore, the composition and value of cost-share amounts maintained in FWS records are subject to question.

For the 5 years from the beginning of fiscal year 2000 through the end of fiscal year 2004, according to FWS officials, the Klamath River Basin Conservation Area Restoration Program received about $9.8 million in cash and noncash contributions: almost $6.3 million from federal sources and almost $3.6 million from nonfederal sources. The federal funds included about $5.1 million in appropriations derived from FWS’s Resource Management appropriation account,which includes a lump-sum appropriation that FWS allocates to various program activities, including the Fisheries Program. FWS operates several subprograms within the Fisheries Program, including the Fish and Wildlife Management Program, which administers several subactivity program elements, including Anadromous Fish Management.

During the 5 years under review, FWS allocated about $5 million in appropriations to the Klamath River Basin Conservation Area Restoration Program established under the Klamath River Basin Fishery Resources Restoration Act. In addition, according to FWS officials, FWS provided about $135,000 more to the Restoration Program during the 5-year period from appropriations FWS has allocated to support the Anadromous Fish Management subactivity of the Fisheries Program’s Fish and Wildlife Management Program. Also, according to FWS records, the Restoration Program benefited during that same time period from the almost $1.2 million in cash and noncash contributions from federal entities that participated in restoration projects. The almost $3.6 million from nonfederal sources came to the Restoration Program as cash and noncash contributions from nonfederal entities that participated in restoration projects, according to FWS records. See table 1 for a year-by-year breakdown of the Restoration Program funding, based on unaudited financial information provided by FWS officials.

In addition to gathering financial information on the Restoration Program’s sources of funds for fiscal years 2000 through 2004, we gathered the same information going back to the passage of the Act in 1986. Specifically, from the beginning of fiscal year 1988 through June 2005, FWS records show that the Klamath River Basin Conservation Area Restoration Program received over $17.0 million in funding from the Resource Management appropriations that FWS has allocated for the Restoration Program established by the Klamath River Basin Fishery Resources Restoration Act and another $188,000 from FWS’s Resource Management appropriations that FWS allocated for other activities funded by the Fisheries Program. In addition, according to FWS officials, the Restoration Program benefited during that same time period from about $1.7 million in cash and noncash contributions from federal entities that participated in restoration projects and from $5.8 million in cash and noncash contributions from nonfederal entities that participated in restoration projects. Although the Act was passed on October 27, 1986, the Restoration Program did not receive designated appropriations for fiscal year 1987. However, some expenditures for the Restoration Program, amounting to about $57,000, were funded during fiscal year 1987 from appropriations available to FWS for Fisheries Program expenditures.

Purposes for which the Restoration Program Spent Funds

According to FWS records, the Restoration Program funded 126 restoration projects during fiscal years 2000 through 2004, in addition to supporting the operations of the Management Council and the Task Force, providing for FWS project management services, paying for program administration expenses, and contributing to the operational costs of FWS’s Yreka field office, Portland regional office, and Washington, D.C. headquarters office.

Of the about $5.1 million received by the Restoration Program from FWS’s fiscal years 2000 through 2004 Resource Management appropriations, FWS’s records show about $2.9 million, or 57 percent, went to restoration projects; about $615,000, or 12 percent, was used by FWS to manage restoration projects, including planning, contracting, tracking agreements, complying with environmental requirements, and providing technical assistance to projects; about $1.1 million, or 23 percent, was spent on program administration, including administrative and technical support provided by FWS to the two federal advisory committees created by the Act; and the remaining about $442,000, or 9 percent, was used for overhead expenses incurred at the FWS headquarters and regional office levels.

In addition, the $4.7 million contributed to the Restoration Program by federal and nonfederal project participants that participated in restoration projects remained in the control of the project participants. The project participants used the $4.7 million of cash and noncash contributions on those restoration projects in which they participated. We were not able to obtain adequate information on the project participants’ contributions to describe the purposes for which those amounts were spent. See table 2 for a year-by-year breakdown of the purposes and amounts of Restoration Program expenditures paid from FWS appropriations.

We used the expenditure categories in table 2 to report how FWS’s Resource Management appropriations were spent because they represent the major functions for which the Restoration Program spends funds and, with the exception of overhead, are the major categories FWS officials use to track the Restoration Program budget. However, to fulfill our engagement objectives, we also sought to provide information about what amounts of the FWS’s Resource Management appropriations received by and for the Restoration Program from the beginning of fiscal year 2000 through the end of fiscal year 2004 were spent for the purposes of restoration projects, travel reimbursements, administrative expenses, overhead, and technical support.

Restoration projects. Table 2 shows that almost $2.9 million was committed to restoration projects from FWS’s Resource Management appropriations for fiscal years 2000 through 2004. Combining that amount with the $4.7 million in cash and noncash contributions provided to restoration projects by project participants brings the total invested by the Restoration Program directly to restoration projects during the 5-year period to a little over $7.6 million.

Of the $2.9 million in project funding from FWS’s Resource Management appropriations, the Restoration Program provided almost $700,000 to three federal entities to help fund 26 restoration projects carried out by those federal entities, and provided almost $2.2 million to 18 nonfederal entities to help fund 100 restoration projects carried out by those nonfederal entities. The three federal entities that carried out the 26 restoration projects are the same ones that brought cash and noncash contributions totaling almost $1.2 million to the Restoration Program, and the 18 nonfederal entities that carried out the 100 restoration projects are the same ones that brought cash and noncash contributions totaling almost $3.6 million to the Restoration Program. Thus, according to FWS records, total investment from federal and nonfederal sources in restoration projects amounted to a little over $7.6 million that funded 126 restoration projects from the beginning of fiscal year 2000 through the end of fiscal year 2004. It should be recognized, however, that in addition to Restoration Program projects, other restoration projects are undertaken in the Klamath River Basin with funding from FWS through its other programs; and other restoration projects still are undertaken in the Klamath River Basin with funding from other federal entities, the states of California and Oregon, and other nonfederal entities.

Travel reimbursement expenses. Travel reimbursement expenses are contained in each of three expenditure categories (project management, program administration, and support of federal advisory committees) shown in table 2, but they can be segregated. Specifically, total Restoration Program travel reimbursement expenses amounted to about $200,000 for the 5-year period, for an average of about $40,000 per year. This includes travel by members of the two federal advisory committees, federal staff who support the committees, and FWS officials who perform project management and program administration activities.

Program administration expenses. Table 2 shows program administration expenses for the 5-year period of about $350,000. Table 2 also shows expenditures of about $800,000 in support of the two federal advisory committees. Based on our discussions with FWS officials, we consider the expenditures made in support of the federal advisory committees to also be administrative expenses for the Restoration Program. Summing the amounts for those two categories produces a total of about $1.1 million for Restoration Program administrative expenses during fiscal years 2000 through 2004.

Overhead expenses. To provide information about what amounts of the funds received by and for the Restoration Program from the beginning of fiscal year 2000 through the end of fiscal year 2004 were spent for the purposes of overhead expenses, we examined the use of Restoration Program funds at the FWS Washington, D.C., office level, the FWS regional office level, and the Yreka FWO level. Each year during the 5-year period, the FWS headquarters in Washington, D.C., received varying amounts of the Restoration Program appropriations for “Cost Allocation Methodology,” a process through which rent and other FWS administrative costs are shared by the programs. As can be seen in table 2, we considered the amount received by FWS headquarters, about $216,000, to be Restoration Program overhead.

The Portland Regional Office oversaw the operations of the Yreka FWO for most of fiscal years 2000 through 2004 and during the first 4 of those years it received a total of about $227,000 of Restoration Program appropriated funds. According to an FWS official, an 8 percent assessment is applied by the regional office to all Fisheries Program funds and used to pay for office management, staff expertise, and support costs, including data management; program oversight of the field office; budget and finance services; human resources, external affairs, and employee assistance services; as well as development and implementation of fisheries policies, operating plans, evaluation methods, and administrative procedures for field offices. Again, as seen in table 2, we considered the amount received by the FWS regional office, about $227,000, to be Restoration Program overhead.

To identify any Restoration Program overhead expenses incurred at the Yreka FWO level, we analyzed the various cost categories maintained by Yreka FWO officials and the office expenses that are allocated to the Restoration Program. After discussing our analysis with the Yreka FWO officials, we decided that Restoration Program overhead incurred at the Yreka FWO level could best be represented by four categories of expenses. During fiscal years 2000 through 2004, the amounts of these expenses allocated to the Restoration Program by FWS totaled about $48,000. This amount is not shown separately in table 2 because, like the travel expenses category, components of this amount are contained in each of three expenditure categories (project management, program administration, and support of federal advisory committees). Adding together the Restoration Program overhead incurred at each of the three FWS organizational levels (almost $216,000 at the FWS Washington, D.C., office level; almost $227,000 at the FWS regional office level; and about $48,000 at the Yreka FWO level), we found that Restoration Program overhead was about $491,000 during fiscal years 2000 through 2004.

Technical support expense. We also attempted to provide information about what amounts of the funds received by and for the Restoration Program from the beginning of fiscal year 2000 through the end of fiscal year 2004 were spent for technical support. As provided for in the Act, staff from the Yreka FWO, along with staff from the State of California’s Department of Fish and Game, provide technical and administrative support to the Management Council and the Task Force. The technical support from FWS comes primarily from three staff: the supervisory biologist and the part-time staff biologist in the Yreka FWO, who spend almost all of their time on Restoration Program activities, and the staff biologist in the Yreka FWO, who spends part of his time on Restoration Program activities. FWS is reimbursed from Restoration Program funds for the portion of FWS staff salaries that is attributable to providing administrative and technical support services to the two federal advisory committees. The State of California is not reimbursed for its employees’ salaries for the time they spend providing administrative and technical support to the committees. Neither FWS officials nor the Restoration Program’s representatives from the State of California could provide us with estimates of the value of technical support they provide. In addition to the support provided by FWS and the State of California, both the Task Force, through its Technical Work Group, and the Management Council, through its Technical Assistance Team, receive technical assistance from many of the entities represented by the Task Force members and the Management Council members, but information was not available on the value of those technical services either.

Purposes for which the Task Force and the Management Council Spent Funds

According to FWS officials, about $800,000 has been used to pay for the committees’ operating costs from the beginning of fiscal year 2000 through the end of fiscal year 2004, a yearly average of about $160,000. The two committees’ operating costs are funded from FWS’s Resource Management appropriations. Officials in FWS’s Yreka, California, field office, who administer the Restoration Program, receive and expend the funds that pay for the committees’ operating costs. They provided us with information that shows that the approximately $800,000 expended for the committees’ operating costs was spent for salaries of federal staff (about $520,000); travel for committee members and federal staff (about $120,000); and office costs, including vehicles, supplies, copies, and meeting rooms (about $150,000). Neither of the advisory committees makes expenditures for restoration projects, and as mentioned earlier, we consider all expenditures for the operations of the advisory committees to represent Restoration Program administrative expenses.

The Task Force and the Management Council submit Federal Advisory Committee Act (FACA) reports each year showing expenditures related to their operations. We obtained FACA reports produced by FWS officials for the Task Force and the Management Council for fiscal years 2000 through 2004 for purposes of determining the types and amounts of expenditures made by the Task Force and the Management Council. However, after conducting some analytical testing procedures, and discussing the FACA report financial information with the Designated Federal Officers for the two federal advisory committees, we concluded that due to changes in interpretations of the reporting instructions, the FACA data were not reported on a consistent basis during the 5-year period. For example, some amounts contained in the FACA reports for fiscal years 2001 and 2002, but not for the other years, likely included some Restoration Program-related expenses incurred and paid by the Department of Commerce and the Department of Agriculture.

No Reasonable Assurance of Compliance with the Act’s Provisions

The Klamath River Basin Fishery Resources Restoration Act imposes several requirements upon the Secretary of the Interior as part of the Secretary’s responsibility for implementing the Restoration Program. It also places certain limitations on the use of funds appropriated under the Act’s authorization. We considered whether the Secretary and the Restoration Program administrators have complied with the Act’s financial- related requirements and limitations. We found that more complete and timely action in complying with the Act’s requirements would better assure that the requirements are fulfilled and that compliance with the Act’s limitations can be reasonably assured only by implementing control mechanisms and record-keeping practices which are not yet in place.

Needed Actions Not Yet Taken on Nonfederal Match and Noncash Contributions Requirements

In 1987, FWS officials drafted proposed regulations to address the nonfederal match and noncash contribution provisions contained in the Act, but the draft regulations were never formally promulgated. The Act requires that 50 percent of the cost of the development and implementation of the Restoration Program be provided, on a basis considered by the Secretary of the Interior to be timely and appropriate, by one or more nonfederal sources. The Act specifies that for purposes of determining whether 50 percent of the cost is being provided by nonfederal sources, the Secretary of the Interior should include the contributions of state and local governments as long as such contributions do not entail the expenditure of federal monies received by the state or local government. The Act also directs the Secretary to consider as financial contributions by nonfederal sources the value of noncash contributions (that is, services, including volunteer services, and real and personal property) provided by the nonfederal sources for the purposes of implementing the Restoration Program.

The Act further requires the Secretary to establish by regulation (1) the training, experience, and other qualifications that volunteers must have in order for their services to be considered as noncash contributions; and (2) the standards under which the Secretary will determine the value of noncash contributions, that is, services, and real and personal property.

We found evidence that the Task Force, which is responsible for assisting and advising the Secretary on the development and implementation of the Restoration Program, had extensive discussions regarding the nonfederal match and noncash contribution provisions of the Act, and the need for regulations, during its public meetings in 1987, 1988, and 1989. We also found that FWS officials drafted proposed regulations to address the nonfederal match and noncash contribution provisions during that same time period and that the Task Force reviewed and approved of the draft regulations. However, according to Interior officials, the draft regulations were never formally promulgated because Interior decided it was not necessary to issue separate regulations regarding qualifications for volunteer services and the standards for valuing noncash contributions. The Department of the Interior based this decision, according to the Interior officials, on its determination that existing Interior grants management regulations, which prescribe rules Interior must follow to meet cost-share requirements in federal grants and other federal awards, provided sufficient guidance.

Because of Interior’s interpretation, new regulations specific to the Restoration Program were not issued, and FWS officials maintain that it is not necessary to issue any. However, inadequate internal controls impair FWS officials’ abilities to be reasonably assured of compliance with these existing Interior regulations. For example, FWS officials told us that they have not rejected any restoration project proposal due to the proposal’s lack of information on the values assigned or the methods for valuing the proposed noncash contributions, even though our review of project files identified several approved projects whose project documents lacked such information. In addition, FWS officials told us that they typically accept the values assigned to noncash contributions by those who propose projects as long as the values appear reasonable, and that they do not have formal criteria for making this reasonableness evaluation. This lack of reasonable assurance of compliance prevents both congressional overseers, who may seek information about program funding, and Restoration Program administrators from being able to make consistent, reliable decisions about when volunteers’ services should count as noncash contributions and how to value all types of noncash contributions to the Restoration Program.

In addition to the potential problems associated with FWS’s current practices related to acceptance of volunteer services as noncash contributions and valuation of noncash contributions, FWS officials have not developed a methodology, or mechanism, for measuring whether 50 percent of the cost of the development and implementation of the Restoration Program is being provided by nonfederal sources. In our discussions with FWS officials, they expressed uncertainty about whether certain nonfederal financial initiatives should be counted toward the cost- share requirement. For example, if the State of California provides funding for restoration projects that have the same goals as the Restoration Program’s projects, but that do not involve any FWS participation, FWS officials are unsure of whether the funding for those projects should be counted toward meeting the nonfederal cost-share requirement.

Furthermore, even though expenditures of federal money by a state or local government to carry out the Restoration Program do not qualify for meeting the Act’s criteria that 50 percent of costs be provided from nonfederal sources, FWS officials have not developed a methodology for determining whether state or local government contributions to the Restoration Program actually constitute expenditure of federal money for purposes of the Act’s cost-share provision. Without having established such methodologies, FWS officials cannot determine whether the Restoration Program is in compliance with the nonfederal cost-share provision of the Act.

FWS officials have requested and collected limited financial data on each restoration project funded by the Restoration Program. For example, FWS’s Request For Proposals (RFP) for restoration projects to be funded during fiscal year 2004 states: “The Klamath Act recognizes in-kind contributions by volunteers as contributions to the Klamath Restoration Program.” However, our review of documents in FWS’s project files, including project proposals, proposed budgets, project agreements, and final reports, showed that the documents often do not contain detailed information needed to determine (1) the amount of cash contribution, (2) the type of noncash contribution, (3) the value of the noncash contribution, and (4) the method of valuing the noncash contribution.

In addition, we found no indication in the project files that the data are routinely analyzed and recorded concerning (1) the amount of a state or local government’s contribution that should be counted as nonfederal, (2) whether the services of volunteers qualify as a noncash contribution, and (3) whether the noncash contributions are properly valued. FWS officials told us that they typically accept the values assigned to nonfederal contributions by project participants. In their project records, FWS officials record a single “cost-share” amount for each project, which they extract from the project proposals submitted by project participants. The cost- share amount represents total contributions brought to the project by project participants, but it does not distinguish between monetary contributions and noncash contributions in the combined amount. In addition, FWS officials do not maintain records on the value of any nonfederal contributions to the Restoration Program that are not project related, such as the State of California’s contribution of technical services to the Management Council and the Task Force. As a result, FWS officials are not able to demonstrate that the Restoration Program is in compliance with the Act’s nonfederal match provision.

Improved Accounting Needed to Assure Compliance with the Act’s Restrictions

Although FWS officials told us they believe they are in compliance with other provisions of the Act that restrict reimbursing certain travel expenses, such compliance cannot be assured or demonstrated because the FWS accounting system does not distinguish between Resource Management appropriations allocated for the Restoration Program and funds from the same lump-sum appropriation allocated for related purposes. The Act places some limitations on the purposes for which the money it authorizes to be appropriated can be spent. For example, the funds appropriated for the Restoration Program may not be used to reimburse any agency or governmental unit whose employees are Management Council members or Task Force members for time spent by any such employee performing Management Council or Task Force duties. Likewise, the Act precludes the funds’ use for reimbursing travel expenses to federal employees who travel as members of the Management Council or Task Force.

Both the Management Council and the Task Force have members who are federal employees, and each has at least one member who is a FWS employee. Our work did not find any instance of noncompliance with the above restrictions. However, FWS offices that receive Restoration Program funds also receive some funds FWS has allocated to the Anadromous Fish Management activity of the Fisheries Program which are designated by the same account code (1331) as the Restoration Program funds. Although, as mentioned above, the Restoration Program funds may not be used for certain purposes, the Anadromous Fish Management funds can be and are used for those purposes. Since neither the Restoration Program funds nor the Anadromous Fish Management funds are designated by an additional subactivity or project code that would distinguish between the two types of funds, the source of funds that have been used for specific expenditures cannot be determined or verified from the accounting records. As a result, FWS’s accounting records do not provide the detailed information needed to assure that the restrictions on the use of Restoration Program appropriated funds are being complied with.

Conclusions

Since passage of the Klamath River Basin Fishery Resources Restoration Act in 1986, the Restoration Program established to carry out the Act has received about $24.7 million in cash and noncash contributions. Of the $24.7 million, the Restoration Program received about $9.8 million during fiscal years 2000 through 2004. The Secretary of the Interior and the Director of FWS have taken a number of actions to formulate, establish, and implement the Restoration Program, including designating a conservation area, establishing the Management Council and the Task Force, formulating a long-term plan, and funding over 350 restoration projects in the Klamath River Basin. Regarding the financial requirements of the Act, FWS officials have correctly identified the need to fund some Restoration Program expenditures, such as certain travel and salary expenses for FWS officials who are members of the Management Council or the Task Force, from monies that are not subject to the Act’s restrictions. However, they have not yet incorporated into their accounting procedures and record-keeping practices sufficient controls to provide reasonable assurance of compliance with those provisions of the Act. In addition, concerning the Act’s requirement that 50 percent of the Restoration Program’s costs be provided by nonfederal sources, FWS officials do collect some information regarding nonfederal contributions to restoration projects, but they do not distinguish between cash and noncash contributions in project documents, document their valuation decisions regarding the noncash contributions, or take steps to verify that nonfederal contributions meet the Act’s criteria. Incorporating these additional controls into the Restoration Program’s operations would not be difficult or costly, and would provide reasonable assurance of compliance with those provisions of the Act.

Recommendations

In order to enhance compliance with the Act, we recommend that the Secretary of the Interior direct the Director of the Fish and Wildlife Service to modify the standard project agreement language to distinguish between cash and noncash contributions from the project participant; include a requirement in the standard project agreement that if any contributor to the project is a state or local government, that contributor must attest to how much, if any, of the contribution is from federal monies received by that state or local government; develop standard operating procedures for reviewing and validating contributor-supplied information regarding the determination and valuation of noncash contributions and determination of nonfederal sources of funds; track Restoration Program funds requested and received through the appropriations process by specifically identifying Klamath Restoration Program funds; and track Restoration Program funds expenditures through FWS’s Federal Financial System by assigning a project code to the Klamath Restoration Program funds.

Agency Comments and Our Evaluation

Interior generally agreed with the report’s findings and recommendations and stated that implementation of some recommendations has already begun. Interior pointed out, however, that incorporating some of the Act’s requirements into the Restoration Program will likely require increased staff involvement in negotiation and verification of noncash values, which would cause increased diversion of restoration project funds to administrative work. We agree that some increased staff involvement will likely be necessary to determine the values of noncash contributions in order to fully comply with the Act’s key funding requirement that 50 percent of the cost of the development and implementation of the program be provided by nonfederal sources. We encourage Interior to closely monitor the costs associated with implementing the Act’s requirements so that it will be in a position to provide this information to Congress when Congress considers reauthorization of appropriations for, or an extension of, the 20-year Restoration Program.

Interior’s comments are included as appendix III to this report. Interior officials also provided some technical suggestions to our draft report, which we did not reprint. We incorporated those technical suggestions as appropriate.

We are sending copies of this report to the Secretary of the Interior, the Director of the Fish and Wildlife Service, and other interested parties. We will also make copies available to others upon request. In addition, the report is available to others at no charge on the GAO Web site at http://www.gao.gov.

Should you or your staff have any questions on matters discussed in this report, please contact me at (202) 512-6906 or williamsm1@gao.gov. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are acknowledged in appendix IV.

Objectives, Scope and Methodology

The objectives of this engagement were to provide information about (1) sources and amounts of funding received by and for the Restoration Program for fiscal years 2000 through 2004; (2) amounts of funds received by and for the Restoration Program for fiscal years 2000 through 2004 spent for restoration projects, travel reimbursements, administrative expenses, overhead, and technical support; (3) amounts of funding received by the Task Force and Management Council for fiscal years 2000 through 2004 spent for the purposes of restoration projects, travel reimbursements, administrative expenses, overhead, and technical support; and (4) whether the Secretary of the Interior has complied with specific requirements contained in certain provisions of the Klamath River Basin Fishery Resources Restoration Act.

For the most part, we limited the scope of our work to fiscal years 2000 through 2004; however, some compliance information and some historical financial information we gathered included earlier years, going back to the passage of the Act in 1986. We performed our work primarily at the headquarters offices of the Department of the Interior, and the U.S. Fish and Wildlife Service (FWS) in Washington, D.C. We also traveled to FWS’s Yreka, California, field office, which administers the Restoration Program, to inspect files and gather information. We gathered additional information from other locations through telephone contacts with FWS officials in FWS’s Portland Regional Office and its California-Nevada Operations Office. We also interviewed by telephone Task Force and Management Council members who represent various entities in California and Oregon.

To provide information about what total amount of funding was received by and for the Restoration Program from the beginning of fiscal year 2000 through the end of fiscal year 2004, and what were the sources of that funding, we first defined the boundaries of the Restoration Program because there were numerous restoration-type activities undertaken by federal and nonfederal entities in the Klamath River Basin during the 5-year period we reviewed. After reviewing the provisions of the Act, having preliminary discussions with FWS officials, and visiting the Klamath River area, we defined the Restoration Program, for purposes of our work, as consisting of all activities and projects that are at least partially funded by appropriations FWS allocated for the Restoration Program pursuant to the Act. Under the definition we adopted, the Restoration Program funding also includes any cash or noncash contributions provided by federal or nonfederal sources to those same activities and projects.

Having defined the Restoration Program, we interviewed FWS headquarters, regional office, and field office officials to determine the types of Restoration Program funding and expenditure information routinely collected and the location and accessibility of that information. To obtain information on the amount of Resource Management appropriations that FWS allocated to the Restoration Program established pursuant to the Act, we reviewed budget request documents and appropriations act documents for FWS and the Department of the Interior, but did not find information on funding specifically for the Restoration Program in those documents. We discussed this with FWS headquarters, regional office, and field office budget officials and were told by them that the appropriations for FWS do not contain a discrete line item for the Restoration Program. Instead, funding for the Restoration Program is combined with other funding within the “General Program Activities” sub- element of the “Anadromous Fish Management” program element, which can be found under the “Fish and Wildlife Management Program” activity of FWS’s Fisheries Program account, which is funded through an allocation from FWS’s Resource Management appropriation. A Portland Regional Office budget official, who oversaw funding for the Yreka Fish and Wildlife Office (FWO), told us that FWS considers there to be an appropriation for the Restoration Program for each of the 5 years of $1 million, less a rescission each year that varied between 0.38 percent and 1.82 percent. We obtained Office Fund Target documents from the Yreka FWO that supported those amounts.

To provide information about the amounts and sources of other funding contributed by federal and nonfederal sources to activities and projects that are at least partially funded by those appropriations allocated by FWS to the Restoration Program, we obtained from FWS officials an electronic copy of their Restoration Projects Database, maintained in FWS’s Yreka, California, office. That database contains information on only those restoration projects that are at least partially funded by appropriations FWS allocated for the Restoration Program pursuant to the Act. It also contains, among other things, information on the cost-share contributions provided to those restoration projects by federal and nonfederal entities. We also obtained and reviewed for some funded restoration projects the project proposals and project completion reports that had been prepared by the cooperators to determine if the amounts of cost share reported in those documents are consistent with the information in FWS’s Restoration Projects Database.

To provide information about whether other amounts of monetary funding or noncash contributions are provided to any of the Restoration Program’s nonproject activities, we obtained FWS budget and expenditure information to identify the other activities and interviewed Yreka FWO officials, Task Force members, and Management Council members to learn of any other funding. We were told that no other cash contributions are received by the Restoration Program’s nonproject activities but noncash contributions, in the form of technical services, are provided by some federal and nonfederal sources to the Task Force and the Management Council. However, FWS officials do not maintain records on the value of those technical services.

To provide information about what amounts of the funds received by and for the Restoration Program from the beginning of fiscal year 2000 through the end of fiscal year 2004 were spent for the purposes of restoration projects, travel reimbursements, administrative expenses, overhead, and technical support, we obtained budget and expenditure documents from the Yreka FWO. We had several discussions with Yreka FWO officials to gain an understanding of how the various financial amounts are derived and the availability of source documents that support the amounts. Through analysis of the financial information, we identified which items on the financial documents represent the Restoration Program’s restoration projects, and which items represent travel reimbursements, administrative expenses, and overhead. Through discussions with Yreka FWO officials, we confirmed our interpretations of these amounts and confirmed Yreka FWO officials do not maintain records on the value of technical services.

To provide information about what amounts of funding received by the Task Force and Management Council from the beginning of fiscal year 2000 through the end of fiscal year 2004 were spent for the purposes of restoration projects, travel reimbursements, administrative expenses, overhead, and technical support, we obtained through the Internet, from a Web site maintained by the General Services Administration, Federal Advisory Committee Act (FACA) reports produced by the Task Force and the Management Council showing expenditures related to those two federal advisory committees for fiscal years 2000 through 2004. We considered using the FACA report financial information for determining the amounts of Restoration Program funds that were spent by the Management Council and the Task Force for the purposes of restoration projects, travel reimbursements, administrative expenses, overhead, and technical support. However, after conducting some analytical testing procedures and discussing the FACA report financial information with the Designated Federal Officers for the two federal advisory committees, we concluded that the FACA report data would present a misleading picture of Restoration Program expenditures.

Our discussions with the Designated Federal Officers for the two federal advisory committees, Management Council members, Task Force members, and Yreka FWO officials, coupled with our review of Management Council and Task Force meeting minutes, charters, and operating procedures, showed that the Management Council and the Task Force do not actually receive or expend any federal or nonfederal funding. The funding that covers the Management Council’s and the Task Force’s operational expenses comes from FWS appropriations, and FWS officials in the Yreka FWO retain control of that funding and pay those expenses.

To determine whether the Secretary of the Interior, the Management Council, and the Task Force complied with specific duties and limitations contained in the Act, we reviewed the Klamath River Basin Fishery Resources Restoration Act and all of its amendments and identified the provisions that require or prohibit specific actions or activities. We then analyzed those provisions that contain mandates and restrictions to identify the financial-related requirements and limitations contained in the Act.

For each provision that contains a financial-related requirement, such as the issuance of regulations to establish qualifications which volunteers must have in order for their services to be considered as noncash contributions, we asked FWS officials whether the required action had been taken, and if so, for evidence of the action. For each provision that contains a financial-related restriction, such as the limitations on the purposes for which money appropriated pursuant to the Act’s authorization can be spent (for example, restricted money may not be used to reimburse any agency or governmental unit whose employees are Management Council members or Task Force members for time spent by any such employee performing Management Council or Task Force duties), we asked FWS officials and the Chairmen of the Task Force and Management Council whether they are aware of the legal restrictions and whether they believe the restrictions have been complied with.

To find corroborating or contradicting evidence regarding compliance with the Act’s financial-related provisions, we reviewed Federal Register notices and existing Interior grants management regulations related to cost-share requirements to determine if the necessary regulations had been issued. We also inspected the Management Council’s and Task Force’s charters, operating procedures, and minutes of meetings to identify any discussions of the Act’s provisions and any indications of an activity that indicates compliance or noncompliance with the provisions. Where we identified any indications of noncompliance, we discussed these indications with FWS, Management Council, and Task Force officials for their explanations. We also asked the Management Council’s and Task Force’s members if they are aware of any instances of noncompliance with the Act or of improper use of Restoration Program funds.

We did not perform a financial audit on the financial information collected from FWS officials. In addition, we did not evaluate the efficiency or effectiveness of the Restoration Program, of individual restoration projects, or of actions taken by the Task Force or the Management Council. Finally, we did not test compliance with all laws and regulations applicable to this engagement but limited our tests of compliance to financial-related provisions contained in the Klamath River Basin Fishery Resources Restoration Act. We conducted our work from June 2004 through June 2005 in accordance with U.S. generally accepted government auditing standards.

We requested comments on a draft of this report from the Secretary of the Interior, or her designee. Interior generally agreed with the report’s findings and recommendations and stated that implementation of some recommendations has already begun. Agency comments are included as appendix III to this report. Interior officials also provided some technical suggestions to our draft report, which we did not reprint in appendix III. We incorporated those technical suggestions as appropriate.

Funding of Restoration Projects by Type of Participant Entity

Comments from the Department of the Interior

GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact listed above, Polly Cheung, Cherry Clipper, Lisa Crye, Francis Dymond, Lauren Fassler, Michael Koury, Tarunkant Mithani, and Debra Rucker made important contributions to this report.