oversight

Dam Safety: Army Corps' Decisions about and Status of Repayment for Harlan County Dam Repairs

Published by the Government Accountability Office on 2019-07-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

441 G St. N.W.
Washington, DC 20548


July 9, 2019

Congressional Committees

DAM SAFETY: Army Corps’ Decisions about and Status of Repayment for Harlan County
Dam Repairs

As the largest owner of federal dams, the U.S. Army Corps of Engineers (Corps) operates over
700 dams that provide a wide range of benefits, including protecting communities from floods,
generating hydropower, and providing water for irrigation. The Corps conducts routine
operations and maintenance activities and, at times, makes major repairs to ensure these dams
operate safely. At some dams, nonfederal entities that directly benefit from dam operations—
such as power utilities or irrigation districts, called “users” in this report—are responsible for a
share of these routine operations and maintenance costs as well as for any major repair costs
due to typical degradation of dams over time. 1 However, when the Corps determines that major
repairs are needed because of certain conditions set out in law—such as to meet updated
“state-of-the-art” design criteria deemed necessary to ensure safe operation of the dam—the
Corps is to apply a legal authority that lowers the share of costs users normally pay. 2

In Nebraska, the Corps operates the Harlan County Dam and Reservoir, which is a source of
water storage used by two irrigation districts, one in Nebraska and one in Kansas. These two
irrigation districts are responsible for paying their share of costs incurred by the Corps to
operate and maintain the Harlan County Dam. 3 In 2018, the Corps completed construction on a
roughly $30 million major repair project of this dam’s “Tainter gates”—a commonly-used type of
gate to control the flow of water over the dam—out of concern that they might fail due to a
deficient design. For this and other major repair projects, some users have raised questions
about how the Corps determines when to use its authority to lower users’ share of costs.




1
  In this report, we use the term “irrigation districts” to mean entities established under state law that have entered into
contracts with the Bureau of Reclamation to receive water for irrigation purposes, which generally encompasses
water used to irrigate land to produce commercial agricultural crops or livestock.
2
  Applying this legal authority reduces a user’s repayment obligation to 15 percent of the share of costs it normally
pays, effectively lowering a user’s cost share by 85 percent. Pub. L. No. 99-662, § 1203, 100 Stat. 4082, 4263 (1986)
(codified at 33 U.S.C. § 467n).
3
  The Bureau of Reclamation manages repayment contracts under which irrigation districts repay their share of costs
spent by the Corps to maintain the Harlan County Dam and other Corps-owned dams in the western states used for
irrigation.

Page 1                                                                                      GAO-19-593R Dam Safety
The America’s Water Infrastructure Act of 2018 included a provision for us to review the Tainter
gate repair project and repayments for the project at the Harlan County Dam. 4 This report
examines

    •    the Corps’ decisions regarding cost sharing with irrigation districts for the Tainter gate
         repairs at the Harlan County Dam, and
    •    the status of irrigation districts’ repayment for their share of the costs of repairs at the
         Harlan County Dam.

More broadly, in enclosure 1, we also compared the Corps’ authorities for determining cost
sharing with those of the Bureau of Reclamation (Reclamation), which is another major federal
owner and operator of dams.
To address these objectives, we examined the Corps’ documents, including its Safety of
Dams—Policy and Procedures, 5 dam-safety assessment reports, cost reports, and
presentations on the Tainter gate repair project. We also interviewed officials from the Corps
and the Assistant Secretary of the Army for Civil Works (ASA(CW))—the office that establishes
the strategic direction, develops policy, and supervises the execution of the Corps’ Civil Works
program—to understand the criteria and information used to decide what cost sharing to apply
to the Tainter gate repair project. Based on the collected information, we compared the Corps’
cost-sharing decisions for the repair project to Corps policy. Since Reclamation manages a dam
portfolio similar in scale to the Corps, we examined laws and guidance for Reclamation’s cost-
sharing authorities for dam safety repairs and compared these authorities to the Corps’
authorities. We also interviewed Reclamation officials to understand how they operationalize
guidance on cost sharing. To describe the status of repayment contracts, we reviewed
Reclamation’s repayment contracts with and payments made by the two irrigation districts that
use the Harlan County Dam: Kansas-Bostwick Irrigation District No. 2 and Bostwick Irrigation
District in Nebraska. We also interviewed officials from both irrigation districts. We focused on
fiscal years 2015 through 2018 because these years aligned with the start of the time period
covered by the repayment contracts between Reclamation and the irrigation districts to repay
repair project costs and included completed fiscal years for which incremental project costs
were known. Since the Corps decided in January 2019 to apply its legal authority that lowered
the irrigation districts’ cost share for some of the repairs made under the project, the Corps and
Reclamation subsequently had to recalculate the amounts to be repaid by the irrigation districts.
As this recalculation was ongoing at the time we concluded our review, we are reporting on
some but not all of the changes to repayment amounts and updated repayment contracts with
the irrigation districts.

We conducted this performance audit from December 2018 to July 2019 in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objectives.




4
 Pub. L. No. 115-270, § 4303 (2018).
5
 U.S. Army Corps of Engineers, Safety of Dams—Policy and Procedures, Engineering Regulation No. 1110-2-1156
(Washington, D.C.: Oct. 28, 2011 and Mar. 31, 2014).

Page 2                                                                           GAO-19-593R Dam Safety
Results in Brief

In January 2019, the Corps decided to apply a formerly unused provision of its legal authority to
lower the share of costs of repairing the Harlan County Dam to be paid by irrigation districts that
benefit from the dam. In initial planning in 2012 for the project to repair the dam’s Tainter gates
to address a design deficiency, the Corps determined that the irrigation districts were to pay
their full share of costs for these repairs. Although the repairs to the Tainter gates were needed
to meet updated design standards and address safety concerns, the Corps had initially followed
long-standing policy to not use the state-of-the-art provision, which it said it did not use because
of the difficulty in defining what types of repairs would qualify. However, we recommended in
December 2015 and a provision in law subsequently required that the Corps clarify policy
guidance on when the state-of-the-art provision might apply. Since then, the Corps and
ASA(CW) had been contemplating changes to the policy of not using the state-of-the-art
provision and, in January 2019, applied this provision for the first time to the portion of the major
repairs at the Harlan County Dam needed to address changes in design criteria for Tainter
gates. In March 2019, the Corps, at the direction of the ASA(CW), began implementing a new
policy that allows for use of the state-of-the-art provision across its dam portfolio.

Reclamation, the federal agency responsible for managing contracts with irrigation districts at
the Corps’ dams in western states, executed repayment contracts with the two irrigation districts
that use water from the Harlan County Dam in 2016. These existing repayment contracts
allowed the irrigation districts to pay their original roughly $4.6 million share of repair costs, with
interest, over 50 years. However, given the Corps’ recent decision to apply the state-of-the-art
provision, the irrigation districts will now repay a lower share of costs for the portion of project
repairs needed to address design deficiencies with the dam’s Tainter gates. Following the
January 2019 decision, the Corps reexamined the project’s costs and concluded that a majority
of these costs were attributable to work covered by the state-of-the-art provision and thus
subject to a lower cost share. Overall, the irrigation districts’ repayment obligation is expected to
be reduced to approximately $2.1 million, about half of the original amount owed (see table 1).

Table 1: Irrigation Districts’ Repayment Obligations for Major Repairs at the Harlan County Dam before and after the 2019
Cost-Sharing Decision

                                                                      Before January                           After January
                                                                                                                            a
                                                                       2019 decision                          2019 decision
    Costs subject to full cost share                                       $30,066,096                            $10,686,032
    Repayment obligation for this portion                                    $4,615,146                             $1,640,305
    of project costs
    Costs subject to lower cost share                                                   $0                        $19,442,107
    Repayment obligation for this portion                                              n/a                            $447,655
    of project costs
    Total repayment obligation                                               $4,615,146                             $2,087,960
Source: GAO analysis of U.S. Army Corps of Engineers (Corps) information. | GAO-19-593R
Note: We report costs for fiscal years 2015 to 2018 because it aligns with the start of the time period covered by the existing
repayment contracts between the Bureau of Reclamation and the irrigation districts and includes only completed fiscal years for
which incremental project costs are known.
a
 When reexamining costs following its January 2019 decision, the Corps made minor adjustments to correct classification errors for
project costs incurred in fiscal years 2015 and 2017. These adjustments increased the total project cost by about $62,000.


Page 3                                                                                            GAO-19-593R Dam Safety
Reclamation is taking steps to update contracts given these changes; this updating includes
amending existing contracts to reflect the lower amount owed for repairs not subject to the lower
cost share and executing new contracts for costs to be repaid at the lower cost share.
Completing these contract actions will take several months, according to Reclamation officials.

Background

As noted above, the Corps operates dams for a variety of purposes, and commensurate with
benefits derived from use of a dam, nonfederal users typically pay a percentage of a dam’s
annual operations and maintenance costs, as well as costs for major repair projects, like
rehabilitating gate equipment or increasing a dam’s height to prevent water flowing over the top
of the dam. At individual dams, the Corps enters into agreements with nonfederal users, for
example municipal and industrial water users, that set out the percentage of operations and
maintenance as well as major repair costs the users will repay. These cost-sharing percentages
(i.e., the full cost share) for operations, maintenance, and major repairs can range from under 1
percent to over 50 percent, based on the extent of benefits that accrue to the user.

However, for certain major repair projects, the Corps is to apply a legal authority that lowers the
users’ share of costs. More specifically, Section 1203 of the Water Resources Development Act
of 1986 (Section 1203 authority) outlines provisions for making safety-related repairs owing to
the availability of new hydrologic or seismic data or changes in the state-of-the-art design or
construction criteria deemed necessary for safety purposes (we refer to this last provision as the
“state-of-the-art provision”). 6 When one of these provisions applies to a major repair at a Corps
dam, the Corps has authority to reduce a user’s repayment obligation to 15 percent of its full
cost share, effectively lowering a user’s cost share by 85 percent. For example, if a user’s full
cost share is 10 percent, then the user is responsible for 15 percent of this share, or 1.5 percent
of costs.

For the Harlan County Dam and Reservoir, in south central Nebraska, two irrigation districts—
Kansas-Bostwick Irrigation District No. 2 and Bostwick Irrigation District in Nebraska—contribute
to ongoing costs. The Corps operates and maintains the dam, and Reclamation manages
repayment contracts with the two irrigation districts that use water from the dam, to pay not only
for the water but also for operations and maintenance as well as major repair costs for the dam
and other infrastructure used to supply the water. 7 Under Reclamation’s repayment contracts,
the irrigation districts are to collectively pay 15.35 percent of costs incurred by the Corps to
operate and maintain the Harlan County Dam. 8

In 2014, the Corps began construction on a $30 million project to repair the Harlan County
Dam’s Tainter gates. The 1995 failure of a Tainter gate at the Folsom Dam near Sacramento,


6
  Pub. L. No. 99–662, § 1203, 100 Stat. 4082, 4263 (1986) (codified at 33 U.S.C. § 467n).
7
  In addition to managing contracts with irrigation districts at Corps-owned dams, the Bureau of Reclamation, a
component of the Department of the Interior, also owns and operates over 400 federal dams in the 17 western states
where it operates.
8
  The Corps and Reclamation have a memorandum of agreement for the Harlan County Dam that stipulates the Corps
will annually provide Reclamation with a summary of operations, maintenance, and any major repair costs which
Reclamation uses to collect payments from each irrigation district. The Bostwick Irrigation District in Nebraska and
Kansas-Bostwick Irrigation District No. 2 split irrigation’s share of these costs at the Harlan County Dam based on an
agreement between the two irrigation districts.

Page 4                                                                                  GAO-19-593R Dam Safety
California, revealed that some of these gates were not designed to accommodate the amount of
friction experienced in their operation. 9 As a result, this friction—which acts on the trunnion pin
around which the gate rotates between open and closed positions—can create stress on a
gate’s arms, causing them to fail. The Corps has over 1,600 of these gates in its dam portfolio
and determined that many gates needed to be rehabilitated so they would not fail. The Tainter
gates at the Harlan County Dam were not designed to accommodate this friction, so the project
involved rehabilitating the gates, including reinforcing the arms and retrofitting the trunnion pin
assembly (see fig. 1), as well as completing other ancillary repairs, like upgrading electrical
controls and other gate components. (We refer to this rehabilitation and repair work as the
Tainter gate repair project in this report.) Construction work to make the repairs concluded in
2018, and the Corps is now completing the administrative close out of the associated contracts.


Figure 1: Construction at the Harlan County Dam in Nebraska and View of a Tainter Gate at the Dam




The Corps Recently Implemented a Formerly Unused Provision in Law That Lowers
Irrigation Districts’ Share of Repair Costs at the Harlan County Dam

As part of its ongoing monitoring and risk assessments for the Harlan County Dam, the Corps
determined that the dam’s Tainter gates needed repairs given the gates’ condition and to meet
current design standards. 10 The Corps updated design standards for Tainter gates since the
Harlan County Dam was designed and constructed. The dam was completed in 1952 using
accepted design standards that did not require trunnion friction to be considered in the gates’
operation. However, the Corps revised its structural engineering manual for Tainter gates in
2000 to require that the gates be designed to account for this friction, following an investigation
of the Tainter gate failure at the Folsom Dam discussed above. In 2008, the Corps conducted a
risk assessment that found that the Harlan County Dam’s Tainter gates had defects and




9
 The Corps designed and constructed the Folsom Dam, and the dam was then transferred to Reclamation, which has
since operated and maintained the dam.
10
   The Corps’ process for monitoring dams includes conducting risk assessments to categorize dam safety risks and
to prioritize repairs and funding. For more information see GAO, Army Corps of Engineers: Actions Needed to
Improve Cost Sharing for Dam Safety Repairs, GAO-16-106 (Washington, D.C.: Dec. 10, 2015).

Page 5                                                                                    GAO-19-593R Dam Safety
exhibited signs of distress stemming from this design deficiency. As a result, in 2012 the Corps
approved a project to repair the gates so they could continue to be safely operated.
When planning the Tainter gate repair project, the Corps followed long-standing policy to
determine that the irrigation districts were to pay their full cost share and did not apply the state-
of-the-art provision of its Section 1203 authority that would lower the cost share. The Section
1203 authority provides for use of the state-of-the-art provision and resulting reduction of users’
cost shares. However, as stated in Corps regulation, use of this provision was excluded
because of the difficulty in defining the kinds of repairs that would apply. 11 Since it was policy
not to use the state-of-the-art provision and because the scope of work did not allow for use of
other provisions in its Section 1203 authority related to making repairs due to the availability of
new hydrologic or seismic data, the Corps decided not to apply this authority, meaning that the
irrigation districts would be responsible for paying their full 15.35 percent share of repair costs.
The Corps communicated this decision to the irrigation districts through presentations during
planning for the Tainter gate repair project. In 2012, the irrigation districts asked the Corps and
ASA(CW) to reconsider this cost-sharing decision.

In January 2019, the Corps, working with ASA(CW), decided to apply the state-of-the-art
provision—for the first time—to a portion of the Tainter gate repair project at the Harlan County
Dam. We had recommended in December 2015 that the Corps clarify policy guidance on the
types of circumstances under which the state-of-the-art provision might apply to enable the
Corps to use the full range of its statutory authority. 12 Then, a 2016 law directed the Corps to
issue guidance relating to use of the state-of-the-art provision. 13 In response to our
recommendation and subsequent statutory mandate, ASA(CW) and the Corps have been taking
steps to clarify policy guidance on use of this provision. In relation to these steps, ASA(CW)
reviewed and concurred with the Corps’ 2019 determination that the state-of-the-art provision
applied to the portion of the Harlan County Dam repairs that addressed design deficiencies with
the Tainter gates. 14 Applying the provision lowered the irrigation districts’ share of costs from
15.35 percent to 2.3 percent for this portion of the repair project. 15

Going forward, the Corps plans to develop new guidance on use of the state-of-the-art provision
across its portfolio of dams. Specifically, ASA(CW) issued a memo in March 2019 that directed
the Corps to modify its policies, regulations, and guidance to allow use of the state-of-the-art
provision. 16 Corps officials said they completed a draft of an Engineering and Construction
Bulletin in May 2019 in response to the memo, and as of June 2019, the Corps was reviewing
and had not set an issuance date for this bulletin. The bulletin will provide clarification and
outline examples of when the provision could apply. Under the new approach for using the
provision, Corps’ districts—the level of the organization that plans, constructs, and manages
projects in specific geographic areas—are to determine when major repairs at a dam are


11
     Safety of Dams—Policy and Procedures, Engineering Regulation No. 1110-2-1156, 2011.
12
     GAO-16-106.
13
     Water Resources Development Act of 2016, Pub. L. No. 114-322, § 1139, 130 Stat. 1628, 1658 (2016).
14
  Department of the Army, Assistant Secretary of the Army for Civil Works, Review of the Cost Allocation for the
Harlan County Dam Tainter Gate Replacement, Section 1203 of the Water Resources Development Act (WRDA) of
1986 (Washington, D.C.: Jan. 15, 2019).
15
  The resultant 2.3 percent is 15 percent of 15.35 percent.
16
  Department of the Army, Assistant Secretary of the Army for Civil Works, Implementation Guidance for Section
1139 of the Water Resources Development Act of 2016, Dam Safety Repair Projects (Washington, D.C.: Mar. 22,
2019).

Page 6                                                                                GAO-19-593R Dam Safety
needed due to changes in the state-of-the-art design or construction criteria and for safety
purposes, and then are to seek approval from ASA(CW) to apply the provision. 17 According to
Corps officials, the new policy will enable the Corps to apply the state-of-the-art provision to
major repairs going forward, but the Corps does not plan to apply it retroactively.

Irrigation Districts Have Made Initial Repayments, and Reclamation Is Recalculating
Future Payments in Response to the Corps’ Use of a Provision to Lower the Districts’
Share of Costs

Irrigation districts have started making annual payments required under existing repayment
contracts. These contracts allow the irrigation districts to repay their share of costs for the
Tainter gate repair project over a 50-year term at 3.25 percent interest, the Treasury rate at the
time the contracts were executed. 18 Reclamation executed the repayment contracts with the
irrigation districts in 2016 for costs incurred in fiscal year 2015 and amended these contracts in
2017 and 2018 to account for costs incurred in subsequent fiscal years for the multi-year
project. 19 See enclosure II for a description of the repayment process and the roles of the Corps
and Reclamation in this process.

The existing repayment contracts were based on the Corps’ 2012 decision that the irrigation
districts pay their full cost share for the Tainter gate repair project—15.35 percent of about $30
million, which amounts to about $4.6 million. Through 2018, the irrigation districts had repaid
about $485,000. 20 With interest, the irrigation districts were scheduled to make payments
totaling over $8.4 million under the existing repayment contracts that cover costs for the repair
project through fiscal year 2017. 21

Given the Corps January 2019 decision to apply the state-of-the-art provision of its Section
1203 authority, described previously, the irrigation districts will now have to repay a lower share
of costs for a majority of the Tainter gate repair project. According to Corps officials, Corps
engineering and other staff had to manually reexamine construction contract documents for the
project to determine what work and related costs were (1) to repair components of the Tainter
gates that were not designed in accordance with state-of-the-art criteria and (2) for routine
maintenance of other gate components. In March 2019, the Corps completed this review and


17
   We will continue to monitor the Corps’ actions to implement new guidance and update the status of our
recommendation as appropriate.
18
   Pub. L. No. 111-11, § 9603, 123 Stat 991, 1348 (2009). Users can repay project costs over a period of up to 50
years, but Reclamation conducts a financial analysis to determine the minimum appropriate repayment period.
Reclamation assesses interest on costs to be repaid based on the rate for applicable U.S. Treasury securities. See
Reclamation, Reclamation Manual, Extended Repayment of Extraordinary Maintenance Costs, PEC 05-03 (Apr. 17,
2014).
19
   The Corps also incurred $506,545 in costs for the Tainter gate repair project in fiscal years 2012 through 2014,
costs that preceded the irrigation districts request to repay their share of costs for the project through long-term
repayment contracts. The irrigation districts paid their share of these costs through the annual billing process
established with Reclamation to pay for routine operations and maintenance costs.
20
   The total amount repaid by the irrigation districts includes $314,583 in upfront payments made when entering into
the contracts with Reclamation and $170,475 in cumulative annual payments made to Reclamation based on the
contracts for 2016 to 2018. Reclamation guidance requires that an irrigation district make an upfront payment totaling
at least 75 percent of the balance of its reserve fund before entering into a long-term repayment contract.
21
   The total amounts due in existing contracts include principle and interest based on project costs for fiscal years
2015 to 2017 but do not include the irrigation districts’ collective share of costs for fiscal years 2018 or 2019.

Page 7                                                                                  GAO-19-593R Dam Safety
concluded that about two-thirds of project costs ($19.4 million) were to address changes in the
state-of-the-art design criteria and should be repaid at a lower cost share of 15 percent of the
districts’ full cost share, while about one-third of project costs ($10.7 million) were for routine
maintenance and should be repaid by the districts at their full cost share. Table 2 summarizes
the irrigation districts’ repayment obligations before and after the Corps’ January 2019 decision.


Table 2: Comparison of Irrigation Districts’ Repayment Obligations for Major Repairs at the Harlan County Dam before and
after the 2019 Cost-Sharing Decision

                                                                                    Before January                After January
                                                                                                                               a
                                                                                     2019 decision               2019 decision
 Costs subject to full cost share
 (15.35 percent)
 Portion of project costs classified as routine maintenance                              $30,066,096                 $10,686,032
 Irrigation districts’ repayment obligation for this portion                              $4,615,146                  $1,640,305
 of project costs
 Costs subject to lower cost share
 (15 percent of full cost share of 15.35 percent)
 Portion of project costs classified as needed to address                                            $0              $19,442,107
 changes in state-of-the-art design criteria
 Irrigation districts’ repayment obligation for this portion                                         n/a                 $447,655
 of project costs
 Total repayment obligation                                                               $4,615,146                   $2,087,960
Source: GAO analysis of U.S. Army Corps of Engineers (Corps) information. | GAO-19-593R
Note: The $30 million cost for the Tainter gate repair project is based on information reported by the Corps to the Bureau of
Reclamation (Reclamation) for fiscal years 2015 to 2018. We report costs for these fiscal years because it aligns with the start of the
time period covered by the existing repayment contracts between Reclamation and the irrigation districts and includes only
completed fiscal years for which incremental project costs are known. Corps officials said the agency will incur minimal additional
costs for the project in fiscal year 2019 to, among other things, update maintenance manuals and close out the project.
a
 When reexamining costs following its January 2019 decision, the Corps also made minor adjustments to correct classification
errors for project costs incurred in fiscal years 2015 and 2017. These adjustments increased the total project cost by about $62,000.


Based on the Corps’ cost information, Reclamation is now taking two steps pertaining to its
repayment contracts with the irrigation districts:

     •    First, Reclamation will execute new repayment contracts with the irrigation districts to
          repay project costs attributable to changes in the state-of-the-art design criteria and
          subject to the lower cost share. In these new contracts, the irrigation districts will be able
          to make interest-free payments over a period of up to 50 years. According to
          Reclamation officials, it will take around 9 months to draft, review, submit for public
          comment, and execute these new contracts. 22




22
  The Corps and Reclamation each have different authorities to apply special cost sharing for major repairs needed
due to changes in the state-of-the-art criteria and other conditions at dams each agency operates, and the two
agencies, following these different authorities, apply percentages differently to calculate a user’s cost share. For the
Harlan County Dam, the Corps and Reclamation agreed to use the Corps’ cost-sharing calculations. See enclosure I
for more details.

Page 8                                                                                              GAO-19-593R Dam Safety
   •     Second, Reclamation will amend the existing repayment contracts to recalculate
         payments based on the new, lower cost for the routine maintenance work included in the
         project, such as repairs to electrical controls. These contracts are likely to retain the 50-
         year repayment term at 3.25 percent interest. Reclamation officials said it will take at
         least 2 months after receiving the cost information from the Corps in March 2019 to
         amend these contracts. Reclamation officials said they also anticipate that all prior
         payments made by the irrigation districts will be applied to these amended contracts.


Agency Comments

We provided a draft of this report to the Departments of Defense and the Interior for comment.
Defense and Interior told us that they had no comments on the draft report.

                                               -----

We are sending copies of this report to the appropriate congressional committees, the Secretary
of Defense, the Secretary of the Interior, and other interested parties. In addition, the report is
available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please contact me at (202) 512-
2834 or by e-mail at vonaha@gao.gov. Contact points for our Office of Congressional Relations
and Public Affairs may be found on the last page of this report. GAO staff who made key
contributions to this report were Michael Armes (Assistant Director); Joanie Lofgren (Analyst-in-
Charge); William J. Cordrey; Elizabeth Erdmann; David Hooper; Vondalee R. Hunt; Jon Melhus;
Malika Rice; Amy Rosewarne; Elizabeth Wood; and William T. Woods.




Andrew Von Ah
Director, Physical Infrastructure Issues




Enclosures – 2


Page 9                                                                      GAO-19-593R Dam Safety
List of Committees

The Honorable Lisa Murkowski
Chairman
The Honorable Joe Manchin
Ranking Member
Committee on Energy and Natural Resources
United States Senate

The Honorable John Barrasso
Chairman
The Honorable Thomas R. Carper
Ranking Member
Committee on Environment and Public Works
United States Senate

The Honorable Raul M. Grijalva
Chairman
The Honorable Rob Bishop
Ranking Member
Committee on Natural Resources
House of Representatives

The Honorable Peter A. DeFazio
Chairman
The Honorable Sam Graves
Ranking Member
Committee on Transportation and Infrastructure
House of Representatives




Page 10                                          GAO-19-593R Dam Safety
Enclosure I: Information on the U.S. Army Corps of Engineers’ and the Bureau of
Reclamation’s Cost-Sharing Authorities for Dam Safety Repairs

The America’s Water Infrastructure Act of 2018 asked us to compare the U.S. Army Corps of
Engineers’ (Corps) cost-sharing authorities to those of the Bureau of Reclamation’s
(Reclamation). These two agencies manage dam portfolios similar in scope and collectively own
34 percent of federal dams. 23
     •   Located within the Department of the Army in the Department of Defense, the Corps has
         both military and civilian responsibilities. 24 Through its Civil Works program, the Corps
         plans, designs, constructs, operates, and maintains a wide range of water resources
         projects including dams as well as levees, hurricane barriers, and floodgates. Corps
         dams have a range of purposes including navigation, flood control, recreation, and
         ecosystem restoration.
     •   Reclamation’s mission areas and geographic scope are generally narrower than the
         Corps. Located within the Department of the Interior, Reclamation has financed and
         constructed projects including dams to provide water to users in 17 western states.
         Initially, Reclamation’s water projects were built almost solely for irrigation to make
         previously arid and semiarid land more productive. Over the years, water projects grew
         in size and purpose, often providing not only water for irrigation but also for hydroelectric
         power, municipal water supply, and other uses.

Both agencies have programs for conducting routine operations and maintenance at dams, like
cleaning drains and mowing embankments on earthen dams, as well as for making major
repairs when needed to ensure continued safe operation of dams. Each agency receives
appropriations and has various authorities to carry out major repairs and ensure the safety of
dams. Like the Corps, as described above, Reclamation has agreements in place for sharing
the costs for operations, maintenance, and major repairs with users at its dams.

The Corps and Reclamation both have special cost-sharing authorities that may apply to certain
major repairs at dams that stem from different laws. For major repairs associated with typical
degradation of a dam over time, the agencies would recover the users’ full share of costs based
on the agreements in place for a dam. However, for each agency, its governing law sets out
three provisions under which special cost sharing applies for making major repairs to ensure
dam safety: changes in seismic conditions, changes in hydrologic conditions, or changes in the
state-of-the-art criteria deemed necessary for safety purposes (see table 3). Reclamation has
used all three provisions since receiving its authority in 1978, but through 2018 the Corps had
only used the seismic and hydrologic provisions since receiving its authority in 1986. 25




23
   The Corps owns 709 dams and Reclamation owns 476 dams.
24
   The Assistant Secretary of the Army for Civil Works establishes the strategic direction, develops policy, and
supervises the execution of the Corps’ Civil Works program.
25
   Reclamation has not applied its state-of-the-art provision to any repairs at its dams to address design deficiencies
with Tainter gates. Reclamation’s use of its state-of-the-art provision is tied to funding specifically used for projects
carried out under its safety of dams authority and as deemed necessary for safety purposes. See 43 U.S.C. § 508.
Since this funding is limited, Reclamation officials said the agency decided to not pursue this funding for needed
Tainter gate repairs. However, they also said repairs needed to correct the deficient design of Tainter gates would
technically fall under its state-of-the-art provision though it would also have to qualify under the safety provision.

Page 11                                                                                     GAO-19-593R Dam Safety
Table 3: The U.S. Army Corps of Engineers’ (Corps) and Bureau of Reclamation’s (Reclamation) Cost-Sharing Authorities for
Certain Major Repairs to Dams

                         Corps                                                Reclamation
    Legislation          Water Resources Development Act of                   Reclamation Safety of Dams Act of
                              a                                                    b
                         1986                                                 1978
    Text describing      [C]osts incurred in the modification by              [C]osts incurred in the modification of
    when and how         the Secretary of dams and related                    structures under this Act, the cause of
    authority can be     facilities constructed or operated by the            which results from new hydrologic or
    used                 Secretary, the cause of which results                seismic data or changes in state-of-the-
                         from new hydrologic or seismic data or               art criteria deemed necessary for safety
                         changes in state-of-the-art design or                purposes, shall be reimbursed to the
                         construction criteria deemed necessary               extent provided in this subsection.
                         for safety purposes, shall be
                         recovered in accordance with the                     Fifteen percent of such costs shall be
                         provisions in this subsection:                       allocated to the authorized purposes of
                                                                              the structure, except that in the case of
                         Fifteen percent of the modification costs            Jackson Lake Dam, Minidoka Project,
                         shall be assigned to project purposes in             Idaho-Wyoming, such costs shall be
                         accordance with the cost allocation in               allocated in accordance with the
                         effect for the project at the time the               allocation of operation and maintenance
                         work is initiated. Non-federal interests             charges.
                         shall share the costs assigned to each
                         purpose in accord with the cost sharing
                         in effect at the time of initial project
                         construction: Provided, That the
                         Secretary of the Interior shall recover
                         costs assigned to irrigation in
                         accordance with repayment provisions
                         of Public Law 98–404.
    Recipient of         U.S. Treasury                                        Reclamation Fund, a special fund within
    repayments                                                                the U.S. Treasury that receives revenue
    from non-                                                                 from the sale of public land, repayments
    federal users                                                             for constructing projects including
                                                                              dams, water sales, and project power
                                                                              revenues.
Source: GAO. | GAO-19-593R
a
Pub. L. No. 99–662, § 1203, 100 Stat. 4082, 4263 (1986) (codified at 33 U.S.C. § 467n).
b
Pub. L. No. 95-578, § 4(b), 92 Stat. 2471 (1978) (codified at 43 U.S.C. § 508(b)).


While the agencies have similar authorities for adjusting users’ cost sharing under certain
circumstances, the Corps and Reclamation use different methods to calculate the users’ share
of costs under each agency’s authorities. However, as noted above, the agencies’ authorities
are worded differently in law, and each agency has acted to implement its authority accordingly.
Below we describe how each agency calculates costs, based on our review of the agencies’
policy documents.
      •   The Corps assigns 15 percent of repair costs in accordance with the cost allocation in
          effect for the project at the time the work is performed. This method means that a user




Page 12                                                                                     GAO-19-593R Dam Safety
         pays 15 percent of its full cost share; that is, the user’s full cost share is reduced by 85
         percent. 26
     •   Reclamation assigns 15 percent of repair costs in proportion to each use of the dam—
         specifically, in proportion to a dam’s reimbursable purposes such as irrigation and
         hydropower but not to non-reimbursable purposes such as flood control. 27 Since the 15
         percent of costs are assigned based on the reimbursable purposes and not on the
         overall cost allocation for the dam, a user may have to pay more or less than its full cost
         share.

Table 4 illustrates how each agency would calculate cost sharing for major repairs at similarly
situated Corps and Reclamation dams, based on our review of the agencies’ policy documents
and interviews with agency officials. As the table shows, the agencies’ different methods can
lead to a user having to repay different amounts for the same repairs at similarly situated dams.




26
  This could be based on the cost sharing for the dam established at initial construction or subsequent reallocation,
such as a dam built entirely for flood control that later had irrigation added as a purpose of the dam.
27
  According to Reclamation policy, costs will be allocated to the reimbursable purposes in proportion to those
purposes’ share of the reimbursable net economic benefits specified in the modification report prepared for major
repairs at a dam, but specific costs will be allocated exclusively to their associated reimbursable purpose. See
Reclamation, Reclamation Manual, Safety of Dams Repayment and Cost Allocation, PEC 05-05 (Dec. 12, 2011).

Page 13                                                                                  GAO-19-593R Dam Safety
Table 4: Examples of How the U.S. Army Corps of Engineers (Corps) and Bureau of Reclamation (Reclamation) Would Apply
Cost-Sharing Authorities to Major Repairs at a Hypothetical Dam

 Project description
 The project made $100 million in dam safety repairs needed due to a change in seismic conditions at
 the dam.
                                           Cost-sharing calculation                     Cost-sharing calculation
                                           at a Corps dam                               at a Reclamation dam
 Example 1:                                The Corps first calculates 15                Reclamation calculates 15
 Dam has one reimbursable                  percent of repair costs :                    percent of repair costs. The
 purpose (irrigation) and one              $100,000,000 x 0.15 = $15                    irrigation user would pay 15
 user that benefits from the dam           million                                      percent of costs, and the cost
 for that purpose.                         Then, the Corps assigns the                  allocation under the existing
                                           irrigation user’s share of costs             agreement would not be
 Under the cost sharing
                                           based on the 25 percent cost                 applied: $100,000,000 x 0.15 =
 agreement in place, this user
                                           allocation in effect: $15,000,000 x          $15 million.
 pays 25 percent of operations
 and maintenance costs.                    0.25 = $3.75 million.
 Example 2:                                The Corps first calculates 15                Reclamation calculates 15
 Dam with two reimbursable                 percent of repair costs:                     percent of repair costs:
 purposes (irrigation and                  $100,000,000 x 0.15 = $15                    $100,000,000 x 0.15 = $15
 hydropower) and one user that             million.                                     million.
 benefits from the dam for each            Then, the Corps assigns each                 Reclamation assigns each
 purpose.                                  user’s share of costs based on               user’s share of these costs in
 Under cost-sharing agreements             the cost allocations in effect:              proportion to its share of
 in place, the irrigation user pays        •    The irrigation user would pay           reimbursable purposes at the
 10 percent and the hydropower                  its 10 percent allocation:              dam.
 user pays 45 percent of                        $15,000,000 x 0.10 = $1.5               •    The irrigation user would
 operations and maintenance                     million.                                     pay its proportionate share
 costs, and these percentages              •    The hydropower user would                    of costs: $15,000,000 x
 align with the purposes of the                 pay its 45 percent allocation:               (10/(10+45)) = $15,000,000
 dam.                                           $15,000,000 x 0.45 = $6.75                   x 0.18 = $2.7 million.
                                                million.                                •    The hydropower user would
                                                                                             repay its proportionate
                                                                                             share of costs: $15,000,000
                                                                                             x (45/(10+45)) =
                                                                                             $15,000,000 x 0.82 = $12.3
                                                                                             million.
Source: GAO analysis of Corps and Reclamation policies and interviews. | GAO-19-593R
Note: For each example, the remaining percentage of costs for the dam are allocated to non-reimbursable purposes like flood
control. The Corps and Reclamation pay the costs allocated to these non-reimbursable purposes out of appropriated funds.


At the 23 Corps facilities where Reclamation manages repayment contracts with irrigation
districts, Reclamation relies on the Corps to determine the total amount users are to repay
under the Corps’ cost sharing authority, according to Reclamation officials and past contracts for
major repair projects at such dams. Reclamation uses this information from the Corps to enter
into repayment contracts. This procedure is not currently outlined in Reclamation guidance.
However, Reclamation has started to communicate this procedure to each of its regional offices,
and Reclamation officials said they plan to update relevant guidance to help ensure consistent
implementation.




Page 14                                                                                         GAO-19-593R Dam Safety
Enclosure II: Process for Repayment Contracts for Major Repairs at the Harlan County
Dam

Figure 2: Process for Repayment Contracts for Major Repairs at the Harlan County Dam, as of March 2019




(103186)



Page 15                                                                                   GAO-19-593R Dam Safety
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