Wyoming's water development program is "respected and appreciated," an audit says, but it hasn't always followed state laws. The report recommends changes, but legislators aren't immediately ready for new laws governing the $46 million-a-year program. Among upcoming projects, a dam and reservoir on the Mercer ranch near Hyattville that would flood some of the land in the background. (Angus M. Thuermer Jr./WyoFile)

A sweeping audit of Wyoming water development found officials failed to follow good-government laws and suggests that the Legislature clarify who is in charge of the program.

Water officials are changing the way they do business after the audit found them not following conflict-of-interest statutes and failing to properly document some public meetings. Record-keeping changes are “fully implemented,” and commissioners are filing conflict-of-interest declarations, said Harry LaBonde, director of the Water Development Office.

“I know nine of 10 have complied,” he said of the conflict filings required of commissioners.  “They are complying with that or moving forward there.”

But he challenged the report’s suggestion that the Legislature clarify who’s in charge.

The Legislature’s Management Audit Committee called for the 128-page report and the Legislative Service Office completed it Jan. 6. It said the “respected and appreciated” program averages $46 million a year but operates under conflicting laws that cause “misperceptions or misunderstandings” as to who has primary authority.

The audit of the Wyoming Water Development Office and commission said laws set up an organizational structure that puts the civilian ten-member commission over the director, a paid state employee. (Legislative Service Office)

“At this time we are not planning any legislation,” audit committee co-chairman Rep. David Miller (R-Riverton) said in an email. “But the commission and the Water Development Office will report back to the Management Audit sometime during one of our meetings in 2016 to see how the work is progressing on our recommendations. Management audit will decide during the interim in 2016 if we need to bring a bill to adjust any statutes for the 2017 general session.”

Laws dating back to the 1970s say the ten commissioners run the program. More recent legislation puts LaBonde on top as director of the Water Development Office, the report says. The governor appoints all of those officials, but only LaBonde is an employee.

Based on the two statutes, the Legislative Service Office created organizational charts showing LaBonde either presiding over or working under the citizen commission.

LaBonde said he didn’t see a conflict between the laws. “I … answer to the governor,” he said. “That does not mean the Commission works for me.

In this organizational chart drawn by the Legislative Service Office and based on one statute, the director of the Water Development Office oversees the civilian commission, a conflict with other laws. The LSO said the Legislature could clarify who’s in charge (Legislative Service Office).

The system works well and commissioners approve almost all work, he said. “There’s not a single project…that the commission has not reviewed. I think it’s working just the way it was intended.”

But the report says lawmakers could consider “more explicit and/or different specifications” addressing water program oversight.

Both commissioners and LaBonde’s office had an opportunity to respond to the findings. The director’s office “disagrees with any statutory revisions,” the printed rebuttal says.

The commission, however, said it’s open to policy revisions “to better outline the division of responsibilities.”

Conflict-of-interests not handled well

In addition to failing to file conflict-of-interest documents, a shortcoming LaBonde said is being corrected, the report criticized other aspects of public records practices. When conflicts have arisen, the commission didn’t properly document members who recused themselves.

“Commissioner voting recusals are not guided by a reliable policy or protocol and are not consistently reflected in Commission minutes,” the report says.

In one instance a commissioner “declared a conflict on a project, and followed with a motion to accept the project, which was subsequently carried by the whole Commission,” the report said. In another instance, a commissioner declared a conflict of interest and minutes failed to record that as a “no” vote as required.

The issue is a technical one, LaBonde said, and will be corrected with more precise recording of events.

“I think the Commissioners have been very up-front,” he said of conflicts. “They declare it and they have not voted.”

Also, the commission did not record and publish minutes of workshops that “can and often do appear to frequently influence subsequent ‘meeting’ sessions.”

Wyoming Press Association President Robb Hicks said the findings are “very troubling,” but that his group is pleased the Water Development Commission has agreed to improve its practices.

“The open-meeting and open-records laws are in place to shed sunshine upon governments,” he said. Such openness “serves the people best, serves the government best and the best decisions come from it.

“We’re pleased to see they’ve acknowledged these and hope that they are earnest in their assertions that they take these recommendations seriously,” Hicks said. “Because they serve the people of Wyoming and the taxpayers, the people of Wyoming and taxpayers have a right to expect that conflicts of interest will be declared and people will not be voting on things where they have a vested interest.”

Report knocks “spirit of equitable distribution” in contract awards

The report also criticized the “spirit of equitable distribution” that allows the commission and office to select engineering firms to do work based on what appears to be reasons other than qualifications and price. The report suggests the “spirit of equitable distribution” is used to spread out work, perhaps over fears that contractors have bid on more projects than they can handle.

One water commissioner interviewed for the report said “consultants aren’t supposed to bid for more than they can handle.” The commissioner wondered whether the “spirit of equitable distribution” was justified on those grounds. “I’m not sure it’s our place to make that decision,” the commissioner is quoted as saying.

Consultants, water office employees, water commissioners and legislators often work together, as on this tour of potential dam sites in the Bighorn Basin last summer. Mark Donner of Trihydro Corporation explains the topography at Meadowlark Lake; former Sen. John Hines stands on the right. (Angus M. Thuermer Jr./WyoFile)

But the LSO said it is uncertain whether there is a requirement that all bidders understand they are not allowed to overextend their firms. Firms spend thousands of dollars preparing bids for work, the report said, but sometimes wonder why.

“As one commissioner explained, from the consultant perspective, proposing a job is a gamble and modifying selection results in the spirit of equitable distribution further limits the odds of being selected for a project,” the report said. In 2015 at least three firms approached a commissioner questioning the selection choices.

The selection of consultants “are made without full notification or disclosure of how the Commission and Office apply factors…” the report said. A successful appeal from a spurned bidder could require a new call for bids.

LaBonde said better record-keeping could resolve the issue. “There’s not documentation of that process,” he said. “They’re saying that needs to be a more open process.”

Also, the commission doesn’t have a priority list and few, if any, project applications have been turned down. Further, the state pays for studies for private groups, something commissioners are worried about. Regardless of those concerns, both the commission and the Legislature have approved paying for work for private entities, the report said.

Auditors found “the essential absence of Program rules, especially where sponsor and application processes and requirements are concerned.” Before November last year, “nearly every project deemed eligible had received funding,” the report said.

Laws also require “the prioritization of development projects, which can be adjusted by the Commission to meet changing Program needs,” the report says. “Yet there is no … method by which the Commission scores, measures, ranks, or orders annual sponsors’ applications,” other than a broad policy statement, the report said.

The LSO also said there could be a cash flow problem because the water development office distributes money while counting on more to flow in.

“I’m still puzzled why that’s a problem,” LaBonde said. “That’s really the way other state budgets are generated. The Water Development Commission has never been unable to make a payment on a project.”

Water development funds are “one of the first accounts that fills,” from tax collections, LaBonde said. “I believe we have a very stable revenue stream.”

Water commissioner Bill Resor called the report productive. “The audit of the Wyoming Water Development Office and commission was a really healthy process,” he said. “It was helpful for them to point where we could improve.”

 

Angus M. Thuermer Jr.

Angus M. Thuermer Jr. is the natural resources reporter for WyoFile. He is a veteran Wyoming reporter and editor with more than 35 years experience in Wyoming. Contact him at angus@wyofile.com or (307)...

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