State State Investigation Targets $1.5 Million Payments

The Oregon Department of Justice is investigating the McKenzie Watershed Alliance after the nonprofit reported more than $1.5 million in "unauthorized payments," raising questions about whether public and utility funds were involved.

The McKenzie Watershed Alliance serves as the fiscal sponsor for the McKenzie Watershed Council and has handled millions of dollars in federal and other funding for restoration projects in the McKenzie River watershed and elsewhere in the Upper Willamette Basin.

The Eugene Water & Electric Board has said it is aware of allegations of financial wrongdoing involving a McKenzie Watershed Alliance staff member. EWEB emphasized that the allegations do not involve its employees.

"The details and facts are still emerging, and we support the investigation proceeding unhindered," EWEB said in a statement.

The investigation comes as the amount of money flowing through the Watershed Alliance and Watershed Council has grown substantially in recent years, including major federal grants for fish habitat and river restoration work.

Federal funding identified for projects involving the organization includes $27,000 from the U.S. Forest Service in 2023 and $653,500 in 2024 for the South Fork McKenzie River Valley Reconnection project.

Much larger awards have come through the National Oceanic and Atmospheric Administration.

In 2023, NOAA awarded $7.6 million for a project that includes replacement of an aging, undersized bridge at Lower Quartz Creek. The project targeted improving access to more than 10 miles of spawning and rearing habitat for fish, including threatened Upper Willamette River spring Chinook salmon and cutthroat trout.

Officials said the Lower Quartz Creek area was considered particularly important for natural production of Upper Willamette spring Chinook in the Willamette Basin.

Another $8.5 million NOAA award in 2024 was intended to plan and implement several high-priority restoration projects in the Upper Willamette Basin. The work included removing fish-passage barriers, reconnecting rivers with their floodplains and restoring natural ecosystem processes to aid spring Chinook recovery. Environmental education and community engagement, including work with tribal partners, were also included.

Together with other government-supported work, the grants bankrolled the rapid growth in funding funneled through the organization in recent years.

EWEB says it has worked with watershed organizations for years as part of its efforts to protect the McKenzie River, the source of drinking water for approximately 200,000 people in the Eugene area. In its statement, the utility said it is now working to determine whether any of its money was involved in the alleged unauthorized payments.

"As a community-owned utility, being a trustworthy steward of our customers' dollars is a top priority," EWEB said. "We take that duty seriously and maintain strong financial controls to ensure customer dollars are appropriately spent."

EWEB also noted it is "working to understand the extent to which utility funds may have been affected" and is proceeding carefully to make sure safeguards are in place to protect public resources.

At the same time, the utility said the investigation will not change the importance of continuing work to protect the McKenzie River watershed.

"Our work on the McKenzie River is vital to protecting our community's drinking water and serving our customers," EWEB said.

The utility said watershed restoration and protection projects have produced meaningful results and that it expects to continue working with watershed management organizations.

"These partnerships allow us to combine expertise, coordinate resources, and achieve outcomes beyond what any one organization could do alone," EWEB said.

The Oregon Department of Justice investigation is continuing, and additional details about the alleged unauthorized payments, including when they occurred, where the money went and which funding sources may have been affected, have yet to be made public.