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COLORADO RIVER WATER USERS ASSOCIATION

1996 Annual Conference
Colorado River-Gateway To the 21st Century
Caesars Palace, Las Vegas, Nevada

Address by Bruce Babbitt
Secretary of the Interior
10:00 am, December 19, 1996

Almost exactly one year ago, on the occasion of your 50th annual convention, I came before you here in Las Vegas to review the status of water administration in the Lower Basin and to make some observations about future directions. I then expressed the hope that a consensus on water management could be forged among the basin states, and that a mediation process then in place could help to move contending interests closer to a resolution of their differences, as steps toward sound long-term management in the Lower Colorado River.

At that time I described in some detail the contentious history of the River, a story that is guaranteed to temper the optimism of even the most hopeful souls. Today I have to report that while I am disappointed that more progress has not been made, I cannot say I am astonished. The Colorado River continues to test the commitment and the endurance of everyone who has been participating in the efforts of the last twelve months. It also has a nearly limitless capacity to generate new controversy. Before turning to the contentious matters that face us, however, I want to emphasize some good Colorado River news of 1996.

In April we completed our first spike flow release from Glen Canyon Dam, creating an artificial flood in the Grand Canyon to reestablish beaches and improve the natural habitat in the floor of the Canyon. The release has helped us to manage and improve the ecosystem of the Canyon in ways that exceeded our expectations. We appreciate the cooperation we have received from the Basin States, the Tribes, and power users in implementing this unique water management program.

On October 9th of this year, I signed the record of decision completing the Glen Canyon Dam EIS that was begun in 1989. That decision initiated the adaptive management process for future operations of Glen Canyon Dam. This process enables us to operate the dam so as to balance the needs of recreation, the environment, cultural resources, water delivery, and hydropower generation.

We have entered into a partnership and funding agreement with the Lower Basin States and other interested parties to develop a multi-species management plan for the Lower Basin. Formal interim § 7 consultation between the Bureau of Reclamation and the Fish and Wildlife Service on river operations is ongoing and should be concluded in the Spring of 1997. Our plan is that a long term multi-species management plan will supersede the interim consultation, and will simultaneously provide both for protection of threatened and endangered species in the Lower Basin and for continued delivery of water and power benefits form the river.

I also want to commend the efforts of Governor Romer and Lt. Governor Shoettler of Colorado, who have convened a process for the purpose of seeking a resolution of the protracted controversy over the Animas-La Plata project. They have done so at considerable political risk, and the issues are divisive and emotional. I have given the process my full support. It is moving along satisfactorily so far, and it may provide a helpful model for negotiated settlement of knotty problems within the Colorado River Basin.

On the other side of the ledger, in California serious unresolved controversies remain both between agricultural agencies, and among the urban water suppliers. No progress is being made toward a settlement of the San Luis Rey water claims as directed by Congress. The mediation process that was taking place has ground to a halt.

It is a matter of special sensitivity that the concerns of other Basin states with the long term future of California's demands on the Colorado River have not been addressed. To be sure, this is only the most recent version of an issue that has been central to Colorado River controversy for seven decades. When California was pressing for the construction of Boulder Dam in the 1920's, other Basin states were concerned that its rapid development would gain it the lion's share of the river under prior appropriation principles, to their disadvantage. This fear prompted the development of the Colorado River Compact in 1922, and the provision in the 1928 Boulder Canyon Project Act requiring California to enact a law limiting its Colorado River contractors to normal use of 4.4 million acre-feet (maf).

California's uses are expected to go above 5.2 maf this year, exceeding by some 80,000 acre-feet its basic entitlement of 4.4 maf. In contrast to the past, however, the unused Lower Basin apportionment upon which California has relied is shrinking. For the first time ever, this year, demand for water in the Lower Basin exceeded the Basin's basic apportionment of 7.5 maf. Demand is expected to exceed 8 million acre-feet this coming year. Consumption in each of the three lower division states has been growing, and we can anticipate that with present patterns of use, demand will continue regularly to exceed 7.5 maf.

Fortunately, in the last few years water has been abundant. We have approximately 50 maf in storage on the Colorado River system, some 83% of system capacity. Analysis shows a very low risk of future shortage. For these reasons, we declared a surplus condition that allowed all Lower Basin water demand to be met in calendar year 1996. We anticipate a similar decision for 1997. However, conditions of abundance will not always prevail, and users in the Lower Basin cannot depend on surpluses always being available.

The six Basin states other than California have proposed discussions to develop multiple year surplus and shortage criteria that will for an interim period meet at least part of the demand in the Lower Basin. This is a significant proposal, but it is based on California's ability to commit to an enforceable program to reduce its reliance on surplus water, without creating undue risk to other entitlement holders.

A crucial question is how California is preparing itself for times of greater stringency. Its uses in excess of 4.4 maf are occurring both in the agricultural and in the urban sectors. The agricultural agencies have an entitlement of 3.85 maf, but called for more than 4 maf this year. There is increased use in both the Palo Verde and Imperial Irrigation Districts. The Metropolitan Water District has been using about 1.2 maf of Colorado River water.

Where is California going? Apparently considerable reliance is being put on the prospect of interstate water marketing, in particular on transfers of Colorado River water from agricultural to urban use. Presumably, much of that water would come from agricultural efficiency gains based on water saved through conservation technologies, funded by urban interests. That was the approach taken in a 1989 MWD/IID conservation plan designed to generate about 100,000 acre-feet per year. Other techniques that have been explored are dry-year options, a means for meeting short term deficits in supply through voluntary agreements by farmers to forego use of river water during periods of shortage; and land fallowing, a more controversial approach because of its potential impact on agricultural communities. During the last year, IID and San Diego initiated an ambitious effort aimed at transferring large quantities of water--several hundred thousand acre-feet per year--from the Imperial Valley to the city.

Water Transfers Through Marketing

As I emphasized last year, I believe that water marketing is an important tool that can help us to use the water in the Colorado River more effectively, and in particular that it can be important in meeting California's long term need to bring its demand in line with available supply. However, some serious obstacles stand in the way of implementing marked-based transfers. I believe I can now usefully take several steps to help effectuate such transfers, consistent with the Law of the River and the fundamental precept that our goal is management of the River to make the most effective use of the limited resource we have. I am initiating the following actions regarding marketing:

1. First, transfers must be founded on a baseline quantum of beneficially-used water from which savings can be made. I know that some basin interests have expressed concern about increased water use by the Imperial Irrigation district attributable to various factors, including changing cropping patterns. We have some real concern about this as well. The Bureau of Reclamation has been working on a cooperative arrangement with the Imperial Irrigation District to determine the amount of water IID is beneficially using. This is a desirable step, and I have instructed the Bureau to seek to implement it as expeditiously as possible. Such collaborative and cooperative efforts are preferable to the use of regulatory strictures, which is the alternative means of determining beneficial use, and which I, as well as the state, have authority to implement if necessary. Once such a baseline is determined, marketing opportunities will be one step closer to reality.

2. Second, I am instructing the Bureau of Reclamation to initiate a rule making process to develop water management regulations for the Lower Basin. As you know, the Bureau began such an effort several years ago, but deferred further work to allow a consensus to develop among the states on approaches to interstate marketing and banking. Those efforts were unsuccessful. This time, the regulations will focus on: intrastate marketing; and interstate marketing within the Lower Basin based on state-approved, willing buyer/willing seller transactions. The regulations may be expanded if the public scoping process identifies other water management activities that could be incorporated in them, without generating significant controversy or delay.

I want to take special note of an Arizona initiative. It has put in place a groundwater banking program that will enable it to store Colorado River water offstream for future use. This program, when operated in conjunction with the Arizona Groundwater Law that was enacted during my tenure as Governor, will help protect Arizona against possible Colorado River shortages it may have to bear. The Arizona program includes an interstate component which would permit Nevada and California to store Colorado River water to help meet future needs in those states. Nevada believes the Arizona plan offers real potential for it to meet its future water needs, at least for a considerable time. I view this as a positive approach and I propose to issue regulations that will authorize programs of this kind.

3. Another obstacle to marketing is the unclarity of the relative rights of various agricultural agencies in California under the Seven Party Agreement of August 18, 1931, and under a subsequent 1934 agreement between the Imperial Irrigation District and the Coachella Valley Water District. Clarification of agricultural rights subject to the Seven Party Agreement, and settlement of the long-festering dispute between Coachella and IID, are also likely to be crucial to effectuating transfers in California from agricultural to urban users. Such transfers would be a key component of the plan sought by the other six basin states, by which California can limit its Colorado River water use. Such a plan will need to include a clear and more definitive interpretation of water entitlements among the California agricultural agencies. We stand ready to assist, and if necessary to assume leadership, in clarifying the relative rights of the parties, as a precondition to water marketing.

Each of the preceding matters is an initiative that I intend to get underway beginning in the next calendar year.

In reflecting on the controversy generated by the Seven Party Agreement, I have noted striking parallels in the circumstance of several of the entities who depend on the water of the Colorado River: a situation of uncertainty about ability to meet needs as a result of being in a subordinate, and potentially perilous, position. In a broad sense, Coachella's posture vis-à-vis IID is like San Diego's vis-à-vis other Met customers, like the Met as to the agricultural contractors, and like that of the Central Arizona Project in relation to the other Lower Basin states. Most of these matters will be taken up in the fullness of time. Each as its own history, and its own equities. Still, we need to keep in mind that in the long term the great issue on the River is providing confidence to every stakeholder that its reasonable needs can be met in good times and bad, without the risk of drastic measures.

There are several other issues that need attention on our shorter term agenda, and now I want to turn to them.

Surplus Criteria

The time is ripe for the formulation of criteria that will govern the declaration of surplus conditions. surplus guidelines will provide a basis for Lower Basin water users to rely upon assessing the future availability of Colorado River water and in making appropriate plans for meeting water needs. I shall direct the Bureau of Reclamation to initiate the development of guidelines for annual decisions regarding surplus determinations in operating the River.

It is clear that surplus water will not be available indefinitely to meet demands beyond the 4.4 million acre-foot entitlement of California. The prospect of long term reliance on such water by users in California is a matter of great concern to other states in both basins. The effective implementation of surplus criteria depends on the presence of a well-conceived strategy within California designed to cope with its long term demands on the River. I shall therefore temporarily defer making any such guidelines final in order to give California an opportunity to put in place a realistic strategy to assure that it will be able to reduce its use when necessary, or to meet its needs from sources that do not jeopardize the entitlement of other.

Banking

I continue to believe, as I observed last year, that some forms of banking, which may include top-water banking, are useful tools that can contribute to more effective management of the River, encouraging additional conservation. Since conservation incentives are one of the most important tools we have in encouraging efficient use of the limited resource we have, I believe banking should remain in our arsenal of techniques. However, considering the intense level of controversy top-water banking spawns, I believe formal regulatory consideration should be left to a later time. I shall, however, stand ready to entertain specific proposals for top-water banking that are put before me, on a case-by-case basis, particularly where there is a potential to demonstrate innovative conservation methods. Any such proposals will be subject to public review and input from interested parties.

The San Luis Rey Settlement

I am distressed that we have still not been able to effect a settlement of water rights claims with the five bands of Indians in San Diego County, and I intend to continue to search out means, with the cooperation and participation of California stakeholders in the Colorado River, to effectuate a settlement consistent with the law enacted by Congress in 1988. Securing such a settlement is in my view key to advancing Colorado River issues of interest to the State of California,

Conclusion

Before closing, I want to emphasize that I have been addressing only Lower Basin matters, and only water supply problems, not environmental issues, which are being addressed in separate forums. I also want to reiterate my commitment to working within the Law of the River, and to assuring that the entitlement of each contractor and of each Basin State is unimpaired. Nor, despite the disappointments of the past year, is there any diminution in my desire to continue searching for consensus on river management issues.

I want to conclude by reiterating the essence of what I said last year. I believe that we have the management tools to make it possible to assure every Basin State that it will be able to meet the needs of all its citizens. But that can only be the case if we work together to put those tools to use. We must insist on prudent, non-wasteful use. We must be imaginative in utilizing marketing, and in encouraging voluntary, willing-buyer/willing-seller markets. We must be creative in seeking out mutually advantageous arrangements both within and among states. With those commitments, we can, step by step, provide assurance that every need will be addressed and that no entitlement holder, or state, will be disadvantaged.