An Economist’s Law of the River Lesli Kirsch-Burke Economist, Boulder Canyon Operations Office Lower Colorado Regional Office April 8, 2016

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The Law of the Colorado River An ever-evolving collection of documents including: –An International Treaty –Interstate Compacts –Federal and State Statutes –Federal Court Decisions & Decrees –Federal Regulations –Operational Criteria –Records of Decision –Contracts and Agreements 3

Origins of Reclamation Reclamation Act of June 17, 1902 provided: –A Federal program for construction of irrigation works to reclaim arid lands –That rights acquired to the developed water: Shall not exceed beneficial use Shall be appurtenant to the irrigated land –That state water law is not affected –That irrigators shall repay 4

Interaction of State and Federal Water Law in the Lower Basin Rights to water are acquired under State law –Prior appropriation doctrine: “first in time, first in right” Rights existing prior to June 25, 1929, the effective date of the Boulder Canyon Project Act, are called Present Perfected Rights (PPRs) –Recognized by Supreme Court Decree In cases of conflict, Federal law controls 5

Key Documents 1922 Colorado River Compact 1928 Boulder Canyon Project Act 1944 Mexican Water Treaty 1948 Upper Colorado River Basin Compact 1956 Colorado River Storage Project Act Arizona v. California Litigation 6

1922 Colorado River Compact Negotiated by representatives of the 7 Basin States (binding upon legislative approval) Divides the Colorado River Basin in two at Lee Ferry, Arizona –The beneficial consumptive use of 7,500,000 acre-feet of Colorado River water is apportioned to the Lower and Upper Basins annually in perpetuity Preserves Present Perfected Rights and Tribal rights Provides a mechanism for future supply to Mexico Herbert Hoover, then Secretary of Commerce, participated in the negotiations as the Federal representative. 7

Administering the Basin Downstream of Lee Ferry, Arizona –Lower Division States Arizona California Nevada –Reclamation’s Lower Colorado Region Upstream of Lee Ferry, Arizona –Upper Division States Colorado New Mexico Utah Wyoming –Reclamation’s Upper Colorado Region Hydrologically, the Upper Basin includes part of Arizona, while the Lower Basin includes parts of New Mexico and Utah. 8

Origin of Native American Rights The 1922 Colorado River Compact states “Nothing in this compact shall be construed as affecting the obligations of the United States of America to Indian tribes” What are those obligations? Winters v. United States: Federal reserved water rights for reservations –Date from the establishment of the reservation –Serve the purposes for which the reservation was established –Cannot be lost through non-use 9

Reservations on the Lower Colorado River 10

1928 Boulder Canyon Project Act Authorizes the Secretary to construct Hoover Dam and the All-American Canal Approves the Colorado River Compact Why so meaningful? 11

Boulder Canyon Project Act, Cont. In authorizing Hoover Dam, provides benefits for: –Flood control –Navigation –River regulation –Water supply, and for –“…the generation of electrical energy as a means of making the project … a self-supporting and financially solvent undertaking…” Allocated $25,000,000 in project costs to flood control, with the remainder repayable from hydropower revenues 12

Boulder Canyon Project Act, Cont. Provides for “a main canal and appurtenant structures located entirely within the United States connecting the Laguna Dam, or other suitable diversion dam, with the Imperial and Coachella Valleys in California….” –Replaces the Alamo Canal, a privately financed canal that ran through Mexico for 50 miles, causing operational disputes –Became known as the All- American Canal due to its route 13

Boulder Canyon Project Act, Cont. Makes the lower Colorado River unique in Reclamation and the United States –The only river managed by a Federal water master (the Secretary) –The United States, through the Bureau of Reclamation, holds no water rights, so does not sell water Instead, enters into permanent contracts for water delivery through Federal Reclamation projects Domestic water diverters compensate hydropower users at a rate of $.25 or $.50 per AF because their diversions reduce hydraulic head Present Perfected Rights, existing prior to passage of the act, are recognized 14

Boulder Canyon Project Act, Cont. Embodies the intent of Congress to settle the western United States in the early 20 th century –Irrigable lands capable of being served by Reclamation projects are withdrawn from public use for homesteading in small tracts Military veterans receive preference 15

Boulder Canyon Project Act, Cont. Of the 7,500,000 AF of Colorado River water apportioned to the Lower Basin in the Colorado River Compact, the States are authorized to enter into an agreement providing: –4,400,000 AF to California –2,800,000 AF to Arizona –300,000 AF to Nevada The states did not enter into an agreement, but the Secretary’s authority to contract with the states effected this division as intended by Congress. 16

Party Agreement An agreement among 7 California water agencies Includes a priority system that was later incorporated into the Secretary’s contracts with California parties –Water cascades through the priorities, some of which are shared Assigns the first priorities to agricultural agencies; coastal urban agencies receive lower-priority water Does not acknowledge Tribal needs 17

California Priority System Arizona and Nevada have similar priority systems 18

Major Water Contracts Following the 7-Party Agreement, the Secretary entered into contracts with individual California agencies in the 1930s pursuant to Section 5 of the Boulder Canyon Project Act In 1942, the Secretary entered into a Section 5 contract with the State of Nevada In 1944, the Secretary entered into a Section 5 contract with the State of Arizona 19

1944 Mexican Water Treaty Allots 1,500,000 AF of Colorado River water to Mexico Allots an additional 200,000 AF to Mexico if surplus water is available In extraordinary drought, Mexico’s allotment will be reduced in proportion to U.S. reductions Administered by the International Boundary and Water Commission –United States Section operates under the State Department –Empowered to settle differences in interpretation or application –Decisions are recorded in the form of Minutes 20

Arizona v. California, Confirms the Lower Division States’ allocations in the Boulder Canyon Project Act Sets forth the basic legal framework under which the Secretary manages the lower Colorado River –Recognizes authority of the Secretary to make key decisions relating to annual water supplies Sets rules for releases in normal, shortage, and surplus years –Allows the Secretary to release one State’s unused apportionment to another State –Recognizes Federal reserved rights and early State law rights –Used “practicably irrigable acreage” to measure Tribal reserved rights 21

1968 Colorado River Basin Project Act Authorizes construction and operation of the Central Arizona Project (CAP) –A system of conduits, canals, pumping plants, storage facilities, and distribution works to deliver Colorado River water to central Arizona Supplements existing agricultural and domestic supplies to reduce groundwater overdraft Provides source of supply for Native American water rights settlements –Powered by an ownership share in the coal-fired Navajo Generating Station powerplant Provides that in a shortage year, CAP diversions are limited before California or (existing) Nevada users 22

1974 Colorado River Basin Salinity Control Act Authorizes construction of projects to control the salinity of water delivered to users in the United States and Mexico –Yuma Desalting Plant –Extension of the Bypass Drain from Wellton-Mohawk –242 Well Field –Coachella Canal lining Enables compliance with United States obligations under Minute 242 of the 1944 Mexican Water Treaty –Minute 242 established salinity criteria for deliveries to Mexico (no more than 115 p.p.m. (115 mg/kg) ± 30 p.p.m. over the annual average salinity of Colorado River waters arriving at Imperial Dam) 23

Lower Colorado Region Project Locations 24

Overview of Tribal Allocations On the lower Colorado River: Arizona v. California, Quantifies Federal reserved water rights (PPRs) for 5 reservations, based on practicably irrigable acreage In Central Arizona: CAP Water Allocations, Provide supplemental water to tribes not covered by Arizona v. California May be independent of settlement acts and agreements In Southern California: San Luis Rey Bands, ,000 acre-feet annually of Colorado River water made available to the Bands from lining of the All-American and Coachella Canals 25

Reservations in Central Arizona 26

2004 Arizona Water Settlements Act Recognizes that 1,415,000 AF per year of Colorado River water is allocated by the Secretary within the framework of the CAP –650,724 AF is dedicated for use by Native American tribes and communities Authorizes the settlement of water claims of the Gila River Indian Community and Tohono O’odham Nation Allowed revenues in the Lower Colorado River Basin Development Fund, established in the Colorado River Basin Project Act, to be used to pay for Indian water projects 27

Central Arizona Project – Tribal Leases TribeLesseeLeased Amount (AFY) Length of Lease Ak-Chin Indian CommunityDel Webb Corporation Pascua Yaqui Tribe 10,000 1, Years 5 Years Fort McDowell Yavapai NationCity of Phoenix Town of Gilbert 4,300 13, Years 1 Year Gila River Indian CommunityGoodyear Peoria Phoenix Scottsdale Apache Junction 7,000 15,000 12,000 1, Years Salt River Pima-Maricopa Indian Community Chandler Glendale Mesa Phoenix Scottsdale Tempe Gilbert 2,586 1,814 1,669 3, , Years San Carlos Apache TribeCity of Scottsdale Phelps Dodge Town of Gilbert Pascua Yaqui Tribe 12,500 14,000 20,000 2,000 Varies 1 Year Tohono O’odham NationAsarco Incorporated10,00025 Years Yavapai-Prescott Indian TribeCity of Scottsdale500Permanent 28

43 Code of Federal Regulations Part 414: Offstream Storage Establishes a procedural framework for the Secretary’s involvement in Storage and Interstate Release Agreements in the Lower Division States Permits State-authorized entities to: –Store Colorado River water offstream –Develop intentionally created unused apportionment (ICUA) –Make ICUA available to the Secretary for use in another Lower Division State In accordance with the Secretary’s obligations under Federal law, particularly the Consolidated Decree in AZ v. CA May occur in the year of storage or in subsequent years Permits only voluntary interstate transactions 29

2007 Interim Guidelines Developed in collaboration with stakeholders Guide joint operations of Lakes Powell and Mead Help to maintain Lake Mead’s water level during drought or low-water periods –Improve equalization of water storage in Lake Mead (behind Hoover Dam) and Lake Powell (behind Glen Canyon Dam) –Include criteria that allow reductions in deliveries to Arizona and Nevada in times of shortage –Encourage efficient and flexible use and management of Colorado River water through mechanisms such as: New water storage facilities Extraordinary conservation measures 30

Other Market-Oriented Mechanisms on the Lower Colorado River Assignments and transfers Fallowing/efficiency projects –Quantification Settlement Agreement –Demonstration System Conservation Program –Pilot System Conservation Program WaterSMART –Grants –Title XVI water reclamation and reuse program

Questions? 32