‘Law of the River’ Threatened : S.D.’s Search for Water Causes Waves of Dissent

The rains continue, the rivers run high and the reservoirs sit full, even on the dry coastal plains of water-poor San Diego County.

No matter to San Diego. Not even a deluge the scope of a Johnstown Flood would divert the attention of San Diego County water representatives. Fearful that their southernmost California county will suffer the greatest from water shortages predicted for Southern California by the 1990s, they have embarked on a course tantamount to sacrilege among Western water officials.

With its burgeoning population of more than 1.9 million people 90% dependent on water imported from outside the county’s boundaries, San Diego planners are haunted by the specter of insufficient water to supply the area’s housing tracts, high-technology industrial parks and avocado groves.

In the last several months, San Diego officials have signaled their willingness--indeed, their desire--to buy water on the open market, at prices agreed to by both the buyer and seller. In one form or another, San Diego has looked at buying water from a private company in Colorado, from farmers in the Imperial Valley and from counties in Northern California’s Sierra Nevada range.

That concept is anathema to the region’s water agencies, long used to transactions carried out under government regulations controlling both allocation and price. The San Diego County Water Authority has come under withering criticism for even raising the idea, especially from top staff planners at the Metropolitan Water District, the powerful Los Angeles-based water wholesaler which traditionally has sold most of the water used in Southern California, including San Diego.

Agencies should not consider paying a price for water that includes profit above and beyond the actual cost of supplying the water, runs the traditionalists’ argument. In particular, MWD and its allies fear that the willingness of San Diego to buy water hurts the chances of Southern California to convince the northern half of the state to permit additional development of the controversial State Water Project. MWD sees completion of that project as vital to stemming otherwise inevitable shortages during dry climatic periods predicted to begin in the next decade.

Water as Commodity

But San Diego and its few supporters elsewhere who dare raise their voices publicly say the future lies in treating water as a commodity, to be bought and sold like oil, or soap or bread. They doubt whether resolution of the north-south feud over water will be solved in time to meet the predicted shortages. Instead, “new” water can be created through conservation and diversion by offering monetary incentives to potential suppliers, they say.

“The idea isn’t going to go away, especially when potential sellers out there see how much money we’re promising,” Larry Michaels, general manager of San Diego County Water Authority, said. “The willingness to pay for water opens up a whole new way to divide water.”

The move that has roiled the waters most during the past months is San Diego’s receptiveness to a proposal from a private company in Colorado to buy 300,000 to 500,000 acre-feet of water annually taken from a tributary of the Colorado River for a guaranteed 40-year period. (Water usage is measured in acre-feet. One acre-foot of water will cover an acre to a depth of one foot. That is approximately the amount of water used annually by a family of four. The MWD provides 3 million to 4 million acre-feet of water a year to its member agencies.)

The company, the Galloway Group of Meeker, Colo., would develop a dam and reservoir on the Yampa River in northwestern Colorado, using water rights it has in the area. It would move the water downstream 1,500 miles to sell to San Diego at 90% of the cost of MWD water, or about $300 an acre-foot by the time the project could be completed, in 1990. Water sales would stop at the end of the 40-year period, when industrial development in northwestern Colorado would require all the available water.

“From the corporate business side, with a need of perhaps 1 million acre-feet of water a year in Southern California at $300 an acre-foot, there is an awfully good potential for profit,” John Musick, the maverick Colorado water attorney who represents Galloway, said. The payments by San Diego would more than enable Galloway to build its $200-million project and turn a profit, he said.

Under the plan, Galloway would store and sell for profit water that now runs unused down the river to California and Arizona. Water agency attorneys throughout the seven-state area encompassing the Colorado River say the plan violates numerous statutes developed since the 1920s to regulate water rights and which are known collectively as the Law of the River.

Those statutes divide the water equally between the northern basin states--Utah, Wyoming, Colorado and New Mexico--and the lower basin states of California, Arizona and Nevada. They decree that water unused in one state will flow unimpeded to be taken by another user elsewhere according to a series of priorities set down in the statutes. They govern the division of waters between Arizona and California. The Law of the River is codified not only by the individual states along the river but by the U.S. Congress and by the secretary of the Interior, who acts as the river’s “master.”

MWD officials say the statutes have brought legal peace to long-contentious river politics. Not only would a change the magnitude of the Galloway plan require wholesale revision of the laws, they say, but it also would set up California once again as a “water bandit” intent on taking an unfair share of the Colorado.

Arizona has been outspoken in opposition because its Central Arizona Project to move water from the Colorado to Phoenix and Tucson depends on the state’s ability to take unused water from the upper-basin states. Should the Galloway plan be realized, that unused water would have to be bought in competition with other bidders, such as San Diego or MWD.

“I’m not worried, because it will never happen,” Wes Steiner, director of the Arizona Department of Water Resources, said at last month’s meeting of the Colorado River Water Users Assn. in Las Vegas. Nevertheless, Steiner and other water officials throughout the basin have taken almost every opportunity to condemn the concept.

The torrent of criticism has caused San Diego officials to take a step back from their plans to initial a contract with Galloway later this month. But that has not phased Galloway in the least. Its president, Doyle Berry, told The Times that he understands San Diego’s fear of alienating MWD and that Galloway will seek a legal test of its concept in Arizona early this year. If that is ultimately successful, San Diego will still get its water, he said.

One prominent water attorney, Clyde Martz of Denver, sees the Galloway proposal not as a legal issue but as a political problem. Martz, who spent many years in the Justice and Interior departments in Washington working on Western water issues, said the plan is legally feasible, but must overcome inter-state politics.

“My first reaction was negative before I looked at this openly,” Martz said, adding that Arizona and MWD must also be convinced before the plan can work practically.

“The water bureaucrats are like the little Dutch boy with his finger in the dike,” attorney Musick said. “They have no control over the future but can only react to what we propose.”

Musick said that the various laws along the Colorado were written to facilitate projects such as the Hoover Dam and Lake Powell, not to become “ecclesiastical writs for all time.”

“Now is the time to adapt the Law of the River to private enterprise,” he said. “Ideally, projects such as ours should be joint public-private investment to eliminate any specter of private enterprise riping off the people of the West by stealing their water.”

At least one water agency in Colorado, the Colorado River Water Conservation District in Glenwood Springs, finds the idea of selling water attractive, but its officials believe that the selling should be done by a public agency. While that agency’s director has been publicly castigated by other water officials for venturing support for the idea, the director has vowed to devise ways of implementing a public plan to market water.

In the meantime, San Diego’s willingness to pay for water also has spurred activity in the Imperial Irrigation District, the predominantly agricultural water agency in the fertile Imperial Valley 100 miles east of San Diego.

The Imperial district handles 2.9 million acre-feet of water annually from the Colorado River to nurture the area’s vast vegetable fields, and state water officials estimate as much as 438,000 acre-feet is lost each year through spillage and seepage from unlined irrigation canals and other wasteful practices. The district is under an order from the California Water Resources Control Board to conserve the excess water, which could then be used by water-poor coastal areas of San Diego and Orange counties.

Until recently, progress was stymied over the question of how to pay for up to $500 million in improvements to the irrigation system in order to save the water. The district itself has insufficient funds, with its federally subsidized water selling for only $9.50 an acre-foot. With prodding from San Diego and other member agencies, the MWD staff last year began negotiations with Imperial over how MWD could pay for the improvements and receive the water.

But MWD has insisted that it would pay only the actual cost of improvements and in return receive the water for a guaranteed period of time. MWD argues that any Colorado River water not used by Imperial automatically accrues to it--under the same Law of the River statutes involved in the Galloway proposal.

However, Imperial has been tantalized by the thought of being able to sell its water for a profit. In addition, the farmers who control the district fear that MWD seeks permanent control over its supplies, similar to the way the City of Los Angeles gained control of water from the Owens Valley early in this century.

As a consequence, the Imperial board of directors last month responded favorably to a proposal from a major worldwide engineering firm that it undertake all the necessary construction work on conservation facilities in return for an annual percentage fee from future water sales. The proposal, made by The Parsons Corp. of Pasadena, would allow Imperial to market its water to the buyer of its choice. Imperial has asked Parsons to make a detailed proposal to the district’s Special Water Problems Committee.

MWD staff officials quickly called the plan unworkable because it would violate the legal system of priorities along the Colorado. MWD General Manager Carl Boronkay said that while MWD is willing to pay for water in some cases, it does not want to buy at market prices.

“We can, for example, offer Indian tribes (along the Colorado) $5 more an acre-foot for their water than they can get through development of farming,” Boronkay said during the Las Vegas water convention. “But the (tribes) can’t bid us against others because of the priority system (under the Law of the River). Otherwise, we end up paying for water that we are already entitled to.”

But MWD’s legal position on Imperial could be challenged in court if Imperial decides to cast its lot with Parsons. Parsons’ legal consultant on the Imperial project, Robert Fellmeth of San Diego, said that Imperial is allowed under California law to transfer water saved through conservation to whomever it wants.

“If MWD takes its position to court, it will lose,” said Fellmeth, a University of San Diego law professor and an expert in public utility law.

The general manager of the San Diego County Water Authority said that Imperial’s negotiations with Parsons represent “an ultimatum of sorts” to MWD.

“Imperial has served notice that it won’t wait two years for MWD to decide what it wants to do,” San Diego water official Larry Michaels said. “Everyone except MWD is telling Imperial it can sell its water.”

Michaels said that a consortium of coastal water agencies would readily buy water from Imperial if offered, especially since the cost, even at $200 an acre-foot or more, would be far cheaper than completing the State Water Project. Michaels said further that the interested water agencies could form a majority of the MWD board of directors.

If a majority of the board decided it wanted to buy water from Imperial, that would be the MWD position no matter what the staff position, Michaels said.

“In other words, the staff could very well become isolated politically on the issue,” Michaels added.

Michaels likes to add up ballpark figures of 400,000 acre-feet from Imperial and 500,000 acre-feet from Galloway to show that the approximately 1 million acre-foot shortfall in Southern California possible by the late 1990s can be met without having to complete the State Water Project.

Boronkay of the MWD considers such talk ridiculous. Without additional water from Northern California, the south cannot meet its needs totally, he says. The primary concern of all Southern California water agencies should center on obtaining state legislative approval to complete the state project, he emphasizes.

Original plans for completing the project with the so-called Peripheral Canal through the Sacramento Delta were shelved after voters defeated the plan in 1982. Approval of scaled-down alternatives has been bogged down in the Legislature for two years.

But the idea of selling water, instead of letting it flow for free to Southern California, has even struck responsive chords in the north, where water shipments south have often been viewed as rapacious, no matter the form.

A consortium of four counties stretching from Lake Tahoe to the Sacramento Delta has informally approached the San Diego water authority as to whether it would consider buying water from a proposed dam and reservoir project on the Consumnes River. That river runs west from the Sierras into the Delta.

The counties--El Dorado, Amador, Sacramento and San Joaquin--want the $470-million project in order to store water that would eventually be needed in their areas as urbanization occurs. The proposal falls into the category of water projects long planned but still unbuilt while the state and federal governments tackled more financially feasible proposals that offered cheaper water. Much of the power and water supplies would be unneeded in the area for 30 to 40 years.

In essence, the willingness of San Diego or other water-short areas to purchase the water would solve the short-term problems of financing the project, similar to the concept espoused by Colorado’s Galloway Group.

“There’d be a lot of excess water to sell over the next 40 years, in the range of 270,000 acre-feet a year at about $250 to $300 an acre-foot,” Joe Flynn, chairman of the El Dorado County Board of Supervisors, said.

Water from the Consumnes at present runs into the Sacramento Delta, where some of it eventually finds its way into the State Water Project’s California Aqueduct to be sent south.

“It’s true that we’re getting that water for free now,” Robert Miller, a planning engineer for the state Department of Water Resources, said. That point was also made in a letter to Flynn from MWD’s Boronkay. But Miller added, “As with a lot of water we get free now, if someone builds a project, the water will no longer be available to us.”

The state water department has looked at participation in the Consumnes project but does not believe it is cost-effective at present, especially since the state project’s many agricultural water users could not afford the $250 or more fee per acre-foot. But urban areas can afford such prices, Miller said.

Flynn said that the counties would like to use the California Aqueduct to ship the water to Southern California--should a buyer be found and environmental and legal details be worked out to permit construction.

“It seems to me that we have an awful lot better chance of getting this thing through if we make a deal with Orange or San Diego areas directly and not have to go through the state,” Flynn said. “People in San Diego would be willing to pay the cost if that’s the only way they’re going to get water.”

Miller of the state water department said: “This has never been attempted before and there are no pat answers. We (as the state) don’t have a vested interest in running all the water, so I don’t think we have institutional types of problems with it, as long as the water is truly surplus to the counties’ needs (under state law).

“But someone might try to challenge the idea and then it would be tested in court.”

Michaels, the San Diego authority general manager, said his agency was willing to talk further with the five counties.

“If they can sell it, we would be interested in buying it,” he said.