San Diego County Plan to Buy Water Stirs MWD Waves

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

But that’s of little comfort to water officials here who import from outside the county 90% of the water used to supply the region’s proliferating housing tracts, high-technology industrial parks and spreading avocado groves.

With a burgeoning population of about 1.9 million in San Diego County, water planners are looking ahead to the 1990s, when they fear their area will suffer the most from long-term water shortages predicted for Southern California.

An Intricate Network

The course they have embarked on to solve the shortage undercuts the intricate network of laws that has governed the allocation of water in the Southwest for generations and has brought them into sharp conflict with the Metropolitan Water District.

The powerful Los Angeles-based district contends that San Diego’s plans threaten completion of the controversial State Water Project, long the key element in the state’s water distribution system.

In the last several months, the San Diego County Water Authority has signaled its desire to buy water on the open market at negotiated prices.

In one form or another, San Diego officials have looked at buying water from a private company in Colorado, from farmers in the Imperial Valley and from counties in Northern California’s Sierra range.

That concept is anathema to the region’s other water agencies, long used to transactions carried out under government regulations controlling both allocation and price.

Traditional Argument

Agencies should not consider paying a price for water that includes a profit for the seller, according to the argument of the MWD and other traditionalists. 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 State Water Project.

But San Diego and its few supporters elsewhere say the future lies in treating water as a commodity, to be bought and sold like oil. They doubt whether resolution of the north-south feud over water will be solved in time to meet the shortages expected as a result of continued urban growth and diversion of Colorado River water to other states.

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,” said Larry Michaels, general manager of San Diego County Water Authority. “The willingness to pay for water opens up a whole new way to divide water.”

The move that has roiled waters most in recent months is San Diego’s receptiveness to a proposal from a private company in Colorado to buy between 300,000 and 500,000 acre-feet of water annually taken from a tributary of the Colorado River for a guaranteed 40-year period. (One acre-foot of water is 325,851 gallons and is approximately the amount of water used annually by an average family of four people. The MWD provides between 3 million and 4 million acre-feet of water a year to its member agencies.)

Yampa River Project

The company, the Galloway Group of Meeker, Colo., would develop a $200-million dam and reservoir on the Yampa River in northwestern Colorado, using water rights it has in the area. Beginning in 1990, it would move the water downstream 1,500 miles to sell to San Diego at 90% of the contemporary price of MWD water, estimated at $300 an acre-foot.

Water sales would end 40 years later, when industrial development in northwestern Colorado would be sufficient to require use of 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,” said John Musick, the maverick Colorado water attorney who represents Galloway.

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 basin 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.

North-South Division

Those statutes divide the water equally between the northern basin states--Utah, Wyoming, Colorado and New Mexico--and the lower basin states--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 implemented 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 would set up California once again as a “water bandit” intent on taking an unfair share of the Colorado River.

For example, 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. But attorney 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 ripping off the people of the West by stealing their water.”

The torrent of criticism aimed at San Diego officials caused them to back away from plans to initial a contract with Galloway later this month. But that has not fazed Galloway. Its president, Doyle Berry, told The Times that he understands San Diego’s fear of alienating MWD and that Galloway will seek a court test of its concept in Arizona beginning early this year.

If ultimately successful, San Diego still will get its water, he said. Meanwhile, 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.

Imperial’s Lost Water

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 through other wasteful practices.

The district is under an order from the State Water Resources Control Board to conserve the excess water, which could then be used by coastal areas in 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, MWD staff last year entered into negotiations with Imperial over how MWD could pay for the improvements and receive the water.

But MWD has insisted that it 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 MWD under the same Law of the River statutes involved in the Galloway proposal.

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

Favorable Response

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 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.

Michaels 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,” he 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 the costs of completing the State Water Project.

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 water shortfall of about 1 million acre-feet in Southern California possible by the late 1990s can be met without having to complete the State Water Project.

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

Voters Defeated Plan

Original plans for completing the project with the Peripheral Canal through the Sacramento Delta were shelved after defeat of the plan by state voters in 1982. Scaled-down alternatives have bogged down in the Legislature the last two years.

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

A consortium of El Dorado, Amador, Sacramento and San Joaquin counties, which stretch from Lake Tahoe to the Sacramento Delta, has informally approached the San Diego County Water Authority and asked whether it would consider buying water from a proposed $470-million dam and reservoir project on the Consumnes River. That river runs west from the Sierra into the delta.

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

‘Lot of Excess Water’

“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,” said Joe Flynn, chairman of the El Dorado County Board of Supervisors. Water from the Consumnes at present runs into the Sacramento Delta, where some of it eventually finds its way into the state project’s California Aqueduct for transmission south.

The state Department of Water Resources has looked at participation in the 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 cost per acre-foot.

But urban areas could afford such prices, according to Robert Miller, a planning engineer for the department. “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,” said El Dorado County Supervisor Flynn. “People in San Diego would be willing to pay the cost if that’s the only way they’re going to get water.”