Interior Dept. Aims to Rechannel Water Policy in West : Resources: U.S. plunges into political rapids with new plan for states to share Colorado River bounty.

In the arid West, where local authorities used to joke that “whiskey is for drinking, water for fighting,” the competition for Colorado River water is getting a bit edgy again.

At the direction of Interior Secretary Bruce Babbitt, the Bureau of Reclamation is trying to reapportion the liquid bounty among the states of California, Arizona and Nevada, which now share about 7.5 million acre-feet, or 2.44 trillion gallons, of river water annually.

As it recalculates how the three “lower basin” states should share their water, the federal government will seek to shift some of the precious resource from powerful agricultural interests to the West’s burgeoning city populations. In addition, it wants to leave more water in the Colorado to sustain fisheries and other networks of living things that rely on the river’s natural flow for survival.

The stakes are enormous. On the table is the Colorado River Compact, a 72-year-old accord negotiated at a time when California agricultural interests ruled the West, when growing metropolises such as Los Angeles, Las Vegas and Phoenix had considerably less clout than today.

In an effort to begin building a consensus behind the potential changes, Bureau of Reclamation chief Dan Beard literally plunged into the policy rapids. In August, he invited a group of Western water users to join him on a five-day rafting trip so they could see for themselves some of the stresses and strains placed upon the river.

Beard repeatedly whooped with delight as the raft plowed through the churning brown rapids of the Colorado. But the river trek, which was interspersed with sober discussions of water rights and resource demands, is likely to appear tame compared to the political whitewater that Beard and Babbitt are attempting to navigate.

Downstream from here, the 34.5 million residents of California, Nevada and Arizona await the refreshment that these waters bring. And thousands of newcomers are arriving daily in these states, clamoring for more. Their sheer numbers are creating dangerous fissures in the legal and political foundations of the current allocation scheme.

The Colorado River Compact and a series of subsequent court rulings are known collectively as the “law of the river.” And that body of law, by design, favors California in general and irrigated farming operations in particular, by granting them the biggest shares and the first rights to the waters of a river so important to the West that it has been called the American Nile.

Nevada, which had only 70,407 residents and virtually no agriculture in 1920, fares poorly under the compact. While California and Arizona enjoy annual allocations of 4.4 million and 2.8 million acre-feet, respectively, Nevada is entitled to only 300,000 acre-feet.

Nevada is demanding a bigger share, and the federal government is sympathetic. The Las Vegas area grew by 62% from 1980 to 1990. It ranks as the fastest-growing urban area in the nation, with nearly 1,000 newcomers arriving weekly. The Clark County area is projected to exhaust its river entitlement before the year 2010, according to Patricia Mulroy, general manager of Southern Nevada’s Water Authority. Without a new supply, the county will be forced to stop its growth by the year 2000, she said.

Because the law of the river favors farms over cities and California over its lower-basin neighbors, it is seen by some critics--and by Babbitt and Beard--as an outdated arrangement that does not reflect the needs of the new West. California farmers, for example, use 3.85 million acre-feet of the state’s yearly entitlement to irrigate their crops, leaving only 550,000 acre-feet for the state’s other 30 million residents.

The Interior Department will stop short of trying to renegotiate the states’ actual legal shares to the Colorado. Instead, they hope to persuade the states to adopt new procedures enabling them to trade and store water among themselves more freely.

Accomplishing even that would be a feat on the order of Moses parting the waters. Beard and Babbitt, already viewed with some distrust throughout the West, must find common ground among state officials and water users who jealously guard their entitlements and are suspicious of “water grabs” by rivals. Farmers, who typically have held their entitlements longer than about anyone else, already are claiming that any move to reduce their share would constitute an uncompensated and illegal “taking” of private property by the federal government.

In the past, the Bureau of Reclamation probably would have taken an easier route. Officials would have answered the clamor for more water by building more dams, reservoirs and irrigation projects.

But those days are over, Beard said. Tight budgets, environmental concerns and a lack of cost-effective building sites on the Colorado have brought such projects to a virtual standstill. The bureau--once regarded primarily as the nation’s premier dam-building organization--is recasting itself as a manager of existing water resources.

In its new role, the bureau is expected to unveil rules this fall to let California, Arizona and Nevada sell any unused Colorado River water to each other. Only Arizona has water to spare; its surplus of 700,000 acre-feet would be thirstily snapped up by its neighbors.

Such marketing schemes have met with stout resistance. Arizona is reluctant to go along because it fears it might lose its rights to any water not retained for its own use. California is opposed because it gets nearly 1 million acre-feet of water each year at no cost. It can do so because it is, before Mexico, the last user of Colorado River water, and the existing law of the river contains no explicit sanction against diversion of any water allocated to, but not taken by, upstream states. If the states agree to a scheme under which Arizona could market its surplus water, California would have to pay for water it now gets free.

Nevada would like to renegotiate a larger entitlement and, if possible, avoid paying for any additional water it receives. But it is willing and able to pay more if necessary.

The Interior Department proposal gives the federal government an expanded role in defining the uses to which Colorado River water can be put. It would broaden Washington’s traditional role in setting conditions, such as the establishment of conservation programs. At a time when the federal government has been accused of waging a “war against the West,” any such expansion is likely to be controversial.

The Interior proposal could overturn a fundamental precedent that has been observed since the compact took effect: Farmers must be allowed their ironclad grip on river water because they established their rights long before cities came into the picture. Under current law, for example, Las Vegas cannot buy Colorado River water from a farmer in the Imperial Valley, even if both sides are willing to make a deal. The Interior proposal creates a mechanism for such arrangements.

Under the law of the river, marginally profitable crops such as hay and alfalfa have been drenched with Colorado River water in the desert-like environment of Arizona while urban dwellers in Southern California have been subjected to strict water rationing.

“Clearly, the driving force behind these negotiations is urbanized southern Nevada and the feeling of leaders there that they’re close to the edge,” Beard said. More generally, he added: “The big change that’s going to come is meeting the needs of Western urban communities. When millions of people in Southern California need water, you just can’t say, ‘Sorry, we need this water to grow alfalfa or hay.’ That’s just not going to happen.”

For California--and for the 16 million people in the Southern California Metropolitan Water District--the stakes in the coming negotiations could not be higher. Slightly more than a quarter of Southern California’s water--about 1.2 million acre-feet annually--comes from the Colorado.

Colorado River water is the Southland’s cheapest source of water, costing less than one-tenth of the next-cheapest source. MWD officials have said they want to increase their supply of river water by 350,000 acre-feet by the year 2005. A renegotiation of the compact’s terms could offer the best opportunity.

Despite the traditional interstate rivalries, metropolitan areas, such as Southern California and Nevada’s Clark County, along with other states have reached across borders to join forces. They have created an organization called the Western Urban Water Coalition to lobby for changes in Colorado River water policy.

In the long run, the Interior Department’s efforts to increase cooperation among lower-basin states will be stopgap. The battle royal over the Colorado’s water lies somewhere beyond the next river bend.

Arizona has water to sell today, but it expects to need its full entitlement by 2040. In the coming decade, the populous lower-basin states are expected to open negotiations with the upper-basin states of Colorado, Wyoming, New Mexico and Utah in hopes of procuring some portion of their yearly entitlements of 7.5 million acre-feet.

That will expose new rifts among the seven states served by the river, and it is certain to cause more resentment toward the federal government. Unless the upper-basin states can persuade Washington to build dams and irrigation projects, they will be unable to use all of the river water they were promised in the 1922 accord.