10 leaves ; 28 cmhttps://scholar.law.colorado.edu/books_reports_studies/1109/thumbnail.jp

University of Colorado Boulder. Natural Resources Law Center

Wahl, Richard W.

English

bepress Legal Repository

New Roles for the Bureau of Reclamation

Colorado Law

University of Colorado Law School Colorado Law Scholarly Commons Books, Reports, and Studies Getches-Wilkinson Center for Natural Resources, Energy, and the Environment 1989 New Roles for the Bureau of Reclamation Richard W. Wahl University of Colorado Boulder. Natural Resources Law Center Follow this and additional works at: https://scholar.law.colorado.edu/books_reports_studies  Part of the Water Resource Management Commons Citation Information Richard W. Wahl, New Roles for the Bureau of Reclamation (Natural Res. Law Ctr., Univ. of Colo. Sch. of Law 1989).     RICHARD W. WAHL, NEW ROLES FOR THE BUREAU OF RECLAMATION (Natural Res. Law Ctr., Univ. of Colo. Sch. of Law 1989).  Reproduced with permission of the Getches-Wilkinson Center for Natural Resources, Energy, and the Environment (formerly the Natural Resources Law Center) at the University of Colorado Law School.  NEW ROLES FOR THE BUREAU OF RECLAMATIONRichard W. WahlOffice of Policy AnalysisU.S. Department of InteriorNatural Resources Law CenterUniversity of Colorado School of LawNRLC Occasional Paper1989NEW ROLES FOR THE BUREAU OF RECLAMATIONRichard W. Wahl*In 1987 a rather remarkable thing happened: the Bureau ofReclamation, the federal agency charged with constructing waterfacilities and multi-purpose dams in the western states, issued ashort report indicating that its mission should change. TheAssessment '87 report indicated thatThe Bureau's primary role as the developer of largefederally financed agricultural projects is drawing to aclose... The Bureau of Reclamation must change from anagency based on federally supported construction to onebased on resource management.The report goes on to discuss some ways in which the Bureau couldfacilitate more efficient resource management, such as improvedsystems analysis of multi-reservoir systems to enhance theirdependable yield, nonfederal operation of Bureau facilities,transfer of title of facilities to water districts, developing awater marketing policy to allow contractors to sublease water ata profit, and increased roles in the areas of groundwatermanagement and .water quality.*Dr. Wahl has been a member of the economics staff for 10years in the Office of Policy Analysis, U.S. Dept. of the Interior.He was a Visiting Fellow at the Natural Resources Law Center duringfall semester, 1988, where he worked on the Center's project onmarket transfers of water. The views in this article are those ofthe author and do not necessarily reflect the views of theDepartment of the Interior. This article is drawn, in part, fromthe author's book Markets for Federal Water: Subsidies, PropertyRights, and the Bureau of Reclamation, to be published this yearby Resources for the Future.How seriously should one take these claims? Some critics ofthe Bureau feel that the report was largely a public relationscampaign and that the agency would proceed with business asusual. Indeed, although Assessment '87 indicates that "decades-old legal authorities and policies based on the Bureau'straditional role in the West must give way to new laws andpolicies which encourage efficient resource management," nopackage of general amendments to Reclamation legislation has beenforthcoming and, therefore, the financial and regulatoryframework of the program remains essentially unaltered. Too, itwould be difficult to expect the personnel making up the agency,with specific training in dam design and construction, to easilyaccommodate a different role.However, in some ways the Bureau has already seen somechanges since the issuing of Assessment '87. It moved most ofits Washington, D.C., headquarters staff to join the Engineeringand Research staff in Denver. Although not guaranteeing anychange in direction, a move of such major proportions doessomething to shake up an agency. On a more substantive policynote, on December 16, 1988, the Department of the Interior issueda set of principles designed to guide Bureau of Reclamationreview and approval of requests for voluntary transfers of waterinvolving Bureau of Reclamation facilities. In brief, thispolicy says that the. Bureau of Reclamation will facilitatetransfer requests that are brought to the agency, so long as thetransfers comply with applicable state and federal law and do notinjure third-parties (parties other than the buyer and seller ofthe water). Transfers may be short-term or long-term leases,permanent sales, or dry-year option agreements. The policy alsomakes clear that, beyond the water user repayment required byfederal contracts and law, the federal government does not intendto burden such transfers with additional federal charges—thetransferring parties are free to work out the financial terms ofthe transaction.This water transfer policy may be the first substantivepolicy redirection of the new Bureau. However, this policy canalso be seen as resulting from a gradual evolutionary process,rather than a sudden or significant departure from past agencypractice.Evolution of Reclamation LawThe Bureau of Reclamation was established by the ReclamationAct of 1902 to provide irrigation water supplies on landholdingsof 160 acres or less. The social goals of the program were toassist in settling the arid west with small family farms.However, almost immediately, the water supplies, were seen asvaluable for other uses. In 1906 the Town Sites Act authorizedthe Secretary to contract for the sale of water to towns orcities in the immediate vicinity of irrigation projects, and tolease surplus hydropower (not needed for irrigation pumping) formunicipal and other uses, provided that the leases not "impairthe efficiency of the irrigation project." An even more generalauthority to contract for water from irrigation projects forpurposes other than irrigation was provided by the MiscellaneousPurposes Act of 1920. For a somewhat different purpose, theWarren Act of 1911 allowed the Secretary of the Interior tocontract out excess project capacity to nonproject individuals,districts, and associations for the purpose of storing ortransporting nonproject water. So, even in the early years ofthe program, reallocating project water and facilities fromirrigation uses to other newly developing uses was seen asimportant for western development. The current attempt toclarify the rules under which water that is already undercontract can be transferred to new uses can be seen as furtheringthe same goal.Past Water Transfer ActivityThe Bureau has been a party to transfers of water for manyyears. Annual rentals of water from the federal reservoirs onthe Upper Snake River date back to the 1930s and are explicitlyrecognized in Bureau of Reclamation contracts with water users.In 1972, the Utah Power and Light Company obtained 6,000 acre-feet of water from two irrigation companies in the federal EmeryCounty project for power plant cooling. During the 1976-77drought in California, the Bureau of Reclamation operated a waterbank in which some 45,000 acre feet of water changed hands fortotal payments of $2.2 million. The City of Casper, Wyoming, ispaying the nearby Casper-Alcova Irrigation District for canallining on portions of the district's fifty-nine-mile canal and190-mile lateral system in order to reduce seepage. The exchangeis intended to provide the city with 7,000 acre-feet of water.One of the most notable examples of a functioning water market isin the Northern Colorado Water Conservancy District around theFt. Collins area, where shares of Colorado Big Thompson Projectwater have, for years, been sold at market value.Perhaps the most dramatic recent examples of water transfersare the agreements reached between the Imperial IrrigationDistrict and the Metropolitan Water District of SouthernCalifornia. Imperial diverts about 3 million acre feet annuallyof Colorado River water, which represents nearly 25% of the totaldiversions from the river. In the fall of 1988, Metropolitan andImperial reached an agreement under which Metropolitan will payImperial to fund conservation measures within the irrigationdistrict that would salvage 100,000 acre-feet of water annuallyfor diversion to Metropolitan's service area. Metropolitan willpay Imperial $92 million for construction of the conservationfacilities, $3.1 million annually for operation and maintenance,and $23 million in five annual installments for indirect costs.The same two entities reached a separate agreement under whichMetropolitan can fund lining of the earthen All-American Canal (afederally constructed facility which transports water from theColorado River to the irrigation district) in exchange for theconserved water. Both state and federal studies indicate thatthere is potential for at least another 100,000 acre-feet ofconservation within Imperial—which may provide the basis forfuture agreements between the two entities.The Larger ContextBecause of the extensive facilities of the Bureau in theseventeen Western states, similar transfers are likely to beimportant to the future development of these states. The Bureausupplies about 27 million acre-feet of water for irrigationannually, about 3 million acre-feet for municipal and industrialuse, and about 1 million acre-feet for other uses. Irrigationwater is delivered to about 10 million acres of farmland.Although this represents, on average, only about 20% of theirrigated acreage in these states, the Bureau delivers water tomore than 40% of the irrigated acreage in some states. However,these figures may under-represent the potential importance of theBureau of Reclamation in water transfers since the Bureaucontrols major storage and conveyance facilities in severalstates (such as the Central Valley Project in California and theCentral Arizona Project).The impetus for such voluntary transfers is not surprisingfor another reason. Contracts for project water deliveriesconfer a property interest to the Bureau's water contractors.Given the terms of the Reclamation subsidy for irrigation, theserights are quite valuable. Under Reclamation law, repayment forconstruction costs is interest-free over 40-years. In addition,since 1939 there has been a statutory provision that repayment bywater districts can be capped at their estimated "ability topay," based on an analysis of expected farm income. The resultof these two provisions is that irrigation water users areresponsible, on average, for paying less than 15% of irrigationconstruction costs. The benefits of this subsidy enhancedagricultural income or became incorporated into the higher valueof irrigated land when parcels of project land were resold.Therefore, the contractual rights to water deliveries areproperty interests of the current landowner, and it is notsurprising to see water-user support for the transferability ofthese interests.Potential for Future Water Transfer ActivityWhat type of future water transfers are we likely to see?Of course, the conditions which create the economic demand fortransfers are going to vary from one situation to another andwould not be possible to predict. In fact, that is the. point offacilitating transfers — project planners cannot accuratelypredict the patterns of economic development and water demands100 years into the future (the typical planning horizon forBureau projects). But, based on past experience and transferscurrently under consideration, one can expect transfers to beuseful in the following general situations. Where there isincreasing urban growth, purchases of water from agriculturaluses are likely to be an inexpensive source of supply, as ispayment for irrigation conservation measures. Agriculturalproducers with high value or perennial crops will be willing topurchase water from other agricultural users, especially duringdrought periods.One could also speculate on some potential future situationswhere transfers might prove useful, even though they have notbeen employed to date. In areas where agricultural drainage isfound to cause problems of contamination (such as the seleniumpoisoning in the Kesterson National Wildlife Refuge), sale of theirrigation water and removing from production the irrigationlands with severe drainage problems will be one way to achieve abetter use of the water and land resources, as well as providingcompensation for farmers. Meeting the water demands and theinternational treaty requirements with Mexico on the ColoradoRiver will place increasing demands on water use in that basin.Water transfers based on already established compact allocationsand water contracts may eventually prove to be one way ofassuring the most efficient use of water in this arid region,while still protecting previously established property interests.Other Changes in the BureauBesides issuing a policy on water transfers, what otheractions have been taken by the Bureau that would indicate theagency's seriousness about the various initiatives proposed inAssessment '87? As noted, the report places emphasis ontransferring greater control over and responsibility foroperation and maintenance of existing projects by water users.There are some recent notable examples: districts along theFriant-Kern Canal, the Madera Canal, and the Tehama-Colusa Canalin the Central Valley Project in California have taken overresponsibility for operation and maintenance of these facilities.The districts were motivated by an interest in greater controlover project works. In addition, they believe they can operatethe facilities at lower cost than the Bureau of Reclamation.These actions were initiated before the issuing of Assessment '87and extend the Bureau's long-standing policy of transferringoperation and maintenance responsibilities to water users.The additional step of transfer of title to facilities is anew initiative. Already, some California districts haveexpressed interest in prepaying their remaining repaymentobligation in order to take title to project facilities. Mostsuch cases require case-by-case approval by Congress, andlegislation for the California districts is pending. In asomewhat different vein, the Bureau took steps in 1988 to sellsome of its financial assets to water users—the outstandingloans under its various loan programs. Such a program could belogically extended to the outstanding repayment obligations forproject construction or could be coupled with transfer of titleto facilities.ConclusionsGiven the disruption accompanying the Bureau's move toDenver and the accompanying staff reorganization, it may takesome time for other initiatives to emerge from the Bureau thatwill move it in the new directions set out in Assessment '87. Asis the case with the actions taken to date, these other changesare likely to be ones not so much initiated by the agency as onesarising from the demands of the Bureau's client water users, aswell as the larger forces leading to changes in the way thewestern states manage their water resources.10

https://scholar.law.colorado.edu/cgi/viewcontent.cgi?article=1109&context=books_reports_studies

New Roles for the Bureau of Reclamation

Abstract

Similar works

Full text

Available Versions

bepress Legal Repository

Colorado Law