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Buy Water as Western Shortages Continue, Attorneys Say (Correct)

Aug. 17, 2021, 10:00 AMUpdated: Aug. 18, 2021, 4:36 PM

Western water scarcity is prompting big law firms in the Colorado River Basin to advise their clients to pursue conservation measures — but also to buy more water.

A projected shortage and first-ever water cuts announced Monday by the Interior Department’s Bureau of Reclamation means that cities, industry, and commercial businesses need to prepare for the likelihood the current 21-year megadrought in the region represents a “new normal.”

“Large industrial and municipal water users have very limited ability to reduce their water needs,” said William Caile of Holland & Hart in Denver. “And they can’t suffer an interruption to their water supply. If you’re a large mine, you can’t just stop your operations because you’re out of water.”

Caile said the clients he works with have been looking at water scarcity for a while, and have adopted efficiency and conservation measures.

“Everybody has been working on that already,” he said. But large users also need to have “a second and a third-level water supply plan, something to fall back on when your primary runs dry.”

It’s easier said than done, he said, given that water is at a premium in the region right now. The value of water is going to increase in future years as more reductions in water allotments follow Monday’s cuts.

State Impacts

In 2022, Arizona will take the biggest hit from the “Tier 1" reductions, but water shortages will soon affect the other six states in the basin — California, Colorado, Nevada, New Mexico, Utah and Wyoming.

The Tier 1 cuts mean “the hydrology that was planned for years ago—what we’d hoped we’d never see, is here,” said Camille Touton, deputy commissioner of the U.S. Bureau of Reclamation. “And the hydrology today might not be the worst we are likely to see.”

Officials said the situation is not yet a crisis, but described it as serious. Many observers see conservation as the only way out. All agree that scarcity is the reality, and the region must learn to live with less water in the future.

“Going forward, it’s essential for all water stakeholders and decision-makers to take an honest look at the basin’s hydrology and accelerate coming together around solutions, from boosting water efficiency and reuse to getting demand management pilots and projects in place,” said Bart Miller, director of the Healthy Rivers Program at the environmental group Western Resource Advocates in Boulder.

Innovative water conservation programs—including management of the national forests, the most important guardian of the upper basin’s snowpack—are included in the $8.3 billion in funding for Western water projects in the Senate’s infrastructure package, he said.

Required Cuts

The Tier 1 cutbacks announced by the bureau are required by the 2007 interim guidelines for the river and by drought contingency plans agreed to in 2019 by the seven Colorado River Basin states — Arizona, California and Nevada in the lower part of the basin and Colorado, New Mexico, Utah and Wyoming in its upper reaches.

If the drought persists, the agreements provide for deeper Tier 2 and Tier 3 cuts, which could be announced as soon as 2022 and 2023. Climate change and an ever-growing population in the cities of the West—a region that stretches from Denver to Los Angeles—means the current supply-and-demand imbalance in the basin is likely permanent.

Some observers say litigation over cuts could begin once the state starts cutting off water to farms. Others said litigation won’t likely begin until water users begin to feel they have no other options.

“The strategies have less to do with litigation and more to do with companies buttressing their water portfolio with additional supplies, having a way to access additional water,” Caile said.

Energy Threatened

Agreements between the states on how to manage cuts have reduced risks, but haven’t eliminated the potential for continued decline of Lake Mead and Lake Powell, the two beleaguered storage pools for the states of the basin.

If Lake Mead and Lake Powell fall below “power pool”—a depth below which their hydroelectric plants will fail to operate—it will spur rate increases and possibly endanger energy reliability for nearly 800,000 customers.

Both lakes are lower than they were since they started filling. Powell stands at 3,551 feet, and its hydroelectric plant in Glen Canyon Dam can’t generate electricity if the lake falls below 3,491. The situation threatens the 15 dams lying on the river’s mainstem and hundreds more dams and electricity generating stations on its tributaries.

California has to forgo water when Lake Mead—the primary reservoir for the lower basin states—falls below 1,045 feet in elevation. At present it’s at 1,067 feet, having fallen 16 feet in the last year.

Nevada and Mexico will get 7% and 5% less water in 2022, respectively, under the drought agreements. Colorado River water allotments are determined by numerous agreements, compacts, state and federal laws, court rulings and decrees, contracts and regulatory guidelines known collectively as “the Law of the River.”

The river, its reservoirs and its tributaries can’t afford any significant new diversions, most notably the proposed Lake Powell Pipeline, which would suck 86,000 acre-feet of water annually out of the already overstressed Colorado River to meet inflated future demands in Washington County in southwest Utah, Miller said.

The river faces “unprecedented and accelerating challenges,” said Tanya Trujillo, assistant Interior Department secretary for water and science.

“The only way to address these challenges and climate change is to utilize the best available science and to work cooperatively across the landscapes and communities that rely on the Colorado River,” Trujillo said.

(Corrects figure in 11th paragraph.)

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bloomberglaw.com

To contact the editors responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com; Meghashyam Mali at mmali@bloombergindustry.com

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