As water shortages loom, Wyo seeks water-bank bill

Worried by growing demands and shrinking water supplies in the Colorado River Basin, Wyoming lawmakers are seeking legislation to authorize water banking in Wyoming and declare it a “beneficial use.”

The proposed changes to water law could allow Wyoming to “bank” Green River water for the purpose of meeting obligations to downstream states, and in doing so keep the state’s water users from running dry in the event of a shortage.   

Lawmakers on two legislative committees were briefed recently of looming disruption in the Colorado River Basin due to drought and growing demand. The 1922 Colorado River Compact that determines how the basin’s water is divided among seven western states and Mexico is based on overly rosy assumptions of flows. With Lake Powell at 43 percent of capacity and falling, water managers are nervous.

They fear cascading events that could limit water use, curtail power generation, reduce critical electricity revenue and jeopardize endangered species in the region where 40 million people depend on Colorado River Basin water. Flows into Lake Powell in 2018 are expected to be 51 percent of normal and a “structural deficit” is causing Lake Mead to fall at a rate of about 12 feet a year.

That’s the message Wyoming State Engineer Pat Tyrrell gave the committees June 18 in Pinedale. “If critical elevations are breached, the system faces threats to [its] ability to control [its] own destiny – Compact compliance, irrigation, drinking water supply, power production, environmental resource preservation and overall sustainability,” his presentation said.

“Five years away or less we could have considerable problems at Lake Powell,” Tyrrell told committee members and the Wyoming Water Development Commission. Wyoming could see water diversions from the Green River curtailed as a result.

Lawmakers voted, without dissent, to draft a bill that would make water banking in Wyoming a beneficial use for contract obligations and drought contingency. The Agriculture, State and Public Lands and Water Resources Committee wants to consider a draft at its next meeting in September.

An over-allocated river puts people at risk

Sen. Larry Hicks, co-chairman of the joint Agriculture Committee, built a case for legislation and water storage over the course of an orchestrated day-long session. Experts told members of Hicks’ Ag committee and members of the Select Water Committee about Wyoming’s obligations to let some Green River water run downstream and opportunities to preserve and use Wyoming’s allocated share of flows.

The 1922 Colorado River Compact was forged “to provide for the equitable division and apportionment” of the basin’s water, according to the Compact. Wyoming has both entitlements and obligations under the framework.

The Compact guarantees 75 million acre feet of water each decade will flow from four upper-basin states — Wyoming, Colorado, Utah and New Mexico — to the lower-basin states — California, Arizona and Nevada — at  Lees Ferry just below Lake Powell’s Glen Canyon Dam in Arizona. Wyoming is partly responsible for that 75 million acre feet obligation and can only claim 14 percent of the remainder — provided the water is going to a “beneficial use.”

But Compact signers “were under the impression there was a lot more water in the system,” said Eric Kuhn, former general manager of the west-slope Colorado River Water Conservation District. Now, “the system is really fully used, and we have this almost 20-year drought,” he said.

The upper basin share, for example, was initially expected to be 7.5 million acre feet annually — or a little more than a million acre feet for Wyoming. But under today’s hydrology, upper-basin states get about 6 million acre feet annually, state engineer Tyrrell said. That brings Wyoming’s share to some 834,400 acre feet. It is currently using some 598,000 acre feet annually.

Just as Wyoming has yet to use it’s full entitlement, so too has the lower-basin never demanded the upper basin curtail use to meet the obligation at Lees Ferry. But the calculus is changing and the slack is being steadily drawn from the system.

As drought and demands play out, Wyoming water developers see their future challenged in many ways. “We have hedge funds that are buying land in Colorado to tie up the water,” Hicks said. “We’re not an island in Wyoming. We need to get to the table and start playing.”

If the ten year running average of flows at Lees Ferry drops below the guaranteed minimums regulators could require upper-basin states to send water downstream. If the upstream states don’t have it to send, they’ll have to curtail their use. In Wyoming, that would affect irrigators, municipalities and industrial users from Cora to Kemmerer and beyond.

Today Wyoming can’t just store water for a non-rainy day and can’t set it aside in case of a downstream call. Upper basin states can’t withhold water they can’t “reasonably put to use,” engineer Tyrrell said. And under current law, water banking doesn’t qualify.

“If we’re not using it,” Tyrrell said, “it becomes system water,” available to downstream users with no credit given toward Wyoming’s balance sheet. “A state is not allowed to withhold water it doesn’t have the ability to use,” Harry LaBonde, director of the Wyoming Water Development Office, said in an interview.

Even if ranchers voluntarily give up part of a season of irrigation — as some have done in a pilot conservation program — Wyoming can’t get credit for those savings. There is no way to “shepherd” those flows to Lake Powell to be made available to help meet the upper states’ obligations.

“There is no mechanism currently that says conserved water, we’re going to protect all the way to Lake Powell.” LaBonde said. “That system does not exist.”

Wyoming would like such a system. Conserved Wyoming water, “it ought to have a bucking bronco on it,” Tyrrell said.

Not all water banks are created equal

A water bank bill could make water that’s conserved for contract security and drought mitigation a beneficial use. LaBonde cautioned against speculating what a bill might contain. But he outlined what could happen to conserved water.

“It could be stored in Fontenelle [Reservoir], under our accounts we have,” he said in an interview. “Wyoming would be reserving that water for whatever purpose would come forward.

“Then the state engineer could say we have a new permit we’re going to recognize,” he said. “That [water] would be protected through the system.”

But engineer Tyrrell’s authority ends at the state line. Conserved water “would need to be protected by Colorado, then Utah,” LaBonde said. “Utah would have to recognize that conserved use.”

To shepherd conserved water to Lake Powell with Wyoming’s brand on it would require action by the Upper Colorado River Commission, the four-state water regulating body, and legislation in Colorado and Utah, he said.

While lawmakers in Pinedale were agreed, in theory, upon the import of water banking, the devil remains in the details. The definitions and rules of water banking are still to be determined. Perhaps the only thing that’s certain is that they’ll be the subject of great attention and debate.  

Oregon State University graduate student Sarah Brennan researched water banking legislation in 19 Western states for a 2018 master of science thesis. She found the most references —139 — in Arizona. Her research showed no Wyoming bills or laws from 2001 to 2016 that contained water banking terms.

One method of water banking has been described as “a voluntary, market-based tool that could facilitate water transactions between willing sellers and buyers.” Jon Stavney, former president of the west-slope Colorado River Water Conservation District, used that description in an essay published on the district’s website. “Water right owners, who are willing to free up some of their water in a particularly dry year or years, would temporarily lease it to those who simply can’t afford to be without water.

“It may … enable agricultural water right owners to realize the value of their senior rights without outright selling those rights,” Stavney wrote. Such banking might be better than the “buy-and-dry” alternative in which water-starved municipalities buy an entire ranch and let it go fallow just to get water rights. Water banking could allow an irrigator to sell only a portion of his or her allocation, keeping an agricultural operation intact.

“Just like financial institutions, water banks can serve as a repository for water rights not needed at present,” authors of the paper “An enhanced water bank for Colorado” wrote in 2016. “Water users in search of additional water can take out a loan of the necessary rights in return for payments to the owner. The bank will quantify the amount of water available under the deposited right (based on its historical use) and ensure that this water can be made physically and legally available to the borrower without injury to other water rights.”

California, a lower-basin state, in recent years expanded “beneficial use” to include conservation and water transfers, Erica Gies wrote in Yale Environment360, a website published at the Yale School of Forestry and Environmental Studies. “That means water saved cannot be construed as wasted or unnecessary and therefore cannot lead to loss of water rights.”

At the Mentor Law Group in Washington state where water banking is widespread, attorneys describe water banks as “a depository into which a person or entity may transfer a water right, for use by that person or entity — or another person or entity — at the same time or in the future, and at the same place or a different place.”

Not enough to go around

In 2010, basin water users for the first time consumed more water than the system provided, Larry MacDonnell, senior fellow, Getches-Wilkinson Center, University of Colorado told the committees.

“We have 60 million acre feet [stored] in the Colorado River Basin that we have been drawing down,” he told the committees. “We’re starting to draw and draw and draw and were not replenishing it. That’s why we’re getting nervous about Lake Powell.”

Troubles lurk downstream. Colorado’s dry Front Range — east of the Continental Divide and outside the basin — could grow from 5 million to 8 million residents. Transbasin diversions from the Colorado could increase, Kuhn said.

Municipal demands may upend “first-in-time” water law, he said. “We’re not going to shut down a power system that has junior rights,” Kuhn said. Shortages and municipal development, “that’s going to create a system where a junior user can condemn a senior user.”

There are other potential problems, as well. Lake Powell generates electricity that’s an essential element of the elaborate western water collection and distribution system. The minimum pool elevation for power generation is at the 3,490 foot elevation. Generation is curtailed even before water drains to that level. A drought like the one between 2001 and 2006 could drain the reservoir to that minimum-power-generation level in 2.5 years, Tyrrell told the committees.

Powell generators create 75 percent to 80 percent of hydro-electric power derived in the basin and revenues from power sales fund the operations, maintenance and replacement work for compact storage projects in the upper basin, said Don Ostler, executive director of the Upper Colorado River Commission. Hydro-electric power revenues also pay for Endangered Species Act obligations.

Without the Powell electricity revenue, the system “probably wouldn’t be able to operate in full compliance,” with environmental laws and other obligations, he said. Wyoming gets more than $24 million of that revenue annually, water development director LaBonde said.

Some characterized potential shortages as low probability but high-consequence events. But Kuhn saw more danger. “There’s a one-in-three chance,” he said of shortages. “That’s a pretty high-frequency event. If we have a curtailment, we could be hurting.”

Added MacDonnell, “We’re “starting to see possibilities where there is not enough water for the Upper Basin. It’s getting harder and harder to meet obligations.”

Water storage plans in Upper Green River Basin

Wyoming’s Water Development Office seeks to accomplish Gov. Matt Mead’s 10-in-10 program to create 10 storage projects in a decade, with several planned in the upper Green River Basin.

Stored water is critical to industry, said John Cora, a representative of the soda ash industry who said operators in southwest Wyoming contribute $115 million annually to state in taxes and have a $350 million payroll.

“Trona is worthless unless we can process that into soda ash,” he said. “We can’t process that into soda ash without water.”

Wyoming has invested $55.3 million in the Green River Basin industrial, recreation and municipal water projects, Hicks said. Lawmakers have earmarked some mineral revenues and added additional money to water development funds to turn a one-time resource into a renewable one. “But the Legislature raided earmarked water money,” Hicks said.

Funds remain, including some $60 million in construction money. Wyoming water developers are eying six major Colorado River Basin projects that could cost more than $130 million and impound up to 125,500 acre feet.

Projects include the rehabilitation of Middle Piney Reservoir, enlargement of Big Sandy Reservoir and a plan to enable draining New Fork Lake by an additional seven feet. Developers would upgrade Fontenelle Reservoir to access an additional 80,000 acre feet, rehabilitate Silver Lake Reservoir in a Forest Service wilderness area, and build an $80-million dam on the West Fork Battle Creek in the Little Snake River drainage near Baggs. In Uinta County, Meeks Cabin and Stateline reservoirs would be enlarged.

LaBonde said the $12 million Middle Piney Dam rehabilitation, which would create up to 4,200 acre feet, is the first project on Gov. Matt Mead’s 10-in-10 program. Big Sandy enlargement is second and the West Fork dam is number five.

Wyoming water developers have passed on another opportunity — expanding the Viva Naughton Reservoir on the Hams Fork of the Green River. Located near Kemmerer, it would have supplied irrigators. But irrigators will instead buy rights from an industrial user.

That’s because Pacific Power and Light recently announced it would be shutting down one of three coal-fired generating units at its Naughton Plant outside Kemmerer, possibly converting it to natural gas. In any case, the closing and potential conversion would free up water for irrigation that’s currently impounded in Viva Naughton for the power plant.

Pilot conservation program shown to work

As Wyoming moves to impound more water, a pilot conservation program among irrigators and others has produced success and controversy. Most program participants don’t flood their fields in late season — basically after they cut hay — instead agreeing to leave that water in the stream in return for cash.

“They decided they would take the money and not irrigate,” state engineer Tyrrell told the committees. In some instances, irrigators along an entire tributary are involved. That gets that water to the main stem of the Green River, Tyrrell said. If water banking were considered a beneficial use, that conserved amount would be stored and credited to Wyoming for potential release to meet downstream obligations in a drought.

Through 2017, Wyoming received 40 applications and implemented 18 projects. By the end of 2018, $4 million will have been paid to irrigators and 24,205 acre feet conserved, according to Tyrrell’s presentation. Money comes from downstream municipal districts.

The amount of water conserved in the pilot program is “not enough in one year to make a difference,” upper basin commission director Ostler said. It would take more money and years “to make a significant difference,” he said.

“A lot more would be required for a large-scale program,” he said. “You have to plan several years in advance.” Plus, there’s the banking issue.

“We’re going to have to have some way to store and bank the water,” he told lawmakers. There’s no jeopardy to irrigators’ rights when they forego water diversions under the program, he said.

The pilot conservation program has detractors. “That whole conservation program in this county, there are people for it and against,” said Rep. Albert Sommers, (R-Pinedale,) a rancher. “I’m not for it.”

Sommers and others fear the loss of flood irrigation’s side benefits, such as support for riparian environments and wetlands. For Sen. Curt Meier (R-LaGrange,) there’s a worry “if we promote additional conservation, many of those incidental benefits we enjoyed … would be harmed or disappear.”

Those seeking to reduce diversions are “missing the point,” Baggs-area rancher Pat O’Toole told the committees. There’s a connection between flood irrigation and river health, he said, as irrigation water flows back to “recharge” a waterway. “We see it going in the ground, percolating back into the river,” he said.

Such percolation help ensure the health of migratory birds and keep them off the list of endangered species, he said. There should be a “sacred water” category for such flows, he said.

Conservation also reduces overall economic activity, said Jim Magagna, executive vice president of the Wyoming Stockgrowers Association. With the pilot program, “we need to be measuring how many bales of hay aren’t being [made] how many head of cattle are not being raised,” how many tractors are not being repaired, he said. “We need to look at it in a broader context.”

The pilot program, however, “is still encouraging agriculture production, Trout Unlimited’s Cory Toye said. “They’re taking their money, buying new tractors, buying new facilities, expanding their herds, buying more land,” he said in an interview. “There’s over $2 million coming into the Upper Green this year alone.”

Although the pilot program won’t be continued after this year, it has proved there’s a market among irrigators and that conservation won’t put them out of business.

“They’re still productive,” Toye said of the participating ranches. “They’re still putting up hay. It’s a valuable tool in the Upper Green.”

Wyoming faces not only downstream users but environmental advocates as well. In Fort Collins, a group called Save the Colorado has vowed to fight every new diversion and impoundment in the basin. Gary Wockner, the group’s president, said all entities are in a gold rush. “Everybody’s trying to get while they can still get,” he told WyoFile.

He recently criticized a proposal near Aspen to store and bank diverted surface water in an underground aquifer. While developers say the plan would preclude the need to inundate wetlands with a reservoir, creeks still would be dewatered and damaged, Wockner said.

Rancher O’Toole criticized development critics like Wockner who say water belongs in the riverbed for environmental and other reasons.

“That’s a perspective that’s being promoted all over,” O’Toole told the legislative committees. “What we’re watching is the dismantling of one of the great visions. Taking water out of the water development process is one of the dumbest things.”

This story was corrected June 26 to delete the names of two groups who were wrongly listed as financial contributors to the pilot conservation program — Ed.