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Commissioner's Perspective on the Colorado River:
Developing Operational Rules to Address Low Reservoir Conditions

Remarks Delivered By:
John W. Keys, III, Commissioner

Law of the Colorado River
CLE International
Las Vegas, NV

May 19, 2005

I. Introduction

Good afternoon. I am John Keys, Reclamation's Commissioner, and it is a pleasure to be here with you all today.

I must admit that I don't usually volunteer to enter a room filled with nearly 200 lawyers, but when the invitation comes from Dennis Underwood, and the focus of the conference is the Law - and future - of the Colorado River, even this old engineer couldn't say no.

While there are lots of issues and disputes and concerns on the Colorado River today, one thing that I'm sure everyone can agree on is that Dennis Underwood is one of the great leaders in the modern history of the Colorado River. I'm very proud to follow Dennis as Reclamation's Commissioner. I'm honored to call Dennis a friend and a colleague, and I credit Dennis with creating an atmosphere where people can find creative solutions rather than seeking out new ways to do battle.

Dennis' approach to problem solving provides a central theme for my remarks today.

While this may not be the most receptive audience for my message, I want to state it clearly and plainly: We face challenges in the Upper Basin. We face challenges in the Lower Basin. We face challenges between the Upper and Lower Basins. And we continue to face challenges on the Colorado between the U.S. and Mexico.

Notwithstanding these challenges, I don't believe that large-scale litigation - especially litigation between the basins - is the way to address the challenges facing us on the Colorado River.

Now I'm not trying to prevent any of you here in attendance from feeding your families. But my experience in the Reclamation program since 1964, leads me to conclude that while the recent drought has caused all of us in the Basin to consider issues that have been relatively dormant for many years, I am optimistic that with the continued leadership shown by the leaders in the Basin States, we can find - and implement - solutions. These solutions must be designed to ensure stability and predictability within the Basin and continue the productive use and management of the Colorado River.

Do we have conflict because we enjoy it? Well, except for a few of the die-hard litigators, the answer is no. We have conflict because of the various needs that compete for a limited resource.

Our common purpose must be to reduce the threat of uncertainty and replace it with the opportunities that can emerge from respecting the needs of others. The progress we've made over the past few years has come from squarely addressing the challenges we face.

Those of you who know me, know that I am an optimistic person, though I do recognize that a nice part of being a pessimist is that you are constantly being either proved right or pleasantly surprised.

On the Colorado River, I'm going to rely on neither optimism nor pessimism. Instead I'm looking realistically at a proven track record of reaching workable solutions - achieved by and with the Basin States - as the basis for my conclusion that we're going to find a productive way through the current set of issues that the drought has highlighted.

The track record of finding solutions is well known to many of you, because many of you in this room - and many on this Conference's panels - helped make them happen. Let me briefly review some of the recent history of the Law of the River.

II. Examples of Recent Progress on the Colorado River

We have many examples in the Colorado River Basin of the benefits that flow from working together.

a. Upper Basin

In the Upper Basin, we have seen the success of the "Recovery Implementation Program/Recovery Action Program," often referred to as the RIP/RAP. This program brings together federal, state, and local agencies to provide funding, habitat and facilities to address the needs of endangered species. The benefits of the RIP/RAP are particularly critical during times of drought.

Another example is shown by the recently adopted 602(a) Interim Storage Guideline adopted for the operation of Lake Powell for the next decade. See 69 Fed. Reg. 28945 (May 19, 2004). This guideline represents an important consensus among the seven Basin States and will serve to protect upstream storage in Lake Powell in a manner that respects the rights of both the Upper and Lower Basin. Under the 602(a) Storage Guideline Lake Powell storage will rebound quicker than Lake Mead when there is a return to average or wetter than average flows.

b. Lower Basin

i. Quantification Settlement Agreement

Eighteen months ago, in October 2003, we worked together to resolve a 75-year conflict through the Colorado Water Delivery Agreement. Reaching the agreement required years of difficult negotiations - both among California's Colorado River contractors and among the seven Basin States. Success crowned those efforts. Negotiators produced the long-sought quantification that enables California to meet the needs of its citizens in a manner that respects the rights of the other Colorado River Basin States.

Our common success serves to implement the limitation imposed by Congress in the Boulder Canyon Project Act of 1928 and agreed to by California in the Limitation Act of 1929 - that is, the promise to live within 4.4 million acre-feet from the Colorado River.

This Agreement also served to strengthen the Colorado River Compact by reinforcing the limits imposed by the Law of the River and reducing the risks to the other six Colorado River Basin states.

ii. Arizona Water Settlements Act of 2004

In December 2004, President Bush signed the Arizona Water Settlements Act into law. This historic legislation facilitates a number of inter-locking settlements:

• it settles the claims of the Gila River Indian Community to the Gila River;
• it protects existing uses of water within the State of Arizona;
• it amends the Southern Arizona Water Settlements Act of 1982 with the Tohono O'odham Nation so that the settlement can be fully and finally implemented;
• it provides funding to allow New Mexico to design and develop projects that fulfill the longstanding obligation for the Upper Gila in New Mexico that date back to 1968;
• it provides a funding mechanism to allow future Indian water rights settlements and the additional development of Tribal infrastructure in Arizona. This funding mechanism will also increase the affordablility of Colorado River water for Tribes in Arizona; and,
• it provides a settlement of long-standing operational and financial issues on the Central Arizona project.

As a result of this settlement, all users on the Central Arizona Project will be able to know who has specific rights to specific amounts of Central Arizona Project water. A little-known aspect of this settlement package also resolved impediments to Arizona's innovative groundwater banking program. In addition, another key aspect of the CAP settlement was the Congressional resolution of litigation over the validity of CAP water delivery contracts. This aspect of the settlement will prove to be particularly important if the drought deepens and shortages are required in the Lower Basin. None of us would want to face uncertainty over the validity of water delivery contracts during a prolonged drought. With the multiple elements of this "global" Arizona settlement in place, we all benefit by knowing the rules of the road for future CAP operations.

Credit for completion of this historic legislation goes to all of the Arizona parties that helped craft this complex settlement. The water leaders in Arizona have demonstrated the ability to find solutions that can address the needs of competing interests within the state of Arizona. This type of leadership will be just as essential to address the mainstem challenges we face together.

In particular, I would like to also take this time to publicly recognize and thank the primary Congressional supporters of the legislation, Senator Jon Kyl and Senator Pete Domenici.

iii. Lower Colorado River Multi-Species Conservation Program

The Lower Colorado River Multi-Species Conservation Program is one of our proudest achievements. Just last month, Secretary Norton approved the program. I joined a number of federal representatives along the Colorado River just below Hoover Dam to sign agreements with more than 50 partners from Arizona, California and Nevada.

As I said that day, I believe we've established the most innovative Endangered Species Act compliance program on any river system in the nation. For the next fifty years, this program will reduce the uncertainties and conflicts between the needs of species and the needs of farmers and urban water users along the lower Colorado.

I know that Jeff Kightlinger will be providing a detailed review of the MSCP tomorrow morning, but to me, the greatest aspect of the MSCP is that it anticipates operational changes on the Colorado River over the next five decades and puts protections in place now, well in advance of changes in water levels or changes in water use. By doing so, we will have greater flexibility to facilitate additional water transfers that many of us believe will be essential for the Lower Basin's future ability to live within its apportionment. These transfers will prove especially necessary to provide temporary water supplies to the Lower Basin's urban areas during times of prolonged drought.

iv. Progress and the Challenges of Implementing the QSA, the Arizona Settlements Act and the MSCP

One thing that each of these historic programs has in common is that as hard as constructing or establishing a program is - actual implementation can often prove even more challenging.

Implementation of the Quantification Settlement Agreement faces a number of challenges. We recognize that state court litigation in California is proceeding and none of us knows for certain what the outcome will be. Lining of the All-American Canal, a centerpiece of California's plan to reduce its use of the Colorado - faces increased international scrutiny. Moreover, none of us should underestimate the hard work facing the Imperial Irrigation District as it ramps up its water conservation activities according to the QSA's transfer schedule.

Turning back to the Arizona Water Settlements Act of 2004, which President Bush signed into law last December, all of the parties in Arizona are working hard to implement this historic settlement. An enormous amount of hard work remains. The Act requires that a number of actions, including Reclamation contracting, State Court proceedings, and numerous agreements be completed by December 31, 2007. If not, the Act becomes ineffective and, in essence, it's back to the drawing board. Reclamation is committed to making the necessary investment of our resources to meet the target.

Lastly, the MSCP is now under way. I'm pleased to publicly announce that Reclamation has chosen Lorri Gray to serve as Program Manager and oversee the MSCP. Those of you who worked on the MSCP know how dedicated Lorri was to getting that program up and running. Lorri made many sacrifices to complete development of the MSCP - and, as many of you did, she worked early mornings, late nights and weekends, taking time away from her family life, to see that the MSCP implementing documents were complete, thorough and finalized. The hard work paid off.

As the MSCP gets under way in its first year, Reclamation will be focused on three key areas:

• Establishing management processes with the partners to ensure both visibility and transparency for Reclamation's implementation of the Program;
• Developing partnerships with state fish and game offices as well as local communities; and,
• Identifying available parcels of land and beginning the planning process for habitat development.

We're excited to be moving forward with this program. We've already seen encouraging signs that a number of groups committed to environmental restoration of the lower Colorado are considering joining the effort. We believe that this program, designed at more than $600 million, and indexed to rise with the rate of inflation over the 50 year term of the Program, will provide great benefits to a broad range of listed species - and just as importantly will prevent additional listings.

III. Update on Drought/Hydrology in Basin: The 2005 Mid-Year Review

a. 2005 Annual Plan of Operations - Why Was the Mid-Year Review Initiated?

In addition to the MSCP, much attention over the past few months has focused on this year's Annual Operating Plan "mid-year" review. First let me explain why this review was undertaken.

As Don Ostler reviewed this morning, flows in the Colorado had been abnormally low since 1999. In light of the drought and based upon the resulting decrease in storage in the Colorado River Basin, the Department included a mid-year review provision in the 2005 AOP to review the 2005 release amount from Lake Powell to determine if the runoff forecast warranted an adjustment to the release amount this water year.

It's important to emphasize that this review was focused only on the operations of Glen Canyon Dam for the remaining five months of this water year.

b. 2005 Water Year hydrology

Since adoption of the AOP last fall, and our commitment to undertake a mid-year review, we've seen some encouraging improvement in the drought conditions in many parts of the Basin.

Snowpack in the Upper Basin currently stands at 126% of average. This year's April to July unregulated runoff into Lake Powell is expected to be 8.9 million acre-feet or 112% of average - more than double the inflow we saw last year. As a result, by July, Lake Powell is expected to rise about 50 feet from this year's low point.

Lake Mead also has increased storage based on winter storms in the Southwest. We anticipate that the net inflow to the Lower Basin will exceed 200% of average for this water year.

Terry Fulp and Reclamation's Lower Colorado Operations team worked closely with our customers and the operations staff at the Corps of Engineers to make the most efficient use of this runoff and we have all benefitted by their efficient and coordinated operations this year.

An important insight to this year's improvement can be shown by the combined projected contents of Lake Powell and Lake Mead. Last August, we projected that as of September 2005, these two reservoirs would contain approximately 21.8 million acre-feet. Today, with the current snowpack and runoff conditions, we project that the two reservoirs will contain 26.8 million acre-feet by the end of the 2005 water year, a gain in this short period of nearly 5 million acre-feet.

Moreover, if we receive average runoff for the remainder of this year and next year - not a certainty, but our hope - Lake Powell and Lake Mead are projected to have roughly equal contents by September 2006. Equalizing the contents of these two reservoirs would certainly be seen as good for users in both basins, reducing the risk of future shortages.

c. Recommendations received from the Upper & Lower Basins

Against this backdrop, the Department conducted two public consultation meetings to review this year's hydrology on the Colorado River with the Colorado River Basin States and the other members of the Colorado River Management Work Group. In addition, we encouraged the Basin States to provide the Department with a consensus recommendation on the issue of whether an adjustment of the release amount from Glen Canyon was warranted this water year.

Regrettably – after a significant amount of effort – the Basin States were unable to reach a consensus recommendation. Looking at the same hydrological information, the Upper Basin States collectively recommended that prudent water management argued for a reduction in this year's Glen Canyon release amount. Conversely, the Lower Basin States collectively recommended against such a reduction.

While the Basin States were unable to reach consensus on the May-September release volume, I believe there is a better understanding on some key issues among the Governor's representatives. I am convinced that the hard work that the Basin representatives put in will pay dividends in the coming months and years.

d. Upcoming steps ordered by Secretary Norton

On May 2nd, Secretary Norton issued her decision regarding the 2005 mid-year review. I've attached that decision to my written materials, which are available at the sign-in desk. The Secretary's decision contains four key points:

1. The Secretary restated the Department's position that the Department retains authority to adjust release amounts from Glen Canyon Dam. 2. Based on this year's hydrology, an adjustment to the planned release amount of 8.23 million acre-feet was not warranted. 3. Due the potential for the drought to continue, Reclamation will propose that the 2006 AOP also contain a provision for a mid-year review.

The fourth point in the Secretary's decision, was her direction to Reclamation to begin a public process to address the challenges of low storage in the Colorado's reservoirs.

This process, at a minimum, will address:

1. Development of shortage guidelines for the Lower Basin.

2. Development of Conjunctive Management Guidelines for Lake Powell and Lake Mead.

The Secretary set an aggressive 45 day timetable for Reclamation to begin this public process. The Secretary set an equally aggressive goal of completing this process by December 2007.

The drought has highlighted the need for all users within the Basin to work together. In this effort, I will tell you that our Secretary was very clear in articulating her vision for the work that Reclamation is to embark on immediately:

"The Department intends to develop operational tools that can continue to assure productive use of the Colorado River into the future, while avoiding unnecessary, protracted or destabilizing litigation."

Reclamation's first step in this process will be to convene a public meeting of the Colorado River Management Work Group, scheduled for a week from today here in Las Vegas, to receive input on the most appropriate processes and approaches to address the impacts of low storage in the Colorado's reservoirs.

IV. Developing Operational Rules to Address Low Reservoir Conditions

As we go into this consultation, Reclamation has been hard at work to begin to analyze potential management approaches to dealing with drought. Both Don Ostler and Larry Dozier's materials address some of the operational concepts that are out there for consideration. Here are some of the key questions that have been identified when thinking about future management of droughts on the Colorado.

Do we protect power generation? Where? At Glen Canyon? At Hoover? At both?

Do we protect lake levels at Mead to ensure that Southern Nevada Water Authority's intakes are still able to draw water from Lake Mead?

Do we protect lake levels for recreational uses?

Keep in mind that every time a decision is made to protect a particular lake level, there will be some reduction in water deliveries, either from the Upper Basin to the Lower Basin, to the Lower Basin states, or to Mexico.

For example, let's take a scenario where we protect an elevation of 1050' at Lake Mead. Why this elevation? Well, that is the lowest at which we believe the turbines at Hoover Dam could operate and this also corresponds to the upper intake for the Southern Nevada Water Authority.

If we want to protect this elevation 80% of the time in the future, we may need to reduce releases in the Lower Basin as soon as 2009 and might need to impose those reductions in as many as 4 out of every 10 years in the future. Larry Dozier spoke this morning from the perspective of Central Arizona Water Conservation District regarding their views on managing future shortages in Arizona, and the competing resource issues involved.

In addition to these concepts for development of shortage management rules for the Lower Basin, the recent work of the Basin States has yielded concepts which may provide keys to improved coordinated operation of Lake Powell and Lake Mead under low reservoir conditions.

Under severe drought conditions, the current operation of Lakes Powell and Mead may not be the most advantageous for providing multiple benefits including water supply, power production, and recreation. Why? Under current operations, during periods of sustained drought - as we have seen - Lake Powell's storage decreases more rapidly than Lake Mead's, putting power generation and other resources at greater risk at Lake Powell.

Again, under current operations, as we recover from a drought and inflows increase, Lake Powell begins to refill, while Lake Mead continues to decline, putting power generation and other resources at greater risk at Lake Mead. Lake Mead's decline would continue until "equalization" kicks in to increase releases from Lake Powell.

By modifying some of the existing operational rules for Lake Powell and Lake Mead (e.g., Glen Canyon releases, equalization, and Hoover Dam releases) during periods of sustained drought we may be able to retain project benefits for both Upper and Lower Basin stakeholders.

This approach doesn't create any new water for the system - but it would lead to Lakes Powell and Mead rising and falling more in tandem.

We don't know if this approach will be the one that the Secretary will ultimately adopt, but we certainly feel that there are concepts here that require serious consideration and analysis. We're hopeful that we can develop additional operational rules for the lower end of the operational range of Lake Powell and Lake Mead.

What we're not trying to do is force a showdown over differing interpretations of the Compact. Most students of the Law of the River recognize that the seven states settled on the mechanism of a "Compact" over 80 years ago to avoid having the Colorado River's future determined exclusively by the federal government, whether it be Congress or the Supreme Court.

Secretary Norton and I respect that history and we continue to hope - and believe- that "unnecessary, protracted or destabilizing litigation" can be avoided. While we recognize that litigation may, at times, be necessary to resolve fundamental questions, my years of experience in the Columbia and Snake River Basins in the Pacific Northwest showed me the significant downside to litigation - especially litigation over annual operations.

The Colorado Basin has enjoyed a long period of consistent progress and stable operations. This period was certainly aided by bountiful flows on the river and reservoirs that held ample reserves for the most part over the past few decades.

I certainly hope - and believe - that this Basin, and those who rely on the Colorado River can find solutions that will avoid some of the crises we've seen on the Klamath, Rio Grande and Columbia rivers.

V. Conclusion - Facing the Challenges on the Colorado by Working Together

Here in the Colorado River Basin we're blessed by the benefits of storage. I'm not aware of many river systems that are able to store nearly four years of average inflow. As a result of this storage, even after perhaps the worst five-year drought in centuries, the reservoirs were still nearly half full.

Last December, at the Colorado River Water Users meeting, Justice Hobbs of Colorado observed that,

"In scarcity is the opportunity for community. Community involves need, conflict, confusion, and, yes, good will and resolution."

It may be helpful for us all to consider how we would act if we are indeed in the middle of a mega-drought.

If the drought continues and deepens, we may face the question as to how would we manage the last few million acre-feet of mainstem reservoir storage. Would each of us say to our neighbors and relatives in other states, "Tough, you need to go without, while I will use as much as I need"?

It is my view of the West that at those times in history, the goodness of human beings comes out, and we hunker down to make it through the hard times together.

Perhaps if we looked at how we would really act, it may help us craft operational policies for such times that mirror our real nature. I'm confident that with that kind of a backdrop, we can successfully manage the Colorado River, by working together. As I told the audience at Water Users here in Las Vegas last December: "Reclamation will do its part – planning for the worst, and hoping for the best. But hope is not a strategy that we will use to deal with the drought in the basin."

Now, based upon Secretary Norton's direction, Reclamation is poised and eager to work with all the interests in the Basin over the next couple of years to add another chapter of success to the history of the Colorado River.