By The Honorable Gale Norton

Secretary of the Interior

American Bar Association Annual Water Law Conference

February 20, 2003

Good afternoon, it is a pleasure to be here in San Diego at the ABA’s Annual Water Law Conference. I see that Jennifer Gimbel and the ABA’s planning committee have prepared a thought-provoking agenda for these two days. That is good, because we have always needed people to think carefully about water and the West.

Former Sen. Alan Simpson of Wyoming tells a story of President Ulysses S. Grant sending a Cabinet member out West. The President requested of the Secretary, “Write me back and tell me what it is they need out there.”

After a time the traveling cabinet member sent a telegraph message to the President, “All this place needs is good people and water.”

Grant wired back to say, “That is all hell needs.”

Unfortunately, when good people disagree on the division of water in the West, the feuding can seem like hell. But it is at times like these that we must stay the course and honor the water laws that have no purpose if they are not applied in times of shortage. Think about it – water law only exists for the purpose of resolving conflicts in times of shortage.

You will notice that I said “times of shortage”, not “times of drought.” The reality that we face today is that in some areas of the West there is not enough water to go around even in normal hydrological conditions.

The stakes are enormous for the West. The population of the West and Southwest has exploded over the last decade. While the Census Bureau reports a national population growth rate of 13%, in the West the average is almost twice that. In several states it is much higher. Over the ten-year census period, Arizona had a 40 % population growth rate and Nevada’s was at 66%.

This trend shows no sign of changing, as Southern California alone projects that it will add another 6 million residents by 2025.

Our challenge is made greater by the drought that grips much of the West.

To help you visualize this drought, let me focus on the Colorado River Basin—the source of a significant amount of the water supplying the city of San Diego. In 2002, rainfall in the Colorado River basin was the lowest in recorded history.

Many reservoirs in the Upper Colorado Region have virtually no stored water left, which means that the supply for this summer will be entirely dependent upon inflows from runoff alone.

The dry year we expect ahead means these inflows will not be sufficient to meet existing needs. To borrow an analogy from the business world, the savings account is almost empty, and the monthly cash flow projections do not cover expenses.

Before the current drought began, in October 1999, reservoirs in the Colorado Basin were more than 90 % full. Today those reservoirs stand at a mere 60 % of capacity.

Just between September 2001 and September 2002, Lake Powell dropped more than 38 feet and Lake Mead dropped almost 23 feet. Today, Lake Powell stands almost 9 stories below its highest level. Since its initial filling in 1980, Lake Powell has never been so low.

In fact, if it were not for massive water storage capability that prior generations built on the Colorado River, Arizona, Southern California, and Nevada would have been in a crisis condition several years ago.

In other areas, like the Middle Rio Grande, the drought has been so deep that even if the runoff in 2003 is twice as much as normal, there will not be enough water to meet existing needs this summer.

In my home state of Colorado, the start of soccer season has been postponed in a number of areas, golf courses have been closed, and one of the Denver suburbs has banned any new outside planting this summer, including home gardens.

But at least some people have retained a sense of humor. Last summer the Denver Water Board launched an advertising campaign to reduce water usage. Their messages were displayed on billboards, sandwich boards and T-shirts. They certainly took a new tack guaranteed to get attention.

For example, one recommended you “Shower in Groups.” Another read, “Instead of washing clothes, don’t wear any.” For the men it was, “Real men dry shave.” And a favorite for those who remember that Coors is brewed in Colorado: “No water. No beer.”

In truth, the reality of water scarcity is not new. Starting with the Anasazi, the people of the West have known that survival was dependent on two relentless principles of life in the desert – water must be used carefully, and water will not be available in times of shortage unless it is stored and saved in times of plenty.

So the question becomes, under what rules will we store and use water in our reservoirs, and how will we divide streamflows when they are not enough to meet the demands?

As lawyers and water managers, you know better than most why we pride ourselves on being a government of laws instead of a government of men and women. Our challenge today is to stay true to the water laws that have been used to allocate water between competing claims. And to resist the temptation to allocate water through ad hoc decisions based on public popularity or political power.

If we yield to this temptation, we will destroy the one thing that everyone who needs water seeks the most – certainty and predictability about how it will be allocated in times of shortage.

Without certainty, people cannot plan for their future. Without certainty, it will be far more difficult for market-based transfers to succeed. Without certainty, we will not be able to protect our environment.

It is at these times that we must renew our commitment to resolving disputes and answering tough questions within the framework of enduring principles of law.

We have before us a challenge that we cannot and must not fail to meet: We must recognize the realities of life in the desert, and the limits on the amount of water that is available, in a way that protects both our environment and the economy of western communities.

Cities need water for their growing populations. Farmers need water to grow our food, Tribes need water for their people and their future, and fish and wildlife need water to survive.

The Interior Department presents a microcosm of these conflicts because we have different bureaus and agencies that represent each of these interests. The Bureau of Indian Affairs has trust responsibilities for Tribes; the Bureau of Reclamation operates projects that provide water for both farmers and cities; the Fish and Wildlife Service administers the Endangered Species Act.

These agencies and bureaus have differing missions mandated by Congress, and the missions are not always compatible. I am mindful of Chief Justice Rehnquist’s comment in one case several years ago–that Congress itself has required the different agencies within Interior to “carry water on both shoulders.”

Balancing that burden isn’t easy. But we navigate through conflicts by working together toward common ground that will benefit all affected groups.

Let me tell you about the approach I use in addressing these conflicts. There are two basic principles that apply. First, my approach is to work with the states, tribes, and local interests to identify practical solutions that work to everyone’s benefit.

Second, we must all remember that in times of shortage, it is critical that everyone understand how the available water supply will be allocated.

As a former Colorado Attorney General, I understand the states’ viewpoint very well. I remain respectful of the states’ primary interests in managing their water resources.

There are many areas where national interests predominate over state and local interests, such as defense, immigration, transportation and communication. Where important national interests are at stake or where there is a need for national uniformity of laws, we must look to Washington, D.C.

But in the field of water law, we have a different system, one that is based on the unique history and traditions of our national experience. Since the mid-nineteenth century, federal policy has been to defer to the authority of the western states to manage their water rights.

Starting more than a century ago, Congress saw development of the lands of the West as a national purpose. The Reclamation Act of 1902 continued the tradition of deference to state water law. In this context, the federal government provided resources to supply irrigation water for farmers and drinking water for cities.

That movement of water has fueled the West’s economic development for the past century. Without it, the West would have remained what it was in the early nineteenth century, when map-makers generally inscribed the words, “Great American Desert” over much of the West.

Many of the great cities of the West–Los Angeles, San Francisco, Salt Lake, Denver, Phoenix, Albuquerque, Las Vegas–and San Diego, owe their growth to the development and importation of water supplies.

But even though the federal government built huge water development projects that have changed the face of the West, Congress has continued to insist the federal projects must comply with state laws, and must acquire their water rights under state laws.

Congress did not adopt a “one-size-fits all” strategy for the federal water program To again quote Chief Justice Rehnquist, the “consistent thread of purposeful deference to state water laws” runs through Congress’s reclamation laws.

To implement Congress’s purposeful deference to state water law, I have adopted a policy of trying to work closely with state and local governments, Indian tribes, and local stakeholders, to respect the rights and interests of all these groups.

I call my policy the 4 C’s–communication, consultation and cooperation, all in the service of conservation. We work with state and local groups to iron out our differences, to see if federal and state policies can work together.

Our emphasis will be to solve problems through mutual agreements and understandings instead of looking for ways to assert an increased federal presence.

It is looking more to Sacramento, to Phoenix, to Cheyenne, to Boise to help provide us with solutions, and relying less on Washington, D.C.

My policy of working with local interests is reflected in how I view some cutting edge issues involving federal-state relationships.

RESERVED RIGHTS DOCTRINE

You are all familiar with the reserved rights doctrine. The Supreme Court first recognized this doctrine a century ago in the Winters case involving the Fort Belknap Reservation in Montana.

The doctrine holds that Congress implicitly reserves water rights for use on federal lands that are withdrawn from the public domain for such purposes as Indian reservations, national parks, national forests, and so forth.

It has brought controversy in the West because every drop of water reserved for federal lands means one less drop of water is available for state allocation.

The Supreme Court has narrowly defined the doctrine. It has held that the doctrine applies only to “primary” reservation purposes and not “secondary” purposes. The doctrine reserves only the minimum amount of water necessary for the primary purpose-- without which the reservation purposes would be “entirely defeated.”

In effect, the Supreme Court has tried to accommodate federal interests and state and private interests by limiting the scope of the doctrine.

It is important to remember that the reserved water rights doctrine is not the only way for the federal government to get water. It has available the full range of options for any other water user. Most wildlife refuges, for example, are on acquired lands, not reserved lands. They function with appropriated or purchased water rights because the reserved rights doctrine only applies to lands withdrawn from the public domain.

Bureau of Reclamation projects similarly have no reserved rights. The federal government must work with the states to obtain water rights.

For their part, the states often are very accommodating when the federal government asks for water rights under state law. In fact, many states have adopted “public interest” statutes that allow for water uses for environmental purposes, and these state laws are very congenial to the kinds of water rights sought by the federal government on reserved lands.

Thirty years ago, a reserved right claim was virtually the only way to protect federal interests in natural ecosystems. Today, most states have in-stream flow laws. They have found innovative ways to work with the federal government to protect endangered species or other fisheries. There is no longer a reason for states and the federal government to fight to the death, when the environment can be protected cooperatively.

Accordingly, we hope to explore a variety of ways to resolve water issues with states, and we hope, avoid protracted litigation. Our goal will be to provide long-term wet water to meet our land management responsibilities, but we want to work with the states to do so.

Obviously, our handling of reserved rights claims on behalf of Indian tribes must be somewhat different. There, the federal government represents the best interests of the tribe, and so must give appropriate deference to the tribe’s preferences.

But where other federal reservations are concerned, we will work in partnership with the states to protect all the purposes of federal land reservations.

ADJUDICATIONS

Although the federal reserved water rights doctrine was created by the Supreme Court in the early 1900’s, as a practical matter no one knew how much water the federal government had reserved and whether those rights trumped all state law-based claims in times of shortage. In short, for many years, water administration was in chaos, as no one knew “who got what when there was not enough to go around.”

Congress responded in 1952 by enacting the McCarran Amendment, which is essentially a waiver of sovereign immunity for the purpose of joining the United States in a stream adjudication.

Congress intended to put an end to the chaos by essentially providing for a quiet title suit that would quantify and assign priorities to all claims for the use of water, whether based on state or federal law, or appropriative or riparian principles.

The theory is great. However, I am deeply concerned by the fact that some adjudications last for many decades. I imaging Senator McCarran never contemplated his amendment could reach its 50^th anniversary with so many water rights claims still unresolved.

The general adjudication of all rights in a river system has been more the exception than the rule in the West. It is easy to understand why—an adjudication is very expensive and time-consuming for all concerned. People sometimes would prefer to live with uncertainty.

But uncertainty is a dark cloud that hangs over everyone’s rights in such cases. It means that everyone–senior and junior users, and others–do not know whether they have valid rights. People are not able to plan for the future and fulfill their legitimate expectations, especially in the arid and semi-arid West, if they don’t know whether they have valid water rights.

I believe that nothing would be better for the West than to remove the dark cloud by adjudicating all water rights in all river systems. Of course, this will not happen for a long time–but this doesn’t mean we shouldn’t pursue it.

I am sure a few of you are noting the inconsistency of a federal official singing the praises of the McCarran Amendment, when the federal government has sometimes been reluctant to waive its sovereign immunity, claiming for various reasons that McCarran does not apply in the particular case. The courts often have rejected the federal government’s contention in these cases.

One of my goals as Secretary is to ensure that we will live with both the letter and spirit of the McCarran Amendment. And that we will faithfully execute Congress’s desire for the United States to fully participate in general stream adjudications.

We will try to advance adjudications wherever possible. I have asked the Interior Solicitor’s Office to identify those cases where Interior’s non-Indian claims are a significant unresolved issue, so that we can evaluate whether a cooperative solution can be crafted. In this way, I hope that we can promote the adjudication of water rights that will provide for certainty and enhance the West’s economic advancement.

As lawyers, we generally understand that business and natural resource management function better if everyone understands what their rights are. But let me borrow from the world of economics to help us think about this point more precisely.

In economic theory, there is something called the Coase Theorem. Its author, Ronald Coase, originally explained it using the example of a railroad train.

Trains generate sparks, which used to frequently ignite brush fires along the tracks. The question he posed was who should have the responsibility to prevent sparks. As lawyers, we look to causation and say that, of course, it is the railroad. But the landowner might also be contributorily negligent by allowing brush to accumulate next to the tracks. In short, we have the makings of a great piece of litigation.

Since economists don’t understand the joys of courtroom drama, Professor Coase posited it would be better—or at least more economically efficient—to have a clear rule.

Since lawyers understand the legislative process, we can easily agree with that concept. The striking point, though, is that Coase said it doesn’t really matter what the clear rule is. If railroads are always liable, they will change their engines to minimize the generation of sparks—and they may pay a small amount to landowners to clear away brush.

If landowners are liable, they will more diligently clear brush and pay for railroads to adopt spark-control technologies. If we know the rules, then the parties can negotiate contractually, and ultimately minimize the number of fires. Clear rules contribute to solving problems.

Now, what does this economic theorem mean for water users? It means we can best solve future problems if we understand who owns what today.

Let’s step back from advocacy on behalf of particular clients and look at the overall water supply.

We know that water needs to be available for the future growth of cities, and that sprinkler systems or lined canals could allow agriculture to use water more efficiently—freeing up water for municipal use. Cities can afford to pay for agriculture efficiencies.

These deals are happening with greater frequency today—where current ownership of water is relatively well defined.

Let me give you a real-world example to illustrate the dilemma of unquantified rights. The Klamath River basin spans the Oregon-California border. It became famous in 2001 when concerns over endangered and threatened fish forced Interior to stop farmers from irrigating.

In that river system, none of the water rights have been quantified, despite two decades of litigation. (Jack Garner says this is correct.) One tribe claims water for agriculture and forestry, farmers claim contractual rights from a Bureau of Reclamation project, non-project farmers have ample state-recognized rights for grazing, two tribes downstream claim water for salmon fisheries, and a wildlife refuge and hydroelectric plant have their own needs.

The competing claims far exceed the amount of water in the river. On top of that chaos, add the huge unpredictability of the ESA, with its regulatory restrictions on water use.

If rights were clearly quantified, then farmers and fishermen could sit down and begin resolving their differences. Farmers might pay fishermen to restrict harvests and thereby improve fish populations. Fishermen might lease irrigation water from farmers who fallow their fields. Rather than face-to-face dealings, the current situation leads to lobbying and protests and litigation, as each party seeks to enlist the external power of courts and federal agencies.

Before we reach the crisis point in other river systems that we have experienced in Klamath, I urge everyone to search for ways to resolve water rights expeditiously.

CALIFORNIA 4.4

Now let me take this same point to the Colorado River Basin. In 1928 Congress determined that California should be allocated 4.4 million acre feet of water from the Colorado River. California irrevocably agreed to this allocation in 1929 in order to guarantee Wyoming, Utah, Colorado, New Mexico, Arizona, and Nevada that their respective shares of water would be protected in perpetuity.

For decades, other states permitted California to draw more than its share, but as the populations and economies of the other basin states blossomed, they have begun to need their full shares.

Interior and the basin states worked with California for a decade to develop a plan to help California gradually reduce its overuse of the Colorado by 2015. It was clearly understood by all the parties that if California failed to meet the requirements of this “soft landing--, an immediate cut off would be required—the so-called “hard landing”. By ramping down voluntarily, California would have extra water during the transition—water that would otherwise not be available.

The first step under this plan was for various water users in California to voluntarily divide California’s share between them, so they could collectively live within California’s overall cap. The Quantification Settlement Agreement reflecting this division had to be signed by December 31 of last year.

The last few weeks of 2002 were dramatic, with extensive negotiating sessions. Despite considerable efforts by California water users, state officials, and Interior, the deadline passed and the state lost its access to extra water.

For the first time, a Secretary of the Interior had to enforce the limits embodied in the Colorado River Compact and the Law of the River.

As Secretary and River Master, I must enforce all the relevant statutes and interstate agreements and all aspects of the Supreme Court’s Decree in the historic Arizona v. California litigation. This means I will continue to hold California to the express covenant it made in 1929 to limit its use of the Colorado River to 4.4 million acre-feet.

The Imperial Irrigation District has challenged Interior’s enforcement of the decree in in U.S. District Court here in San Diego.

Next Monday, the United States will be filing the first round of substantive pleadings in this far-reaching case. While it would not be appropriate for me to discuss the precise issues in the litigation here, I reiterate my remarks to the Colorado River Water users in December: Failure by the California entities to reach a voluntary, consensual plan to reduce California’s excessive use of the Colorado is likely lead to another decade-long round of divisive litigation.

WATER INITIATIVE

Finally, I want to talk about the steps we are taking to meet West-wide water challenges. The President’s budget request, announced earlier this month, emphasizes the need for water use efficiency in our water infrastructure. It is a commitment to return to the solid principles of conservation.

We will take steps to develop a resource management program that will respond to growing demands for water in the West while continuing to serve traditional users and adhere to state water laws.

Many water delivery systems use technology popular when the Spanish missions still flourished. That is not how to deal with 21^st century problems.

We will look at new technologies and advanced water management systems, such as lining and modernizing canals.

Reclamation will use and further the concept of state water banks wherever possible to help resolve future water supply conflicts. This concept is already being employed in several river systems, including California’s Central Valley, to provide a predictable water supply for fish and other environmental purposes.

Research and development of desalinization technologies will also be a priority. Interior will work with other federal agencies to enhance research efforts, with the goal of reducing the costs of these technologies and making large-scale desalination practical.

Taken together, we hope these measures will help stretch existing water supplies to meet demands in the most cost-effective manner possible.

In conclusion, I believe that water issues are among the most challenging issues that face us as a society in the coming decades. I have expressed my strong view that clarifying ownership is critical to meeting future needs.

Moreover, I am committed to defending appropriate federal interests, ensuring that water needs of reserved lands, Indian Tribes, fish and wildlife, and Bureau of Reclamation customers are addressed.

Now I have to admit, I do not have all the answers. I am asking my department and our Department of Justice attorneys to search for solutions. I also invite ideas from you. If you see opportunities for negotiated solutions, please let me know. If you see opportunities for innovation, we want to know. Write to me, or talk with Rod Walston or Ann Klee—my two top attorneys who are here today.

The current drought is a warning of even more serious problems on the horizon if we don’t resolve our differences today. As we move forward, we will follow the rules of the road that have been laid down by Congress in its statutes, by the courts in their decrees, and by other laws.

In this way, we can hope for greater certainty of water supplies, which is a necessary predicate to continued environmental protection and economic growth.

Thank you.