Western States Water Council

5296 Commerce Drive, Suite 202

Murray, UT 84107

Phillip C Ward, Chairman

Re:  Western States Water Council Fall Meeting  — Missouri River Water Storage Reallocation Study

Mr. Ward,

I write regarding the Council’s fall meeting. The proposed agenda for the 2013 fall Meeting of the Western States Water Council (WSWC) in Deadwood will address, among other topics, recent developments in Indian Reserved Water Rights Claims and of the Missouri River Natural Flows. It is my understanding that the U.S. Army Corps of Engineers (hereinafter Corps) will also be sending representatives to attend the Deadwood meeting, and  intends to meet with the WSWC to discuss the Missouri River Water Storage Reallocation Study. I provide comments regarding the study and the project it entails. The comments will focus on certain important aspects of the Oahe Dam Reallocation Study, which is one of the several sites for the study conducted by the Corps. My comments will not include other important issues that might otherwise be considered during review of the study, such as NEPA, the NHPA, pending legislation, or constitutional questions regarding reserved rights and the taking of water. While I am a member of the South Dakota State Bar Committee on Natural Resources and the Environment, however, the comments in this letter are my own and do not reflect those of the Committee.  Additionally, although I attempted to confer with the author of the Corps’s 204 page Oahe Dam Water Storage Reallocation Study before submitting this letter, he has declined to speak with me on the subject.

On August 6, 2013 the WSWC provided a position paper on this subject to the Corps. The paper discussed states’ legal rights to the natural flows of water as affected by the Corps’ project. This letter, and my comments, address additional matters which were not discussed in the WSWC August 6 paper. I will review the Oahe Dam Reservoir Report, one of several reservoir reports put forth by the Corps on the various dam sites.  The “Oahe Dam/Lake Oahe Project Surplus Water Report” (hereinafter Report) is a 204-page document detailing the Corps’ proposal to first identify and then subsequently designate surplus reservoir water—with the purpose of making surplus reservoir water available for municipal and industrial water use. The Report provides information on existing uses and identifies the various contemporaneous users of Missouri River water.  These users include private parties, the state governments whose borders run along the Missouri River, and various Indian Tribes.  The Report reflects that the project is granted legal authority under Section 6 of the 1944 Flood Control Act, which permits the Corps to enter into surplus water agreements and issue easements for yet-to-be-determined, undistributed surplus water.

The Corps is a federally created ‘regulatory monopoly’ in its particularized areas of authority. The Corps is in effect the world’s largest civil engineering firm. The Corps is the Nation’s largest, single producer of hydroelectricity.  In the United States alone, the Corps operates 75 hydropower projects which house 349 generator units, with a total capacity of 20.7 million kilowatts, or about 3.5 percent of the Nation’s total electric power production. Along the Missouri River, the Corps operates a total of 36 generator units capable of producing approximately 2.4 million kilowatts of power. These power plants and dams along the Missouri River—authorized by Congress in the Flood Control Act of 1944, commonly called the “Pick-Sloan Act”—include the Oahe Dam. The Act authorized the managing of Missouri River to provide for flood control, navigation, municipal and industrial water supply, recreation, and hydropower generation. The management of Missouri River water, however, was not delegated to the Corps.

 The Western Area Power Administration (WAPA) is the federal agency that markets and delivers the power produced at the Missouri River power plants within a 15-state region of the central and western United States. WAPA buys and sells power from 56 hydropower plants around the nation. WAPA markets this power to rural electric cooperatives, municipal and public-owned systems. The Missouri River reservoirs are WAPA’s largest producer of energy. The Oahe Dam near Pierre, South Dakota and the Garrison Dam—which creates Lake Sakakawea in western North Dakota—are the two biggest power producers in the Missouri River system. According to the 2012 Corps’ Mainstem Reservoir Report, the Oahe Dam produced 2,908,388 kWh of electricity in 2012.  WAPA is mandated to sell this energy at “the lowest cost consistent with sound business principles” which is generally understood to be at the “cost of production.” This includes repayment to the U.S. Treasury, costs associated with construction, and operation and maintenance costs for the Pick-Sloan Project facilities. These power plants and dams produce revenue for the US government. The Corps now proposes to produce revenue for the US government by selling surplus water from the reservoirs.

A “surplus” is a quantity or amount in excess of that which is required or that which otherwise exists. Determining a surplus in the proposed project necessitates two questions: (1) what are the qualitative existing rights to the water in the reservoir; and (2) what is the quantity of water used or that could be used, under the existing right? Intuitively, the first question requires a determination of who is currently using the water, whom has the right to use the water presently and in the future, and under what rights permit such usage. In the second question, one should determine whether the existing right quantifies as water used or water that could be used. Only after conducting both a qualitative and quantitative review would the Corps be able to properly propose, or ostensibly deem, what is “surplus water.”

The existing rights here include the contemporary use of reservoir water as well as any current and future legal rights to use the water. The Report provides statistics, projections, and data, but is absent of analysis on the existing water rights of the parties to be affected by the project. Stated differently, the Report does not examine the first question. For example, on page 4-8 the Report acknowledges South Dakota’s claim that the natural flows of the Missouri River water are subject to the exclusive jurisdiction and authority of the states. Nevertheless, the Missouri River’s waters are being impounded by the Corps’ reservoirs; the Corps does not consider this claim in its calculation of surplus water, neither does it incorporate the claim in its analysis, nor quantify the claim amount. The underlying authority by which the Corps proceeds with the project does not legally authorize the Corps to dismiss such a claim. Such substantive property right determinations of the states and Tribes are left to separate legislation, court decision, compact, or treaty. The Corps’ rulemaking authority does not extend to superseding legal claims to water rights by Indian Tribes or the states.

In its Report the Corps proposes to sell “surplus water” from the Oahe Dam/Lake Oahe Project by entering into water supply agreements with various users. The Corps has identified 57,317 acre-feet/year of water as “surplus”. How did the Corps arrive at that determination?  The Report states there are 84 water withdrawal related easements at the Oahe Dam/Lake Oahe Project. The Corps has allocated 52,106 acre-feet for existing use, even though it acknowledges “the quantities of water being withdrawn through these easements are difficult to determine from the available data.”  The Corps, nevertheless, adds its estimated 10% future growth in water use to its 52,106 acre-feet/year allocation in order to arrive at the 57,317 acre-feet/year surplus water valuation.  The Report states that the estimated growth was “determined using best professional judgment and accounts for a variety of risk and uncertainty factors relevant to potential future water demand”. The exact methodology in establishing the estimated growth in use of water was not discussed in the Report. “The Corps keeps records on easement allocations, it does not collect data on actual water usage.”

In regard to water use for irrigation purposes, the Report states surplus water agreements “may be for domestic, municipal and industrial uses, but not for crop irrigation.”The limitation of the proposed project’s scope draws a thin line. On one hand, the Corps has no statutory or rulemaking-authority to manage, address, or sell water for irrigation purposes. On the other hand, the states and Tribes have legal authority to manage, address, or sell river water for irrigation purposes. This issue creates an administrative nightmare for the states and Tribes. Irrigation accounts for more water usage than domestic, municipal, and industrial uses combined. Even more disquieting is that the Corps’ own procedural manual indicates that agricultural irrigation is not eligible to be included in this project.

In support of the project the Corps provides an annual cost comparison chart indicating that a savings of $10.7M could be realized. The Report, however, is silent on whom the beneficiary of these savings might be. Moreover, the Corps miscalculated savings when it applied a volume of 57,317 acre-feet/year in its valuation. The proper measurement of “surplus water” volume would be 5,211 acre-feet/year, because this figure distinguishes between the “No Action” alternative (new groundwater) and the “Proposed Action” alternative (the surplus water). Furthermore, the unit cost of groundwater and additional Lake Oahe water in the annual cost comparison chart is created using USGS water usage data, which is not consistent with water usage data provided by the permit issuing authorities in North Dakota and South Dakota. Use of the USGS water usage date leads to an inflated calculation of savings.

The Report does not address the legal authorization of the Corps to undertake a surplus water program, relative to Tribal reserved water rights under the Winters Doctrine and under the Treaty of Fort Laramie of April 29, 1868. Both of these historic legal events occurred before the Flood Control Act, which was passed in 1944. On the matter of reserved rights, the Corps has stated:

Unless specifically provided for by Federal statute, quantification of water rights does not entail an allocation of storage at Corps reservoirs.  The Corps recognizes, however, that the tribes have claims to reserved water rights, and will, to the extent possible, continue to operate the Mainstem Reservoir System [System] based on that recognition.

The Flood Control Act at Section 6 states

 The Secretary of War (now Army) is authorized to make contracts with States, municipalities, private concerns, or individuals, at such prices and on such terms as he may deem reasonable, for domestic and industrial uses for surplus water that may be available at any reservoir under the control of the War Department (now Department of the Army): Provided, That no contracts for such water shall adversely affect then existing lawful uses of such water.

Indian Tribes are not subject to the Corps’ general authority to create or impose surplus water regulations. The Supreme Court has held that Tribal reserved water rights are paramount to other rights, including water rights under a prior appropriation system. The Ninth Circuit has held that, “Indians were awarded the paramount right regardless of the quantity remaining for use of white settler.” Thus, both statutorily and at common law, reserved water rights are an exception to the general rule that state law controls the management and allocation of water rights relative to Tribal water rights. A federal reserved water right has a priority date corresponding to the date of the statute, executive order, or treaty creating the reservation, regardless of whether the water at issue has ever been put to actual use. Similarly, the quantity of a federal reserved water right is not determined by the amount of water put to beneficial use. It is determined, rather, by the amount of water necessary to carry out the primary purpose of the reservation. Because the priority date of a federal reserved water right is unrelated to the actual use of water, such a right cannot be lost by non-use, unlike a water right secured under state law.

The foregoing comments indicate issues concerning the Corp’s Report and its implementation. Please feel free to circulate this letter to interested parties General Counsel for WSWC has requested a copy of this letter. Please contact me if you would like to discuss this matter further.  Thank You.

                                                                                                 Sincerely,

                                                                                                 /S/David L Ganje

                                                                                            David L Ganje

CC

The Honorable Jo-Ellen Darcy

Assistant Secretary of the Army (Civil Works)

108 Army Pentagon

Washington, DC 20310-0108