BOARD01417

• Board Meeting Date: 5/24/1999
• Description: WSP Section - Colorado River Basin Issues - Upper Colorado River Commissioner's Report - Historic and Continuing Interest of the Upper Basin in Preserving Secure Interstate Allocations
• Board Meetings - Doc Type: Memo

9. Several decisions of the United States Supreme Court on the issue of interstate sales and
transfers of water struck down certain state laws restricting or prohibiting the export of water from one
state to another, as violative of the Commerce Clause of the United States Constitution. 56 The factors
outlined above encouraged discussions on the issue of "water marketing" on the Colorado River.
Proponents of water marketing argued that Upper Basin states should be able to sell or lease to Lower
Basin entities their "entitlements" to the use of water from the Colorado River System. They also argued
that individual Upper Basin water users should be able to sell water or water rights to Lower Basin water
users. Although many proposals were made, the three most notorious proposals have been the
"Galloway Proposal" the "RCG Proposal, and the "Roan Creek Proposal.""

The 1991 Meeting in Torrence - These factors, among others, prompted exchanges of
correspondence between the Governors, discussions between state representatives, and finally a meeting
of the state representatives with a number of the California water agencies in Torrence, California in
June 1991. At this meeting, the state representatives other than California expressed their concern about
California's reliance on water in excess of its basic apportionment. The states expressed their willingness
to find ways to accommodate continued needs of California, but insisted that California must be willing
to commit to a program to reduce its normal year uses to 4.4 maf/yr. For its part, California presented a
conceptual proposal to create an interstate water bank, patterned after the water bank instituted in
California during the 1991 drought in the Central Valley. California agencies also agreed to discuss the
idea of a program to reduce Met's dependence on water in excess of California's basic apportionment.

reservoir evaporation losses in the Upper Basin, total consumption in the Upper Basin may be estimated at about 4.2
mafper year. Id. This compares with the Bureau's estimate (with which the Upper Division States do not agree), of
a firm developable yield in the Upper Basin of 6.0 maf per year. Hydrologic Determination 1987, Water
Availability from Navajo Reservoir and the Upper Colorado River Basinfor Use in New Mexico, Bureau of
Reclamation.

56E.g., City of El Paso v. Reynolds, 563 F. Supp. 379 (1983); Sporhase v. Nebraska, 102 S.Ct.3456 (1982).
But cf Intake Water Company v. Yellowstone River Compact Commission, 769 f.2d 568 (9" Cir., 1985), (holding
that an interstate compact has the authority of federal law, and is not subject to attack on the basis of the Commerce
Clause by a private entity who sought to sell water interstate outside the scope of the compact).

"The Galloway Proposal was made in 1984 by a group known as the Galloway Group, Ltd. Galloway
entered into an option with the San Diego County Water Authority to "lease" 300,000 to 500,000 afper year of
water released from reservoirs to be located on the White or Yampa Rivers in Colorado. According to the proposal,
the water released for use in San Diego would have been debited to the Upper Basin under the 1922 Colorado River
Compact, and to Colorado under the Upper Colorado River Compact.
The RCG (Resource Conservation Group) Proposal, made in 1989, sought to create three kinds of "water"
for sale or lease from the Upper Basin to the Lower Basin. The first type of water was undeveloped, unused water
in the Upper Basin, currently flowing to and being used in the Lower Basin. The second type of water was water
stored in Upper Basin Reservoirs, for which there were contracts but for which there was not a present use. The
third type of water was water presently consumed by irrigated agriculture in the Upper Basin. RCG proposed to
create "pools" of the "Type 1," Type 2" and "Type 3" water for sale or lease in the Lower Basin. Both proposals
met with unanimous resistance from all the Colorado River Basin States. Among other things, the states were
concerned that the concepts were legally impossible, that they opened up an unregulated "water market" on the
Colorado River, and that such an arrangement was destructive to interstate comity.
The Roan Creek Proposal was made in 1993, by which the Chevron Shale Oil Company
proposed to construct a reservoir on Roan Creek in Colorado and "lease" the water for use in Nevada
pending ultimate need for oil shale development. The proposal was conceptually identical to the failed
Galloway Proposal.

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