The Central Arizona Project tried to strike a deal to sell water to California for $18 million during the 2015 drought, which the state claims underscores the need for reforms to the water delivery system’s operations.
The topic recently surfaced in meetings commenced by Gov. Doug Ducey to plan for the future of water in the state. Many potential changes to water laws were aimed at the Central Arizona Water Conservation District, which operates CAP.
The unsuccessful 2015 deal with California gives ammunition to the Ducey administration’s efforts to change how CAP operates, providing backup to their claim that the organization needs to be brought in line. And for CAP, it lays bare that the state is building a case to go after a separately elected body.
To the state, what happened in 2015 is indicative of an organization gone rogue and working outside its authority. To CAP, the deal was an innovative way to store water in California, and to characterize it as a sale is irresponsible and politically motivated.
The potential deal – and its subsequent unveiling in the governor’s water meetings – shows the fractures between two of Arizona’s largest water players. It also shows the disagreements between the two over authority and duties that go back multiple years.
“There’s a long history and a pattern here of these things going on,” said Tom Buschatzke, Department of Water Resources director. “There’s always peaks and valleys in relationships between entities.” He said the state is trying to smooth out the bumps now.
CAP calls the Water Department’s claims “political rhetoric” that serve as “a distraction that weakens and divides Arizona water users at the very time Arizona water managers need to work cooperatively to address the very real water issues facing our state,” its spokeswoman Crystal Thompson said in an email.
The state has suggested it may try to alter the way the CAWCD board is elected, require financial and performance audits by the auditor general and prohibit CAP from contracting for federal lobbying services.
Additionally, the state wants to make it clear the Arizona Department of Water Resources is the primary entity responsible for conserving water in Lake Mead, an idea that blew up earlier this year when the department said CAP overstated its role in a lawsuit claiming sovereign immunity.
In spring 2015, the Metropolitan Water District of Southern California approached CAP about putting together a water storage deal. Metropolitan serves 19 million people in Los Angeles and San Diego and the surrounding areas.
Documents prepared by CAP for the governor’s water meetings show the deal, which never went through, would have transferred 60,000 acre-feet of Arizona’s allotment at Lake Mead to Metropolitan at a price of about $300 per acre-foot. Metropolitan would return the same amount of water, minus a small amount to account for losses in the delivery process, to Arizona at a future date. An acre-foot is enough water to cover an acre of land, which is roughly the size of a football field, at one foot deep, or about 326,000 gallons.
The $18 million would have been used to cover CAP’s direct and indirect costs related to the deal, as well as build new wells and fix old ones. Some of the money would have gone to the Arizona Water Banking Authority.
The deal could have put Arizona’s water allotment from the Colorado River in jeopardy, Buschatzke claimed. At the time, Lake Mead was near the level that would have triggered cutbacks to users, and taking water out to give to California instead of leaving it in the lake could have spelled disaster, he said.
CAP denies the water deal would have put the state any closer to cutbacks. The 60,000-acre-feet of water was set to be delivered by CAP to the Arizona Water Banking Authority anyway, which is what happened after the deal fell through, according to CAP. CAP and other Arizona entities have worked together to keep more water in the lake to avoid cutbacks.
But for the Department of Water Resources, one line in a legal memo from CAP’s outside counsel, shows what the deal was really about.
“I am not at all sure that one ever avoids the obvious reality that Arizona is, to a greater or lesser degree, selling water to California,” attorney Stuart Somach wrote in a memo to CAP in May 2015.
For Buschatzke, that line says it all.
“It’s mind-boggling to me that anyone could draw a conclusion other than the conclusion that we have drawn, given this document. They’re trying to rewrite history,” Buschatzke said.
Metropolitan intended to use the water in 2015 to help alleviate statewide cutbacks that called on everyone in California to use 25 percent less water, said Bill Hasencamp, the district’s manager of Colorado River resources.
“We would use it to meet our short-term needs during the drought. … It might have sounded like a sale because there was money,” Hasencamp said.
But it wasn’t a sale, not in water resources terms, Hasencamp said. It was an interstate water banking agreement similar to ones Metropolitan has with Nevada, he said. The water would have lessened the drastic effect of the drought on Metropolitan’s water users, and Arizona would have for sure gotten the water back in the future, plus the money Metropolitan paid for the water, he said. Now, as the drought has eased slightly since 2015, the district has more than enough water available in storage to repay the amount Arizona would have given it, he said.
“There’s no reason to think one agency would not honor its agreement,” Hasencamp said. Any suggestion the water wouldn’t be paid back is “almost insulting,” he said.
In fact, Hasencamp noted, Nevada has water stored in Arizona that it expects to get back in the future.
NO LEGAL WAY
But, according to Buschatzke, there’s no legal way CAWCD could have entered into a storage agreement with another state to store water outside Arizona. The state says CAP doesn’t have the legal authority to enter into interstate agreements to store water — only the Arizona Water Banking Authority, which Buschatzke chairs, can do that. Plus, state statutes say any water Arizona stores must be stored in the state itself, not in other locations.
“We gave them the benefit of the doubt with (Metropolitan Water District) and didn’t push the legal ground argument. We let them back off on the policy. But that’s not going to happen again. We will assert the legalities of this,” he said.
The performance audits the state has proposed for CAWCD would make sure the agency doesn’t operate outside its authority, Buschatzke said.
The insinuation that CAP operated outside its legal authority to secretly sell water to California is insulting and inaccurate, according to CAP.
“Anyone claiming (the Central Arizona Project) attempted to negotiate an agreement to transfer Arizona water to California is perpetuating a false story to serve ulterior political motives. That’s the only explanation for such irresponsible rhetoric,” CAP’s Thompson said.
The Department of Water Resources was brought into the mix in mid-2015 and discussed the issue with CAP. Some emails in the documents prepared by CAP allude to the department being supportive of the idea, but having questions.
Eventually, CAP backed away from the deal, citing policy reasons. But in the documents CAP prepared, its own employees and representatives seem to acknowledge the appearance of the water deal. In one draft of potential deals, one of the “cons” to the storage deal is risking the “optics” of selling unused Arizona water to California.
Thompson said California authorities reached out to CAP to start a “water storage conversation” that “simply put, could be viewed as transferring water out of Arizona.” After talks with the Department of Water Resources and their own attorney, CAP decided not to move forward because “(CAP) opposes the sale, lease or transfer of Arizona’s Colorado River entitlement outside the State.”
CAP affirmed its policy against transferring, selling or leasing water to outside groups at its meeting this month.