On November 18, the Imperial Irrigation District (“IID”) filed a petition with the State Water Resources Control Board to modify the Board’s 2002 water rights order WRO 2002-13 approving the long-term water conservation and transfer agreement between IID and the San Diego County Water Authority (“SDCWA”). The IID requests that the Board “initiate a collaborative dialogue . . . with the objective of building a consensus around a (Salton Sea) restoration and funding plan that can be implemented immediately.” IID requested that the Board schedule and notice a public hearing no later than August 18, 2015 (the penultimate step in the requested process) to assess the factual and legal basis for making the restoration of the Salton Sea as a condition of QSA transfers in a new water rights order.
What are the issues raised by IID’s petition? After summarizing IID’s petition, the discussion sorts through the issues.
A Call for Salton Sea Restoration
The IID petition is a request to restart deliberations over Salton Sea restoration. The Salton Sea Authority, California’s Resource Agency and the Bureau of Reclamation each released studies of restoration alternatives, costs and funding mechanisms in the 2006 and 2007 time period. None were a catalyst for action.
In 2013, the California Legislature passed AB 71 stating an “intent of the Legislature” to protect fish and wildlife dependent on the Salton Sea and minimize odor, air quality and water quality problems. The Secretary of Resources leads the effort with demonstration projects and research in consultation and coordination with the Salton Sea Authority.
IID argues that time is of the essence. Under the Board’s 2002 water rights order, IID has a mitigation obligation to deliver water directly to the Salton Sea to avoid water conservation reducing Salton Sea inflows. This obligation ends in 2017. Thereafter, both the elevation is projected to fall and the salinity of the Salton Sea is projected to rise rapidly.
A recent study by the Pacific Institute estimated the cost of inaction on Salton Sea restoration. The present value of the public health costs of continuing non-attainment of federal air quality standards in the Imperial Valley through 2047 are estimated at $21 billion (or a higher $37 billion under a worst case scenario). Blowing dust and declining sea elevations are estimated to reduce property values by $400 million in the Imperial Valley and by $6.4 billion in the Coachella Valley. Continued deterioration of the Salton Sea is estimated to reduce direct recreational spending at the Salton Sea State Recreation Area by $6 million annually. Assuming Californians value the ecological benefits of the Salton Sea the same as Mono Lake, “a potential non-use valuation of the Salton Sea (is) on the order of $1.9 billion annually.”
The State’s failure to restore the Salton Sea requires the Board to revisit its 2002 water rights order. “The Board should take steps to ensure that the State follows through with its commitment.” To this end, “the Board should initiate a collaborative, cooperative process . . . to agree on a restoration plan that can realistically be presented to the Board, implemented and funded in time to prevent the environmental and public health crisis that the (Salton) Sea otherwise faces.”
IID argues that the Board has continuing authority to revisit the impacts of the “QSA transfers”. At one level, IID believes that the Board expressly reserved continuing authority in its amended 2002 water rights order. At another level, IID argues that the Board’s statutory duty regarding review of transfers to avoid unreasonable impacts on fish, wildlife or other instream beneficial uses provides authority for action. IID also cited case law related to the Public Trust doctrine.
IID advances another argument stating that Salton Sea Restoration was an integral part of the QSA. It finds support from statement of legislative intent in QSA legislation passed in 2003 and contemporary newspaper articles. It argues that Salton Sea restoration was the responsibility of the State.
IID’s final argument involves reliance on legislative intent. IID observes that the Quantification Settlement Agreement (entered into by IID, Coachella Valley Water District and the Metropolitan Water District of Southern California) states that the QSA and related agreements “are premised on, among other things, the special considerations set forth in Section 6.2.” Among the sixteen items specified in Section 6.2 is “the continuation of the QSA Legislation in full force and effect without material modification.”
The last item in Section 6.2 involves “Failure of Consideration”: a material failure of any item in Section 6.2 shall constitute “an irreparable injury” and an “irreparable harm to the public interest.” IID cites case law suggesting that “a failure of consideration is a ground for either rescinding or terminating a contract.”
IID acknowledged that the Board is not a court and, therefore, not the venue to hear a contract dispute. In a footnote, “IID does not waive, hereby expressly reserves, all of its rights to seek any contractual or other relief to which it may be entitled in law or equity.” IID aspires to use a Board process to avoid “any possible litigation regarding restoration of the (Salton) Sea.”
What IID Requested
Given that “the crisis the Salton Sea faces is imminent,” IID urges the Board to avoid an open-ended process. IID suggests the following sequence:
- Initial Status Conference (before year-end): Board order parties to commence dialogue and guidance, including timeline and procedures to follow.
- Second Status Conference (by May 18, 2015): parties inform Board of the results of the dialogue.
- Public Adjudicatory Hearing (by August 18, 2015): regarding the QSA and restoration of the Salton Sea.
IID requests that the Board then modify its the 2002 water rights order to add State implementation and funding of a Salton Sea restoration plan as a condition of the IID transfers.
Analysis and Discussion
What are the provisions of the Board’s 2002 revised order regarding continuing authority and mitigation? What is the QSA Legislation provision in the QSA? What does this all mean for the proceeding sought by IID?
Revised 2002 Board Order
The Board order approving the IID-SDCWA transfer had sixteen conditions. Four involve reservation of continuing authority:
- Condition 7: Board reserves continuing authority “to consider whether it would be appropriate to add, delete, or modify the mitigation measures required by Conditions 5 and 6, above, in light of the results of the feasibility of restoration to be prepared by the Secretary of the Interior, the Salton Sea Authority, and the Governor of California, in accordance with the Reclamation Act of 1998 . . . and Senate Bill 482.” The Board further reserves continuing authority to revise Condition 5 or 6 if the incidental take authorization in SB 482 is not effective.
- Condition 9: Board reserves continuing authority to require IID to implement mitigation measures specified in US Fish and Wildlife Service’s Biological Opinion for designated Bureau of Reclamation activities not implemented by the Bureau, provided that the implementation of the measures are feasible.
- Condition 14: Board reserves continuing authority to consider changes in the order if IID revises, amends or supplements environmental documentation certified on June 28, 2002 before IID approves the project or any substantial changes made to the project as part of IID’s approval decision.
- Condition 15: Board reserves continuing authority to consider whether any changes to its order to minimize or mitigate for socio-economic impacts may be appropriate after consultations with state agencies specified in SB 482.
Only one condition of continuing authority (Condition 7) involves the Salton Sea. This condition is related to whether designated studies under federal and state law concerning the feasibility of restoration should prompt the Board to revise either Condition 5 (Salton Sea Habitat Conservation Strategy and Habitat Conservation Strategy outlined in environmental documentation certified by IID on June 28, 2002 and defined in SB 482) or Condition 6 (monitoring plan of Salton Sea elevation and salinity).
In that the strategies contained in Condition 5 do not include Salton Sea restoration, it is hard to follow IID’s reasoning that the Board’s expressed continuing authority is linked to restoration.
There are two other conditions involving mitigation related to the issues raised in IID’s petition:
- Condition 8: The Board required IID to monitor and mitigate air quality as outlined in its certified environmental documentation. The plan shall continue as long as project-related air quality impacts occur. IID shall also comply with any relevant requirements of the State Implementation Plan for PM10 Emissions or PM10 rules of local air quality districts, as they may be amended. Further, “if the air quality impacts of the project are not being mitigated to less than significant levels, (IID) shall identify any air quality mitigation measure that it determined was infeasible.” “If the Chief of the Division of Water Rights determines, after consultation with (local and state air quality agencies) that the mitigation measure is feasible and necessary to mitigate the air quality impacts of the project, then (IID) shall implement the mitigation measure.”
- Condition 13: “To mitigate for the recreational and aesthetic impacts of a receding Salton Sea shoreline,” IID is required to undertake actions specified in certified environmental documents.
The implications of Condition 8 are worth consideration. Until 2017 (with direct delivery of water to the Salton Sea), IID transfers are not anticipated to reduce Salton Sea inflows. So, the air quality impacts are none. With the delivery of mitigation water ending in 2017, IID still has mitigation obligations under Condition 8. Therefore, any significant air quality impacts from falling elevation means that IID has not met its obligation under Condition 8. If you like, an “IID failure to mitigate” rather than a “State failure to restore”—unless the only way to mitigate is to restore.
A comparable analysis applies about loss of recreational or aesthetics. Any statement about “unmitigated project impacts” is really about the adequacy of mitigation in Condition 13.
QSA Legislation Provision in the QSA
The IID Petition notes that the QSA was premised on many special considerations including “the continuation of the QSA Legislation in full force and effect without material modification.” Recital L defines QSA Legislation as three acts (SB 317, SB 277 and SB 654) “to facilitate implementation of this Agreement and Related Agreements.” Related agreements involve the more than thirty agreements executed concurrently with the QSA. None involve Salton Sea restoration.
When the QSA was negotiated, there were three scenarios that formed the structuring of agreements and assignment of environmental responsibilities:
- An unrestored Salton Sea without IID transfers
- An unrestored Salton Sea with IID transfers
- Restored Salton Sea with IID transfers
The delivery of mitigation water to the Salton Sea gave a window for the assessment and potential implementation of Salton Sea restoration. The obligation of mitigation water during this period totals 775,000 acre-feet of water. Valuing this water at the price SDCWA pays IID for conserved water, $400 million of Colorado River water will be invested. With this investment coming to an end and no Salton Sea restoration on the horizon, IID has petitioned the Board to add Salton Sea restoration into the mix.
IID transfers include obligations to mitigate the impact of lowering elevation and rising salinity on air quality, recreation and aesthetic values. To the extent that there are concerns about the impact of IID transfers, should not the first line of inquiry be related to Conditions 8 and 13 of the Board’s 2002 revised water rights order? Until these are shown inadequate, the premise that the end of direct delivery of water into the Salton Sea triggers any type of emergency is unfounded. In other words, lowering elevation and rising salinity with effective mitigation does not equal an emergency.
Even if mitigation proves effective, there are two issues. First, the cost of mitigation through 2047 may exceed the mitigation funding obligations of IID, Coachella and SDCWA—their scheduled obligations has a present value of $133 million with a valuation date of 2003. In its petition, IID states that these funding obligations may be exhausted by 2025. Under a Joint Powers Agreement, the State of California will be responsible for any remaining funding. IID petition asks whether these funds would be better spent on restoration than mitigation?
This question was precisely the justification for Condition 8. Evidently, the feasibility studies conducted in the 2006 and 2007 time period prompted no one to ask the Board to revisit Condition 5 or 6.
Second, even with reasonable mitigation, Salton Sea restoration may provide benefits beyond mitigated IID transfers. Do the various legislative actions imply that Salton Sea restoration was integral to the QSA?
Based on the above analysis, the Board may be surprised with their requested role. The only continuing authority the Board reserved on this matter involved whether feasibility studies of Salton Sea restoration should fine-tune IID’s mitigation obligations stated in Condition 5. For almost the next year, the Board is requested to become a “facilitator” of sorts among interested parties about restoring the Salton Sea.
If the parties can not voluntarily agree to tie Salton Sea restoration to continuation of IID transfers, then IID asks the Board to add a new condition on the QSA based on legal theories of statutory construction and interpretation of news articles. If the Board decides to reject IID’s request, what is next? Salton Sea restoration enters the courtroom? Since QSA litigation has been ongoing since 2003, will QSA litigation on one legal theory or another last beyond 2047?
The short-term questions are the following:
- Will the Board hold the Initial Status Conference requested by IID before the end of 2014?
- Will the Board at the Initial Status Conference order the Secretary of Resources, QSA parties, etc. to participate in IID’s requested process with timelines and guidance of issues to address?
- Will the Board hold a Second Status Conference before six months as requested by IID?
- Will the Board hold an adjudicatory hearing within nine months as requested by IID?
- As parties to the QSA agreement, will Coachella and MWD agree that Salton Sea restoration was integral part of the QSA?
- In the absence of a settlement before the hearing, will the Board find that restoration of the Salton Sea was an integral part of the QSA as argued by IID?
- Will the Board make restoration of the Salton Sea a condition of a revised water rights order as requested by IID?
These questions involve a mix of politics, policy and law. Rather than dwell into the dark recesses of legal theory or political rhetoric, the Journal of Water solicits the “wisdom of crowds” through the Stratecon Water Policy Marketplace.
Written by Rodney T. Smith, Ph.D.
Publisher’s Note: Dr. Smith served as an economic advisor to the Imperial Irrigation District from 1996 through 2011. He participated in the negotiation of the IID-SDCWA agreement and the QSA. He was a witness on behalf of IID at the Board hearings in 2002. He also represented IID in its acquisition of 42,000 acres of farmland in Imperial Valley from Western Farms and represented IID in the financing of that acquisition. The analysis, opinions and conclusions expressed, as always in the Journal of Water, are his own and do not reflect the opinions or positions of any past or current clients of Stratecon Inc.