California Asserts Authority to Control Environmental Effects of Federal Reclamation Project

On June 12 the Attorney General of California filed suit in federal district court seeking a judgment that the state may impose reasonable conditions on the operation of a federal water project in order to protect environmental interests. The action, California v. Morton,¹ grows out of a conflict between the State Water Resources Control Board and the U.S. Bureau of Reclamation regarding the operation of the federal Central Valley Project (CVP). State review of the program has been more responsive to environmental concerns and has now forced a confrontation on the limits of a state's authority to protect these interests against federal encroachment. The litigation demonstrates an increased momentum on the state level in efforts to protect the environment, encouraged by recent federal legislation and implemented by state environmental quality statutes.

California has a long history of attempts to better manage its water resources. The state experiences both spring floods and summer droughts, with much of its land unusable and growth in many areas limited without water transported from other parts of the state. In 1919 the state attempted to solve this situation with the "Marshall Plan," a statewide plan for water management proposed by Colonel Robert Marshall of the U.S. Geological Survey. When state resources to cope with the problem were outstripped, Congress passed legislation which created the Central Valley Project, now the largest reclamation project in the United States. Total reservoir capacity presently exceeds 8.5 million acre-feet of water.

the state's own interest in solving its water problems did not disappear when the fedeal government took over the CVP. In 1959, with the passage of the Burns-Porter Act, California became committed to the development of its own State Water Project. In 1970 the legislature took further action which indirectly affected the management of water resources. The California Environmental Quality Act (CEQA) required that the preservation of environmental quality be given priority in all state projects and in the actions of state agencies. The recent actions of the State Water Resources Control Board implementing this mandate in its own procedures reflect a dramatic change in California's attitude toward water management, and by implication, all other development. Without water from the CVP, growth in Southern California is limited. While the Board has not denied water to these areas outright, it has given notice that any requests will be considered in light of competing environmental interests.

On four occasions the Board has imposed conditions on permits issued to the Bureau of Reclamation allowing increased water flows from the CVP. The most important of these orders are the Delta Water Rights Decision, D.1379 of April, 1971, and the recent decision on the New Melones Dam, D.1422 of April, 1973.² In the Delta decision³ the Board ordered the Bureau to allow increased flows of fresh water through the Sacramento-San Joaquin Delta to prevent saline intrusions from the Pacific Ocean which threatened wildlife, agriculture, and industry on the Delta. The order was a landmark in many ways. First, the ongoing operation of a federal project was reviewed by a state agency. The Board had reopened a prior permit proceeding to impose the new conditions under its powers of reserved jurisdiction. Second, the order would increase water flows in the Delta beyond the level at which they would naturally occur in the absence of the federal water project. The Board held that it was required to impose conditions on all permits to assure the optimum beneficial use of the state's water, which included requiring the release of water to downstream users not a part of the project.

Decision 1422 dealt with the Bureau's application for a permit to appropriate 2.4 million acre-feet of water behind [3 ELR 10107] the controversial New Melones Dam.⁴ The final order contains 25 conditions that restrict present storage to less than half that amount until the Bureau can show it has firm commitments to deliver water for uses that will have benefits outweighing any damage to fish, wildlife, or recreation along the Stanislaus River. The Board, acting pursuant to CEQA, conducted its own balancing of economic benefits and environmental costs and determined that at the present time the demand for water was not sufficient to allow the destruction of important stream fisheries and whitewater boating areas involved. This assessment was separate from the Bureau's own environmental impact statement filed under NEPA and found to be sufficient by a federal district court.⁵ That statement had not found the environmental interests so compelling.

The Water Resources Control Board was created in 1967, combining the functions of the Water Rights Board and the Water Quality Board. Its formation recognized that water quality and water quantity were not separate concerns, especially in a state where water was scarce. Any person seeking to appropriate water within the state is required to apply to the Board for a permit. These permits are further conditioned pursuant to a statutory requirement that the water be put to a beneficial use which is in the public interest and meets the requirements of CEQA. The Board has construed its obligations to require the conditioning of all permits to provide for the optimum range of beneficial uses for all parties in the state, not just those involved in the permit application.

The complaint seeks a decree that the Bureau, like any person, must apply to the Board for permission to appropriate water from the state, and is subsequently bound by any conditions placed in the permit. As early as 1961 the Water Rights Board had claimed that such was the case. The Board ruled then that Section 8 of the Reclamation Act of 1902 required the Bureau to conform with state laws concerning the "control, appropriation, use or distribution of water used in irrigation, or any vested right acquired thereunder."⁶

The ruling and its rationale were never challenged in the state courts by the Bureau as provided for in the California Water Code. For comity the Bureau had always complied with the Board's rulings. On October 6, 1972, however, the Department of the Interior and the Department of Justice announced that the federal government did not consider itself to be bound by the orders of a state agency. In support of its position the Bureau seems to have case law reaching back to McCulloch v. Maryland. In Ivanhoe Irrigation District v. McCracken,⁷ the United States Supreme Court unanimously reversed the California Supreme Court, finding "nothing in Section 8 [of the Reclamation Act of 1902] that compels the U.S. to deliver water on terms imposed by the states." As recently as 1963 the Court has affirmed the notion that California's agencies cannot force the Bureau to release water from a federal project, or to allocate that water according to locally set preferences. In addition, these cases have pointed out that the Bureau ultimately has the power of eminent domain and may "seize" any water necessary for the operation of a federal project.

Court decisions in related areas have given the question a simplistic treatment, focusing only on the question of federal-state sovereignty.The District Court for the Central District of California has held that the federal government need not obtain a permit from a local air pollution control district when installing equipment that will issue air contaminants.⁸ State authority over federal actions was held to be limited to only that explicitly granted in the Clean Air Act.

What these previous cases have not considered, and what the complaint sets out, are recent actions by the federal government establishing new policies and priorities concerning environmental interests that emphasize the role of local authorities. Reference is made to the Federal Water Pollution Control Act, the Environmental Quality Act of 1970, and Section 101 (a) of NEPA, all of which stress federal-state cooperation with primary responsibility given to the states. The state argues that this reflects a willingness on the part of Congress to submit fedderal actions to reasonable state regulation which is aimed at protecting the environment.

Justice Holmes termed a river as being "more than an amenity, it is a treasure." Justice Douglas resurrected that phrase in 1959 to expand the Rivers and Harbors Act to protect environmental as well as navigational interests.⁹ Now the State of California is seeking to protect its rivers by giving active consideration to environmental and recreational interests in decisions regarding water management. This independent evaluation under a state environmental protection statute, even if not binding on the federal government, must at the very least be included in the Bureau's own assessment of envirionmental impact under NEPA. To that end the controversy is already having effect. The chairman of the Council on Environmental Quality wrote to the Bureau two weeks after the Board's ruling on the new Melones Dam project, suggesting that it reevaluate its position in light of these new developments. In all, the scrutiny given to major projects affecting the environment has been expanded to include interrelated local, state, and federal evaluation, offering an opportunity for more comprehensive environmental planning and analysis.

1. No. C 73-984 ACW (N.D. Cal.).

2. Copies of the full decisions are available from ELR facsimile Service.

3. Note, The Delta Water Rights Decision, 2 Ecol. L. Qtly. 733 (1972).

4. See Comment, 3 ELR 10062 (1973).

5. Environmental Defense Fund, Inc. v. Armstrong, 3 ELR 20294 (N.D. Cal. Mar. 16, 1973), decided one month prior to the water board's ruling in D. 1422.

6. 43 U.S.C. § 383 (1970).

7. 357 U.S. 275 (1958).

8. California v. Statsny, 2 ELR 20561 (C.D. Cal. 1972).

9. United States v. Republic Steel Corp., 362 U.S. 482 (1959).