June 14, 2013

CPR Scholar Sandi Zellmer: Senate Passes Wrong-Headed “States’ Water Rights Act” WRDA Amendment to Facilitate N.D. Fracking

The 2013 Water Resources Development Act (WRDA), as adopted by the Senate on May 13, S.601, would authorize $12 billion in federal spending on flood protection, dam and levee projects, and port improvements.  A new version of WRDA is passed every few years, and it is the primary vehicle for authorizing U.S. Army Corps of Engineers’ water projects and for implementing changes with respect to the Corps’ water resource policies.

S.601 contains several notable provisions, not the least of which is the so-called “States’ Water Rights Act” Amendment.  This amendment would bar the Corps from charging a storage fee for “surplus water” drawn from Missouri River reservoirs.  For the purposes of Section 6 of the 1944 Flood Control Act, which governs Missouri River operations, “surplus water” is defined as water stored in a Corps of Engineers reservoir that is not required because the congressionally authorized need for the water never developed.  In the Dakotas, the water in question was originally intended for irrigation, but irrigated agriculture in this region did not develop to the extent anticipated in 1944.

In the midst of one of the most severe draughts seen by this region since the 1930’s, one has to wonder whether there could ever be such a thing as “surplus” water.  Last summer, crops withered in the field, and low water levels on the Missouri threatened to shut down commerce on the Mississippi River and to disrupt shipments worth billions of dollars.

What kind of sleight of hand might this be?

We’ve seen this kind of power play (pardon the pun) before.  In the early 1980’s South Dakota Governor William Janklow arranged to purchase 50,000 acre-feet of water from Oahe Reservoir under a renewable five-year contract with the Bureau of Reclamation at $30 per acre-foot, about 1/3 of which was to be transferred to Energy Transportation Systems, Inc. (ETSI) for its coal slurry pipeline from Wyoming to the Gulf States.  John Thorson explains, “At an initial average price of $150 per acre-foot, the energy deal was expected to return as much as $1.4 billion to South Dakota.”[1] Then-Secretary of Interior James Watt applauded this “brilliant and creative suggestion.” Id.  Not everyone agreed.  The Sioux Indian Tribes claimed ownership of part the water under the federally reserved rights doctrine, and downstream states feared that the sale would impact navigation.  A coalition of states and other interested parties successfully sued to prevent the sale.  The U.S. Supreme Court did not resolve the underlying substantive issue (how much water is “surplus” to other lawful uses and whether or how much it might be sold for), but it did find that the Corps (not the Bureau) “has exclusive authority to contract to remove water for industrial uses.”[2]

According to the WRDA amendment’s sponsor, Senator Hoeven (R-ND), if the Corps were to charge fees for the water, the Corps would, in effect, penalize North Dakota “by essentially charging a tax for water that would be freely available in the absence of the Corps’ dams and reservoirs.” [3]  His theory seems to be that ND has exclusive authority to extract and sell the River’s “natural flow,” even if the water is diverted directly from storage in a federal reservoir. Judicial decisions don’t support that theory, however (equitable apportionment between the states of the basin requires a fair division of the resource, with upstream states getting no more than their fair share). [4] True, states do have legally recognized interests in water utilization and control.  But as Thorson notes, “Unbridled, state-permitted diversions from the system, though initially small, cumulatively over time would frustrate the agency’s ability to meet authorized purposes,” and to balance competing demands for flood control, navigation, hydropower, recreation, species recovery, tribal water rights, and other uses.

Meanwhile, North Dakota has a far different set of interests than the downstream states—North Dakota's oil patch needs copious amounts of water for hydro-fracking. “One well in North Dakota's rich Bakken formation can use up to 3 million gallons of water during hydraulic fracturing, a process that uses pressurized fluid and sand to break open oil-bearing rock 2 miles underground.”  The Corps estimated that the fracking industry’s short-term water demand from Lake Sakakawea alone would be about 27,000 acre-feet of water a year over the next 10 years.[5]  For more information about hydraulic fracturing or “fracking”, see content.sierraclub.org/naturalgas/.

Understandably, North Dakota wants its booming new industry to have the raw materials it needs for oil and gas production and development.  But transferring the water free of charge to one of the basin states raises significant concerns.  If North Dakota receives the so-called surplus water from the Corps, can it turn around and sell that water for a tidy profit to the industry?  If so, what rights would any other Missouri River Basin state have to protest the sale?  And would the other basin states be entitled to share in any proceeds that North Dakota might receive?  For that matter, should the federal taxpayer enjoy some of those proceeds, if nothing else to help defray the operating costs incurred by the Corps of Engineers over the years? 

If the amendment is enacted into law, it would likely be a windfall for North Dakota, the energy companies, or both, and it would be disastrous from the standpoint of conservation (it’s human nature to waste things that we don’t have to pay for).  

Since 2010, the Corps has restricted access to Missouri River water and has proposed charging for storage at Lake Sakakawea and Lake Oahe to recover the costs of the Missouri River projects. The Corps is in the process of completing four concurrent actions that will impact industrial and municipal water supply users throughout the Missouri River basin. One of these involves a notice and comment rulemaking to establish a nationwide standard for pricing surplus water uses and to address other current and future aspects of water supply policy.  Another piece of this coordinated effort will systemically examine whether some amount of the storage included in the Missouri River reservoirs may be permanently allocated for municipal and industrial water supply use. The leadership of the House Committee on Transportation and Infrastructure, which has primary jurisdiction over WRDA, has indicated that they are not in a rush to take up the Senate WRDA bill.  Congress should let these administrative processes continue to their conclusion, rather than to continue to piecemeal these complex, interrelated issues at the behest of one state or one industry.








[1] The Federal-State Dynamic in Meeting Local Water Supply Needs: USACE’s Evolving Role, ABA SEER Water Law Conference, June 6, 2013

[2] ETSI Pipeline Project v. Missouri, 484 U.S. 495, 506 (1988).


[3] John Hoeven, A Victory for the Missouri River Basin, BismarckTribune, May 19, 2013.

[4] See Nebraska v. Wyoming, 325 U.S. 589, 618 (1945)

Sandra Zellmer, CPR Member Scholar; Robert Daugherty Prof. of Law, University of Nebraska College of Law. Bio.

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