Colorado River: January 31 Drought Contingency Plan Deadline Looming-And the Shutdown Isn’t Helping

By Tarah Bailey, GWC Graduate Fellow

The last two decades marked the longest period of drought in the Colorado River’s recorded history, and water demands in the last decade exceeded available supply.  With thirty-five to forty million people in the U.S. currently relying on water from the Colorado River Basin, its waters are over allocated at a rate above mother nature’s ability to replenish.  As such, water supplies are steadily dwindling.  Lake Mead, the largest reservoir in the country and an important emergency reserve supply, is now only 38% full and Lake Powell is just 43% full.

The water users of the Colorado River Basin include seven states – Colorado, New Mexico, Wyoming, and Utah (the Upper Basin states) and Arizona and California (the Lower Basin states) – and Mexico. The river is managed under numerous compacts, federal laws, court decisions and decrees, contracts, and regulatory guidelines collectively known as the “Law of the River.”  Under the Law of the River, the Upper Basin states must deliver a certain amount of water to the Lower Basin states each year. Due to the drought in the last couple decades, water users have relied on Lake Mead and Lake Powell to compensate for water shortages and to maintain the water delivery requirements the Law of the River demands. But with Lake Mead and Lake Powell steadily depleting, the basin state users must curb consumption and figure out a way to limit usage. 

The Interior Department’s Bureau of Reclamation (“Reclamation”) oversees the Colorado River and enforces the Law of the River. Reclamation has spent more than three years urging the states to adopt plans that would reduce water consumption.  According to Anne Castle, former Assistant Secretary for Water and Science at the U.S. Department of the Interior and Senior Fellow at the GWC, the 2007 Interim Guidelines – which control the amount of water released from the Glen Canyon Dam (Lake Powell) – “are not sufficient to deal with the reality of the current extended drought, the possibility of further reductions of flows, over appropriation of the basin in general, and structural deficit in the lower basin.”  To address these ongoing issues, the basin states have been developing Drought Contingency Plans (DCPs) in response to the ongoing historic drought and to manage Lake Powell and Lake Mead in a more sustainable manner.

In December 2018, Reclamation’s Commissioner Brenda Burman called on the seven basin states and water entitlement holders in the Lower Basin to finalize and execute their DCPs by January 31, 2019. The DCPs would require some users to reduce their use – something seemingly impossible to the many farmers and irrigators reliant on the river’s waters in the region.  Because 70% of the river’s water is used by and for the basin’s irrigators, curtailing consumption must come at a price.

In Arizona, a desert state that has consumed beyond its allotted amount for years, farmers in Pinal County are not happy. The January 31 deadline is rapidly approaching and Arizona still does not have an approved plan.  Arizona is the only state where the DCP must be approved by legislation.  Although the DCP has been a top priority since legislators reconvened on January 14, they have only three weeks to approve it.  Out of the seven basin states, Arizona is struggling the most to figure out which water users should see cutbacks first and by how much. Farmers, cities, homebuilders, and tribes are all fighting for more.

The DCP will determine how Arizona’s water users will share the cut of at least 512,000 acre-feet of water out of the 2.8 million they use per year.  But to offset these cutbacks, funding for groundwater infrastructure is required. Arizona Gov.  Doug Ducey and the Central Arizona Project board, which oversees the 336-mile long water delivery system in central Arizona, have each pledged $5M to help fund groundwater infrastructure for Pinal County farmers.

Another issue holding up Arizona lawmakers is the current federal government shutdown.  While Reclamation remains funded through the shutdown (because of its involvement with energy and water appropriation), some of its legal counsel were furloughed. So local Reclamation managers in Arizona are trying to move forward without their counsel – a difficult feat due to the complexities involved.  But Reclamation recently reached an agreement with the Department of Interior to pay for a few of the solicitors and lawyers to come back to work to help hash things out.  With their lawyers on hand, hopefully Arizona’s DCP will be approved in time.

As for the other basin states, all other DCPs are approved.  Arizona remains the lone holdout.  If Arizona misses the January 31 deadline, Reclamation has stated it will step in and take control of matters to prop up Lake Powell.  What that means for the states is that they would lose control over the destiny of their Colorado River waters.  No one wants that.  

As the January 31 deadline looms, the fate of the Colorado River remains uncertain and the pressure is on Arizona lawmakers to make quick decisions.

Tarah Bailey (Colorado Law ’18) is a Graduate Fellow at the Getches-Wilkinson Center for Natural Resources, Energy and the Environment

Colorado’s Responsibility to Protect the Public and the Environment from Adverse Impacts of Oil and Gas Development By GWC Senior Fellow Robert Hallman

Oil and gas (O&G) production in Colorado is growing largely through development of wells using hydraulic fracturing (pumping millions of gallons of water, sand and chemicals under high pressure) coupled with horizontal drilling at distances extending one to three miles from the wells. (The entire process in now commonly referred to as “fracking.”)

The search for the most productive areas increasingly involves proposals to locate multiple well pads in urban, suburban and exurban areas exposing communities to industrial-scale operations and related environmental, public health and safety, economic, and social impacts.

In response, various impacted parties have urged the Colorado Oil and Gas Conservation Commission (the Commission) to expand and/or strengthen its environmental, safety, siting, and public participation rules applicable to O&G projects; and many local governments have sought to ban or otherwise regulate fracking through home rule and/or land use/zoning authority.

The Law

The Colorado Oil and Gas Conservation Act (the Act) established the Commission to regulate O&G operations “so as to prevent and mitigate significant adverse environmental impact on the air, water, soil, or biological resources resulting from oil and gas operations to the extent necessary to protect public health, safety, and welfare, including protection of the environment and wildlife resources, taking into consideration cost effectiveness and technical feasibility.” It also directs the Commission to promulgate rules “in consultation with the department of public health and environment [DPHE]…, to protect the health, safety and welfare of the general public in the conduct of O&G operations.”

The Act further states that it is in the public interest “to foster the responsible, balanced development, production and utilization of… oil and gas… in a manner consistent with the protection of public health, safety and welfare, including protection of the environment and wildlife resources….”

The current Commission interprets the Act to mean it is required to balance a number of competing policies with protection of the environment, public health, and safety. The Commission’s “balancing test” has come under increasing scrutiny as environmental and safety issues have increased. The effects of climate change, explosions and leaks caused by pipelines, and a variety of community impacts associated with industrial-scale fracking have grown in number and intensity. In January, the Colorado Supreme Court agreed to review whether the balancing test satisfies the requirement to protect public health, safety and the environment in Colorado Oil and Gas Conservation Commission, American Petroleum Institute, and Colorado Petroleum Association v. Xiuhtezcatl Martinez, et al, 17SC297 (the Martinez Case).

The Martinez Case

In November 2013, a group of concerned citizens requested that the Commission adopt a rule to suspend issuance of permits for O&G projects until it determined, based on the best available science and independent third-party confirmation, that drilling can be done without impairing Colorado’s atmosphere, water, wildlife and land resources, adversely impacting human health, and contributing to climate change.

After holding a hearing and receiving an opinion from the Attorney General (AG) that found the proposed rule was beyond the Commission’s “limited statutory authority,” the Commission denied the request. A key reason was its conclusion that the proposed rule would require the Commission to “readjust the balance crafted by the General Assembly” under the Act. The Commission cited the AG’s opinion as “the primary basis of the Commission’s denial.”

Petitioners appealed and in February 2016, the Colorado District Court (Denver) affirmed the Commission’s denial. In March 2017, the Colorado Court of Appeals, in a two to one decision, held that the Commission erred in construing the Act to require a balancing test and reversed the District Court’s decision.

The Appellate Court did not address the merits of the proposed rule and remanded the matter for further proceedings consistent with its opinion.

The majority acknowledged the Act’s intent to foster “balanced development, but held that the statutory language, “ ‘in a manner consistent with’ does not indicate a balancing test but rather a condition that must be fulfilled.” Additionally, the majority found that the Commission’s obligation to prevent and mitigate significant adverse environmental impacts “to the extent necessary” to protect the public “evidences a similar intent to elevate the importance of public health, safety and welfare above a mere balancing….”

In May 2017, six of the seven Commission members voted to appeal the Appellate Courts ruling to obtain clarity. The Governor opposed an appeal, claiming the ruling was not a significant departure from current practice. The AG disagreed and sought review by the Supreme Court, arguing that the Appellate Court adopted a novel view of the Act by rejecting the Commission’s balancing test in favor of mandating that development be regulated subject to protection of the environment, public health, and safety.

The AG’s issue for review by the Supreme Court was stated as follows: “When the Commission engages in rule-making, is it permitted to disregard the Act’s policy of fostering O&G development in Colorado?” However, in granting review the Supreme Court reframed the issue asking whether the Appellate Court erred in determining that the Commission misinterpreted the Act as requiring a balance between O&G development and public health, safety, and welfare.

Discussion

Based on the plain language of the Act, its legislative history, and established principles of statutory construction, the Appellate Court’s decision appears sound. For example, the word “balanced” appears once in the legislative declaration and only modifies development, production and utilization of O&G. Balanced O&G activities are declared to be in the public interest only if they proceed in a manner consistent with protection of public health, safety and welfare, and the environment. Treating such protection as one of many policies to be weighed, as opposed to a mandate applicable to O&G operations is unwarranted. Moreover, the AG’s opinion relied on by the Commission to support a balancing test is conclusory at best and circular at worst, including citing the Commission’s use of the balancing test in a 2008 rulemaking to implement 2007 amendments to the Act for support of the balancing test in the Martinez Case.

In any event, no matter how the legislative declaration is interpreted, the Act’s substantive provisions, set forth above, establish a clear mandate for the Commission, in some cases in consultation with the Colorado Department of Public Health and Environment (CDPHE), to develop environmental, public health, safety, and welfare protections for O&G operations without reference to fostering development or any other competing policies.

This mandate authorizes the Commission—as the expert agency regarding O&G operations—to supplement and expand the array of requirements to protect the environment, and public health, safety, and welfare applied to the O&G industry by other responsible federal and state agencies. It would be unreasonable at best to conclude that, having granted such powers to the Commission, the legislature intended the Commission to weaken or even avoid adopting such measures that it deems necessary to “foster” development. It would also fly in the face of established environmental protection, public health and safety policy and practice.

Claiming, as Judge Booras does in her dissenting opinion, that the direction to the Commission in one substantive provision to consider cost effectiveness and technical feasibility supports a general balancing test is unpersuasive. Cost effectiveness and technical feasibility are required considerations only to the extent they relate to assessing proposed environmental protection measures and do not encompass the broad economic implications and “many other factors” (largely unspecified) that the Commission claims it must consider. Also, as the Appellate Court noted, the statutory direction for the Commission to prevent and mitigate environmental impacts “to the extent necessary” to protect the public and environment belies any intent to mandate a regulatory balancing test.

The AG and the Appellate Court minority opinion argue that the Supreme Court’s 2016 decisions determining that local fracking bans and moratoria were preempted by state law support the view that the statewide interest in developing O&G resources trump or at least must be balanced against any environmental, public health and safety concerns. This claim is baseless. The issue in those cases was the extent to which local governments can regulate adverse impacts of O&G projects. The court did not address the nature and extent of the Commission’s authority to promulgate regulations, including whether it is required to balance protections with fostering development.

Whatever the Supreme Court holds in the Martinez case, its decision may be significantly affected by the results of the November 2018 elections for Governor, AG, and state legislature, each of which has a variety of opportunities to impact actions by the Commission. Earlier this year, for example, a bill to codify the Appellate Court decision passed by the House of Representatives died in the State Senate.

Robert Hallman is a GWC Senior Fellow, and a Fellow at the Center on Global Energy Policy at Columbia University. The author includes his thanks to GWC Student Fellow – Griffin Hay – for his research assistance.

Advising the EPA: The Insidious Undoing of Expert Government By CU Law Professor Sharon B. Jacobs

This post originally appeared on the Harvard Law Review Blog

The modern administrative state was built on the promise of expertise. As James Landis argued in his New Deal-era defense of the bureaucracy, expert agencies are needed to effectively oversee the behavior of sophisticated industry actors. Consistent with Landis’s vision, government agencies today are populated by subject matter experts. Thus, the Environmental Protection Agency (EPA) employs biologists and chemists while the Nuclear Regulatory Commission employs physicists and reactor systems engineers. Increasingly, agencies have also sought the advice of outside experts. These outside experts form advisory committees, task forces, work groups, and boards that review agencies’ internal decisions and provide recommendations and advice.

The federal government now makes use of upwards of 1,000 such committees. Sheila Jasanoff has called them a “fifth branch” of government. In the 1970s, congressional concern about the proliferation of advisory committees produced the Federal Advisory Committee Act of 1972 (FACA). FACA imposes reporting and transparency requirements on federal advisory committees. In addition, the Act states that advisory committees should be “fairly balanced in terms of the points of view represented and the functions to be performed.”

On Halloween, EPA Administrator Scott Pruitt issued a new directive entitled “Strengthening and Improving Membership on EPA Federal Advisory Committees.” The directive states that no member of an EPA advisory committee shall “be currently in receipt of EPA grants” or be “in a position that otherwise would reap substantial direct benefit from an EPA grant.” A memorandum accompanying the directive explained that direct receipt of EPA grants “can create the appearance or reality of potential interference” with members’ abilities to “independently and objectively” serve.

That justification is superficially appealing. But the directive’s outward concern with impartiality masks an effort to rebalance advisory committee membership to favor industry representatives over academics. By preventing EPA grantees from serving on advisory committees, the agency is likely disqualifying some of the country’s ablest scientists. Those dismissed from the EPA’s advisory commissions in the wake of the directive include researchers from Harvard, Stanford, and the University of Southern California. In contrast to academics, industry scientists need not seek EPA grants because their research is funded by their employers. They are thus unaffected by the directive. Industry membership on advisory boards raises impartiality concerns of its own. But Administrator Pruitt’s directive ignores this source of potential bias completely.

Moreover, the insinuation that receiving a grant from the EPA renders an advisory board member impartial is misleading. The EPA estimates that in the past three years, members of its Science Advisory Board, Clean Air Scientific Advisory Committee, and Board of Scientific Counselors received a combined total of more than $77 million in direct EPA grant funding. But that figure, by itself, proves nothing. The EPA already employs a conflicts screening process. According to one former member of EPA’s Scientific Advisory Board, advisory commission members are given a conflict of interest form to fill out for each separate issue discussed. If a conflict is identified, the member is immediately recused.

Disallowing advisory committee service by agency grant recipients will not necessarily lead to ideological “stacking” of committees. But the directive’s application has already resulted in more substantial industry membership on EPA advisory committees. There have also been committee leadership changes. Dr. Peter Thorne, whose University of Iowa webpage identifies him as a co-investigator on an EPA-funded study, was recently replaced as chair of the EPA’s Science Advisory Board by Dr. Michael Honeycutt, lead toxicologist for the Texas Commission on Environmental Quality. Dr. Honeycutt has broken with the scientific consensus by questioning the need to reduce smog levels. One of his arguments? Most people spend 90% of their time inside, where smog is less likely to affect them.

Administrator Pruitt’s directive is of concern to those who value advisory committees’ scientific integrity (and some lawmakers have already expressed their displeasure). But is it illegal? Any legal challenge must overcome several hurdles. The first, and most easily surmounted, is that the APA limits judicial review to “final agency action.” The EPA’s directive is likely final under Bennet v. Spear, which requires that the action “mark the ‘consummation’ of the agency’s decisionmaking process” and be one “from which ‘legal consequences will flow.’” As the D.C. Circuit has held, even informal guidance like this directive can be deemed final when it reflects a settled agency position. This directive is binding on its face and has immediate legal consequences for advisory committee members. While Administrator Pruitt was careful to note that he was “reserv[ing] the right to exercise my discretion to depart from the procedures set forth in this directive,” that statement is probably not enough to deprive the directive of finality.

The second hurdle is Article III standing. Under the governing test, plaintiffs must demonstrate to a court’s satisfaction that the directive has caused them a cognizable injury. They must also show that a verdict in their favor will redress that injury, at least in part. The most obvious candidates to challenge the directive are advisory board members who were dismissed due to their EPA grant funding or EPA grant recipients who were potential appointees prior to the directive’s issuance. As the 10th Circuit has explained, “Standing predicated upon denial of a fair opportunity to compete for a position or contract is well established.”. Alternatively, environmental groups like the NRDC and the Sierra Club may be able to invoke the ideas of organizational standing and procedural injury to challenge the directive on their members’ behalf. The Fifth Circuit has held that entities with an interest in the accuracy of particular agency decisions have standing to challenge advisory committee irregularities under FACA, although in that case the challenge came from regulated industry rather than from regulatory beneficiaries.

On the merits, one possible challenge to the directive is that it violates FACA’s requirement that advisory committees be “fairly balanced.” As one commentator has noted, the courts are divided on whether this requirement is justiciable. The Ninth Circuit observed that FACA does not “articulate what perspectives must be considered when determining if the advisory committee is fairly balanced,” and thus provides no meaningful standard for judicial review. However, the D.C. Circuit, Tenth Circuit, and Fifth Circuit have reached the opposite conclusion. In a case called Cargill v. United States, the Fifth Circuit not only found the “fairly balanced” requirement justiciable, but it also found that appointing agency grantees to serve on advisory boards at the Department of Health and Human Services (HHS) was not a violation of FACA. “Moreover,” the court concluded, “if HHS were required to exclude from peer review committees all scientists who somehow had been affiliated with the department, it would have to eliminate many of those most qualified to give advice.”

Per Cargill, therefore, status as a grant recipient is not disqualifying under FACA. But arguing that the EPA is not permitted to disqualify grant recipients is much harder. FACA’s “fairly balanced” edict is worded broadly enough to give agencies significant latitude in selecting advisory commission members. A facial challenge to EPA’s directive would likely fail, since there undoubtedly exist qualified members of academia not in receipt of EPA grants. More likely to succeed are as-applied challenges to the makeup of specific EPA advisory committees on the basis of industry over-representation. There is some evidence, however, that courts are inclined to defer to an agency’s selection of advisory committee members.

Plaintiffs might also challenge the directive as arbitrary and capricious under the Administrative Procedure Act (APA) or as a violation of FACA. Courts assessing agency action under the APA’s arbitrary and capricious standard ask, in part, whether an agency has articulated a rational connection between the facts found and the choice made. There is a powerful argument here that EPA’s focus on one version of independence (from the EPA itself) while ignoring another version of independence (from regulated industry) was arbitrary. It could also be argued that the equation of grant receipt with bias is itself an arbitrary conclusion, especially in light of the Fifth Circuit’s Cargill opinion.

Because Administrator Pruitt’s directive was announced on Halloween, it seems fitting to invoke the Celtic origins of that holiday, on which Celtic druids would make predictions about the future. My gloomy prediction is that this directive is not the last blow to agency expertise and unbiased science that we will see from the Pruitt EPA. Advocates should pursue judicial solutions where possible, but the surest remedy for such violations is political. Scott Pruitt is unfit to lead the EPA and should be replaced at the earliest possible opportunity.

Sharon B. Jacobs is a Professor at CU Law and a member of the GWC Board.