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California, Arizona and Nevada are in negotiations with the federal government to cut around 10% of their Lake Mead water usage over the next four years.
CNN  — 

Three Western states and the federal government are nearing a deal to leave millions of gallons of water in the Colorado River’s Lake Mead – water that would have otherwise been used to irrigate fields or generate hydropower – in exchange for at least $1 billion in federal funding for voluntary water cuts, according to two sources familiar with the plan.

The Colorado River system provides water and electricity to more than 40 million people in seven states, as well as irrigation for Western farmers. But that system has shown alarming water loss after a multi-year, climate change-fueled drought collided with decades of overuse.

Western states and the federal government have been in tense discussions for months to come up with a plan to prevent the Colorado River and the nation’s largest reservoirs, Lakes Mead and Powell, from teetering into disaster.

Top water negotiators from California, Arizona and Nevada have discussed leaving 3 million acre-feet of water in Lake Mead over the next four years, the sources said – while cautioning negotiations with the US Interior Department were fluid and could change.

The tentative amount would be around 10% of the states’ normal water allocation and would be in addition to previously agreed-to cuts that were negotiated in 2019 and 2007. The federal funding being offered for water cuts was part of $4 billion in drought relief funding passed in the Inflation Reduction Act.

States and the US government are trying to clinch a framework agreement ahead of May 30, the end of the comment period for a dramatic environmental analysis released by federal officials last month. That analysis could force the three states to cut nearly 2.1 million additional acre-feet of their Colorado River usage in 2024 alone. At the time, top federal officials said publicly they hoped their proposal would spur discussion among states who have spent the past year sparring over cuts.

“We think the US created a circumstance to encourage this kind of discussion by putting out two fundamentally flawed alternatives,” a source involved in the negotiations told CNN.

Will Lanzoni/CNN
The Colorado river serpentines near Lake Havasu City, Arizona, on April 3, 2023.

The Interior Department declined to comment on the details of the possible agreement, but department spokesperson Tyler Cherry said in a statement that officials have been “engaged in productive, good faith discussions with the Lower Basin States’ representatives toward a consensus-based alternative to address the ongoing drought impacting the Colorado River system,” since the environmental analysis was released last month.

“We are heartened by the progress the parties have made in recent weeks,” Cherry said.

Even though the states have struck an agreement among themselves, finalizing the details with the federal government could prove tricky. Outstanding issues include a proposal that some of the water cuts go uncompensated by the feds, and whether the Upper Basin states of Colorado, Utah, New Mexico and Wyoming will go along with the agreement.

A good winter has eased tension

Positive discussions about voluntary water cuts would have seemed unthinkable last year after a devastating dry spell pushed Lake Mead down to about 1,040 feet – just 27% of its capacity and the lowest level since the reservoir was filled in the 1930s.

But this winter brought blockbuster, above-average snowpack to much of the West, which has given states far more water to work with than previous years.

Western water officials say a key goal this year is to build water elevation at Lake Mead. Some of that will be refilled naturally from the good winter runoff, but state officials said more should come from farmers, cities and tribes reducing their water use in exchange for federal dollars.

“What I’m hoping happens is people who were considering putting their water into the (federal water cut) program still do,” Arizona’s top water official Tom Buschatzke told CNN in April. “It’s a bit easier to do the conservation when you can be compensated and when it’s really wet, versus when it’s really dry and you’re looking at forced cuts – a lot more uncertainty about how far down Lake Mead could go and how big those cuts might get.”

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A canal runs through farm land in near the California-Arizona border on April 4, 2023.

Buschatzke stressed that states should look at the wet winter “as an opportunity to do more conservation, rather than Mother Nature has fixed our problem.”

States have spent the last year in tense negotiations after Bureau of Reclamation Commissioner Camille Calimlim Touton called on Western water users to cut 2 to 4 million acre-feet of their Colorado River usage or risk the system crashing.

Surprisingly, a particularly tense period of negotiations in January – one that isolated California – gave way to productive in-person talks, multiple negotiators told CNN last month.

“It was really intense and horrible,” California’s top negotiator JB Hamby recently told CNN, speaking of the January period. “I think at the end of the day, the biggest issue that has caused all these complications which was easy to resolve was simply getting people in the same room and talking to each other.”

Remaining sticking points

Before this month’s breakthrough, California, Arizona and Nevada struck an agreement among themselves, which was unveiled to Deputy Interior Sec. Tommy Beaudreau and Touton at an April 21 meeting in Nevada, one source told CNN. But some new tensions between the states and feds have cropped up over the analysis produced by the Interior Department last month.

States were hoping their plan for voluntary, compensated cuts could essentially happen in the place of federal action on the river, an idea federal officials pushed back on, according to one source familiar with the meeting.

Will Lanzoni/CNN
A field is irrigated on Quechan tribal land in Yuma, Arizona, on April 4, 2023.

And there has also been haggling over what level Lake Mead would have to drop to in order for the federal government to be able to step in and make additional unilateral cuts.

“There’s been a lot of effort to diplomatically address this, but it got hampered by ego and issues,” the source said. The source added White House officials, including senior advisers John Podesta and Mitch Landrieu – responsible for overseeing the Inflation Reduction Act and Bipartisan Infrastructure Law – are also being read in on negotiations, since funding for water cuts and future water infrastructure projects will come from those laws.

Sources also said the pot of money for compensated cuts could grow above $1 billion, given the fact that some water users including farmers are asking for higher sums of money to cut back their water usage. Agreements are gradually being signed between cities and tribes and the feds, and short-term fallowing agreements with farmers are still being negotiated.

But as CNN has reported, those contracts to cut water in exchange for money are also flexible enough to give farmers and cities the chance to back out, should dry conditions return.