RIVER'S WATER SET FOR SALE; NEW RULE ALLOWS INTERSTATE TRANSFER.

Byline: Daily News Staff and Wire Services

Opening the way for a new market in vital water for growing Western states, Interior Secretary Bruce Babbitt announced Thursday a federal rule that for the first time would allow interstate sales of water from the Colorado River, even as he warned once more that California must work harder to reduce its dependence on the river.

In a speech to the annual meeting of the Colorado River Water Users Association here and in remarks to reporters afterward, Babbitt said the new rule, to be issued later this month and to take effect next year after a period for public comment, was an important step in enabling Western states to sort out their water needs in an orderly way, without resorting to bitter litigation.

``If we work this well, there's enough water,'' Babbitt said.

The short-term effect of the rule, which would apply only to the lower Colorado basin states - Arizona, Nevada and California - would be to allow Arizona, which has stored excess Colorado River water underground in aquifers, to sell it to fast-growing Nevada, which has new demands for it. But in the longer term, the measure could be extended in the 21st century to allow states in the upper basin, like water-rich Utah, to sell water to more populous neighbors for a profit.

Sen. Harry Reid, D-Nev., who also addressed the meeting Thursday, said that he strongly supported Babbitt's proposal and that ``we in Nevada recognize that our long-term supply solutions'' will depend on such measures, which, he added, ``will cost us money.''

Under the Colorado River Compact of 1922, which set rules for water use among the seven states that the river serves, the lower basin states together are entitled to 7.5 million acre-feet a year, and the upper basin states - Colorado, Wyoming, Utah and New Mexico - are also allotted 7.5 million. An acre-foot is the amount needed to cover an acre of land a foot deep in water, about 326,000 gallons.

For most of the century, transfer of water between the states was not an issue, because they never exceeded their allocations. But in recent years the lower basin states have exceeded their limit, driven by California, which is currently running about 800,000 acre-feet above its 4.4-million-acre-foot allotment.

Depending on rainfall and reservoir conditions, the Interior secretary determines whether annual surpluses are available to the states, and California has been living on such surpluses from year to year over the last decade or so.

That has long angered California's lower basin neighbors, Arizona and Nevada, which fear that whatever their own legal rights, it will prove politically difficult to wean California from using more than its share.

Earlier efforts by individual states to stockpile excess water for future use or sale foundered in disagreements over attempts to store such water at federal expense in reservoirs like Lake Mead. But Arizona's success in storing water underground paved the way for the proposal announced Thursday.

Officials for the Metropolitan Water District, which delivers water wholesale to utilities throughout Southern California, were pleased by the speech, which strengthened their hand in a dispute over a proposed water deal.

``We are greatly encouraged by what we heard from Secretary Babbitt,'' said MWD General Manager John Wodraska. ``His remarks bode well for the reliability and economy of urban Southern California's water supply.''

The water transfer in dispute would allow agricultural interests - which have top priority for water from the Colorado - to sell some of their share to the San Diego County Water Authority.

But the arrangement would require the MWD to make its pipelines available for the transfer. Officials have disagreed over how much San Diego should pay for the use of the pipelines. Negotiations over the issue have been going on for months, but no agreement over the issue has been reached.

In his speech, Babbitt called for agricultural users to establish a base line of their needs before any transfer takes place.

``Without that fundamental quantification, the secretary points out, there's no way of telling whether we're making any progress in reducing our draw from the river,'' Wodraska said.

Officials for the Imperial Irrigation District, which provides water to farming interests, don't want to set a base line for usage, fearing it may crimp the amount of water they'll be able to use or sell in the future, one expert said.

``That ain't going to fly - it's a prelude to a huge water war,'' he said.

Imperial officials acknowledged they don't want the quantification issue to stand in the way of the San Diego transfer.

``We will have to talk to the secretary about that,'' said Paul Cunningham, an Imperial district spokesman. ``Our water right is a flexible water right. We are entitled to use as much water as there is available as long as we use it reasonably and beneficially.''