	Introduction

Federal water projects operated by the U.S. Army Corps of Engineers (Corps) and the U.S. Bureau of Reclamation (Reclamation) may be operated for a variety of authorized purposes, which are identified by Congress at the time each project is authorized. Additionally, the Corps and Reclamation have general authority under the Water Supply Act of 1958 (WSA) to include water storage for municipal and industrial (M&I) use as a project purpose for new and existing projects. The WSA requires congressional approval of water storage if water supply storage would seriously affect the original project purposes or involve a major operational change for the project. This ambiguity has become a particular issue when severe drought raises the competition for water supply, and is an especially contentious issue in eastern riparian states where all users are affected by any drought. Increasing pressures on the quantity and quality of available water supplies are raising interest in—and concern about—changing operations at federal facilities to meet M&I demands. The tradeoffs inherent in such reallocations may garner controversy because a shift from a currently authorized purpose (e.g., hydropower, navigation, flood control) to M&I use changes the types of benefits produced by a dam and the stakeholders served. This issue is also at the center of litigation related to the Corps' operation of Lake Lanier in the Apalachicola-Chattahoochee-Flint River Basin (ACF). Two federal appellate courts have examined questions related to water allocation at Lake Lanier, and each reached a different result. First, the issue was the subject of a 2008 decision by the U.S. Court of Appeals for the D.C. Circuit, Southeastern Federal Power Customers v. Geren . Then, in 2011, the U.S. Court of Appeals for the 11 th Circuit considered consolidated cases challenging related issues ( In re Tri-State Water Rights Litigation). Using the context of the Corps' reallocation of water in Lake Lanier, this report specifically analyzes the reallocation issues under the WSA, including the various legal challenges to the Corps' actions and outcomes of the litigation. It also analyzes data regarding the Corps' reallocations under the WSA in various projects and legislative options for Congress. Although the WSA provides authority to Reclamation as well, the application of the WSA to Reclamation is beyond the scope of the report. General Authority for M&I Water Supply

In addition to project-specific authority for M&I water supply, Congress has enacted some generally applicable legislation that authorizes the Corps to provide water supply for M&I use at any of its facilities. Significantly, however, Congress did not define "seriously affect" or "major structural or operational changes" under the WSA. In 1977, the Corps adopted as part of its manual the following provision for guiding when a reallocation was to be considered insignificant, thus not requiring congressional approval:
Modifications of reservoir projects to allocate all or part of the storage serving any authorized purpose from such purpose to storage serving domestic, municipal, or industrial water supply purposes are considered insignificant if the total reallocation of storage that may be made for such water supply uses in the modified project is not greater than 15 per centum of total storage capacity allocated to all authorized purposes or 50,000 acre feet, whichever is less. Citing these examples of the Corps' recognition of the limits on its discretion under the WSA, the D.C. Circuit's decision, finding that water supply was not an authorized purpose and that the Corps' actions constituted a major operational change.
Pursuant to congressional authorization, the U.S. Army Corps of Engineers (Corps) and the U.S. Bureau of Reclamation (Reclamation), the agencies with primary responsibility for federal water resources management, operate water projects for specified purposes. In the case of Corps dams and their related reservoirs, Congress generally has limited the use of such projects for municipal and industrial (M&I) water supply, but growing M&I demands have raised interest in—and concern about—changing current law and reservoir operations to give Corps facilities a greater role in M&I water storage. Reallocation of storage from a currently authorized purpose to M&I use would change the types of benefits produced by a facility and the stakeholders served, which has led to controversy over project operations at some federal projects.
The Corps and Reclamation, therefore, may be authorized to operate federal water projects for M&I use under the project-specific authorization statutes. Alternatively, the generally applicable Water Supply Act of 1958 (WSA) authorizes the Corps and Reclamation to include water storage for municipal and industrial use as a project purpose for new and existing projects. The WSA requires congressional approval if adding water supply storage would seriously affect the original project purposes or involve a major operational change for the project. However, the WSA does not define the extent to which the change in water supply storage must affect existing purposes or what constitutes a major operational change. This ambiguity has become a particular issue when severe drought raises the competition for water supply, and is an especially contentious issue in eastern riparian states where all users are affected by any drought. Because of such water shortages in some riparian basins with Corps projects, the Corps' reallocation of water storage at its discretion has been of particular interest.
This issue is at the center of ongoing litigation related to the Corps' activities in the Apalachicola-Chattahoochee-Flint River Basin (ACF). The scope of the Corps' authority under the WSA was the subject of a 2008 decision by the U.S. Court of Appeals for the D.C. Circuit (Southeastern Federal Power Customers v. Geren), as well as a 2011 decision by the U.S. Court of Appeals for the 11th Circuit (In re Tri-State Water Rights Litigation). The D.C. and 11th Circuits reached different results, and the U.S. Supreme Court declined a petition for its review of the issue in 2012. These cases each addressed a tri-state water dispute involving Lake Lanier, a Corps water project in the ACF basin, which includes parts of Alabama, Florida, and Georgia.
Using the Corps' reallocations of water storage for M&I use at Lake Lanier as an example, this report analyzes the legal and policy issues associated with reallocation under the WSA. Specifically, it examines Corps authority under the WSA, including limitations on modifications that constitute major operational changes. The report details data and examples regarding the Corps' reallocations under the WSA. It also analyzes various legal challenges of water supply storage at Lake Lanier, including courts' identification of congressionally authorized purposes, and discusses results of the litigation and options for Congress. Although the WSA provides authority to Reclamation as well, the application of the WSA to Reclamation is beyond the scope of the report.