	Limited Use of Federal Reservoir Storage for Municipal and Industrial (M&I) Water Supply

Increasing pressures on the quantity and quality of available water supplies are raising interest in—and concern about—changing operations at Corps facilities to meet municipal and industrial (M&I) demands. A reallocation embodies tradeoffs; shifting storage to M&I use from a currently authorized purpose (e.g., hydropower or navigation) changes the types of benefits produced by a dam and the stakeholders served. Congress recognized state primacy in developing M&I supplies in the Water Supply Act of 1958 (1958 WSA; P.L. 85-500; 72 Stat. M&I Water Storage at Corps Facilities

		Authority for M&I Storage Can Be Project-Specific or General

Congress authorizes the Corps to undertake construction of dams and other water resources infrastructure. Congress Limited Agency Discretion for Reallocating Storage

In the 1958 WSA, Congress provided the Corps some general M&I water supply authority, but limited the agency's decision-making without congressional approval. In March 1977, the Corps adopted as part of its manual the following provision for determining when a reallocation does not require 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. 2009 Court Order Found the Corps Exceeded Its Authority

The questions of whether the Corps has regularly exceeded its discretionary authority and how many reservoirs have storage reallocated under this authority have received attention in the wake of a federal court decision related to Corps operations and reallocations at Lake Lanier (GA). The court found that the cumulative impacts of the Corps' actions exceeded its discretionary authority to reallocate. Other Texoma reallocations have been made with specific congressional approval. The 84,099 AF reallocation from hydropower to M&I use was approved in a 1985 Corps document that included a compensation arrangement for lost hydropower, which had been negotiated among Lake Texoma stakeholders. The Corps thus concluded that the transfer could be performed under the 1958 WSA without congressional approval, even though it exceeded the agency-established policy limiting reallocations without congressional approval to 50,000 AF. Whether the studies used to support the reallocations shown in Table 1 sufficiently evaluated how an M&I reallocation may affect authorized purposes or may constitute a major operational change is a general concern raised by the 2009 court order's questioning of the Corps evaluations related to Lake Lanier operations. An evaluation of the sufficiency of Corps reallocation analyses is beyond the scope of this CRS report. Whether Congress agrees with the Corps' interpretation and use of its discretionary authority is a policy issue of increasing relevance as interest grows in M&I reallocation at federal facilities.
Congress has limited the use of Army Corps of Engineers dams and reservoirs for municipal and industrial (M&I) water supply. 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. A reallocation of storage to M&I use from a currently authorized purpose (e.g., hydropower or navigation) changes the types of benefits produced by a facility and the stakeholders served.
While Congress has specifically authorized 91 Corps multi-purpose facilities for M&I supply, it also has delegated to the Secretary of the Army constrained authority to reallocate storage to M&I water supply. In the Water Supply Act of 1958 (1958 WSA; P.L. 85-500), Congress provided that storage at Corps facilities could be allocated to M&I water supply without congressional approval if this reallocation did not seriously harm authorized project purposes or involve major structural or operational changes. Whether the Corps has regularly exceeded its discretion to reallocate is a concern raised in response to a July 2009 federal court order that found the Corps exceeded its discretion at Lake Lanier (GA).
In order to guide its implementation of the discretionary authority to reallocate, the agency developed guidance on what may constitute a major change or serious harm to an authorized purpose. Since 1977 that guidance has included quantitative limits on reallocations conducted without congressional authorization. Issues for Congress include whether the Corps' interpretation of its discretionary authority is consistent with congressional intent and whether current law and policy are appropriate for current demands and constraints on water resources.
CRS analysis of available data indicates that the Corps generally has not exceeded agency-established quantitative limits, with two exceptions in addition to Lake Lanier. One of the exceptions, Cowanesque Lake (PA), was made with the consent of Congress but conducted under the 1958 WSA authority. The other exception was a 1985 reallocation from hydropower to M&I use at Lake Texoma (TX/OK). The Corps found that a reallocation at Lake Texoma would neither require significant modification of the project, nor seriously harm authorized purposes (as the result of compensation being provided for lost hydropower). The Corps concluded that it could make the reallocation without congressional approval using its discretionary authority, in spite of the reallocation exceeding the agency-established quantitative limit. Whether this or other Corps reallocations and operational changes performed without congressional authorization (including those that have fallen within agency-established quantitative guidelines) have seriously harmed other project purposes or constituted a major operational change cannot be independently determined by available data, and is beyond the scope of the analysis herein.