A showdown over Colorado River water is setting the stage for a high-stakes legal battle

The federal government wanted seven western states that rely on the river to decide how to cut up to 30% of its water allocation. But there's one holdout: California.

(CNN) -- Months of bitter negotiations between seven states that rely on the Colorado River's vanishing water have collapsed along a clear fault line over the past week: California versus everyone else.

The multi-state talks, which have been ongoing in fits and starts for months, were focused on achieving unprecedented water cuts to save the Colorado River -- a system that provides water and electricity to more than 40 million people in the West.

As less and less water has been flowing through the river and its reservoirs, U.S. Bureau of Reclamation Commissioner Camille Touton last year called on the basin's seven states -- California, Arizona, Nevada, New Mexico, Colorado, Utah and Wyoming -- to figure out how to cut 2 to 4 million acre feet of usage, or as much as 30% of their river water allocation.

If they couldn't agree on how to do it, Touton vowed the federal government would step in.

On Monday, six states -- including lower basin states of Arizona and Nevada -- released a letter and a proposed model for how much Colorado River water they could potentially cut to stave off a collapse and prevent the nation's largest reservoirs, Lakes Mead and Powell, from hitting "dead pool," when water levels will be too low to flow through the dams.

The maximum amount of basin-wide cuts the six states are proposing in their model is 3.1 million acre feet per year. It accounts for water conservation and evaporation and, if approved, could kick in if reservoir levels fall to catastrophically low conditions.

California -- the largest user of Colorado River water -- is conspicuously absent from the text and will release its own letter and model calling for more modest annual cuts of around 1 million acre feet later this week, JB Hamby, the chair of the Colorado River Board for the state and an Imperial Irrigation District board member, told CNN.

Behind the rift is a decades-long, rancorous relationship between California and Arizona that has collided with a river system in crisis due to years of overuse and climate change-fueled drought.

The split between California and the six other basin states raises the likelihood that the water battle could end up in the nation's highest courts, especially if the feds propose steep cuts for California and its powerful water districts believe their senior water rights are under threat. The Imperial Irrigation District provides water to Southern California farmers and has a senior right to Colorado River water -- a priority claim because it was established before other districts' and states' rights.

"The lack of a consensus and six states moving forward with an approach that does not harmonize with the law is troubling," Hamby said. "It is everyone's best interest to avoid litigation, but being put into a situation like this where you have six states approaching things in this way raises the risk."

In the meantime, one of the West's most important water sources will continue to dry up.

"I think California is playing with fire here," said David Hayes, a former top climate aide to President Joe Biden, now at Stanford University Law School. "This issue is bigger than any group of water rights holders. The implications of not addressing this issue could affect the economy of the entire state of California."

As state consensus proves difficult to reach and pressure grows on the federal government to act unilaterally, many negotiators and outside observers are expecting this year to bring litigation that could wind up at the Supreme Court.

"I don't know if the Supreme Court would take it," Wade Noble, a lawyer representing Yuma, Arizona, farmers and irrigation districts, told CNN. "I suspect everybody who has been lawyering up wants to make sure their legal team has Supreme Court experience. These are the types of issues that get there."

Priority vs. reality

The issue at the heart of why it has been so difficult for California and Arizona to agree on water cuts comes down to priority: Who is legally first in line for water when cuts occur.

Imperial Irrigation District's senior rights entitle it to use just over 3 million acre-feet of Colorado River water every year, the same amount of water as Arizona and Nevada's entire allocations combined.

Arizona agreed to a junior water right in 1968, in exchange for building the Central Arizona Project -- a system of canals that divert Colorado River water to cities and agriculture from Phoenix to Tucson. That means historically, Arizona has been the first in line for cuts, while California's river allocation has been left untouched. Arizona has more recently argued that future cuts need to be spread around more evenly, rather than cities like Phoenix and Tuscon getting cut to zero.

"We need all water users to be able to look at the real situation on the river now," said Brenda Burman, general manager of the Central Arizona Project and a former Bureau of Reclamation commissioner in the Trump administration. "When you look at how this river has shrunk, when you look at how much less water there is in the river than any of us ever thought -- you have to say everyone who receives a benefit from this infrastructure needs to be willing to put some water on the table."

But the senior water right is one the Imperial Irrigation District plans to staunchly defend.

"We're not going to give up a century of history and position and things that people worked for over a century to protect in two days," Hamby said of the recent negotiations. "Doing away with the priority approach is not something that's acceptable."

Experts said that arguments of senior water users that they have the oldest right may run into the reality that the river system is crashing quickly.

"A hundred-year-old agreement is not necessarily going to be around for another 100 years and the whole system could get blown up," Hayes said.

Hayes added he fears possible future litigation could delay needed action on the river.

"Decisions to cut back water deliveries below the Hoover Dam cannot wait for a complex water rights case to be litigated up through the Supreme Court. That can take years," Hayes said. "Plus, no legal decision will solve the fundamental problem of insufficient water. That reality needs to be faced."

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