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Quick fix

— The Colorado River basin is drying up, which will prompt a formal shortage declaration today. But the political will to solve the water challenge could slow to a trickle.

— Pressure is rising on FERC to take climate and environmental justice into account in permitting decisions, but questions are being raised about how far its authority extends to do so.

— A cohort of 9 Democratic House moderates are threatening to tank the two-track infrastructure and social spending plan unless the bipartisan infrastructure deal hits Biden’s desk. But progressives have already promised a rebellion to prevent that from happening.

WELCOME TO MONDAY. I’m your host, Matthew Choi. Josie Hammon of Senate Minority Leader Mitch McConnell’s office gets the trivia for knowing Wladyslaw Szpilman played Chopin’s Ballade No. 1 in G minor for the German officer in “The Pianist.” For today: What was the name of Maria’s monastery in “The Sound of Music”? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today's episode: Weed’s inconvenient truth.

Driving the day

WATER RUNS DRY: The Western states and parts of Mexico that rely on the Colorado River are facing a formal shortage declaration today, which will require the first-ever water delivery cuts on Arizona and Nevada starting next year, Pro’s Annie Snider reports. The declaration has been on scientists’ radars for a while thanks to a two-decade-long megadrought, but recent conditions have shrunk the river’s two main reservoirs to alarming levels not seen since they were first filled.

Not only could that jeopardize access to water, but it could also risk the functioning of the Glen Canyon dam, which provides 5 million people in the Western states with electricity. Federal water managers took emergency measures for the first time last month to prevent water levels dropping too low and seriously harming output.

States in the Colorado River watershed have so far been collaborating to adapt to dwindling water resources, working together for the past decade and a half to plan for a drier future. But that cooperation is being tested with a new era of water scarcity. Elected officials are going to have to face politically difficult choices on how to deal with the low supplies of water that are no longer congruous with the interstate and international pacts to manage the shared water resources. And state leaders recoil at the thought of having to cut water use in the upper basin or cases where the Southwest’s urban areas risk loss of water access.

“I am concerned that we are not seeing leadership in the upper Colorado River basin that grasps the depth of the challenge that we face in terms of the need, as a broad basin community, to use less water for all our water users,” John Fleck, director of the University of New Mexico’s water resources program and a former science journalist, told Annie. “That’s politically difficult because you can get voted out of office for staying stuff like that, but that’s, I think, what leadership requires.” Read more from Annie here.

WHAT IS FERC GOING TO DO ABOUT IT: Several court decisions have tasked the Federal Energy Regulatory Commission to take a more proactive approach to incorporating climate change and environmental justice into their work. That’s raising some questions among Republicans on how far the body’s powers on those fronts can go.

The DC Circuit Court ordered FERC to redo permits for two LNG projects this month after deeming the commission’s environmental analyses for the projects insufficient. FERC Chair Rich Glick says the commission has so far only paid lip service to addressing environmental justice concerns, and he is trying to steer the commission to better incorporate them, particularly when approving and denying pipeline projects.

But Republicans are questioning how much power FERC has to reject projects solely on climate concerns. Denying a pipeline project is exceedingly rare for the body, with only two of the over 400 pipeline applications the commission evaluated since 1999 getting rejected for failing to show the public benefits outweigh the harm, according to a November 2017 report. The commission also has no set thresholds for when to deny a project based on greenhouse gas emission levels.

“What’s obvious going forward is that this is going to be subject to litigation,” Edward Hild, a principal at Buchanan & Ingersoll Rooney and former chief of staff to Sen. Lisa Murkowski, told Pro’s Gloria Gonzalez.

But environmentalists are still pushing for bold, precedent-setting action to protect frontline communities from fossil fuel infrastructure. Marquita Bradshaw, executive director of Sowing Justice, who would be a candidate for the looming FERC commissioner vacancy if environmental and other groups get their say, believes the agency must take into account "environmental injustices and racism so we can actually have a system that’s fair for everyone.”

On the Hill

A HOUSE DIVIDED: A group of nine moderate Democrats made an explicit threat for the first time Friday to withhold their votes from the party’s budget resolution this month until the House passes the bipartisan infrastructure deal and it gets signed into law. It’s a major affront to House Speaker Nancy Pelosi’s vow not to take up the infrastructure deal without the $3.5 trillion social spending measure.

Pelosi can only afford to lose three votes in the House, and it’s not just the moderates threatening to jump ship. Progressives are also willing to tank the bipartisan infrastructure deal if they think the budget package is doomed, pitting the two party wings against each other in a battle of wills.

Some Democratic centrists think there will be enough House Republican support for the bipartisan package to make up for left-wing defections. But progressives are warning them not to be so sure about that if GOP leadership or former President Donald Trump — who has trashed the deal and its Republican backers — push their party peers away from the deal. Read more from Heather and Sarah.

RACIAL JUSTICE IN FEMA: Sens. Jon Ossoff (D-Ga.) and Tim Scott (R-S.C.) are spearheading a bipartisan effort to open more access for Black property-owners to disaster assistance under FEMA. In a letter earlier this month to Homeland Security Secretary Alejandro Mayorkas, the two lawmakers pointed out that FEMA often requires property documentation that many Southeastern Black property owners don’t have because they inherited property in less formal channels. That can shut out more than a third of Southeastern Black-owned land from federal disaster assistance, the lawmakers wrote in the letter, released by Ossoff's staff Friday. Read the letter here.

Around the Agencies

THE OTHER TWO-TRACK APPROACH: The White House is baffling some environmentalists and Republicans over the contrast between its climate ambitions with what appears to be major concessions to fossil fuels. The administration requested OPEC+ increase its oil output to alleviate gas prices at home and greenlit drilling on federal lands at a faster rate than the Trump administration. The bipartisan infrastructure deal also contains big investments for priorities supported by the fossil fuel industry, including carbon capture and highway expansion.

Environmentalists say the pushes seem incongruous with the administration’s climate agenda, which is the most ambitious in U.S. history. And the optics aren’t great with the U.N.’s latest IPCC report directly linking recent disasters to human-made climate change. But the White House is saying it's being politically pragmatic, with high gas prices going into election season potentially jeopardizing Democratic majorities in Congress — and with them the party's climate agenda. “We can do two things at once,” a White House spokesperson told POLITICO in an email. Read more from Pro’s Ben Lefebvre, Catherine Boudreau and Tanya Snyder.

NO GOODS FOR THE QODS: The Treasury Department’s Office of Foreign Assets Control targeted Omani oil broker Mahmood Rashid Amur Al Habsi with sanctions, accusing him of being a middleman for Iranian oil and foreign buyers. The revenue helped finance the country’s Qods Force, an elite branch of the Revolutionary Guard that is engaged in “destabilizing regional activities,” the department said. The guard is considered a terrorist organization by the U.S. Shipping companies based in Oman, Liberia and Romania were also placed under sanctions for allegedly partaking in Al Habsi’s dealings. Ben Lefebvre has more for Pros.

WHERE IN THE WORLD IS JENNIFER GRANHOLM? The energy secretary is in Anchorage, Alaska, today with Murkowski. The pair will be touting clean energy opportunities in the state.

Beyond the Beltway

LITERALLY THE HOTTEST MONTH EVER: July was the hottest month ever recorded in world history, according to NOAA, which has been keeping track since 1880. July was 1.67 degrees Fahrenheit above average temperature — the previous record was first set in July 2016. The global average temperature for July in the 20th century is 60.4 degrees Fahrenheit. Pro’s Zack Colman has more.

ICYMI: Sierra Club executive director Michael Brune resigned Friday after 11 years leading the group. He wrote that he was sorry for “any instance” where staff and volunteers did not “feel safe, supported and valued,” but didn’t elaborate on what that was referring to. Brune was at the head of the group during several pinnacle moments, including its endorsement of reparations for Black Americans and his exposure of the group’s secret deal with the natural gas industry to promote it as a bridge energy source. Zack has more for Pros.

Movers and Shakers

— Jamiah Adams is joining The Climate Reality Project as senior vice president for diversity and justice. Adams previously served as chief of diversity, equity and inclusion for the Tom Steyer PAC and worked with the NAACP, MoveOn.org, NextGen America, the Sierra Club and the Democratic National Committee.

The Grid

— “Amid Extreme Weather, a Shift Among Republicans on Climate Change,” via The New York Times.

— “Climate Change Hits Sushi Supply Chain Amid California Water War,” via Bloomberg.

— “In the West, a Connection Between Covid and Wildfires,” via The New York Times.

— “Climate Movement Keeping Eye on Biden Fed Chair Nomination,” via Bloomberg.

— “Oil Giants Turn to Startups for Low-Carbon Energy Ideas,” via The Wall Street Journal.

THAT’S ALL FOR ME!

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