BILL ANALYSIS
SB 902
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Date of Hearing: June 27, 2006
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Lois Wolk, Chair
SB 902 (Denham) - As Amended: May 11, 2006
SENATE VOTE : (Not relevant)
SUBJECT : San Joaquin River Storage Bond
SUMMARY : Enacts the Upper San Joaquin River Storage and San
Joaquin River
Restoration Bond Act of 2006, which would authorize, subject to
voter approval at the November 7, 2006 election, $1.225 billion
worth of general obligation (G.O.) bonds. Specifically, this
bill :
1)Enacts the Upper San Joaquin River Storage and San Joaquin
River Restoration Bond Act of 2006, subject to voter approval
at the November 7, 2006 election
2)Authorizes $1.225 billion in G.O. bonds, subject to
appropriation:
a) $500 million for state cost share for construction of an
upper San Joaquin River surface storage project.
b) $125 million for: surface water storage studies,
preliminary engineering design and cost-sharing
evaluations; identification of upper San Joaquin River
storage projects (including groundwater projects) that help
protect the environment; and groundwater storage projects
that provide interregional benefits.
c) $600 million for San Joaquin River restoration above the
confluence with the Merced River
3)Conditions funding of construction of new reservoir on a
finding that a Section 404 permit (Clean Water Act) will be
required.
4)Requires reservoir to make new water available for
appropriation, but gives allocation priority to any entity
that foregoes exercise of rights to appropriate water for
river restoration or environmental purposes.
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5)Commits state cost-share for "public benefits and protecting
and enhancing public trust resources," which is defined to
include:
a) major river restoration;
b) water quality improvement of a major river or water body
that serves as a water supply source for more than one
region of the state and significant public trust resources;
c) flood control benefits;
d) emergency water supplies to respond to terrorism or sea
level rise;
e) improved riverine processes;
f) protection of regional economies with unemployment
exceeding an unspecified amount;
g) regional and statewide recreational benefits.
6)Requires comprehensive financing plan, including federal
cost-share and "beneficiaries pay."
7)Establishes fiscal conditions for issuing bonds and expending
bond proceeds.
EXISTING LAW authorizes study of water storage facilities in the
Sacramento and San Joaquin River basins. Federal law authorizes
the Bureau of Reclamation to operate the Friant Unit of the
Central Valley Project, which makes the Federal Government, not
the State, the primary actor on upper San Joaquin River water
issues.
FISCAL EFFECT : $1.225 billion in additional bond authorization
COMMENTS : This bill proposes a substantial State investment in
planning and construction for an unspecified Upper San Joaquin
River reservoir, with benefits and cost-sharing to be determined
at some later time. It continues pursuit of surface storage
bond funding proposed in the Governor's infrastructure bond (AB
1839/SB 1166), which the Legislature chose not to support in its
final bond measures placed on the November ballot last month.
The bill further narrows the Governor's proposal to focus only
on a San Joaquin River reservoir.
Upper San Joaquin River Storage Investigation:The 2000 Record of
Decision for the CALFED Bay-Delta Program inaugurated five
surface storage investigations, including the "Upper San Joaquin
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River Storage Investigation," which has considered several sites
including the current favorite at Temperance Flat. The federal
Bureau of Reclamation (Reclamation) has assumed the lead for
this investigation, due to its dominant water management role as
the operator of Friant Dam (Central Valley Project) on the main
stem of the Upper San Joaquin. The final "reconnaissance study"
(a preliminary study in the federal water development process)
is not due until 2009.
Reclamation's 2005 "Initial Alternatives Information Report"
estimated an annual yield of 165,000 acre-feet from a 1.3
million acre-foot reservoir at Temperance Flat. In contrast,
Reclamation's Millerton Reservoir, just downstream, has a
capacity of about 520,000 acre-feet and an annual yield of about
1.5 million acre-feet. Reclamation attributes the low
Temperance Flat yield to substantial fluctuation in San Joaquin
River basin precipitation, leading to a Temperance Flat
reservoir filling only occasionally. Other groundwater storage
projects in the basin, such as the proposed Madera Ranch
project, would further reduce this annual yield. The bill
sponsors responded to a question about this low yield by
explaining that the reservoir "would be integrated into the
overall operations of the system as a means of supporting San
Joaquin River restoration, improving water quality down the SJ
River and into the Delta, facilitating potential water quality
exchanges with urban users, and advancing efforts to improve
conjunctive use programs throughout the valley." The
Reclamation study of Temperance Flat includes some analysis of
how the reservoir might be incorporated into the Friant system
to accomplish these goals.
Costs:SB 902 proposes spending $500 million for State
cost-sharing on construction and $125 million on studies
supporting that construction or other groundwater projects. The
estimates for total costs at Temperance Flat, however, start at
$1 billion or more. Reclamation estimated the cost of
Temperance Flat from $670 million for a smaller reservoir
(~450,000 acre-feet) up to $1 billion for the larger version.
The current feasibility study, however, is considering only the
larger reservoir options. Applying the 165,000 acre-foot
estimate of yield, the cost for annual yield works out to $6060
per acre-foot.
San Joaquin River Litigation: Since 1989, the Federal
Government and the water users relying on Friant Dam have
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defended their continued diversions out of the San Joaquin River
basin against a legal challenge by the Natural Resources Defense
Council and other environmental groups. Reclamation diverts
water from the San Joaquin River down to agricultural irrigators
in the Kern River and Tulare Lake basins, effectively
de-watering the San Joaquin River for a 60-mile reach starting
just below Friant Dam. Federal Judge Lawrence Karlton has ruled
- and been upheld by the Ninth Circuit Court of Appeals - that
the Federal Government must comply with state law requiring that
water be maintained below Friant Dam to support the River's
fishery.
Last fall, after the judge set a February 2006 trial date, the
parties began settlement discussions, which have almost
concluded. During a court hearing last week, the parties
explained that they expected to return by June 30 with a request
for the judge to approve the settlement. The last unresolved
issue is an agreement with State agencies as to the State's role
in the settlement. This year's State budget includes $1.75
million to support the settlement process or State agency
activities to restore the River. Although the bill sponsors
suggest that this bond funding would support any settlement, the
litigants on the other side dispute that suggestion. In the
past, the environmental parties have advocated increased use of
groundwater storage and other measures to replace the water that
will be used to restore the river.
Groundwater/Conjunctive Use:SB 902 includes $125 million that
may be used for groundwater projects, if not used for four other
purposes (i.e. studies) supporting the surface storage
development. One of the Federal Government's primary reasons
for constructing the Friant-Kern system was stabilization of
groundwater, whose depletion had led to extensive land
subsidence. Since completion, the Kern/Tulare basins'
groundwater has more than stabilized, becoming one of the most
productive and valuable groundwater storage basins in the
nation. The vast acreage of groundwater spreading draws, in
part, from inexpensive winter flows from the San Joaquin,
commonly known as "215 water" or surplus. In another area
served by Friant, Madera Irrigation District is developing a
separate "Madera Ranch" groundwater storage project. With the
construction of a new surface reservoir, the value of these
groundwater storage projects may decrease because less 215 water
would be available. Therefore, the option of spending some of
this funding for groundwater projects seems to contradict, or at
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least is inconsistent, with the proposal to build a new
reservoir that would only fill in flood years.
Flood Management:Bill sponsors also suggest that Temperance Flat
has the potential to provide flood management benefits. They
argue that this year's high flood flows, particularly just
downstream near Firebaugh, would be reduced if more water could
be stored upstream. They have not provided any documentation as
to this claim. Nor have the sponsors shown whether a reservoir
is the most cost-effective way to improve flood management in
the area. The United States Corps of Engineers drafted a
"Comprehensive Study" of flood management alternatives in this
area that included other non-structural alternatives. Local
opposition to that analysis, however, prevented the completion
of the Comprehensive Study.
In contrast to the Sacramento River system, the flood bypasses
in this area are small, leaving most of the flood flows in the
main stem and stressing levees that have merely a dry creek bed
in most or all months of most years. Buying flood easements for
the occasional high flows from local farmers may provide a more
cost-effective method of reducing flood risks. This method also
may improve groundwater supplies. In 1950, landowners
downstream from Friant won a takings lawsuit in the Supreme
Court against the Federal Government for Friant Dam taking the
flood flows on which they had always relied to refill their
groundwater aquifer. See, United States v. Gerlach Livestock
Co., 339 U.S. 725 (1950).
Timing of Bond Funding:SB 902 proposes committing, in 2006, a
significant portion of the State's bonding capacity for
construction of a reservoir, when the necessary studies are not
near completion and no beneficiaries have stepped forward with
an interest in paying the high costs of constructing this
reservoir. The feasibility study is not due until 2009, and
final designs and cost-sharing would not be done until several
years later. This proposal contrasts with the last time the
State successfully proposed building a reservoir, through the
State Water Project (SWP). The Burns-Porter Act, the bond act
for building the SWP approved by the voters in 1960, funded a
project that already had been designed and relied on water
contractors to repay the bonds.
Reduced Power Benefits:PG&E and Southern California Edison own
power plants upstream from Temperance Flat. The Temperance Flat
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alternatives would cause a reduction in power generation, with
uncertain power generation benefits from a Temperance Flat dam.
Reclamation's 2005 analysis did not estimate how much power such
a dam might generate, so some question whether Temperance Flat
would cause a net loss of power generation.
Environmental Restoration Funding:SB 902 provides $600 million
for environmental restoration in the San Joaquin River above the
confluence with the Merced River. There is no additional
information or direction as to the types of expenditures that
this funding might fund. Reclamation has estimated total
restoration costs in the range of $600 million to $1 billion.
This restoration would include some realignment of a river that
generally has not had water flowing in most years for the last 5
decades. In light of the imminent litigation settlement, this
money may be used for restoration projects on which the
litigating parties agree - although the litigants now disagree
on whether this bond proposal should proceed.
Funding History:This year's budget includes several million
dollars for both River restoration and continued study of San
Joaquin River storage options: $1.75 million for restoration; $1
million for storage studies, and another $1.3 million for
comparing the reservoir options. Proposition 13 (2000) provided
$15.7 million in funding for settlement of the San Joaquin River
litigation, and much of that funding was spent when the parties
were negotiating 5-6 years ago.
Priority for Federal Government:SB 902 gives a priority for
allocation of new water created by the proposed reservoir to
"any entity that, for the purpose of river restoration or any
other environmentally beneficial reason, forgoes the exercise of
rights to appropriate water." In effect, this would direct new
water to the Federal Government because Reclamation holds the
"rights to appropriate water" on the San Joaquin. While certain
downstream irrigators still hold rights to appropriate water
from the San Joaquin, they have exchanged those rights for water
deliveries from Reclamation's Delta-Mendota Canal. The farmers
who receive water from the Friant system do not hold any water
rights from the San Joaquin River.
Changes to Public Trust:SB 902 redefines "public benefits and
protecting and enhancing public trust resources" without
explicitly limiting this new definition to these bond proceeds.
The bill's definition creates ambiguity as to its effects on
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California's public trust doctrine. No California court has
ever recognized "emergency response," flood control, or
"protection of regional economies" as part of the public trust
in water resources. Limiting public trust water quality
interests to water bodies that supply water for more than one
region also may narrow the doctrine beyond recognition. This
definition may cause confusion as state and local agencies
implement the many other state statutes that exercise and
protect these public interests in water.
Fiscal Issues:This bill's fiscal provisions raise several
issues. First, the bill allows DWR to adopt emergency
regulations to spend this funding and requires only
"appropriation from the fund," not appropriation by the
Legislature. It is therefore unclear whether DWR may be able to
spend this money without legislative approval. Second, the bill
fails to require specific cost-sharing, but only funds a study
to determine cost-sharing at a later time. Third, it is
estimated that voter approval of these bonds will add another
$2.4 billion worth of principal and interest debt for the
General Fund.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of CA Water Agencies
Building Ind. Assoc. of Tulare/Kings Co.
CA Citrus Mutual
CA Cotton Ginners & Growers Associations
CA Grape & Tree Fruit League
City of Clovis
City of Fowler
City of Fresno
City of Mendota
City of Reedley
City of Sanger
City of Visalia
County Board of Supervisors: Fresno, Kern, Kings, Madera,
Merced, Stanislaus, San Joaquin & Tulare
Delano-Earlimart Irrigation District
Friant Water Authority
Friant Water Users Authority
Madera County Farm Bureau
Madera Irrigation District
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Nisei Farmers League
P-R Farms, Inc.
Ruiz Foods
San Joaquin River Exchange Contractors
Water Authority
San Joaquin River Task Force
Tulare County Farm Bureau
Tulare Firestone Tire & Service, Inc.
Tulare Irrigation District
Opposition
Butte Environmental Council
CA Outdoors
CA Sportfishing Protection Alliance
California Trout
Delta Keeper
Environmental Water Caucus
Foothill Conservancy
Foothills Audubon Society
Friends of the River
Granite Bay Flycasters
Natural Resources Defense Council
No. CA Council Federation of Fly Fishers
Planning & Conservation League
Protect Our Water
San Joaquin Raptor/Wildlife Rescue Center
San Joaquin Audubon Society
Save the Mokelumne River
Sierra and Foothills Citizens Alliance
Sierra Club - California
Sierra Nevada Alliance
South Yuba River Citizens League
The Bay Institute
Analysis Prepared by : Alf W. Brandt / W., P. & W. / (916)
319-2096