BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 426
                                                                  Page  1

          Date of Hearing:   April 30, 2013

                                Anthony Rendon, Chair
                     AB 426 (Salas) - As Amended:  April 23, 2013
          SUBJECT  :   Water Transfers: Statutory Adjudications

           SUMMARY  :   Allows a party with a water right that was decreed  
          through a statutory adjudication prior to January 1, 1981 to use  
          an alternative voluntary method for seeking a temporary,  
          long-term, or permanent transfer of that water right.  Allows  
          that party, instead of going back to court, to seek a change  
          through the same administrative processes at the State Water  
          Resources Control Board (State Water Board) that are available  
          to parties with statutorily adjudicated water rights that date  
          after January 1, 1981 or who hold permits or licenses,  
          regardless of the date.

           EXISTING LAW:

           1)Requires, since 1914, that a party seeking to appropriate  
            surface waters of the State apply to the State Water Board for  
            a permit or license and empowers the State Water Board with  
            continuing jurisdiction over those permits and licenses.   
            Grants continued recognition to other types of water rights  
            that existed at the time the permit system was created  
            including riparian rights, pre-1914 appropriative rights, and  
            others, subject to certain conditions.

          2)Allows a water rights applicant, permittee, or licensee to  
            petition the State Water Board in order to make a change in  
            the point of diversion, place of use, or purpose of use from  
            that specified in a water rights application, permit, or  
            license ("change petition").  

          3)Allows the State Water Board to approve a valid change  
            petition as long as, among other requirements, the change  
            would not result in substantial injury to any legal user of  
            water and would not unreasonably affect fish, wildlife, or  
            other instream beneficial uses.

          4)Establishes procedures for determining all of the water rights  
            on a stream system, including rights based on appropriation,  
            riparian right, or other basis, pursuant to administrative  


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            proceedings before the State Water Board followed by judicial  
            proceedings and the issuance of a decree that is conclusive as  
            to the rights of all existing claimants or would-be claimants  
            upon that stream system ("statutory adjudication decree").

          5)For a water right obtained pursuant to a statutory  
            adjudication decree issued after January 1, 1981, or for a  
            water right pursuant to a statutory adjudication decree but  
            that is based on a permit or license, regardless of the date  
            of the decree, allows the water right holder to seek a change  
            to that water right through a change petition to the State  
            Water Board.  

          6)If the statutory adjudication decree was issued before January  
            1, 1981, and the water right is not based on a permit or  
            license, requires the water right holder to seek a change to  
            that water right by petitioning the court with jurisdiction  
            over the decreed rights.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   The original statute first allowing the holder of  
          rights under a statutorily adjudicated decree to transfer them  
          by voluntarily going to the State Water Board, instead of a  
          court, was enacted on January 1, 1981. What is less clear is why  
          the statute, by its own terms, only applied to decrees that were  
          issued after its enactment.

          In 1977, then-Governor Jerry Brown issued an Executive Order  
          creating the Governor's Commission to Review California Water  
          Rights Law (Commission) and mandating it to review existing law  
          and propose modifications.  In its Final Report issued in 1978,  
          the Commission acknowledged that "drought succeeds like nothing  
          else in reminding Californians of their enormous dependence upon  
          water" and stated that the severe drought and significant water  
          shortages of 1976 to 1977 had "served to highlight the principal  
          strengths and weaknesses of the state's water rights law."  The  
          report contained detailed analyses of existing law and  
          recommendations for both administrative actions and statutory  
          changes.  In fact, the Final Report was so specific with respect  
          to proposed statutory changes that it presented them as draft  
          bill language complete with strikeouts and underlines to the  
          then-existing Water Code.

          One major area of the Final Report focused on improving  


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          efficiencies in water use, including encouraging voluntary  
          short-term and long-term transfers.  Among the draft statutory  
          language provided in order to potentially implement those  
          changes was a new Chapter 10.5 in Division 2, Part 2, of the  
          Water Code which included the following article:

                       Article 3.  Transfer of Decreed Rights
               1746.  Any water right determined under a court decree  
               issued pursuant to [a statutory adjudication]  
               subsequent to the enactment of this legislation shall  
               be transferable pursuant to the provisions of chapters  
               10 and 10.5 of this code. The court having the  
               appropriate jurisdiction over the decreed rights shall  
               enter a supplemental decree modifying any rights  
               involved upon motion of the board or any interested  

          AB 1147 (Filante), Chapter 933, Statutes of 1980, enacted the  
          portion of the State Water Rights Commission's recommendations.   
          As Assemblymember Filante noted in his press release, "AB 1147  
          amends several sections of the Water Code, dealing with water  
          rights; clarifies the ownership of waste water and waste water  
          facilities; and allows for the transfer of water rights."  AB  
          1147 included the above language, almost verbatim, as Water Code  
          Section 1745.  In its March 19, 1979 digest to AB 1147, the  
          Legislative Counsel's office stated Section 1745 would, "permit  
          the transfer of any water right, including riparian rights,  
          which has been quantified after the effective date of the bill  
          pursuant to a statutory adjudication."  

          Eight years later AB 982 (Costa), c. 1145, Statutes of 1988  
          amended, repealed, and reordered several of the Water Code  
          sections created under AB 1147.  AB 982 deleted the provisions  
          regarding temporary transfers and instead allowed short-term  
          (less than 1 year) CEQA-exempt transfers, among other changes.   
          In the reorder, AB 982 moved Water Code 1745 to Water Code  
          Section 1740 but left it virtually unchanged except for deleting  
          "subsequent to the enactment of this legislation" and  
          substituting the enactment date of the original legislation:  
          "after January 1, 1981."

           Supporting arguments  :  The author states that "this bill  
          provides an optional, voluntary process for water right holders  
          to gain permission from the State of California to transfer  
          their water rights to other parties.  Importantly, it does not  


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          mandate that such water rights holders go to the State Water  
          Board for permission."  By authorizing an additional, voluntary  
          process through and administrative agency, the author states  
          that "this bill encourages water transfers" by allowing "those  
          with old water rights to participate in the transfer market  
          through a simpler process than petitioning a court to reopen an  
          entire adjudication."  The author adds that the "effect of the  
          limitation to post-1981 decrees has severely limited the  
          applicability of section 1740 as all but a few adjudication  
          decrees were entered before that date."


          None on file.

          None on file.

          Analysis Prepared by  :    Tina Cannon Leahy / W., P. & W. / (916)