BILL ANALYSIS Ó AB 1095 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair AB 1095 (Eduardo Garcia) - As Introduced February 27, 2015 SUBJECT: Water Quality, Supply, and Infrastructure Improvement Act of 2014: restoration funding: Salton Sea SUMMARY: Appropriates an unspecified amount of funding to the California Natural Resources Agency (CNRA) for Salton Sea restoration projects from the $475 million that is available in the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Proposition 1) for the state of California to comply with obligations in specified settlements, compacts, and Acts. EXISTING LAW: 1)Authorizes $7.545 billion in general obligation funding for water-related projects and programs in Proposition 1, the Safe Drinking Water, Quality, and Infrastructure Act of 2014 (Prop. 1). 2)Under Prop. 1, authorizes $475 million in order to fulfill State obligations related to: the Klamath Agreements; Tahoe Compact; San Joaquin River Restoration Agreement; Salton Sea Restoration; and, Central Valley Project Improvement Act refuge water supplies. AB 1095 Page 2 3)Establishes the Salton Sea Restoration Act (SSRA) with the legislative intent of providing that the State undertakes restoration of the Salton Sea ecosystem and the permanent protection of the wildlife dependent on that ecosystem based on a "preferred alternative" that is developed as a result of a restoration study and alternative selection process. 4)Requires the SSRA preferred alternative to provide the maximum feasible attainment of specified environmental objectives, including restoration of long-term stable aquatic and shoreline habitat to historic levels and diversity of fish and wildlife dependent on the Salton Sea, elimination of air quality impacts from restoration projects, and protection of water quality. 5)Provides that for purposes of the SSRA restoration plan the Salton Sea ecosystem includes the Salton Sea, agricultural lands surrounding the Sea, and the tributaries and drains within Imperial and Coachella Valleys that deliver water to the Sea. 6)Requires the CNRA Secretary, in consultation with the Department of Fish and Wildlife (DFW), the Department of Water Resources (DWR), the Salton Sea Authority (SSA), air quality districts, and the Salton Sea Advisory Committee, undertake a restoration study to determine a preferred alternative for restoration of the Salton Sea, prepare a Programmatic Environmental Impact Report (PEIR) analyzing the alternatives, and submit a preferred alternative to the Legislature on or before December 31, 2006. 7)Establishes the Salton Sea Restoration Fund (SSRF), which is administered by the DFW Director. Authorizes moneys deposited in the SSRF to be expended, upon appropriation by the Legislature, for the following purposes: a) Environmental and engineering studies related to restoration of the Salton Sea and the protection of fish AB 1095 Page 3 and wildlife dependent on the Sea; b) Implementation of conservation measures necessary to protect fish and wildlife dependent on the Sea; c) Implementation of the preferred Salton Sea restoration alternative; and, d) Administrative, technical, and public outreach costs related to development and selection of the preferred Salton Sea restoration alternative. FISCAL EFFECT: Unknown COMMENTS: This bill appropriates an unspecified amount of funding from Prop. 1 for Salton Sea restoration. 1)Author's statement: The author states that this bill is needed because the Salton Sea is California's largest inland lake and very important to both the residents of Imperial and Riverside counties and to the wildlife that relies upon the Sea for habitat. The author adds that the Salton Sea is nicknamed "California's Everglades" by some as it currently supports 400 species of birds, many of them year-round, and is a critical stopping point along the 5,000-mile Pacific Flyway. The author adds that without restoration communities windblown particle from the dry lakebed will worsen the already poor air quality in the Imperial and Coachella Valleys to the detriment of many who live there and already suffer air quality-related health problems. 2)Background: The Salton Sea, California's largest lake, is located in a low-lying trough or desert sink in Southern California, much of which is below sea level. The current sea AB 1095 Page 4 was formed in 1905 when the Colorado River flooded its banks at a faulty construction site during the building of the All-American Canal. However, the sea bed has periodically filled and receded numerous times, from prehistoric times through the 1800s. The present sea is fed primarily by agricultural runoff. Since it has no natural outlet, it is becoming increasingly saline and today is considerably saltier than the ocean. The State's obligation to fund Salton Sea restoration is related to the Quantification Settlement Agreement (QSA), which is in turn related to California's dependence on Colorado River water. The Colorado River Compact is a 1922 agreement among the seven Colorado River basin states as to how they will apportion Colorado River flows. Based on the flows of the River prior to 1922, 7.5 million acre-feet (MAF) were assigned to the Upper Division, consisting of Colorado, New Mexico, Utah, and Wyoming and 7.5 MAF were assigned to the Lower Division as follows: California 4.4 MAF , Arizona 2.8 MAF, and Nevada .3 MAF. But even though California received the lion's share, it continuously relied upon another .8 MAF of "surplus" from the other States to average about 5.2 MAF. As the rest of the southwest grew, the other States began to pressure the Secretary of the Interior to give California a deadline to come up with a plan to ratchet back to 4.4 MAF. As a result, Secretary of the Interior Gale Norton gave California a deadline of December 31, 2002 to come up with a "4.4 Plan" or she threatened to discontinue declaring surpluses and cut off the extra water supply. Under California appropriative water law, the most senior water rights holder takes all that he or she has used reasonably, beneficially, and continuously, and then the next most senior, and so on with any shortage falling wholly upon the most junior water rights holders first. But in order to AB 1095 Page 5 reach a 4.4 Plan, the major Colorado River water rights holders, Imperial Irrigation District (Imperial), the Metropolitan Water District of Southern California, the San Diego County Water Authority (San Diego), and the Coachella Valley Water District (Coachella), agreed to quantify their water rights, engage in a series of transfers, and restore the Salton Sea. The reason for inclusion of the Salton Sea is that, beginning in 2017, the QSA included ag-to-urban water transfers that would reduce the runoff from IID that was providing significant inflow to the Sea. As a result, the Sea will shrink considerably in size, increasing salinity and exposing large areas of dry sea bed playa. 3)Reasons for Salton Sea Restoration: The Salton Sea is one of the most important wetland areas in California for migratory waterfowl and shorebirds, since over 95% of California's historical wetlands have been converted to other land uses. The Salton Sea supports over 400 species of birds, and is an internationally significant stopover site for hundreds of thousands of birds migrating along the Pacific Flyway. Recently, fishery resources in the sea have declined significantly due to increasing salinity, evaporation and declining water quality. Once the QSA water transfers are fully implemented, it is generally recognized that without restoration efforts the ecosystem of the Salton Sea will collapse over the next decade or two. The drying up of the sea also will have human health impacts. As the Pacific Institute, an independent research and policy analysis think tank writes in Hazard, the Future of the Salton Sea with No Restoration Project (May 2006), more than 100 miles of dusty lakebed could be exposed to the desert winds. That would cause fine particles to blow over the Coachella and Imperial Valleys with the latter already suffering from the highest childhood asthma hospitalization rate in the State and both areas containing high numbers of seniors who are especially susceptible to poor air quality. AB 1095 Page 6 4)State Obligation to the Sea: To facilitate the implementation of the QSA, the Legislature passed and the Governor signed a package of three bills in September 2003. This Legislation details the financial responsibility the State assumes with respect to mitigation, and requires the formation of a joint powers authority (JPA) to implement and allocate mitigation responsibilities between local agencies and the State. The JPA consists of DFW, Coachella, Imperial, and San Diego. Under the QSA, Coachella, Imperial, and San Diego agree to fund the first $133 million (in 2003 dollars) for mitigation costs related to habitat restoration and air quality and the State of California assumed responsibility for all mitigation and monitoring beyond that first $133 million. This open-ended State obligation was subject to litigation with the Third District Court of Appeal ruling that while the State is contractually liable for the excess mitigation costs, neither the QSA parties nor anyone else can compel the Legislature to appropriate funds to pay for the mitigation. In other words, the court found that the State's contractual obligation under the QSA to pay for excess mitigation costs may be unenforceable but it is not illusory as the Legislature could choose to fund it. 1)Restoration proposals and funding: In 2007, the CNRA completed a restoration study and released the Salton Sea Ecosystem Restoration Program Plan and Final PEIR. The Agency estimated that the preferred alternative identified in the PEIR would cost over $8 billion, expended over a period of 75 years, to implement. The preferred alternative included a saline habitat complex at the north and south end of the Sea, a Marine Sea extending around the northern shoreline in a horseshoe shape, air quality management facilities to reduce particulate emissions from exposed playa, a brine sink for discharge of salts, sedimentation distribution facilities, and early start habitat projects to provide habitat pending completion of other habitat components. A detailed financing AB 1095 Page 7 plan was never developed for the preferred alternative, which has not been endorsed by the Legislature. The PEIR also noted that even the "no project" alternative would cost the State over $1 billion due to state and federal requirements to address air quality, water quality and habitat issues even if no restoration plan is pursued. In 2008, the nonpartisan Legislative Analyst's Office released a report, Restoring the Salton Sea. The report recommended that the Legislature set explicit statutory priorities for addressing environmental problems at the Sea and, in particular, establish the protection of air quality and the preservation of wildlife habitat as the highest priorities for expenditure. In 2012, the CNRA, jointly with the U.S. Army Corps of Engineers, prepared and released a draft Salton Sea Conservation Habitat (SCH) Project Environmental Impact Statement/Environmental Impact Report (EIS/EIR). The SCH Project EIS/EIR proposes a range of aquatic habitats to support fish and wildlife species dependent on the Salton Sea. The CNRA's preferred alternative identified in the EIS/EIR would include construction of 3,770 acres of habitat ponds. Proposition 84, The Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006 made $47 million available for deposit into the SSRF. November 2012 the California State Auditor put out a report whose title says it all: Salton Sea Restoration Fund: The State Has Not Fully Funded a Restoration Plan and the State's Future Mitigation Costs are Uncertain. The report establishes that between fiscal years 2003-2004 and 2012-2013 the State had spent approximately $32 million and anticipated another approximately over $81 million in funding from Prop. 84 and the SSRF water agencies. Prior to 2013, the majority of the AB 1095 Page 8 SSRF was spent on habitat project planning and environmental work, with some limited on-the-ground restoration. The Governor's 2013-14 budget included $2 million to study funding and restoration alternatives by the SSA and $28.4 million from the SSRF for the first phase of implementation of the SCH Project. The first phase includes on-the-ground construction of 800 to 1,200 acres of habitat ponds. Additional funding for implementation of the SCH Project is also being sought at the federal level. 2)Prior and related legislation: In 2003 and 2004, the Legislature approved a package of bills facilitating the implementation of the QSA and calling for restoration of the Salton Sea: SB 277 (Ducheny), Chapter 611, Statutes of 2003; SB 317 (Kuehl), Chapter 612, Statutes of 2003; SB 654 (Machado), Chapter 613, Statutes of 2003; and, SB 1214, Chapter 614, Statutes of 2004 (Kuehl)). Among other things, the legislative package directed DWR in consultation with the newly-created Salton Sea Advisory Committee and SSA, to prepare an ecosystem restoration study and associated programmatic environmental documentation, and created the SSRF. The agencies released a Salton Sea Ecosystem Restoration Program plan and programmatic environmental impact report in 2009 with an estimated cost of over $8 billion. SB 51 (Ducheny), Chapter 303, Statutes of 2010, established, among other things, the Salton Sea Restoration Council (Council) to serve as the state agency responsible for overseeing restoration of the Salton Sea. SB 51 required the Council to evaluate Salton Sea restoration plans and to report to the Governor and the Legislature by June 30, 2013, with a recommended restoration plan. The Governor's 2012 Reorganization Plan, as modified by budget AB 1095 Page 9 trailer bill SB 1018 (Leno), Chapter 39, Statutes of 2012, eliminated the Council, effective December 31, 2012, before the Council ever actually met. AB 71 (V. Manuel Pérez), Chapter 402, Statutes of 2013, required the CNRA Secretary, in consultation with the SSA, to lead Salton Sea restoration efforts. AB 148 (V. Manuel Pérez), Chapter 124, Statutes of 2014 made technical and clarifying changes to AB 71. 3)Supporting arguments: Supporters state that only after the State and QSA parties committed to mitigation and restoration measures was the QSA signed. Supporters add that the conservation-based component of the water transfer agreement with San Diego commences in 2017 after fifteen years of State Water Resources Control Board-ordered return flows of mitigation water to the Salton Sea and that, as a result, the "need for funding to meet the State's obligation looms very, very large indeed." 4)Proposed Committee amendment: The author advises that the bill inadvertently omits from its language a reference to Chapter 614 from the 2003-2004 Legislative package when referring to the mitigation measures that should be funded. Committee staff proposes amending Section 1 of the bill as follows to correct the omission: SECTION 1. Of the funds authorized pursuant to Section 79736 of the Water Code, the sum of ____ dollars ($____) is hereby appropriated from the Water Quality, Supply, and Infrastructure Improvement Fund of 2014 to the Natural Resources Agency to support restoration projects that fulfill the obligations of the state in complying with intrastate or AB 1095 Page 10 multiparty water quantification settlement agreement provisions, as set forth in Chapters 611, 612,and613 , and 614 of the Statutes of 2003. REGISTERED SUPPORT / OPPOSITION: Support Imperial Irrigation District Salton Sea Authority (if amended) Opposition None on file Analysis Prepared by:Tina Cannon Leahy / W., P., & W. / (916) 319-2096 AB 1095 Page 11