BILL ANALYSIS Ķ SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: AB 1649 Hearing Date: June 28, 2016 ----------------------------------------------------------------- |Author: |Salas | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |May 27, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Dennis O'Connor | | | | ----------------------------------------------------------------- Subject: State water policy: priority: surface water storage projects and joint powers authorities BACKGROUND AND EXISTING LAW On November 4, 2014, the voters ratified Proposition 1, which authorized $7.12 B in general obligation bonds to fund a variety of water related programs and projects. Among Prop. 1's provisions was Chapter 8. Statewide Water System Operational Improvement and Drought Preparedness. That chapter provides a $2.7 B continuous appropriation to the California Water Commission (CWC) for public benefits associated with water storage projects that improve the operation of the state water system, are cost effective, and provide a net improvement in ecosystem and water quality conditions. Chapter 8 includes provisions that: Require the CWC to select projects through a competitive public process that ranks potential projects based on the expected return for public investment as measured by the magnitude of the public benefits provided, pursuant to specified criteria. Limits eligible project to: Surface storage projects identified in the CALFED Bay-Delta Program Record of Decision, dated August 28, 2000, except for specified prohibited projects. AB 1649 (Salas) Page 2 of ? Groundwater storage projects and groundwater contamination prevention or remediation projects that provide water storage benefits. Conjunctive use and reservoir reoperation projects. Local and regional surface storage projects that improve the operation of water systems in the state and provide public benefits. Prohibit the CWC from allocating funds for a project before December 15, 2016, and until the CWC approves the project based on the CWC's determination that all of the following have occurred: The CWC has adopted the regulations for quantifying public benefits and specifically quantified and made public the cost of the public benefits associated with the project. The project applicant has entered into a contract with each party that will derive benefits, other than public benefits, from the project that ensures the party will pay its share of the total costs of the project. The benefits available to a party shall be consistent with that party's share of total project costs. The project applicant has entered into a contract with each public agency that administers the public benefits, after that agency makes a finding that the public benefits of the project for which that agency is responsible meet all the requirements of this chapter, to ensure that the public contribution of funds pursuant to this chapter achieves the public benefits identified for the project. The CWC has held a public hearing for the purposes of providing an opportunity for the public to review and comment on the information required to be prepared pursuant to this subdivision. Further prohibit the CWC from allocating funds to a project until of the following additional conditions are met: Feasibility studies have been completed. The commission has found and determined that the project is feasible, is consistent with all applicable laws and regulations, and will advance the long-term objectives of restoring ecological health and improving water management for beneficial uses of the Delta. All environmental documentation associated with the project has been completed, and all other federal, state, AB 1649 (Salas) Page 3 of ? and local approvals, certifications, and agreements required to be completed have been obtained. Allow funds allocated for surface storage projects to be provided to local joint powers authorities (JPAs) formed by irrigation districts and other local water districts and local governments within the applicable hydrologic region to design, acquire, and construct those projects. Such JPSs shall own, govern, manage, and operate a surface water storage project, subject to the requirement that the ownership, governance, management, and operation of the surface water storage project. Declare, that "In approving the Water Quality, Supply, and Infrastructure Improvement Act of 2014, the people were informed and hereby declare that the provisions of this chapter are necessary, integral, and essential to meeting the single object or work of the Water Quality, Supply, and Infrastructure Improvement Act of 2014. As such, any amendment of the provisions of this chapter by the Legislature without voter approval would frustrate the scheme and design that induced voter approval of this act. The people therefore find and declare that any amendment of the provisions of this chapter by the Legislature shall require an affirmative vote of two-thirds of the membership in each house of the Legislature and voter approval." PROPOSED LAW This bill would require the Department of Water Resources (DWR), by April 30, 2017, to develop a state water policy that gives priority to the formation of joint powers authorities that are formed to address critical surface water storage needs and to the funding of the joint powers authorities' surface water storage projects. The bill also makes a number of findings regarding the need for new surface storage, and explicitly finds: Of the water storage projects available, the Temperance Flat Dam and Sites Reservoir will meet statewide goals and provide all of these public benefits to the greatest extent. ARGUMENTS IN SUPPORT AB 1649 (Salas) Page 4 of ? According to the author, "This bill urges the state to expedite water storage projects. As California continues to combat historic drought conditions, we should be doing everything we can to update our water storage infrastructure. Had investments been made decades ago, we would be prepared to capture the rainfall from recent El Niņo storms. Expanding and improving California's water storage capacity is long overdue." ARGUMENTS IN OPPOSITION The Association of California Water Agencies (ACWA) object to the declaration that of the water storage projects available, the Temperance Flat Dam and Sites Reservoir will meet statewide goals and provide all of these public benefits to the greatest extent. ACWA writes that while they advocated for the inclusion of funding for surface storage projects, they also advocated that there be no earmarks. Finally, it writes "In 2015 and 2016, ACWA has been consistent in taking negative positions on bills that were attempting to rewrite Proposition 1 after its enactment." A coalition of environmental interests similarly objects to giving priority to the JPAs formed to fund the propose Temperance Flat Dam and Sites Reservoir. Specific objections include: "AB 1649 picks 'winners and losers" among water storage projects. This contravenes the original intent of the Legislature and assurances given California voters that Proposition 1 funding would be competitively allocated. Of the 41 concept papers for water storage projects recently submitted to the California Water Commission, only four are proposed by JPAs." "Without any substantiating evidence, AB 1649 flatly states that the controversial Temperance Flat Dam and the Sites Reservoir "will meet statewide goals" and provide "public benefits to the greatest extent." There are few public documents available to confirm this statement." "In fact, the Temperance Flat Dam fails to meet statewide goals to increase water supply reliability and provide real public benefits. Based on existing federal environment review documents and public and regulatory agency comments, the proposed dam will cost billions of dollars, produce a paltry AB 1649 (Salas) Page 5 of ? 1/10th of 1% increase in the state's water supply, provide no substantial public benefits, and result in unacceptable environmental harm to the San Joaquin River. In addition, this project has not been subject to environmental review under the California Environmental Quality Act (CEQA), which is required under Prop. 1." "Quantifiable water supply and public benefits that may be provided by the Sites Reservoir project are largely speculative at this point and highly dependent on how the project is operated. No complete CEQA analysis or feasibility report has been released by CDWR or the Sites JPA for review and comment by the public and regulatory agencies. Conservationists are concerned that potential adverse impacts to the Sacramento River caused by Sites diversions are being ignored or glossed over. There is simply no evidence in the public record at this time that Sites deserves prioritized state attention and funding over other projects." COMMENTS Bill Won't Do What The Author Desires. While the author intends to give a boost to the Temperance Flat Dam and Sites Reservoir, the bill's approach won't do that. Prop. 1 continuously appropriated funds to the CWC and gave it specific rules governing how it was to allocate those funds. This bill tells DWR to develop a policy. That presents a problem. A policy developed by DWR can't, in and of itself, affect how the CWC allocates its funds. To change the rules for how the CWC allocates the storage funds, one would need to amend Chapter 8 of Proposition 1. And, by the provisions of Chapter 8, any amendment to that chapter by the Legislature requires an affirmative vote of two-thirds of the membership in each house of the Legislature and voter approval. What About Future Bonds? A future bond might be affected by a policy developed by DWR that gives priority to the funding of the joint powers authorities' surface water storage projects. However, it would be simplest just to write the bond measure with the desired priorities and considerations in it. Some would argue that is precisely what the legislature did when writing Proposition 1. How Would DWR Do This? DWR is not well suited to developing AB 1649 (Salas) Page 6 of ? such a policy. The CWC advises the Director of DWR, approves rules and regulations, and monitors and reports on the construction and operation of the State Water Project. In 2009, comprehensive water legislation was enacted to give the Commission new responsibilities regarding the distribution of public funds for water storage projects, and the development of regulations for the quantification and management of the public benefits associated with the projects. Because of its regulatory authority, the Commission is in a better position to adopt regulations on funding surface water storage projects. Additionally, establishing a state policy on funding JPA projects would likely be subject to the regulatory process in the Administrative Procedures Act (APA). Typically, it takes about 18 months to adopt and approve regulations through the Office of Administrative Law. Even with an APA exemption, the 60-day timeline in this bill will have significant costs. Lastly, DWR does not have expertise or authority over joint powers authorities which typically are formed between public agencies under contractual agreement. DWR would likely require outside legal counsel to formulate the policy and the 60-day deadline would not allow sufficient time for public input. Would Mostly Benefit Sites. While the findings call out both Temperance Flat Dam and Sites Reservoir, assuming for the sake of argument that this bill did result in an actionable policy that prioritized JPAs for funding, only Sites is proposed to be constructed and operated by a JPA. If Temperance Flat Dam is build, the U.S. Bureau of Reclamation would almost certainly be the project sponsor, as the Bureau issued the Draft Feasibility Report and the Draft Environmental Impact Statement, the dam would inundate federal lands, and it would be directly upstream of the Bureaus Friant Dam. SUGGESTED AMENDMENTS: None SUPPORT Fresno Chamber of Commerce Madera County Board of Supervisors OPPOSITION AB 1649 (Salas) Page 7 of ? American Rivers Association of California Water Agencies American Whitewater The Bay Institute Big Sandy Rancheria Western Mono Indians Butte Environmental Council California Sportfishing Protection Alliance California Wilderness Coalition Clean Water Action Foothill Conservancy Friends of the River Natural Resources Defense Council Planning and Conservation League Revive the San Joaquin River Sacramento River Preservation Trust Sierra Club California South Yuba River Citizens League Winnemem Wintu Tribe Private Citizen (1) -- END --