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
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          |Author:    |Salas                  |           |                 |
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          |Version:   |May 27, 2016                                         |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Dennis O'Connor                                      |
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           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.







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                 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,  








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               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








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          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  








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            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  








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          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








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          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 --