BILL NUMBER: AB 2304 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 11, 2016
INTRODUCED BY Assembly Member Levine
FEBRUARY 18, 2016
An act to add Chapter 7.5 (commencing with Section 485) to
Division 1 of the Water Code, relating to water.
LEGISLATIVE COUNSEL'S DIGEST
AB 2304, as amended, Levine. California Water Market
Exchange. Clearinghouse.
Existing law, the Costa-Isenberg Water Transfer Act of 1986,
requires the Department of Water Resources to establish an ongoing
program to facilitate the voluntary exchange or transfer of water and
implement the various laws that pertain to water transfers. The act
requires the department to create and maintain a list of entities
seeking to enter into water supply transfers, leases, exchanges, or
other similar arrangements and to maintain a list of the physical
facilities that may be available to carry out water supply transfers.
The act requires the department to prepare a water transfer guide
with prescribed components.
This bill bill, on and after July 1, 2018,
would establish the California Water Market Exchange,
governed by a 5-member board, in Clearinghouse as an
independent office within the Natural Resources
Agency. Agency for the purpose of making the
water transfer and exchange process more transparent and more
efficient and to enhance access to voluntary water market
transactions, as specified. This bill would require the
market exchange, on or before December 31, 2017,
clearinghouse, on or before December 31, 2018, to create a
centralized water market platform on its Internet Web site that
provides ready access to information that has been provided
about water available for transfer or exchange.
exchange and information about the process for transferring or
exchanging water. The bill would require the Secretary of the Natural
Resources Agency to convene a Water Market Clearinghouse Task Force,
composed as prescribed, and would require the task force to make
recommendations to the clearinghouse, as specified. The bill, on or
before December 31, 2018, would require the clearinghouse to consider
and act upon the recommendations submitted by the task force in
order to establish administrative procedures under which
state agencies would more expediently act upon proposed water
transfers or exchanges and would prioritize projects that provide
environmental and community benefits or have a demonstrated history
of minimal potential impact to other legal water users or instream
beneficial uses. The bill would require the clearinghouse to work in
collaboration with other state agencies to make necessary changes in
the rules and regulations governing water transfers and exchanges.
This bill, for bill would require
all transfers and or exchanges of
water occurring on or after January 1, 2018, would require
the submission of certain data and information to the market exchange
and 2020, that require conveyance across the
Sacramento-San Joaquin Delta or result in conveyance of water from
one watershed to another to be submitted to the
clearinghouse and processed, as specified, and would require
the payment of an administrative fee to the market exchange,
clearinghouse for this processing, as
specified. This bill would require the market exchange to
develop specified procedures in consultation with federal, state, and
local agencies. The bill, on or before December 31,
2018, would require the agency to create an Office of the
Water Transfer Advocate within the clearinghouse and to appoint an
advocate.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) A more efficient water transfer process and a more accessible
water market can play important roles in reducing uncertainty and
water shortage impacts on the state's economy now and in the future.
(b) The California Water Action Plan calls for making improvements
to the water transfer process as part of a comprehensive, long-term
water management policy.
(c) While numerous water agencies and water users currently
participate in the water market, water transfer processes are complex
and water market information may not be readily available to the
public and all potential sellers and buyers.
(d) Providing greater transparency in and access to water
marketing will provide a needed tool to increase water supplies by
leveraging significant local and regional investments made over the
past two decades to increase water supply reliability.
(e) An enhanced water market, used in conjunction with investments
in conveyance, water use efficiency, including water conservation
and water recycling, surface and groundwater storage, desalination,
and other strategies, will add to the water supplies that are
available to help the state weather multiple years of drought and
protect economic and environmental uses of water.
(f) Voluntary water transfers are a proven and effective way to
help meet California's water needs, as evidenced by the landmark 1991
Governor's Emergency Drought Water Bank and numerous subsequent
water banks, exchanges, and short- and long-term water transfers.
(g) Water markets can improve water use efficiency and pricing,
which in turn can contribute to increased water supply for
consumptive uses, enhanced stream flows, and more water for wetlands
and other environmental resources. This benefit would be of
particular importance during prolonged drought.
(h) Improving the water transfer process and enhancing access to
water markets can accomplish all of the following:
(1) Protect existing local and regional investments.
(2) Improve coordination among water agencies.
(3) Incentivize significant investments in water use efficiency
projects and programs.
(4) Increase water supply and water supply reliability for urban
and agricultural water users.
(5) Increase the quantities or improve the timing of water
available for transfers by providing information to sellers and
buyers who might not otherwise have sufficient information to
participate in water markets.
(6) Benefit the environment by enhancing the state's water
supplies and increasing the amount or improving the timing of water
available for environmental uses.
(7) Benefit communities by bolstering water supplies and reducing
reliance on groundwater resources.
SEC. 2. Chapter 7.5 (commencing with Section 485)
is added to Division 1 of the Water Code , to
read:
CHAPTER 7.5. CALIFORNIA WATER MARKET CLEARINGHOUSE
485. This chapter shall be known, and may be cited, as the
California Water Market Clearinghouse Act of 2016.
486. It is the intent of the Legislature to create the California
Water Market Clearinghouse to do all of the following:
(a) Advance water sustainability, resiliency, and adaptability to
drought and climate change by promoting efficient water markets.
(b) Provide important benefits and opportunities for disadvantaged
communities and environmental resources.
(c) Increase agency coordination, transparency, and decisionmaking
capacity.
(d) Facilitate water transfers and water user access to exchanges
by the establishment of a centralized market information platform and
better coordinated review and approval processes, thereby
streamlining the process. This can be achieved without a significant
increase in the overall transaction costs or regulatory burdens
associated with water transfer processes.
(e) Enable and encourage public and private investments in water
use efficiency and other water-saving measures through participation
in water transfers and exchanges.
(f) Promote and enable water transfers and exchanges as effective
mechanisms for management of sustainable surface and groundwater
resources in the state.
(g) Protect environmental resources, including groundwater,
consistent with the requirements of the Sustainable Groundwater
Management Act (Part 2.74 (commencing with Section 10720) of Division
6).
(h) Protect drinking water supplies in areas of origin from
cumulative impacts of multiple or long-term water transfers and
exchanges.
487. (a) On and after July 1, 2018, the California Water Market
Clearinghouse shall operate as an independent office within the
Natural Resources Agency. The purpose of the California Water Market
Clearinghouse is to make the water transfer and exchange process more
transparent and more efficient and to enhance access to voluntary
water market transactions, in particular those that provide
environmental or social benefits.
(b) The director of the California Water Market Clearinghouse
shall be appointed by the Secretary of the Natural Resources Agency.
488. (a) On or before December 31, 2018, the California Water
Market Clearinghouse shall create a centralized water market platform
on its Internet Web site that provides ready access to information
that has been provided about water available for transfer or exchange
and information about the process for transferring or exchanging
water. The platform shall be readily available to the public and
contain all water transfer or exchange data and information collected
by the California Water Market Clearinghouse.
(b) On or before December 31, 2018, the California Water Market
Clearinghouse shall consider and act upon the recommendations
submitted by the Water Market Clearinghouse Task Force and shall
establish administrative procedures under which state agencies shall
more expediently act upon proposed water transfers or exchanges.
Those procedures shall require state agencies to prioritize projects
that provide environmental and community benefits or have a
demonstrated history of minimal potential impact to other legal water
users or instream beneficial uses. The California Water Market
Clearinghouse shall act consistent with rulemaking procedures of the
state and shall work in collaboration with other state agencies to
make necessary changes in the rules and regulations governing water
transfers and exchanges.
(c) On and after January 1, 2020, all transfers or exchanges that
require conveyance across the Sacramento-San Joaquin Delta or result
in conveyance of water from one watershed to another shall be
submitted to the California Water Market Clearinghouse and processed
according to the procedures and standards established, pursuant to
subdivision (b), by the California Water Market Clearinghouse in
coordination with other state and federal agencies.
(d) On or before December 31, 2018, the Natural Resources Agency
shall create within the California Water Market Clearinghouse an
Office of the Water Transfer Advocate and appoint a Water Transfer
Advocate.
(e) Nothing in this chapter provides authority to the California
Water Market Clearinghouse to approve or disapprove water transfers
or exchanges.
489. (a) In order to provide the California Water Market
Clearinghouse with appropriate recommendations to improve the water
transfer process and increase access to the water market as part of a
comprehensive, long-term water management policy, the Secretary of
the Natural Resources Agency shall convene a task force, to be known
as the Water Market Clearinghouse Task Force.
(b) The Water Market Clearinghouse Task Force shall make
recommendations, based upon the best available science, to the
California Water Market Clearinghouse regarding all of the following:
(1) How to aggregate and disclose in a publicly accessible manner
the information required to be submitted in support of an application
to transfer water pursuant to Section 1725 or any other law. The
information should include, but not be limited to, all of the
following:
(A) The names of the water buyer and seller.
(B) The quantity of water to be transferred or exchanged.
(C) The price to be paid for the water transfer or exchange.
(D) The time and duration of the water transfer or exchange.
(E) The nature of the underlying right to the water proposed to be
transferred or exchanged.
(F) The origin and proposed point of use, place of use, and
purpose of use of the transferred or exchanged water.
(G) A description of the conveyance and storage facilities
necessary to complete the transfer or exchange.
(H) An identification of any third-party impacts including, but
not limited to, water quality impacts.
(2) The information required for water users and the public to
readily track the progress of a proposed transfer through agency
review to ensure expedient approval whenever possible.
(3) The type of information that the California Water Market
Clearinghouse should require to be submitted to it by state or local
agencies that approve a water transfer or exchange after the transfer
or exchange is completed. The information should include, but not be
limited to, all of the following:
(A) The quantity of water transferred or exchanged.
(B) The new place of use for the transferred or exchanged water.
(C) The new point of rediversion for the transferred or exchanged
water.
(D) The parties to the water transfer or exchange.
(E) The conveyance and storage facilities used to complete the
water transfer or exchange.
(F) The time and duration of the water transfer or exchange.
(4) Procedures and standards designed to provide for all of the
following:
(A) Better coordinated review of and action upon applications or
proposals to transfer or exchange water, or both.
(B) Priority for projects that provide environmental and community
benefits or have demonstrated a history of minimal potential impact
to other legal water users or instream beneficial uses.
(C) Reduced transaction costs of water transfers and exchanges.
(D) Comprehensive evaluation of transfers that should be eligible
for expedited review, with consideration of drinking water supply,
environmental quality, and groundwater sustainability benefits and
impacts.
(E) Assurance that transfers and exchanges protect environmental
and community resources in areas of origin and in recipient areas.
(F) Demonstration that a transfer will not adversely affect
groundwater conditions in any areas involved in the transfer.
(c) In addition to the recommendations required pursuant to
subdivision (b), the Water Market Clearinghouse Task Force may
consider and make recommendations, based upon the best available
science, to the California Water Market Clearinghouse regarding any
or all of the following:
(1) Consolidating places of use.
(2) Incentivizing and facilitating water use efficiency-related
water transfers, as well as transfers between environmental uses.
(3) Developing and facilitating pilot transfers based on crop
fallowing and other practices to quantify and validate consumptive
water use rates and incorporating findings into water transfer
guidelines.
(4) Providing transparency regarding Delta carriage water loss
analysis.
(5) Establishing or documenting conveyance access protocols.
(6) Creating market mechanisms for access to capital.
(d) (1) The Water Market Clearinghouse Task Force shall be
composed of the following members:
(A) One representative from each of the following state agencies:
(i) The Natural Resources Agency. This representative shall serve
as the chair of the Water Market Clearinghouse Task Force.
(ii) The department.
(iii) The Department of Fish and Wildlife.
(iv) The Department of Food and Agriculture.
(v) The Office of Planning and Research.
(vi) The board.
(B) Representatives from academia, agricultural water suppliers,
municipal water suppliers, disadvantaged communities, environmental
and conservation organizations, and groundwater management entities.
(C) Representatives from entities that have participated in water
transfers as sellers and buyers of water.
(2) The federal water and resources agencies shall be invited to
have representatives participate in the Water Market Clearinghouse
Task Force.
(e) The Water Market Clearinghouse Task Force shall conduct three
public meetings to consider public comments on draft recommendations
to the California Water Market Clearinghouse. The Water Market
Clearinghouse Task Force shall publish draft recommendations at least
30 days before the public meetings. One public meeting shall be
conducted at a location in northern California, one public meeting
shall be conducted at a location in the central valley of California,
and one public meeting shall be conducted at a location in southern
California. The Water Market Clearinghouse Task Force shall invite
California Native American tribes, environmental justice
organizations, cities, counties, and local production agricultural
organizations to participate in the public meetings.
(f) On or before January 1, 2018, the Water Market Clearinghouse
Task Force shall submit its recommendations to the California Water
Market Clearinghouse.
490. (a) Anyone submitting information pursuant to subdivision
(c) of Section 488 shall pay an administrative fee, established by
the California Water Market Clearinghouse, to recover the reasonable
costs of the California Water Market Clearinghouse in administering
this chapter.
(b) Fees imposed pursuant to subdivision (a) shall be deposited in
the California Water Market Clearinghouse Fund, which is hereby
created in the State Treasury. Moneys in the fund shall be available,
upon appropriation by the Legislature, to the California Water
Market Clearinghouse for the purposes of this chapter.
491. This chapter applies in addition to any other law relating
to water transfers and exchanges.
SECTION 1. It is the intent of the Legislature
in creating the California Water Market Exchange that the market
exchange do all of the following:
(a) Create water sustainability, resiliency, and adaptability to
drought and climate change.
(b) Provide important benefits and opportunities for disadvantaged
communities and environmental resources.
(c) Increase transparency and decisionmaking capacity by better
integrating data collection and reporting.
(d) Facilitate water transfers and exchanges by the establishment
of a centralized exchange platform and streamline review and approval
processes.
(e) Enable and encourage public and private investments in water
use efficiency measures through participation in water transfers and
exchanges.
(f) Provide water transfers and exchanges as an effective
mechanism for sustainable management of surface and groundwater
resources in the state.
SEC. 2. Chapter 7.5 (commencing with Section
485) is added to Division 1 of the Water Code, to read:
CHAPTER 7.5. CALIFORNIA WATER MARKET EXCHANGE
485. This chapter shall be known, and may be cited, as the
California Water Market Exchange Act of 2016.
486. The following definitions govern the construction of this
chapter:
(a) "Disadvantaged community" has the same meaning as defined in
Section 79505.5.
(b) "Market exchange" means the California Water Market Exchange
established in Section 487.
(c) "Small community water system" has the same meaning as defined
in Section 116275 of the Health and Safety Code.
487. (a) The California Water Market Exchange is hereby
established in the Natural Resources Agency.
(b) The market exchange shall be governed by a five-member board,
composed as follows:
(1) The Secretary of the Natural Resources Agency.
(2) Four individuals appointed by the Governor.
(c) Each board member appointed by the Governor shall hold office
for a term of four years. The Governor shall stagger the terms of the
initial members appointed. A vacancy shall be filled by the Governor
by appointing a member to serve the remainder of the term.
488. (a) On or before December 31, 2017, the market exchange
shall create a centralized water market platform on its Internet Web
site that provides ready access to information about water available
for transfer or exchange. The platform shall be readily available to
the public and contain all data and information collected by the
market exchange in order to ensure transparency of information
regarding the quantities of water available for transfer or exchange
and the prices paid for transferred or exchanged water.
(b) Before a transfer or exchange of water, the market exchange
shall require the submission of data and information that includes,
but is not limited to, all of the following:
(1) The names of the water buyer and seller.
(2) The quantity of water to be transferred or exchanged.
(3) The price to be paid for the water transfer or exchange.
(4) The time and duration of the water transfer or exchange.
(5) The nature of the underlying right to the water proposed to be
transferred or exchanged.
(6) The origin location and proposed place of use of the
transferred or exchanged water.
(7) A description of the conveyance and storage facilities
necessary to complete the transfer or exchange.
(8) An identification of any third-party impacts that may result
from the transfer or exchange.
(c) After a transfer or exchange of water, the market exchange
shall require the submission of data and information that includes,
but is not limited to, all of the following:
(1) The quantity of water transferred or exchanged.
(2) The conveyance and storage facilities used to complete the
water transfer or exchange.
(3) The time and duration of the water transfer or exchange.
489. The Legislature intends that water transfers and exchanges
protect and enhance environmental and community benefits that include
the following:
(a) Instream flows and ecosystem water supply.
(b) Improved water monitoring and data networks.
(c) Ecosystem restoration projects benefitting aquatic and
riparian species.
(d) Improved drinking water supply and quality projects.
(e) Development of needed technical, managerial, and financial
capacity for disadvantaged communities.
(f) Acquisition through the market exchange of needed water
supplies for small community water systems.
490. On or before December 31, 2017, the market exchange shall do
both of the following:
(a) Develop procedures, in consultation with federal, state, and
local agencies with jurisdiction over water transfers or exchanges,
to streamline and expedite review and action upon applications to
transfer or exchange water and to prioritize projects that provide
environmental and community benefits as described in Section 489. The
procedures shall recommend types of transfers and exchanges that
could be more routinely approved.
(b) Establish standards and procedures to ensure that transfers
and exchanges protect environmental and community benefits consistent
with Section 489 and to encourage projects that improve
environmental conditions, provide safe drinking water, and provide
other community benefits.
491. (a) Anyone submitting information pursuant to subdivision
(b) or (c) of Section 488 shall pay an administrative fee,
established by the market exchange, to recover the reasonable costs
of the market exchange in administering this chapter.
(b) Fees imposed pursuant to subdivision (a) shall be deposited in
the California Water Market Exchange Fund that is hereby created in
the State Treasury. Moneys in the fund shall be available, upon
appropriation by the Legislature, to the market exchange for the
purposes of this chapter.
492. (a) This chapter applies in addition to any other law
relating to water transfers and exchanges.
(b) This chapter applies to all transfers and exchanges of water
occurring on or after January 1, 2018.