BILL ANALYSIS Ó
AB 2304
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Date of Hearing: May 25, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2304 (Levine) - As Amended May 11, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes the California Water Market Exchange
Clearinghouse (Clearinghouse) in the Natural Resources Agency
(NRA) to enhance access to voluntary water market transactions.
Specifically, this bill:
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1)Requires the NRA Secretary to appoint a director of the
Clearinghouse, and to establish and Chair a task force of
members of state agencies and various stakeholders to develop
recommendations on how to create and implement the
Clearinghouse, as specified.
2)Requires the Clearinghouse to create a centralized water
market platform by December 31, 2018. Establishes an
unspecified administrative fee to be deposited in the
California Water Market Clearinghouse Fund for appropriation
by the Legislature.
3)Requires the NRA to create an Office of the Water Transfer
Advocate and appoint the Advocate on or before December 31,
2018.
FISCAL EFFECT:
1)Increased costs of between $750,000 and $1.2 million to adopt
regulations to establish administrative procedures.
2)Unknown cost associated with the activities of the task force.
3)Annual operating costs of approximately $2 million per year
for transfers and exchanges concerning State Water Project
(SWP) water and an additional $2.1 million per year for
non-SWP water to be conveyed through SWP facilities.
The Department of Water Resources notes that the direction in
this bill to prioritize environmental and community benefit
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transfers is counter to the contractual obligations which may
result in costly legal challenges.
COMMENTS:
1)Purpose. According to the author, only 3% of water used in
California comes from water transfers. This bill is intended
to improve transparency, increase market participation, and
enhance the environmental and community resources in our
poorest communities while providing for less burdensome water
transfers.
2)Background. Water transfers involve a change in the place of
water use, from the water's historic point of diversion and
use, to a new location either within or outside the watershed
of origin. Water transfers can last up to a year (temporary),
more than a year, or be permanent. Water transfers are
strictly voluntary, and must not create harm to other legal
water users, the environment, or the local economy from which
the water is being transferred.
Water transfers can be an effective water management tool.
Transfers are particularly useful for meeting critical needs
during drought periods. Transfers can only occur with "new
water" the surface water system will realize as a result of
changes in reservoir operation, groundwater substitution, crop
idling or shifting, and occasionally water conservation action
taken.
In March 2016, the Association of California Water Agencies
released principles recommending ways to improve the water
transfer process. There appears to be general agreement among
many on the need for improvement in the governance and
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management of data associated with water transfers. This bill
attempts to provide guidance, transparency, and data to make
the water transfer process more efficient.
Related Legislation. AB 1755 establishes the Open and
Transparent Water Data Act to create a statewide information
system to integrate water data in publicly accessible website
to simplify and expedite decision-making. This bill will be
heard today in this Committee.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081