BILL ANALYSIS Ó
AB 2480
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Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
AB 2480
(Bloom) - As Amended April 5, 2016
SUBJECT: Source watersheds: financing
SUMMARY: Declares a state policy that source watersheds be
recognized and defined as integral components of California's
water system, and eligible for financing on an equivalent basis
with other water infrastructure. Specifically, this bill:
1)Declares it to be established policy of the state that source
watersheds are recognized and defined as an integral component
of California's water system, and that the maintenance and
repair of source watersheds are eligible for financing on an
equivalent basis with other water collection and treatment
infrastructure.
2)Defines eligible maintenance and repair activities to include
the following forest ecosystem management activities:
a) Upland vegetation management to restore watershed
productivity and resilience.
b) Wet and dry meadow restoration.
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c) Road removal and repair.
d) Stream channel restoration.
e) Conservation of private forests to preserve
watershed integrity through permanent prevention of
conversion and degradation, achieved through conservation
easements.
f) Other projects with a demonstrated likelihood of
increasing conditions for water and snow attraction,
retention, and release under changing climate conditions.
3)Requires the State Water Resources Control Board (Water
Board), in consultation with the Department of Water Resources
(DWR), to develop investment plans that prioritize actions for
restoration and conservation to improve watershed function in
the watersheds that flow into the Shasta and Oroville
Reservoirs.
EXISTING LAW:
1)Authorizes DWR to operate and maintain the State Water Project
(SWP) that provides water supplies for urban and some
agricultural uses in the state. Funds from the sale of general
obligation and revenue bonds have provided about 78 percent of
the financing for construction of the SWP, repayment of which
is made by SWP beneficiaries. The contractors repay water
supply related costs of the SWP that include about 94 percent
of the annual costs for operation and maintenance of SWP
facilities.
2)Authorizes the issuance of bonds and loans to finance
expenditures of the SWP, and authorizes DWR to enter into
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contracts and establish prices, rates, and charges to produce
the revenues needed to pay for the costs of operation and
maintenance of the SWP.
3)Authorizes the Central Valley Project (CVP), a federal water
project operated by the U.S. Bureau of Reclamation that
provides water primarily for agricultural purposes but also
supplies water for some urban uses in the state.
4)Requires DWR, in fixing and establishing prices, rates, and
charges for water and power, to include as a reimbursable cost
of any state water project an amount sufficient to repay all
costs incurred for the preservation of fish and wildlife and
determined to be allocable to the costs of the project
constructed for the development of that water and power. Costs
incurred for enhancement of fish and wildlife or for the
development of public recreation are not included as
reimbursable costs.
5)Authorizes DWR to use revenue bonds or other funds available
for the purposes of the SWP to finance, in whole or in part,
water conservation programs and facilities that reduce demands
by the sponsoring contractor for project water from the system
and increase the supply of project water available in the
Delta for distribution.
6)Includes a state policy that the Legislature consider other
works as may be necessary to develop water to satisfy the
requirements of the watershed in which water originates
whenever the Legislature authorizes the construction or
acquisition of a project that will develop water for use
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outside that watershed.
FISCAL EFFECT: Unknown
COMMENTS: This bill establishes a state policy that source
watersheds are recognized as essential components of the state's
water systems and that their maintenance and repair may be
financed similarly to the ways in which other water collection
and treatment infrastructure is financed. This bill also
directs the Water Board to develop plans to maintain watersheds
in the Klamath-Cascade Region that feed the Shasta and Oroville
reservoirs, which, in turn, supply the SWP and CVP.
1) Author's Statement: California's complex water system, which
includes the built infrastructure of dams, reservoirs, canals,
pumps and pipes that deliver water throughout the state rely
on a suite of financing options that provide the funding for
necessary infrastructure costs. However, these projects rely
on more than the built infrastructure to function. They also
rely on the five watersheds above the dams to collect, treat
and deliver that water to the dams. These watersheds include
the Feather, Pit, McCloud, Upper Sacramento and Trinity River
watersheds. While there is recognition that watersheds serve
these functions, there is no policy of system of support for
this natural infrastructure which is integral to, and supplies
and complements, the built infrastructure. These watersheds
are essential to ensuring the future of a well-functioning
water system. There is also substantial scientific
recognition that watershed condition affects the quality and
quantity of water delivered by watersheds to dams. Enhancing
the conditions of the watersheds would increase water quality
by reducing sediment, lowering temperatures, and can also
increase water quantity by as much as 5 to 20% depending on
conditions. The current condition of these watersheds is
suboptimal. Restoration and conservation of these watersheds
has been sporadic and inadequate, and there is no
comprehensive plan for their restoration and conservation to
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support water security. The goal of this bill is to recognize
the fundamental water system infrastructure role of source
watersheds, and set the foundation for a comprehensive plan of
restoration and conservation, with the potential of future
financing such as revenue bonds and other financing mechanisms
similar to those available for the built infrastructure.
2)Background: California's two largest water projects are the
SWP and the CVP. The SWP is a water storage and delivery
system of reservoirs, aqueducts, power plants and pumping
plants that store and distribute water to urban and
agricultural water suppliers in Northern, Central, and
Southern California, parts of the Bay Area and Central Coast.
Of the contracted water supply, 70 percent goes to urban users
and 30 percent to agricultural users. The Project makes
deliveries to two-thirds of California's population.
The CVP is a federal water project operated by the U.S. Bureau
of Reclamation. The CVP includes 22 reservoirs with a
combined storage of 11 million acre-feet, of which 7 million
acre-feet is delivered in an average year. In comparison, the
SWP's 20 major reservoirs can hold 5.8 million acre-feet, with
annual deliveries averaging up to 3 million acre-feet. CVP
water irrigates more than 3 million acres of farmland and
provides drinking water to nearly 2 million consumers. SWP
deliveries are 70 percent urban and 30 percent agriculture,
meeting the needs of 20 million Californians and more than
600,000 irrigated acres, respectively. The CVP has long-term
contracts with more than 250 contractors in 29 out of 58
counties; while 29 agencies have 50-year contracts with the
SWP.
Background information provided by the author notes that
watersheds are an essential part of the state's water systems,
constituting the natural infrastructure that functions to
collect, treat and transport water to reservoirs. The
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Klamath-Cascade watershed in particular spans 10 million acres
and serves as the headwaters of the Sacramento River and the
source of much of the water that flows into the Delta. As the
original source of the water for 25 million people and much of
California's agricultural economy, the author and sponsors
assert it is imperative that this watershed remain healthy.
However, watersheds are impacted by numerous stressors,
including drought, climate change, forest conversion, invasive
species, fire risks and fire suppression, neglect, and
inadequate forest management.
Outside the Klamath-Cascade region, in other parts of the
state the snowpack has been decreasing with that trend
expected to continue into the next century. The
Klamath-Cascade watershed receives 75% of the state's
precipitation. According to the Pacific Forest Trust,
ensuring continued healthy watershed function requires that
85% of the watershed remain intact as relatively natural
forest. The Trust is working with private landowners in the
region to conserve forests, and asserts that watershed
protection through maintenance of healthy forests is the least
costly and most effective approach to guaranteeing flows in
the Sacramento River.
Examples of productive watershed investments in other states
include New York City, where investments in watershed
protection through forest conservation reportedly saved the
City between $6 and $8 billion over 10 years. In 1989 New
York City faced the requirement that all surface drinking
water sources undergo filtration unless human activities could
be controlled within source watersheds. The City faced the
choice of constructing new filtration facilities at an
estimated cost of $8 billion for construction and $300 million
in annual operating costs, or protecting upstate watersheds
for a cost of $1 to $1.5 billion.
Another example is the city of Denver which partnered with the
U.S. Forest Service to invest in forest restoration and
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watershed improvements after devastating fires and associated
sedimentation cost the city $160 million in fire suppression,
recovery and cleanup costs. The city is investing $16.5
million over five years on 38,000 acres of priority watershed
lands critical to Denver's water supply. The restoration
actions include forest thinning, removing roads, re-contouring
land, and controlled burns.
In another example closer to home, the San Francisco Public
Utilities Commission indicates that it saves considerable
costs that would otherwise be required for filtration of the
City's water supply, by protecting the Hetch Hetchy watershed
which is the source of much of the city's drinking water.
The Pacific Forest Trust also asserts that conserving and
restoring wet meadows in the Klamath-Cascade watershed could
increase groundwater storage by hundreds of thousands of
acre-feet annually. Mountain meadows act as natural sponges,
soaking up water during the wet season and releasing it slowly
in the dry season when demand is highest. By filtering
sediment, storing water and regulating stream flow, wet
meadows help ensure high quality supplies of water, and help
relieve drought and flood risks.
A February 2015 report by the Association of California Water
Agencies (ACWA) entitled "Improving the Resiliency of
California's Headwaters - A Framework" acknowledges that
forests, meadows and source waters play a critical role in the
state's water supply, including water supply reliability and
improved water quality. With these areas at increasing risk
of wildfires and other threats, ACWA stresses the pressing
need for actions to help safeguard California's future water
supply reliability and water quality. The report's
recommendations include: 1) improving headwaters management as
a high priority, 2) prioritizing funding for proactive
headwaters improvements and substantially increasing
restoration efforts, 3) better realignment and water resource
management expertise among the Board of Forestry and CalFire,
4) incorporating headwaters management strategies into land
use planning, 5) updating and optimizing multiple benefits of
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tools such as forest thinning, vegetation management and
controlled burns, 6) investments in landscape-level research
on water and forests, and 7) promotion of biomass as a
potential source of revenue for headwaters protection.
3)Prior and Related Legislation: AJR 24 (Dahle), Chapter 112,
Resolutions of 2013, encouraged state and federal agencies
with jurisdiction over forest resource management to
collaborate across jurisdictions with regard to
landscape-scale efforts to maintain and restore California's
forests to protect the state's natural resources and water
supply, including watersheds, for future generations.
AB 1471 (Rendon), Chapter 188, Statutes of 2014, authorized over
$7 billion in General Obligation bond funds for various water
needs, including $1.45 billion for multi-benefit ecosystem and
watershed protection and restoration projects. The purposes
of these expenditure authorizations include: 1) to protect and
increase the economic benefits arising from healthy
watersheds; and2) to implement fuel treatment projects to
reduce wildfire risks, protect watersheds tributary to water
storage facilities, and promote watershed health.
4)Support Arguments: Supporters assert this legislation is
critical to supporting natural infrastructure improvements for
source watersheds in the state. Watersheds are an essential
part of the state's water systems, constituting the natural
infrastructure that collects, treats, and transports water to
reservoirs. Supporters emphasize that watersheds in
California are in sub-optimal condition, threatening water
security. This is especially true with the increased stresses
of on-going drought and climate change. Watershed restoration
and conservation will help prevent degradation, maintain and
enhance reliability, improve water quality, and, in some
cases, increase the quantity of water flowing into the state's
reservoirs. Healthier watersheds also help regulate the
timing of flows into reservoirs, extending flows later into
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the year. California does not currently have a comprehensive
plan for financing or improving watershed function to support
its water systems, yet the state does provide for
comprehensive financing of the built infrastructure of water
systems. This bill will lay the foundation for development of
a comprehensive watershed investment plan that will provide
environmental and social co-benefits.
5)Opposition Arguments: None received.
REGISTERED SUPPORT / OPPOSITION:
Support
Audubon California
Bear-Yuba Land Trust
California League of Conservation Voters
Defenders of Wildlife
Mono Lake Committee
Pacific Forest Trust (sponsor)
Sequoia Riverlands Trust
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Trust for Public Lands
Wholly H2O
Opposition
None on file.
Analysis Prepared by:Diane Colborn / W., P., & W. / (916)
319-2096