BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
                             Senator Fran Pavley, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 2480         Hearing Date:    June 28,  
          2016
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          |Author:    |Bloom                  |           |                 |
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          |Version:   |June 13, 2016                                        |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Dennis O'Connor                                      |
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                       Subject:  Source watersheds:  financing


          BACKGROUND AND EXISTING LAW
          
          The California Water Code contains a number of statements of  
          state water policy.  These include: 

           The water resources of the State [are to] be put to beneficial  
            use to the fullest extent of which they are capable, and that  
            the waste or unreasonable use or unreasonable method of use of  
            water be prevented.  CWC §100.
           All water within the State is the property of the people of  
            the State, but the right to the use of water may be acquired  
            by appropriation in the manner provided by law. CWC §102.
           It is hereby declared to be the established policy of this  
            State that the use of water for domestic purposes is the  
            highest use of water and that the next highest use is for  
            irrigation. §106.
           It is hereby declared to be the established policy of the  
            state that every human being has the right to safe, clean,  
            affordable, and accessible water adequate for human  
            consumption, cooking, and sanitary purposes. CWC §106.6.

          On March 8, 2016, this committee had an oversight hearing titled  
          "Assessing California's Chronically Under Funded Water Needs:  
          Options for Moving Forward."  The hearing included a panel that  
          described different approaches to resolving some of these  
          funding challenges.  Among the panelists was Laurie A. Wayburn,  







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          Co-founder, Co-CEO, and President of the Pacific Forest Trust.   
          In her testimony, she described an approach to invest in healthy  
          watersheds and provide more water supply.   
          ( http://sntr.senate.ca.gov/content/2016-informationaloversight-he 
          arings  )

          PROPOSED LAW
          
          This bill would:

           Declare it to be "the established policy of the state that  
            source watersheds are recognized and defined as integral  
            components of California's water infrastructure."

           State that source watersheds that supply the state and  
            federally operated systems, the State Water Project and the  
            federal Central Valley Project, collectively provide 80  
            percent of state reservoir capacity and are of particular  
            importance to maintaining the reliability of California's  
            water supply. 

           State that to the extent feasible, the maintenance and repair  
            of these watersheds and associated projects shall receive  
            financing consideration on the same basis with other water  
            collection and treatment infrastructure.

           Limit eligible maintenance and repair activities pursuant to  
            this bill to the following forest ecosystem management  
            activities:

             1.   Upland vegetation management to restore the watershed's  
               productivity and resiliency.
             2.   Wet and dry meadow restoration.
             3.   Road removal and repair.
             4.   Stream channel restoration.
             5.   Conservation of private forests to preserve watershed  
               integrity through permanent prevention of conversion and  
               degradation, achieved through conservation easements.
             6.   Other projects with a demonstrated likelihood of  
               increasing conditions for water and snow attraction,  
               retention, and release under changing climate conditions.

          ARGUMENTS IN SUPPORT
          








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          According to the author, "California's water system is highly  
          complex and sophisticated.  80% of its reservoir supply is held  
          in two dam facilities, the Shasta and Oroville Dams, which are  
          the built infrastructure foundation for the State and Central  
          Valley Water Projects."

          "[T]hese projects rely on more than the built infrastructure to  
          function.  They rely on the five watersheds above the dams to  
          collect, treat and deliver that water to the dams.  These are  
          the Feather, Pit, McCloud, Upper Sacramento and Trinity River  
          watersheds. While there is recognition that watersheds play  
          these functions in various parts of the water code, there is no  
          policy or system of support for this natural infrastructure  
          which is integral to, and supplies and complements, the built  
          infrastructure of these water systems."

          "Further, there is substantial scientific recognition that  
          watershed condition affects the quality and quantity of water  
          delivered by watersheds to dams.  The condition of these five  
          watersheds is distinctly suboptimal.  Enhancing that condition  
          would increase water quality (reducing sediment such as ash &  
          soil), lowering temperatures, and likely quantity (from 5-20% or  
          more depending on conditions) as well as fundamental function."

          "Restoration and conservation in these watersheds has been  
          sporadic, inadequate and supported by general obligation bonds.   
          There has been no comprehensive plan developed for their  
          restoration and conservation to enhance our water security. Such  
          efforts to date have been both limited and uncoordinated and  
          fiscally inefficient."

          "AB 2480 therefore recognizes 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 to be appropriately classed as  
          revenue bonds and similarly financed as the built infrastructure  
          improvements and maintenance are."

          ARGUMENTS IN OPPOSITION
          
          According to the Association of California Water Agencies  
          (ACWA), "AB 2480 would declare state policy that source  
          watersheds are recognized and defined as integral components of  
          California's water system. As amended, this bill would now  








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          require that, to the extent feasible, the maintenance and repair  
          of source watersheds and associated projects would receive  
          financing consideration 'on the same basis' with other water  
          collection and treatment infrastructure and would specify that  
          the maintenance and repair activities that are eligible for  
          funding are limited to certain forest ecosystem management  
          activities. This bill does not define what 'on the same basis'  
          would mean. The bill also does not include language prohibiting  
          the imposition of a public goods charge to finance the  
          provisions of this bill."

          "With respect to financing, much of the land within these source  
          watersheds is federal national forest lands. If we are going to  
          enhance these watersheds, we need to support a federal-state  
          partnership in the funding portion moving forward."

          "ACWA supports watershed funding that is paid for through the  
          General Fund, the Greenhouse Gas Reduction Fund (Cap and Trade),  
          or a future General Obligation Water Bond. We do not support a  
          public goods charge or statewide water tax to fund watersheds or  
          any other priorities."

          "For these reasons, ACWA opposes AB 2480 and respectfully  
          requests your "NO" vote when the bill is heard in the Senate  
          Natural Resources and Water Committee on June 28, 2016."

          COMMENTS
          
           ACWA Headwaters Framework.   On March 20, 2015, the ACWA released  
          a policy framework aimed at effectively managing headwaters  
          areas such as the Sierra Nevada, source of much of the state's  
          water supply.

          According to ACWA's press release, "The formal release of the  
          document, 'Improving the Resiliency of California's Headwaters,'  
          comes the day after Gov. Jerry Brown and legislative leaders  
          outlined an emergency drought package to mobilize state  
          resources to deal with a fourth year of drought. Given the  
          severity of the drought, the risk of more destructive wildfires  
          this summer and ongoing climate change, ACWA believes it is time  
          to elevate headwaters issues and engage partners at all levels  
          'Improving the Resiliency of California's Headwaters - A  
          Framework,' makes nearly 30 specific recommendations in the  
          areas of improved planning, coordination and implementation,  








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          managing headwaters resources, research and financing headwaters  
          improvements."

          Among the recommendations in ACWA's report were:
           Improved headwaters management must become a high priority for  
            state, federal and local agencies. 
           Agencies at all levels should find ways to help public and  
            private landowners restore meadows and watersheds to improve  
            their critical functions and reduce wildfire impacts. 
           Stakeholders at all levels should invest and participate in  
            landscape-level research that explores water and forestry  
            relationships, including ecological forest thinning which can  
            have multiple benefits for water supply reliability, water  
            quality and ecosystems.  (  http://www.acwa.com/Headwaters  )

           What Does The Science Show?   While studies show a water supply  
          benefit to different watershed restoration activities, the  
          economics are a bit less clear.  For example, a recent study by  
          the Nature Conservancy titled Estimating the Water Supply  
          Benefits from Forest Restoration in the Northern Sierra Nevada,  
          found:

          "This assessment is a first attempt at calculating the water  
          supply benefits from watershed-scale forest restoration in the  
          northern Sierra Nevada. These watershed level results suggest  
          that the economic benefits from water yield increases may be an  
          important argument in favor of additional forest restoration  
          investments. Nevertheless it is important to emphasize that such  
          actions do not represent a solution to California's water  
          crisis, but rather a sensible investment in forest management  
          that is likely to create benefits for water users downstream."  

          (Podolak, K., D. Edelson, S. Kruse, B. Aylward, M. Zimring, and  
          N. Wobbrock. 2015. Estimating the Water Supply Benefits from  
          Forest Restoration in the Northern Sierra Nevada. An unpublished  
          report of The Nature Conservancy prepared with Ecosystem  
          Economics. San Francisco, CA.)  
          (  http://www.nature.org/ourinitiatives/regions/northamerica/united 
          states/california/forest-restoration-northern-sierras.pdf  )

          SUGGESTED AMENDMENTS: None 
          
          SUPPORT
          








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          Audubon California
          Bear-Yuba Land Trust
          California League of Conservation Voters
          California ReLeaf
          Defenders of Wildlife
          Former Legislator, Wesley Chesbro
          Lutheran Office of Public Policy
          Mono Lake Committee
          Pacific Forest Trust
          Sequoia Riverlands Trust
          Trust for Public Land
          Wholly H2O
          
          OPPOSITION
          Association of California Water Agencies
          San Diego County Water Authority


          
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