BILL ANALYSIS Ó
AB 2550
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Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
AB 2550
(Patterson) - As Introduced February 19, 2016
SUBJECT: State Water Resources Control Board: instream flow
curtailments: compensation
SUMMARY: Requires the State Water Resources Control Board
(State Water Board) to compensate an individual who is unable to
divert their full water right due to a State Water Board issued
instream flow curtailment. Specifically, this bill:
1)Makes Findings and Declarations that water right holders use
water for beneficial purposes, people are a priority, people
suffer economic harm when they do not have water, and that
they should be monetarily compensated if they have water
deliveries curtailed.
2)Requires the State Water Board to financially compensate a
water right holder at the going average price per acre -foot
for the entire difference between their full right and any
curtailment.
3)Applies this compensation only to curtailments issued on or
after January 1, 2017.
EXISTING LAW:
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1)Provides that all water within the state is the property of
the people of the state
2)Provides that the people of the State have a paramount
interest in the use of all the water of the State.
3)Provides that the protection of the public interest in the
development of the water resources of the State is of vital
concern to the people.
4)Provides for the establishment of a water rights system
administered by the State Water Board that entitles a water
right holder to use water for beneficial purposes that are
nonwasteful.
5)Gives the State Water Board authority under emergency
conditions when there is prolonged water shortages and/or
drought and where water is not available under a diverter's
priority, to curtail diversions.
FISCAL EFFECT: Unknown, but potentially significant.
COMMENTS: This bill would require the State Water Board to
compensate individuals for every acre-foot below their full
entitlement they are unable to divert.
1)Author's statement: In times of drought, California's water
priorities become clear by where it determines water to flow.
It is unreasonable that during a time of drought that there is
a high degree of prioritization of instream flows at the
expense of human needs. There needs to be a mechanism that
recognizes the cost of curtailing instream flows and the
impacts it has on communities' downstream.
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2)Background:
The basics of curtailment: A curtailment of water is a
reduction in a full water right diversion. Curtailment of
water diversions can only occur in times of prolonged low
precipitation years and/or when a drought State of Emergency
has been declared by the Governor. The right to divert surface
water in California is based on the type of right being
claimed and the priority date. Water right permits specify the
season of use, purpose of use and place of use for the
quantity of water authorized under the permit or license. In
times of drought and limited supply, the most recent "junior"
right holder must be the first to discontinue use. Even more
senior water right holders, such as some riparian and pre-1914
water right holders may also receive a notice to stop
diverting water if their diversions are downstream of
reservoirs releasing stored water and there is no natural flow
available for diversion.
When the amount of water available in a surface water source
is not sufficient to support the needs of existing water right
holders and in-stream uses, the State Water Board may issue
notices of curtailment to water rights holders based on
California's water rights priority system. There have been
three periods of time in which the State Water Board has
issued curtailments. In 1976-77 the State Water Board
curtailed water rights in many watersheds throughout the
state. It also curtailed water rights in 1987-88. In January
of 2014 the Governor proclaimed a drought State of Emergency.
In May and June of 2014 the State Water Board began issuing
notices of curtailment. Many watersheds in the state continue
to face curtailments.
Curtailments can serve several purposes. They can ensure that
more senior water right holders are receiving their rights, or
that public trust and water quality standards are met.
Current curtailments enforced through State Water Board
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emergency regulations are based on public trust needs required
for federally listed fish.
Who owns what and why: All water in the state is the property
of the people. A water right is a property right but the
holders do not own the water, they possess the right to use it
for reasonable and beneficial purposes. A reasonable and
beneficial purpose is variable and depends on the availability
of water relative to all beneficial uses.
The state, through the State Water Board, allocates water
rights. The State Water Board allocates water rights through
an administrative system that is intended to maximize the
beneficial use of water while protecting the public trust,
serving the public interest, and preventing the waste and
unreasonable use or unreasonable method of diversion of water.
This system has been established to manage limited water
resources and to avoid a "tragedy of the commons" scenario.
The "tragedy of the commons" is an economic problem in which
every individual tries to reap the greatest benefit from a
common resource. As the demand for the resource overwhelms the
supply, every individual who consumes an additional unit
directly harms others who can no longer enjoy the benefits.
Many of the world's large rivers are in a state of overuse
because of poor management and over allocation. When a river
is overused there are impacts on the size and frequency of
floods, the length and severity of droughts, and there are
adverse effects on ecosystems. As a result, poor management
of California's water resource today will lead to shortages in
the future.
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Curtailments are a necessary tool for the State Water Board to
manage water. Limiting curtailments will create a conflict
for the State Water Board with its responsibilities to support
the water rights system, uphold the public trust, meet water
quality standards, and serve the public interest.
Consequences Intended and Unintended:
In the last calendar year the State Water Board has curtailed
approximately 94 million of acre-feet of water. That
curtailment has been necessary due to limited supply from the
drought.
In addition to altering what is a beneficial use limited
supply drives up the price of water. While in average supply
times the average market price per acre-foot of agricultural
water is in the $100-150 range, it would not be unreasonable
to expect the average market price per acre-foot of
agricultural water in times of drought to be in the $500 range
or possibly even $1,000. At these rates of water and at the
recent level of curtailment it would not be unreasonable to
say that this bill would create the potential for a $100
billion dollar obligation for the State Water Board to meet
and a virtual certainty of a $10 billion dollar obligation.
To put this price tag into context the State Water Board has a
budget of approximately $2.5 billion in 2015-16 and the State
General fund was approximately $115 billion in that same
period.
This bill would create both an incentive to become a new water
right holder and a disincentive for the State Water Board to
issue new water rights. New water right holders would receive
the benefit of being compensated at a relatively high rate per
acre-foot earliest in times of curtailment. A curtailment
situation might be preferred by the new water right holder
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over receiving their full right.
The State Water Board would likely look to cease or
significantly limit issuing new water rights as they would
need be cognizant of costs from curtailing and costs from a
legal challenge if they failed to carry out their
responsibilities by not curtailing. There is flexibility in
the process the State Water Board applies to issuing new water
rights. In general the evaluation of a new water right
assumes an average amount of available water. The State Water
Board would likely tighten the process of issuing new water
rights, probably setting a critically dry year as the
baseline. This would result in water rights being denied even
though water would be available much of the time.
The committee may wish to consider the consequences of new
water rights being dramatically limited and what that would
mean for development and generally across the economy.
Impacts of Drought taken Seriously: Since 2014 the state has
pledged over $870 million to support drought relief, including
money for food to workers directly impacted by the drought,
funding to secure emergency drinking water supplies for
drought impacted communities and bond funds for projects that
will help local communities save water and make their water
systems more resilient to drought.
3)Opposing Arguments: This bill would undermine decades of
California water law. This would make the State liable for
simply implementing existing state law and create a liability
that does not exist today. California law does not require
the State to compensate businesses that may be impacted when
the State adopts new air quality or water pollution rules that
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protect public health and the environment, and the same is
true with respect to new instream flow requirements.
By overturning decades of California law to require
compensation when the State adopts new instream flow
requirements, AB 2550 would severely limit the State's ability
to protect fisheries, California's rivers, and the thousands
of fishing jobs that depend on their health. This bill is an
unreasonable limitation on the State's police powers and
threatens California's environment and fisheries.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
American Rivers
Audubon California
California Coastkeeper Alliance
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California League of Conservation Voters
Clean Water Action
Defenders of Wildlife
Earth Law Institute
Environmental Justice Coalition for Water
Foothill Conservancy
Golden Gate Salmon Association
Mono Lake Committee
Natural Resources Defense Council
Pacific Coast Federation of Fishermen's Associations
Sierra Club California
Trout Unlimited
Wholly H2O
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Analysis Prepared by:Ryan Ojakian / W., P., & W. / (916)
319-2096