BILL ANALYSIS Ó SB 37 Page 1 Date of Hearing: June 28, 2016 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair SB 37 (Vidak) - As Amended June 21, 2016 SENATE VOTE: 37-0 SUBJECT: Kings River East Groundwater Sustainability Agency Act SUMMARY: Creates the Kings River East Groundwater Sustainability Agency, specifies the boundaries, Board composition, powers and duties, and adds the Agency to the list of exclusive local agencies created to manage groundwater. Specifically, this bill: 1)Creates a groundwater management agency in the Counties of Fresno and Tulare to be known as the Kings River East Groundwater Sustainability Agency (Agency). a) Defines the boundaries of the Agency. b) Provides that the Agency is governed by a Board consisting of seven members, as specified. 2)Adds the Agency to the list of agencies created by statute to SB 37 Page 2 manage groundwater that are deemed the exclusive local agencies within their respective statutory boundaries with powers to comply with the Sustainable Groundwater Management Act (SGMA). 3)Requires the Agency to be a groundwater sustainability agency (GSA), pursuant to existing law, for that portion of the Kings Subbasin that lies within the boundaries of the Agency. 4)Requires the Agency to develop and implement a groundwater sustainability plan (GSP), pursuant to existing law, to achieve sustainable groundwater management within the territory of the Agency. 5)Provides that the Agency only has the powers granted by this Act and SGMA, for purposes of groundwater management within the boundaries of the Agency, together with any other powers as are reasonably implied, necessary, and proper to carry out the objectives and purposes of the Agency to implement SGMA. Requires the agency to abide by the rules and regulation promulgated by the Department of Water Resources (DWR) and the State Water Resources Control Board (SWRCB) to implement SGMA 6)Allows the board to adopt ordinances for the purpose of regulating, conserving, managing, and controlling the use and extraction of groundwater within the territory of the Agency. 7)Permits the Agency to exclude from any of the requirements of the act, or the operation of any ordinance, any operator who annually extracts less than a minimum amount of groundwater as specified by an ordinance adopted by the board. SB 37 Page 3 8)Requires the Agency to enter into a coordination agreement with other local agencies for purposes of coordinating the Agency's plan with other agencies or GSP's within the Kings Subbasin, as required by SGMA. 9)Allows, pursuant to SGMA, the Agency to impose fees, including, but not limited to, permit fees and fees on groundwater extraction or other regulated activity, to fund the costs of a groundwater sustainability program, that include, but are not limited to, the preparation, adoption, and amendments of a groundwater sustainability plan, investigations, inspections, compliance assistance, enforcement, and program administration, including a prudent reserve. EXISTING LAW: 1)Requires the DWR to evaluate groundwater basins and designate them as high, medium, low or very low, according to various factors including, but not limited to, level of dependence upon the basin by municipal and agricultural users. 2)Requires that local agencies in high- and medium-priority basins subject to SGMA form one or more GSAs by June 30, 2017. 3)Allows any local agency or combination of local agencies overlying a groundwater basin to elect to be a groundwater sustainability agency for that basin, except as specified. 4)Requires that GSAs in basins with chronic overdraft develop and adopt a GSP for their basin by January 31, 2020. SB 37 Page 4 5)Defines the Kings basin in the San Joaquin Valley to be in chronic overdraft. 6)Requires that GSAs in all other high- and medium-priority basins subject to SGMA develop and adopt a GSP by January 31, 2022. 7)Requires the DWR to draft and adopt emergency regulations for the evaluation of GSPs, the implementation of GSPs, and coordination agreements by June 1, 2016. 8)Provides GSAs with optional tools for reaching sustainability including, but not limited to, the ability to conduct investigations, collect fees, limit pumping, require measurement and reporting of groundwater extractions, monitor compliance, charge civil penalties for violations, and implement plans and programs to recharge a basin. FISCAL EFFECT: Unknown. COMMENTS: Creates the Kings River East Groundwater Sustainability Agency, specifies the boundaries, Board composition, powers and duties, and adds the Agency to the list of exclusive local agencies created to manage groundwater. SB 37 Page 5 1)Author's Statement: SGMA requires local agencies to manage groundwater basins in a sustainable manner and provides local agencies the ability to develop plans and implement strategies to sustainably manage groundwater resources. Establishing a sustainability agency as required by SGMA, authorizes any local agency or a combination of local agencies to elect to be a GSA through a joint powers agreement, memorandum of agreement, or a water corporation. The act leaves no room for a private, non-profit, or unelected member of the public to sit on a GSA as a voting member. SB 37 will create the Kings River East Groundwater Sustainability Agency as a special act district. The GSA will cover an area in Fresno and Tulare counties east of the Kings River, including all of the cities of Dinuba, Orange Cove, and Reedley as well as the communities of Cutler, East Orosi, London, Orosi, and Sultana. SB 37 provides that the GSA shall only have the ability to carry out the powers provided in SGMA. Additionally, the creation of this district will not pose challenges to other GSAs in terms of coordination because of requirements under SGMA for multiple plans implemented by multiple GSAs within a basin to be coordinated pursuant to a single coordination agreement. 2)Background: SGMA requires the development of a local process to sustainably manage groundwater. Specifically, in all SGMA regulated basins GSAs must be formed by June 30, 2017, GSPs for critically overdrafted basins must be written by 2020, and sustainability must be reached by 2040 (the timeline is two years later for all other basins). Prior to SGMA, there were several ways that groundwater was managed at the local level. A local agency that provided water service was authorized to develop and implement a groundwater management plan, known as AB 3030 plans. The Legislature also created a number of "special act special districts" that addressed groundwater SB 37 Page 6 management - these local agencies were created via statute to establish unique governance structures and grant powers that were customized to the problems and solutions of a particular groundwater basin. Local Control under SGMA: GSAs must self-identify by June 30, 2017, to the DWR, and can include a city, a county, a special district, or a combination of these agencies organized via a legal agreement, like a Joint Powers Authority (JPA) or Memorandum of Agreement (MOA). One agency can form a GSA for the entire basin, or multiple agencies can form individual GSAs and coordinate for basin sustainability. There are multiple options for local agencies to manage groundwater under SGMA, including alternatives to forming a GSA and developing a GSP. SGMA does not specify exactly how GSAs should govern local groundwater resources to achieve sustainability goals. All groundwater basins designated as medium- or high-priority, and identified as subject to critical conditions of overdraft, must be managed under one or more GSPs by January 31, 2020. The Kings Subbasin that is the subject of this bill has been designated to be in a state of critical overdraft. Kings River East GSA: On March 28, 2016, Alta Irrigation District filed paperwork with the DWR on behalf of the to-be created Kings River East Groundwater Sustainability Agency, in order to notify the DWR that Kings River East would like to serve as the GSA for a portion of the Kings Subbasin of the San Joaquin Valley Basin. The notice to the DWR says that "all of those local agencies, acting as interested parties, have entered into a Memorandum of Understanding to form the Kings River GSA,?. in the MOU, such interested parties commit to forming either (i) a special act district, or (ii) a joint powers authority to implement the GSA." The notice to the DWR also states: SB 37 Page 7 "On March 17, 2016, the Kings River East held a public hearing to consider serving as the GSA. The signed MOUs state the intent of the parties to form the GSA. The District did not receive any written comments prior to the hearing. Furthermore, at that public hearing, the Kings River East did not receive any comments or conditions objecting to or criticizing the formation of the Kings River East GSA. Section 6 of the MOU, regarding the GSA Governing Body, specifies and describes the governance structure for the Kings River East GSA." The notice to the DWR also references this bill, the intent of which is to establish a special act district. Powers and Duties: This bill specifies that Kings River East shall exercise powers granted by this act and SGMA that are reasonably implied, necessary, and proper to implement SGMA. The bill further specifies that the board may adopt ordinances for the purpose of regulating, conserving, managing, and controlling the use and extraction of groundwater and give the agency the ability to exclude groundwater extraction operators. Chaptering Out: A portion of this bill amends the same code section as SB 564 (Cannela) West Kings Groundwater Sustainability Agency. SB 564 will be heard in this committee at the same June 28, 2016 hearing as this bill. Committee staff suggests that these bills be amended to address their chaptering out conflicts. 3)Prior and Related Legislation: SB 37 Page 8 a) SB 564 (Cannela), would establish West Kings Groundwater Sustainability Agency. b) SB 1168 (Pavley), Chapter 346, the Statutes of 2014, enacted SGMA. c) AB 1738 (Dickinson), Chapter 347, the Statutes of 2014, enacted SGMA. 4)Supporting Arguments: The Kings River East working group has engaged in a collaborative process to determine how irrigation districts, cities, counties, agricultural, and disadvantaged communities can come together to develop a GSA. Kings River East has proven its intent to work with its neighbors within the same groundwater basins though the signing of MOUs in order to comply with SGMA regulations including complimentary GSP's. A one size fits all approach to SGMA will not be successful but the passage of this bill would signal the confidence that the state has in local agencies to create groundwater sustainability amongst the diverse conditions that exist in our aquifers. 5)Opposing Arguments: This bill proposes a new local agency with unknown powers, as a result, remaining sustainable groundwater agencies within the Kings Basin may be at a disadvantage when developing the basin-wide plan. If the new agency is granted specific or implied powers and authorities beyond and/or different than those of other agencies within the basin, coordination will be difficult and the potential for conflict increased. SGMA provides for a variety of alternatives for coordinated governance and management of groundwater within a basin. Alternatives to this agency should be thoroughly explored prior to the creation of a redundant sustainable groundwater agency in Kings Basin. Until alternatives are considered it is premature to establish a new special agency in order to achieve sustainability of groundwater resources SB 37 Page 9 within the East Kings area. The creation of this agency may potentially compromise the interests of other local agencies and key stakeholders in the area. REGISTERED SUPPORT / OPPOSITION: Support Alta Irrigation District Association of California Water Agencies California Association of Realtors California Citrus Mutual City of Dinuba City of Orange Cove City of Reedley Community Water Center Cutler Public Utility District SB 37 Page 10 Gillette Citrus, Inc. Hills Valley Irrigation District Kings County Water District Kings River Water District London Community Services District Orange Cove Irrigation District Orosi Public Utility District Peltzer Enterprises Sultana Community Services District Tulare County Board of Supervisors Tulare County Farm Bureau SB 37 Page 11 Opposition Fresno Irrigation District (To previous version) Analysis Prepared by:Ryan Ojakian / W., P., & W. / (916) 319-2096