Chair of the Water Commission Joe Byrne discusses the specifics and the process for allocating the water bond’s $2.7 billion for storage projects
At the May meeting of the Delta Plan Interagency Implementation Committee, Chair of the Water Commission Joe Byrne spoke to the Committee about the water storage funds allocated in the bond and the activities the Commission has been engaged in since the passage its passage in November.
“The Water Commission’s most significant responsibility is the $2.7 billion in Chapter 8 of the water bond,” Mr. Byrne began. “We also have responsibilities in regards to being the eminent domain body for the Department of Water Resources, and all regulations to be adopted by the Department of the Water Resources have to first be approved by the commission. Of particular relevance are two regulations that the Department is going to adopt with regards to the Sustainable Groundwater Management Act. One is the basin boundary adjustment regulations, and the other has to do with how to evaluate the sufficiency of groundwater basin plans, once those are implemented. So we’re not the rulemaking body for that, but we are an approval body that those will go through.”
He then turned to the specifics of the water bond’s Chapter 8, noting that the language in Prop 1 is identical to the language that was in the 2009 bond, other than the amount is $2.7 billion instead of $3 billion. “There have been a lot of folks who have had ideas of certain things that are included that maybe aren’t, or certain things that are indicated to be a little more strongly qualifying than they are, so I’ll walk you through very quickly what is in the bond,” he said.
There are three overarching themes in the legislation that each project has to have, Mr. Byrne said. “One is that it needs to improve the overall operation of the state water system,” he said. “The second is that it is cost-effective, and third is that it provides a net improvement in ecosystem or water quality conditions. We’re also supposed to develop a competitive process that ranks projects based upon their expected return for the public investment as measured by the magnitude of the public benefits.”
“The eligible projects that are articulated in the bond are the CalFed projects; groundwater storage projects, and groundwater contamination, prevention, or remediation projects that provide water storage benefits; conjunctive use and reservoir reoperation projects; and local and regional surface storage projects that improve the operation of water systems in the state and provide public benefits, so again, there’s the overarching theme of improving the operation of the state’s system,” he said.
The projects that are funded must have a Delta connection, Mr. Byrne pointed out. “This is all the language says: unless it provides ‘measurable improvements in the Delta ecosystem or to the tributaries of the Delta.’ So what measurable means, we’ll have to figure out, but it has to have some impact on the Delta ecosystem or the tributaries to the Delta.”
The public benefits eligible to be funded are ecosystem improvements, water quality improvements, flood control benefits, emergency response, and recreation benefits. “We’re still figuring out the difficult task of how to quantify them,” Mr. Byrne acknowledged. He noted that the bond language specifies that 50% of all the benefits funded have to be for ecosystem improvements, and that they cannot fund more than 50% of the total cost of the project.
“The statute says that we cannot spend money prior to December 15, 2016,” he said. “That’s partially the case because we’re going to go through a rulemaking process where we are developing the rules to adopt regulations.”
The bond language requires consultation with the Department of Fish and Wildlife as to what their relative environmental values and priorities are for ecosystem benefits, as well as the State Water Resources Control Board on the relative value and benefits associated with water quality benefits; however, the big challenge is quantifying environmental benefits, he said.
“The priority part is easy; we’ve already received a list from the Department of Fish and Wildlife as well as the State Board that outlines some of the priorities. I know they are working very hard and we’ll be working hand in hand throughout this process. We can only fund public benefits, so the money that we spend needs to be associated with the quantification. That’s something that will be very challenging that we’ll be embarking on and started on already over the 18 and 19 months to come.”
Mr. Byrne said that they also have to develop ways to manage the public benefits. “One of the keys is not just the applicant will submit an application and it will say that it will do x, y, and z; they have to able to demonstrate that they are going to do x, y, and z and if there are any other third parties that they are depending upon to execute some of these public benefits, then the applicants will have to have contracts in place to guarantee that they are going to happen,” he said. “So saying that there’s going to be 20,000 acre-feet of extra flow into the Delta, it’s going to go towards the biological opinions or whatever, is great, but there’s going to have to be some element for us to feel confident that that is going to happen.”
“I think that is what is really interesting and unique about this program,” he said. “I’m not sure it was thought of in the way that everyone is on the same page and said what’s the best program we can put together; I’m sure there were people on different sides and this is the compromise they came up with, but I think it really works in a lot of ways. Some of the biggest issues that we’ve had in the Delta in the last number of years have been with ecosystem and the endangered species act, and I think the way the bond works for Chapter 8 is that those concepts are clearly incorporated into storage, so it’s not just your business as usual, build a dam or have a groundwater storage that is single purpose, single entity, it really has to think far beyond that. I think that is a big benefit of this program.”
Since the bond has passed, there’s been considerable more interest in the activities of the Water Commission, he said. “We’ve been holding hearings, we have a stakeholder advisory group comprised of a variety of different stakeholders who have met a number of times already, and we’re having public meetings around the state. Our Water Commission meetings are public. One of our primary goals starting off is to educate people as to what is in the bond. There’s a lot of politics around the bond and a lot of emotion so we’re trying to fulfill our role of simply implementing what is says, so we’ve been educating at all these meetings, and ultimately coming out to forums like this.”
The Commission has also been working on the regulations and guidelines, Mr. Byrne said. “Unfortunately, we’re going to have to go for the formal rulemaking process for our regulations as well as our guidelines, which is not the norm, but due to some language in the bond, that’s the conclusion of legal counsel,” he said. “We’re going to have a formal process for both of those, which I think hinder us a little, but I think we’re up to the challenge, and that process will be taking place over the course of the next 18 months. Our goal is to have draft regulations and potentially guidelines to the OAL between September, October, and November, and then we’ll go through the formal rulemaking process over the course of the next year, with the thought being that we will ultimately be in a position to spend money as quickly as possible after December 15, 2016.”
“There are a number of terms and aspects of the bond that are not clear, so the purpose of developing regulations is to expand upon that and provide some more detail so that applicants will be in a position to really understand what we’re looking for, be able to figure out how they are eligible, and not essentially be shooting in the dark,” he said. “There are questions, such as, what does the state water system mean. Does that mean the state water project? Does that mean every single river and stream in the state? Or does it mean that is has to be connected in some way to the Delta? So that’s one we’re looking at. We’re looking at recreation benefits, how far downstream can recreational benefits go? and a variety of other things that are ultimately coming up in order to interpret this as best as we can. We’re having an open and transparent process.”
Mr. Byrne said this process will be different because the entire process will be in public. “It’s not going to be submit your application and figure out if whether you got it or not in three months,” he said. “We’re going to be evaluating people in front of them, and given the complexity of the issues as well, we anticipate having somewhat more of an interactive process with applicants than we might in a more traditional program such as in Prop 84 and others, and that’s primarily in order to help people understand exactly what it is that we’re looking for.”
The heavy lift the next several months will be working on how to define and quantify the public benefits and coming up with a way for applicants to really understand what it is that makes people eligible or ineligible and helping them through that process, he said.
“With those three overarching goals, I think the primary one is improving the operation of the state water system,” he said. “We’ve been encouraging people to think more regionally and more collaboratively and to think about how one, two, or three projects might be better served as one project together, combined, to integrate. Those are things that as we learn more about and as we define more public benefits and try to quantify them, we are really realizing that people are going to have to do that in order to really put forward projects that improve the overall system and also have the impacts of improving or providing for the benefits that they say they are going to do.”
Mr. Byrne said that over the course of the next year, more details will emerge, as well as opportunities for participation in the process. “I’m sure there will be many opportunities to jump in and say that you agree or disagree with how we’re interpreting certain things, but our goal is to interpret the statute as clearly as we can,” he said. “No one has a desire to go beyond that, but there’s going to be some opportunity to try and work through and figure out how to make that as clear as possible.”
Joseph Calcara with the Army Corps of Engineers asked about the emergency response benefits. Can you share any insight on the rigor behind that … ?
“The language in the bond actually says, ‘emergency response including but not limited to securing emergency water supplies, and flows for dilution and salinity repulsion following a natural disaster’, so there’s some specificity already,” replied Mr. Byrne. “But you’re right, we’ll have to think as to whether there needs to be any further definition of that. Ultimately, 50% of the benefits that we fund need to be ecosystem improvements, but probably it’s fairly easy to satisfy an emergency response benefit given the current system and the fact that it indicates securing emergency water supplies. I’ll be honest, that’s one we haven’t tackled in much specificity yet.”
“I would like the Corps to play in that element because I think that’s going to help us down the road to the extent that we get into plan formulation and federal interests, that if we could get some traction on those calculation of emergency benefits,” said Mr. Calcara. “I haven’t seen that in any other project, so that may help for the business case for that project.”
“One of the places that I’ve heard things on two completely different ends of the spectrum has been the question of how groundwater storage plays into the calculation,” said Felicia Marcus. “Some people say that it’s all about surface storage, and then other people saying that it should all be groundwater storage and no surface storage. …. My response has been nothing is all this or all that, but the devil’s in the details. If you could illuminate that issue … “
“As a lawyer, I read statutes and laws all the time, and it says very clearly in this one that the eligible projects are the CalFEd projects, groundwater storage projects and groundwater contamination, prevention, and remediation projects, and there’s a special category also for conjunctive use and reservoir reoperation projects,” responded Mr. Byrne. “There are no guaranteed projects in those four categories, at least pursuant to the statute, so groundwater projects would be as eligible as surface water projects. I agree with you that surface water projects and groundwater projects in conjunction make a lot of sense, and that is something that we talked a lot about and would encourage applicants to look at, but both projects qualify, and there’s no priority for any of them, although some may have been studied and worked on for a lot longer period of time and have a bit more of head start. There’s no specific priority in the statute.”
Department of Water Resources Director Mark Cowin pointed out a small but potentially important role he plays in the process. “In the first Neanderthal versions of this legislation when it was being crafted, originally, the Director of the Department of Water Resources had all the responsibilities that the Water Commission ended up with, and I just thank God that it didn’t end up that way,” said Director Mark Cowin. “However the Director of Water Resources does have one remaining responsibility, and I think this is really just an oversight, but nonetheless it is still in the statute, and that is before a project is eligible, to confirm that the proponents have received commitments for 75% of the funding for the non-public contribution to the project.”
“I’ve said many times over the last many months that I believe that will probably be the biggest challenge to any project proponent to get their proposal up for consideration by the Water Commission,” Director Cowin. “So while we’re hearing a lot of suggestions that we ought to find ways to speed up this process, I’ll be surprised if there is a list of eligible projects including the funding commitment for the non-public benefits by the end of 2016, so if you are thinking about a project, if your local agencies or entities are interested in pursuing this funding, get started now.”
Joe Byrne added that in February, they put out a scoping survey which provided a lot of useful information. “We had 170 responses, totaling $12.7 billion in projects. 50% were groundwater projects, 40% were local and regional surface storage projects including some CalFed projects, and 10% were conjunctive use. The interesting stat and the reason I raise it is that only 57% of all the projects identified any ecosystem benefits at all. Not to say that they are not there, but they didn’t identify them, and only 23% identified any benefits to the Delta ecosystem or its tributaries so it’s clear to us from that that there’s a lot of interest and a lot of projects out there, but educating as to what is in the bond specifically is important for us to do.”