Water transfers and the Delta Plan, part 1: The basics

As the Delta Stewardship Council prepares to revisit the issue of single-year transfers, staff review the basics: the types of water transfers, the risks involved, and current oversight

Item_16_Attach_1_Page_01Water transfers are transactions between sellers who may have an excess of supply and are willing to sell some of it temporarily, and buyers who need additional water supplies to meet their demands.  Water transfers can be an effective tool for water managers to move water to where it is needed most, especially during times of drought.

But water transfers are not easy transactions, nor are they without controversy.  The impacts of transfers can be many, and can affect not only the area from which the water is transferred, but downstream users and instream flows as well.  Impacts can be both economic and environmental, so to ensure that these impacts are identified and minimized, transfers involving public agencies are required to comply with CEQA or NEPA.  In addition, most transfers are reviewed by the State Water Resources Control Board, the Bureau of Reclamation, the Department of Water Resources, or a combination thereof.

Single-year transfers (transfer agreements lasting up to one year) are short-term commitments that help farmers and water managers react to seasonal circumstances. In approving the Delta Plan, the Delta Stewardship Council considered single-year transfers which utilize the Delta and their impact on the coequal goals; the determination was made to exclude them from the Council’s covered action process until December 31, 2016.  With the exemption set to expire, the Delta Stewardship Council is examining the issue of transfers that utilize the Delta, focusing on single-year transfers and their possible impact on the Delta.

So this week, we’ll be following the Delta Stewardship Council as they examine water transfers in detail.  Today’s post gives the background and basics of water transfers, which sets up for the much more detailed discussions that will follow.  Tomorrow, we’ll hear from Bill Croyle with the Department of Water Resources and Tom Howard with the State Water Resources Control Board on the transfer process.  On Wednesday, Dr. Bruce Herbold and Sandi Matsumoto with the Nature Conservancy discuss environmental impacts of transfers.  The series will wrap up on Thursday with a panel comprised of water lawyer Dustin Cooper representing buyers, and Frances Mizuno with the San Luis & Delta Mendota Water Authority and Steve Hirsch with Metropolitan Water District representing sellers.

In preparation for the upcoming discussions, Council staff reviewed the basics of water transfers at the July meeting.

Dan RayThis year especially, we see the importance of water transfers as a tool to improve the reliability of our water supplies,” began Deputy Executive Officer Dan Ray. “We’re able to move water from areas that have a little more ample supply to areas that have a woefully inadequate supply, and that’s important. It’s a flexible system that can respond in different ways from year to year as conditions change.”

Mr. Ray then gave the background on single-year water transfers and how they are addressed in the Delta Plan. “When the Council developed the Delta Plan, there was a recognition that transfers were an important element in strategies to improve reliability, but there were also nagging questions about how adequately they were overseen to make sure that both goals of the Delta Reform Act were being addressed”, he said. “There was a concern that perhaps single year water transfers, some of which get less scrutiny, were being used inappropriately to avoid that kind of oversight. You were discussing transfers as an element of a reliability strategies and you asked the DWR and the SWRCB to put together a workgroup working with stakeholders to identify ways to reduce impediments to transfers and also to protect water rights and environmental resources and give a report back on that.”

You set a deadline on a determination you made that said you didn’t think one-year transfers had a significant effect on the coequal goals so you could consider that report as you move ahead, and that work has been underway.

He then turned it over to Kevan Samsam, Supervising Engineer, to update the Council on the work that has been done and how staff expects to address this issue in the coming months.

The Council has already determined that single year transfers occurring through December 31st of 2016 do not have a significant impact on the coequal goals for the purpose of determining whether a project meets the definition of covered action,” he said. “What this means is currently single year transfers are not covered actions, but those same transfers come 2017 could be covered actions unless the Council takes action.”

Mr. Samsam said that the purpose of today’s presentation is to review where the Council left the topic of single-year transfers back in 2012-13 when the Delta Plan was adopted in preparation for bringing in experts from DWR and the State Water Board to provide new information. His noted that he would be focusing primarily on north-to-south transfers which use State Water Project or Central Valley Project facilities to move water from the Delta watershed to the San Joaquin Valley. “I should note that water transfers are very common, and this is just a subset of that,” he said.

Kevan SamsamWater transfers as we know are a great tool for moving water to where it is needed most,” he said. “You can have transfers among neighbors in a water district which are very simple to execute and don’t have regulatory oversight, or you can have transfers that move water hundreds of miles from the northern part of the state, through rivers, canals, and pumping plants down to the southern part of the state. Water transfers can be single year transfers, meaning they occur just for this calendar year or season, or they can actually be multi-year transfers. An example of a multi-year transfer would be the Yuba Accord where they are transferring water south over the long-term.”

There are also exchanges, where water is provided to a buyer this year, but then at a later date, that water might be given back to the seller,” Mr. Samsam said. “Then there are also combinations of transfers and exchanges. Pretty much the creativity of the people entering into the transfers is the only limit to the characteristics.”

While transfers occur all over California, the most abundant transfers are intra-basin, he said. “There is a lot of water that is transferred among farmers and water agencies in Southern California, and there is a tremendous amount of water that’s transferred among the parties in Northern California as well,” he said.

Today we’re going to focus on those transfers that involve the Delta – those that originate in, terminate in, or those that transect the Delta in route from the seller to the buyer,” he said. “The majority of water being transferred through the Delta are those north to south transfers. There are some transfers that do terminate in the Delta and there are probably some transfers that do originate in the Delta. In the future there are some signs that that might become more common, but we’re going to talk about the ones that head south, and those are the ones that rely on the State Water Project and CVP.”

Mr. Samsam noted that as a result of the biological opinions, both the SWP and the CVP are limited to transferring water only in a July through September window when the impacts to Delta smelt are lessened.

Item_16_Attach_1_Page_03He then reviewed the most common types of transfers:

Groundwater substitution transfer: “In this case, a seller who has a surface water right decides that they are going to forego that surface water and make it available for transfer, and they are going to pump groundwater instead. This would make the amount of the groundwater that they pump available for transfer, less streamflow depletion, because as we know, groundwater and surface water are connected.”

Crop idling or crop shifting transfer:Another common type of water transfer would be a crop idling or crop shifting transfer. In this case, the amount of water that a farmer might apply to their plot of land is decreased, either by idling the land or by shifting to a lower water requirement crop, and the reduction of the amount of water the crops would consumptively use. It’s the consumptive use which is calculated as the evapotranspiration of the applied water that is what is available for transfer, not the amount of water that the farmer would have applied to their field.”

Reservoir storage: “A less common type of transfer would be reservoir storage transfer, also known as reservoir reregulation. It’s when a seller who has water currently stored behind a dam releases that water for transfer. The water that is released is in addition to the normal operations of that reservoir.”

Item_16_Attach_1_Page_04He then presented a slide detailing the transfer process and schedule, acknowledging that it’s a busy slide. “What I would like you to take away from it is that per this schedule, if you want to have a water transfer occur now in the summer, you had better have started the process in January,” he said. “If you didn’t start in January, you’re late and that could impact your transfer.”

Mr. Samsam pointed out that there are some risks to transfers:

Curtailments:In 2008 and 2009, the biological opinions added regulations that allows the State Water Project and the Central Valley Project to move water south only during that July through September window. This limited window can exacerbate some of the challenges that water transfer have. One of the types of challenges they have is curtailment. You may in January decide that you’ve identified a water transfer you’d like to have happen, but because you have to wait until July for that water to become available and transferred to you, in a year like this year or last year, the State Board could curtail that surface water right and that water would no longer be available for transfer.”

Export capacity:When the pumps are running, their primary focus is to move project water. If the hydrologic conditions are right, they are going to be moving as much water as they can and there might not actually be physical room to move transfer water on top of that.”

Delta outflow requirements:Delta outflow requirements add challenges as well. When you want to have a transfer that originates north of the Delta and you’re going to come through the Delta, they add carriage water to that which is the water that’s going to contribute their fair share to the water quality requirements of the Delta. It’s almost a transaction cost, so if a farmer releases a certain amount of water, a portion of that will be transferred south but the remaining will actually flow out through the bay. Now the issue with carriage water is it’s hard to calculate, so there is a risk that at the time a transfer is conceived, you might have an idea of what you expect that carriage water to be, but when the actual transfer occurs, that carriage water requirement might actually be greater, in which case the buyer would receive less water.

Reservoir operations:Not very common, but if you have water behind a reservoir that you want to make available for transfer, you’re water is secondary to project water and you can think of it as sitting on top of project water. If prior to July, the hydrologic conditions are great and the reservoir actually has to make releases to have flood storage capacity available, it’s that stored water that you wanted to have transferred is what gets spilled first. Project water would be protected.

Item_16_Attach_1_Page_06Mr. Samsam presented a slide detailing the oversight on north-to-south transfers that use project facilities. “They are reviewed either by the state board, DWR, or by the Bureau of Reclamation,” he said. “The State Board has regulatory authority over post 1914 water rights, so all post-1914 water rights must petition the board for a change in point of diversion, and the State Board must issue an order approving that change before the water can move. On top of that, the sellers who want to transfer water using the project facilities must first enter into a contract with DWR or USBR. Both USBR and DWR will make independent findings and review that transfer before agreeing to move it.”

He said there are a small number of transfers that would avoid review by these three agencies. “These are water transfers that include a pre-1914 water right as the seller that are not exported from the Delta using these project facilities,” he said. “Examples might be pre-1914 from up in the Sacramento Valley watershed that proposes to sell water to someone such as Contra Costa Water District, or somebody who might pick up that water through the Freeport pumping plant. That would probably avoid some of this review.”

Mr. Samsam noted that single-year transfers that petition the State Board for a temporary change are exempt from CEQA, but since water transfers involving pre-14 water rights do not petition the state board, they are not exempt from CEQA and they actually are still required to perform a CEQA analysis.

Item_16_Attach_1_Page_07He then discussed the approval process that the three agencies go through in approving transfers. “With respect to the State Board, the State Board must find that the proposed transfer will not injure any legal user of water and will not unreasonably affect fish and wildlife for other instream users,” he said.

DWR has a slightly different role. Their first and foremost is they calculate that there is real water or new water as its being called today – that is, that the transfer actually adds additional water to the system that would be the new water that’s available for transfer,” he said. “In addition to the new water calculation, DWR needs to find that the transfer will not impact operations of the project, the water transfer does not injure any other legal user of water, nor will the proposed transfer unreasonably affect fish, wildlife, or other instream beneficial user, as well as the overall economy, or the environment of the transfer area, meaning where the water was made available.

The Bureau of Reclamation also determines that the transfer involves real water or new water,” he said. “They also look that the transfer will have no adverse impact on contractors, water supplier operations, they meet fish and wildlife obligations, and they also look at groundwater conditions in the originating area.”

Both DWR and the Bureau also make sure that the respective CEQA or NEPA documentation is completed,” he added.

When the Council discussed single-year transfers when developing the Delta Plan, they were aware of this information and understood the importance of water transfers as a tool to increase water supply statewide, Mr. Samsam said. “In particular the Council understood the importance of single-year transfers, and actually sought ways that they and the Delta Plan could help transfers and see if the process for approving transfers could actually be improved.”

But the Council also wanted to better understand the impact of water transfers on the Delta, he said. “Did the change in timing of streamflows associated with water transfers had an adverse impact on the Delta ecosystem? What was known about any adverse impacts resulting from water transfers?” he said. “The Council also had concerns about the lack of oversight on a small subset of single year transfers, such as a transfer that would include a pre-1914 seller and an export from the Delta that doesn’t include the projects. The Council had concerns also about reoccurring single year contracts. The concern was that these could be used in lieu of multi-year contract agreements, and by doing so they would actually avoid analyzing any long-term impacts.”

Item_16_Attach_1_Page_09At the time the Council was discussing this, there wasn’t a lot of information that was needed for the Council to make strong determination. “Staff initially proposed the language that’s before you on this slide for a Delta Plan recommendation to ask DWR and the State Board to look at these concerns and report back to the Council what they had found,” he said. “The Council felt this recommendation needed additional focus on the reoccurring single-year transfer issue and ultimately adopted this recommendation.”

Mr. Samsam noted that Governor Brown on May 20, 2013 and also again on April 25, 2014 issued an executive order directing DWR and the State Board to expedite the review and processing of water transfers.

With the existing oversight that’s applied to water transfers, the Council was cautious of the potential to disrupt water transfers through the application of additional regulatory oversight, ie the Council’s authority over covered actions,” he said. “Now as a Council, you have the discretion to define categories of activities that will or will not have a significant impact on the coequal goals, and you actually did so in this case. The Council determined that single year transfers occurring in the near future through December 31, 2016 would not have a significant impact on the coequal goals. However, the Council did not have enough information to determine if single-year transfers beyond the 2016 horizon pose a significant risk to the Delta.”

The Council made the determination temporary pending a report back from DWR and the State Board. “Unless the Council decides to take action, this determination that single-year transfers do not have a significant impact on the coequal goals will expire at the end of next year,” he said. “Starting January 1, 2017, all water transfers, including single year water transfers, would be subject to the Council’s authority over covered actions, and could be required to file a certification of consistency with the Council.

Ultimately, the Council will have to decide if they want to take action on this issue, he said “Do you want to extend the current Delta Plan approach, or would you require that single-year transfers file a consistency determinations as covered actions under the Delta Plan?

Mr. Samsam noted that the Council can take several possible actions. “If you take no action and allow the determination to expire, starting January 1, all water transfers, including the single-year ones, could be subject to the Council’s authority over covered actions,” he said. “The Council could consider extending or making permanent the determination that single-year transfers don’t have a significant impact on the coequal goals; this would require an amendment to the Delta Plan regulations and would require submission of the new regulation to the OAL process. This could take some time. This action would also require a review of the Delta Plan’s EIR to insure that the new regulation or amendment was considered in our environmental analysis; if it’s not, then we might have to actually to look at the environmental impacts of any new or amended regulation.”

You may actually consider amending the determination to become permanent but yet exclude a subset of single-year transfers that meet the criteria that you would establish,” he continued. “This would also require going through the OAL process and the CEQA evaluation. Additionally the Council may consider changes to the Council policies and how the Delta Plan relates to water transfers, and you could do this based on the discussion and testimony that I hope to bring before you later.”

And so with that …

For more information …

Coming up tomorrow …

Bill Croyle with the Department of Water Resources and Tom Howard with the State Water Resources Control Board discuss the water transfer process and the recent efforts to streamline the process.

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