California Water Fix update: The Design and Construction Enterprise and overview of the permitting processes

Metropolitan Seal sliderboxMetropolitan’s Special Committee on the Bay-Delta hears the details of the Design and Construction Enterprise and an overview of the State Water Board hearing process

At the January meeting of Metropolitan’s Special Committee on the Bay-Delta, Program Manager for Bay Delta Initiatives Steve Arakawa updated Committee members on the recently-released Design and Construction Enterprise draft agreement and the permitting issues for the California Water Fix project.

Before he began his presentation, he played a video about the California Water Fix project that was released about the same time as the Governor gave his State of the State address. “It’s important to consider the messaging in the video,” he said. “This video is attributed to the California Natural Resources Agency, the California Department of Food and Agriculture, and the California Environmental Protection Agency and those agencies are listed at the end of the video.”

Mr. Arakawa then proceeded with an update where the California Water Fix is in the planning process, focusing on the Design and Construction Enterprise and the permitting process with a particular emphasis on the State Water Board.

Design and Construction Enterprise

Back in the middle of January, the Department of Water Resources released a draft agreement for the Design and Construction Enterprise which is the means by which the tunnel pipeline project would be managed. Mr. Arakawa noted that DWR began taking internal steps for this process back in May of 2014, and since that time, the project planning has continued.

Work has continued on the draft agreement, with water contractor representatives working with the DWR to formulate the terms that go into this agreement,” he said. “The key milestone that occurred about a week and a half ago is that the state made it available publicly on the web. It’s not an executed agreement – it’s a draft agreement … it’s intended that this agreement would be executed once the Record of Decision and Notice of Determination on the environmental process are completed.”

3a_Presentation_Page_06The intent of the Design and Construction Enterprise is to organize the resources and the staffing efforts around the California Water Fix project as a single mission effort of the organization whose sole purpose would be to design and construct the California Water Fix; the organization would go away after the completion of that, he explained.

Mr. Arakawa then reviewed the key points of the agreement:

  • The Design and Construction Enterprise would provide the means of designing and constructing the project. It would be a separate enterprise operating under DWR authorities and would be located in a different place than the other existing staffing resources of the DWR.
  • After completion of the project with the project operational, the Design and Construction Enterprise would then be dissolved because its mission would be completed.
  • The enterprise would be led by a program director who would be responsible for the day to day management of all of the activities related to completing the project, including reporting, management of consultants, providing information on progress, etc.

There is a provision in the draft agreement that a group of contractor representatives through a conveyance project coordination agency would have a strong role in the management of the project, along with the Department of Water Resources director, and so those two entities working in coordination is how the Design and Construction Enterprise draft agreement is really set up,” he said. “It specifies what the obligations and roles of each of those entities are and how they would work together in order to complete the project. It talks about the role of the Department of Water Resources director and the role of the group of contractors organized through a JPA and what they would be responsible for, but also how they would interact with the enterprise and with DWR regarding completion of the project.”

3a_Presentation_Page_08The Design and Construction Enterprise itself would be managed by a program director; it would have a combination of staff resources that could come from DWR, other contracting water agencies, and consultants. “The program director would be responsible for managing all of this, and the program director would be reporting to both the DWR director and to the conveyance project coordination agency or public agency JPA,” he said. He noted that an advisory committee will be assembled to bring in experts to help provide technical expertise to help support the project.

The key thing to note is that the program director would have a single point of accountability so all of the responsibility for making sure things happen on the time frame and within the budget would be through that program director,” he said. “The program director would be hired with the concurrence of the JPA, so the water contracting agencies would play a role in selecting the program director.

The Enterprise will manage the design and construction of the project. The agreement would be executed after the Record of Decision and Notice of Determination at the completion of the environmental review process. Mr. Arakawa said the water contracting agencies through the JPA would have the ability to weigh in on matters that materially affect the project, such as anything affecting the budget, schedule, or permitting issues.

In the draft agreement, anything that would result in an additional $10 million or anything that would result in an additional 60 days of project schedule would be something that the water contracting agencies through the JPA would have the ability to weigh in on,” he said. “The Director of Water Resources would make decisions on matters relating to this project, and on things that have material effect, the Director under this agreement would seek the concurrence of the JPA before proceeding.”

Overall, the Director is responsible as a state representative for the overall project, but the contract language in this draft agreement lays out the roles that the JPA would have,” he said. “The Enterprise would be staffed with various qualified people from different sources, including DWR, public water agencies and consultants. The program director would be the responsible entity for selecting who would be working on the project and any changes that would be needed along the process of developing the project. That program director would be responsible for making any of those staffing changes.”

State Water Board and other permitting processes

The State Water Board will begin hearings in April on the place of diversion for the project on the Sacramento River, so those proceedings are beginning to be organized; notices to appear have been filed by the different entities, including the water contractors, and briefs are being developed, Mr. Arakawa said.

3a_Presentation_Page_11He then presented a timeline showing the different permitting aspects of the project, noting that the diagram covers the period from 2015 to early 2017. The first section of the diagram is related to compliance with the Endangered Species Act. The second section is the environmental process under CEQA and NEPA and the preparation of the EIS-EIR and the completion of decision making process. The third section is the water rights and water quality permitting processes at the State Water Board. The fourth section are the various Army Corps of Engineer permits that are required.

Mr. Arakawa then discussed each one of these permitting processes in turn.

With respect to the Endangered Species Act, the key activity has been the development of the biological assessment that’s been going on for several months now. The biological assessment provide the description of the project and how it would be operated. It is the basis for consultations between the Bureau of Reclamation and the Department of Water Resources and the regulating agencies, in this case the US FWS which has jurisdiction over Delta smelt and the NMFS which has jurisdiction over salmon and steelhead.

The preparation of this biological assessment is a key milestone in the process for seeking the permits under the Endangered Species Act on the federal side,” he said.

Similarly, the documents are being prepared on an application for compliance with state endangered species regulations under Section 2081b of the State Endangered Species Act; a lot of the same information is drawn in terms of how the project is going to be operated, how its described, etc, for the fish agencies to make a determination, he said.

The fish agencies will make a determination of whether the project and the way it’s operated is sufficiently protective under the correct provisions under Section 7 under the federal Endangered Species Act and Section 2081 under the state, but mainly that the project is mitigating its impacts and its avoiding jeopardy of endangered species under the federal act.”

Mr. Arakawa noted that the schedule doesn’t have any precise end dates – it’s just a general view of how they anticipate the schedule working out, based on the information they’ve seen. “We expect that the permitting on the state and federal side under the Endangered Species Act will coincide around the same time as the decision on the CEQA and NEPA environmental documents, so we expect it to be converging about the same time frame which is about the middle of 2016.”

The environmental documents were initially released in December of 2013 for a 228 day review, and a recirculated revised documents in July of 2015 for about 113 days of public review. “So the project has had significant public review and comment under both state and federal law,” he said. “The state is now in the process of working with the consultants and with agencies on completing a final environmental impact report and statement that would then be the basis for its decision making – the Record of Decision and Notice of Determination. The approximate schedule for that decision making is the middle of this year, 2016.”

The next set of processes are the water rights and water quality processes under the State Water Board’s jurisdiction, he said. “This is in the form of the water rights that go along with the point of diversion on the Sacramento River,” he said. “The two projects currently have existing rights but they are in a different location to divert water, so being able to divert on the Sacramento River requires these rights for a new point of diversion. The State Water Board also has water quality authority to make a determination that the project will not in any way affect the water quality regulations that are in place. That determination is made under a Section 401 water quality certification, so those are the two areas of jurisdiction the State Board is focused on.”

Mr. Arakawa noted that the Corps of Engineers permits and the State Water Board water quality certification are connected, because the Board will be looking to the water quality certification when it makes its decision. He noted that although the bars show the process extending out to the end of the timeline, the water quality certification could occur at any time; once that decision is made, then the Corps of Engineers can make a determination under the Clean Water Act’s Section 404 which deals with structures in the channels, and also Rivers and Harbors Act Section 10 and Section 408. “All of these are under Corps jurisdiction; they manage this process but they count on the water quality certification from the State Board,” he said. “So the State Water Board can issue this water quality certification sooner than that end point, and once that is done, the Corps of Engineers can make a determination under its permits under Section 404, etc, so that’s how these permit issues line up.”

He then returned to the State Water Board process which is just in its initial phases. “Back in September, the Bureau of Reclamation and the Department submitted the petition to add the new points of diversion on the Sacramento River, so that initiated the process,” he said. “Also, the Department of Water Resources applied for the Section 401 Water Quality certification that analyzes whether the project will have any negative effect on water quality, and so that initiates the process.”

The State Water Board is in the process of preparing and organizing its proceeding which will have two phases,” he said. “The first phase will focus on the proposed project and any effects it might have on legal users of water, whether they be agricultural or urban, and so it’s mainly looking at other water right holders and whether it impacts negatively on any of those. The hearings begin on April 7. March 1 is the current deadline for briefs.”

Mr. Arakawa noted that Metropolitan and the State Water Contractors have filed notices of intent to appear to be able to provide rebuttal arguments to anything that may come up in the process. “The Department of Water Resources will provide the main testimony related to how this project will or will not affect any water right holders and then the State Water Contractors with support from Metropolitan will be there to participate in the process and to be prepared to help with any rebuttal arguments if those are necessary,” he said. “In addition, Metropolitan has filed a notice of intent to make a policy statement with regard to the project so we’ll be prepared to do that as well.”

Mr. Arakawa noted that to date, approximately 100 protests have been filed from various water right holders. “Water right holders are going to make sure they are involved in the process, so they have filed the proper paperwork so they can bring up issues once those proceedings begin, so they are preserving their rights to participate. That’s phase 1.”

Phase 2 focuses on the fish and wildlife and environmental aspects of the project. With this proceeding, the board will look specifically at the tunnel project and how that tunnel project affects fish and wildlife and what kind of flows are necessary in order to support the proposed project. Hearings on phase 2 would begin after the Notice of Determination and Record of Decision, after the Record of Decision or the environmental planning process is completed.

Mr. Arakawa noted that the State Water Board has a separate and parallel process looking at the existing water quality control plan for the Bay Delta that is proceeding on a parallel track.

Lastly, the Board has its water quality certification review. “The Executive Director has the authority to make a decision on the water quality certification to indicate that the project is protective of existing water quality regulations, and as I mentioned earlier, that decision could come at any time prior to the end of that timeline,” he said.

Status of cost allocation discussions

Mr. Arakawa said that on the State Water Project side, discussions are continuing amongst the State Water Contractors regarding how the California Water Fix would be implemented and how it would be paid for.

There have been two different allocation schemes that have been considered by the contractors and both of them recognize that the benefits would be connected with what is being paid for,” he said. “One version is the allocation of cost based on Table A contract amount. That is an existing mechanism the state has for allocating costs and that is also being considered in the California Water Fix approach. Secondly, there was another option where capacity could be secured by individual contractors and the benefit of securing that capacity would go to those who pay, so if you acquire sufficient capacity in the tunnel that matches your Table A, you would get the benefit of that Table A. If you secure more than that, than you would get additional benefit, if you are paying for more than your Table A amount is.”

Those kind of conversations are continuing, along with how water can be managed on a year to year basis between the contractors to provide the kind of water management capability that contractors are looking for to help support moving forward with this decision on the project,” he said.

Along on the federal side, there have been discussions that the federal contractors and the Bureau have had and we’re anticipating that those conversations would be leading to something that could be discussed in more detail around the April time frame, so that’s kind of a general view of where things are with cost allocation discussion.”

And with that …

Discussion Highlights

We’ve been working on this for a number of years now, and I’m concerned because I saw a report that came out last month from the Hoover Institute that basically says that a third of Californians support the tunnels, about a third of Californians are against the tunnels, and about a third of Californians are undecided,” asks one of the Directors. “First of all, should we be concerned with this, and secondly, is there anything we can do to move the needle?

I’ve also seen reports that 2/3rds of Californians have never heard of the Delta and have no idea where it is, so I’m not entirely sure what to make of polls like that,” responded General Manager Jeffrey Kightlinger. “First, approval of the tunnels is not on the ballot, so there hasn’t been that sort of campaign to really try to educate the public at large. Most of the efforts have been aimed at electeds and people who are decision makers, and fair amount of time is spent educating, but since there is nothing out there for a public approval, there hasn’t been that sort of debate. Now there is an initiative out there that talks about financing of public projects that could indirectly impact the tunnels, but I don’t think that would be campaign about the tunnels either, so I don’t know that there has been a real education program. I thought those numbers were kind of surprising, that 1/3 would be supporting and 1/3 would be against it – I think it would be 2/3rds would have no view whatsoever since they are not sure where the Delta is, so … the numbers I find surprising.”

How much effort we can make to move that needle … I don’t really know that there is much you can do to really educate that sort of basic policy,” continued Mr. Kightlinger. “We spend a lot of time with the public getting people to understand where their water comes from. It’s a tough issue, it’s all about infrastructure and things like that. I don’t know that those numbers would shift much. I’m happy to get input; if people think we should be doing more, we can certainly do more. Everything takes money, time, effort, and energy … “

Director agrees that if we don’t need a vote of the people, then why bother with the effort. “On the other hand, the more arrogant that we are … the more our enemies are going to try and shoot us down. I want to make sure we are headed in the right direction.”

Agreed, and I understand the concerns and misgivings,” he said. “I’m not sure there’s a lot we can do about it, absent a widespread campaign and a funded campaign, and I’m not sure that’s appropriate for Metropolitan. We do our tours, we do our things with our leadership, we try to educate Southern California leaders through tours in the Delta. At the end of the day, a lot of this falls on the shoulders of the Governor, and he has to explain his policies to the people of the State of California, and I think what you saw is him starting to do that … I think you’re seeing the Governor’s administration step up that effort to communicate his policies to the people.”

For more information …

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