By complying with a state-directed water budget formula, will agencies be forced to strand their water rights or infrastructure investments?
On May 9th of 2016, Governor Brown issued the latest in a series of executive orders in response to the drought, which was entitled, “Making water conservation a California way of life.” In that order he directed a group of state agencies including the Department of Water Resources and the State Water Control Board to develop a permanent framework for using water more wisely, eliminating water waste, strengthening local drought resilience, and improving agricultural water use and drought planning.
An urban advisory group comprised of 35 water agencies and NGOs was formed and met a number of times; a draft framework was released on November 30th. Among the comment letters notably was one signed by a 114 public water agencies from throughout California, expressing support for many of the concepts included in the proposal while also conveying a number of significant concerns. The draft framework was submitted to the Governor's office in early January; the final framework was released on April 7th.
At the 2017 California Water Policy Conference, a panel discussion focused on the tug of water between state and local water agencies, and the concern that by having to comply with a state-directed water budget formula regardless of their situation, the water agencies will be essentially forced to strand access to their water rights as well as the water supply portfolios they've invested in for their own drought resilience in order to buffer their customers from impacts during times of drought or conditions of scarcity.
Seated on the panel were Eric Garner, managing partner at Best Best and Krieger; David Rose, an attorney with the State Water Resource Control Board's Office of Chief's Council since 2007; Bruce Reznik, who took the helm of the Los Angeles Water Keeper over a year and a half ago; and Brian Poulsen, General Counsel of El Dorado Irrigation District. The panel was moderated by Greg Zlotnick, Water Resources & Strategic Affairs with the San Juan Water District.
“I think it's fair to say that many in the water community felt that the governor's direction wasn't truly or at least effectively taken to heart in the draft framework,” said moderator Greg Zlotnick. “First the executive order acknowledges, ‘Each water supplier establishes its accepted tolerance for risk that varies based upon many intertwined technical, economic and political considerations.’ There are those who think this nod to local control has been brushed aside by a one-size-fits-all approach to replace these local agency prerogatives with an inappropriate statewide mandate that would impose water use targets and budgets, and force conservation where it isn't necessary when one considers an agency's supplies and supply reliability.”
“Second, the executive order states that the proposed water use targets, ‘Shall be customized to the unique conditions of each water agency,’” continued Mr. Zlotnick. “Many in the water community believe that in addition to the demand profile of an agency, the supply side of the equation, including water rights and their priorities need to be accepted as part of their ‘unique conditions’ and should also inform implementation requirements related to conservation above and beyond efforts to improve water use efficiency. So those recommendations are on their way to the legislature.”
Mr. Zlotnick noted that there have been other pieces of legislation that were proposed relating to the recommendations, including water planning requirements, the imposition of the water targets and increased reporting requirements; these things need additional legislative authority and action to converge upon the state agency the ability to transform them from proposals into legally binding mandates.
Each panelist was then given some time to make a presentation before the discussion.
ERIC GARNER, Best Best & Krieger
Eric Garner began by saying his job was to review California water rights in order to set the table for the discussion to determine if the ‘death of water rights’ is fairly exaggerated.
The first thing to understand is that water is really a different type of property. It is generally treated as real property similar to land, but there are so many exceptions to that that it really subsumes the notion that it's real property, Mr. Garner said. “The state owns all the water in California, holds it in trust for the people, and all we get is a use right to that water, or a usufructuary right. That's a very important thing to keep in mind as we go forward. It's not like the land under your house, which subject to local zoning regulations and nuisance laws, you can pretty much do what you want to on that property. Water is a different type of property.”
In California, generally two types of water: surface water and groundwater. Surface water is obviously the water flowing on the surface of the land, as well as the underflow connected to those river and streams, as well as subterranean streams, which are rare. Groundwater is percolating water that is in the underground aquifers. “The important thing to understand here is that surface water and groundwater have two entirely separate legal regimes apply to them,” he said.
California has the most complex water rights system in the US, if not the world. With surface water, there are two different types of rights: riparian rights and appropriative rights. Riparian rights, at its simplest level, are the rights you get simply by owning property next to a stream. This came from English common law, which works great in a wet country like England, but not so much in a dry place like California, Mr. Garner noted.
Appropriative rights were originally developed for miners, but is the most common water right in California. “That's where we get ‘use it or lose it’ and ‘first in time, first in right,’” said Mr. Garner. “It's a simple priority system. Riparian rights are not priority; riparian rights are based on the land ownership. You don't get it by using it or not using it, you get it by property ownership. With appropriate rights, you have to use them, if you don't use them for a period of five years, you risk losing them.”
The riparian and appropriative rights systems developed in parallel. In 1914, legislation was adopted that required all surface water users from that time forward to get a permit. So there are two types of appropriative rights: pre-1914 rights which don’t require a permit as long as you were using water before 1914, and post-1914 rights which do require a permit.
Mr. Garner pointed out that the state's regulatory authority over those is not identical; pre-1914 do not need permits whereas 1914s do, but they do have the ability to regulate the reasonableness of those uses, but that's been the subject of litigation. So with respect to conservation mandates, you have to distinguish between pre-1914 and post-1914 water rights, he said.
Turning to groundwater, the Sustainable Groundwater Management Act was passed in 2014, but it doesn’t require a permit going forward for all groundwater use in the state, so it’s not nearly as strong as the 1914 law, he said. He also noted that the Sustainable Groundwater Management Act itself mentions several times that it doesn’t affect existing water rights or water rights law.
Common law rose through the courts and it’s still what governs groundwater; there is no statewide system for groundwater. There are two types of groundwater rights: overlying and appropriative. “The overlying right is in effect the riparian right applied to groundwater but tilted vertically,” said Mr. Garner. “If you own land overlying a groundwater basin, you get to pump water out of the ground and use it on the land; that's simply the overlying right.”
An appropriative right is pumping water and taking it out of the basin, but you can only take surplus water, Mr. Garner said. “It is not a permit, so don't confuse that with the surface water right, this is an appropriate right to groundwater. But if there is no surplus, you can't take it. Where that gets complex is, even if a city is in a basin, if it's pumping that water out of the ground and putting it in the common water system, it's an appropriator. And appropriators are junior to overlying users under the common law and thus you get lots of litigation related to those things. So that's your fundamental groundwater law system.”
There are two other concepts that are important, he said. “The first is reasonable use. Reasonable use is the cardinal principle of California law. It overarches everything I just talked about. Priority is not the most important thing in California law; reasonableness is. You can have the highest priority, and if your use is unreasonable, then the priority could be reduced, or your use could be reduced. Reasonableness is determined based upon the facts and circumstances of every individual situation. There is no hard and fast rule as to what is reasonable. It was adopted into the California Constitution in 1928, in what's now Article 10 Section 2. It has been applied by the courts in various ways at various times since then.”
Mr. Garner emphasized that it is not a simple priority system as reasonableness governs everything. “As I like to say, in California we always start with priority but we often don't end with priority.”
The other concept is the public trust doctrine. The Audubon case in 1983 introduced the public trust doctrine, which is not something that had been applied to water rights before in the entire history of the appropriative system; it was introduced and is now part of it, he said.
“California law has shown this continuing ability to adapt and change to social conditions and the water rights have adapted and what a water right is has adapted and changed to those social conditions,” concluded Mr. Garner.
DAVID ROSE, State Water Resources Control Board
David Rose began with the standard disclaimer that his statements are not necessarily reflective of the State Water Board, any of its members, staff, or the Governor.
The framework is a proposal for implementation by the State Water Board, Department of Water Resources, the California Public Utilities Commission, the Department of Food and Agriculture, and the Energy Commission to do a number of things to implement Governor Brown's executive order. The four main things are to eliminate water waste, strengthen local drought resilience, improve agricultural water use and efficiency, and drought planning.
In order to accomplish these things, the framework proposes a number of actions, some which require new legislative authorities and some of which do not. Two of those actions are updating water shortage contingency planning and urban water management planning, processes that water agencies already go through from SBX7-7, the 2009 legislation better known as 20 by 2020. The 20×2020 plan gave agencies four different methodologies to choose from to identify a baseline to which they must achieve a 20% reduction in total water production.
“What the framework is essentially proposing is to use option 2 from that process, which is setting specific standards for certain areas of urban water usage,” Mr. Rose said. “One of those is residential per capita indoor water usage. The proposal is to use the current 55 gallons per person per day number until there is more data to update that. The second factor will be outdoor use. In order to set a standard for that requires a lot of information, such as how much outdoor use is there. So the State Water Board and the Department of Water Resources will be doing some modeling and figuring out some ways to come up with expected outdoor landscape use per supplier service area, unless the supplier already has their own, and some do.”
Without having the exact information and numbers for total landscape area, the Water Board and the Department will develop proxies through a stakeholder process. The calculation will take into account a number of factors, such as evapotranspiration rate. The proposal will apply lower evapotranspiration rate to create a water budget for each agency.
The framework has more information on the factors that would go into determining each water agency’s budget. The proposal does take into account factors such as age of construction, making allowances older construction built before requirements were in place, and lower evapotranspiration rates being applied to newer construction.
The SBX7-7 legislation applied a 10% reduction to Commercial, Industrial and Institutional (CII) use, and the framework proposes to have certain performance measures instead that would be based on water use standards by industry. These performance standards will be figured out at a later date, Mr. Rose said.
Targets will be set for water loss; the State Water Board and the Department of Water Resources are working on developing water loss audit regulations. “So all of those four factors – minus CII – are going to be lumped together and multiplied by the specifics of each supplier, service, and population,” he said. “What is 55 gallons per person per day mean if you don't multiply it by 365 days times the number of people you have? What does that landscape mean if you don't multiply it the surface area of you landscaping? So this is going to be one size fits all in the sense that, if you go in to get fitted for a suit, they take your measurements and then you get a suit that fits you. So it's not one size fits all frankly. It's your size fits you, is how we're intending that this approach actually work because it takes into account everybody's climate, everybody's population, all the variables that are appropriate.”
BRUCE REZNIK, Los Angeles Waterkeeper
Bruce Reznik with the Los Angeles Waterkeeper then gave the environmental perspective on the framework and the issues. He recalled how he attended the public meeting on the draft framework in Los Angeles, his comments brought out a lot of gasps. “Unfortunately, we're really coming in from a very different philosophical place,” he said. “There is a really huge divide when I see some of the comments being made – literally there were gasps whenever I spoke at the workshop in LA, and I have the exact same reaction when most of the water agencies spoke so, somewhere we need to see if there is a way to bridge that divide.”
In terms of the framework itself, Mr. Reznik summed his feelings up with ‘meh’. “It's a step,” he said. “I don't really think it makes conservation a California way of life. It makes conservation a California way of life-ish.” He then his view of the ‘good, bad, and the ugly’ of the framework.
One of good things is the uniformity, he said. “Before this we had the water shortage contingency plans, and there wasn't uniformity,” he said. “A lot of agencies didn't have the plans they were supposed to – stage 1, 2, and 3 meant different things. When we were faced with an emergency, we tried to implement things, we realized it was a mess. So the framework at least provides that kind of uniformity of knowing what is expected of agencies.”
For better or worse, it moves away from just the 20% reduction by 2020, which Mr. Reznik say as very broad based and not giving a lot of direction. “There are pluses and minus, but it doesn't recognize the variability and agencies that have already done good work versus the one that were five hundred gallons per person per day. So it is an effort to move toward efficiency and to move away from that sort of one size fits all so I think that's a good thing. I think the local control and flexibility is a good thing. The fact that you take all these different factors from the indoor residential, to the outdoor, to the water loss you come up with a grand total.”
“If there is an agency that wants to do less indoor because they recycle a lot of their water and they actually want to make sure there is enough water to recycle, okay, focus on the water loss or focus more on the outdoor, so I actually think it gives quite a bit of flexibility,” he continued. “Frankly, I think the emergency regs, which I liked, I thought that actually gave flexibility as well. I think that was unfairly criticized as one size fits all. If you were a lower level agency in terms of usage it was a much smaller reduction, I think everybody needs to be doing reductions even if you are already good, you could do better. I think at the higher end agencies the percentage reduction wasn't big enough. But I thought that wasn't fairly criticized as a one size fits all and I think the same with these.”
Mr. Reznik said what he doesn’t like about the framework is that he doesn’t think it’s nearly aggressive enough. “I think the time lines are too long, I think the numbers are too high,” he said. “55 gallons for indoor? That's nothing. We should all be doing that today. LA, four million people a tenth of the state's population, is now at about 103 now.”
When he first saw the number 55, he thought that was for all residential – indoor and outdoor. “That's a number I could really get behind, and then I determined that's indoor only – okay well that's got to be implemented next year right? Oh, 2025. Really? We've got to be doing better than that.”
For the ugly, Mr. Reznik noted that agriculture still consumes a lot of water and he doesn’t think the framework addresses nearly enough agricultural water use.
The other ugly would be recycled water. The question with recycled water is should it be counted against the water budget. “Efficiency and conservation should apply to all water, including recycled water,” he said. “Even though I maybe an advocate of recycled water, reductions have to come first so.”
BRIAN POULSEN, El Dorado Irrigation District
Brian Poulsen, General Counsel for the El Dorado Irrigation District, then gave the upstream senior water rights holder's perspective on the long term water conservation framework. “It won't come as any surprise that from our perspective, the long term conservation framework is not consistent with our 150 years of water rights system founded upon the priority of right,” he said. “And though water rights priority is not the end all and be all, it is the foundation of the system we have.”
The priority system serves two really important purposes that have to do with conditions that exist. “As a matter of fact, Article 10 Section 2 that sets forward the reasonable use doctrine says, ‘Because of the conditions that exist in the state of California, because of the scarcity of water, we developed a system based on priority of right,’” he said. “Priority of right is important because it provides certainty to those with a water right. You have certainty to know that when you are going to have water and how much water you are going to have. That's why we developed this system which is much different than the system for allocating water adopted in areas where scarcity is not the dominant circumstance, such as in the eastern states.”
Mr. Poulsen explained that the reason this is important is because as a provider of drinking water, certainty is a necessity in order to prudently plan your investments in infrastructure. “One of the things that most people that are not in the industry don't fully appreciate is how much it cost to provide the services that we as drinking water providers provide,” he said, noting that his district is located in the Sierra Nevada foothills. “We don't have the economy of scale of dense populations to be able to fund infrastructure in a small geographic location; the contrary is true – we have a very large geographical surface area dominated by extreme differences in topography and so providing reliable drinking water is a challenge, and it's a challenge that costs a lot of money. So in order to be able to prudently plan and make the investments in infrastructure necessary to provide that public service, we have to have certainty in what our supply is going to be.”
“What I believe that the proposed conservation framework does is it intentionally ignores the system of priority, which is what our water rights appropriation system is founded upon, and it tries to move us to something more closely related to the system that looks more closely to what we have on the east coast, which is that it's a correlative right rather than a right based on priority. What I mean by correlative is that in a correlative system, every water right is correlative to those whom it shares a right. So when there is scarcity, we’re all in it together, we all reduce together. That sounds fine, that sounds idealistic but it's not consistent with the reality of the conditions that exist, that require certainty for water agencies to be able to prudently plan their investment.”
Panel moderator Greg Zlotnick then gave the panelists a chance to respond to each other. David Rose began by disagreeing with Brian Poulsen about the certainty that the water rights system provides. “I think that certainty is not one of the bundle of sticks in the water rights system because it depends on things like, does it rain or snow? And since there is some uncertainty in that, from the starting point you don't have complete certainty,” Mr. Rose said. “You have certainty as to where you are in line. First in time does mean first in right although waste and unreasonable use is an overarching principle and the public trust is an overarching principle. Those two things, the fact that there are those two things that overlie all water rights, go ahead and add some additional uncertainty to it.”
“I agree there is a degree of predictability,” Mr. Rose continued. “I know that my right is senior to this other person so that in times of shortage, they get cut off before I do. But what I don't know is that I will have all the water that my right covers and so in that, I don't think will ever be taken care of.”
“The framework meshes with the water rights system in as much as supply and demand are two different things, the water rights system covers supply and this covers demand from an efficiency stand point,” Mr. Rose said. “They are just addressing two different sides of the same coin even though it's all coming down to who uses water.”
Mr. Zlotnick noted that in Southern California, the Bay Area and other places that depend on imported water, they are always essentially dicing scarcity and shortage, which is quite different than in Northern California in the source areas. It is weather dependent, but generally the speaking, the supply situation is much healthier in the source areas than in the areas importing water, which is why Southern California and some parts of the Bay Area have invested in recycled water, conjunctive use projects and other things to provide a buffer. “Part of this is understanding the difference of experience and management of north and south source water areas which tend to have more senior water rights, and they look at that as a property right,” Mr. Zlotnick said.
Question: Taking a simplified view of the framework – essentially saying you have a budget based on your per capita use and your outdoor use, the question is under the water rights system, if you have water rights and or contracts with the water projects or your own sources that you've developed that give you regular access to water well above whatever your budget level is, what happens to that water that in theory under this budget you don't need any more or is being said that you can't use?
“Priority certainly has greater advantage of certainty if you're looking at pure priority system,” replied Eric Garner. “The disadvantage is of course that priorities are set on time of use. Since the water use started 150 years ago, that may not be the social priorities of today and without reasonable use in California, you wouldn't have seen the evolution of this state from mining to agriculture to now agriculture and a large urban population and manufacturing that makes very valuable chips that get shipped all over the world. California has allowed that evolution.”
Mr. Garner noted that if we were drawing up a water rights system in 2017, we wouldn’t draw up the one we have, but we don’t have that luxury. “We have the one we have and it's important that we stay grounded in what we have and have had throughout our history. … Historically when you've seen changes in priority, water rights have been regulated in two ways. One is that the use is unreasonable and there are a series of cases that talk about certain uses that are unreasonable and that can vary based over time or geography. So here the state could be saying, it's unreasonable to have lawns in certain parts of the state. They could have made that finding, they have not. And that would have impacted use.”
“Of course there would be litigation over that, and that would be firmly grounded though in the reasonable use doctrine of determining that certain use in some places is unreasonable; you could do the same thing for certain agricultural crops in some places so there is that authority historically to determine reasonable use,” Mr. Garner said.
Mr. Garner noted that the State Board battled the Imperial Irrigation District back in the 1980s and 1990s over the amount of water being used on crops. “That goes to quantity, so we could be saying it's a waste of water to use more than the amounts here, but I don't think it's made that finding. A lot of it depends on the legal basis for that as to whether you're really going to be entitled to transfer that conserved water.”
Bruce Reznik agreed with Eric Garner that water rights can be a valuable tool, but they are just a tool. “So to me, what's the problem we're trying to fix? Is the water system broken? To me the answer is actually fairly clearly yes.”
“The water sector is the largest energy user in the state with 19% of electricity,” Mr. Reznik. “The number one customer of electricity in the state is the State Water Project which means our water sector has a huge impact on climate and climate change. The vast majority of waterways in California are rivers or creeks or coastal areas are impaired for pollution. They don't meet Federal Clean Water Act standards or state Porter Cologne standards. In LA County, the assessment of waterways is that about eighty percent that are impaired. You have a million Californians that don't have access to clean water. You have collapsing ecosystems all up and down the state including the Delta. Our groundwater is overcharged. Our allocation system is massively over allocated to the tune of six million acre feet per year. These all spell problems with our existing system.”
Perhaps most sadly is that California is no longer a leader, said Mr. Reznik. “We lead on car emissions and air resources board and energy – a world wide leader. You can't say we're a leader in water. Israel is a leader in water, Australia is the leader, we're not a leader and yet it's so critical for us.”
“For me, I think we just need to rethink our water system,” Mr. Reznik continued. “Like any planning exercise, you start with what do you want to achieve. Obviously you want safe water and reliable water. We want it delivered in a way that is environmentally benign, that's energy efficient, that's cost effective. There may be some other factors too. … Do we want to make judgments that, maybe in a place with known water shortages, golf courses aren't something we should have everywhere. I know that's a controversial statement.”
It can be boiled down to reduce, reuse, recycle, restore, Mr. Reznik said. “It's conservation and efficiency and truly getting to world-wide best practices. It's reuse, reclaiming our storm water, gray water, onsite reuse, recycle. Restoring existing contaminated ground and surface water – that's where we need to be focusing.”
Water rights are a tool, Mr. Reznik said. “It's been effective in some ways and a hindrance in others and it goes back to 1914 – there is a part of me that says, really? Women couldn't even vote. We were driving horse and buggies. Really? We can change the laws of man, we can't change the laws of nature. Pumping water five hundred miles over the Tehachapi takes a lot of energy. And in a world of climate change we cannot afford to continue doing that. So to me I think it's okay to revisit the laws of man cause we ain't gonna revisit the laws of nature.”
Moderator Greg Zlotnick said that the questions also comes down to is this water being saved, conserved to provide for the environment as a purpose? It's not a balancing test it's sort of like, we should save water because … Why is this being done?
“I actually think there are good reasons to conserve water,” said Brian Poulsen. “The framework to me seems to reflect an inaccurate reality for why conservation is important. I'll give you an example. The framework says, glowingly that, ‘As a result of the emergency water conservation regulations over the last years, Californians conserved over 2 million acre feet of water, which is enough to serve over ten million people for a year.’ That sounds all great, but where is that two million acre feet of water? And who did it serve for a year? Is it somewhere in the Cal EPA basement? Because, I'll tell you in my service area that water that 30% that we conserved over 2015, in 2016, that water spilled over our dams in 2016 and again is currently spilling right now. That water is not serving ten million people for a year. It's going out into the ocean. Now there maybe, that in of itself may serve a legitimate purpose, I'm not here to say that water going out to sea is a waste of water, but I do think it's important for us to reflect on what happens to the water that's conserved.”
“I think that the idea that we should all conserve because that's good, and that may be true to some extent, but I think it's important for us to understand where that water goes when we conserve it,” Mr. Poulsen said.
Question: “Article 10 Section 2 of the Constitution says you can't waste and use water unreasonably,” said Moderator Greg Zlotnick. “In this process to set standards and in terms of overall budgets, is there essentially a defacto determination being made through this process, that any use above your budget or use that can be used, you can't use anymore. Is that a statewide determination of waste? Can you speak to whether or not is this moving down the line in defacto determinations and is there a jurisprudential problem with that based on past cases determining what waste and reasonable waste is?”
“With waste, what you are actually doing is really look at how the water is being used,” said Eric Garner. “The Imperial cases or that an unreasonable use is trickier because the way that has really evolved in the context of litigation because … looking at the facts and circumstances of that case and all the uses there … reasonableness requires a comparison of all uses to determine how much should be used. I'm not saying there are no ways around that, but that is something that leaps out because when you have municipal users and agricultural users in litigation and there is a reasonable use determination, you look at all the uses that affect that water, that river or all the uses that affect the ground water. I think it's a little hard. I can't really say if it's a jurisprudential determination defacto or not, but it's a different path than we've seen in the past. Even from the State Board – when they wanted to impact someone's water use, they've approached it differently.”
David Rose said the simple answer is no, it's not a defacto or any type of waste or unreasonable use declaration. “The board and the courts know how to do that – they've done that a whopping hundred times in history, so there is a process for determining that something is a waste and a reasonable use. In the framework, there is a table of the types of actions that the agencies are being directed to do. One of those is to declare certain uses a waste on reasonable use. The executive order and the framework identify the types of uses that the board declares to be a waste and unreasonable use through emergency regulations during the drought, like hosing off your sidewalk, or watering your lawn when it's raining. The governor has tasked the board with going through a rule making process to declare those things a waste and unreasonable use and those activities can be done under existing authorities. The board has waste and unreasonable use authority.”
“For the standards, the efficiency standards, it says, ‘these actions need new authority’ so I don't believe there is any intention to use the waste and unreasonable use authority at all for those issues of conservation and efficiency,” Mr. Rose continued. “I can see how somebody can make the argument that you're declaring it away, so it's a reasonable use you are calling it unreasonable but, again, that's happened maybe half a dozen times through court cases, a couple of regulations by the board, and one or two adjudicative proceedings – but otherwise what we're talking about is an overlay onto water use like the legislature promoting recycled water use, or certain rules regarding clean and safe drinking water. So I really don't think that it touches on waste and unreasonable use at all, other than the specific items – the prohibitions that the board intends to make permanent as declared waste and unreasonable use.”
Moderator Greg Zlotnick then asked each panelist to comment on what's the difference from a policy stand point about conservation standards and long term permanent, not emergency but a permanent conservation standard. “What's the difference between conservation and efficiency? And does it matter in a water rights context?”
Brian Poulsen said it's an important question because too often the terms are used interchangeably and there are real differences. “In my mind conservation means just reduction, cutting back, whereas efficiency is the minimum amount of water necessary to reasonably serve the purpose for which you're using the water. So those are two different things. Why I think it's important to make this distinction because when I read article 10 section 2 which is where this reasonable use doctrine is derived, the article section 2 says very clearly, it is the intention of the state to maximize beneficial use in water. And to prohibit the waste or unreasonable use, but the focus, the focus of that section is on use of water. So in my mind article section 2, it certainly doesn't promote conservation, it doesn't encourage conservation, what it encourages is efficient use of water.”
“Where I feel the biggest flaw in the long term conservation framework from a policy standpoint in my mind is that it takes an approach which I characterize as command and control – We, the State Water Board, are going to tell you and everyone else how to use water,” Mr. Poulson continued. “A better approach, apart from a policy perspective, instead of saying we're going to limit you to X amount of water because we think that that's the right thing to do, is to incentivize the maximum beneficial use of water – incentivize a more efficient use of water. We do that by providing economic incentives for end users or more accurately water suppliers to encourage the conservation.”
“Greg mentioned water code section 10 article 11, which says that when you have a right to use water and you conserve that water, you have a right to sell it,” said Mr. Poulsen. “God imagine if we did that? Imagine if we incentivized urban water conservation by taking what we're not using after we've made all our improvements, and then we've sold our water? That would incentive massive conservation from an urban stand point, the likes we've never seen and you know, could help us solve some of the allocation problems that we have where some entities don't have water and some entities do.”
Bruce Reznik said in terms of incentives, he’s advocated for those and bonds and all sorts of things. “I don't think they're mutually inclusive; if you want to get things done, it's the carrot and the stick and I think both need to be used,” he said. “I think conservation is important for conservation's sake. I think we do need to look at things as a whole and make sure the water is going where we want it to be going. I think there are value judgements – restoring streams that need to be restored, water staying in reservoirs so that we have emergency supply. That's all stuff you can figure out. It doesn't mean, ‘I'm gonna throw my hands up and not do conservation because I don't know where every drop went.’”
Conservation has huge impacts, Mr. Reznik said. “One of my favorite factoids is, there was a great compilation of data by Dr. Frank Loews at UC Davis on their website, that during the height of conservation, the energy savings from that nearly 20% reduction in water usage outpaced every other traditional energy efficiency measure combined at about a quarter of the cost. That's a pretty good outcome in my mind.”
“Essentially if you're not looking at the Aldo Leopold or John Muir type version of conservation where conservation means using less, water code section 10 article 11 anticipates that,” said David Rose. “So if you use less water because you are undertaking conservation practices, you can transfer that. So I think that incentive already exists. I definitely appreciate the incentives that can come from conservation, but I don't think that they were accomplishing what the Governor intended to accomplish. That law and that incentive predated anything we've been doing during the drought, so I just don't think that incentive itself is going to get us all the way there.”
“I'm a fairly staunch defender of the water rights system, but the ability for transfers between willing buyers and willing sellers should mean that the system can get the water where it needs to go,” Mr. Rose continued. “That coupled with the fact that there is no way it's ever going to change frankly because our takings laws and all sorts of other things are quite different than Australia's means that this is the system that we have, whether we like it or not, and I don't think we are going to move from it quickly.”
Mr. Rose pointed out that in terms of the overlay of conservation or efficiency versus water rights, there is a different way of looking at it. “In general, California water law prohibits cold storage – that would be getting a right and not put it to beneficial use with the hope that you'll lose it later. I think there's potentially an argument that inefficient water use is cold storage of a water right. You're holding on to that water right when you don't actually need it; you're not putting it to beneficial use. Of course that's something that somebody could argue in the future – that's not anything the board or the legislature or anybody I'm aware of is saying.”
“What we're saying is we can do better,” said Mr. Rose. “Separate from your water rights, if you do conserve, if you do the same thing with less which is what efficiency means, then efficiency won't equate to conservation; if you're not fully efficient then it will. Then you can use the water that you were previously using. Not that your water right on its face value would allow you to use, but you weren't putting to use. Your municipality hasn’t built up all the way, you can transfer it. You can build out more, you can do something different. So I see the overlay or the demand side aspect of conservation and efficiency as identified by the framework as meshing quite well with existing water rights framework.”
Eric Garner said a big issue for water suppliers is the financial issue. “Selling water is a revenue generator for people in the LA area. Those like Bruce who are strong advocates of less consumption of water because it does cause lots of impact. That means more recycled water and more stormwater capture; those are all good things and we need to diversify our water portfolio as much as possible but it costs money. At the end of the day, you're asking usually five people to vote to charge people for that, which okay, that's the job they signed up for but, selling less water makes that charge bigger.”
“No question, we should find a way to fund our infrastructure needs, but that’s not in the water rates,” said Mr. Garner. “Most agencies aren't there yet. It would be great to get some state help on that issue, but that's just a real fundamental challenge for local agencies in terms of doing the things that the want to do because no one wants to be in a position where they don't have enough water to serve their customers. That's not going to get you reelected. That's not what you're out there to do. So they want to do the right things.”
Question: In 2014, Governor Brown issued the California Water Action Plan, and conservation efficiency was part of that, but also part of that was the need for the state and regional and local entities to coalesce to build a robust and reliable water supply for the state of California. The problem I see with the regulations and the framework is it creates such an air of uncertainty for a water agency that may be contemplating building a water supply with a moving target out there … the regs have an effect on habits and actions that water agencies will take in the long run. The question is how do we tie those two together and make sure at the end of the day we don't fail our customers?
Brian Poulsen said that goes directly to the heart of what he was trying to articulate in his last comment. “In order to achieve real efficiency of water usage and conservation, you have to make a financial incentive for water agencies to do that. Because as we talked about, it costs a lot of money to plan for and build the infrastructure necessary to build the infrastructure necessary to provide a reliable water supply. It is true that the water code addresses the ability to conserve and retain the right in recycled water, and it's true that those sections of the water code have existed long before this conservation framework. But there are other hurdles that have historically prevented water agencies from the ability to truly take advantage of that incentive. Sometimes the water rights system sort of gets in the way of itself, and we've experienced that in our ability to sell conserved water … but to answer your question, we can achieve maximum efficiency by providing market incentives for water suppliers to encourage water conservation and still meet their mission of providing reliable water supplies.”
“The first thing I would say is, often times, people look at those as equals and I don't,” said Bruce Reznik. “There are hierarchies. If you want to raise money for more local infrastructure to build a recycling plant (which I support) or a desalination plant (which I don't because the energy intensity) – if you don't need to build that because you've just lowered your demand side, that's always the best option. It's the cheapest, it reduces runoff and energy so to me, you are reducing your demand.”
Mr. Reznik acknowledged that in terms of revenue, it’s tough and there is no easy answer. “It's an unenviable position because of all the hurdles that have been put in by Prop 218 and other types of things to raise rates. … Since I've been an LA water keeper and all my predecessors have been working our tails off to try to get rid of 218 … ultimately to be honest, I think we need to be more innovative in the way we look at water pricing. … The reality is, if your model is based on selling water and that's how you pay for your infrastructure, operations, maintenance, staffing and all that, and then you've got these hurdles like 218 that don't allow you to do tier pricing or other kinds of things that make it challenging to raise rates in general. You're setting it up for disaster and we need to change some of these laws.”
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