At the July meeting of the Metropolitan’s Special Committee on the Bay Delta, committee members received an update on the California Water Fix project, including a report on the recent meetings of the Delta Conveyance Design and Construction Agency and the Delta Conveyance Finance JPA. They were also briefed on the State Water Board’s update to the Bay Delta Water Quality Control Plan.
CALIFORNIA WATER FIX UPDATE
Public Agency Participation
Steve Arakawa, Manager of Bay Delta Initiatives, began with an update on California Water Fix. He presented a slide showing recent actions from other State Water Project contractors approving the project, and noting that most recently the Crestline-Lake Arrowhead Water Agency approved the project in early July.
July meeting of the Delta Conveyance Design and Construction Authority
The Delta Conveyance Design and Construction Authority (DCDCA) met in mid-July. The DCDCA is the entity that would be under agreement with the Department of Water Resources to be responsible for the design and construction of the facilities. There are 5 seats on the board of directors, four of which are already filled: Metropolitan has two seats, represented by Directors Richard Atwater and Steve Blois, Santa Clara Valley Water District has one seat occupied by Tony Estremera; and the other State Water Contractors are represented by Sarah Palmer, board member with Zone 7. A position is being held for Kern County Water Agency as they have not yet taken the action to join the Authority yet.
Tony Estermera is the president; Richard Atwater is the vice president, and Sarah Palmer is the secretary.
The DCDCA met in mid-July. The board ratified the actions taken in May at its first meeting including authorizing the agreements with the interim Executive Director Jill Deurig and interim General Counsel Stephanie Morris. The DCDCA also authorized negotiating a lease for office space; authorized professional services agreement to provide financial controls and scheduling support services with the Hallmark Group; and authorized a document retention policy.
The main action at the meeting was the board approval of the budget of $134 million for 2018-2019. Mr. Arakawa noted that the budget has a large contingency of $42 million which is to deal with things such as the timing of when actual bonds may be issued and sold. The objective of the parties in the JPA is to be in the position to begin bond financing a year out from this period in time, so the budget is set up to provide for expenditures over the next year and the contingency that takes into account that there may be a schedule change with the beginning of bond financing, he said.
The DCDCA has issued an RFQ or Request for Qualification process to secure an engineering design manager, geotechnical services, real property services, and survey and mapping. They will be conducting interviews for the respondents beginning in August, with expectation of reaching a decision at the Board’s October meeting. If the Board takes action in October, there would be a notice to proceed expected in November.
Delta Conveyance Finance Authority meets for the first time
The Delta Conveyance Finance Authority also met for the first time in July. The Finance Authority is an entity with the single purpose of securing financing for the project by issuing, selling, and delivering bonds, and refunding bonds or notes. The parties to the finance JPA are participating public water agencies. Some water agencies have taken action to join the finance JPA; this allowed for the execution of the JPA agreement in early July. The term of the JPA is for 50 years or until all bonds have been paid.
The Finance JPA will be governed by a Board of Directors; for administrative matters, each director will have one vote, but for finance decisions or additional bond issuances, the decision making would be based on weighted vote, taking into account the amount of responsibility of financing that each entity has. The Finance JPA will have an executive director and other staff as necessary but will likely be small staff-wise.
The Finance JPA was formed on July 3rd as Alameda County Flood Control and Zone 7 voted to join the Finance JPA. Since then, Metropolitan, San Gorgonio Pass Water Agency, and Santa Clara Valley Water District have taken action to join the JPA.
At the first meeting, Chair Randy Record was voted in as president; Gary Kremen, Santa Clara Valley Water District board member was voted in as vice president; and Jeff Davis, General Manager and board member from san Gorgonio Pass Water Agency, was voted in as Secretary. The JPA agreement provides for additional members joining the JPA board as individual contractor entities vote to join the finance JPA.
Other actions taken at the first meeting of the Finance JPA were to approve a professional service agreement with Michael Bell Management Consulting, Inc., to retain Brian Thomas as Interim Executive Director; they authorized Executive Director to negotiate and execute a services agreement with the Metropolitan Water District to provide treasury/controller and accounting services; and they also authorized sending letter of interest for Water Infrastructure Finance and Innovation Act (WIFIA) program assistance for $1.6 billion in loans for a portion of Water Fix.
Cal Water Fix hearings at the State Water Board
Next, Mr. Arakawa turned to the State Water Board hearing for the petition for adding points of diversion on the Sacramento River. The hearing began in July of 2016. It had two parts; Part 1 was the potential impacts to other legal water right holders, and that part is complete. Currently, they are in Part 2 which are the impacts to fish and wildlife; they will be starting the rebuttal phase on August 2nd.
“Once that rebuttal phase is completed, and depending on whether they have sur-rebuttal, we could be looking at the completion of the live hearings coming up soon here in the next two months or so,” he said. “Then the Board would have to take all the information on the record and determine how it puts together its decision making. We have no timeline from the State Water on how they would handle that. Obviously there still remains an interest from various corners to provide for the opportunity for a State Water Board decision some time by the end of the year.”
The changes include reducing impacts to wetland areas; addressing the locations of shafts for access or retrieval of tunnel boring machines; changing the locations for where reusuable tunnel material will be temporarily placed, reducing power line needs, reducing some of the impacts to the town of Hood, and some realignment in the south Delta to avoid sensitive wetland areas and to modify the approach in that area.
“The result of the supplemental EIR is that the refinements do not increase the impacts overall of the project, but the state is going through that analysis and disclosing both how they would do the refinements and how they would deal with each of the areas,” said Mr. Arakawa.
Certification of consistency with the Delta Plan
The Delta Reform Act established the Delta Stewardship Council and established the state’s policies of coequal goals for the Delta for water supply reliability and protecting, restoring, and enhancing the ecosystem in the Delta. Under the Delta Reform Act, the Delta Stewardship Council has the responsibility for administering the Delta Plan that was adopted in 2013. As part of the process, the Council receives a certification from project proponents that the action is consistent with the Delta Plan.
Continuing efforts include negotiating a master agreement with the Department of Water Resources for how the 3000 cfs portion of the tunnel would be managed and how that agreement would work between Metropolitan and the Department of Water Resources, Mr. Arakawa said. There is an interest from the Santa Clara Valley Water District, who is both a State Water Project and a Central Valley Project contractor, to secure a portion of the unsubscribed capacity to allow for conveyance of its federal water through the tunnels.
“They have been talking with Metropolitan and they took an action to their board to get authorization to negotiate an option agreement,” he said. “What’s in front of us is to actually get a master agreement with DWR and set up the opportunity to negotiate and execute and option agreement with Santa Clara, and on their end, they are working with the Bureau of Reclamation to provide the support they need on the federal side.”
As water contractors look to manage their supply and their costs, in recent months, there has been negotiations between the contractors and the Department of Water Resources to look at amendments to the contract to provide for enhanced abilities to transfer water on a multi-year basis and on a single-year basis which build upon the water management tools that are in the existing contract, he said.
“That process led to an agreement in principle that we’ll be reviewing with our Board in the coming months,” he said. “That agreement would require actual contract language for the contract amendment and that will be going in front of the Board for approval. The reason I mention all of that is because for any party looking to do multi-year transfers as part of their effort to manage supply and manage costs, they would be looking to this contract amendment to provide the contract support to do that.”
Director Steiner asked if the Metropolitan is going to finance the unsubscribed portion of the project at all through the JPA.
General Manager Jeff Kightlinger indicated that the answer might be yes. “It would make a lot of sense to keep all the financing kept together in one place, but we haven’t made a final determination on that. Obviously we looked at what is the most cost effective way to do that.”
Another director asked about status of negotiations with respect to the master agreement with DWR.
Assistant General Manager Roger Patterson said they have not done a lot of work on that. “It’s getting cued up. There was a rough term sheet we shared with the Board and that’s basically where it sits. Part of the reason for that is the Department of Water Resources has been totally swamped with getting the consistency determination for the plan done and getting the Supplemental EIR out on the street, as well as some of these other things, so they are pretty well swamped, but they have identified the people they will have on their negotiating team if you will, as Metropolitan’s, so we’ll be moving to that fairly shortly because that master agreement needs to be done before we have anything we can option into with Santa Clara, for instance, so it’s essential.”
Regarding the proceedings at the State Water Board for the change in point of diversion for Cal Water Fix, Director McKenney asks if Mr. Arakawa if he has an any feel for how it’s going at the Board.
“It’s not done,” said Steve Arakawa. “We are in the rebuttal phase for the change in point of diversion, so it’s certainly not completed. It’s quasi-judicial, which means you provide testimony under oath, usually you’re testifying as an expert in certain areas. There has been at times wide ranging testimony and wide ranging witnesses; the State Water Board has the real challenging situation of trying to sort out how much of this is backed up by substantive technical support and how much of it is not, and that’s going to have to go into their decision making. I wouldn’t want to say where it’s headed right now because I don’t think we’re done yet. I think it’s yet to be seen. On the Department’s side and the coordination with the contractors, everybody is doing the best they can to make sure that the State Water Board has a strong record to work with.”
UPDATE ON SWB WATER QUALITY CONTROL PLAN PROCESS
Jennifer Nevills, Senior Resource Specialist with Metropolitan, next updated the Committee members on the ongoing process at the State Water Board to update the Bay Delta Water Quality Control Plan.
The water quality control plan for the Bay Delta is to meet requirements for the federal Clean Water Act as well as the state Porter-Cologne Act. The plan identifies beneficial uses of water such as municipal uses, agricultural uses, fish and wildlife, agriculture, and recreation and then adopts water quality objectives for those beneficial uses and sets standards to meet those objectives.
The plan is subject to a periodic review. This update has been in progress since 2009 and the Board is currently working to update the 2006 water quality control plan. The update is unrelated to the hearings underway for the change in point of diversion for California Water Fix.
The process to update the water quality control plan is occurring in two phases. Phase 1 is for the San Joaquin River and Southern Delta water quality objectives; Phase 2 relates to the Sacramento River and tributaries coming directly into the Delta as well as interior Delta flows and cold water.
“This is important because it essentially sets water quality standards in the Delta, so they set salinity standards and flow standards, and it can directly affect our export capabilities for the State Water Project and the CVP,” Ms. Nevills said.
Throughout the process, Metropolitan has been involved in the process to update water quality control plans and and working with the State Water Contractors to provide input throughout the process. In general, Metropolitan has concerns about the unimpaired flow approach and the science and methods behind using unimpaired flows and correlating that to species abundance. They have also stated their concerns with implementation, telling the Board that they should consider development of comprehensive solutions, which has involved into a voluntary settlement process. She noted that over the course of ten years, they have submitted literally hundreds of pages of comments.
Ms. Nevills then expanded on the unimpaired flow approach. The State Board defines unimpaired flow as the natural production of a river basin as if it was unaltered by diversions, storage, import or export from that basin, so essentially what would have happened had there been no development in that basin, she said, noting that they recommend a percent of that unimpaired flow to be outflow into the Delta and out of the Delta.
“On it’s face, it sounds like a reasonable thing that water that falls in the watershed should go out the Delta,” she said. “But for a couple of reasons, it’s not a good indicator of what the natural flow in the system used to be, and it’s also not necessarily a good indicator of improved species abundance in the current highly altered Delta ecosystem. It’s a very different place then it was 150 years ago.”
She explained that in the natural Delta, the flows regularly spread out into the Valley and into the floodplains, infiltrating into groundwater, and they took their time coming back in to the Delta as outflow. She also noted that a lot of outflow was taken up by the vast wetlands and vegetation and essentially was evapotranspirated, or used up.
“So both in timing and quantities, unimpaired flow is very different from what would have occurred in a natural Delta system,” she said. “In fact, current outflow is more similar in quantity to natural Delta outflow than unimpaired flow is, so the unimpaired flows approach gives a larger quantity then what currently flows out or would have flowed out in the natural Delta.”
The State Water Board recently released two documents for the update. The first was for Phase 1, which has to do with the San Joaquin and the Southern Delta salinity standards. The Board is near the final stages for Phase 1; they released the draft final CEQA document earlier this month. For phase 1, they are proposing flow requirements for the main tributaries to the San Joaquin River, the Stanislaus, Tuolumne, and Merced, of 40% of the unimpaired flow that would be required as outflow from those tributaries; they provide for an adaptive range of 30 to 50%. They also add a minimum flow standard in the Delta for February through June at Vernalis, and if those flows were not meeting that minimum flow standard, those tributaries will have to make additional releases to meet that minimum. In addition, it includes some modified salinity standards for the south Delta as well as additional monitoring locations.
The implementation for Phase 1 is more defined then for Phase 2. The Board calls for the establishment of a working group for the tributaries that would include water users on those tributaries as well as federal and state fisheries agencies and the State Board itself; those groups would work to provide recommendations for biological goals, adaptive management, and operations.
The proposal also calls for developing specific biological goals for salmonids, such as abundance, population, distribution of population, and habitat – things that can be measured and tracked on a timeline, she said. They are looking for very specific things to gauge success in this program, and they would move within that adaptive range of 30 to 50%. In addition, it creates additional monitoring and evaluation and reporting types of requirements.
For Phase 2, the Board released a framework document. Phase 2 is not nearly as far along as Phase 1, although additional steps will be taken to get Phase 2 to that point. The framework document proposes tributary flows on the Sacramento and the tributaries that flow directly into the Delta from the east side tributaries of 45 to 65%.
The framework document for Phase 2 also covers the Delta itself. They have a number of flow objectives for the Delta; one is the cold water habitat narrative which are essentially words describing what they want, such as sufficient quantities of habitat at suitable temperatures that are maintained to support passage, holding, spawning, incubation, and rearing of salmon.
Phase 2 also has Delta outflow and interior Delta narratives. Ms. Nevills said it is the inflow-based Delta outflow objective that she thinks is key to the update. “Essentially what the inflow-based Delta outflow objective does is it requires all of those tributary flows to also be outflow from the Delta, so it’s not a case where the tributaries release more water and then the pumps pick it up,” she said. “There’s an equal requirement for that water to flow out through the Delta. It also wraps in the current biological opinion requirements, so there is a fall outflow requirement commonly called Fall X2 and some interior Delta flow requirements that are being folded into this plan.”
The plans for implementation are not as far along as the Phase 1; the framework document simply states that these tributary flows would be for each tributary and that monitoring and compliance points for each of those tributaries would be established.
“It does provide additional guidance on implementation and voluntary agreements, which I think is a good step forward,” said Ms. Nevills. “Some of those requirements are that it could be developed by individual tributaries or groups of tributaries, it must provide flow within that adaptive range of 45 – 65%, or it must provide flow and non-flow actions that achieve comparable ecological benefits, so they are looking for things that achieve the ecological functions that they are looking for. Any sort of voluntary agreement would be subject to consultation with fisheries agencies and concurrence with the Department of Fish and Wildlife and the State Board itself.”
Ms. Nevills then showed how the proposal stacks on top of the current requirements. “Currently under water rights decision D-1641, there are a number of requirements in place that we operate under today,” she said. “Some of the major ones are spring outflow requirement, there is an export-inflow ratio so essentially limits exports depending on how much water is coming into the Delta, and there are different restrictions on operating the Delta Cross Channel gates, and those are operated for water quality purposes.”
“With these proposals as they are, it would layer on those San Joaquin inflows and the minimum base flows,” she continued. “It would add the Sacramento River and tributary inflows, and then there’s that inflow based outflow requiring that the water from those tributaries to be outflow from the Delta. In addition to that, it also rolls in the biological opinion restrictions that we already operate under – the Fall Outflow and the Inflow-Export ratio has to do with the San Joaquin, so it just folds all of those additional requirements into this plan.”
“Those requirements wouldn’t be on top of what we’re currently doing but they would be folded in,” she said. “There’s some language in the document that indicates that they would update those requirements as the biological opinions change, but they have the right to keep them in place, also. So we could get relaxation on the Fall X2 biological opinions and they would have the option to keep the requirement as it is.”
With respect to California Water Fix, it’s not clear what the new requirements mean in terms of water costs to the project if the update to the water quality control plan is adopted and implemented as proposed. She said that she’s seen some estimates and it’s a pretty big number but it’s very unclear where that water would be coming from. “What’s really important when talking about Water Fix is to think about the shifting baseline,” she said. “The water quality control plan update is happening with or without Water Fix. This is a change from now into the future, and I think it’s important to note that this is why we talk about Water Fix in comparison to that future baseline rather than current conditions, so we always look at the future with and without Water Fix. We can see something like this would significantly change the situation from current.”
To look at Water Fix in the future, you have to consider the restrictions that would be in place and then what sort of value does Water Fix provide in that situation. “I think in general, it provides pretty much the same sorts of benefits. I took this slide directly from our Water Fix presentation from last July, I think it’s pretty much unchanged, so it provides that flexibility to work around fishery issues, work around some of the reverse flow issues, it also provides the same sorts of seismic and climate change mitigation, so I think in a nutshell, we don’t have a specific number, that’s not available yet, but we have an idea that it still provides that flexibility over not having it in the future.”
Ms. Nevills also noted that there is a process in the works to develop voluntary settlement agreements. In September of 2016, Governor Brown sent a letter to the State Water Board Chair Felicia Marcus, asking that they pursue voluntary agreements and asked that their staff give time and focus to implementing potential voluntary agreements. At that point they hired the former Interior Secretary Bruce Babbitt to facilitate that process between all of the parties.
“This would potentially include all of the tributaries and the Delta to bring together packages of flow and non-flow actions that would meet those state board requirements for voluntary settlement,” she said. “So there is a process in place, and the goal is to get to a comprehensive solution that’s more durable and more acceptable and provides those ecological benefits that the State Board is seeking. It would be a lot more implementable then proceeding to a water rights decision process to implement these plans.”
In the past, Ms. Nevills pointed out that there have been some great examples of successful implementation of voluntary agreement, such as the Yuba Accord and the Bay Delta Accord.
Comments on the Phase 1 document were due on July 27; Metropolitan is developing their comments with the State Water Contractors and will submit those by the deadline. The public meeting for adoption of Phase 1 is scheduled for August 21st and 22nd. The State Board is planning to receive comments and can potentially adopt the Phase 1 document at the time.
Phase 2 is several steps behind Phase 1, but a staff report is expected later this year. “Metropolitan will continue to work through those voluntary settlements to build something more durable and lasting than this proposal,” Ms. Nevills said. “And of course we will continue tracking this as staff and report back to your board when things come up.”
Director Mc Kenney asked if the State Board is asserting in this process that their proposal bears any rational relationship to the way it has been for the last 100 years. “Have they decided what water is available for appropriation, or are they just saying that they are rewriting everything?”
“I’m not a water rights expert, but what I’ve seen is that they are equally pursuing water from senior water rights holders all the way down, so there is no distinguishing priority in wanting that unimpaired flow,” she said.
“Except that they’ve created a new higher priority than everybody else,” noted Director McKenney.
“Right now, they are laying out goals and benchmarks for where they are trying to go, and then you’d have to go through the water rights proceedings process and if they were to finally get there,” said General Manager Jeff Kightlinger. “But they are essentially putting people on notice that these are the kinds of goals we want to achieve. The whole reason people often go the voluntary settlement route is because the State Water Board through the CWA and Porter Cologne, their jurisdiction is over water quality and water quantity. They really can’t get at all of the land use issues, like dealing with predator species or developing habitat, so when you put together a package that says, we’re not going to put all the same water quantity out there to achieve your goals, but we can do these various steps on removing pollution, addressing habitat, dealing with predators, and some water, often they say, well that’s a better package than we could have reached with our limited tool kit, and so we’ll accept that as equivalent. That’s where by laying out this benchmark, they are putting people on notice that if you’re going to come to us with settlements, please look at these issues.”
Director Peterson then closed the meeting with an observation. “Nancy Sutley probably asked the most important question in this committee some ten years ago, and that was the issue of, there’s only so much water, who gets it? Do the salmon get it or the smelt get it, because they have different needs and if you only have so much water, you can only go one way or the other, and who is to play God here? It seems to me the state has got a real issue in that they are creating laws which are good, like SGMA. To me, SGMA is a great law, but it counters this law or this ideal or goal of the state in that you’re going to take water that would be filling up groundwater basins potentially and running it out to the sea, so it seems to me at some point, rather than arguing these things the way we do, the state legislature needs to sit down and prioritize what they want. Do they want groundwater basins, do they want free flow to the ocean, do you want the salmon to survive, do you want the smelt survive? and make those decisions because the courts don’t do it very well.”