Existing law provides that all dams and reservoirs in the state are under the jurisdiction of the Department of Water Resources. Existing law requires the department to supervise the construction, enlargement, alteration, repair, maintenance, operation, and removal of dams and reservoirs for the protection of life and property. Existing law makes it unlawful to construct, enlarge, repair, alter, remove, maintain, or operate any dam or reservoir except upon approval by the department, as prescribed.

This bill would establish within the Natural Resources Agency the Division of Safety of Dams. The bill would transfer authority over dams and reservoirs from the department to the division.

Date of Hearing: May 16, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 3045

Author:(Gallagher) – As Amended Ver:April 25, 2018

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill transfers the authority over the State Water Project (SWP) from the Department of Water Resources (DWR) to a commission, established by the bill, in the Natural Resources Agency (NRA). Specifically, this bill:

1. Creates the State Water Commission (Commission) , a nine-member board appointed by the governor and confirmed by the senate comprised of the following members:
2. Three registered engineers with demonstrated experience in civil or hydrological engineering, as specified.
3. Two members with demonstrated experience in the fields of water rights, water conveyance, or water storage.
4. One member nominated by the Butte County Board of Supervisors.
5. Three public members, representing agricultural, environmental, and municipal water interests.
6. Authorizes the Legislature to remove a member of the Commission for dereliction of duty, corruption, or incompetency by a concurrent resolution adopted by both houses.
7. Authorizes the Commission to hire an executive director, who shall hire employees to carry out commission functions. Expressly subjects the Commission to open meetings law, establishes compensation and expense reimbursement provisions and requires the Commission’s headquarters to be in Sacramento, California.
8. Requires the Commission to administer the SWP and have full charge and control of construction, operation and maintenance of the SWP, as of July 1, 2019.
9. Requires the Commission to set all rates, charges, and revenues associated with the SWP.
10. Transfers all unexpended balance of funds from DWR to the Commission on July 1, 2019.
11. Requires the Commission to conduct an annual review of the progress of construction and operations of the SWP as specified.
12. Requires the Commission to hold public hearings on proposed new facilities, as specified.

FISCAL EFFECT:

The SWP accounts for 60% of DWR’s budget, including funds for state operations, local assistance, and capital outlay. Overall, these funds are used to support over 2,500 of 3,200 positions at DWR. Various other DWR activities are not SWP-related but are performed by employees that split their time between SWP and non-SWP efforts, creating efficiencies in the work these PYs perform.

The movement of SWP employees to a separate entity will require that the non-SWP functions that remain with DWR will need to be staffed without any SWP support. These efforts include: Division of Flood Management; Sustainable Groundwater Management Act implementation; Integrated Regional Water Management Program; Water Use Efficiency, including California Irrigation Management Information System and the Land and Water Use Program that supports local land use planning; restoration efforts not associated with mitigation; Division of Environmental Services; data collection for drought and other planning, including California Data Exchange Center, a primary river and hydrology data source for all of the state; the development of the California Water Plan; and Safe Drinking Water; Coastal Protection, Recreation, and Outdoor Access program.

If the SWP were to be “divorced” from DWR, the remaining programs of DWR would face cost increases to duplicate services currently supported not only from those remaining programs, but also the SWP.  IT services estimate a one-time $14 million cost to firewall the information technology service – essentially purchasing a separate system for one of the two “halves” of the current department.  In addition to the $14 million estimated for IT costs, there would be additional resources required for the management activities to be duplicated.  According to DWR, costs are very difficult to quantify at this time, but DWR believes costs would be at least $6-8 million per year, including the costs of the new Commission.

COMMENTS:

1. Purpose. As this bill was introduced, the purpose was to move the Division of Safety of Dams (Dams) to the Natural Resources Agency, to address concerns about conflicts of interest. Specifically, DWR, as the owner and operator of the SWP, and as the regulator of DOSD, may face an inherent conflict of interest as it regulates its own facilities.

The author’s concerns over this conflict of interest arose following the Oroville Dam emergency spillway failure and ensuing evacuation.

The Water Parks and Wildlife Committee staff proposed the amendments that are currently contained in this bill, which were adopted by the committee in its last policy hearing, without much opportunity for public notice or input.

1. Major Reform. This bill represents a major reform effort and raises numerous policy considerations that have not been vetted. In a letter to the Board, dated May, 8, 2018, the Metropolitan Water District of California (MWD) staff raised numerous issues. According to MWD:
2. The governance structure outlined in the bill fails to include any representation from the primary stakeholders that exclusively pay for the SWP and receive its benefits.
3. The bill fails to address its original intent of bolstering dam safety.
4. DWR staff functions and expertise will be split into two separate organizations.
5. The bill may delay critical time-sensitive decision-making through an added layer of government.
6. The bill could disrupt ongoing activities, such as capital improvement and refurbishment of SWP infrastructure, aqueduct subsidence repairs and ecosystem improvements.
7. The bill may impact legal issues related to water rights, permitting, and coordingated operations with federal agencies.
8. Is it Cheaper to Keep Her? Any policy decisions to “divorce” the SWP from DWR may have significant impact on the General Fund and should be made deliberately with that in mind and with a funding plan to hold the department and its employees whole.

The NRA must approve all legislative and budget proposals as well as major policy initiatives proposed by DWR and all other departments, boards, commissions, and conservancies located within the agency. It is unclear if moving the SWP from a constituent department to the agency will accomplish the independence desired.

If the re-organization of water functions in state government is contemplated, the author may wish to also look at the duties of the State Water Resources Control Board, particularly whether it makes fiscal sense to separate the water quality and water rights functions of the board, in light of this proposal.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 24, 2018

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Eduardo Garcia, Chair

ABPCA Bill Id:AB 3045 (

Author:Gallagher) – As Introduced Ver:February 16, 2018

SUBJECT: Natural Resources Agency: Division of Safety of Dams

SUMMARY: This bill would shift the Division of Safety of Dams from the Department of Water Resources to the California Natural Resources Agency. Specifically, this bill:

1. Establishes within the California Natural Resources Agency (CNRA) the Division of Safety of Dams (DOSD).
2. Transfers all authority over dams and reservoirs from the Department of Water Resources (DWR) to the new division under the CNRA.

EXISTING LAW:

1. Establishes the CNRA with oversight over the state’s parks, wildlife, fire, conservation and water planning agencies.
2. Establishes the DWR under the CNRA to function as the state’s main water planning agency including the ownership and management of the State Water Project (SWP).
3. Establishes the DOSD within the DWR, and authorizes the DOSD, among other authorities, to restrict the amount of water held behind dams under certain circumstances.
4. Requires, the DWR, as of July 1, 2017, to classify the public safety risk of all state jurisdictional dams and to revise the classification of a dam to reflect changes in downstream population, critical infrastructure, and land use.
5. Requires the DWR to inspect dams, reservoirs, and critical appurtenant structures within its jurisdiction once per fiscal year with the exception of low hazard potential dams which shall receive inspections, at a minimum, every two fiscal years.
6. Requires dam owners to disclose information sufficient to enable the DWR to determine conditions of dams, reservoirs, and critical appurtenant structures regarding their safety and to perform, at the owner’s expense, other work necessary to secure maintenance and operation that will safeguard life and property.
7. Requires the inspection to include, but not limited to, visual inspection of major features of the dam, including its groins, abutments, and toe areas, the dam’s spillway, and the dam’s outlet works. The inspection is to also evaluate seepage conditions and available instrumentation and geological data, as applicable.

FISCAL EFFECT: Unknown

COMMENTS: This bill would shift the Division of Safety of Dams (DOSD) from the Department of Water Resources (DWR) to the California Natural Resources Agency.

Author’s Statement:

We don’t allow any other industry to regulate itself, and state government shouldn’t be exempt from this, especially when it comes to infrastructure that protects our communities and supplies water to millions of people. The current organizational structure of our dam supervision and safety program undermines the regulator’s independence because the Department of Water Resources acts as both the regulator and as the owner of State Water Project Facilities. These functions should be conducted by separate entities so that safety isn’t sacrificed in an effort to control costs.

Background: Dam Safety Program. The DWR maintains a dam safety program that includes oversight of public and private dams. The program has evolved since the state began regulating regulated dams to prevent failure, safeguard life, and protect property in August 14, 1929.

They include annual maintenance inspections, construction oversight, application reviews, and re-evaluation of existing dams. Recent legislation (outlined below) placed further restrictions on dams should they not meet DOSD criteria during inspections. As an example, one of the options available to the DWR, should a dam fail any of the safety inspections, is to restrict the level of water behind the dam or appurtenant structure. This reduces the potential downstream danger from failure, and should mitigate possible inundation scenarios, until the dam or feature is repaired.

There are 1,250 dams in California subject to the program and that are inspected annually. These dams are currently classified in three categories consistent with federal definitions: high hazard (678); significant hazard (271); and low hazard (289). Two dams are under review for classification.

Flood Conditions in 2017. The heavy rainstorms in 2017 mostly ended the five-year drought in Northern California. Much of the Sierra Nevada saw its rainiest and snowiest October-February period on record. The heavy precipitation has caused flooding, levee breaks, and sinkholes throughout the state. Snowpack has been measured at over 160 percent of normal water content. Even after the rains stopped, the record high snowpack in the mountains generated high flows in the summer in many parts of the state.

Oroville Dam Disaster. On February 7, 2017, with heavy rains and runoff impacting reservoir levels at Oroville Reservoir, the DWR increased flows through its main spillway to 54,500 cubic feet per second (cfs). A large amount of debris was found coming out of the spillway, and after shutting down the spillway, authorities discovered a massive break in the spillway. As inflows increased, the lake reached capacity at 901 feet and water began flowing over the emergency spillway for the first time in history. Erosion progressed rapidly up the hillside on the emergency spillway, and on February 12, 188,000 people in towns downstream were evacuated due to the possibility of a failure of the emergency spillway.

The DWR then increased flows over the broken main spillway to 100,000 cfs with continued heavy inflows. Water levels decreased, and on February 14, residents were allowed to return to their homes. Over the next few months, the DWR primarily used the broken main spillway to lower lake levels. Periodic shutdowns were required in order to clear debris from the base of the dam which was impacting the ability to release water through the main hydropower plant at the base of the dam itself.

The DWR, in April 2017, sought bids to repair the main spillway over a two-year period, shored up the emergency spillway, and brought the main hydropower plant back online. As of January 2018, phase one of the construction repair has been completed in time for the rainy season. The repair project is on track to be complete by December 2018.

Following the disaster, the Legislature held extensive hearings on the dam failure, and passed a series of bills intended to increase dam safety and public information related to dam failures.

Concerns about State Water Project Conflicts of Interest. Concerns have been raised that the DWR, as the owner and operator of the SWP, and as the regulator of the DOSD, faces an inherent conflict of interest as it regulates its own facilities. The forensic team investigating the failure at Oroville dam found that the DWR was likely subject to significant pressures by the SWP contractors to control costs. Similarly, in its 2010 report “Managing for Change: Modernizing California’s Water Governance,” the Little Hoover Commission found:

Now complete, the (State Water) project functions as a utility and no longer fits in the Department of Water Resources, where it dominates the agenda of a state department that also is responsible for water planning and management and where these dual missions often conflict.

The Commission recommends that the state create a separate organizational structure to operate the State Water Project as a state owned entity with an independent board whose members represent the interests of the state as a whole, including a robust economy and the “reasonable and beneficial” water use that the state constitution requires.

The Little Hoover Commission further recommends that “water rights permits and licenses held by the DWR should be relocated with the project. This would remove the structural conflict to joining the water rights function and the water planning and management functions while also allowing a new Department of Water Management to have independent regulatory oversight of the project through the added perspective of statewide management and planning. Such a structure should provide it with the operational flexibility enjoyed by the water districts that are its customers for water as well as its competitors for employees and electricity.”

Over the past several years, there have been many discussions and debates about the role of the SWP in coordination with the DWR and its planning functions. The inherent conflict goes further than the DOSD, and includes fiscal, water rights and license holdings. For example, when the SWP renegotiates licensing with the Federal Energy Regulatory Commission, it has, in the past, agreed to include projects that, in turn, increased costs to the general public either directly (such as expanding recreation areas that are managed by the Department of Parks and Recreation), or through the Davis-Dolwig Act which, as described by the Legislative Analyst’s Office (LAO) leaves up to the Legislature how to fund mandatory recreation benefits created by the SWP:

Chapter 867, Statutes of 1961 (AB 261, Davis)—the Davis-Dolwig Act—states the broad intent of the Legislature that SWP facilities be constructed “in a manner consistent with the full utilization of their potential for the enhancement of fish and wildlife and to meet recreational needs.” The DWR is charged with implementing the act as part of planning for construction of SWP facilities. The Davis-Dolwig Act does not provide criteria specifying what kinds of recreation facilities or fish and wildlife enhancements are to be developed, nor does it require legislative review or approval of such facilities or enhancements that DWR chooses to develop in the course of implementing the law. The Davis-Dolwig Act states that the cost of fish and wildlife enhancements and recreation is a non-reimbursable cost to SWP contractors. That is, under the act, DWR is not to include costs of fish and wildlife enhancements and recreation in charges levied on the SWP contractors. The act states the intent of the Legislature that such costs be paid for by an annual appropriation from the General Fund. The act, however, did not actually appropriate any General Fund monies to pay for Davis-Dolwig costs. Since one Legislature cannot bind another Legislature to a future action, and the State Constitution prohibits the Legislature from creating certain debts or liabilities without voter approval, we are advised that the intent language of Davis-Dolwig does not create a legal obligation for the General Fund to cover the costs of these fish and wildlife enhancements or recreation. It is up to the Legislature, at its complete discretion, whether to provide funding in accordance with the act.

The LAO made several recommendations to improve fiscal oversight of funding resulting in SWP negotiations and in the end, the Legislature chose to require the SWP to bring any new contracts before it prior to finalization.

Other State and Large Water Project Models. The author discusses that, unlike California, the large state-owned water projects in the west are run by independent entities. This includes projects in Utah and Arizona, serving the arid southwest. A debate may be had about whether these systems favor the investors in the project or the state’s water systems—however California remains the outlier in its management of its state-owned project. Similarly, the state is home to numerous large water delivery systems that are managed by independent and public entities. San Francisco Public Utilities Commission, East Bay Municipal Water District, and Metropolitan Water district all provide wholesale water to California’s population centers. Each has an independent board with public meetings to make decisions about projects, including those affecting other Californians. Mitigation, water rights, and streamflow are still regulated through the State Water Resources Control Board in a public manner.

Considerations/Committee Amendments. The Committee suggests that, rather than moving the DOSD out of the DWR, where it functions as part of the state’s water planning and regulatory functions, that the author’s intent to remove conflict would be better served by creating an independent and separate organizational structure for the SWP, as proposed by the Little Hoover Commission. In order to maintain oversight of the SWP and to ensure the state’s investment is achieved, this could be done as a division under the California Water Commission or as an independent agency under the California Natural Resources Agency. Because of the challenges created by moving water from the watershed to water users, the board should include representation of that area, such as from Butte, Plumas or Shasta Counties.

Related Legislation: The Legislature recently opined on the functions of the DOSD in a series of bills related to dam safety.

SB 92 (Committee on Budget), Chapter 26, Statutes of 2017 and AB 1270 (Gallagher), Chapter 3, Statues of 2018. These bills, among other things, and after extensive hearings on dam safety, including a May 11, 2017, joint hearing on the Oroville Dam disaster with Assembly Budget Subcommittee No. 3, Water, Parks and Wildlife Committee, and the Accountability and Administrative Review Committee, were passed and signed by the Governor, in part in response to the issues raised in that hearing.

SB 92, among other things:

1. Requires the DWR to complete a reconnaissance of the geologic, hydraulic, hydrological, and structural adequacy of the identified 108 largest spillways in the state by October 1, 2017. By January 1, 2018, the DWR shall complete a thorough site investigation and evaluation of those spillways that are found to be potentially at risk. Immediate action such as emergency repairs or reservoir operation restrictions will be required of dam owners as necessary to reduce the risk of any spillway identified to be in poor condition as a result of the study. The DWR shall complete evaluations of the remaining spillways by January 1, 2019, and direct dam owners to make required repairs or restrict reservoir operations as needed.
2. Proposes the DWR re-classify jurisdictional dams as extremely high-, high-, significant- or low- risk. The DWR will require inundation maps and Emergency Action Plans for all jurisdictional dams allowing a waiver for low hazard dams. During regular inspections, the DWR will track any dams where the hazard classification has changed and reassess the waiver as necessary.
3. Requires the DWR to identify which scenarios beyond a complete dam failure require a separate inundation map. The dam owner will create the inundation map and submit the map to the DWR, which then will be reviewed and approved by the DWR's Division of Flood Management. The approved maps will then be posted publicly on DWR's website and linked to the California Office of Emergency Services (Cal OES) website.
4. Provides the DWR additional enforcement power over dam owners who are not complying with the new emergency plan/inundation maps requirements. The trailer bill also revises the Water Code to incorporate penalties such as fines and reservoir operation restrictions when dam owners violate the DWR's directives and orders.

AB 1270, among other things:

1. Repeals provisions related to dam safety and inspection, and instead would require the DWR to inspect dams, reservoirs, and appurtenant structures within its jurisdiction every fiscal year if the facility is classified as significant, high, or extremely high hazard, and every two fiscal years if the facility is classified as low hazard. Inspections must include visual inspection as well as review of geologic data, evaluation of seepage, among others.
2. Requires annual operation of critical outlet and spillway control features, and demonstration of the operability of these features in the presence of the DWR every three years or as directed by the DWR.
3. Requires the DWR, in consultation with independent, national dam safety and dam safety risk management organizations to, on or before January 1, 2019, and every 10 years thereafter, propose amendments to its existing dam safety protocols to incorporate updated best practices, including risk management, to ensure public safety. This information would be required to be placed on the DWR Internet Web site.
4. Requires the DWR to report to the Governor and the Legislature on amendments developed pursuant to these provisions.

REGISTERED SUPPORT / OPPOSITION:

Support

County of Butte

Opposition

None on file

Analysis Prepared by: Catherine Freeman / W., P., & W. / (916) 319-2096