Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 441

Author:(Eggman) – As Amended Ver:March 27, 2019

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

SUMMARY:

This bill revises the beneficial use doctrine for water rights to provide the diversion of water to underground storage, including the diversion of water for groundwater recharge, constitutes beneficial use for which an appropriation may be made if the diverted water is put to beneficial use.

Additionally, this bill provides the forfeiture periods of a water right do not include any period when the water is being used in the aquifer or storage area or is being held in underground storage for later application to beneficial use.

FISCAL EFFECT:

1. The Department of Fish and Wildlife (DFW) anticipates a significant increased workload and associated costs of $1.7 million annually (General Fund).

Because this bill adds the beneficial use of groundwater storage while eliminating the five-year forfeiture period, DFW anticipates numerous agencies applying to store surface water underground to achieve their groundwater sustainability goals under the Sustainable Groundwater Management Act (SGMA), among other water rights applications.

DFW, as a trustee agency, is required to review and comment on every water right petition.

1. According to the State Water Resources Control Board, this bill will not result in additional costs.

COMMENTS:

1. Purpose. According to the author:

Currently, diversion to underground storage is considered a beneficial use only if the surface water is stored in the ground and then subsequently extracted for a consumptive beneficial use. Some of the beneficial uses defined in current regulations include recreational use, domestic use, irrigation, power generation, and municipal and industrial use, but prevention of salinity intrusion and subsidence are not included.

The withdrawal and beneficial use of that stored water has to occur within five years or the right to that water is forfeited. This creates a perverse incentive, and fails to account for the fact that there is a need to recharge aquifers for reasons other than later consumptive use. There are inherent benefits to having water underground, including the protection of water quality and prevention of subsidence.

1. Background. California's system for surface water rights recognizes both riparian rights and appropriative rights. Riparian rights are based on applying water from a stream or watercourse to the adjoining land. Appropriative rights allow a person to acquire a right to divert, store and use water regardless of whether the land it is used on is adjacent.

An appropriative water right is based on the concept of "first in time is first in right" and is generally subject to the issuance of a permit by the State Water Board with the exception of pre-1914 appropriative rights (those water rights initiated before 1914, when the Water Commission Act took effect).

Groundwater storage or recharge refers to the injection of surface water into the aquifer.

1. Reasonable and Beneficial Use. California's water law and policy, Article X, Section 2 of the California Constitution, requires that all uses of the state's water be both reasonable and beneficial. It places a significant limitation on water rights by prohibiting the waste, unreasonable use, unreasonable method of use or unreasonable method of diversion of water.

A portion of an appropriative water right that is not used beneficially during a five-year period may be considered abandoned and available for use by others.

This bill eliminates the five-year forfeiture period.

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

Date of Hearing: March 26, 2019

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Eduardo Garcia, Chair

ABPCA Bill Id:AB 441 (

Author:Eggman) – As Introduced Ver:February 11, 2019

SUBJECT: Water: underground storage

SUMMARY: Allows stored groundwater to be declared a beneficial use for purposes of water rights. Specifically, this bill:

1. Revises the beneficial use doctrine for water rights to additionally provide that certain uses of groundwater storage constitute beneficial use. These include:
   1. Protection of water quality.
   2. Recovery of groundwater levels.
2. Provides that the forfeiture period of a water right does not apply to water being beneficially used, or being held in storage, for a later use.

EXISTING LAW:

1. Recognizes that water resources belong to the people of the state but that individuals can hold rights to use water. (Water Code [WC] §102)
2. Recognizes two primary forms of water rights:
   1. Riparian rights, which are based on applying water from a stream or watercourse to adjoining land; and,
   2. Appropriative water rights, which attach when an entity, whether or not it borders a water course, is the first in time to divert the water and use it in a way that is both reasonable and beneficial. (WC §101)
3. Specifies that any portion of an appropriative water right that is not used beneficially during a five-year period may be considered abandoned. Technically, it means that volume of water reverts back to the public and may be available for use by others. (WC §1241)
4. Allows water that is stored underground to be considered to have been beneficially used if the following three things happen:
   1. The purpose for which the water was later used was identified at the time of storage;
   2. The use that was identified was considered beneficial; and,
   3. The water was actually applied to that use. (WC §1242)

FISCAL EFFECT: Unknown. This bill is keyed fiscal.

COMMENTS: According to the Author, this bill is needed to allow the improvement of water quality and the prevention (or reversal) of subsidence to be considered a beneficial use. Both of these actions would require water to be held in groundwater storage for a period of multiple years, if not decades.

Author’s Statement:

Protecting groundwater and groundwater basins is critical for the environment, agriculture, and our communities. The need for groundwater recharge was recognized by the previous administration during discussions on the Sustainable Groundwater Management Act, but the beneficial use question was abandoned when a solution did not quickly materialize. The legislature passed the Act because we recognize as a state that groundwater and basins are a critical component of our water system.

An aquifer can be recharged naturally or artificially, and is critical to managing groundwater sustainably and preventing groundwater aquifers from being permanently damaged by overdraft. Overdraft reduces water supply, increases pumping costs, and may lead to high costs of replacing or deepening a well, which disproportionately affects rural landowners and small-scale farmers. A permanent consequence is land subsidence, which is mostly irreversible. Recharging aquifers helps prevent damage from overdraft and can also protect water quality, such as serving as a barrier to saline water intrusion and other contaminants.

Currently, diversion to underground storage is considered a beneficial use only if the surface water is stored in the ground and then subsequently extracted for a consumptive beneficial use. Some of the beneficial uses defined in current regulations include recreational use, domestic use, irrigation, power generation, and municipal and industrial use, but prevention of salinity intrusion and subsidence are not included.

The withdrawal and beneficial use of that stored water has to occur within five years or the right to that water is forfeited. This creates a perverse incentive, and fails to account for the fact that there is a need to recharge aquifers for reasons other than later consumptive use. There are inherent benefits to having water underground, including the protection of water quality and prevention of subsidence.

Groundwater Storage in California. Recent actions related to groundwater have focused on applying a growing body of science to the law. Groundwater remains the greatest water storage asset in the state. According to the Department of Water Resources (DWR), storage from all major reservoirs in the state totals less than 50 million acre-feet (AF). Groundwater capacity is estimated at between 850 million and 1.4 billion AF. As has been widely reported, however, this capacity figure is reduced by water quality issues. Salinity, chemical concentrations, and degradation of groundwater basins is a challenge to utilizing groundwater to the fullest extent possible.

Converting the status of water that is "parked" underground from an intermediary point on the beneficial use continuum into an end point has complex ramifications to the existing water rights system, and beneficial use doctrine, with far-reaching consequences.

Beneficial Use Doctrine. Beneficial use is a fundamental principal of water rights law. The doctrine defines and limits, on an ongoing basis, the scope of an appropriative water right. It is the difference between a "paper" water right – a document asserting that an individual has the right to a specific amount of water, whether they have used it or not – and a "wet" water right, meaning a water right of continuing validity because the amount of water described has been reasonably, beneficially, and continuously used.

The difference between the two does matter. California is an arid state. The beneficial use concept was born out of recognition that economic opportunities, from gold mining to farming, are tied to the availability of water. The concept rewards those intrepid individuals who are "first in time" to put the water to use and gives them water rights senior to all others who come after. Later, the doctrine was modified to prohibit the squandering or hoarding of water by limiting the legal right to only that portion that is used reasonably and continuously.

The seniority of a water right is important. In times of shortage the most senior water rights holder receives all of his or her allocation, and then the next most senior, and so on and so forth. The most junior water rights holders might receive nothing. Some junior water rights holders during the recent extended drought were required to cease withdrawals so that senior water rights holders would be kept whole.

This bill could potentially allow a senior water right to be created, enlarged, maintained, or all three, upon the assertion that a recharge of groundwater from overlying land occurred. There is no requirement that the action be deliberate or not otherwise a waste of water, such as from flooding a field or leaking from a ditch. A claim to the amount of water in recharge could then be sold or transferred. Perhaps more importantly, the portion of water diverted to recharge would be denied to downstream water users.

Of particular concern to those recharging groundwater basins—and the beneficial use doctrine—is the potential loss of water right should water be held in storage for a longer period of time. This concept is likely if the reason for recharging the basin is, in fact, to reverse the long process of water withdrawal. This is somewhat akin to the filling of a surface water storage facility. It is unlikely that the water in the lowest areas of the reservoir will ever be used—many times this water is below the lowest penstocks, where water might be released. This water may remain in place for decades—and no consideration of the beneficial use doctrine has been invoked for these areas in recent years.

This raises the question, if water is stored for many years—decades, for example—should there be a consideration for this long-term storage under the beneficial use doctrine?

Recent Public Policy Institute of California (PPIC) Report. In April 2018, the PPIC released a report titled Replenishing Groundwater in the San Joaquin Valley. The report surveyed valley water districts’ current recharge efforts and “revealed strong interest in the practice, and a number of constraints.” These include:

• Clarify rules on water availability for recharge. “The State Water Board needs to develop an expeditious process for enabling water users to capture surface water when it is available.”
• Evaluate infrastructure capacity—essentially evaluating conveyance and storage capacity in various regions of the valley.
• Improve recharge on farmland—increasing active recharge on farmland which will “require addressing a suite of technical issues and establishing incentives.”
• Address regulatory barriers. “State and federal agencies need to improve processes for improving construction of new recharge projects, moving recharge water through their conveyance facilities, and enabling more flexibility in where water is stored.
• Water managers and growers also need guidelines from the state for implementing on-farm recharge in ways that are consistent with water quality rules.
• Strengthen groundwater accounting.

Finally, the report cites a concern among farmers regarding beneficial use of recharge. Specifically the report includes the following remarks from a manager, “Under the California Water Code, recharge is not a ‘reasonable and beneficial use’ of water. Our water right is limited to water for irrigation only. To engage in a practice that is not permitted under our water right would jeopardize our water right. That needs to be addressed.”

The report then discusses an alternate view taken by some water users and staff, “noting that rechargers will generally need to establish water rights to store water underground, just as they do for above-ground storage.” They conclude that finding ways to expedite the permitting process provides a reasonable strategy for the valley.

Prior and Related Legislation.

AB 2649 (Arambula, 2017) was initially substantially similar to this bill and later evolved to address groundwater recharge under high-flow events. The bill was ultimately amended to a different purpose.

AB 1427 (Eggman, 2017) was identical to this bill. AB 1427 died in Assembly Appropriations Committee.

AB 647 (Eggman, 2015) was similar to this bill. AB 647 died in Senate Natural Resources and Water Committee.

Supporting arguments: Supporters argue that this bill would assist in managing our groundwater basins in a sustainable manner by providing that certain uses of stored water while underground constitute beneficial use.

Opposing arguments: Opponents of similar bills have voiced concerns that this type of change might effectively increase the over-allocation of water in California and cause injury to existing water rights holders and other water users, including State Water Project and Central Valley Project contractors, as well as the state's salmon fishery and other instream beneficial uses of water.

Committee Amendments: The committee suggests the following amendments to remove time as a barrier to groundwater recharge.

SECTION 1. Section 1242 of the Water Code is amended to read:

1242. The storing diversion of water underground, to underground storage including the diversion of streams and water for groundwater recharge, constitutes a diversion of water for beneficial use for which an appropriation may be made if the flowing diverted water is put to beneficial use consistent with this division. The beneficial use of water on lands necessary to diverted to underground storage is not limited to uses requiring subsequent extraction or release of the accomplishment of stored water and may include beneficial uses such storage, constitutes a beneficial use as protection of water if quality made while the water so stored is thereafter applied to in underground storage. The forfeiture periods in Sections 1240 and 1241 do not include any period when the beneficial purposes for which water is being used in the appropriation aquifer or storage area or is being held in underground storage for storage was made. later application to beneficial use.

Amendment 2. On page 1, strike out lines 1 and 2 and strike out page 2.

REGISTERED SUPPORT / OPPOSITION:

Support

California Farm Bureau Federation

Opposition

None on file

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

Date of Hearing: March 26, 2019

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Eduardo Garcia, Chair

ABPCA Bill Id:AB 441 (

Author:Eggman) – As Introduced Ver:February 11, 2019

SUBJECT: Water: underground storage

SUMMARY: Allows stored groundwater to be declared a beneficial use for purposes of water rights. Specifically, this bill:

1. Revises the beneficial use doctrine for water rights to additionally provide that certain uses of groundwater storage constitute beneficial use. These include:
   1. Protection of water quality.
   2. Recovery of groundwater levels.
2. Provides that the forfeiture period of a water right does not apply to water being beneficially used, or being held in storage, for a later use.

EXISTING LAW:

1. Recognizes that water resources belong to the people of the state but that individuals can hold rights to use water. (Water Code [WC] §102)
2. Recognizes two primary forms of water rights:
   1. Riparian rights, which are based on applying water from a stream or watercourse to adjoining land; and,
   2. Appropriative water rights, which attach when an entity, whether or not it borders a water course, is the first in time to divert the water and use it in a way that is both reasonable and beneficial. (WC §101)
3. Specifies that any portion of an appropriative water right that is not used beneficially during a five-year period may be considered abandoned. Technically, it means that volume of water reverts back to the public and may be available for use by others. (WC §1241)
4. Allows water that is stored underground to be considered to have been beneficially used if the following three things happen:
   1. The purpose for which the water was later used was identified at the time of storage;
   2. The use that was identified was considered beneficial; and,
   3. The water was actually applied to that use. (WC §1242)

FISCAL EFFECT: Unknown. This bill is keyed fiscal.

COMMENTS: According to the Author, this bill is needed to allow the improvement of water quality and the prevention (or reversal) of subsidence) to be considered a beneficial use. Both of these actions would require water to be held in groundwater storage for a period of multiple years, if not decades.

Author’s Statement:

Protecting groundwater and groundwater basins is critical for the environment, agriculture, and our communities. The need for groundwater recharge was recognized by the previous administration during discussions on the Sustainable Groundwater Management Act, but the beneficial use question was abandoned when a solution did not quickly materialize. The legislature passed the Act because we recognize as a state that groundwater and basins are a critical component of our water system.

An aquifer can be recharged naturally or artificially, and is critical to managing groundwater sustainably and preventing groundwater aquifers from being permanently damaged by overdraft. Overdraft reduces water supply, increases pumping costs, and may lead to high costs of replacing or deepening a well, which disproportionately affects rural landowners and small-scale farmers. A permanent consequence is land subsidence, which is mostly irreversible. Recharging aquifers helps prevent damage from overdraft and can also protect water quality, such as serving as a barrier to saline water intrusion and other contaminants.

Currently, diversion to underground storage is considered a beneficial use only if the surface water is stored in the ground and then subsequently extracted for a consumptive beneficial use. Some of the beneficial uses defined in current regulations include recreational use, domestic use, irrigation, power generation, and municipal and industrial use, but prevention of salinity intrusion and subsidence are not included.

The withdrawal and beneficial use of that stored water has to occur within five years or the right to that water is forfeited. This creates a perverse incentive, and fails to account for the fact that there is a need to recharge aquifers for reasons other than later consumptive use. There are inherent benefits to having water underground, including the protection of water quality and prevention of subsidence.

Groundwater Storage in California. Recent actions related to groundwater have focused on applying a growing body of science to the law. Groundwater remains the greatest water storage asset in the state. According to the Department of Water Resources (DWR), storage from all major reservoirs in the state totals less than 50 million acre-feet (AF). Groundwater capacity is estimated at between 850 million and 1.4 billion AF. As has been widely reported, however, this capacity figure is reduced by water quality issues. Salinity, chemical concentrations, and degradation of groundwater basins is a challenge to utilizing groundwater to the fullest extent possible.

Converting the status of water that is "parked" underground from an intermediary point on the beneficial use continuum into an end point has complex ramifications to the existing water rights system, and beneficial use doctrine, with far-reaching consequences.

Beneficial Use Doctrine. Beneficial use is a fundamental principal of water rights law. The doctrine defines and limits, on an ongoing basis, the scope of an appropriative water right. It is the difference between a "paper" water right – a document asserting that an individual has the right to a specific amount of water, whether they have used it or not – and a "wet" water right, meaning a water right of continuing validity because the amount of water described has been reasonably, beneficially, and continuously used.

The difference between the two does matter. California is an arid state. The beneficial use concept was born out of recognition that economic opportunities, from gold mining to farming, are tied to the availability of water. The concept rewards those intrepid individuals who are "first in time" to put the water to use and gives them water rights senior to all others who come after. Later, the doctrine was modified to prohibit the squandering or hoarding of water by limiting the legal right to only that portion that is used reasonably and continuously.

The seniority of a water right is important. In times of shortage the most senior water rights holder receives all of his or her allocation, and then the next most senior, and so on and so forth. The most junior water rights holders might receive nothing. Some junior water rights holders during the recent extended drought were required to cease withdrawals so that senior water rights holders would be kept whole.

This bill could potentially allow a senior water right to be created, enlarged, maintained, or all three, upon the assertion that a recharge of groundwater from overlying land occurred. There is no requirement that the action be deliberate or not otherwise a waste of water, such as from flooding a field or leaking from a ditch. A claim to the amount of water in recharge could then be sold or transferred. Perhaps more importantly, the portion of water diverted to recharge would be denied to downstream water users.

Of particular concern to those recharging groundwater basins—and the beneficial use doctrine—is the potential loss of water right should water be held in storage for a longer period of time. This concept is likely if the reason for recharging the basin is, in fact, to reverse the long process of water withdrawal. This is somewhat akin to the filling of a surface water storage facility. It is unlikely that the water in the lowest areas of the reservoir will ever be used—many times this water is below the lowest penstocks, where water might be released. This water may remain in place for decades—and no consideration of the beneficial use doctrine has been invoked for these areas in recent years.

This raises the question, if water is stored for many years—decades, for example—should there be a consideration for this long-term storage under the beneficial use doctrine?

Recent Public Policy Institute of California (PPIC) Report. In April 2018, the PPIC released a report titled Replenishing Groundwater in the San Joaquin Valley. The report surveyed valley water districts’ current recharge efforts and “revealed strong interest in the practice, and a number of constraints.” These include:

• Clarify rules on water availability for recharge. “The State Water Board needs to develop an expeditious process for enabling water users to capture surface water when it is available.”
• Evaluate infrastructure capacity—essentially evaluating conveyance and storage capacity in various regions of the valley.
• Improve recharge on farmland—increasing active recharge on farmland which will “require addressing a suite of technical issues and establishing incentives.”
• Address regulatory barriers. “State and federal agencies need to improve processes for improving construction of new recharge projects, moving recharge water through their conveyance facilities, and enabling more flexibility in where water is stored.
• Water managers and growers also need guidelines from the state for implementing on-farm recharge in ways that are consistent with water quality rules.
• Strengthen groundwater accounting.

Finally, the report cites a concern among farmers regarding beneficial use of recharge. Specifically the report includes the following remarks from a manager, “Under the California Water Code, recharge is not a ‘reasonable and beneficial use’ of water. Our water right is limited to water for irrigation only. To engage in a practice that is not permitted under our water right would jeopardize our water right. That needs to be addressed.”

The report then discusses an alternate view taken by some water users and staff, “noting that rechargers will generally need to establish water rights to store water underground, just as they do for above-ground storage.” They conclude that finding ways to expedite the permitting process provides a reasonable strategy for the valley.

Prior and Related Legislation.

AB 2649 (Arambula, 2017) was initially substantially similar to this bill and later evolved to address groundwater recharge under high-flow events. The bill was ultimately amended to a different purpose.

AB 1427 (Eggman, 2017) was identical to this bill. AB 1427 died in Assembly Appropriations Committee.

AB 647 (Eggman, 2015) was similar to this bill. AB 647 died in Senate Natural Resources and Water Committee.

Supporting arguments: Supporters argue that this bill would assist in managing our groundwater basins in a sustainable manner by providing that certain uses of stored water while underground constitute beneficial use.

Opposing arguments: Opponents of similar bills have voiced concerns that this type of change might effectively increase the over-allocation of water in California and cause injury to existing water rights holders and other water users, including State Water Project and Central Valley Project contractors, as well as the state's salmon fishery and other instream beneficial uses of water.

Committee Amendments: The committee suggests the following amendments to remove time as a barrier to groundwater recharge.

SECTION 1. Section 1242 of the Water Code is amended to read:

1242.  The storing of diversion of water underground, to underground storage, including the diversion of streams and the flowing of water on lands necessary to the accomplishment of such storage, water for groundwater recharge, constitutes a diversion of water for beneficial use of water for which an appropriation may be made if the diverted water so stored is thereafter applied put to beneficial use consistent with this division. is put to beneficial use consistent with this division. The beneficial use of water diverted to underground storage is not limited to uses requiring subsequent extraction or release of the stored water and may include beneficial uses such protection of water quality made while the water is in underground storage. The forfeiture periods in sections 1240 and 1241 do not include any period when the water is being used in the aquifer or storage area or is being held in underground storage for later application to beneficial use.

REGISTERED SUPPORT / OPPOSITION:

Support

California Farm Bureau Federation

Opposition

None on file

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