(Without Reference to File)

SENATE THIRD READING

STR Bill Id:SB 307

Author:(Roth)

As Amended Ver:April 30, 2019

Majority vote

SUMMARY:

Requires the State Lands Commission (SLC), in consultation with the Department of Fish and Wildlife (DFW) and the Department of Water Resources (DWR), to find that the transfer of the water from a groundwater basin underlying specified desert lands will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands in order for that transfer to be allowed.

Major Provisions

1. Prohibits a transferor of water to use a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands that is in the vicinity of a national monument, a national preserve, a national park, a state or federal wilderness area, or state lands to outside of the groundwater basin unless the SLC, in consultation with DFW and DWR, finds that the transfer of the water will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands.
2. Requires a transferor of water subject to the provisions of this bill to submit an application to the SLC for review of the proposed transfer.
3. Requires the application to include, at a minimum, both of the following:
   1. The names of the transferor and the owner of the water conveyance facility; and,
   2. Data and reports pertinent to making the finding required by this bill.
4. Requires the SLC to review the application submitted within 15 months of receipt of the application and shall make a written finding, available to the public, on whether the proposed transfer will not adversely affect the natural or cultural resources. Authorizes SLC to extend the 15-month review period to 24 months based on a specified determination.
5. Requires the transferor of the water to report to the SLC, on an annual basis, information on the condition of the groundwater basin if the SLC makes a finding the transfer does not adversely affect the natural or cultural resources.

COMMENTS:

1. Background. The area of desert lands this bill applies includes the Mojave National Preserve and Mojave Trails National Monument, other state/federal public lands, and some private lands with Cadiz being one of the largest private landowners in the region. This bill would subject the proposed groundwater transfer and storage project known as the Cadiz Project to the finding requirement. The Cadiz Valley is about 3 miles south of historic Route 66 near the now abandoned town of Chambless in the Mojave Desert. According to the Cadiz Inc. website, the project "is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California's Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California." The project proposes to connect to the Colorado River Aqueduct through a new conveyance pipeline in an existing railroad right-of way that crosses federal and state land in order to transfer groundwater to fill unused capacity in the aqueduct.
2. Controversy. The Cadiz Project has been considered for approximately twenty years. In 1998, Cadiz Inc. and Metropolitan Water District of Southern California (MWD) began discussion about a project that would have imported Colorado River water to Cadiz and exported groundwater from Cadiz to the MWD service area. Ultimately, MWD decided not to go forward citing uncertainties about potential environmental impacts. The Cadiz Project has completed its environmental impact review under the California Environmental Quality Act. The Cadiz Project has faced opposition from environmental groups and United States Senator Diane Feinstein. In 2015, the United States Bureau of Land Management said Cadiz couldn't use the right-of-way because the proposed water infrastructure didn't further a railroad purpose. This meant the Cadiz Project would need federal approval and be subject to the National Environmental Policy Act. However, the Trump administration reversed the decision and asserted that the Cadiz Project does not need federal approval. U.S. District Judge George Wu struck down the Trump administration's decision that the project did not need federal approval because it made no explanation of the reversal.

In 2017, SLC wrote the project proponents and stated that the pipeline that is part of the Cadiz Project crosses state lands under SLC jurisdiction and would require a lease from SLC. In December 2018, DFW Director Charles Bonham sent a letter to the CEO of Cadiz, Scott Slater, which stated, "New information demonstrates a hydrologic connection between the aquifer underlying the Project pumping site and nearby Bonanza Spring… data indicated these legally-protected sheep [desert bighorn sheep] utilize the spring. Further analysis and additional review of these effects will be necessary for DFW to evaluate the anticipated lake and streambed alteration notification."

1. SB 307. There are many disputed facts about the impact of the Cadiz Project between the project proponents and opponents, including the rate of groundwater recharge, the quality of the water being removed, and the impacts on natural springs and sensitive desert habitat. In addition, as mentioned above, both SLC and DFW have indicated reasons for further evaluation of the Cadiz Project. The review and finding this bill requires could offer an opportunity for the state to conduct an independent review to better understand the impacts of this water transfer on the state's natural and cultural resources. If SLC did find adverse impacts, through the review of available scientific information, and therefore could not make the finding required for the transfer to proceed an applicant could resubmit a revised application and project to address the adverse impacts identified. The opponents would like the bill to be amended to have SLC potentially impose conditions to avoid adverse impacts from the projects. Imposing such conditions would require SLC to suggest revisions to the Cadiz Project, which is beyond its public lands expertise.

According to the Author:

It is imperative that California diversifies its water supply and takes a holistic view of our water portfolio to meet long-term demand. However, this should not be interpreted as an open invitation to tap water resources beyond their environmental sustainability, especially in precious and precariously-balanced environments like the Mojave Desert. This bill seeks to specifically address this issue by pausing any proposed water resource extraction in the Mojave Desert until the state can fully understand the potential impacts on a desert aquifer of such proposals. The U.S. Geological Survey has estimated that the natural recharge rate of this basin from rainfall ranges from 2,000 to 10,000 acre-feet (AF) per year – a range that is far less than the 50,000 AF of annual extraction envisioned by the current proposed project by Cadiz, Inc. in the Mojave Desert.

A consensus on amendments has not been reached, despite multiple attempts by the author. Most recently, amendments proposed by the opposition prior to the bill's hearing in Assembly Natural Resources Committee were given consideration and, after a robust discussion, were rejected by committee members during the hearing. There were numerous concerns voiced by the committee members about the workability of the opposition's proposed changes as it relates to SB 307's intended goal. In light of this, I could not accept any amendments which would serve to undermine the efficacy of this bill.

For decades, until the current federal administration abdicated its responsibility to protect its public lands in the Mojave, the federal government has applied and required stringent scientific reviews to major projects such as this desert water extraction proposal, and California should continue to apply that standard. There is too much at stake to get this wrong. Desert flora and fauna depend on the continued viability of this water source, and the Cadiz project could be used to guarantee water supply to 400,000 residents. But only if it is sustainable. Hitting the pause button to allow an independent team of scientists review the evidence will ensure an uninterrupted supply of water to all residents while protecting a National Treasure – the Mojave – from man-made destruction.

Arguments in Support:

In support of the bill, National Parks Conservation Association made the following statement:

SB 307 will protect one of the most valuable regions in the Mojave Desert from groundwater mining projects, such as the Cadiz groundwater pumping/export project. The Federal Government already has protected large areas in the Mojave National Preserve and Mojave Trails National Monument. This bill will protect both federal and state public lands that support a unique desert habitat, by requiring the State Lands Commission to do an independent scientific analysis of proposed groundwater projects on the limited private lands in this region. The Assembly Natural Resources Committee, at its June 10, 2019 hearing, discussed and rejected the Cadiz amendments, which Cadiz nevertheless continues to request. After such careful legislative analysis and debate, it is time to pass SB 307.

Arguments in Opposition:

The Cadiz, in opposition to the bill, states the concern that SB 307 seeks to impose a new, unique standard of state review upon a California company that would annually conserve more than 10 billion gallons of water naturally evaporating in California's Mojave Desert. This clean, reliable and affordable water supply could help the state correct its persistent failure to meet its Human Right to Water objectives by bringing enough water for 400,000 people a year for the next 50 years in Phase 1 alone. The Santa Margarita Water District, in opposition to the bill, states SB 307 makes it more onerous to deliver clean, safer drinking water to communities across the state and to address other related issues, including our housing and homelessness crisis, sustainable farming, and the broader push to further strengthen economic opportunity for all.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

Unknown, reimbursable costs for the SLC to review the Cadiz Project application, consult with DFW and DWR and make a finding, likely in the range of several hundreds of thousands of to low millions of dollars. All state costs are anticipated to be minor, absorbable or reimbursable.

The SLC will structure reimbursement agreements with the project applicant as well as with DWR and DFW. It is unknown the extent to which the SLC will consult with the other state departments. The SLC may establish inter-agency agreements for either or both departments to perform environmental work for the commission, or the SLC may have the departments review the work of contractors prior to making a finding. Some costs will be incurred by all agencies prior to the reimbursement agreements, but should be minor or absorbable.

VOTES:

SENATE FLOOR: 21-11-6

YES: Allen, Archuleta, Atkins, Beall, Caballero, Glazer, Hertzberg, Hill, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Skinner, Stern, Umberg, Wieckowski, Wiener

NO: Bates, Borgeas, Chang, Galgiani, Grove, Jones, Moorlach, Morrell, Nielsen, Stone, Wilk

ABS, ABST OR NV: Bradford, Dodd, Durazo, Hueso, Hurtado, Rubio

ASM NATURAL RESOURCES: 7-2-2

YES: Friedman, Chau, Cristina Garcia, Limón, McCarty, Muratsuchi, Mark Stone

NO: Flora, Mathis

ABS, ABST OR NV: Eggman, Melendez

ASM APPROPRIATIONS: 12-4-2

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong

ABS, ABST OR NV: Eduardo Garcia, Obernolte

UPDATED:

VERSION: April 30, 2019

CONSULTANT: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0001259

Date of Hearing: July 10, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 307

Author:(Roth) – As Amended Ver:April 30, 2019

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

SUMMARY:

This bill prohibits a water transfer from a groundwater basin in specified desert lands unless the State Lands Commission (SLC) finds the transfer will not adversely affect the natural or cultural resources of the nearby public lands. Specifically, this bill:

1. Prohibits a transferor of water to use a water conveyance facility with unused capacity to transfer water from a groundwater basin underlying desert lands in the vicinity of a national monument, a national preserve, a national park, a state or federal wilderness area or state lands unless the SLC, in consultation with the Department of Fish and Wildlife (DFW) and the Department of Water Resources (DWR), finds the transfer will not adversely affect the natural or cultural resources, including the groundwater resources or habitat, of those federal and state lands.
2. Requires a transferor of water subject to the provisions of this bill to submit an application to the SLC for review.
3. Requires the application to include, at a minimum, both of the following:
   1. The names of the transferor and the owner of the water conveyance facility.
   2. Data and reports pertinent to making the finding required by this bill.
4. Requires the SLC to review the application within 15 months of receipt and make a written finding, available to the public, on whether the proposed transfer will not adversely affect the natural or cultural resources. Authorizes SLC to extend the 15-month review period to 24 months based on a specified determination.
5. Requires the SLC to review all available scientific information, as defined, in making the finding.
6. Requires the transferor of water to annually report to the SLC on the condition of the groundwater basin, if the SLC makes a finding that allows the transfer.
7. Defines “desert lands” as a specified area in the Mojave Desert surrounding where the Cadiz Valley Water Conservation, Recovery, and Storage Project (Cadiz Project) is proposed.

FISCAL EFFECT:

Unknown, reimbursable costs for the SLC to review the Cadiz Project application, consult with DFW and DWR and make a finding, likely in the range of several hundreds of thousands of to low millions of dollars. All state costs are anticipated to be minor, absorbable or reimbursable.

The SLC will structure reimbursement agreements with the project applicant as well as with DWR and DFW. It is unknown the extent to which the SLC will consult with the other state departments. The SLC may establish inter-agency agreements for either or both departments to perform environmental work for the commission, or the SLC may have the departments review the work of contractors prior to making a finding. Some costs will be incurred by all agencies prior to the reimbursement agreements, but should be minor or absorbable.

COMMENTS:

1. Background. This bill is focused on the proposed groundwater extraction and transfer project known as the Cadiz Valley Water Conservation, Recovery and Storage Project. The Cadiz Valley is about 3 miles south of historic Route 66 near the now abandoned town of Chambless in the Mojave Desert. According to the Cadiz Inc. website, the project:

…is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California.

Current law prohibits a public agency from denying a bona fide water transferor access to and conveyance in a water facility with unused capacity for the period of time for which that capacity is available, if (a) fair compensation is paid for that use and (b) the transferred water does not reduce the beneficial uses or lessen the water quality of the water in the facility. Additionally, use of the facility cannot injure any legal user of water; unreasonably affect fish, wildlife or other instream beneficial uses; or unreasonably affect the overall economy or environment of the county from which the water is being transferred.

In this case, the Cadiz Project would rely on the use of the Colorado River Aqueduct owned by the Metropolitan Water District of Southern California (MWD). Currently, MWD keeps its aqueduct at capacity filled with Colorado River water, its cheapest source of water. Unused capacity is an unlikely scenario. The Cadiz Project could instead pursue a dedicated capacity agreement, which would require MWD board approval.

Additionally, the groundwater associated with the Cadiz Project contains arsenic and chromium 6 at a greater level than what is currently in the Colorado River aqueduct. In order to meet the water quality requirements of the aqueduct, water treatment will be necessary and is part of the project design.

The Cadiz Project will require a water pipeline to connect the pumped groundwater to the Colorado River aqueduct. The project proposed to use an existing railroad right of way across federal land to pipe supplies from its proposed well field to the aqueduct.

In 2015, the U.S. Bureau of Land Management (BLM) ruled the Cadiz Project could not use the right of way and would instead need to obtain federal permission to run the pipeline across the surrounding federal land, triggering an environmental review.

After President Trump took office, a BLM official revoked the agency’s 2015 decision and gave the Cadiz Project permission to use the right of way. Last month, a federal judge struck down the Trump administration’s decision, thus upholding the 2015 ruling that requires environmental review for pipeline siting.

Current law requires a public agency to comply with the California Environmental Quality Act (CEQA) when it undertakes a project that may cause either a direct physical change in the environment or a reasonably foreseeable indirect change in the environment. If the lead agency determines a project’s significant environmental impacts cannot be avoided, the agency is required to prepare an extensive environmental impact report (EIR). CEQA provisions are enforced, as necessary, by the public through litigation.

On December 4, 2018, Director of DFW Charlton H. Bonham sent a letter to the CEO of Cadiz Inc. In that letter, Director Bonham wrote:

In anticipation of the Project Lake and Streambed Alteration (LSA) notification, the Department began re-familiarizing itself with the Project EIR certified by the CEQA lead agency Santa Margarita Water District (District) and other related material. In the course of its review, the Department identified information of substantial importance that was developed after the District certified the Project EIR. This new information indicates the Project may cause significant effects not discussed or substantially more severe effects than shown in the Project EIR.”

Specifically, new information demonstrates a hydrologic connection between the aquifer underlying the Project pumping site and nearby Bonanza Spring. The Department began installing GPS collars on desert bighorn sheep in the area of the Project in 2013 and this data indicates these legally-projected sheep utilize the spring. Further analysis and additional review of these effects will be necessary for the Department to evaluate the anticipated LSA notification, to consider and take appropriate action in response under the Fish and Game Code, and to fulfill its public trust responsibility for California fish and wildlife and the habitat on which they depend.

Nevertheless, the Cadiz Project has a certified Final Environmental Impact Record (EIR) and has been validated and upheld by California’s courts in 12 separate decisions.

1. Purpose. According to the author:

SB 307 seeks to protect valuable public land resources in the Mojave Desert. Many significant natural and cultural heritage sites rely on the precariously balanced ecosystem…Protecting these resources requires an independent science review and the establishment of an environmentally sustainable pumping rate before Cadiz can proceed with pumping and export to Southern California. It is incumbent upon us as stewards of public lands to ensure environmental sustainability for all of our natural resources.

1. Support and Opposition. This bill is supported by numerous environmental groups who generally oppose the Cadiz Project. This bill is opposed by numerous business, water and labor groups who generally support the Cadiz project and/or oppose the precedent established in the bill.

Cadiz recently took the positon of oppose unless amended on the bill. Cadiz is requesting amendments to:

1. Substitute the word “determine” or “determination” for “finding” to allow for legal recourse.
2. Set a shorter review timeline.
3. Require the SLC to condition the transfer, if necessary, and include recommendations on how to avoid adverse environmental impacts if any are identified.

The author has declined to accept the amendments stating they are unnecessary or inappropriate. According to the author, there is no legal effect of using the word “determination.” The author notes that the Code of Civil Procedures contains the term “finding” as well as “determination” and both terminologies entitle an appeal process to be made. The author states that requiring the SLC to impose conditions on the project, essentially redesigning the project, is improper. Instead, if the SLC finds adverse impacts, then Cadiz will have the opportunity to redesign its own project.

1. Prior Legislation. AB 1000 (Friedman), of the 2016-17 Legislative Session, was substantially similar to this bill. The bill was held on suspense in the Senate Appropriations Committee.

SB 120 (Roth), of the 2016-2017 Legislative Session, was substantially similar to this bill with the exception of not having an application process or consultation with DWR. The bill was held on suspense in the Senate Appropriations Committee.

Neither AB 1000 nor SB 120 were heard in this committee.

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

Date of Hearing: June 10, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

SBPCA Bill Id:SB 307

Author:(Roth) – As Amended Ver:April 30, 2019

SENATE VOTE: 21-11

SUBJECT: Water conveyance: use of facility with unused capacity

SUMMARY: Requires the State Lands Commission (SLC), in consultation with the Department of Fish and Wildlife (DFW) and the Department of Water Resources (DWR), to find that the transfer of the water from a groundwater basin underlying specified desert lands will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands in order for that transfer to be allowed.

EXISTING LAW:

1. Requires the SLC to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
   
2. Grants, in trust, public trust lands to over 70 local public agencies to be managed for the benefit of all the people of the state and pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
3. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for grazing, commercial, industrial, and recreational purposes.
4. Authorizes the SLC to charge and collect reasonable fees for services performed by it, not exceeding the actual cost to the state of such services.
5. Prohibits the state or a regional or local public agency from denying a bona fide transferor of water from using a water conveyance facility that has unused capacity for the period of time for which that capacity is available, if fair compensation is paid for that use and other requirements are met, including:
   1. The commingling of transferred water does not result in a diminution of the beneficial uses or quality of the water in the facility and the transferred water is substantially the same quality as the water in the facility.
   2. This use of a water conveyance facility is to be made:
      1. Without injuring any legal user of water;
      2. Without unreasonably affecting fish, wildlife, or other instream beneficial uses; and,
      3. Without unreasonably affecting the overall economy or the environment of the county from which the water is being transferred.
         

THIS BILL:

1. Prohibits a transferor of water to use a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands that is in the vicinity of a national monument, a national preserve, a national park, a state or federal wilderness area, or state lands to outside of the groundwater basin unless the SLC, in consultation with DFW and DWR, finds that the transfer of the water will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands.
2. Requires a transferor of water subject to the provisions of this bill to submit an application to the SLC for review of the proposed transfer.
3. Requires the application to include, at a minimum, both of the following:
   1. The names of the transferor and the owner of the water conveyance facility; and,
   2. Data and reports pertinent to making the finding required by this bill.
4. Requires the SLC to review the application submitted within 15 months of receipt of the application and shall make a written finding, available to the public, on whether the proposed transfer will not adversely affect the natural or cultural resources. Authorizes SLC to extend the 15 month review period to 24 months based on a specified determination.
5. Requires the transferor of the water to report to the SLC, on an annual basis, information on the condition of the groundwater basin if the SLC makes a finding the transfer does not adversely affect the natural or cultural resources.
6. Defines “desert lands” as a specified area in the Mojave Desert surrounding where the Cadiz Valley Water Conservation, Recovery, and Storage Project (Cadiz Project) is being proposed.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Ongoing annual costs (General Fund or special funds) around $500,000 starting in fiscal year (FY) 2019-20 for DFW to review water transfers and conduct the analyses required in the bill.
2. Ongoing annual costs (General Fund) around $500,000, starting in FY 2019-20 for DWR to review water transfers and conduct the analyses required in the bill.
3. Unknown costs (General Fund) likely in the low hundreds of thousands of dollars, for SLC to make the finding required in the bill. SLC indicates that these costs would be reimbursed by the project proponent.
   

COMMENTS:

1. Author’s statement:

While California has begun to rebound from its prolonged drought, it is still imperative that the state continue to diversify its water supply. Governor Newsom has openly acknowledged California must take a more holistic view of our water portfolio to meet long term demand. However, this should not be interpreted as an open invitation to tap water resources beyond their environmental sustainability, especially in precious and precariously-balanced environments like the Mojave Desert. SB 307 seeks to specifically address this issue by pausing any proposed water resource extraction in the Mojave Desert until the state can fully understand the potential impacts on a desert aquifer of such a proposal. The U.S. Geological Survey has estimated that the natural recharge rate of this basin from rainfall ranges from 2,000 to 10,000 acre-feet (AF) per year – a range that is far less than the 50,000 AF of annual extraction envisioned by the current proposed project by Cadiz, Inc. in the Mojave Desert. For decades, until the current federal administration abdicated its responsibility to protect its public lands in the Mojave, the federal government has applied and required stringent scientific reviews to major projects such as this desert water extraction proposal, and I believe California should continue to apply that standard. There is too much at stake to get this wrong. Desert flora and fauna depend on the continued viability of this water source, and the Cadiz project could be used to guarantee water supply to 400,000 residents. But only if it is sustainable. Hitting the pause button to allow an independent team of scientists review the evidence will ensure an uninterrupted supply of water to all residents while protecting a National Treasure – the Mojave – from man-made destruction.

1. Background. The area of desert lands this bill applies to would subject the proposed groundwater transfer and storage project known as the Cadiz Project to the finding requirement. The Cadiz Valley is about 3 miles south of historic Route 66 near the now abandoned town of Chambless in the Mojave Desert. According to the Cadiz Inc. website, the project “is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California.” The project proposes to connect to the Colorado River Aqueduct through a new conveyance pipeline in an existing railroad right-of way that crosses federal and state land in order to transfer groundwater to fill unused capacity in the aqueduct.
2. Controversy. The Cadiz Project has been considered for approximately twenty years. In 1998, Cadiz Inc. and Metropolitan Water District of Southern California (MWD) began discussion about a project that would have imported Colorado River water to Cadiz and exported groundwater from Cadiz to the MWD service area. Ultimately, MWD decided not to go forward citing uncertainties about potential environmental impacts. The Cadiz Project has completed its environmental impact review under the California Environmental Quality Act. The Cadiz Project has faced opposition from environmental groups and United States Senator Diane Feinstein. In 2015, the United States Bureau of Land Management said Cadiz couldn’t use the right-of-way because the proposed water infrastructure didn’t further a railroad purpose. This meant the Cadiz Project would need federal approval and be subject to the National Environmental Policy Act. However, the Trump administration recently reversed the decision and asserted that the Cadiz Project does not need federal approval.

In 2017, SLC wrote the project proponents and stated that the pipeline that is part of the Cadiz Project crosses state lands under SLC jurisdiction and would require a lease from SLC. In December 2018, DFW Director Charles Bonham sent a letter to the CEO of Cadiz, Scott Slater, which stated, “New information demonstrates a hydrologic connection between the aquifer underlying the Project pumping site and nearby Bonanza Spring… data indicated these legally-protected sheep [desert bighorn sheep] utilize the spring. Further analysis and additional review of these effects will be necessary for DFW to evaluate the anticipated lake and streambed alteration notification.”

1. SB 307. There are many disputed facts about the impact of the Cadiz Project between the project proponents and opponents, including the rate of groundwater recharge, the quality of the water being removed, and the impacts on natural springs and sensitive desert habitat. In addition, as mentioned above, both SLC and DFW have indicated reasons for further evaluation of the Cadiz Project. The review and finding this bill requires could offer an opportunity for the state to better understand the impacts of this water transfer on the state’s natural and cultural resources. If SLC did find adverse impacts, through the review of available scientific information, and therefore could not make the finding required for the transfer to proceed an applicant could resubmit a revised application and project to address the adverse impacts identified. SLC has the existing authority to negotiate a reimbursable agreement with Cadiz, to pay for the SLC’s work related to the review that may be required for the Cadiz project to proceed. The reimbursable agreement could also cover the SLC’s costs for consultation with the other state agencies required by this bill.
2. Governor Newsom. Last year the Governor (then Lieutenant Governor) wrote a letter of support for a substantially similar bill, SB 120 (Roth). Below is an excerpt from that letter:

This vulnerability of desert ecosystems and high social and cultural value assigned to their stability and persistence requires additional caution in decision-making relating to resources development. Of particular importance is water extraction, as desert ecosystems are heavily reliant on this scarce resource. SB 120 (Roth) would add additional review to desert water projects to ensure these projects have no adverse impacts to desert ecosystems. This review would also provide additional opportunities for stakeholders to participate in the decision-making process, which would ensure development of desert resources reflects the needs and values of those who rely on or otherwise value desert ecosystems.

Under this bill, review would be conducted by the SLC and the DFW. The SLC is charged with overseeing the responsible development of state land resources in the desert, and thus has the expertise and institutional capacity to consider the merits of a proposed project and its potential impacts to valued desert uses and resources. DFW is similarly equipped to review desert water projects for their impacts to desert wildlife and ecosystems. These agencies would provide balanced, science-based decisions that also account for regional needs and stakeholder input, and are thus best suited to review desert water projects.

1. Previous legislation.

AB 1000 (Friedman, 2017) was substantially similar to this bill. This bill was held on suspense in the Senate Appropriations Committee.

SB 120 (Roth) was substantially similar to this bill with the exception of not having an application process or consultation with DWR. This bill was held on suspense in the Senate Appropriations Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

29 Palms Inn
Active San Gabriel Valley
Amah Mutsun Land Trust
Amah Mutsun Tribal Band
Armargosa Conservancy
Audubon California
AZUL
California Coastal Protection Network
California Democratic Party Rural Caucus
California Environmental Justice Alliance
California League of Conservation Voters
California Native Plant Society
California State Parks Foundation
California Wild Sheep Foundation
California Wilderness Coalition
Campbell House
Center for Biological Diversity
Center for Community Action & Environmental Justice
Center for Food Safety
Chicano Indigenous Community for Culturally Conscious Advocacy & Action
Civic Sundays
Clean Water Action
Coalition to Protect Americas National Parks
Community Water Center
Conservation Lands Foundation
Defenders of Wildlife
Delores Huerta, Labor Leader
Desert Tortoise Council
Earthjustice
East Area Progressive Democrats
Environment California
Environmental Defense Fund
Environmental Water Caucus
Environmental Working Group
Feminists In Action (Formerly Indivisible Ca 34 Womens)
Fort Mojave Indian Tribe
Friends Committee on Legislation of California
Friends of Big Morongo Canyon Preserve
Friends of the Earth
Friends of the Inyo
Gateway Neighborhood Association
Harrison House Music, Arts & Ecology
Hispanic Access Foundation
Indivisible CA-33
Indivisible CA-43
Indivisible California Green Team
Indivisible Northridge
Indivisible South Bay- LA
Inland Empire Waterkeeper
Leadership Counsel For Justice And Accountability
Los Angeles County Board of Supervisors, Supervisor Hilda Solis,
Los Angeles Indivisible
Los Angeles Mayor Eric Garcetti
Los Angeles Waterkeeper
Lost Coast Interpretive Association
Mojave Desert Land Trust
Mojave National Preserve Conservancy
Morongo Basin Conservation Association
National Parks Conservation Association
Native American Land Conservancy
Natural Resources Defense Council
Nature for All
Nextgen California
Orange County Coastkeeper 
Planning and Conservation League
Sacred Places Institute for Indigenous Peoples
San Bernardino Valley Audubon Society
San Diego Coastkeeper
San Diego County Democrats for Environmental Action
San Diego League of Conservation Voters
Sanctuary Forest Inc.
Sequoia ForestKeeper
Sierra Club California
Southern California Watershed Alliance 
Southland Resistance
State Controller's Office
The Nature Conservancy 
The Wilderness Society
The Wildlands Conservancy
United States Senator Dianne Feinstein
United Steelworkers Local 8599
Vet Voice Foundation
Wholly H₂O
340 Individuals

Oppose

Anaheim Chamber of Commerce
Association of California Cities-Orange County
Association of California Water Agencies
BizFed - Los Angeles County
Building Industry Association of San Diego
Building Industry Association of Southern California, Baldy View Chapter
Building Industry Association of Southern California
Building Industry Association of Southern California, Los Angeles & Ventura Chapter
Building Industry Association, Riverside County Chapter
Cadiz, Inc.
California Association of Mutual Water Companies
California Building Industry Association
California Chamber of Commerce
California Groundwater Coalition
California Hispanic Chambers of Commerce
California Special Districts Association
California State Council of Laborers
Chino Valley Chamber of Commerce
City of Mission Viejo
Construction Industry Coalition on Water Quality
East Orange County Water District
El Toro Water District
Engineering Contractors Association
Fontana Chamber of Commerce
Greater Irvine Chamber of Commerce
Greater Los Angeles African American Chamber Of Commerce
Greater Ontario Business Council
Groundwater Resources Association of California
Hesperia Chamber of Commerce
Hispanic 100
Inland Empire Economic Partnership
International Union of Operating Engineers, Southern California & Southern Nevada
League of United Latin American Citizens
Los Angeles Area Chamber of Commerce
Municipal Water District of Orange County
Murrieta Wildomar Chamber of Commerce
Orange County Business Council
Orange County Council of Governments
Otay Water District
San Bernardino County Farm Bureau
San Gabriel Valley Economic Partnership
Santa Margarita Water District
South Orange County Economic Coalition
Southern California Association of Governments
Southern California Contractors Association
Southern California Partnership For Jobs
Southern California Water Coalition
Three Valleys Municipal Water District
Victor Valley Chamber of Commerce
Yorba Linda Water District

Analysis Prepared by: Michael Jarred / NAT. RES. /

 THIRD READING  

Bill No: SB 307

Author: Roth (D), et al.

Amended: 4/30/19

Vote: 21

SENATE NATURAL RES. & WATER COMMITTEE: 5-1, 4/9/19

AYES: Stern, Allen, Hertzberg, Jackson, Monning

NOES: Jones

NO VOTE RECORDED: Borgeas, Caballero, Hueso

SENATE APPROPRIATIONS COMMITTEE: 4-2, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Bates, Jones

SUBJECT: Water conveyance: use of facility with unused capacity

SOURCE: National Parks Conservation Association

DIGEST:

This bill prohibits a transferor of water from using a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands, as defined, that is in the vicinity of specified federal lands or state lands to outside of the groundwater basin unless the State Lands Commission (SLC), in consultation with the California Department of Fish and Wildlife (CDFW) and the Department of Water Resources (DWR), finds that the transfer of the water will not adversely affect the natural or cultural resources of those federal and state lands.

ANALYSIS:

Existing law:

1. Requires the SLC to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
   1. Grants, in trust, public trust lands to over 70 local public agencies to be managed for the benefit of all the people of the state and pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
   2. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for grazing, commercial, industrial, and recreational purposes.
2. Prohibits any activity in a bed, channel, or bank of, any river, stream, or lake, except as provided under the Lake and Streamed Alteration (LSA) program.
   1. Requires any person, state or local governmental agency, or public utility to provide written notification to the CDFW regarding the proposed activity along with specific information regarding the project, such as the location, project design, any/all California Environmental Quality Act (CEQA) documents, and copy of any other applicable local, state, or federal permit or agreement already issued.
   2. Upon determination by CDFW that the application is complete, authorizes the CDFW to issue LSA permits which authorize activities that alter a streambed if reasonable measures to protect fish and wildlife resources are included.
3. Prohibits the state or a regional or local public agency from denying a bona fide transferor of water from using a water conveyance facility that has unused capacity for the period of time for which that capacity is available, if fair compensation is paid for that use and other requirements are met, including:
   1. The commingling of transferred water does not result in a diminution of the beneficial uses or quality of the water in the facility and the transferred water is of substantially the same quality as the water in the facility.
   2. This use of a water conveyance facility is to be made:
      1. Without injuring any legal user of water;
      2. Without unreasonably affecting fish, wildlife, or other instream beneficial uses; and,
      3. Without unreasonably affecting the overall economy or the environment of the county from which the water is being transferred.

This bill:

1. Prohibits a transferor of water to use a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands, as defined, to outside of the groundwater basin unless SLC, in consultation with CDFW and DWR, finds that the transfer of the water will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those lands.
   1. Requires a transferor of water to submit an application to SLC before using a water conveyance facility.
   2. Requires, if SLC finds that the transfer of the water will not adversely affect the natural or cultural resources of those federal and state lands, the transferor of water to annually report to SLC on the condition of the groundwater basin.
2. Defines “desert lands” as a specific area in the Mojave Desert that contains the location of the proposed Cadiz Valley Water Conservation, Recovery, and Storage Project.

Comments

It’s All About Cadiz. This bill is focused on the proposed groundwater transfer and storage project known as the Cadiz Valley Water Conservation, Recovery and Storage Project (Project). The Cadiz Valley is about three miles south of historic Route 66 near the now abandoned town of Chambless in the Mojave Desert. According to the Cadiz Inc. Web site, the Project “is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California.”

Long Standing Controversy. In 1998, Cadiz Inc. and Metropolitan Water District of Southern California (MWD) began discussion about a project that would have imported Colorado River water to Cadiz, California, and exported groundwater from Cadiz to the MWD service area. Ultimately, MWD decided not to go forward citing uncertainties about potential for environmental impacts.

In the intervening years, there have been environmental documents certified, numerous court challenges, sometimes conflicting findings by federal agencies, and strong and consistent opposition by Senator Feinstein and others.

The crux of the dispute is differing estimates of the sustainable yield of the Cadiz Valley groundwater basin. Cadiz, citing a CH2M study, claims the groundwater basin naturally recharges at 32,500 acre-feet/year and can sustainably support the proposed water supply and storage project. Opponents respond that the U.S. Geological Survey’s study found that the natural refill rate of the desert aquifer is between 2,000 and 10,000 acre feet of water per year.

There continues to be a back and forth of studies reaffirming or countering the positions of the projects proponents and opponents.

Recent Events. On December 4, 2018, Director of CDFW Charlton H. Bonham sent a letter to the CEO of Cadiz Inc. with the subject line in bold all caps:

Information regarding new significant or substantially more severe impact to fish and wildlife resources from the Cadiz Valley Water Conservation, Recovery and Storage Project.

In that letter, Director Bonham wrote, “In anticipation of the Project LSA notification, the Department began re-familiarizing itself with the Project EIR certified by the CEQA lead agency Santa Margarita Water District (District) and other related material. In the course of its review, the Department identified information of substantial importance that was developed after the District certified the Project EIR. This new information indicates the Project may cause significant effects not discussed or substantially more severe effects than shown in the Project EIR.

“Specifically, new information demonstrates a hydrologic connection between the aquifer underlying the Project pumping site and nearby Bonanza Spring. The Department began installing GPS collars on desert bighorn sheep in the area of the Project in 2013 and this data indicates these legally-projected sheep utilize the spring. Further analysis and additional review of these effects will be necessary for the Department to evaluate the anticipated LSA notification, to consider and take appropriate action in response under the Fish and Game Code, and to fulfill its public trust responsibility for California fish and wildlife and the habitat on which they depend.”

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• Ongoing annual costs (General Fund or special funds) around $500,000 starting in fiscal year (FY) 2019-20 for CDFW to review water transfers and conduct the analyses required in the bill.
• Ongoing annual costs (General Fund) around $500,000, starting in FY 2019-20 for DWR to review water transfers and conduct the analyses required in the bill.
• Unknown costs (General Fund) likely in the low hundreds of thousands of dollars, for SLC to make the finding required in the bill. SLC indicates that these costs would be reimbursed by the project proponent.

SUPPORT: (Verified 5/20/19)

National Parks Conservation Association (source)

State Controller Betty Yee

29 Palms Inn

Active San Gabriel Valley

Amah Mutsun Land Trust

Amah Mutsun Tribal Band

Amargosa Conservancy

Audubon California

AZUL

Big Morongo Canyon Preserve

California Coastal Protection Network

California Democratic Party Rural Caucus

California Environmental Justice Alliance

California League of Conservation Voters

California Native Plant Society

California State Parks Foundation

California Wild Sheep Foundation

California Wilderness Coalition

Campbell House

Center for Biological Diversity

Center for Community Action and Environmental Justice

Center for Food Safety

Chicano Indigenous Community for Culturally Conscious Advocacy & Action

Civic Sundays

Clean Water Action

Coalition to Protect America’s National Parks

Community Water Center

Conservation Lands Foundation

Defenders of Wildlife

Desert Tortoise Council

Earthjustice

East Area Progressive Democrats

Environment California

Environmental Defense Fund

Environmental Water Caucus

Environmental Working Group

Feminists in Action

Fort Mojave Indian Tribe

Friends Committee on Legislation of California

Friends of Big Morongo Canyon Preserve

Friends of the Earth

Friends of the Inyo

Gateway Neighborhood Association

Harrison House Music, Arts, & Ecology

Hispanic Access Foundation

Indivisible CA33

Indivisible CA43

Indivisible California Green Team

Indivisible Northridge

Indivisible South Bay - LA

Inland Empire Waterkeeper

LA Waterkeeper

Leadership Counsel for Justice and Accountability

League of Conservation Voters – San Diego

Los Angeles County Supervisor Hilda Solis

Los Angeles Indivisible

Los Angeles Mayor Eric Garcetti

Lost Coast Interpretive Association

Mojave Desert Land Trust

Mojave National Preserve Conservancy

Morongo Basin Conservation Association

Native American Land Conservancy

Natural Resources Defense Council

Nature for All

NextGen California

Orange County Coastkeeper

Planning and Conservation League

Sacred Places Institute for Indigenous Peoples

San Bernardino Valley Audubon Society

San Diego Coastkeeper

San Diego County Democrats for Environmental Action

Sanctuary Forest Inc.

Sequoia ForestKeeper

Sierra Club California

Southern California Watershed Alliance

Southland Resistance

The Nature Conservancy

The Vet Voice Foundation

The Wilderness Society

The Wildlands Conservancy

United Steelworkers Local 8599

U.S. Senator Dianne Feinstein

Wholly H2O

340 individuals

OPPOSITION: (Verified 5/15/19)

Association of California Cities – Orange County

Association of California Water Agencies

BizFeed

Building Industry Association of San Diego

Building Industry Association of Southern California

CADIZ

California Association of Mutual Water Companies

California Building Industry Association

California Chamber of Commerce

California Groundwater Coalition

California League of United Latin American Citizens

California State Council of Laborers

Chambers Choice Drilling

Chambers DP Drilling

Chino Valley Chamber of Commerce

City of Mission Viejo

Congressman Ken Calvert

Congressman Paul Cook

East Orange County Water District

El Toro Water District

Engineering Contractors Association

Fontana Chamber of Commerce

Greater Irvine Chamber of Commerce

Greater Ontario Business Council

Groundwater Resources Association

Hesperia Chamber of Commerce

Hispanic 100

Inland Empire Economic Partnership

Inland Empire Utilities Agency

International Union of Operating Engineers

Laguna Beach County Water District

Limoneira Company

Los Angeles Area Chamber of Commerce

Municipal Water District of Orange County

Murrieta/Wildomar Chamber of Commerce

Orange County Business Council

Orange County Supervisor Lisa Bartlett

Otay Water District

Regional Council of the Southern California Association of Governments

San Bernardino County Farm Bureau

San Bernardino County Supervisor Dawn Rowe

San Bernardino County Supervisor Janice Rutherford

San Gabriel Valley Economic Partnership

Santa Margarita Water District

South Orange County Economic Coalition

Southern California Partnership For Jobs

Southern California Water Coalition

Three Valleys MWD

Twentynine Palms Water Districts

VICA

Victor Valley Chamber of Commerce

ARGUMENTS IN SUPPORT: According to the author, “While California has begun to rebound from its prolonged drought, it is still imperative that the state continue to diversify its water supply. Governor Newsom has openly acknowledged California must take a more holistic view of our water portfolio to meet long term demand. However, this should not be interpreted as an open invitation to tap water resources beyond their environmental sustainability, especially in precious and precariously-balanced environments like the Mojave Desert.

“SB 307 seeks to specifically address this issue by pausing any proposed water resource extraction in the Mojave Desert until the state can fully understand the potential impacts on a desert aquifer of such a proposal. The U.S. Geological Survey has estimated that the natural recharge rate of this basin from rainfall ranges from 2,000 to 10,000 acre-feet (AF) per year – a range that is far less than the 50,000 AF of annual extraction envisioned by a current proposed project in the Mojave Desert.

“For decades, the federal government has applied and required stringent scientific reviews to major projects such as this desert water extraction proposal and I believe California should continue to apply that standard. Considering the federal government has chosen to abdicate its responsibility to protect its public lands in the Mojave, the state has an obligation to ensure the review that was originally intended to take place by the federal government is completed before authorizing a project that has the potential to significantly impact such a fragile ecosystem.”

ARGUMENTS IN OPPOSITION: Opponents make two key arguments:

1. The bill seeks to impose additional state environmental review by unrelated agencies on a project that has already undergone environmental review under the CEQA. If a project has been publicly-reviewed and approved under CEQA but there are questions about the validity of that environmental review, our court system is available for resolving those questions. This bill disregards CEQA as the final arbiter of environmental safety and sets a dangerous precedent that once any infrastructure project goes through the CEQA process, it has not necessarily complied with California environmental law.
2. The use of water conveyance facilities is governed by the wheeling statutes in the California Water Code. The purpose of these statutes is to prevent public agencies from denying access to aqueducts and other water conveyance facilities when there is available space. This bill would frustrate that purpose and make it more difficult to move water, something on which California’s entire water system depends. Furthermore, only owners of conveyance facilities are empowered to make findings or impose conditions on wheeling approvals – MWD owns and governs the Colorado River Aqueduct, not the State Lands Commission.

Prepared by: Dennis O'Connor / N.R. & W. / (916) 651-4116

5/20/19 15:12:22

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 307 (Roth) - Water conveyance: use of facility with unused capacity

Bill Summary:

This bill would prohibit a transferor of water from using a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands, as defined, that is in the vicinity of specified federal lands or state lands to outside of the groundwater basin unless the State Lands Commission (SLC), in consultation with the California Department of Fish and Wildlife (CDFW) and the Department of Water Resources (DWR), finds that the transfer of the water will not adversely affect the natural or cultural resources of those federal and state lands.

Fiscal Impact:

• Ongoing annual costs (General Fund or special funds) around $500,000 starting in fiscal year (FY) 2019-20 for CDFW to review water transfers and conduct the analyses required in the bill.
• Ongoing annual costs (General Fund) around $500,000, starting in FY 2019-20 for DWR to review water transfers and conduct the analyses required in the bill.
• Unknown costs (General Fund) likely in the low hundreds of thousands of dollars, for SLC to make the finding required in the bill. SLC indicates that these costs would be reimbursed by the project proponent.

Background:

Current law prohibits a public agency from denying a bona fide water transferor access to and conveyance in a water facility with unused capacity for the period of time for which that capacity is available, if (1) fair compensation is paid for that use and (2) the transferred water does not reduce the beneficial uses or lessen water quality of the water in the facility. Additionally, use of the facility cannot injure any legal user of water; unreasonably affect fish, wildlife, or other instream beneficial uses; or unreasonably affect the overall economy or the environment of the county from which the water is being transferred.

A public agency must comply with the California Environmental Quality Act (CEQA) when it undertakes a project that may cause either a direct physical change in the environment or a reasonably foreseeable indirect change in the environment. If the lead agency determines a project’s significant environmental impacts cannot be avoided, the agency is required to prepare an extensive environmental impact report (EIR). CEQA provisions are enforced, as necessary, by the public through litigation.

Proposed Law:

This bill would:

1. Prohibit a transferor of water to use a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands, as defined, to outside of the groundwater basin unless SLC, in consultation with CDFW and DWR, finds that the transfer of the water will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those lands.
2. Require a transferor of water to submit an application to SLC before using a water conveyance facility.
3. Require, if SLC finds that the transfer of the water will not adversely affect the natural or cultural resources of those federal and state lands, the transferor of water to annually report to SLC on the condition of the groundwater basin.

The bill defines “desert lands” as a specific area in the Mojave Desert that contains the location of the proposed Cadiz Valley Water Conservation, Recovery, and Storage Project (Cadiz Project).

Related Legislation:

AB 1000 (Friedman, 2017) was substantially similar to this bill. AB 1000 was held on the suspense file in the Senate Appropriations Committee.

SB 120 (Roth, 2018) was identical to this bill. SB 120 was held in the Senate Appropriations Committee pursuant to Senate Rule 29.10(d).

Staff Comments:

This bill is focused on the proposed groundwater transfer and storage project known as the Cadiz Project. The Cadiz Valley is located in the Mojave Desert and according to the Cadiz Inc. website, the project “…is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California.”

There has been continued dispute largely over differing estimates of the sustainable yield of the Cadiz Valley groundwater basin. One study claims the groundwater basin naturally recharges at 32,500 acre-feet/year and can sustainably support the proposed water supply and storage project. However, a U.S. Geological Survey’s study found that the natural refill rate of the desert aquifer is between 2,000 and 10,000 acre feet of water per year.

Although the project has completed its California Environmental Quality Act (CEQA) review, in December 2018, Director of CDFW Charlton H. Bonham sent a letter to the CEO of Cadiz Inc. stating that CDFW has identified new information that indicates the Cadiz Project may cause significant effects not discussed or substantially more severe effects than shown in the project’s certified EIR. The letter stated additional analysis and review is necessary to effectively and responsibly evaluate these potential impacts on California fish and wildlife. It is currently unclear whether CDFW plans on conducting subsequent or supplemental environmental review based on its new information identified in the letter.

According to the author, SB 307 seeks to specifically address the potential impacts identified by CDFW “…by pausing any proposed water resource extraction in the Mojave Desert until the state can fully understand the potential impacts on a desert aquifer of such a proposal.” However, opponents of the bill state that the project has already been publicly-reviewed and approved under CEQA, and SB 307 sets a dangerous precedent of disregarding the CEQA process.

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Henry Stern, Chair

2019 - 2020 Regular

Bill No: SB 307 Hearing Date: April 9, 2019

Subject: Water conveyance: use of facility with unused capacity

BACKGROUND AND EXISTING LAW

Existing law:

1. Requires the State Lands Commission (SLC) to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
   1. Grants, in trust, public trust lands to over 70 local public agencies to be managed for the benefit of all the people of the state and pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
   2. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for grazing, commercial, industrial, and recreational purposes.
2. Prohibits any activity in a bed, channel, or bank of, any river, stream, or lake, except as provided under the Lake and Streamed Alteration (LSA) program.
   1. Requires any person, state or local governmental agency, or public utility to provide written notification to the Department of Fish and Wildlife (DFW) regarding the proposed activity along with specific information regarding the project, such as the location, project design, any/all California Environmental Quality Act (CEQA) documents, and copy of any other applicable local, state, or federal permit or agreement already issued.
   2. Upon determination by DFW that the application is complete, authorizes the DFW to issue LSA permits which authorize activities that alter a streambed if reasonable measures to protect fish and wildlife resources are included.
3. The Sustainable Groundwater Management Act (SGMA):
   1. Defines “sustainable groundwater management” as the management and use of groundwater in a manner that can be maintained during the planning and implementation horizon without causing undesirable results.
   2. Defines “undesirable results” to include, among other things, depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of the surface water.
   3. Establishes criteria for prioritizing groundwater basins and requires DWR to prioritize each basin as one of the following priorities:
      1. High priority.
      2. Medium priority.
      3. Low priority.
      4. Very low priority.
   4. Requires that a groundwater sustainability plan be adopted for high and medium priority groundwater basins in California.
   5. Establishes basic requirements for groundwater sustainability plans (GSPs).
   6. Provides state oversight to ensure compliance with SGMA.
4. Prohibits the state or a regional or local public agency from denying a bona fide transferor of water from using a water conveyance facility that has unused capacity for the period of time for which that capacity is available, if fair compensation is paid for that use and other requirements are met, including:
   1. The commingling of transferred water does not result in a diminution of the beneficial uses or quality of the water in the facility and the transferred water is of substantially the same quality as the water in the facility.
   2. This use of a water conveyance facility is to be made:
      1. Without injuring any legal user of water;
      2. Without unreasonably affecting fish, wildlife, or other instream beneficial uses; and,
      3. Without unreasonably affecting the overall economy or the environment of the county from which the water is being transferred.

PROPOSED LAW

This bill would:

1. Prohibit a transferor of water to use a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands that is in the vicinity of a national monument, a national preserve, a national park, a state or federal wilderness area, or state lands to outside of the groundwater basin unless the SLC, in consultation with the Department of Fish and Wildlife, finds that the transfer of the water will not adversely affect the natural or cultural resources, including groundwater resources or habitat, of those federal and state lands.
2. Define “desert lands” as a specific area in the Mojave Desert that contains the location of the proposed Cadiz Valley Water Conservation, Recovery, and Storage Project (Project).

ARGUMENTS IN SUPPORT

According to the author, “While California has begun to rebound from its prolonged drought, it is still imperative that the state continue to diversify its water supply. Governor Newsom has openly acknowledged California must take a more holistic view of our water portfolio to meet long term demand. However, this should not be interpreted as an open invitation to tap water resources beyond their environmental sustainability, especially in precious and precariously-balanced environments like the Mojave Desert.”

“SB 307 seeks to specifically address this issue by pausing any proposed water resource extraction in the Mojave Desert until the state can fully understand the potential impacts on a desert aquifer of such a proposal. The U.S. Geological Survey has estimated that the natural recharge rate of this basin from rainfall ranges from 2,000 to 10,000 acre-feet (AF) per year – a range that is far less than the 50,000 AF of annual extraction envisioned by a current proposed project in the Mojave Desert.”

“For decades, the federal government has applied and required stringent scientific reviews to major projects such as this desert water extraction proposal and I believe California should continue to apply that standard. Considering the federal government has chosen to abdicate its responsibility to protect its public lands in the Mojave, the state has an obligation to ensure the review that was originally intended to take place by the federal government is completed before authorizing a project that has the potential to significantly impact such a fragile ecosystem.”

ARGUMENTS IN OPPOSITION

Opponents make two key arguments:

1. The bill seeks to impose additional state environmental review by unrelated agencies on a project that has already undergone environmental review under the CEQA. If a project has been publicly-reviewed and approved under CEQA but there are questions about the validity of that environmental review, our court system is available for resolving those questions. This bill disregards CEQA as the final arbiter of environmental safety and sets a dangerous precedent that once any infrastructure project goes through the CEQA process, it has not necessarily complied with California environmental law.
2. The use of water conveyance facilities is governed by the wheeling statutes in the California Water Code. The purpose of these statutes is to prevent public agencies from denying access to aqueducts and other water conveyance facilities when there is available space. This bill would frustrate that purpose and make it more difficult to move water, something on which California’s entire water system depends. Furthermore, only owners of conveyance facilities are empowered to make findings or impose conditions on wheeling approvals – Metropolitan Water District of Southern California (MWD) owns and governs the Colorado River Aqueduct, not the State Lands Commission.

COMMENTS

It’s All About Cadiz. This bill is focused on the proposed groundwater transfer and storage project known as the Cadiz Valley Water Conservation, Recovery and Storage Project. The Cadiz Valley is about 3 miles south of historic Route 66 near the now abandoned town of Chambless in the Mojave Desert. According to the Cadiz Inc. website, the project “is designed to capture and conserve billions of gallons of renewable native groundwater flowing beneath our property in California’s Mojave Desert that is currently being lost to evaporation and salt contamination at nearby dry lakes. Through the active management of the aquifer system and employing a state-of-the-art groundwater protection program, the Project will reduce the loss of groundwater to evaporation from the dry lakes, put this water to beneficial use and create a reliable water supply for Southern California.”

Long Standing Controversy. In 1998, Cadiz Inc. and Metropolitan Water District of Southern California (MWD) began discussion about a project that would have imported Colorado River water to Cadiz, Ca. and exported groundwater from Cadiz to the MWD service area. Ultimately, MWD decided not to go forward citing uncertainties about potential for environmental impacts.

In the intervening years, there have been environmental documents certified, numerous court challenges, sometimes conflicting findings by federal agencies, and strong and consistent opposition by Senator Feinstein and others.

The crux of the dispute is differing estimates of the sustainable yield of the Cadiz Valley groundwater basin. Cadiz, citing a CH2M study, claims the groundwater basin naturally recharges at 32,500 acre-feet/year and can sustainably support the proposed water supply and storage project. Opponents respond that the U.S. Geological Survey’s study found that the natural refill rate of the desert aquifer is between 2,000 and 10,000 acre feet of water per year.

There continues to be a back and forth of studies reaffirming or countering the positions of the projects proponents and opponents.

Recent Events. On December 4, 2018, Director of DFW Charlton H. Bonham sent a letter to the CEO of Cadiz Inc. with the subject line in bold all caps:

Information regarding new significant or substantially more severe impact to fish and wildlife resources from the Cadiz Valley Water Conservation, Recovery and Storage Project.

In that letter, Director Bonham wrote, “In anticipation of the Project LSA notification, the Department began re-familiarizing itself with the Project EIR certified by the CEQA lead agency Santa Margarita Water District (District) and other related material. In the course of its review, the Department identified information of substantial importance that was developed after the District certified the Project EIR. This new information indicates the Project may cause significant effects not discussed or substantially more severe effects than shown in the Project EIR.”

“Specifically, new information demonstrates a hydrologic connection between the aquifer underlying the Project pumping site and nearby Bonanza Spring. The Department began installing GPS collars on desert bighorn sheep in the area of the Project in 2013 and this data indicates these legally-projected sheep utilize the spring. Further analysis and additional review of these effects will be necessary for the Department to evaluate the anticipated LSA notification, to consider and take appropriate action in response under the Fish and Game Code, and to fulfill its public trust responsibility for California fish and wildlife and the habitat on which they depend.”

What About SGMA? As a part of the 2009 water package, the legislature enacted SB 7X 6 (Steinberg, 7X, Ch. 1, Stat. 2009). The purpose of that bill was to ensure that “that on or before January 1, 2012, groundwater elevations in all groundwater basins and subbasins be regularly and systematically monitored locally and that the resulting groundwater information be made readily and widely available.” This led to DWR creating the California Statewide Groundwater Elevation Monitoring (CASGEM) Program.

The program’s mission is to establish a permanent, locally-managed program of regular and systematic monitoring in all of California's alluvial groundwater basins. This early attempt to monitor groundwater continues to exist as a tool to help achieve the goals set out under the Sustainable Groundwater Management Act (SGMA).

The legislation directed DWR to systematically review each basin and subbasin to ensure that all basins were being monitored appropriately. To ensure all basins were being monitored, the legislation provided direction to DWR on which basins to prioritize for review first, etc. The priorities were designed to identify which basins had the greatest amount of human interaction. That was done to ensure that DWR would be focusing first on those basins where the consequences to humans would be the greatest. Those criteria were:

• The population overlying the basin or subbasin.
• The rate of current and projected growth of the population overlying the basin or subbasin.
• The number of public supply wells that draw from the basin or subbasin.
• The total number of wells that draw from the basin or subbasin.
• The irrigated acreage overlying the basin or subbasin.
• The degree to which persons overlying the basin or subbasin rely on groundwater as their primary source of water.
• Any documented impacts on the groundwater within the basin or subbasin, including overdraft, subsidence, saline intrusion, and other water quality degradation.

With the passage of SGMA in 2014, there was a need for a system to determine which basins needed to be sustainably managed and those where the need for such attention was not as great. So, SGMA directed DWR to prioritize basins as one of the following:

• High priority.
• Medium priority.
• Low priority.
• Very low priority.

SGMA also directed DWR to use the CASGEM criteria, and added one more criterion to the list.

• Any other information determined to be relevant by the department, including adverse impacts on local habitat and local streamflows.

Basins categorized as high- or medium priority basins are required to have at least one groundwater sustainability agency, and develop and implement groundwater sustainability plans to sustainably manage the groundwater basin.

As noted under existing law, SGMA defines “sustainable groundwater management” as the management and use of groundwater in a manner that can be maintained during the planning and implementation horizon without causing undesirable results.” SGMA further defines undesirable results as one or more of the following effects caused by groundwater conditions occurring throughout the basin:

• Chronic lowering of groundwater levels indicating a significant and unreasonable depletion of supply if continued over the planning and implementation horizon. Overdraft during a period of drought is not sufficient to establish a chronic lowering of groundwater levels if extractions and groundwater recharge are managed as necessary to ensure that reductions in groundwater levels or storage during a period of drought are offset by increases in groundwater levels or storage during other periods.
• Significant and unreasonable reduction of groundwater storage.
• Significant and unreasonable seawater intrusion.
• Significant and unreasonable degraded water quality, including the migration of contaminant plumes that impair water supplies.
• Significant and unreasonable land subsidence that substantially interferes with surface land uses.
• Depletions of interconnected surface water that have significant and unreasonable adverse impacts on beneficial uses of the surface water.

For those groundwater basins DWR categorized as low- or very low-priority, the formation of groundwater sustainability agencies and groundwater substantiality plans is allowed, but not required.

DWR categorized the Cadiz Valley groundwater basin as a very low-priority basin. As such, it is exempt from having to comply with SGMA.

It is important to note that the criteria for prioritizing groundwater largely reflect current human uses of the basins. The criteria do not consider other potentially relevant factors such as planned future uses, unique or sensitive landscapes, adjacency to State or National parks, wilderness areas, etc. This might be an area worthy of further legislative attention.

What Happens In The Absence Of This Bill? The project has a certified Final Environmental Impact Report (EIR) that has survived a number of legal challenges. Additionally, the County of San Bernardino has approved a Groundwater Management, Monitoring and Mitigation Plan (GMMMP).

Generally, once legal challenges to an EIR have run their course and the EIR is certified, the EIR is presumed adequate as a matter of law. As noted in DFW’s letter to Cadiz described above, “with the presumption of legal adequacy attached to the Project EIR, subsequent or supplemental environmental review is disfavored and is the exception to the rule under Public Resources Code section 21166. Indeed, a responsible agency may only determine subsequent or supplemental review is necessary in limited circumstances. Once such circumstance exists where new information of substantial importance shows a project will have a significant effect not discussed in the certified EIR or that significant effects previously examined in the EIR will be substantially more severe.” (Citations omitted). This may be an issue with the various other additional agreements/permits the project requires. In particular, the project will need:

• A Lake and Streambed Alteration (LSA) agreement with DFW. As noted under existing law, any activity in a bed, channel, or bank of, any river, stream, or lake, is prohibited except as provided under the LSA program. The process begins with written notification to DFW regarding the proposed activity along with specific information regarding the project. This information includes:
  • A detailed description of the project’s location and a map.
  • The name, if any, of the river, stream, or lake affected.
  • A detailed project description, including, but not limited to, construction plans and drawings, if applicable.
  • A copy of any document prepared pursuant CEQA.
  • A copy of any other applicable local, state, or federal permit or agreement already issued.
  • Any other information required by the department.

Once DFW determines the application is complete, and applicable fees are paid, then either:

• • DFW informs the entity that the activity will not substantially adversely affect an existing fish or wildlife resource, and that the entity may commence the activity without an agreement, if the entity conducts the activity as described in the notification, including any measures in the notification that are intended to protect fish and wildlife resources.
  • DFW determines that the activity may substantially adversely affect an existing fish or wildlife resource and issues a final agreement to the entity that includes reasonable measures necessary to protect the resource, and the entity conducts the activity in accordance with the agreement.
  • A panel of arbitrators issues a final agreement to the entity in accordance with FGC §1603(b), and the entity conducts the activity in accordance with the agreement.
  • DFW does not issue a draft agreement to the entity within 60 days from the date notification is complete, and the entity conducts the activity as described in the notification, including any measures in the notification that are intended to protect fish and wildlife resources.

As noted in the comment on recent events, DFW has determined that further analysis and additional review will be necessary for DFW to “evaluate the anticipated LSA notification, to consider and take appropriate action in response under the Fish and Game Code, and to fulfill its public trust responsibility for California fish and wildlife and the habitat on which they depend.”

On March 13, 2019, Cadiz announced the release of a new technical report jointly commissioned by Three Valleys Municipal Water District and Jurupa Community Services District to provide an independent assessment of the Cadiz Water Project, including available technical work and the Project’s GMMMP.

According to Cadiz, “The panel report recommends several complementary additions to the GMMMP – not operational changes – designed to instill further public confidence in the Project plan. These include public monitoring plans prior to the start of the Project, increased frequency of groundwater monitoring activities, additional reviews of weather conditions and additional technical monitoring features and installations at nearby springs and wells. The report noted that the recommendations are provided in an abundance of caution and do not reflect any shortcomings in the GMMMP.”

Cadiz has not notified DFW under the LSA program regarding the project and so DFW has not formally begun its review of the project as required under the LSA statues. Consequently, it is not clear if the recent technical report adequately addresses DFW’s concerns or not. Nor is it clear if DFW will determine that subsequent or supplemental environmental review is required.

• A wheeling agreement with MWD. As noted under existing law, a public agency that has unused capacity in a water conveyance facility must make that capacity available, if fair compensation is paid for that use and other requirements are met, including:
  • The commingling of transferred water does not result in a diminution of the beneficial uses or quality of the water in the facility and the transferred water is of substantially the same quality as the water in the facility.
  • This use of a water conveyance facility is to be made:
    • Without injuring any legal user of water;
    • Without unreasonably affecting fish, wildlife, or other instream beneficial uses; and,
    • Without unreasonably affecting the overall economy or the environment of the county from which the water is being transferred.

Cadiz will need to use MWD’s Colorado River Aqueduct (CRA) to wheel the water to its partner water agencies. In a September 15, 2017 letter to Senator Feinstein responding to her earlier letter regarding the Cadiz project, MWD General Manager Jeffrey Kightlinger made a number of points, including:

“The facilities identified in the FEIR may not be adequate to meet Metropolitan’s requirements for introduced water into the CRA. Additional treatment and adequate reservoir capacity are not contained in the current project description and would likely need to be addressed in additional environmental documents.”

Cadiz has not yet submitted a formal wheeling proposal to MWD. Consequently, it is not clear precisely what additional facilities or water treatment process will be needed beyond those identified in the FEIR, nor whether addition of those additional facilities or water treatment process will necessitate additional environmental review.

• A lease agreement with the State Lands Commission. In September 2017, SLC notified Cadiz that it appeared the project will cross state-owned lands under the SLC’s jurisdiction and reminded it that any use of those lands will require a lease from SLC. Further, “[b]ecause the Commission will be making a discretionary decision when considering a lease, a subsequent EIR or its equivalent may be required to meet the California Environmental Quality Act requirements. Staff will make a final determination about possible ownership of other lands within the Project area and conveyance route, and the level of environmental documentation to be required, after we receive your application.”

Cadiz has not as yet submitted a lease application to SLC. Consequently, it is not clear if SLC will require a subsequent EIR or its equivalent.

What Is The Objective Of The Proponents? There are at least two camps. One group is clearly trying to simply kill the project. They won’t be satisfied until the project is totally abandoned. Another group simply wants to ensure that the project is sized appropriately, whatever that size might be. The author appears to be firmly in this second camp.

How To Resolve The Conflict – Staff’s view is that the conflict will remain unless and until an arbiter, that both is and appears to be fair, objective, and independent, reviews and assesses all relevant studies to:

• Estimate the sustainable yield of the groundwater basin, and
• Assess risks of undesirable results should that yield estimate be overstated.

Here, sustainable yield has the same meaning as under SGMA, namely “the maximum quantity of water, calculated over a base period representative of long-term conditions in the basin and including any temporary surplus, that can be withdrawn annually from a groundwater supply without causing an undesirable result.”

Once the sustainable yield is determined, then the project would be redesigned as necessary to conform to the sustainable yield and a monitoring system would be designed to ensure the undesirable results.

Who Is A Fair, Objective, And Independent Arbiter? This bill proposes the State Lands Commission as the arbiter. SLC is composed of the Lieutenant Governor, the State Controller, and the Governor’s Director of Finance.

In the eyes of Cadiz, SLC is likely suspect, as both the Controller and our then Lieutenant now current Governor previously signed letters supporting previous versions of this bill last year.

Similarly, the supporters of this bill likely find the researchers hired by Cadiz for its research are suspect, including the authors of its most recent report. This may be especially true as at least one of the authors of the most recent report previously signed letters opposing versions of this bill last year.

(This is not to suggest that any of these persons are, in fact, biased. Only that others may infer there may be some sort of bias.)

If Not State Lands, Who? There are a number of candidates:

• Another state agency, such as DWR, which provides technical support for SGMA and assesses groundwater sustainability plans; DFW, which assisted DWR in identifying groundwater basins with groundwater dependent ecosystems; the Natural Resources Agency, which includes both DWR and DFW; or the State Water Resources Control Board, which is the ultimately backstop for SGMA and has a well-established process for hearing and deciding conflicts.
• An independent panel, the membership of which could be selected by a state agency, or by some independent science organization such as the National Academy of Science or the California Council on Science and Technology.
• A state agency informed by an independent panel, where the independent panel would assess the science and make recommendations to the state agency, who would ultimately determine the safe yield, etc.

Related Bills:

AB 1000 (Friedman, 2017) was substantially similar to this bill. AB 1000 was held on suspense in the Senate Appropriations Committee.

SB 120 (Roth, 2018) was identical to this bill. According to the Chair of the Senate Appropriations Committee, SB 120 was held in committee for procedural reasons.

Technical Amendment. The bill states that SLC must find that “the transfer of the water will not adversely affect the natural or cultural resources … of those federal and state lands.” The bill should probably read “of those federal and or state lands.

SUGGESTED AMENDMENTS

On page 2, line 10, delete “and” and insert “or”

SUPPORT

National Parks Conservation Association (Sponsor)

Senator Diane Feinstein

Controller Betty Yee

Mayor Eric Garcetti

29 Palms Inn

Active San Gabriel Valley

Amah Mutsun Land Trust

Amah Mutsun Tribal Band

Amargosa Conservancy

Audubon California

AZUL

California Coastal Protection Network

California Democratic Party Rural Caucus

California Environmental Justice Alliance

California League of Conservation Voters

California Native Plant Society

California State Parks Foundation

California Wild Sheep Foundation

California Wilderness Coalition

Campbell House

Center for Biological Diversity

Center for Community Action and Environmental Justice

Center for Food Safety

Chicano Indigenous Community for Culturally Conscious Advocacy & Action

Civic Sundays

Clean Water Action

Coalition to Protect America’s National Parks

Community Water Center

Conservation Lands Foundation

Defenders of Wildlife

Desert Tortoise Council

Earthjustice

East Area Progressive Democrats

Environment California

Environmental Defense Fund

Environmental Water Caucus

Environmental Working Group

Feminists in Action

Fort Mojave Indian Tribe

Friends Committee on Legislation of California

Friends of Big Morongo Canyon Preserve

Friends of the Earth

Friends of the Inyo

Gateway Neighborhood Association

Harrison House Music, Arts, & Ecology

Hispanic Access Foundation

Indivisible CA33

Indivisible California Green Team

Indivisible Northridge

Indivisible South Bay - LA

Inland Empire Waterkeeper

LA Waterkeeper

Leadership Counsel for Justice and Accountability

Los Angeles Indivisible

Lost Coast Interpretive Association

Mojave Desert Land Trust

Mojave National Preserve Conservancy

Morongo Basin Conservation Association

Native American Land Conservancy

Natural Resources Defense Council

Nature for All

NextGen California

Orange County Coastkeeper

Planning and Conservation League

Sacred Places Institute for Indigenous Peoples

San Bernardino Valley Audubon Society

San Diego Coastkeeper

San Diego County Democrats for Environmental Action

Sanctuary Forest Inc.

Sequoia ForestKeeper

Sierra Club California

Southern California Watershed Alliance

Southland Resistance

The Nature Conservancy

The Vet Voice Foundation

The Wilderness Society

The Wildlands Conservancy

Wholly H2O

Individual (1)

OPPOSITION

Orange County Supervisor Lisa Bartlett

San Bernardino County Supervisor Janice Rutherford

Association of California Water Agencies

BizFeed

Building Industry Association of San Diego

Building Industry Association of Southern California

CADIZ

California Association of Mutual Water Companies

California Building Industry Association

California Chamber of Commerce

California Groundwater Coalition

California League of United Latin American Citizens

California State Council of Laborers

Chambers Choice Drilling

Chambers DP Drilling

City of Mission Viejo

East Orange County Water District

El Toro Water District

Engineering Contractors Association

Limoneira Company

Greater Irvine Chamber of Commerce

Groundwater Resources Association

Hispanic 100

Inland Empire Economic Partnership

Inland Empire Utilities Agency

Laguna Beach County Water District

Los Angeles Area Chamber of Commerce

Municipal Water District of Orange County

Orange County Business Council

Otay Water District

Regional Council of the Southern California Association of Governments

San Gabriel Valley Economic Partnership

Santa Margarita Water District

South Orange County Economic Coalition

Southern California Partnership For Jobs

Southern California Water Coalition

Three Valleys MWD

Twentynine Palms Water Districts

VICA

-- END --