Assembly Standing Committee on Water, Parks, and Wildlife

Hello, Dr. Schmidt. Can you hear me?

Good morning. Okay. We're going to bang the gavel, see what happens. Oh, look. That worked. Okay. We're going to begin the Water Parks and Wildlife Committee Hearing. We're going to begin with our informational hearing. At the conclusion of the informational hearing, hopefully around 11:00 a.m., we'll have a regular Committee hearing where we will hear two bills, AB 676: Bennett and AB 125: Bauer-Kahan. I'll begin by sharing logistical information to ensure the public access to the discussion.

First, the hearing is being live streamed on the Assembly's website for anyone who wants to follow along. Second, after the final panel, the Committee will take public comment either in person here in Room 444 or via the phone. If you want to provide public comment via the phone, call in number for the hearing is 877-692-8957 and the PIN is 1315444. Please call in when we've heard from the last witness on the agenda.

The operator on the line will give you instructions on how to be placed in the queue. If you're calling in, please eliminate all background noise which includes muting us so we don't hear the echo, and now we will turn to the informational hearing. So I want to thank all of you for being here and all of my colleagues for joining us for this important conversation on the status of the Colorado River.

As we all know, the Colorado River is crucially important water source to California, but to the entire southwest. However, more than two decades of drought have caused sharp declines in the water available for use within the Basin. In fact, 2000 to 2021 were the driest years in 1,200 years in the Colorado River. As the water levels in Lake Mead and Lake Powell continue to decline, the federal government is weighing various ways to address the shortage.

Whatever decisions are made later this year will likely impact water supplies in California and the entire west. It will likely reduce water flowing to the Salton Sea and may reduce flows for environmental restoration efforts in Mexico. While this is the current situation, we also know that climate change will continue to influence hydrology within the Basin, similar to what we are seeing with the snowpack in our Sierra. For me, that leads to the question about how do we as California and its water agencies--

Are we getting anywhere or do I need to--

We can hear you. If you could hold on one second, but we're almost ready. We need to prepare for this less certain future, and we need to know as a state how we can be supportive of the agencies that have long relied on the Colorado River. So I'm excited to hear both from experts, our statewide folks, and our local agencies on what the future holds and how we can best support all of you.

With that, would any of my colleagues like to join in before we start? No? We'll have lots of opportunities. Okay, so we're going to start with you, Mr. Schmidt. So, you ready?

Hello. This is the AT&T operator. The Webex feed is in the main and it is waiting to speak. One moment.

I can hear no one. I cannot hear anything in the room.

Okay. One moment. Okay, they should be open now.

Mr. Schmidt, can you hear us?

I can. Can you hear me?

We can. Amazing.

I apologize. I did not hear any of the opening remarks.

That's okay. I was saying that we were in a drought. You can go ahead.

Thank you very much. Can you...

So we can see your slides?

See my presentation slides?

Yep. Yep, they're up.

Can you see them?

We can.

All right. Thank you. Let me try to be efficient. Thanks for this opportunity. This is obviously an important issue. Let me just start with some broad context. At some level, this is all about climate change and it's about consumptive use. Climate change is causing a decline in water supply in the Colorado River Basin that is necessitating a political response, primarily reconsidering the water allocation schemes that are described in the Law of the River, and that's going to necessitate management schemes that will ripple all the way down to environmental and ecosystem effects.

I just want to briefly talk to you about the nature of the declining water supply, and I'll very briefly talk about some of the ecosystem implications. These are hydrographs, and I'm assuming you can see my cursor, and this is in the course of a year, the ebb and flow of the Colorado River system during the time when the Colorado River Compact was negotiated in the earliest part of the 20th century, a big snowmelt pulse of the Green River, the Colorado River, and the San Juan River which became the big snowmelt pulse through the Grand Canyon all the way to Yuma.

The primary water supply to the system are the Rocky Mountains. That's where all the water comes from. Each blue diamond on this graph is the estimated natural flow coming out of the Upper Basin.

If there were no humans, no reservoirs, and no water use in the system, and you can see great variability in the flow, and I've shown a black line which is a moving average and I've divided the system--and this is commonly, this is what the science community does--into the average flow for the early 20th century when the Colorado River Compact was negotiated, about 18 million acre feet, average conditions for the rest of the 20th century, about 14 million acre feet, and then conditions in the 21st century, 12.5 million acre feet.

There's great variability. Between 2018 and 2022, there was a little less than 11 million acre feet in the system. This 2023 year that we're in the middle of, Reclamation just announced their first preliminary estimate of what this year's natural flow will be, and it'll be nearly 19 million. So, great variability, but overall, the modern river is 30 percent less runoff than when the Colorado River Compact was negotiated and 13 percent less than conditions through the 20th century.

If we look more carefully at the last 40 years, this blue line is the up and down of the average flow of the river coming out of the Upper Basin plus inflows within the Grand Canyon, and you can see we had the very wet years of the 1980s, a few good years in the 1990s, a big long period of low runoff in the early part of the 21st century, a few good years, most notably 2011, and I've put a star at the estimate of the total water supply in the system in this year.

I'd like to note in red is the total estimated consumptive use in the river: all of the states plus all of the evaporation from reservoirs plus the water delivered to Mexico, and there's much less up and down in the uses. It's been pretty much the same since about 2005.

And whenever the red line is higher than the blue line, that means we're spending more out of our checking account than is our income in those years, and whenever the blue is higher than the red, that means we're using less than has come in. In blue is a total reservoir storage in the Colorado River system, and the system was essentially full at about the year 2000.

Since that time, reservoir storage has greatly decreased to its present condition, in which Lake Mead and Lake Powell are less than 30 percent full. The other point to make to really emphasize is this brown line is how much of the water is just in Powell and Mead. You can see that there's not much of a difference here. This is all the other reservoirs in the system. This is just what's in Powell and Mead, and this is everything else.

So really, the story of the system is what is in Powell and what is in Mead, and we're more than 30 million acre feet down in capacity. How did we get to this situation? We got to this situation in an episodic way. The system was nearly full in 2000, and for eight years, we spent more than we got in income and we only had one year that we had more runoff than we used.

As a result, if you're spending more than your income, you spend down your bank account and that's what we did precipitously. For the next 11 or 12 years, we had a few decent years, another big low year, and the system sort of moved along and actually decreased a little bit, but the point is, during this period, even though we greatly sank the system in the first part of the 21st century, we never rebuilt it.

And the political agreements negotiated in 2007 set in motion some plans to potentially reduce consumption, but they never were implemented in a way that ever got us any recovery such that in the year 2020, after more than a decade of living on the edge and the brink of disaster, we then had the next several years of very low runoff, we'd never recovered the system, and therefore, when the next period of dry years occurred, the system plunged to its present crisis.

The star again is the estimated inflow in 2023, and it represents a rare opportunity to recover reservoir storage. This year's snowmelt is indeed large. The current snowpack is a little less than 170 percent of median. In this black line is a present snowpack rising to its peak and now beginning to melt, but let's do some back-of-the-envelope calculations.

If the total supply from the Upper Basin plus Grand Canyon plus a few other places is going to be about 20 million acre feet in 2023, and the average consumptive uses and losses in the last five years that we have data is a little less than 15 million acre feet, then we would need four to five more gangbuster years just like this repeated every year in a row to refill the system.

That's not going to happen, and therefore, the only option is to reduce uses because this 2023 year is likely to be a one-off, unusually big year. Who uses the water? Let me just quickly cover this. In the Upper Basin, Colorado is the biggest user, using a little less than 50 percent of the water. If we also consider the proportion of water evaporated in reservoirs, Utah is the next significant user, but I'd like to point out that these uses are pretty flat and haven't changed much in 40 years.

Of this, agriculture is the biggest user of water, largely irrigated pasture and alfalfa, 60 percent of the total use if you consider all reservoir evaporation, 70 percent if you ignore reservoir evaporation. About 17 percent of the water in the Upper Basin goes out of the Basin to the Denver, Colorado Front Range and the Wasatch Front.

In the Lower Basin, California, as you know, is the largest user of water and Arizona is the next most significant user of water, but as the setup to the need to reduce consumption in the whole Basin, this slide captures the nature of the great debate before us. The Upper Basin uses in total about as much water as California uses.

If you consider the uses in the Lower Basin plus evaporation from reservoirs and losses to the riparian ecosystem, then the total amount of water in the system that has to be released out of Hoover Dam is a number like 10.4 million acre feet. So this is the great debate. The Upper Basin says, 'you guys in the Lower Basin use all the water, you make the cuts.' The Lower Basin says, 'we've been using this water for many, many decades and fuel the largest economies in the world.'

'You should make the cuts in agriculture.' This is the debate, and I'm sure that the panelists will all touch on the details of who makes the reductions, but my point is, somebody needs to make the reduction. Our estimates are that the needed reductions have to be on the order of two to five million acre feet, and I've shown that in this little red line, but the amount of a drop to be made precipitously in consumption throughout the Basin is fairly unprecedented.

And thus is the reason for this great political debate, is the unprecedented nature of everybody looking at the other guy and saying, 'somebody else needs to cut. We know we need to cut, but somebody else needs to do it.'

And the last warning is that most climate projections--and it all has to do with the estimates of carbon loading into the atmosphere and how much the atmosphere warms and the linkage that a warmer atmosphere lengthens the natural growing season, moves tree-line higher, creates drier soils--is that by mid-century, we're looking at between nine and eleven and a half million acre feet runoff.

That's much lower than today, and so that is the crisis. It's not just that we need to immediately reduce consumptive use, but we need to reduce it even further at the climate warmth.

In blue are the hydrologies of the modern river in contrast to what I showed earlier which was the river of old, and you can see how little water is in parts of the river. Along the California Arizona Border, a large, large amount of water is released out of Hoover and Davis Dam. It's progressively taken out to Southern California to the Central Arizona Project, to the Imperial Valley and the Mexicali Valley, such that zero makes it to the sea.

And thus, this is what the river looks like in the old days in the Delta and what it looks like today, and when a river is fully tapped, then when the supply goes down, something has to give in consumption because no water makes it to the sea even today. So we have a river in four parts, the Upper Basin where there's lots of water, much less use.

Water goes through the Grand Canyon, sequentially gets taken out along the Lower River, and then nothing gets through to the Delta. This is the modern river. We must make significant reductions in use and loss. 2023 is a rare opportunity to recover reservoir storage if we reduce consumptive use right now despite the fact that we have a big water year, and all of these decisions will affect the ecosystems of the river. So there you go, and I'll have a great conference and I'll look forward to listening.

Thank you, Mr. Schmidt. I don't know if anyone has any questions for you before you hop off. Yeah. Ms. Pellerin.

Just wondering if we can get a copy of that slide.

Oh, yeah. Do we have the slides? Yes, we can send those around. Thank you. Yes, Mr. Mathis.

Completely agree with the fact that water levels are going down and we need to look at changes. Question is: first, could you dive a little bit more into the environmental uses of water that are coming from that system?

Sure. Let me just quickly return to the image that I provided in that last slide. In the Delta, first, if we move upstream, the Delta is an ecosystem which there's no soft pedaling it. It's an original ecosystem that has been completely destroyed because you take one of the most productive delta estuary ecosystems and now you have zero flow in it. So everything in the Delta is about releasing little bits of water to maintain or create groves of natural vegetation that has a lot of ecological benefit.

But that would require everyone in the Basin reducing their uses to intentionally reduce water to the environment in the delta in Mexico. Upstream between Hoover and Yuma, there is a declining amount of water, but you've got a lot of water in the system that you've got to route all the way down to Imperial and then a bit more water to Mexico.

And there what you've got is a lot of pumping systems to maintain created habitat on the old floodplains of the river funded by the Lower Colorado Multi-Species Recovery Plan, and that's a program that probably will continue just fine, even because you're moving a lot of water through the system. Grand Canyon is sort of the scenic bedrock ditch between two parts of the same big, enormous reservoir, Powell and Mead.

And so Grand Canyon always has lots of water because you're moving lots of water to the Lower Basin, and so Grand Canyon has lots of ecological, recreational, and spiritual significance, and it will always have the water that's going from the Upper Basin to the Lower Basin.

In the Upper Basin itself above Lake Powell, there's relatively lots of water and a natural feel. There are a few rivers that have been largely dewatered, but there's a whole lot of water in a lot of places in the system, so the water moving through the system accomplishes lots of ecosystem benefit at the same time simply because you're having to move water through the system. Does that make sense?

Yes. So on an overall, if you were to take a percentage of how much water is used for environmental use versus human use--whether it's household, industrial, et cetera--what's the percentage break-off between environmental and human use?

It. I would say that for dedicated and environmental uses, the percent for the environment is virtually zero. The system routes water from the upper basin to the lower basin. Now, along the way, people enjoy that and the ecosystems enjoy that. But there are no places where we specifically dedicate water to the environment such that no one can use it. Every drop of water gets used.

If we were delivering water to the delta below Morelos Dam for only the environment, then that would be an amount of water dedicated to the environment. But from my perspective, at this point, that number is minuscule and virtually zero. That is not to say that there are not great ecosystem benefits through the Grand Canyon of moving that water, that there aren't great ecosystem benefits of moving the water out of the upper basin towards the lower basin. But there's no part of the river system where we say hands off to the water because if you do that, somebody else downstream uses it.

And that's specifically for Colorado, correct?

I'm not sure I understand the question. Are there uses of...

When you're saying what you're referring to right now is water from the Colorado River?

Yes. Yes.

Okay.

Yes.

Now, for the entire California system as a whole, including water south of the Bay Area Delta, but we're talking water in general.

Yeah, I apologize. My remarks were only about the Colorado River.

Okay. I just want to make sure we're clear because there's always different numbers out there on environmental use versus agricultural and human use. I want to make sure we're being specific that we're talking about Colorado versus the rest of the California system, you know, going Shasta through the delta and south.

That is correct. And to use a good comparison, in California, water is passed through the delta of the Sacramento-San Joaquin for environmental uses, and it goes out to the sea. In the Colorado River system, nothing goes through the delta except the rare intentional short term release.

Mr. Schmidt, I think there's some confusion.

Only about the Colorado.

Mr. Schmidt, I think there's some confusion. You weren't the only one who was, about the delta. We have a delta up here in Northern California. Can you just clarify which delta you're speaking of so that everybody is on the same page?

Water is released through the Sacramento-San Joaquin delta on a regular basis. And I'm aware that that is controversial and for the environment. My remarks had nothing to do with that delta. My remarks were only about the delta of the Colorado River in Mexico. I apologize for the confusion.

Thank you. Now, you mentioned about how we need to look at lowering our water usages. Beyond just doing that, what are some options you would recommend the state to look at, to increase water into these systems, especially for California to look at. Should we be looking at things like more desalination? Should we be looking at things like more water recycling? Should we be looking at adding additional storage to other parts of our system? In your opinion.

Yes, in my opinion. In the long term, if someone invents a cost effective, energy efficient way to desalinate water, those people will justifiably be gazillionaires. That is an important and critical component. We need to be doing everything we can to continue to conserve use. We must. We need to carefully look at agriculture and what crops we grow and to be continually increasing the efficiency of agricultural use of water, because agriculture is the biggest consumer of water.

And then ultimately, California is a leader in its efforts to reduce carbon emissions into the atmosphere. That's a very long game, but so long as the atmosphere warms, we're going to keep having a further decline in water supply in the system. I cannot speak because it's just not what I work on, the other water systems that supply Southern California, the Owens and the State Water Project. But from my perspective, we must be implementing conservation, and desalinization is an inevitable something that's going to expand inevitably.

Thank you.

Thank you. Mr. Bennett.

Thank you. Really appreciate the clarity of your presentation, the fact that your slides are available. I just have one question for you. Do you have any information, since we have such a variable supply of water, do you have any information about how much of our current consumption could we classify as variable? In other words, crops that don't have to be planted every year versus permanent crops like orchards, et cetera? Do you have any of that information for the uses of the Colorado River water? What percentage of them are more flexible versus those that have less ability to flex as our supply flexes?

Let me speak frankly to guys, worked in this a long time, but for whom, I'm not an agricultural economist or anything like that, so just take what I say with a grain of salt. I think that when you look from the highest, most distant, big perspective, most of the water use in the upper basin is for pasture grass and alfalfa. There are lots of examination of strategies to partially fallow the land, to not irrigate fully.

And I think that all of those options, at least in the upper basin, ought to be in play in a serious way because critically, the most significant uses of water are for livestock forage, and those have to be the most adjustable strategies. And it's long been recognized in the basin that agriculture is the great buffer. A state like Nevada has essentially no agricultural use. As they reduce further and further and further their urban uses, there's a point at which you can't reduce it anymore.

You have no buffer, but for most of the system, you have a big buffer. And then similarly, in the lower basin, in Arizona and California, we have large agricultural uses of water. And I would argue that it is a significant difference between growing cauliflower and lettuce and tomatoes in the winter in the lower basin versus growing alfalfa, livestock forage, or, God forbid, cotton, certainly in the summer and at times when water uses is significant. So at the highest, most rarefied way, there's tremendous buffer in the agricultural community that's got to be dealt with in fair economic and economic justice terms. But there's a tremendous amount of buffer there.

Thank you.

Thank you. I have one last question for you. First of all, I was taken aback by the briefing document we had which indicated the population growth is going to increase the needed amount of water off the Colorado River to between 18 and 20 million acre feet from where it is today. And looking at those averages of 12, that's something we need to be grappling with.

But one of the other things it talked about was the native people who live in the Colorado River basin, and that there's still, I think it was 22 tribes have adjudicated rights to the water, but there's still 12 tribes with claims to the water that are outstanding. And we had a hearing last year on our native Californians and the history of the water being taken from them.

And we discussed the importance of ensuring that the native people have access to the water that they need and deserve and have a right to. So it looks from this document that those 12 additional tribes with unresolved water claims may be also adding to the system as well. Can you talk a little bit about those increases in water demand that may be coming in the future?

Well, that is a multimillion dollar question, isn't it? If the tribes are asserting their legal rights to 20-ish million acre feet or whatever the number is in a system that has no water and is in deficit, how in the world do you do that? I think that people who will be testifying after me participate in behind the scenes negotiations and talks with the tribes. It's not my place to speculate from afar, but I would say, I do work with some tribes, especially in the lower basin now.

And I would say the focus is primarily on recognizing their legal right and recognizing their senior legal right to the water. It is true that the tribes want to explore, in some cases, utilizing more water for agriculture, but in other cases, it's my sense that the tribes are willing to lease back that water, but potentially for justified economic recompense for other people using their water. And tribes have complained that their non-use of water has sustained the system and they haven't been reimbursed for it.

So I think it's one issue is recognizing the tribe's legal rights. And then the second question is, what are you going to do with that water? There's certainly a new agreement in Arizona for the Colorado River Indian tribes to begin to have the right to market their water to traditional municipal users elsewhere in the state. So I think it's two different issues.

But it is absolutely true that the world has changed significantly in the last two-ish years, and that the assertion of tribal interest and recognizing tribal senior water rights is a part of the puzzle and conversation that was largely ignored 10 or 20 years ago.

Well, thank you, Mr. Schmidt. We really appreciate your being here. You're laying the found work, the groundwork for the rest of the conversation, and thank you for your time. So we're going to move to our next panel. We have Secretary Crowfoot here in the room, and I believe we have Mr. Hamby from the Colorado River Board of California. They are both here. And then Mr. Harris, also in person with us, Executive Director of the Colorado River Board of California.

Well, Chair, Members of the Committee, thanks so much for allowing us to testify and for holding this hearing. Obviously, the future of the Colorado River is important not only to our state, but our region and the entire country.

Moderator, can you mute the phones, please?

So this is an important opportunity to unpack all that we face moving forward. I'll start by providing sort of a 10,000 foot view of water in California and how the Colorado River plays in. I know that many of you and many folks that are watching might live these issues week to week, so this may be a little repetitive, but I'll spend a few minutes just level setting.

So I lead the Natural Resources Agency here in the state, and water management is split between our two environmental agencies at the state level. Our State Water Board and the Regional Water Boards are part of the California Environmental Protection Agency. And our agency includes the Department of Water Resources, which administers the State Water Project, the infrastructure, the reservoirs, the conveyance that moves a lot of the water in the state and has other functions.

Important for this hearing, our agency also includes the Colorado River Board of California, to which Mr. Hamby is Chair, and Chris Harris is the Executive Director, that entity within your state government essentially serves as the secretariat or organizer, coordinator for the water agencies that have water rights in California. So you'll hear from the leader of Metropolitan Water Agency of Southern California later in the hearing. Serving 19 million people, part of the Colorado River Board of California and our agricultural water agencies, including the Imperial Irrigation District.

So close collaboration across state government. And really the point of the spear on this discussion of the Colorado River and its future lies with the Colorado River Board of California. I, as the agency leader on behalf of the Governor, working closely daily, weekly with both Mr. Hamby and Mr. Harris to navigate a way forward for the sustainable future of the Colorado River. At the highest level, California gets about 40% of our water in a regular year from groundwater and the remaining 60% from snowpack and rain and its runoff.

Obviously, that 40% of groundwater can grow during a drought where we have less surface supplies and more groundwater usage. And it's why it's so important that we're advancing sustainable groundwater use and implementing what we know as SGMA, really critical. But the conversation today is really about the snowpack and the surface water use in California. Two mountain systems collect that snowpack for the benefit of California. The Sierra Nevada, of course, and the Rocky Mountains.

The Sierra Nevada, when snow falls on the western side of the Sierra Nevada, that all pushes into a bunch of rivers that are in the San Joaquin system, in the Central Valley, and the Sacramento River system as well. That then goes out through the Sacramento-San Joaquin Bay Delta, the delta we know. Some portion of all of that snowmelt ultimately is diverted through the delta and is used by, not only Southern California in the Central Valley, but large portions of the Bay Area as well.

When snow accumulates on the eastern side of the Sierra Nevada, that flows into a set of river systems that also benefit California, including the Owens River, that provides water to Los Angeles. So that's the water that really falls and is used within the state. The Colorado River system obviously collects all of the snow that falls in the very large Rocky Mountain system across seven states. And water users, 40 million water users across seven states in the US use that water, half of which are in California.

So important note, 20 million or half of the Colorado River users are Californians. Also, 5 million plus acres of farmland in the west irrigated by Colorado River water. And importantly, Mexico shares that water as well. So when we've had a drought like we have in California, we oftentimes focus on the Sierra Nevada and the San Joaquin Sacramento river system because that is a large portion of our water.

But as the previous contributor noted, Colorado River has been experiencing a drought that stretched over two decades, which has had major impact, primarily on Southern California and southeastern part of California. That really relies heavily on the Colorado River. What Mr. Hamby will tell you is that the Imperial Valley, which provides prosperity to hundreds of thousands of Californians, relies solely on the Colorado River, whereas other parts of the state actually mix their supplies. So climate change is obviously accelerating. Its impacts are accelerating.

We all talk about weather whiplash. The Governor likes to say the dry periods are getting drier, the wet periods are getting wetter. So we clearly need to modernize our management and live within this new reality and upgrade our infrastructure. And that's really what we're focused on across California. Part of what we're discussing is how to balance usage of these river systems. But part of what we need to do, and thanks to the Legislature's investments, the Governor's leadership, we are doing, is diversify our water sources.

So that includes improving our efficiency and conservation, expanding recycled water, capturing more groundwater and storing it underground, capturing stormwater in our urban areas, expanding desalination where it makes sense, and even targeted above ground storage. Our scientists tell us we're going to lose about 10% of our water supply by 2040 simply because of hotter temperatures. We're going to have those dry periods, those wet periods, but hotter temperatures mean more of that snowpack evaporates in the warming air and absorbs into thirstier soils.

So we need to diversify our sources of water. And the Legislature, the Governor, have invested over $8 billion in the last two years to help local and regional water agencies do that. But important point for this discussion is we continue to believe that we will need to move water across long distances within these river systems to sustain California. And that includes from the north or the Sierra Nevada, but it also includes the Colorado River Basin.

So, yes, we are working to diversify our supplies and build local self sustainability of communities across California, but we need to continue to have a durable, sustainable use of water, including on the Colorado River. So where does California come into the solution on the Colorado River? And what I'll say is it's exercising the leadership that it's demonstrated in the past.

So 20 years ago, in 2003, California had to reduce its water usage significantly, almost a million acre feet, as a result of Arizona and Nevada using more water and starting to use up their full apportionment of water. And California reduced its water usage through what was the, and remains the largest transfer of water from an agricultural district to an urban district in America. 500,000 acre feet of water from the Imperial Valley was shifted to greater San Diego.

And San Diego, in exchange, funded important investments into agricultural irrigation efficiency, so ag could continue and prosper in the Imperial Valley. It was a huge sacrifice. And one consequence of that is the reduction of water into the Salton Sea, which has created an environmental crisis in that part of the state. So that was California stepping up to reduce its water usage. In more recent years, water agencies, including Metropolitan, the large water agency in Southern California, have voluntarily kept water supplies in Lake Mead.

It's called intentionally conserved storage. And by doing so, they've staved off these pernicious cuts that we're now starting to experience, these harmful cuts, because of California water agencies voluntarily keeping water in Lake Mead. So, from our perspective, we have a great story to tell about California's water leadership building sustainability in the Colorado River Basin.

Fast forward, last summer, as the drought worsened and as these water supplies in Lake Mead and Lake Powell, the big reservoirs, were becoming alarming, the US Reclamation Commissioner, who leads, essentially the federal agency that manages western water infrastructure, identified the need to drastically cut water use across the basin. And that's what Mr. Hamby, Mr. Harris, will talk more about. I want to make the point that California water agencies were the only water agencies to step up and immediately voluntarily propose to reduce water usage.

And that proposal, that 400,000 acre foot reduction of water use across those water agencies per year as a proposal to achieve 1.6 million acre feet of savings in Lake Mead, is being implemented right now. So while you've read headlines about the inability of all of these water agencies to find a consensus solution, the good news is there's a piece of that progress moving forward, and that's California's voluntary water use reduction.

And that actually galvanized a voluntary proposal from an Indian tribe in Arizona to do something similar. And they actually identified California stepping up as the reason they were willing to do that. So we know that one of the benefits of this conversation, as challenging as it is, is everyone agrees on the premise of the problem statement, which is we all need to live in a smaller water footprint across the basin.

We also all agree that we need to find a shared solution across water agencies across seven states. There are myriad ways where we could continue to fight, litigate, but we recognize that one consequence of that continued approach would be the potential collapse of the system. And until this recent hydrology in the snowpack, we were looking at two or three years away from not being able to generate any power out of these two reservoirs and not being able to export any water.

So to a place like Imperial Valley, that's no water, and to a place like Southern California, that's a large portion of the supply that keeps the economy going. So we recognize that doing nothing is mutually assured destruction. We recognize that we have to find a way to live within our means. And I will say, and this is really my segue to the next speakers, progress is being made. Clearly, the conflicts or the disagreements get accentuated in media reports around this topic.

But I can tell you that week in, week out, month by month, there are productive conversations happening between our water agencies and water agencies in Arizona, Nevada, and the upper basin. And I am confident we will find a shared solution that moves us forward to conserve the water, we need to to stabilize the system and then look forward to what are called the guideline updates that you'll hear more about, which is really looking over coming decades around how we're going to live within this smaller water footprint given climate change. So thank you for your interest. Thank you for your broad investment in water, which is part of the solution. And I look forward to the conversation today.

Thank you, Secretary. I don't know who wants to go next. Perfect.

I'll go next. And I have some slides we'll queue up here briefly. Thank you, Chair, thank you, Members of the Committee. My name is JB Hamby. I'm the Chair of the Colorado River Board of California and California's Colorado River Commissioner. Next slide. So as we've talked about today, the Colorado River encompasses seven states in the United States and two in Mexico, Baja and Sonora. In the upper basin, you have Colorado, New Mexico, Wyoming, Utah. Lower Basin is Arizona, California, Nevada.

Secretary Crawfoot mentioned half of the Colorado River users in the basin and outside of it live here in California. Next slide. So the Colorado River Board was formed in 1937 to protect California's interests and rights in the Colorado River. It's composed of member agencies that are both urban and agricultural. We also have members from the Department of Water Resources and the California Department of Fish and Wildlife.

And recently and very historically, we have two at large members that have been appointed by Governor Newsom, President of the Fort Yuma-Quechan Indian Tribe, Jordan Joaquin and Frank Ruiz of the Audubon Society. Next slide. So each state has a representative on Colorado River matters. They can't represent all of the interests, but in order to comprehend all of the diverse stakeholders across the basin, each state has one appointed Commissioner for California. That's the Chairman of the Colorado River Board, who serves ex officio as the Commissioner.

The Basin State Representatives Commissioners meet periodically discussing conditions of the River operations, future operating rules, and collaborate with the United States, Mexico, and basin tribes. Next slide. Want to give you a little overview and tour of some of our agencies that rely and communities that rely on Colorado river water. First is the Palo Verde Irrigation District, one of the first users on the lower Colorado River. They have 105,000 acres of forage vegetables and fruit crops.

They're right alongside the river on the other side of the Colorado River Indian tribes just north of them. Next slide. In the very southeastern corner of our state is the Fort Yuma-Quechan Indian tribe and the Bard Water District. They each share this small valley on the other side of Yuma, Arizona, right on the river.

About half of the acreage is in the Bard unit, about half is in the Indian unit, and the Bard Water District serves and partners with the Fort Yuma Indian Quechan Indian tribe to deliver water there as well. Next slide. Then we have the Imperial Irrigation District with 3.1 million acre feet per year of rights to Colorado River water, irrigating half a million, roughly half a million acres of forage, vegetable, fruit crops in the Imperial Valley, wedged between Mexico to the south and the Salton Sea just to its north.

And the IID conserves and transfers, as Secretary Crowfoot mentioned, half a million acre feet of water a year in long standing durable partnerships with urban water providers in Southern California that have helped to maintain California within its 4.4 million acre foot allocation. Next slide. So that would be 3.1 million. The 500 is deducted from that, so it takes it down to 2.6 million, a little less than that, oftentimes, of total use on an annual basis, Assemblyman.

Then we have the Coachella Valley Water District, that's about 330,000 acre feet a year, plus some additional transfer water. Half of the Valley is urban, so think of Coachella festival, if anyone attended recently. And then the other half of the valley is dates, vegetables, fruit, turf crops there on the north side of the Salton Sea. Next slide. Then we have the Metropolitan Water District of Southern California, serving half of California's population.

26 Member agencies, base rights to 550,000 acre feet per year, supplemented with up to an additional 590,000 acre feet per year of supply, potential conservation forbearance following exchange and other transfer programs that have been developed over the years. Next slide. So a little bit of background on how California really kickstarted the development of the river and the cooperation of the states to work together.

So California was the quickest and one of the fastest developing regions in the early history of the basin, primarily in the Imperial Valley and its growth, and then the growth of the Los Angeles area, looking for additional water supply resources. The other states, being concerned about California's growth over time, wanted to protect their rights. California needing some stable supplies. There was periodic floods that were very devastating that used to flow through Mexico up into the Imperial Valley, and then the need for hydropower.

There was a dam that was needed on the lower Colorado River to harness the energy from that water and also to protect communities from those devastating floods. So in 1922, the cornerstone of the Colorado River's management, the Colorado River Compact, was signed by each of the seven states representatives. Half of the water allocated for the upper basin states, half of the water for the lower basin states. This was really meant to preserve upper basin future development. They were colder, higher, slower growing.

The lower basin states, particularly California and also Mexico as well, that was growing a lot with water at the time, partly from California, allowed the lower basin development to proceed. So California pushed and was successful in obtaining the Boulder Canyon Project Act from Congress in 1928 that ratified the 1922 compact. It authorized the construction of the Hoover Dam, the Imperial Dam, and the All-American Canal that delivered water directly to the Imperial Valley rather than going through Mexico where it used to go previously.

And it apportioned that seven and a half million acre feet from the lower basin states. For California, that was 4.4 million acre feet, 2.8 for Arizona, and 300,000 acre feet for Nevada. The Interior Secretary, Department of Interior, contracted individually with Palo Verde Irrigation District, the Metropolitan Water District, Imperial Irrigation District, and the Coachella Valley Water District for direct deliveries.

And California, because other states were concerned about California's growing use of Colorado River water, in exchange to get the Hoover Dam constructed for largely California's benefit, California voluntarily limited its rights in perpetuity to 4.4 million acre feet per year. Next slide. So California's agencies together, the Interior Secretary, wanted to make this water available for California as the Hoover Dam was being constructed, but needed to have some certainty and have the agencies work out amongst themselves how that water was going to be divided up within California.

So for California's base apportionment, there was 3.85 million acre feet per year allocated for the largely agricultural districts and then 550,000 acre feet for the Metropolitan Water District. Beyond that, there was additional water contracted for that later became an issue, which I'll get to in a moment. Additional water to Met San Diego, IID, Coachella, and then the Palo Verde Irrigation District for up to a total of 5.362 million acre feet per year of Colorado River use. Next slide.

So, in 1944, the United States and Mexico entered into the 1944 Treaty that apportioned water in the Rio Grande in Texas, also the Colorado River, and then dealt with a little bit of the Tijuana River as well. That gave Mexico 1.5 million acre feet per year in this binational agreement.

And it allows proportional shortage sharing between the United States and Mexico that Mexico has been a very good partner with over the years and developed minutes, which are basically small incremental adjustments or interpretations of the treaty that don't require US Senate approval. And then in 1963, Arizona and California ended their long battle between the two states over some key disputes that the two states had.

This was the longest case in the history of the United States Supreme Court, largely over California's opposition to the construction of the Central Arizona Project. This large canal that goes from Lake Havasu up to Phoenix and then Tucson, pulling large amounts of water out of the river. California felt that was going to impair California's rights and further this deficit that existed and was well known at that time on the river even prior to climate change, intensifying the situation.

Also dealt with Gila River issues and how the river was calculated overall and interpretations of the prior appropriation doctrine between states. The Secretary of Interior was required not to deliver outside of entitlements, report regularly and then also importantly, especially for California, it identified present perfected rights.

Those are rights that existed prior to the construction of the Hoover Dam and prior to the Colorado River Compact and ensured that those were protected, but also importantly, that the rights of American Indians in the lower basin were protected. Those are some of the highest priority water users on the entire basin are the tribes whose priority date is not based on their use, but based on the creation of their reservation, which makes them some of the highest priority users both in California and the basin as a whole.

Question, too, as he goes along.

Absolutely.

Could you just repeat, you said the Secretary can't deliver. I'm sorry, when you say the Secretary cannot deliver the state's outside entitlements, what do you mean by outside entitlements?

So there was a dispute at the time, if you saw in that chart, that basically divvied up California's 4.4, but it went beyond that. There were different interpretations at the time. There was an early case called Wyoming versus Colorado, which basically said, if you have individual states that have prior appropriation doctrine, basically the first in time, first and right principle, then it also applies between these states themselves. So California's historical interpretation was, we've been developing, we've been using this water before other states could. Yes.

While there's some idea about splitting the water on an agreement basis between the states, there was this rival interpretation that because California was developing, putting that water to use, making massive investments in development of those water resources, that was really what was critical to that case is this dispute between California, Arizona. California reliant on the priority system and the belief that because that water was put to use, developed the infrastructure developed to be able to put that water to use, whereas it was not in other states that California should have the right to that water.

So the Supreme Court, in that case, on a very split decision that was very consequential, stated that California was limited to that 4.4 million acre feet per year, that because it used in excess of that, it did not have the rights to it. So that has had lingering sort of consequences over time.

So the first in time, first in line was sort of.

Parts preserved, other parts not.

Got it. Thank you.

Next slide. And so in 1968, Arizona being successful in the Arizona versus California case, they developed the. We're looking to develop the Central Arizona Project, delivering water uphill several hundred miles. California, though stinging from that loss, got into the Legislation that in a time of shortage, that the cap's supply, which was going to further the deficit in lower Basin, would be subordinated to all of California's use, which is an important protection for our state.

And also required the interior secretary to develop long range operating criteria, which were baked in in 1970 for 8.23 million acre feet of releases from Lake Powell down to Lake Mead covering the lower basin, 7.5 million acre feet of use, plus half of the mexican treaty obligation. Next slide. And in 2003, as Secretary Crowfoot noted, California was depending on the surplus water that Arizona was not using historically until the Central Arizona Project was created.

So at that time, the interior secretary who was a former Governor of Arizona, required California to get back within its 4.4 million acre foot entitlement. That was an 800,000 acre foot reduction, which was a dramatic, steep reduction. It took five years to negotiate and 10 years to litigate beyond that to validate the agreement. But in essence, what it does is 3.1 million acre feet are quantified for IID.

Previously, it was flexible as much as it was able to use. CVWD at 330,000 acre feet, and then a bevy of individual transfers between water users uncompensated, agreed upon terms and bases. And then also because of the reduced water use in the Imperial Valley, there was less water being delivered to the Salton Sea as a result, which meant that there was going to be economic ecological consequences to the sea. The state then assumed the mitigation and restoration funding obligations under the agreement. Next slide.

And then sort of in closing here, the basin, moving away from a history of conflict and misunderstandings, has developed an effective way of managing, based on voluntary agreements between the seven states in partnership with the U.S. Bureau of Reclamation. So in 2001, there were interim surplus guidelines to divvy up the surplus. That was at the time. Very quickly it was realized in 2002 that we went from surplus to one of the worst years of hydrology ever.

The states then developed the 2007 Interim Shortage Guidelines, which we operate under today that expire in 2026. The '07 guidelines were not enough to be able to manage the system, so the 2019 drought contingency plan was adopted as an overlay to ensure that there were additional voluntary reductions that were made between the lower basin states. Mexico was able to contribute on a voluntary basis as well, and the upper basin had provisions to comply with their compact obligations. Next slide.

And then last year and this year has been filled with a lot of events. We're even going to be meeting with the lower basin states and reclamation tomorrow to be able to further our collaborative efforts. Last year, we had some really bad hydrology, and if nothing was done, it was realized the system was going to get to deadpool within two or three years time, at which point you physically cannot pass water through the dams anymore.

So the reclamation commissioner asked for two to 4 million acre feet of reductions. Fortunately, there was the Inflation Reduction act passed by Congress last summer that allowed for $4 billion of drought funding, which has been prioritized for Colorado River response that's been used to help California meet its 400,000 acre foot voluntary effort to be able to kick start the process.

It's also enabled this partnership between the CNRA between the Bureau of Reclamation, Coachella Valley Water district, the Torres Martinez Indian tribe, and the Imperial Irrigation District over Salton Sea impact response and additional efforts. So right now, we're engaged in this supplemental environmental impact statement process. The '07 guidelines which are expiring in 2026 are not enough at that time to manage the system. Reclamation opened up a process to revise the current guidelines. Fortunately, the hydrology has improved significantly recently.

So that'll enable us to move forward to 2026 to have a more stable position as we're renegotiating the next set of guidelines in earnest. And then also right now handling the current SEIS supplemental environmental impact statement process to revise the current guidelines. The lower basin states of Arizona, California, Nevada, who have historically had different conflicts, are working well together to try and develop at least an interim plan to bridge us over into the future.

And then in closing here on the next slide, the basin states are working together to develop this final SEIS. At least in the near term, the demand exceeds supply in the basin. There's no other way around it. The Inflation Reduction Act funding, the hydrology has helped significantly, but ultimately developing the next set of guidelines to operate the Colorado River.

We're going to have to tackle the decades of drought deficit that's deeply impacting the river system and the future effects of climate change that are only going to intensify future shortages. So California is working with our in state stakeholders, basin state tribes, Mexico, the United States, to be able to deal with things in the next short term basis and in the long term. And with that, that's my last slide there, and thank you for the opportunity.

Mr. Ward.

One question. When you said that for the IRA to be able to support the 400,000 acre feet of reduction, what did that support manifest in? Was it furrowing land? And how did we achieve 400,000 acre feet off of money?

Right. So reclamation, once they received that money, the Congress authorized it for three categories. There was what we call bucket one, two, and three. So bucket one was for near term conservation that can be generated quickly. So that's things like fallowing, that's efficiency based improvements, things that can generate water quickly. Then there is bucket two, which is federal investment in long term durable projects that can generate long term conservation benefits that are more than a year or two that can last into the future.

And then the third bucket was for drought related impacts to the environment. So that's been helpful and helped to provide that historic investment in the Salton Sea in partnership with CNRA and the local agencies and tribe.

Is that 400,000 acre feet? Is that a sort of one-time occurrence that came because of that infusion of money? Is it going to require additional federal support ongoing to be able to sort of achieve the same targets year over year? Or are some of those bucket two, bucket three projects kind of multi-year in nature?

That's a good question. So the multi-year projects, they'll be able to generate that conservation in the longer term, the issue is that we have this money, we're going to be able to generate water quickly. That was meant to help the system from collapsing, which is the situation it was in up until the recent multiple pulses of pineapple expresses, and so on. And so that's going to help us from now until the end of the current guidelines.

Those durable investments will help go beyond that, but certainly in the long-term, for the next set of guidelines post 2026, there's going to need to be use of these monies to be a bridge into the future, but there's likely a need for additional investment to be able to help sustain the either voluntary or mandatory reductions that will have to be, had to be able to adjust to the new and present reality in the basin.

Mr. Harris. Thank you.

Good morning, all. It's nice to be here with you. My name is Chris Harris. I'm the Executive Director of the Colorado River Board of California. And I kind of come at this with 30 plus years in the Colorado River basin. 1st 10-12 years was with the State of Arizona doing this job for Arizona, and I moved over here in 2000, so just before the QSA came in.

And I can tell you, in all the years I've been working on the Colorado River system, it's been a story of collaboration, and it was not always the case. And Commissioner Hamby and Secretary Crowfoot have alluded to things like Arizona versus California, multidecadal Supreme Court legislation, and significant conflict between the basin states and even between Mexico. But for the past 30 years, it's really been a story of, we understand what the consequences are of not working together.

It's failure, and it means the collapse of this system. Even back 30 years ago, we've been grappling with this supply and demand imbalance, if you will. The supply that's available is decreasing over time, but our demand increases over time. So it's always been a challenge. And every one of the steps that Commissioner Hamby walked us through and some of the story that Secretary Crowfoot told us this morning is we've stepped up when we've had to.

Yes, it's contentious, and it's really difficult stuff getting in these negotiations quietly in a small group with my colleagues and counterparts in other states and with the Department of the Interior or also with Mexico. I sit on the minute oversight group. I'm California's sole representative in these bi-national discussions on how we manage the Colorado river between our two countries. They are great partners.

We have now also ramped up significant partnership and collaborative efforts with 30 Native American tribes across the basin, 24 of which are in the State of Arizona. And, Madam Chair, you made note of the water rights state of some of the tribes across the basin. About 25% of the water uses and water rights within the basin are held by tribes in the basin.

Now many of them have, through Indian water rights settlements authorized by Congress, have allowed the tribes then to market or lease their Colorado River water supplies to generally the urban sector, whether it's over in central Arizona, Phoenix, and Tucson, metropolitan areas and other areas across the basin. Colorado primarily, and a little bit in Utah. But there are still tribes in Arizona specifically that have unsettled water rights. So they're in various stages of negotiation between that state, the Department of the Interior, and that tribe.

And each one of those is moving on a separate path. But I do believe interior recognizes that part of this puzzle that we all have of a shrinking bucket of water. And all of these uses, whether they are settled long time, historically-based uses with water rights in each state, or there are new demands on the system. The Lake Powell pipeline of a few years ago still hasn't gone away. It's still there.

Utah has the desire to build a pipeline, move water from Lake Powell to St. George, Utah, but there isn't the ability to develop new water supplies. All of us know that we can't develop new water supplies without probably retiring an existing water use somewhere. Dr. Schmidt referred to the ecological impact of this supply demand imbalance, and he was focused on the Colorado River delta down at the base of the river in the Gulf of California.

And that's a particular challenge because we have a national obligation the United States does each year to provide one and a half million acre feet to Mexico. And in times of shortage, they proportionally share with us. So the amount of reduction that users in the United States are bearing, Mexico takes that same pro rata, shortage reduction.

They have been great partners, and in fact, we're working right now with them to potentially execute a new minute to the treaty, which would provide for Mexico, contributing additional conservation that could remain in Lake Mead and help build storage there. Secretary Crowfoot reflected on the work we've done since 2007, and California has really been the leader in this and that is creating intentionally created surplus, implementing on the ground water conservation both in the urban sector and in the ag sector, and then leaving that water.

Since we're not using it here, we're going to leave it in Lake Mead. We kept Arizona from taking a shortage as early as probably 2015 until last year. So they benefited greatly by all of the dollars and the hard work that California did in keeping Lake Mead up high enough that they did not have to go into shortage condition.

We signed up voluntarily to enter into the 2019 Drought Contingency Plan, and the California agencies got together and said, we're the senior user in the Colorado River basin. We don't need to take a reduction until you essentially take the junior water users across the rest of the lower basin down. But we said this is the right thing to do, leave water in Lake Mead. And as Lake Mead declines, California's contributions continue to kick in.

And then you sir, referenced the 400,000 that we just signed up to do an additional 400,000 acre feet of reduction in 2022 October. And this is something I worked very closely with Secretary Crowfoot and our agencies in putting together this package. We had worked all summer in trying to negotiate a lower basin deal between Arizona, California, and Nevada. We couldn't get anywhere, but California said, all right, this is what we said we'd do in these negotiations all summer.

We'll just go ahead and forward lean into it and do it now. We had two things that came along that have profoundly changed where we're headed.

The trajectory that we're on as three lower basin states, and with our partner in Mexico, the historic opportunities under the Biden administration's IRA, that funding that $4 billion that's now being used for drought conservation and drought management across the west, but primarily in the Colorado River basin, is going to be a huge tool, and it will provide us a bridge, as both Secretary Crowfoot and Commissioner Hamby indicated through this remaining four years of the '07 guidelines, getting us to a place where we now can hopefully successfully pivot to creating the next set of long-term guidelines.

We only have three and a half years left to develop the operating and administrative guidelines, probably for the next 20 to 30 years. That's going to be a monumental task, which is why the second thing that we got was some help from Mother Nature this year.

This terrific hydrology that we received both in California and in the Colorado river basin, working together gives us the ability this year in water year 2023, to potentially back significant volumes of water supply that won't be needed in Southern California and leave it in Lake Mead. Just don't take it out. That's going to be a buffer. And it gets to what Dr. Schmidt was referring to is when you've got opportunities like this, don't waste them.

Take those big reductions now and put off having to take deeper reductions later. And if you all recall, and I think part of the rationale for this hearing back in February was the whole issue with the proposals, competing proposals between the six states versus California's proposal, and the failure of the negotiation process last summer and the hydrology back then. Even as late as January, we didn't know where this winter was really going.

Even as late as January, we honestly thought another dry year or two and we were going to reach those critical elevations in both Powell and Mead where you could not effectively move water through the system. But we now are in a position where we will balance the volume of Lake Powell and Lake Mead, and that's going to mean something around nine and a half million acre feet will be moved from Lake Powell down to Lake Mead. And that's going to move Lake Mead's elevation up significantly.

But we said, okay, one year does not get us out of a drought. Let's go ahead and continue as though we still need to do something around 2 million acre feet of water use reductions. Those are the discussions that we're having right now with my counterparts in Arizona and Nevada and with the Fed team. They're going well. And I can't go too far into the weeds right now.

But we are on a path that the goal would be to be able to inform the final SCIS that's being prepared right now. The two alternatives that were identified in that SCIS, one was follow the strict priority system, which would mean significant impacts to our urban water users in California, Arizona, Nevada, and potentially where they would get no Colorado River water supplies if there was not sufficient supply in Lake Mead.

The other one was just a straight across the board pro rata shortage, which should be concerning to everyone across the western United States. Now, it may well be over time that you can reach voluntary agreements among states to share equitably in water use reductions and so forth. But each state has a prior appropriation scheme. Each state has a State Water Resources Control Board or a DWR that manages those water rights.

So legislators in Montana are also watching what we do, that we don't upset the apple cart in trying to fix our unique problem down here that makes it difficult for them to deal with problems in the Snake River basin, or the Klamath River basin or the Rio Grande River basin.

So the tale I want to tell here, and piggyback on what they've said, is collaboration, the use of voluntary agreements, working together with our sister states, is definitely the most desirable path forward, because otherwise we are going to be back in a position where one state or a group of water users in states are challenging other states or water users in other states, and we'll be in the United States District court for the next decade.

And that will inhibit, if not prohibit, the ability for the states to collaborate going forward. So I think what we've done in the past, the past is present and we've got to keep doing it. It's hard, but I think you're going to hear from some of the water users. There are all kinds of opportunities, and all of you this morning have mentioned some of them. Whether it's desalination, wastewater recycling, stormwater capture, all of those things are tools in the toolbox.

You're not going to build a bunch of Carlsbad diesel plants up and down the California coast, but we are talking about a bi-national plant down in Rosarito with Mexico, U.S. funding along with Mexican funding, and some of that water could be peeled off and moved back up into, for example, the San Diego County Water Authority area of use. There are a lot of opportunities like that. We work with Mexico right now and we pay for on-farm efficiency and fallowing programs down there.

And some of that water conserve that we Fund now allows that water to come back to both Arizona, California, and Nevada. We all collectively work together. That's the path forward. Maybe I'll stop there.

Well, thank you. I really appreciate all the work you guys put into this, and you'll be back at it in '26, so don't feel too excited that it's almost over, but really appreciate it. Anyone have any questions? Yeah, Mr. Ward.

Thank you again. So I saw in our background that when we have a surplus here, that California is entitled to 50% of that surplus. And I'm wondering, given the dire circumstances that we have upstream to this infrastructure, what's the discussion on? Are we going to take that surplus this year? We're going to leave it. I think that's wise. And so are we seeing that matched by everybody else in their surplus agreements?

It's a great question, and it's actually contingent upon the secretary declaring a surplus. The Secretary of DOI. If in the decree in Arizona v. California, the court laid out normal conditions. How much each state gets when there is a sufficient supply under normal conditions, operating conditions. And then it's also defined what you do if there is insufficient mainstream water supply. In other words, shortage conditions. And those are specified in the 2007 Interim Shortage Guidelines. What are the reductions Arizona takes? What are the reductions Nevada takes?

And then these minutes we have with Mexico defines what their reductions are. And then there is the separate category, which we haven't used in a long time, since the early 1990s. If there is surplus conditions where they're either making releases for space building or flood control releases out of Powell and Mead, and reclamation needs to move that water down the system, then they open it up, and you can actually now take surplus supplies legally.

The decree enjoins the secretary from releasing water to any user unless it's authorized to do so. You must have a contract with the United States to take Colorado River water. So it's very strictly managed. They account for every acre foot of water that moves through the system. Dr. Schmidt, and just as a follow up, I would say with respect to Mexico, it's not as simple as just opening up the gates and letting that water go to Mexico.

If we provide water to Mexico at Morelos Dam, they can immediately divert it into their agricultural delivery system in the Mae Cali valley, and they can also send it over the hill via the Tijuana aqueduct to the urban sector on the coast. There's nothing that we can do to compel a sovereign nation to do something with additional water that we give it to them. It's their water once it hits their border.

Thank you, Madam. Chair, just two more quick questions. We recognize how, again, low the levels are right now. I think 23% of capacity, right? In Lake Mead and knowing that it would take, we heard, seven years like this year to be able to really get back to macropathy, which is very much not likely. As part of the conversations with the other states, are we maybe trying to think about some achievable goals? Do we want to try to get to 50% in a reasonable amount of timeline?

And is that something that's a little bit more near term that we could work toward as we're thinking about the 20-30 year negotiations?

So I think it's a short-term, and then there's a longer term goal. So from now until the end of the current guidelines in 2026, we're trying to keep the system stable. So the current hydrology has helped that a lot.

Plus the additional IRA funding funded conservation will help maintain stable elevations in the reservoirs post 2026, I think what your question is intimating is it's not healthy to be operating the system at such low levels, because if you have a couple of bad years back to back, you wipe out all of these users who are 100% dependent on the Colorado River and the lower basin. And that's just an untenable situation. So in the post 2026 guidelines, we'll need to develop what that looks like and what we can.

And volumetrically just., and I think this is where you were going, is trying to look at what is the delta that we're trying to solve right now during this interim period. The existing guidelines compel us to provide in this year, 721,000 acre feet of reductions, and California has stepped in with 400,000 on top of that.

And then if you wanted to completely close the structural deficit, and this is what Dr. Schmidt was talking about this morning, in other words, balance your checking account, so to speak, so that you're not writing hot checks on Lake Mead storage, you need about one and a half, maybe 1.6 million acre feet. So start doing the math. 721,000 acre feet, another 400,000. We've got a little ways to go.

But without saying anything more, I can tell you that the three states are working on closing that deficit. That's the challenge in a fashion that is balanced between our three states.

Are you seeing other states make investments in water recycling like we are?

Well, that's great question. And I believe Adele Hajj Khalil from MWD will refer to this. But yes, all three states, Arizona, California, Nevada, have gone in on a regional wastewater recycling center here in the metropolitan Los Angeles area. And then that would give met the ability to lay off taking Colorado river water and Nevada and Arizona, who've invested in it, they could take some of that water, but you've now taken California off that chunk.

It's now a supply that California can rely on in the metropolitan water District service area.

Right, but is Las Vegas doing that? Is Phoenix doing that?

Yes, they are. Yeah. And that's a really great point. And I wanted to say this. The other thing, I think that's necessary, and even from a state perspective and a basin-wide perspective, in the Colorado River basin, I really want to see water use consistency standards both in the urban sector and the ag sector. Los Angeles, for the past 18 months, has had a big chunk of their service area in human health and safety, but Phoenix wasn't. Las Vegas is good. I will give them props.

They are forward leaning into water conservation activities. But Denver, Salt Lake City, there's a ways to go if you're pulling turf out of metropolitan areas across the desert southwest, everybody needs to start doing that. It makes sense. And if you're also going to focus on ultimately what can be done in the ag sector to squeeze the sponge even more.

But we've got to have consistent standards, and this is probably more a role for the Congress to grapple with through things like the farm Bill, IRA funding, part two, should it occur, things like that.

Thank you. Yeah. Mr. Mathis, did you want to. Sorry, go ahead.

Just want to say I appreciate the conversation about the voluntary agreements, because I think we lose sight of that when we look at some of our water policies here in the state and things that we're looking at with water rights and things like that and of that nature, because those voluntary agreements allow us to work together collaboratively, as you just mentioned. Is there anything else you'd want to highlight more, just specifically to the importance of voluntary agreements.

In the Colorado river basin if, I don't think there is another path forward for us that can be successful. I think any other path, if you go in and impose mandatory water use reductions, for whatever reason, it's going to lead to litigation. Somebody is going to say, I can't do that. It's just a bridge too far.

But if you sit down and willingly engage with people, lay out what are the needs, whether you're trying to develop additional water supplies for tribes or the environment, or just make the system more efficient, like we did with the QSA and backstopped our urban water users, that's always the preferable path.

Thank you. And then one last thing. We've talked about the reductions in Colorado and things like that. I know we're primarily here to discuss water, but it doesn't go without saying that we lose loss of power generation as well. I don't know if the secretary would like to speak towards that, because I know that is another huge concern we have, especially as we're looking at regionalization and everything else going forward.

Yeah. Well, I would say on the Colorado system, the concern is twofold in terms of a potential catastrophic scenario. One is no water and the other is no power. And both of those reservoirs generate an immense amount of power. And so you would see the crippling of economies and livelihoods, both from a lack of water and a lack of power. So it's important to point out that not only do these reservoirs hold water that we need, but they also generate power.

Lake Powell and Lake Mead are both black start units for Palo Verde nuclear generating station over in Arizona. So should they ever have to start that reactor up again if they had to shut it down, you really need those big hydro plants to kick it up and going. The other thing, as the secretary indicated, we're so close on the margin with energy production in the southwestern region.

Those two play such an important role, particularly Hoover Dam, for moving water supplies from the Colorado river to the metropolitan region. MWD and the City of Los Angeles have significant, I think, better than 50% of the Hoover power flows into Southern California.

So would it be wise, as we're going forward, looking past 2026, to look at, when we discuss, like, desal, but also to look at power generation along with desal as part of these partnerships and these things, we look going forward?

Absolutely. Unless you get to a place like Dr. Schmidt said, if you find the new mousetrap for desal, where it's not quite as energy intensive, it's difficult to come up. This has been some of the challenge we've had with Mexico. They have the energy on the Baja side. They don't have it on the Sonora side. We've been looking at some opportunities on the Sonoran Coast of the Gulf of California, but there wasn't the energy generation over there or the transmission capacity.

So that's going to be an important part. Small local augmentation efforts with smaller desal plants probably can fit into the grid. Going to have to work with the Coastal Commission, so on and so forth. And you're going to have to kind of tailor make them for each area.

If we're looking at new power generation. And part of that.

It's going to take that. You got to go hand in glove. You're right.

Thank you.

Thank you, Ms. Schiavo.

Thank you so much for this. This is incredibly helpful. I actually was recently appointed to the Council of State governments and the Colorado River Forum. So I look forward to talking with you all a lot. And you know, one of the things that keeps being kind of in the back of my head throughout all of these conversations is the tension that we have around the need for housing and the additional demand that is in our future.

And I know you're talking about kind of plotting out the next 20 years right now, I guess. Kind of. How are you thinking about that?

And in one of the conversations with a local water agency that I had, they talked about, we were talking about building housing and the increased demand, and they were talking about the incredible improvements around conservation and how in a lot of ways, they've been able to kind of keep that demand flat and are there things that we as a Legislature need to be thinking about more in terms of how we move forward around housing policy to ensure that we're doing as much conservation as we can.

And I guess, how are you balancing all of those things and planning out the future of our water here?

So I would say on that, in terms of future housing, especially in California, the more dense development you have, the less of a water footprint. And then over half of our water use is outdoors. So if you're able to ensure we're not having the 1950s style lawns, that goes a long way to ensure that all that indoor water use like is the case in southern Nevada. 100% of it gets recycled over and over and over again.

Everything that's applied outdoors, which they try to be careful about, is lost to the atmosphere. So in terms of future housing, I think that doesn't make a huge, in California, at least doesn't make a huge impact on our future water supply issues as much as how it is used and whether we're able to recycle and recapture it, which Mr. Hoshkalil from metropolitan could talk more about.

And I would just add that real success stories across California in improving efficiency of water use across our communities. I've lived most of my adult life in Northern California, and I always tell my neighbors in Northern California, if you want to see really strong efficiency of water usage, go to Southern California, because the greater Los Angeles area, as I understand it, has added millions of people to its population and actually kept its water level flat. Now, let me make a caveat.

There's good efficiency happening in Northern California too. But point being, there's a lot of good work underway, and legislation that passed three or four years ago is being implemented to essentially develop smart water budgets across California communities to provide enough water for continued growth and usage and livelihoods and quality of life, but eliminating water waste, reducing excessive water use so that we can grow. We never want an excuse for lack of housing to be a lack of water.

Right. I don't want to get over my skis either, because clearly it's above my pay grade, but I look at it as a trickle down type of thing. I mostly interact with the United States and my counterparts in the other states. So there are seriously things that we do. We use Los Angeles as a model. L.A. uses less water than Tucson, and Tucson was always kind of the gold standard for a long time, several decades.

And that includes the industrial water use in Los Angeles lumped into that 100 gallons per capita per day, which is remarkable for a city the size of Los Angeles, but planning is done at the local level. It's county and municipal governments. California, the building code, I just built a new house out in Ventura County in Fillmore, and it's amazing to me the things they now require to be in your house when it's built.

It's the right thing to do, whether it's the EV plug in or the solar panels on the roof, good appliances in there. And the incentive programs that all of our municipal water agencies up and down this state have implemented under both Governor Brown and Governor Newsom, as we've been in these incredible droughts over the past decade, those are all making a difference.

And I think the thing that we try and do as Californians is show people what we're doing, bring them in for tours and the public education programs that I know the state authorizes, the Legislature pays for, and then local governments also augment those efforts. Those are critical. Getting our stakeholders and our constituencies to understand where this climate change path is going. We don't know if it's going to continue to decline or if conditions will stabilize. I kind of think they're going to continue to decline.

So we're going to have to keep coming at this and pushing hard. So I appreciate the challenges you're grappling with day by day here.

Well, representing L.A., I'm glad to hear that we're leading the charge. So that's wonderful.

You are indeed. San Diego, the entire MWD service area has been just, even in the 23 years I've been in California, it's been remarkable to see the changes.

And we know how competitive NorCal is with SoCal, so now they're going to conserve more. So good work. Are you complete Miss. Schiavo?

Yeah.

Mr. Bennett.

I want to thank all three of you. This has been very informative in.

And Mr. Harris, in particular, you're sort of hinting that cooperation is probably the only way we're going to get this accomplished. When I think about, just one example, Arizona paying for a water recycling project in Los Angeles is so much better than trying to have Los Angeles pay for that.

You're right.

And so that has so many opportunities for us because, if we can cooperate on recycling, because it's, the funding is going to be a huge part of all this. And that includes funding for improved variability in demand as we go forward. So the other thing I want to point out is consistency in standards, not easy to do across all these states, but it would certainly help because it would help on the cooperation side of it, if you can point to the, everybody's doing the same thing with those things. So I was happy to hear this, and I really like to reinforce it.

And if there's anything we can do legislatively to try to help keep the cooperation going in these areas. Consistency of standards, there could be some challenges that we could put out there to other states. But if there's something that we could do, that'd be great for us and encourage you to think about how, because I think we have a Legislature that would be willing to do that.

The bigger, getting past, you guys are working hard, and I'm glad to hear you're feeling mildly optimistic about where we're going between now and 2026. If, as you say, there's the potential that we're going to have a continued downslide, even if we don't, we almost certainly will have increasing variability. Not just variability, but increasing variability. With increasing variability, it seems to me it's just part of our solution has to be increased variability of demand.

We have to build that into the system, and we don't think that way very much. And that's where cooperation could really help us out. Funding agriculture for fallowing crops is a legitimate thing to do, particularly if we could find ways to take the surplus years and perhaps increase the production or value of the crops that are out there. So is there much conversation about improving the variability of our demand for water across? This is a question for all three of you, I guess, right?

Yes, sir. I'll just speak to, as we think about the next set of long term guidelines. We're actually going to be utilizing in our sort of modeling and analysis process a technique known as robust decision making. And it kind of gets to what you're addressing, sir. You want to have red flags or even yellow caution flags that pop up and tell you when conditions may be looking like they're on a decline or if supplies may not be as readily available.

Whether it's wet, you have to deal with extreme flooding, extreme hydrologic conditions, or dry conditions. So we're trying to get more adept and nimble at being able to implement adaptive management that makes sense, whether that's in the Administration or decision making or actually pulling levers and knobs with respect to operations. And you're right, it's going to take a team in doing that at all levels.

We anticipate we'll have to go to the Congress for probably a relatively large package of federal legislation that will accompany this next set of guidelines. Just because we're going to have so many of these new toys in there that we're going to have to use, and it may well be in individual states. We'll have to utilize your interest and expertise in helping us get there, working with our Administration in putting together packages of good ideas. Maybe, Secretary Crowfoot, do you have any thoughts?

Well, just briefly and at a high level. Your point is well taken. We have to manage for extremes, this weather whiplash. We have a management approach that historically has been very static year over year. We need to be more nimble. And so really, that's where these voluntary efforts come in to create contingency plans, scenario planning, so that you can make a change very quickly. That's happening in the Colorado River Basin.

It's also happening in the Sacramento and San Joaquin Basin, because at the end of the day, managing through decade of litigation doesn't work. We need to be able to be more nimble to adjust to these conditions. And I think that conversation is happening not only in the Colorado River system but up north as well.

If I could just end with this, and that is, I mentioned, it doesn't feel like we spend too much time on talking about increasing our ability to flex our demand, but also that goes the other side, increasing our ability to capture the surplus. And all of that has a big funding component to it and cooperation and planning ahead.

But it seems that, there is some, if we're going to have huge wet years and then long drive periods, grabbing everything we can during those wet years, but it's easier to do if we know we've got that flexibility built in on both sides. So, anyway, I wish you well in terms of that.

Yeah. And I would just say, and give you all credit, the investments that the Legislature and the Governor had made are hitting the ground and creating more of those groundwater recharge projects. We know we need to do more of it, more quickly given climate change, but we are collectively making strong progress.

Thank you. If there's anything, I'd love to see variability of demand become a common theme that comes out of the long term solutions. Thank you very much.

It's headed that way, sir.

Great.

Thank you. And listen to the beautiful noise of this building. I just want one last question, and I think this is probably best addressed by you, Mr. Hamby, because you're here as Chair of the Colorado River Board. You're also a board member in IID.

We've sort of touched on it briefly, but I wanted to hear that, as we look at cuts now and in the future, and again, we're going to remain dependent on the Colorado River, but with variability, we're going to have to be real about it. What do you think the impact is on our ag community? I mean, they're such an important part of our economy. The breadbasket of the west, 5 million, was 5 million acres across the basin, of agricultural land. And so that's something really critical we need to be looking at and thinking of how we continue to support that while also being real about water supply. So do you want to touch on that?

Sure. So I would say that what California in general and IID in specific have done very well is engaged in these efficiency-based conservation programs. There's other programs that have been developed between Metropolitan and the Bard area or the Palo Verde areas as well.

Those have been durable, long-lasting, effective mechanisms that have ensured that areas that have some water that can engage in additional conservation that is costly to implement, or if it's on the fallowing side, that there is a lost income and there's other community impacts as a result of it, that there is an effort to make those whole, to be able to move the water, but able to achieve some level of wholeness or compensation in return. California is very advanced on that.

The other states, not so much, particularly in the upper basin, they're beginning to engage in a system conservation pilot program that they began a few years ago. I think the first time they went at it, they generated 4000 acre feet or something. Now I think they have somewhere in the neighborhood of 40,000 acre feet worth of applications.

In California, we've been doing upwards of half a million acre feet a year for about 20 years. 7.2 million acre feet from 2003 to this year alone, just from IID. So there's a lot more that can be done in other agencies and other states across the basin. But at least in California, there's a lot of that's been done already. There's more that can be achieved, but there's limits to efficiency. You get to a certain point where you become fully efficient.

And at least, to answer your question about the IID context, stepping up with half a million acre feet of already existing transfer conservation transfer obligations, putting another 250,000 acre feet on top of that from now until 2026, under this California proposal. There's maybe 50,000 acre feet left of true efficiency that's left in the system. There's more projects that can be done, more canal linings, these sort of things that have longer term benefits for conservation. But then you start, anything beyond efficiency, you start moving toward fallowing, where you're not just using less water and you grow the same crop. The other end of the spectrum, fallowing, no water, no crop.

And then somewhere in between is probably the next step, which is to be able to generate these short term volumes of temporary compensated conservation would be something like a summertime program where you would layoff of water use in the summertime, where it's in the hottest months, productivity is a little bit less anyway, and then you could develop that sort of robust amount of water generated during those months, minimize the community impacts, both for the farmers who are engaged in this, the agricultural workers that are engaged as well and depend on farming for their livelihoods, and then the community as a whole who are in the farming economy, but not necessarily farmers themselves.

So all the various associated businesses that are impacted under the following approach. So if that answers your question, California is far ahead from a lot of the other states. There's a lot of lessons that they could learn from California's example, particularly with the QSA and from some of Metropolitan's existing programs. Those would go a far away, particularly in Arizona.

Amazing. Thank you. I appreciate it. Thank you all for being here, and thank you for all you're doing to protect California's water. I appreciate it. Okay. I know we're running behind. This is too interesting. I'm letting people talk. So, for our last panel, how Southern California is preparing for the climate impacts to its water supplies. We now understand very well where you are. So let's hear what you're doing.

We have Silvia Paz, Executive Director of Alianza Coachella Valley, who will be with us via Webex, Tina Shields from Imperial Irrigation District, Adel Hagekhalil from MWD, and Sandra Kerl from San Diego County Water Authority. Awesome. Should we start with, is she here? Ms. Paz, are you on Webex?

Can you hear me?

We can hear you. There you are. Great.

I have a presentation to share. Will I just be doing the share screen?

No, I think we're sharing it here. Yeah.

Perfect. Well, thank you, Chair, for the invitation, and I appreciate the previous panel. Thank you to Secretary Crowfoot for the leadership that they've taken and for mentioning the Salton Sea. My name is Silvia Paz. I grew up in a community near the Salton Sea, and I still live here. My background is in public policy. I worked on issues of the Salton Sea since 2010, when I worked as a staffer for then Assembly Member Manuel Perez.

And now I lead a nonprofit organization that's really at the intersection of how policy decisions are impacting our community and trying to address those impacts from the bottom up. Next slide, please. For this presentation, I think I have it in three parts. My goal is really, as you have now, the bird's eye view of the entire Colorado water system and the challenges ahead of us.

I really want to ground us on one community, and a community that might require decisions that are maybe a little bit different than what would apply to the rest of the state. And that's particularly because of the Salton Sea and the fate that has resulted to the community surrounding the Salton Sea as a result of the water transfers. So again, I have my presentation in three parts. Just introductions grounding us in the community and then the types of things that we're doing at the local level to try to contribute to addressing climate change. Next slide.

First. So this is a little bit about Alianza, which I mentioned. We have dedicated the last 10 years to this organization. We operate as an alliance, bringing in different partners, including our local government agencies, to try to transform the socioeconomic conditions of the Coachella Valley. Next slide. We also work with these various nonprofit organizations, all of us who share a vision of seeing a more vibrant, thriving, and healthy Coachella Valley, where people really have to exercise some influence over the decisions that are impacting their lives.

Next slide. So when we're talking about water issues and the Salton Sea in particular, I like to remind us that any decisions that are impacting the Salton Sea are going to affect the lives of at least 106,219 people. This is based on the 2020 census. For a long time, many times, the Salton Sea was talked about as a body that independent of the community surrounding it. But there is so much at stake right now, particularly with the impacts of climate change.

So these are the communities' names that you'll see next slide. And what is particularly key to understanding our communities is that based on a UC Davis regional opportunity index, you see the Salton Sea. It's the area all covered in red. And that means that we really are at the lowest opportunity index when it comes to measures of assets in education, our economy, housing, mobility, transportation, health, the environment, and civic life. So we are already a vulnerable community that's becoming more and more vulnerable. Next slide, please. And this video is just going to give you some images of what our community looks like. So we can play the video about three minutes. If you go back and click on the video.

I don't think we can do the video. So let's just keep going.

Okay. Let's move forward. So when we're talking about our communities, we're talking about multiple exposures. We're exposed to heat, fugitive of dust, water contaminants, pesticide drift, the Salton Sea sediments, unregulated toxic dump sites, and added vulnerabilities. 94% people of color, 45% people with a limited English proficiency, and 65% of people below the poverty line. Next slide, please. So what we're doing at the local level is trying to meet the gaps.

When the 10 year plan, for example, was introduced in 2018-2017, we were very surprised that there wasn't enough data showing how quickly the shoreline was decreasing on the northern end of the lake. There was enough data on the southern end because of the work that IID had been doing, but there wasn't enough on the north end of the lake.

So one of the things that we do is community science, which engage community members in activities to monitor the reduction of the Salton Sea shoreline and its impacts. And we do this under the leadership of Dr. Ryan Sinclair with Loma Linda University and other partners. Next slide.

And that is really the result of some of the things that I've heard in the conversations that were solutions to address a water situation but employed systems like the following. For example, that not only reduce the water inflows to the Salton Sea, but it's leaving playa that exposed: playa that has contaminants, given that it's been giving agricultural runoff for many years.

And the other thing that I would encourage you all to think, as you're thinking of policies for water conservation, is that not only is the water and the environment impacted, but we are talking about also reductions in employment because agriculture is the largest employer in the community surrounding the Salton Sea.

So I think, I'm not conveying that we shouldn't be conserving water, but I think that if we are going to be moving in this direction, that we need to have an all hands on board, that we're thinking about diversifying our economy, transitioning our workforce, and strengthening the infrastructure surrounding our communities. Next slide. The second thing that we do is we've been exploring new approaches to increase the resiliency of the Salton Sea region.

Again, a lot of times, it is scary for us living on the ground when we only hear about conservation and ecology, when we know we have a fragile infrastructure and vulnerable communities that are all codependent and coexisting with the Salton Sea. So, next slide.

One of the things that we have done recently is partner with UC Santa Cruz, Dr. Chris Benner, Dr. -Economist- Manuel Pastor, and reimagining how we can be addressing the Saltonn Sea and know in a more integrative and inclusive way, inclusive of the people, inclusive of the environment, and inclusive of the economy, and realizing that addressing the salt and sea. I mean, really addressing our water issues, is more about the water itself.

It's about how the socioeconomic conditions in a region can be shifted so that we can benefit the most vulnerable.

Thank you. You have a couple of minutes to wrap up.

Next slide. And the third part is we are advocating for community driven solutions. Next slide. And this is the vision that our community has for how we can start tackling some of the water issues that we end up with a more beautiful, healthy, thriving, and united sultancy region that we're employing solutions that have multi benefits.

This is, for example, addressing access through multimodal transportation, embedding some infrastructure like charging stations, which our communities currently don't have, and most importantly, exploring how trails and revegetation can help us mitigate some of the dust exposure surrounding the playa. Next slide. So I will leave you with this, which is our definition of environmental justice.

And it's really that all people can enjoy an environment that is conducive to healthy livelihoods and that we're seeking to address the disproportionately negative impact that traditionally our vulnerable populations have had to endure. Thank you.

Thank you so much for that work you do.

Good afternoon, Madam Chair and members of the committee. My name is Tina Shields. I'm the water department manager at Imperial Irrigation District and have about 30 years of experience working in these large-scale water conservation and planning areas, as well as on Colorado River issues. Next slide, please. So, as you heard earlier from Chairman Hamby, who also serves on IID's board, IID is the largest irrigation district in the nation.

Ms. Shields?

We divert Colorado River water through Imperial Dam and through six desilting basins to drop out the sediments to deliver supplies first to the Yuma and Mexico region. The water then goes into the all-American canal, which is the red line along the bottom of this, and travels about 85 miles west to the Imperial Irrigation District service area. We manage a 3.1 million acre-foot entitlement, that's a consumptive use cap during the term of the QSA.

It actually has been larger in years past, and that includes about 2.6 million acre feet of the present perfected senior water rights that were discussed earlier. That water is used to support our communities and our farms. Next slide.

We have the benefit of a year-round growing season within the Imperial Irrigation District, and with that sunshine and the water supplies from the Colorado River, we're able to produce significant vegetable and forage crops that are used to feed the nation and create this reliable food supply that was discussed earlier. We have prime agricultural land. We have farmers that have the ability to use that water in a very efficient manner and achieve significant crop yields well in excess of other areas that have more limited seasons.

If you eat beef, cheese, pasta, steak, that food supply comes from the food and the forage crops that we grow in our area, either directly or indirectly. And it's really to the kudos to our farmers and our farm workers and our service providers to those regional economies that have benefited and provided these food supplies for us. Next slide. So, there are many unique aspects to the Imperial Valley. We have blazing hot summers you've all heard about. We have a very large-scale agricultural landscape.

But after our diverse and tight-knit community, what really makes this system, what you see here in this green aerial imagery, is the 3000 miles of open channel gravity flow conveyance system that moves this Colorado River water to and through our community. This conveyance system is very important to us because the Colorado River is our only source of water. If we lose the Colorado River, our community ceases to exist and that's really not an exaggeration. We don't have usable groundwater.

We don't have state water project supplies or any way to get that water there. We are sort of a one-horse show when it comes to water supplies. And so we're very protective of that resource and very interested in how these multistate discussions turn out in the future. Next slide, please. So, our strategic plan at IID identifies our primary mission as providing reliable, efficient, and affordably priced service.

But more importantly, it codifies our goals to protect the water rights within our community for the sustained benefit of our economy and the regional economy as well. However, since the late 1980s, our water delivery business has been really expanded to include a secondary function, and that's the implementation of these large scale conservation planning partnerships with the urban areas. Mr. Harris mentioned the nation's largest ag-to-urban water transfer, the quantification settlement agreement.

And as Chairman Hamby mentioned, and you can see from this graph, we're generating about a half million acre-feet a year through active conservation and through nonfallowing, which is really important to our community if we want to keep using that water. We want to be more efficient. We want to have these partnerships, but not by affecting our local community and putting people out of work. So that's very critical to us. Next slide, please. Beginning in 1989 was our first water conservation transfer program with Metropolitan.

Metropolitan funded large-scale investments in our system. You see some pictures here of concrete lining and reservoirs and a new water control center. With these conservation opportunities, we are able to conserve a little over 100,000 acre-feet a year, that is then diverted by metropolitan and used within their service area to help create this water supply reliability within California and also on the Colorado River. Next slide. A decade later, we expanded this. Our agency entered into negotiations with San Diego County Water Authority.

Those got bogged down a little bit in some litigation and complexities. But eventually, in 2003, with the authorization of the QSA, not only with a San Diego transfer put into effect but an additional transfer with Coachella Valley Water District to total another 300,000-acre feet. And again, we've used the funding provided by these agencies to make our system more advanced. We've brought in technology, computers.

We have a gravity flow system, which is pretty awesome because it doesn't require pumping and large-scale power, and it's very cost-effective. But we've been able to modernize that. We've also been able to provide growers direct payments so that they can then take that funding and implement field-level conservation measures. So, a large-scale conversion from flood irrigation to drip systems, tailwater return systems, linear move systems.

So it's a very efficient way of getting water on the crop and still maintaining the active salt balance on the field so that we have leaching that occurs to help remove those salts. Next slide. So, in total, because of these transfers and these active conservation efforts, we've been able to conserve significant volumes of water. The last two decades alone, over 7.2 million acre-feet has been generated by IID and its farmers. Our on-farm program is a developing program.

It's very popular in the valley because it enables farmers to do things that on their own, they wouldn't be able to do, but they still continue to farm, and that's really important to us. Next slide. We mentioned earlier the salt and sea. So this is sort of our rock and a hard place on these transfers.

As we implement the efficiency conservation measures, it causes a direct reduction in the water that ran off the tail end of the fields into the salt and sea and has created these large-scale reductions in inflow, which then causes the sea to recede and this playa to be exposed. So, so far, we've had about 30,000 acres of land exposed that used to be underwater. It's very concerning to us when the high winds occur, about the potential for dust emissions.

So we've seen significant progress as of late from Secretary Crowfoot's team, their implementation efforts at the salt and sea with their management program. At the south end of the sea in this orange area, they're beginning to construct a 4100-acre species conservation habitat project, a big wetlands project, and looking to double that in size with the additional funding from reclamation. So we're really focused on identifying the lands that are the most emissive and targeting those for these dust control measures.

The sea salinity is also a challenge because the fish are unable to reproduce, and that's sort of the restaurant for the birds. So we have really a changing environment. That's a real challenge to say, how do we address this? And for the state to look at long term, we're doing piecemeal projects, but we need to come up with an overall plan about what we envision the sea being in the future.

So it's kind of a science experiment out there, but we've seen so much progress lately from where we were a dozen years ago, and we're really looking forward to seeing those projects have water diverted into them. The next slide, please. So we mentioned earlier the voluntary conservation proposal that California put forth. Of that 400,000 acre-feet a year, IID will be contributing about 250,000 acre-feet. That is going to jump our conservation from about 16% of our water supply to about 24% of our water supply.

So it's really going to be a heavy lift for our community. We're trying as much as possible to prioritize these efficiency conservation measures, but we know you can only do so much in such a short period of time. Our second sort of line of defense to generate this water is probably going to be a deficit irrigation program. So, as Director Hamby mentioned, if we don't water some Bermuda fields for two or three months in the summer, we lose a couple of cuttings.

We provide some compensation to growers that volunteer for those programs, but you don't have a larger scale economic impact on the farm service providers. Ultimately, we'll probably, to get that level of volume, have to implement a following program. We have done this in years past, but they've been strictly prohibited in recent years. We call them the f-word because it's such an impact on our community, and we really want to avoid it.

But if that's what's necessary to address the long-term issues at the Salton Sea, we're willing to look at doing that in the near term because that resource is so important to us. And I think I'll conclude my remarks. But thank you very much for your time.

Thank you so much. Mr. Hagekhalil?

Great. Good morning and thank you, Madam Chair and honorable members of the Committee. Adel Hagekhalil. I'm the general manager of Metropolitan Water District. Thank you for the opportunity to share details about Metropolitan's experience managing the challenges on the Colorado River. Metropolitan is a regional water wholesaler for Southern California. With our 26 Member agencies and rate retailers, we provide water to 19 million people, half of all Californians.

Metropolitan was created nearly a century ago for the express purpose of building and operating an aqueduct to bring water from the Colorado River to growing Southern California. Today, the water delivered through this aqueduct remains a cornerstone of the region's water supply portfolio. On the average, 25% of the water used in Southern California comes from the Colorado River. Had it not been for this critical supply, the drought of the past three years would have been much more damaging to Southern California.

You heard the secretary talk about health and safety in Southern California, especially on the western side of our service area, Ventura, and others. We actually were in health and safety because we were running out of water, and our storage was being exhausted across our system. While much is uncertain on the Colorado River, one thing is clear: everyone who relies on water from the river is going to have to use less.

None of us can afford to allow a true crisis to develop on this vitally important water supply. And you heard a common theme across the board. It's all about collaboration. We all have to collaborate to move forward, and Metropolitan and California are known for doing a collaboration. California has had to manage through large-scale cuts in the Colorado River.

In 2003, we heard when our state primarily lost access to 800,000 acre feet of supply water, the majority of these cuts fell on Metropolitan, cutting our supply in half. Under the priority system agreed to in the 1930s, Metropolitan was established as a junior water right holder in California, below the state's agriculture users. When cuts happen in California, they fall on Metropolitan first. Our state responded in a remarkable way. We entered a new era of collaboration.

We set aside decades of dispute to forge partnerships across agriculture, urban, and tribal interests, allowing enough water to come flowing to Southern California. The groundbreaking agreements that resulted, including the 2003 Quantification Settlement Agreement, the 2005 Palo Verde Land Following Agreement, all that facilitated water transfers from farmers to cities and funded the lining of all American canal and the Coachella Canals to have reduced seepage and to lead to new agriculture conservation in California, and partnerships with Metropolitan to address the challenges ahead on the Colorado River.

We must build on these partnerships, expand the collaboration, and increase the great strides in conservation we all have made. I want to talk a little bit about the ag partnerships to replace the water it lost, Metropolitan along with San Diego County Water Authority, and you'll hear from my partner, Sandy Curl. And the State of California invested billions of dollars in ag conservation programs in the imperial irrigation, as you heard earlier, and Palo Verde.

Today, half of the water Metropolitan annually receives from the Colorado River comes through these partnerships and programs. We pay participating farmers to conserve water through partial land following crop rotation and irrigation improvements. The water saved is then made available to Metropolitan. Developing this partnership isn't a simple equation of paying them to conserve water. Each agreement includes unique elements critical to ensuring the continued success of the agricultural economy in each participating community.

For example, through Metropolitan's partnership with the Palo Verde irrigation district, farmers are paid to refrain from irrigating between seven and 28% of the valley's land. At Metropolitan's call, the amount of total acreage followed is limited to preserve the region's farming identity but also to help the community. We actually enacted a community enhancement fund to pay to help the communities and create jobs and create businesses. Our agreements with Bard Water District and the Kwachan tribe are structured differently.

There, we fund seasonal following participating farmers who are paid to avoid planting the lower value water-intensive crops they would normally grow in the spring and summer crops, such as Sudan grass, while during the winter and fall, they continue to plant higher value winter vegetables, such as lettuce and broccoli. And in this program with Bard and Kempson, they use some of that money to line canals to build improvements on efficiency improvements. So they're not just paying farmers actually doing improvements to help enhance conservation.

And through our partnership with the Imperial Irrigation District, and you heard from Tina, we have funded system efficiencies allowing farmers to grow the same amount of crops with less water. There is no one-size-fits-all, but there are solutions that we have, and we have worked hard to develop them. But make no mistake, Metropolitan is not just asking the ag community to save water. We are absolutely doing the same in our cities. Since the 1990s, per capita use in Southern California has dropped nearly 40%.

So even with the increase in population, we are continuing to show a decrease. The sustained conservation is thanks in parts to the more than $860 million that Metropolitan has invested in water efficiency programs. We've funded repaid programs to incentivize residents to replace plumbing fixtures and appliances with more efficient models and grant programs that help businesses do the same on larger scale. Right now, we're also looking at how we can enter and help disadvantaged communities through direct install.

And we're partnering with a gas company as they're doing efficiency audits on energy, they're doing efficiency audits on water and doing direct installs to help move the needle. Our turf rebate program is quite changing the landscape of Southern California. We have directly funded the replacement of more than 200 million grass with water-efficient landscaping, saving more water that serves 62,000 homes annually.

I'm currently working with some of you and your colleagues on legislations to permanently reduce the use of water on outdoor landscaping by banning nonfunctional turf on some properties. All of these efforts help Southern California on a critical to making the Colorado River more sustainable. Southern California's commitment to conservation has helped Metropolitan accumulate 1.2 million acre feet of water. You heard that earlier, we put 1.2 million acre-feet stored in Lake Mead that help boost the reservoir levels in Lake Mead by 19ft.

That helped other states not take the cuts and delay. The impact that we've done by reducing demands are only half the equation. We must also increase supply. Metropolitan has long recognized that we need to diversify the region's water supplies and has invested more than $720 million in recycled water and groundwater recovery projects. Now we're taking this investment to the next level, developing what will be the world's largest water recycling facility, pure water Southern California in Carson.

This project will use technology to purify clean wastewater that would otherwise be discharged to the ocean to produce a new, drought-proof supply of high-quality water for Southern California. When completed, it will produce 150 million gallons of water a day, enough water for half a million homes in Southern California. We're grateful for the support that you provided here, and we look forward to your continued support. It is a project that certainly brings great benefit to our state and even beyond our borders.

You heard that this project is a partnership with Arizona and Nevada. And I think that's the issue that we need to talk about. We cannot just talk about cuts. We need to talk about solutions on a watershed basis. All of us has to invest. All of us have to work together. And this example of Arizona and Nevada investing in projects here shows that we're all tied together. As climate change reduces flow on Corral River, it's only through collaboration and partnership we will succeed.

By 2026, We must negotiate these long-term agreements to ensure the river sustainability for generators to come. But for now, we must stabilize the river through short-term measures. The winner has provided us a lifeline, but we need more than that. The Federal Inflation Reduction Act will also be critical to funding the necessary cut in use. We've worked with our ag partners to apply for IIA funding to support some of the following programs.

Water saved through these programs will help put it in Lake Mead instead of coming to Metropolitan, and we're working on those efforts right now as we speak. Over the past two decades, we have invested over $2 billion in ag-urban partnerships. Whatever solutions emerge, we cannot put these programs at risk. We're also working collaboratively with the basin state partners right now to come up with a workable solution that will buy us time between now and 26.

Working together, we must develop equitable, realistic solutions that reduce our collective reliance on the river. Whether it's conservation, we're looking at nonfunctional turf and taking this next level: irrigation efficiencies and how we can do that more recycling and reusing every drop, stormwater capture and infiltration, improved conveyance. We need to build the system to move water around so we can adapt to the change that we're seeing. Building storage. I'll just tell you. Back in 2000, we built Diamond Valley Lake in Hemet.

A lot of people question why we're building an 800,000-acre-foot storage in Hemet. And that reservoir has helped us. It's a savings account. And these savings account have to be built across our system to help us capture the water. So when we have it and then use it when we don't, instead of fighting over it, these are the solutions that we need to put in place.

Thank you. If you could wrap up.

Yes. And then I would say the California's future success depends on us having one voice. And I'll tell you that California is together. That's what you see here today. But also want to be together with our partners, Mexico, and the seven states. I'm optimistic. Metropolitan is leading the way right now developing a climate adaptation master plan with a goal to develop realistic, resilient water supply for everyone with no one left behind. And I want to leave you one thing about affordability.

That's a huge issue for all of us. How can we invest as we're reducing our water consumption and our cost is going up? How can we invest the money without really impacting the disadvantaged communities? So affordability and Prop 218, I think need to be discussed with you. Thank you very much.

Thank you. Ms. Kerl, our last witness, but definitely not least.

Thank you so much. Good morning. Chair and members of the committee, I'm Sandy Curl, general manager of San Diego County Water Authority, and really appreciate the opportunity today to talk to you about how we're continuing to respond to the ongoing effects of climate change. Like the water authority with our partners in Southern California remain focused on good steward, being good stewards of our water supplies.

If I could go to the next slide, I'll begin by just highlighting San Diego County Water Authority partners with 24 retail agencies. We sustain a $268 billion regional economy, and we serve 3.3 million residents. Next slide. Our conserved Colorado River is incredibly important to the San Diego region, providing more than half of our region's water.

When you ask how California is responding and preparing to the effects of climate change, I offer the San Diego region's focus on a diversified water supply portfolio and is an example of focusing on conservation and water management while developing new drought-proof water supplies. Not only has this focus served our communities well, but it also has reduced demands on both the Colorado River1 and the state water project. We have taken almost no state water project for the last two years.

Since 1990, our programs and initiatives have developed have decreased our per capita water use in the region by 40%, reducing demands on imported supplies. And then, the Water Authority played a leading role, along with our partners, in a 2003 Quantification Settlement Agreement.

And, as you've heard many times today, which is the largest ag-to-urban water transfer done, and the QSA allowed California to stay within its 4.4 million acre foot annual apportionment for the river and has successfully enabled our state to meet that goal since 2003. With respect to the QSA, it's been an important tool by which the Bureau of Reclamation has been able to manage the river.

Overall, our region's conserve water provides nearly 280,000-acre feet of water to the San Diego region through investments on on-farm conservation and irrigation system efficiencies. In total, the QSA has conserved more than 3 million acre-feet of Colorado River water since 2003 and done so in a way that supports both the critical ag economy, funds social economic needs, and addresses the environment, and, most importantly, the Salton Sea, which you've heard a lot about this morning. In addition, San Diego has focused on developing local supplies.

For instance, the water authority partnered with Poseidon Resources to build the largest seawater desalination plant in the US, which produces up to 56,000-acre feet of drought-proof water supplies annually. We also actively support our member agencies in developing their own local supply projects, including potable reuse projects, which are expected to generate more than 33,000 acre-feet annually by 2025 for our region and another 100,000 acre-feet in the next 15 years.

The Water Authority has spent $1.5 billion on emergency and carryover storage projects, expanding our local reservoir capacity and the ability to move water when and where it is needed in the region. I highlight these projects because it's important to provide a clear message that we have been proactive in not only meeting the needs of those we serve but in investing in conservation, water management, and supply development to support the state and the river. And California is prepared to do more.

California was the first basin state, as you heard, to respond to reclamations call put out for additional conservation to support the river. Now, as we consider the important decisions ahead on the river, there remains a need to find long-term solutions to the impacts of climate change. The Water Authority supports a consensus-based approach that protects the law of the river, the priority rights system, and California senior rights.

It's critical that reclamation consider both near-term and future operations of the river by building on the foundation of the law court decisions, compacts, and agreements that have come before. It is through those established laws that we and our partners develop the QSA, which is really a model for all other Colorado River basin states to follow in implementing ag-to-urban transfers and providing long-term sustainable conservation in a way that protects ag and the environment.

And as reclamation is set to spend 4 billion in Inflation Reduction Act funds for drought and the river and adequate portions must be used to address impacts to the Salton Sea and to fairly compensate farmers for their conservation efforts. The water authority also believes that seawater desalination projects should be considered by the IRA funding as an important part of a long-term and sustainable solution for the river.

Specifically, our Carlsbad desalination plant has the capacity to expand production by 6000 acre-feet annually and produce a new supply that could support the river. I'll finish by noting that California has a history of doing its part to protect the Colorado River's precious water supplies. And we stand ready to continue to do our part. Thank you. And I'd be happy to answer any questions.

Thank you so much for being here. I think it's really important that we do make sure people understand the story of what Southern California is doing to conserve and diversify in the face of climate change. So I appreciate you all being here to help tell that story. Now, we are way over time, but I want to make sure that we have a chance if anyone has burning questions for these folks before we move on. Yeah, Mr. Ward?

No questions; I just wanted to respect your time and thank you for these presentations. Obviously, there's a lot of partnerships here between all of our agencies to get the math right and try to come to outcomes that are fair and that are responsible for all these that we have. Look forward to continuing to work with everybody here to meet Southern California's needs.

Okay, well, thank - Mr. Mathis? Sorry.

Thank you. I just want to applaud the efforts that you guys are making. You mentioned and in here on the ag jobs that every six jobs in the Imperial Valley. I think we often forget what the multiplier on that is when you think about agricultural jobs. It's not just the one person working in ag: it's their spouse, it's the 2.5 kids. And you multiply that out, and you have entire communities.

And so it's important that, as you mentioned, you're looking at efficiencies, but you're not taking production offline. And I think that's extremely important as we look at water efficiency statewide, to look at how we can mirror those types of programs because there are ways where we can cut back but still produce the same amount and still keep those jobs online and keep those families here in the state. So, thank you all.

Yeah, thank you. And I think the collaboration as the former litigator in the room, I really appreciate the collaboration rather than litigation, as it always produces better results. I would agree with that. So I want to thank you all because clearly, you're working hand in hand to ensure that our communities are well taken care of. So really appreciate everything you do. Thanks for being here.

With that, we will go to public comment in the room if anybody wants to join us. Public comments? Seeing none, we will conclude this informational hearing and move to our bill presentations. We have two bills up today. I'll invite our team up to help with the actual bill hearing. Thank you. So we have two bills we're hearing today, both nonfiscal. Mr. Bennett, do you want to go first with? Oh, right.

We need to establish a quorum. We're going to call the roll. We haven't done that.

[Roll Call]

We have a quorum. And so we're going to start with AB 676. Mr. Bennett, when you're ready.

Thank you very much, Madam Chair and committee members. I'd like to begin by accepting the committee's amendments. I genuinely thank the chair and the committee staff's hard work trying to pull all of these water bills together, but particularly with some of the issues on this bill. The fundamental problem that this bill is trying to address is that the legislature has not adopted a definition of domestic use.

And yet domestic use is a very important water principle out there because the legislature has adopted a statute that prioritizes domestic use as the highest priority use for water in California. And as we start to have more and more variability and more and more crisis with water, we need clarity on what do we mean by domestic use. And you will have people say that, "Well, you can look at this case, and the courts ruled this, and the courts ruled this."

And then there's also a regulation, which is not statute, but there's a regulation that identifies domestic use. And that regulation goes all the way back, 1943 and ruling. And that regulation, I don't think, reflects the values of the legislature today with the crisis that we have going forward. And so that's what makes this important. I'm happy to engage people who are concerned about what the definition currently is, but we haven't had a willingness to have much engagement on modifying the definition of domestic use.

It's rather been opposition to even trying to do this. We have accepted the amendment that I think resolved a significant concern about the potential for confusion, and that is the public trust doctrine. And the reasonable use doctrine are very important principles. We wanted to simply reaffirm them with this bill. But by removing that language, we think we avoid any potential confusion. But today, I'll give you an example: the old definition of domestic use, that's the regulation that's out there right now, includes a half an acre of lawn and ornamental uses.

And yet we had a water agency recently say that we're only going to deliver water based on health and safety because of the dire situation in terms of delivery. And you could have somebody say, "What's domestic use? What about my ornamental plants? What about my half acre of lawn? Those kinds of things would all be litigated."

I think the presentation we just had on the Colorado River and the emphasis that trying to do water law or trying to do water situations with lawsuits is a terrible way to try to move forward, and it is a very slow and inefficient way and doesn't lead to good practice. If we eliminate some of the ambiguity, it's less likely that there'll be a lawsuit, more likely that a water district could make a decision based, or they can look right at the statute.

But if I'm a water district, and I'm talking about particularly small water districts, water districts that don't have many resources. You don't want them to have to go to a lawyer every time to say, "Is this a domestic use? Is this a domestic use?" You want them to be able to look right at the legislature and say, "This is a domestic use." And so, with that, I respectfully ask for an aye vote, and I am happy to take questions.

Thank you. Mr. Bennett, do we have any witnesses here in support? Seeing none, do we have primary witnesses in opposition? Okay, sure. Whatever's your pleasure. Oh my gosh, it's so cold in here. Maybe somebody will hear us if we say that.

Good morning. Andrea Abergel with the California Municipal Utilities Association. CMUA currently has an opposed position. We really appreciate the author taking the committee's amendments. It goes a long way towards alleviating our concerns. We agree we don't want there to be confusion as it relates to domestic use, but I think that more work needs to be done to reconcile the regulatory definition with what is in your bill. So hoping to work with you on that and to work on any unintended consequences to agriculture.

And with that, we can consider removing our opposition.

Thank you.

Thank you.

Kris Anderson, on behalf of the Association of California Water Agencies, just want to echo the comments made by CMUA; certainly committed to just trying to work out the details and make sure we get the details correct with this bill. Thank you.

Thank you. Any additional witnesses in opposition?

Yes. Thank you, Madam Chair and Members Jason Ikerd; on behalf of the San Francisco Public Utilities Commission, I just want to echo the comments that have already been made, including the appreciation for the committee amendments that were accepted today.

Thank you.

Hi, good morning. Alfredo Medina here on behalf of the Imperial Irrigation District; also would like to align our comments with CMUAs, and we look forward to working with the author. Thank you.

Good morning. Brenda Bass, California Chamber of Commerce, and I will align my comments with the earlier commenters as well. Thank you.

Good morning, everyone. Ed Manning, with KP Public Affairs for Western Growers Association, is currently opposed.

Good morning. Chair and members. Izzy Swindler, Shaw Yoder Antwih Schmelzer & Lange. On behalf of the San Joaquin County Board of Supervisors, Solano County Board of Supervisors, Stanislaus County Board of Supervisors, and lastly, South San Joaquin Irrigation District in strong opposition. Thank you.

Thank you.

Good morning, Chairman, Members Lily Mckay. On behalf of the United Water Conservation District, we appreciate the amendments and align our comments with ACWA as well. Thank you.

Good morning. Annalee Akin, on behalf of Mesa Water District, also opposed but aligned with CMUA and ACWA.

Thank you.

Chairmembers. Dean Talley with the California Manufacturers and Technology Association, respectfully opposed.

Thank you. Seeing no additional folks, I'll bring it back to the committee, Mr. Mathis.

Sure. Mr. Bennett, I appreciate striking out the sections and the amendments, but what are your plans to incorporate current case law and especially with agriculture? What are you looking at in defining that going forward?

I'm looking forward to talking with anybody that wants to offer what they think is the appropriate definition for domestic use. If this definition that we have here is not the appropriate one, offer us an appropriate one. Ultimately, the fundamental question is: should the legislature have a definition of domestic use? I think it just absolutely makes sense for us to have a definition of domestic use, particularly as critical as the decisions are going to be coming forward.

I mean, the Colorado river discussion lets us know.

Absolutely. That's why I'm asking. Where are you wanting to go with that? Because we have current case law that kind of directs some of what that looks like. But in your opinion and in your vision, where do you see that going?

What I offer here is where I am at this point in time and what I think is an appropriate definition for domestic use. But I'm certainly open to anything else. But this is the definition that I have at this point in time.

Okay. That doesn't include agriculture.

Well, the state legislature identified that domestic use is priority, and irrigated farmland is second. That's a high priority by comparison to some other countries. So, I'm not trying to change the position of irrigated land being second in line to domestic use. But certainly, I think if you ask the people of California, they would say drinking water for people to stay alive has to be the highest priority. Hospitals have to have water. That's domestic use.

So, the bill isn't referring to agriculture because we're trying to define domestic use. The bill does recognize that we have already established agriculture as second in line after domestic use.

Thank you.

Anybody else have any questions? Okay. With motion by Mr. Ward, second by Mr. Hart: Mr. Alanis is saying there's people - oh, on the phones. Thank you. I was like, does he want to call me? I'll always take your call, Mr. Alanis. So, we will go to the phones for any support or opposition. Moderator.

Well, ladies and gentlemen, if you have support or opposition to this bill at this moment, press one, then zero on your telephone keypad. We will go to line number 13 to start. Please go ahead.

And just a reminder, name, organization, and position.

On behalf of Turlock Irrigation District, opposed, unless amended, align our comments with ACWA and CMUA.

We will go to line 14. Please go ahead.

Good afternoon - good morning, Madam Chair, members of the committee. Sharon Gonsalves, on behalf of the City of Corona in opposition: align our comments with CMUA and ACWA. Thank you.

Our last comment from the phone comes from line six.

Please go ahead.

Madam Chair and members. Kendra Dijogo, on behalf of the Modesto Irrigation District, echoing the comments of CMUA and ACWA. Thank you.

Thank you.

Thank you. Okay.

And I think - no more comments to address...we have a motion in a second. Would you like to close, Mr. Bennett?

Number one, I think it's an unfair labor practice to have somebody sit here in this cold room. I've had my staff bring me a scarf here.

It is making us move faster because we're freezing.

But I would like to say this, that the original concerns about the bill were confusion. And I think we addressed that by taking staff's recommendations in terms of taking sea out. If there's something else wrong with the bill, I wish somebody would say, "What is wrong with the Bill? What's wrong with the definition?" But nobody is saying that.

But I do think that just in general when you try to do anything in the area of water, there is an immediate sort of opposition to almost anything that comes down with water. But I haven't heard anybody say what's wrong with the remaining bill and its definition. But that doesn't mean I'm not willing to continue to work. And this is a public invitation to all the people that spoke. Contact us, tell us what it is you would like to have different.

We'd be welcome to have that conversation. And with that, I respectfully ask for an aye vote. Thank you.

Thank you. Let's call the roll.

AB 676. Motion is due. Passed as amended. [Roll Call] That Bill has eight votes. It's out, but we'll leave it open.

No, you may not have my jacket.

Easy there. All right, so we will move forward. Space heaters next with AB 125. Madam Chair, when you're ready.

Thank you. And I have to say, 126 is really hot. So it's like all the cold air is going up and the warm air is going down. I don't know what's happening in this building.

It's being annexed.

Good morning, Mr. Chair and Members pleased to present AB 125, which will prevent speculation and water profiteering on water resources that our community and farms need to survive. I'm accepting the Committee amendments to help clarify the bill's intent. As you all know, under California law, a water right holder possesses the right to use the water, but the public ultimately owns the water. Despite this, there appears to be a veritable gold rush by investment funds on surface water and groundwater throughout the west.

And many stand to make a pretty penny on these resources as we face the droughts that we actually talked about extensively this morning. Given that we're experiencing increasing water scarcity due to drought and climate change. I believe it is not acceptable that investments funds come here and make exorbitant profits off of this essential resources that is truly a public good. I will remind you that according to the State Water Board, just shy of 1 million Californians currently lack access to safe and affordable drinking water.

I don't believe that some should profit off of water while so many struggle to get enough for their basic needs. That's why I've authored AB 125, which will prohibit investment funds from speculating or profiteering off of precious water resources. I'll note that respectfully. The opposition has had a lot on their plates in the water world and we did take significant amendments, as I noted, to clarify the intent of the Bill and hopefully address many of the agricultural concerns.

But those conversations hopefully will continue as we didn't hear from people as quickly as we would have liked to. But they did get it in time. So not judgment on their part, just we have more work to do and I'm open to that and looking forward to that.

All right. Do we have any other support in the room? Do support on the phone lines? Mr. Operator.

If you have support at this moment, press one and then zero on your telephone keypad.

We have no support via the phone. Please go ahead.

All right, thank you. We will move to opposition in the room. All right. I suppose we'll start with registered opposition and give you guys each two minutes.

Good morning, Mr. Chair and members. Ed Manning with KP Public Affairs on behalf of Western Growers today This bill is one in a series of bills that make some fairly fundamental changes in California water law, as was referred to by the bill author. And I think the very starting point in California water law to understand and beneficial use doctrine, which you've heard about today, is we emphasize in California water law, what are you doing with the water? Not who owns the water right. This bill flips it on the head. Flips it on its head by saying, if you use water for a legal purpose, depending on who you are, we're going to make that illegal. And that's a problem. And I'll tell you why it's a problem and why I think the terms profiteering are misused. In agriculture, for example, people use water, obviously, to grow their crops.

And depending on the availability of water and the price of the water and the price of the commodity, the crop, they may choose to fallow land, grow certain things, or ultimately have to not be able to continue in agriculture. And some of them may sell their farms for the water because the water has more value than the underlying value of growing crops and especially certain types of crops. That's an important flexibility, and the system depends on that. And I'll talk about why.

California law has a thing called water transfers. They're critically important. It allows water to move from one place to another, especially in times of need. What you don't realize is that the major player in California water transfers are public agencies. The price is set by the availability of the supply and the demand. Public agencies are largely driving that price. Agencies, rice farmers in Northern California, and those public water agencies that serve them and those with riparian rights, the farmers themselves, can choose to fallow land or not grow crops, or transfer the water to Southern California in times of need. That often happens.

We're over two minutes. I want to make sure.

Okay.

It's deep. I understand.

Yeah. Unfortunately, we have important issues and we limit it to two minutes. But you can't do water law in two minutes, unfortunately. Last point I'll make.

Maybe there'll be some questions.

If you're selling water at the same price as a public water agency, why is it profiteering if the private sector entity does it? Second, we have water banks in California, including ones the CalPERS are invested in with private entities, including hedge funds. And you know what they do? They take agricultural water, isn't productive, they invest, they increase the water supply, and they sell it. All of those things will be upended by this bill. So please understand what this bill does, and it's not about profiteering. Thank you.

Thank you.

I will try to keep my comments brief. Good morning, Chair and members. I'm Brenda Bass with the California Chamber of Commerce, and we are respectfully opposing AB 125. Even with the committee's amendments, we believe that the terminology in this bill is vague and that it would have severe impacts on the flexible and efficient movement of water throughout our state. I'll give a couple of examples. Ed mentioned the groundwater banking. So many groundwater basins are exploring using credits to meet water needs while ensuring groundwater sustainability.

This kind of looks like a complex banking system where participants arrange to put water into the groundwater basin in exchange for a credit that will allow you to use that water at some future time for a future use. So selling a credit for specific water that may still be in the planning and development stage for a future use could potentially run afoul of this bill if an investment fund is involved in that kind of transaction.

So in this way, the bill would hinder emerging groundwater markets that the PPIC has noted will be instrumental in achieving groundwater sustainability. We also have concerns that this will have an impact on development because developers need to secure a water supply for a planned project in order to obtain those approvals. This can include purchasing some form of water rights or a contract to serve the planned community. And we're concerned, again, that these definitions are expansive enough that it would preclude unnecessary transactions and influx of capital simply due to the involvement of an investment fund as defined in the bill. And I will stop there out of respect for time. But thank you.

Thank you. All right, so let's go to any other opposition in the room. Seeing none, we'll go to the phones.

If you have opposition at this time, press one, then zero on your telephone keypad. We will go to line six. Please go ahead.

Thank you. Kendra Daijogo with the Gualco Group on behalf of the California Association of Wine Grape Growers. Respectfully opposed.

Thank you.

We have no other opposition on the phone.

All right, and we'll go to committee. Mr. Ward, your hand was up first.

Great. Thank you. I want to thank our Chair for bringing forward this bill. I think it's fascinating, and I really appreciate that you're getting into this conversation about yes, it's going to flip things on its head a little bit, but I think we are at a pinch point right now on not just water, but several other issues as well that are a necessity for the betterment of all Californians.

And so as we think about this, I guess for the Chair, I've got questions kind of on the one hand, on the other hand. I appreciate that you've worked on refining the bill and narrowing some of the definition as well. And as we're thinking about how we define an investment fund and are there legitimate purposes whereas a vehicle, as a transaction, that is a mechanism by which a family, a property owner is going to use something.

I wouldn't want to try to capture something that was for planned development, for example. But I do want to get out exactly where you want to go, which is are you really just trying to use the equity banks that you had to procure water opportunities, sit on that, hold on that and then affect a market, right? And then turn that around and that's speculation, right? And that affects all ratepayers downstream. And I wanted to see if you're committed to continue to work on this so that we're not having unintended consequences.

Absolutely. And like I said, you'll see that. I think, although sounds like maybe not, but we attempted to address what you heard the opposition say about beneficial use. We changed it to waste and unreasonable use. So we're working to try to address some of the concerns that we're hearing. But basically what the crux of this is, is across the west, and this is not just in California.

And to be honest with you, Sigma saved us a little bit from this because our groundwater, although we're starting to see more speculation as to pumping, is a little more protected than our neighboring states. They're coming in and they're buying our land and they're selling the water. And when you look at how much they're charging, and I was a little confused by that claim because I've asked how they set the price and they say it's whatever the market demands.

So as you can imagine, in really bad drought years, year after year, people are going to have to pay more for water from folks who are coming here just to sell water to met and others. So that's going to our communities. They're able to charge exorbitant amounts for this water because they're here for the buck. Right. They don't care if our hospitals have water, if our people have water. They're here to make money.

And so what this bill is trying to do is say that isn't going to happen here in California that we are going to say know, and we're very clear that prior agriculture use that you can do those water transfers that you heard about this morning that's clearly laid out now in the amendments because yes, sometimes we do have to ask farmers to use less water and we pay them for that. And that's part of the banking that you're hearing about. And it's really, really important.

And Ventura has been one of the leaders in modeling that. And so we want to allow for those continued mean I would never want and we can work on the real estate trust. That was something that was brought up. I don't think it's captured in the bill. But if somebody thinks it is, we're happy to amend that out. But what we're really, really trying to get out here is what is a gold rush for essential life. We need it.

And for people to come here and then just, I mean I see down the line years from now as this gets bigger and bigger, our water rates being something the state has lost complete control over because all of our water, or not all, but significant portions of our water are in the hands of private funds that are here just to make money off folks. And so we're trying to change that dynamic in California while ensuring that we're taking care of our agricultural community who does need to have the flexibility that you've heard described and other such circumstances.

I agree fully and I'm happy to move the bill. We see more evidence of these transactions occurring. And as we all know, we don't have an abundance of water and we don't have the opportunity to have all these players in the mix. We've got to be fair. And when one class of actors come in and then start to distort a market, that's a problem. That's a problem for all Californians, whether you're a resident user or an ag user as well. And it's not just limited to water.

It happens in the housing space. It happens in healthcare products. And so I appreciate that you're looking at this because it's tricky. And I think to really kind of get legislation that's going to tackle specifically, it is a hard effort and I applaud you for that. And I want to think about maybe some of the lessons from this as well, about other things that are essential. Life supporting, community-supporting elements across California as well. Thank you.

Thank you, Mr. Ward. Thank you, Mr. Bennett.

I heard you. We're going to go to Ms. Friedman and then I believe Mr. Alanis and then go to you, Mr. Bennett.

So the rights that are on these properties, the rights to the roto, are a little bit different than the way we consider water that's flowing down a river, for instance. Right? That water that's flowing down a river is considered usually water of the United States. A lot of times that water is used by multiple users for public benefit. This is a little bit different. Do you think that hedge funds should also have access to water that's coming down the Colorado, for instance?

Oh, you're asking them. I think that's for you guys.

First of all, you do. Just to be clear, there's a thing called the public trust doctrine that would overlay that river. And we have water quality standards and all sorts of regulatory overlays. But the fact is we have riparian water rights holders throughout Northern California in particular, who are allowed to beneficially use that water and have for some over hundreds of years and have a legal right to do so.

And so I think the question that you're asking is sort of the who question, should we stop certain classes of companies or private entities from owning a water right? As opposed to the what question? The what question is, if they're selling the water at the same price as a public entity, why is it a problem?

I guess what I was trying to get at is you were talking about us doing that this bill would interfere with the market.

It would.

I understand. So can you tell me what the benefit is for the public or for people of California of having these hedge funds involved in this market? As opposed to what's traditionally happened, which is those riparian rights holders, a lot of agricultural areas, sort of the different water agencies who are in the business not of generating profits for a shareholder, but of delivering water to the people that they serve. Most of them are public. There are some private ones, but they still are in the business of serving water to their membership. So what is the public benefit of having the hedge funds enter this market?

So I think it's about keeping pieces on the board in terms of moving water efficiently from where it is to where it needs to go. And if a hedge fund is the person that's acting as a broker in that, and that helps get water from where it's more plentiful, like in the north of the state, to where it's needed, like Southern California or the southern part of the Central Valley, then I think that's important, that we have a robust market that allows water to move from place to place. And to another point.

Those agencies that would be the recipient, are they supporting the hedge funds doing that?

In some cases, yes. I'll give you a specific example. There's a water bank that was funded actually by the State of California that's funded largely by a hedge fund out of Los Angeles, the CalPERS investment.

But do they own the property now? Did they come in?

They own the property.

If we can let him dive in.

Well, I wanted just some clarification, but thank you.

Yes, and you did interrupt.

Assemblymember, they came in to your question. They came in and bought the property. The property was historically agricultural, though very low producing. There was an existing water right. They acquired that and then they partnered to actually enhance the ability of that property to even store more water underground. So they had the original water right. They supplemented it, and then they moved that water to public water agencies when they need it. And some of them store there when there's water available to store and they spend a lot of money to do that.

Right. So I understand the investment upfront and having the vision to do that, but there's nothing that would prevent a public agency from doing that or partnering with other public agencies to do the same thing. So if a public agency were to do the exact same thing that you mentioned, is the hedge fund making money on that proposition, on that particular transaction?

Sure. And so would a public agency.

No, wait a second. If a public agency did that, that money would then be spread. If it was a public agency, that money that they would be making would go into their infrastructure, into their rate base, all of that. So having the hedge fund involved is skimming money out of what that system would cost. It's making the water more expensive for those public agencies that are the ultimate recipient.

You look at it that way, perhaps, but the other way to look at it is, would someone have come in and made those investments to improve the ability of that property to store more water and make it available at different times. That's one issue. The other issue is you're assuming that they can somehow charge a price for water in the water market in California that's excessive or inappropriate, when in fact, if you look at, and this bill doesn't, there's no real discussion of how water markets work in California. I think it's worth time to look at that because there are active water markets in California and there are both public and private entities.

They're selling water at the same price by saying that someone who, an investment fund who sells the water at the same price is somehow inherently wrong or evil or is profiteering when they're getting the same exact price as the water that a public entity would sell, I think is a problem. Your point is maybe they shouldn't be allowed to participate because they'll take the money as a profit. And that's a different point, I think.

I kind of think it's the whole point, but I'm going to ask the author to respond.

Well, I also think, I didn't really realize that the opposition would want us to put price controls on water in lieu of this, which would also make me comfortable. I guess my concern is the gouging of Californians. So if what he would prefer is to ensure that these private entities aren't charging more than the public entities and that we keep prices down, that's another avenue we could take. Because my concern really here is hedge funds coming in and gouging people for life-saving water. So I guess that's on the table.

That's not what I said, by the way, just to be clear. Nor did I invite that, nor is it appropriate, unless you want to regulate all water prices everywhere. So what you can do.

Well, I want to thank the author for bringing this forward. I think that most. So I represent Southern California. I represent cities in the metropolitan area. And I don't think there's any for-profit water systems in my district. But there are in Southern California for sure. But those agencies are also in the business of delivering water to their constituents, not just speculatively buying and selling water. But I think that my constituents who rely on their water all the time are very sensitive now about where their water comes from. Very sensitive of the price, very sensitive of conservation because of drought. Something that was not really thought much about 20, 30 years ago is very much on the top of people's minds.

I think they'd be really disturbed to hear that there are hedge funds now coming into the market. They wouldn't think that it was a public benefit. They wouldn't see the benefit to them. They would think that this is going to make it even harder for public agencies to work together to pull every drop of water out of the state and make sure that it goes to the highest public use. There are uses that maybe aren't high uses that could pay more for water as well at a time when we have people who worry about keeping the lights on at their business because of water. I would like to be added as a co-author to the bill. And I'm very happy that you brought it forward. I'm looking forward to supporting it. Thank you.

Thank you. I would love that, Ms. Friedman.

All right. Thank you, Mr. Friedman. Mr. Alanis.

Thank you. I'm just curious, a little bit more from the Western Growers. If you could just dive in a little bit deeper. I was just a little curious on that part that we missed.

Which part?

Where he would cut off with his two minutes.

I think that's the part where you were kind of diving into the different.

I did get to that in terms of how the water banks work and how it would take flexibility away from agriculture, which is the main concern. So I think I covered it more than covered it, especially with Ms. Friedman.

All right, Mr. Bennett.

Thank you very much. Two points I'd like to emphasize that democracies usually solve a problem after it becomes a big problem, and it's always harder to solve the problem afterwards. This is, in many ways forward looking in terms of anticipation of a growing potential problem. Water is going to become more and more precious. Water is going to become more and more expensive. We don't want the groundwater or any water, but particularly the groundwater in California, to be used as an investment asset.

Just like you might say, let's try to corner the silver market. Let's. Because in the example that's just been given, the public agency has an incentive to supply that water to the public to meet a public need. A private investment firm would have an incentive to say, when's the best time for us to sell this water? When can we get the maximum price for this water? And so this is an attempt to begin to address that the issue of water is not one that should be fundamentally a focus on private profit by itself. There is a profit motive in agriculture that makes sense, but it's not a profit motive on just the extraction of the water.

And if we want to make water a commodity that we allow the private sector to purchase up, we could literally find ourselves with speculators determining what water supply availability is, particularly at the margin where things could be really critical at different times. So those are the reasons why I seconded the motion and applaud the author. And at the same time, I recognize the statement of my colleague from San Diego. It's always tricky to do this, to try to regulate the market. It is tricky, but that doesn't mean it's not a worthwhile thing to do. You just have to be sharp as the author is as she approaches us.

Thank you.

All right, anybody else from the committee? Okay. Yeah. Bill has a first from Mr. Ward and a second from Mr. Bennett. Would you like to close?

Thank you, Mr. Vice Chair. Yes. I think this has been an interesting year and a half, chairing this committee and diving into the many issues. And I'm so glad so many people are engaged in the informational hearings we have because really grappling with California's water issues is what we need to be doing. It's one of the things that most Californians think about every day is how am I going to get my water? How much is it going to cost me?

Am I going to be able to pay all my bills, including my water bills? I think as we think about water in California, and you've heard the opposition say it, and I couldn't agree more, that we need to be ensuring that water is used in ways that benefit Californians, right? That's the fundamental principle of our water laws.

And having these outside actors coming in to see the next great buck to be made off of water in the West and in California is something that we need to be keen to here in the Legislature, and we're trying to get it right. I made significant amendments thinking that they would really move the opposition. I'm hearing today that didn't happen, but we'll continue to work at it because we really were trying to. We believe that this effort, if we get it right, will protect agriculture in California because when the water prices go up, our food prices go up because ag needs water. And water is essential to everything we're trying to do here in California.

And so to ensure that we're protecting these resources from a gold rush that drives up costs for domestic use, for agriculture use, for the use that we need most in California is something that will hurt all of us, will hurt our economy and will benefit out of state actors. And I will note that it is not just hedge funds and investment funds, but we're seeing foreign countries coming in and buying up these rights to benefit off of our scarcity. And so really we need to be protecting the people we represent every day. And I think this bill is a step in that direction. Although, as I've acknowledged, happy to continue to work with the opposition to try to get it right, to really focus on what we're trying to achieve here.

All right, get a motion in a second. Secretary, please call the roll.

All right. Bauer-Kahan. I'm sorry. AB 1205, motion do pass as amended. Bauer-Kahan. Aye. Bauer-Kahan, aye. Mathis. No. Mathis, no. Alanis. Alanis, no. Bennett. Aye. Bennett, aye. Dahle. No. Dahle, no. Davies. Davies, no. Friedman. Aye. Friedman, aye. Hart. Hart, aye. Kalra. Aye. Kalra, aye. Pellerin. Aye. Pellerin, aye. Rubio. Aye. Rubio, aye. Schiavo. Aye. Schiavo, aye. Villapudua. Aye. Villapudua, aye. Ward. Aye. Ward, aye. Weber. Aye. Weber, aye. So that's eleven to four and that one's out.

Eleven to four, the bill is out.

AB 676. Motion do pass as amended. Friedman? Friedman aye. Pellerin? Pellerin aye. And that's 10 to 4.

I forgot I was still in charge. This hearing's adjourned.