California Legislature Enacts Bill Package on Drought 

On Thursday March 26, 2015, the California Legislature adopted legislation which it describes as allocating approximately $1 billion to emergency drought relief in the state.  As more than 50 percent of the new appropriations target flood control, it remains to be seen to what extent the legislation will mitigate drought conditions.

The legislation consists of two appropriations bills (Assembly Bill 91 and Senate Bill 75) and two policy trailer bills (Assembly Bill 92 and Senate Bill 76) (collectively the “Legislation”), which were announced on March 19, 2015 by Governor Brown as a mobilization of state resources to face the fourth consecutive year of extreme drought.  Governor Brown is expected to sign and enact the Legislation imminently.  The Legislation is intended to direct state funds to drought relief on a faster track than the drought relief contained in the Governor’s January 2015 budget proposal which likely will not be approved until June.

Background

California is currently in the midst of a record drought; this January reportedly was the driest January in California since recordkeeping began in 1895.  The state’s snowpack levels, which supply the state with water throughout the summer, are at historic lows.  There are some reports that California has water remaining in its reservoirs to last just one more year.   California’s groundwater reserves are at historic lows, and reportedly have been decreasing by 12 million acre-feet a year since 2011.  A key factor in the decline of the state’s groundwater reserves is pumping in the Central Valley for agricultural purposes and to replace surface water allocations that have been reduced and, in some cases, eliminated.  On March 17, 2015, the State Water Resources Control Board (“SWRCB”) renewed and updated its statewide emergency water conservation regulations which prohibit excessive outdoor water use and, among other things, require urban water suppliers to implement water shortage contingency plans.  If the drought continues, more curtailments on water usage are expected.

Overview of Legislation

Emergency Relief.  The Legislation appropriates to SWRCB $15 million for emergency drinking water projects, including the design and construction of connections to public water systems and the construction/rehabilitation of wells, and $4 million to provide emergency drinking water to communities affected by the drought.  The Legislation allocates $4.4 million to the Office of Emergency Services to provide communities with drought disaster recovery support.  $24 million is appropriated to the Department of Social Services to provide food assistance to people affected by the drought.  Emergency help for fisheries includes $14.6 million, mostly from the state general fund, allocated to the California Department of Fish and Wildlife (“DFW”) to continue its drought-related operations, which include fish rescues, hatchery operations and fish and wildlife monitoring.

Infrastructure.  The Legislation includes approximately $272 million from the $7.545 billion Water Quality, Supply, and Infrastructure Improvement Act of 2014, also known as Proposition 1, which was approved by California voters last November.  Specifically, the Legislation will accelerate Proposition 1 funding by allocating approximately $132 million to water recycling and demonstration projects and approximately $136 million to improve access to clean drinking water and pay for wastewater treatment in disadvantaged communities.  These appropriations can mitigate drought by producing water suitable for beneficial use and/or for groundwater replenishment.

Mitigation & Monitoring.  The Legislation makes funds available to monitor and mitigate drought conditions and potentially produce new water, including through conservation.  $11.6 million is allocated from the general fund to the California Department of Water Resources (“DWR”) to continue its evaluation of surface and groundwater conditions, expedite water transfers and provide guidance to water agencies.  $20 million is allocated to DWR to fund water use efficiency programs which reduce greenhouse gas emissions.  $10 million is allocated to the Department of Food and Agriculture for agricultural water efficiency projects which reduce greenhouse gas emissions.

The Legislation also includes funding for species and environmental preservation, including a $2 million allocation to DFW to maximize water delivery and efficiency to endangered species including their habitat, and Delta monitoring.  $4 million  is allocated to the Department of Parks and Recreation to control invasive aquatic species within the Sacramento-San Joaquin River Delta and the Suisun Marsh.  $4 million  is allocated to the SWRCB and DFW to enhance instream flows in certain stream systems that support critical habitat for anadromous fish.

Regulatory Oversight.  Approximately $23 million is allocated to the SWRCB for enforcement of water rights and water curtailment actions.

Flood Control.  The largest allocation ($660 million) is earmarked for flood control including the completion, operation or replacement of flood control projects.  While new flood control projects, or repairs to existing facilities, play a role in water capture, it appears that these aspects of the Legislation were designed to allocate funds remaining under Proposition 1E before its expiration, rather than solely focus on drought relief.  Set to expire on July 1, 2016, Proposition 1E  is otherwise known as the Disaster Preparedness and Flood Prevention Bond Act of 2006, which authorizes $4.1 billion in bonds for disaster preparedness and flood prevention projects.  Of the $660 million, approximately $320 million will be available to reduce urban flood risks and $118 million for rural flood management.  $222 million will be granted to DWR for local assistance projects.

Establishment of the Office of Sustainable Water Solutions

The Legislation establishes the Office of Sustainable Water Solutions (“OSWS”) within the SWRCB.  OSWS’s mandate is to promote sustainable drinking water and wastewater treatment solutions and safeguard the effective and efficient provision of safe, clean, affordable, and reliable drinking water and wastewater treatment services.  OSWS will be particularly focused on aiding small communities with modest resources and large infrastructure needs.  OSWS will help communities seek out state and federal funding for water supply projects.

Limited Suspension of Public Contracting and Procurement Requirements

Generally, the State Contract Act provides for a contracting process by which public agencies engage contracts through a competitive bidding process, under which bids are awarded to the lowest bidder, with specified alternative bidding procedures authorized in certain cases.  This process can be  cumbersome and may frustrate public agencies from promptly engaging in emergencies.  As several communities in the Central Valley are without water entirely, the Legislation provides public agencies with greater flexibility to respond to an urgent drinking water need and temporarily suspend the State Contract Act.

Broader Context

The Legislation is the latest response from Sacramento to attempt to address the ongoing drought.  In April 2014, the Governor issued a Proclamation of a Continued State of Emergency in response to the state’s ongoing drought, which extended his January 2014 Emergency Drought Declaration.  In 2014, Governor Brown signed a $687.4 million drought package, which offered aid to communities, food and housing assistance and funds for projects to help communities capture and manage water.  In October 2014, the Governor signed the Sustainable Groundwater Management Act, intended to address the alarming loss of groundwater reserves over the last four years, and to bring groundwater management into a comprehensive regulatory scheme. The Governor’s January 2015 budget proposal includes $532 million in expenditures under Proposition 1 and the last $1.1 billion in funds available under Proposition 1E for flood protection.

Certainly, these actions in the aggregate should make important funding available to real projects, potentially helping to produce new sources of water for beneficial use, capture and store water when available, conserving water that otherwise would be used, and mitigating the impacts of chronic drought conditions.  Given the scale and complexity of the drought, however, and should the drought persist as some scientists predict, similar and even more robust legislation may be in the offing.  These actions  may do less to provide immediate relief, than to lay groundwork important to long-term water security in  California.