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Independent governance eyed for State Water Project

The California Aqueduct, part of the State Water Project, flows by an almond orchard in the Central Valley. (Photo: Alabn, via Shutterstock)

The Legislature created the Department of Water Resources in 1956 for the purpose of managing the State Water Project, then in its early stages of planning. That project now comprises 700 miles of tunnels, pipelines, aqueducts and siphons that transport water from California’s north to its more arid south, serving 26 million people and 750,000 acres of farmland along the way.

It’s a huge project with a lot of infrastructure, and it’s most of what DWR does. But more than 60 years later, there is a move under way to take control of the project out of the hands of DWR and place it in an independent commission.

AB 3045 would create a new State Water Project Commission under the state’s Natural Resources Agency to run the project.

Of the department’s $3.4 billion budget this year, $1.7 billion is dedicated to the State Water Project, according to the department. Of the department’s 3,500 employees, 1,900 work on the expansive system.

Some critics don’t think it should be that way. They say there is an inherent conflict in having DWR run the State Water Project, and that the project lacks transparency.

A proposed law would take the project out of the hands of the department that has always housed it. The legislation, Assembly Bill 3045, is on the suspense file in the Assembly Appropriations Committee. The committee may vote on it Friday. Should the committee decline to vote, it will remain in suspension.

In other words, it will be dead.

But that won’t be the end of debate around issues the bill brings up.

AB 3045 would create a new State Water Project Commission under the state’s Natural Resources Agency to run the project – the agency, whose secretary serves in the governor’s cabinet, has broad authority over DWR.

Proposed by Republican Assemblymembers James Gallagher of Yuba City, with principal coauthor Sen. Jim Nielsen of Tehama, the bill passed through the Assembly Water, Parks, and Wildlife Committee with a unanimous vote last month.

It’s not often in the Democrat-controlled Legislature that Republican-authored bills of this significance get unanimous votes.

Gallagher and Nielsen, responding to the concerns of some constituents, are both vocal critics of DWR’s approach to dam safety.

The commission proposed in the bill would have nine members appointed by the governor and confirmed by the Senate. Members would include three engineers; two water experts; three members representing, respectively, agriculture, environmental interests, and municipal water users; and one member nominated by the Butte County Board of Supervisors. Butte County is located in Gallagher and Nielsen’s districts.

Gallagher said the scope of the proposal — disentangling 60 years of integration in a department — goes beyond what he would expect the Legislature to tackle in one session. But he thinks the plan could spur other changes over the course of deliberations.

“This kind of opens the conversation,” he said.

Gallagher and Nielsen, responding to the concerns of some constituents, are both vocal critics of DWR’s approach to dam safety, and Gallagher authored a law requiring more vigorous inspection of dams.

The legislators’ districts include the Oroville Dam, which experienced a break in its main spillway last year during heavy rains. The failure prompted the evacuation of 188,000 people in the area.

A forensic investigation of the incident determined that DWR’s insularity and complacency, along with an inadequate safety culture, contributed to the failure.

With this latest bill, Gallagher said he hopes to bring transparency to the project and eliminate the conflict he sees in its structure.

Putting the State Water Project under an appointed commission that holds open meetings would give the public the opportunity to see how decisions are reached governing the project’s operations.

Separating the State Water Project and DWR would also mean the project would no longer be in the same department as the Division of Safety of Dams, which conducts inspections.

The bill does not include an additional option of bringing the project into state budget deliberations,  a move that would make spending more transparent.

Presently, the budget of the State Water Project does not go through budget proceedings in the Legislature. That’s partly because the project is overwhelmingly funded by the contractors that purchase its water,  and its expenditures do not come out of the state budget.

That means the Legislature does not get input into project spending or an opportunity to debate line-item spending on activities like maintenance. The exception is funding for project staff, which is included in budget proceedings.

The Legislative Analyst’s Office has recommended including the project in the budget process, stating in a 2009 report, “We are concerned that the process the Department of Water Resources (DWR) follows to develop SWP budgets lacks checks and balances that would help ensure accountability.”

Separating the State Water Project and DWR would also mean the project would no longer be in the same department as the Division of Safety of Dams, which conducts inspections. Having regulatory authority and operations in the same department means “there’s not really this independent group that’s inspecting them,” said Gallagher.

He compared the current arrangement, where the regulatory division and operations of the project happen under one department, to a contractor building a house, then returning to inspect their own work and declaring the house has been built to code. “In other words, they’re regulating themselves,” he said.

DWR spokesperson Erin Mellon said the department does not comment on pending legislation. Brian Ferguson, a spokesman for Gov. Jerry Brown, also declined to comment.

Pulling apart DWR would be difficult and increase costs, according to analysis of AB 3045 by the Appropriations Committee staff.

The State Water Project shares human resources, information technology and senior administration with the rest of the department. Separating IT would amount to a one-time cost of $14 million, the department has estimated; and the additional annual cost of running the department and project separately would total at least $6 million.

“This bill represents a major reform effort and raises numerous policy considerations that have not been vetted,” the analysis states. It goes on to say that because legislative, budget and policy proposals from departments within the Natural Resources Agency require approval by the agency anyway, it’s unclear whether removing the State Water Project from the Department of Natural Resources would actually make the project more independent.

DWR spokesperson Erin Mellon said the department does not comment on pending legislation. Brian Ferguson, a spokesman for Gov. Jerry Brown, also declined to comment.

A May 10 letter opposing the bill drew signatures from 33 water agencies and organizations, including Valley Ag Water Coalition, whose membership includes irrigation districts; State Water Contractors, an association of 27 contractors of the project; and at least 17 individual member agencies of State Water Contractors.

Metropolitan serves 26 cities and water agencies in Southern California. It’s the largest customer of the State Water Project and covers roughly half the project’s costs.

The letter criticized the proposed commission for not including membership from water agencies that contract with the State Water Project and pay its costs, and said the bill could create a “fracture and unworkable governance structure” and disrupt ongoing capital improvements.

Jeffrey Kightlinger, general manager of water wholesaler Metropolitan Water District, told Capitol Weekly he agreed there was conflict in the current structure and said he is supportive of removing the State Water Project from DWR.

Metropolitan serves 26 cities and water agencies in Southern California. It’s the largest customer of the State Water Project and covers roughly half the project’s costs. The board of Metropolitan, which is made up of representatives of its member agencies, advocated for separating the project from DWR in policy principles published in 2009. Metropolitan opposes AB 3045.

Instead of keeping the project within the Natural Resources Agency, Kightlinger thinks it should be spun out as a public utility, which would be less saddled by bureaucracy. And in lieu of the proposed commission structure, Kightlinger would prefer to see a commission of ratepayers — in other words, contractors like Metropolitan.

“My board is representative of the people who pay the bills,” he said, adding that the model “has worked well” and ensures infrastructure is well-maintained.

The intent of the tunnels is to make transportation of water from Northern California to Southern California more efficient and reliable, and to improve the health of Delta ecosystems.

He said another option would be a commission or board of representatives elected by region, similar to the board of the Central Arizona Project.

Who runs the Department of Water Resources?
A controversy underlying the proposal is the role of the 29 contractors that purchase water from the State Water Project. The contractors cover virtually all project costs, and critics of the department say this gives them the power to skew department priorities.

“It’s not just that there’s bureaucrats within DWR who may not be doing their job, it’s that the contractors themselves are basically running the Department of Water Resources, from our perspective,” said Osha Meserve, lawyer representing Sacramento-San Joaquin Delta area agencies, including counties, water districts and wildlife interests that all oppose the $17 billion plan for the department to build two new tunnels under the Delta.

The intent of the tunnels is to make transportation of water from Northern California to Southern California more efficient and reliable, and to improve the health of Delta ecosystems. Metropolitan pledged to cover most of the cost after other water agencies declined to contribute. Opponents say the tunnels could negatively impact Northern California water users and landowners, as well as the environment.

“There’s always been at least the perception and the suspicion that the water contractors have a lot of influence over the Department of Water Resources,” said Gallagher. But without more transparency into how the State Water Project is operated, he said it’s impossible to know.

“It has always been our opinion that the assets they [the department] have invested in for the last 50 years need to be maintained.” — Jennifer Pierre

The report from the forensic investigation into the Oroville Dam failure said the department “was likely subject to significant pressures by the [State Water Contractors] to control costs, and these pressures were exerted in various ways such as openly during discussions in meetings.” This would include the costs of maintenance and repair, John France, the lead engineer on the forensic team that investigated the Oroville Dam crisis, confirmed to Capitol Weekly. He added, however, that his team found no written documentation of such pressure.

Jennifer Pierre, general manager of State Water Contractors, an association representing 27 contractors of the State Water Project, said the contractors could not control department operations if they tried, and that besides they would have no incentive to cut corners on safety in order to trim costs.

“It has always been our opinion that the assets they [the department] have invested in for the last 50 years need to be maintained,” she said during a panel at a recent conference hosted in Sacramento by the Association of California Water Agencies, which represents publicly-run water agencies. The topic of the panel was how the Department of Water Resources could regain public trust after the Oroville Dam crisis.“

“At the end of the day, DWR makes the final decisions,” said Metropolitan general manager Kightlinger.

Not a new idea
AB 3045 originally proposed a smaller change: Separating the Division of Safety of Dams from the Department of Water Resources and putting it directly under the Natural Resources Agency. With 56 employees and 18 open positions, according to DWR data, the division is a fraction of the size of the State Water Project.

Little Hoover recommended putting the State Water Project under different authority as part of a sweeping proposal for comprehensive reforms to the state’s overall approach to managing water.

Separating dam regulation from dam operations would have been an incomplete solution by leaving other department divisions that regulate the State Water Project in the same department as the project, according to Gallagher’s capitol director Katja Townsend, who oversees Gallagher’s legislative package and Capitol office operations. The division regulates 1,200 dams throughout the state, and only 30 of those dams are part of the State Water Project.

An analysis from the Assembly Water, Parks, and Wildlife Committee staff suggested the larger change of removing the project would better accomplish the bill’s goals, citing a 2010 report from independent state oversight committee Little Hoover Commission.

Little Hoover recommended putting the State Water Project under different authority as part of a sweeping proposal for comprehensive reforms to the state’s overall approach to managing water. The commission did not exclusively recommend keeping the State Water Project within the Natural Resources Agency.

Meserve, the lawyer representing Delta interests, called the bill “well-intentioned” but said keeping the project within the agency would not result in sufficient independence. She also said that because staff tend to move between the agency and Department of Water Resources, the same people could still end up being involved in regulation and operation.

“It’s a pretty tangled web this is in,” she said.

That interconnectedness facilitates efficiency, the Little Hoover report cites department staff as saying. Having the project remain in the department allows for more management structure options, and makes it easier to move staff among divisions as needed, whether for special projects or emergencies. Those benefits could be lost by dividing up the Department of Water Resources.

Gallagher’s bill puts a spotlight on the convoluted, interwoven nature of California’s water management structures, and the pressures and conflicts those structures potentially create.

“Separating operating functions from planning and management also would reduce career development opportunities – and the richness of understanding – gained by moving through different assignments within a larger department,” the report summarizes.

It’s not clear how common it is for regulatory authority and dam operations to coexist in the same department. At least one other state — Colorado — also does this, according to testimony given at a legislative hearing in January about AB 3045 by France, who led the Oroville forensic team.

“I don’t think that’s an inherent flaw,” he said, adding that his team saw some evidence the Division of Safety of Dams “might be even a little harder on DWR to compensate for that situation.”

Gallagher’s bill puts a spotlight on the convoluted, interwoven nature of California’s water management structures, and the pressures and conflicts those structures potentially create.

Maybe the State Water Project faces pressures from the contractors that pay for it. But those contractors have their own customers to heed.

“Given that SWP costs paid by the SWC were ultimately passed on to the California public and farmers, it would be understandable that the SWC would themselves feel pressured to control costs,” the forensic report on the Oroville Dam crisis said.

 

 


  • Water Wonk

    Who gets the liability, for say, failures of facilities? The contractors?

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