Is there a Singapore PUB for the US?

The Singapore Public Utilities Board (PUB) is known globally as a leading water utility. Because of the nation’s precarious geographic and political situation, PUB has led the way in developing alternative sources of water, such as reuse and desalination. The agency has undertaken and supported significant R&D work for water technology, which serves the dual purposes of meeting its own long-term water supply goals and helping new products reach international markets.

Although PUB has led in reuse and desalination, it plans to expand its capacity further to meet projected water demands of population growth and industry through 2060. Existing and planned future water supplies are shown below. Note the relatively small proportion of “traditional” local water supplies, compared to reuse and desalination, and that future water supplies will be derived 100 percent from alternative supplies.Slide1

This raises the question: what agency in the United States might assume such a leadership role here? There have been several “water technology hubs” on a smaller scale, such as the Milwaukee Water Council and Houston Water Innovation Hub, and agencies such as Orange County Water District in California have adopted new technologies. But will a large agency commit to investment in water supply and treatment technologies on a larger scale for a longer term? Will such a program be implemented by the City of Los Angeles through its One Water LA program? Or will another agency step forward, such as the Metropolitan Water District of Southern CaliforniaCity of Houston or New York City?

In recent decades, US cities, districts and states have been reluctant to invest in new water supplies based on the perception of cost and environmental impacts, even when those concerns have been shown to be chimeric. Moving forward, however, certain areas must act, if they are to maintain safe, reliable water supplies. For example, California cities and agriculture will need to make substantial investments based on regulatory changes that will reduce the quantity of surface and groundwater available in future, as will Texas industry in order to make water available for economic development along the Gulf Coast. But who will have the courage to step up and make real investments?

Federal Reserved Groundwater and California

On November 27, 2017, the United States Supreme Court denied certiorari regarding the Ninth Circuit’s decision in Agua Caliente Band of Cahuilla Indians v. Coachella Valley Water District, 849 F.3d 1262 (March 7, 2017). Thus, the Supreme Court left in place the appellate decision, which was the first to hold that an Indian tribe may claim reserved rights in groundwater resources.

The United States formed the Agua Caliente Reservation through executive orders in 1876 and 1877, with the purpose of providing a sustainable home in the Coachella Valley for the Agua Caliente Band of Cahuilla Indians. Surface water in the area is limited to relatively small quantities in the Whitewater River System, so that the vast majority of local water supplies are derived from groundwater. Production and use of groundwater by local cities and agriculture have resulted in cumulative overdraft of the Coachella Valley Basin by approximately 5.5 million acre-feet since the 1980s. Historically, the Agua Caliente Tribe has not produced groundwater directly from the Basin, but has purchased water (including groundwater, surface water and imported water supplies) from the Coachella Valley Water District (CVWD) to meet its needs.

In 2013, the Tribe filed an action for declaratory and injunctive relief against the two largest producers of groundwater from the Basin, CVWD and Desert Water Agency (DWA). The parties and court divided the litigation into three phases, the first of which concerned whether the Tribe holds reserved groundwater rights and resulted in the decisions of the Ninth Circuit and Supreme Court.

As recognized in a long line of cases, when the United States reserves lands from the public domain for specific purposes, that reservation impliedly includes water resources that are necessary to accomplish its purposes. See United States v. New Mexico, 438 U.S. 696, 701 (1978); Cappaert v. United States, 426 U.S. 128, 138 (1976); Arizona v. California, 373 U.S. 546, 600 (1963); Winters v. United States, 207 U.S. 564, 575-78 (1908). The reservation of land and water rights for federal purposes may be for Indian, military, forestry or other purposes. Importantly for the development of water resources in the western states, reserved rights vest on the date of the reservation and are superior to the rights of subsequent appropriators under state law.

Although the doctrine of federal reserved water rights has been established for over 100 years, no federal appellate court had ever directly considered whether the United States could reserve rights in groundwater as well as surface water. The Ninth Circuit held that there is no meaningful distinction between the two sources of water when considering the achievement of federal purposes, and so extended the possibility of reserved rights to groundwater. CVWD and DWA argued that it was unnecessary for the court to recognize federal reserved rights for the Tribe in the Basin, because California law would provide correlative, overlying groundwater rights for the Tribe. The Ninth Circuit disagreed, noting that reserved rights are a creature of federal law and thus preempt conflicting state laws.

With the denial of review by the Supreme Court, the decision of the Ninth Circuit effectively ends the question of whether federal reserved rights may extend to groundwater resources in the affirmative. While it is possible that another appellate circuit could disagree and force resolution by the Supreme Court, that appears unlikely. Thus, the decision represents a significant victory for Indian and other federal reservations across the United States.

Within California, the decision means that CVWD and DWA may have less groundwater to allocate between themselves and other users in the Coachella Valley Basin. As those agencies seek to comply with the Sustainable Groundwater Management Act of 2014, they will need to decrease their use of groundwater from the Basin, increase recharge with imported supplies or both. While the Tribe’s reserved rights will be quantified in a future phase of the litigation, the decision of the Ninth Circuit can be expected to result in greater need for imported water supplies by CVWD and DWA. That will increase demands for water from the state’s water conveyance infrastructures, including those which transport water from the Colorado and Sacramento Rivers. Thus, it was not surprising that CVWD approved its participation in the California WaterFix by a board action on October 10, 2017.

Given the interconnected nature of California’s water system, pressures in one Basin often create ripple effects across the state. Those effects can be negative, in that deficits in one area can lead to higher prices in other areas or, if prices are not allowed to operate effectively, shortages. Those effects can also be positive, in that the state can resolve local water deficits on a statewide level, especially during wetter years.

Temperance Flat Reservoir Update

Supporters of Temperance Flat Reservoir have published a new video promoting this water storage project on the San Joaquin River. In August 2017, the San Joaquin Valley Water Infrastructure Authority filed an application with the California Department of Water Resources (DWR) for $1.3 billion in funding from Proposition 1. DWR is expected to issue a decision in the second quarter of 2018 regarding which water storage projects will receive funding. In the meantime, the video offers a summary of, and advocacy for, the project.

Note: The author of this blog has no opinion on Temperance Flat Reservoir.

Mutual Water Companies in the California Legislature 2016

I am happy to report that the California Legislature did no harm to mutual water companies in 2016. Given the past few sessions, that should be considered a positive outcome.

The only bill specifically naming mutual water companies that was passed by the Legislature, Senate Bill 1328, was vetoed by Governor Brown on September 24, 2016. That bill would have allowed the State Water Resources Control Board (SWRCB) to provide grants from the Greenhouse Gas Reduction Fund to implement drinking water, wastewater, water reuse and stormwater projects that were intended to decrease demand for fossil fuels needed to pump, transport and treat water. Named beneficiaries were public agencies, nonprofit organizations, public utilities and mutual water companies. It was good that mutuals and public utilities would have qualified for grant funding along with public agencies, and that the Legislature recognized the important role private water companies play in delivering water and wastewater services in California.

Governor Brown’s veto statement referenced a desire to prevent duplicative programs. He directed the Resources Agency to work with the SWRCB to include stormwater projects in the Urban Greening Program. Since SB 1328 was unlikely to provide a significant source of funds for private water companies, the veto can be considered neutral in its effect.

The Legislature did pass a number of bills which will affect the water supplies used by mutual water companies, but since those bills will impact all water organizations and users, I will address them in future posts.

New California Legislation re Mutual Water Companies

No year has passed since 2011 without the introduction of new legislation aimed at reforming the management and governance of mutual water companies in California. The 2015 legislative session was relatively light, but two laws regarding mutuals were passed and signed by Governor Brown: Assembly Bills 656 (Garcia) and 1077 (Holden).

Assembly Bill 656 allows mutual water companies to participate with public agencies in joint powers agreements (JPAs) for the purpose of insurance and risk pooling. Such JPAs are common among public agencies, and AB 656 will allow mutual water companies to join those organizations and reduce their insurance costs. Insurance may be provided by a JPA through self-insurance, co-insurance under a master policy or insurance purchased from any insurer authorized to transact business in California. (Cal. Govt. Code §§ 990.4, 990.8(a).) Any revenue generated by the JPA must be used to help its members reduce their risk liabilities and further their technical, managerial and financial capacities. A redline comparing the old and new statutes can be found here.

Assembly Bill 1077 modifies the Mutual Water Company Open Meeting Act, which is found at Corporations Code § 14305 and was adopted in 2013 as part of Assembly Bill 240. A redline of its changes to existing law can be found here. Section 1 of the bill includes legislative findings that are generally positive toward mutual water companies, noting that they have made great improvements since 2013 in their service quality, transparency and finances. The Legislature also found that many mutuals have small or no meeting facilities, and are located in remote parts of the state where meetings are difficult for shareholders to access.

In light of those findings, AB 1077 modified the rules for allowing eligible persons (a term which includes members, customers and local elected officials) to participate in board meetings via teleconference. Existing law required a mutual water company board to allow an eligible person to participate in a board meeting in person, if they gave at least 24 hours notice. Under the law as modified, the board must allow a person who fails to give notice access to the meeting, although the board may require the member to participate by teleconference rather than personally. In addition, a board may require an eligible person to participate by teleconference if the meeting space is too small to accommodate all requested participants. The board must provide all teleconference participants with an electronic copy or photocopy of all documents not related to an executive session held at the meeting. There is no deadline for an eligible person providing notice of their intent to attend a meeting by teleconference, so the Legislature has in effect deleted the notice requirement.

In practice, there are very few eligible persons who want to attend mutual water company board meetings. In fact, most mutuals have a difficult time recruiting members to serve on the board and convincing enough persons to attend member meetings to achieve quorum. The only time meeting attendance becomes an issue is when there are eligible persons who disagree with some action taken by the board, and in my experience their disagreement often takes on some degree of anger and interpersonal unpleasantness. In those cases, a board that does not want to be inundated with disgruntled and possibly disruptive members, who wait until the last minute to show up without notice, must have a teleconference set up and ready for all board meetings. Given the small size of most mutuals, very few have existing teleconference services, and this law will impose an additional expense to what the Legislature found were their “limited financial means.”

AB 1077 also modified the Open Meeting Act by clarifying that an executive session of the board must take place during a regular meeting. Thus, a board may no longer hold a meeting entirely in executive session. The board will need to call the meeting to order, take public comments, withdraw to executive session, return from executive session and report on the matters discussed there, and adjourn the meeting. That will make mutual board meetings more like public agency meetings.

Although 2015 saw limited legislation aimed directly at mutual water companies, I understand there are plans to make 2016 a more significant year, and mutuals will continue to be affected by the Sustainable Groundwater Management Act of 2014 and the amendments made to that law in 2015. I will post on that topic in the future.

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