Title: A Model Water Transfer Act for California
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Permanent Link: http://ufdc.ufl.edu/WL00002779/00001
 Material Information
Title: A Model Water Transfer Act for California
Physical Description: Book
Language: English
 Subjects
Spatial Coverage: North America -- United States of America -- Florida
 Notes
Abstract: A Model Water Transfer Act for California
General Note: Box 11, Folder 2 ( 17th Annual Water Management Seminar - 1998 ), Item 16
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
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Bibliographic ID: WL00002779
Volume ID: VID00001
Source Institution: Levin College of Law, University of Florida
Holding Location: Levin College of Law, University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Full Text


















A Model Water Transfer
Act for California


PART A: PURPOSES AND POLICIES

Section 101. Declaration of Policies.
The Legislature hereby declares that voluntary transfers
of water are an integral part of water resources management
and planning in this State. Voluntary water transfers improve
the administration of California's existing water resources by
increasing the flexibility of water supply and allocation, par-
ticularly during droughts and other water shortages.
The Legislature also declares that short-term and long-
term water transfers are in the public interest and promote
the purposes of Article X. Section 2 of the California
Constitution. Water transfers serve the public interest by
creating economic incentives to use water more efficiently
and by allowing market processes to direct the distribution
of developed water supplies.
The Legislature further declares that the recognition and
protection of water rights are in the public interest and are
necessary to facilitate voluntary transfers of water in California.
The Legislature recognizes that some water transfers may
adversely affect a variety of third-parties, including other water
right holders, other lawful water users, local water agencies.
cities and counties, and other persons who use the States water
resources for their livelihood, recreation, and aesthetic enjoy-
ment. To the extent that water transfers cause injury to other
water users. water quality, fish and wildlife, other instream uses
of water, groundwater resources, and the regional economies of
areas from which water is transferred. these third-party interests
must be appropriately protected or compensated.
The Legislature also recognizes that federal, state, and
local water agencies exercise significant control over the dis-
tribution of water in California. The Legislature therefore fur-
ther declares that such agencies should assist their
members and customers who seek to transfer water and.
subject to terms and conditions that protect the water sup-
ply obligations of the agencies, should make available their
water transportation and distribution facilities to facilitate
voluntary water transfers.
The Legislature finally declares that a variety of other
institutional changes are required to encourage the volun-
tary transfer of water. These changes include revision of the
law governing the State Water Resources Control Boards
review of water transfers within its statutory jurisdiction.
authorization of expedited transfers of conserved and sal-
vaged water, improvement of the processes for transferring
water to instream uses, authorization of regional water
banks, and clarification of the relationship between the water
transfer laws and the California Environmental Quality Act.


Section 102. Purposes.
In accordance with the policies set forth in section 101.
the Legislature hereby enacts a comprehensive set of laws to
govern voluntary transfers of surface water and to protect the
legitimate interests of others who may be affected by such
transfers. The purposes of this Act include the following:


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a. Establishment of a unified code to
govern voluntary transfers of surface water and
voluntary changes in surface water rights;

b. Authorization of short-term and long-term
water transfer agreements as voluntarily agreed to by
the parties and subject to the requirements of this Act;

c. Revision of the standards governing
transfers of water within or through the
Sacramento-San loaquin Delta;

d. Clarification of rules appiicabie to the
conjunctive use of groundwater to replace
transferred surface water;

e. Amendment of the California Environ-
mental Quality Act. Division 13 (commencing
with Section 21000) of the Public Resources
Code. to exempt water transfer negotiations
and certain water transfers from its provisions;

f. Protection of water rights during the
term. and after the conclusion, of water transfer
agreements:

g. Creation of economic incentives for.
and legal protection of. water conservation and
efficient use of developed water resources:

h. Prevention of harm to third-party
water rights holders and other legal water users
from voluntary water transfers;

i. Protection of groundwater resources.
instream uses. fish and wildlife, and other envi-
ronmental resources that may be adversely
affected by voluntary water transfers;

I. Establishment of economic and legal
incentives to encourage voluntary water transfers
that are unlikely to cause significant adverse envi-
ronmental and economic harm to third-parties;

k. Creation of an expedited process for
transfers of conserved and salvaged water;

1. Creation of a security system to pro-
vide for the monetary compensation of legal
water users and other third-party interests
injured by expedited transfers of conserved and
salvaged water undertaken pursuant to this Act;

m. Authorization of transfers of water to
instream uses;


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n. Enactment of a water transfer fee to
provide funding for the State Water Resources
Control Board's review of voluntary water trans-
fers within its statutory jurisdiction:

o. Recognition and definition of the
respective rights of local water agencies and
their members and customers to transfer water
and to receive transferred water:

p. Revisions of the laws governing the
transport of water through water supply facili-
ties owned or operated by an entity other than
the owner of the transported water:

q. Authorization for the creation of a
State Water Bank and local and regional water
banks: and

r. Establishment of a registry of water
transfers to be administered or supervised by
the State Water Resources Control Board.

Section 103. Title.
This Act shall be titled the "California Water
Transfer Act."

PART B: GENERAL AUTHORITY

Section 201. Coverage of the Act and Definitions.
The provisions of this Act shall apply to. ( ) vol-
untary changes in surface water rights that do not
involve a transfer of water from the existing water
right holder to another user: (2) voluntary changes
in surface water rights that do involve a transfer of
water from the existing water right holder to anoth-
er user; and (3) voluntary transfers of water that do
not require a change in water rights.
All references in this Act to "water transfers" or
to "transfers of water" shall include voluntary
changes in surface water rights, voluntary transfers
of surface water rights, and voluntary transfers of
water. Water transfers include transfers of water
held pursuant to a surface water right, water held
pursuant to a contract right, and water distributed
by any local water supply agency.
The provisions of this Act shall not apply to
changes in pueblo rights or transfers of water
based on pueblo rights. Except as set forth in sec-
tion 207. the provisions of this Act shall not apply
to changes in riparian rights or transfers of surface
water based on riparian rights. Except as set forth
in section 208, the provisions of this Act shall not
apply to changes in groundwater rights or to
transfers of groundwater.


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q Section 202. Authorization of Water Transfers.
Notwithstanding any other provision of law.
surface water rights and surface water (as set forth
in section 201) may be transferred in accordance
with :he provisions of this Ac:.

Section 203. Agreements to Transfer Water.
Agreements to transfer water may include pur-
chase and sales contracts. deeds. leases, exchange
agreements. options, futures contracts, subordina-
tion agreements, gifts. agreements to forego the use
of water. and other types of arrangements to transfer
water :"at are mutually agreeable to the parties.

Section 204. Short-Term and Long-Term Water
Transfers.
Short-term proposals or agreements to transfer
water are proposals or agreements the term of which is
two years or less. Long-term proposals or agreements
to transfer water are proposals or agreements the term
of which is greater than two years. Long-term propos-
als and agreements include permanent changes in
water rights and permanent transfers of water.
;f a water right holder or water transferor enters
into successive short-term agreements with the
same party (or agents, representatives, subcontrac-
tors. assignees, or beneficiaries of the same party).
and such successive agreements have commence-
ment dates within one year of each other and result
in the transfer of water for a term in excess of two
years. the agreements shall be regarded as a long-
ter- agreement and the provisions of this Act gov-
ern:.- long-term agreements shall apply to the
secr.d agreement and any successive agreements

Section 205. Compliance With Other Laws.
Throughout the term of all water transfer agree-
ments. the parties to the agreement shall comply
with all requirements of federal law and state law
where applicable, including but not limited to:
Article X. Section 2 of the California Constitution;
sections 1410-1418 of the California Civil Code;
other provisions of this Code: terms and conditions
imposed by permit or license administered by the
State Water Resources Control Board: and other
judicial and administrative decisions respecting
water rights, water quality, and other beneficial uses.

Section 206. Through Delta Transfers.
No transfer of water within or through the
Sacramento-San loaquin Delta (as defined in sec-
tion 12220 of this Code) shall cause a violation of
the water quality standards (including flow require-
ments and temperature standards) applicable to the
Delta as established under state and federal law.


Within one hundred eighty days of the effective date
of this Act, the State Water Resources Control Board
shall promulgate regulations to implement this sec-
tion. Following the promulgation of these regula-
tions, all transfers of water shall be consistent with
the regulations, and compliance with the regula-
tions shall be deemed compliance with this section.
In the rulemaking proceedings required by this
section. the Board shall determine whether transfers
of water within or through the Sacramento-San
loaquin Delta should be accompanied by an addi-
tional amount of carriage water to ensure that such
transfers do not cause a violation of applicable
water quality standards. If the Board determines that
additional carriage water is required, it shall include
in the regulations a table that states the additional
amount of carriage water that must accompany each
transfer of water within or through the Delta for var-
ious hydrologic conditions and types of transfers.
The Board shall consult with the California
Department of Water Resources, the California
Department of Fish and Game. the United States
Bureau of Reclamation. the United States Fish and
Wildlife Service. the National Marine Fisheries
Service, and the United States Environmental
Protection Agency before promulgating the draft of
the regulations required by this section. The Board
also shall submit the draft regulations to academic
experts in the fields of hydrology, marine biology,
water supply engineering, water quality, water rights,
and related disciplines for peer review and comment
before the Board promulgates final regulations.


Section 207. Transfers of Quantified Riparian
Rights and Agreements to Forego
the Use of Water Held Pursuant to
Riparian Rights.
Riparian rights that have been quantified by
judicial decree issued pursuant to Chapter 3 (com-
mencing with section 2500) of Part 3 of this Code.
and water held pursuant to such decreed rights, may
be transferred in accordance with Parts D. E. and F of
this Act. The court may enter a supplemental decree
as necessary to modify the original decree to incor-
porate the transfer of water pursuant to this section.
Nothing in this Act or any other law shall pre-
clude any agreement to forego the use of water held
pursuant to riparian rights for any period estab-
lished by the agreement.

Section 208. Surface Water Transfers and
Groundwater Replacement
Transferors of surface water from groundwater
basins subject to critical conditions of overdraft, as
designated by the Department of Water Resourcesin -. ..


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the Bulletin 118 Series, shall not initiate or increase
the use of groundwater to replace the transferred
surface water if the surface water is exported for use
outside the overdrafted groundwater basin. This
prohibition shall not apply to the use of groundwa-
ter stored for the purpose of subsequent extraction
for surface water replacement or direct transfer as
part of a groundwater banking program carried out
by direct recharge. delivery of surface water in lieu of
groundwater pumping, or by other means.
Transferors of surface water from groundwater
basins that are not subject to critical conditions of
overdraft as designated by the Department of
Water Resources in the Bulletin 13 Series. may not
initiate or increase the use of groundwater to
replace the transferred surface water except in com-
pliance with the following requirements:

I. The transferor has legal authority to
use groundwater and such use does not exceed
the transferor's groundwater rights under state
and local law

2 The transferors use of groundwater is
consistent with all valid laws that govern the
extraction, appropriation, and use of ground-
water. including groundwater management
statutes, local groundwater management plans
adopted pursuant to sections 10750 through
10755.4 of this Code. city or county ordinances.
judicial decisions and decrees governing the
extraction and use of groundwater. and the pro-
vis:Sr.s of Division !3 Icommencing with
S-c::cn 2!000i of the ?Pubic Resources Code.

3 The transferors use of groundwater
does not cause the long-term operating safe
yield of the groundwater basin to be exceeded.

The absence of a local groundwater manage-
ment plan or city or county ordinance governing
groundwater shall not preclude the use of ground-
water to replace transferred surface water in accor-
dance with the terms of this section.

Section 209. California Environmental Quality Act.
The provisions of Division 13 (commencing
with Section 21000) of the Public Resources Code
shall not apply to short-term agreements or pro-
posals to transfer water.
For other agreements and proposals to transfer
water, the provisions of Division 13 (commencing
with Section 21000) of the Public Resources Code
shall be applicable only to the decision by a public
agency whether to approve. to amend. to renew, or


to rescind a long-term transfer. The provisions of
Division 13 (commencing with Section 21000) of the
Public Resources Code shall not apply to the con-
sideration. negotiation, or execution of agreements
or proposals to transfer water or to the payment .f
monetary or other consideration re!aced to suc-
agreements or proposals. The provisions of Division
13 (commencing with Section 21000) of the Public
Resources Code also shall not apply to the termina-
tion of long-term agreements to transfer water at
the conclusion of the term of such agreements.

PART C: PROTECTION OF WATER RIGHTS

Section 301. Protection of the Rights of the
Transferor.
The offer of water for transfer, the transfer nego-
tiations, and the agreement to transfer water shall
not be used as evidence of the transferor's waste or
unreasonable use. or cessation of use. of the water
or water rights made available for transfer Nor shall
the transfer of water cause, or be the basis of. a for-
feiture or abandonment of any water rights, contract
rights, or other right to use water

Section 302. Protection of Water Rights During
Transfer.
Throughout the term of all water transfer agree-
ments, compliance with Article X. Section 2 of the
Califomia Constitution. sections 100 through 101. 1410.
and 1675 of this Code. and any other legislative, admin-
istrative. or judicial !imitation on water rights shall be
determined based :n an assessment of the reasonable-
ness of the transferee's use of the transferred water.
Except for permanent transfers of water or water
rights, if the transferee's right to use transferred
water is reduced or divested on the basis of the
transferee's abandonment, forfeiture, waste, or
unreasonable use, the reduced or divested rights
shall revert immediately to the transferor. In the case
of permanent transfers of water or water rights that
are reduced or divested on the basis of the transfer-
ees abandonment forfeiture. waste, or unreason-
able use. the forfeited rights shall be extinguished.

Section 303. Protection of Water Rights After
Transfer.
Except for permanent transfers of water or water
rights, at the conclusion of the term of a water trans-
fer agreement, all rights in, and to the use of. the
water subject to the transfer agreement shall revert
back to the transferor. Following the conclusion of the
term of a water transfer agreement, neither the trans-
feree nor any other beneficiary of the transfer may
bring any claim for a continuation of the water supply


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made available by the transfer agreement Nor may
the transferee or any beneficiary of the transfer claim
any right to a continued supply of water based on
reliance estoppel. intervening public use. water
shortage emergency. unforeseen or unforeseeable
increases in demand, or any other cause

Section 304. Water Conservation.
The conservation. salvage, or other reduction in
the use of water for the purpose of transferring the
amour.: so conserved. salvaged or reduced shall be
deemed a reasonable and beneficial use of water.

PART D: GENERAL STANDARDS AND PROCE-
DURES GOVERNING TRANSFERS OF WATER

Section 401. Coverage.
Except for Expedited Transfers of Conserved
Water pursuant to Part E. all transfers of water gov-
erned by this Act shall comply with the standards
and procedures set forth in this Part.

Section 402. jurisdiction of the State Water
Resources Control Board.
The State Water Resources Control Board shall
have jurisdiction over transfers of water appropriat-
ed pursuant to water rights acquired under authori-
\ ty of the Water Commission Act or this Code and
over transfers of water held pursuant to riparian
rights that have been quantified by judicial decree
issued pursuant to Chapter 3 (commencing with
section 25001 of Part 3 of this Code. where the trans-
fer recu.res an alteration Of the purpose of use.
place : usse. point: of diversion point cf return flow.
or an. ::her term or condition of the water right as
set for- in the applicable permit. license, or decree.
The Board shall not have jurisdiction over any
other transfers of water unless the water right hold-
er requests the Board to exercise jurisdiction pur-
suant to sections 403 and 404.
The State Water Resources Control Board
shall review proposals to transfer water over which
it has jurisdiction pursuant to the authority grant-
ed by this section in accordance with the proce-
dures and standards set forth in sections 403 and
404 All other transfers of water governed by this
Part shall comply with the standards and proce-
dures set forth in section 405.

Section 403. Procedures for Review by the State
Water Resources Control Board of
Petitions to Transfer Water
The State Water Resources Control Board shall
review proposals to transfer water in accordance
with the procedures set forth in this section.


All petitions to transfer water shall be filed by the
water right holder. If the proposed change or transfer
is for the benefit of a contractor or user supplied
directly or indirectly by the water right holder, the
water right holder may authorize the contractor or user
to participate as co-petitioner. The water right holder
shall notify the Board in the petition of all co-petition-
ers. Co-petitioners shall have the same rights and
responsibilities under this section as the petitioner

a. Petition. A water right holder who seeks to
transfer water shall submit to the Board a petition to
change the terms of the permit. license, or decreed
right as required to accomplish the proposed trans-
fer. The petition shall include a written explanation
of the changes in water storage. timing and point of
diversion, place and purpose of use. timing and'
point of return flow. and water quality or instream
flows that are likely to occur as a result of the pro-
posed transfer. Where applicable, the petition shall
be accompanied by a copy of the water transfer
agreement. The petitioner may omit the financial
terms of the agreement from its submission to the
Board. The petitioner shall provide copies of these
documents to the Califoria Department of Fish and
Game and to the Supervisors of the county or coun-
ties in which the petitioner currently stores or uses
the water subject to the petition.

b. Notice. Within ten days of submission of the
petition to the Board, the petitioner shall cause to be
published in at least one newspaper of general circu-
lation in the county or counties in which the peti-
tioner currently stores or uses the water subject to
the petition a notice of the petition and a brief
description of the terms of the proposed water trans-
fer. The Board shall publish general notice of the sub-
mission of the petition and of all subsequent actions
taken on the petition. The Board may impose other
reasonable notice requirements on the petitioner.

c. Investigation. Within ten days of receipt of
the petition, the Board shall begin an investigation
of the proposed water transfer. The Board shall
determine and evaluate the changes in water stor-
age. timing and point of diversion, place and pur-
pose of use. timing and point of return fow. and
water quality or instream flows that would be likely
to occur as a result of the proposal.

d. Protests. Water users that may be affected by
the proposed water transfer and other interested
parties may file written protests with the Board.
Protests shall be filed no later than thirty days after
publication of the notice required by subsection (b).


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Copies of the protest and supporting documenta-
tion shall be served on the petitioner. the California
Department of Fish and Game. the Board of
Supervisors of the county or counties described in
subsection (a). and the proposed transferee.

e. Analysis. For petitions that involve a short-
term proposal or agreement to transfer water, the
Board shall complete its investigation and prepare a
written analysis of the proposed transfer no later
than thirty days after commencement of the investi-
gation. For petitions that involve a long-term pro-
posal or agreement to transfer water, the Board shall
complete its investigation and prepare a written
analysis of the proposed transfer no later than nine-
ty days after the commencement of the investigation.
For good cause, the Board may extend these time
periods for no more than thirty days. Upon comple-
tion of the analysis of the proposal, the Board shall
provide copies of the analysis to the petitioner, the
California Department of Fish and Came. the Board
of Supervisors of the county or counties described in
subsection (a). the proposed transferee, and any
party who has filed a written protest.

f. Response. The Board shall grant the petition-
er. the California Department of Fish and Game. the
Board of Supervisors of the county or counties
described in subsection (a). the proposed transferee.
and any party who has filed a written protest an
opportunity to respond in writing to the Board's
analysis of the proposed water transfer All written
responses shall be submitted to the Board no later
than twenty days after receipt of the Board's analysis

g. Hearing. The Board shall conduct a hearing
on all petitions that involve a long-term proposal or
agreement to transfer water within thirty days of
completion of its analysis of the proposal. The Board
shall provide individual notice to the petitioner, the
California Department of Fish and Game. the Board
of Supervisors of the. county or counties described in
subsection (a). the proposed transferee, and any
party who has filed a written protest of the time and
place of the hearing. If no protest was filed within
the thirty days set forth in subsection (d). and if the
petitioner waives its right to a hearing, the Board
may act on the petition without a hearing.

h. Decision. For petitions that involve a short-
term proposal or agreement to transfer water, the
Board shall render a decision on the petition, with-
out a hearing, no later than twenty days after receipt
of the last timely filed written response. For peti-
tions that involve a long-term proposal or agree-


ment to transfer water, the Board shall render a
decision on the petition no later than thirty days
after the conclusion of the hearing, or no later than
thirty days after receipt of the last written response
if there is no hearing. The petitioner may stipulate
to an extension of the time for decision.
The Board shall grant the petition unless it deter-
mines. based on the evidence, that the proposed
water transfer would not comply with the require-
ments of section 404. The Board may grant the peti-
tion subject to conditions imposed by the Board to
ensure compliance with the requirements cf section
404 If the cBard grants the petition, it shall amend the
terms and conditions of the permit, license, or decreed
right as necessary to accomplish the water transfer.
The Board shall explain its decision in writing
and shall serve copies of the decision on the peti-
tioner, the Department of Fish and Game, the Board
of Supervisors of the county or counties described
in subsection (a). the proposed transferee, and any
party who has filed a written protest.

i. judicial R-uew. The petitioner, the proposed
transferee, and any party who has filed a written
protest in accordance with the requirements of this
section may petition the Superior Court for a writ of
mandate to review a decision of the Board rendered
pursuant to this section and section 404. The petition
for writ of mandate shall be filed no later than thirty
days after receipt of the decision of the Board. Venue
shall be in the County of Sacramento and in the
countyy or counties in which the water that is the sub-
ject of the transfer petition is currently stored or used.
The Superior Court shall review the decision of the
Board pursuant to the requirements of section 1094.5
of the Code of Civil Procedure. except that in all cases
the court shall sit without a iury and shall review the
decision of the Board under the substantial evidence
standard set forth in subsection 1094.5(c).

i. Liitation on Damages. Except as required by
the California Constitution or by the Constitution of
the United States. the courts shall have no authority
to award damages or other monetary relief to the
petitioner, the proposed transferee, or any other party
alleged to be injured or aggrieved by a decision of the
Board to deny. to grant. or to place conditions on a
petition to transfer water pursuant to this section. *

Section 404. Standards for Review by the State
Water Resources Control Board of
Petitions to Transfer Water.
The State Water Resources Control Board shall
review petitions to transfer watei according to the
standards set forth in this section. "' ::" ':' :


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a. Short-Term Water Tmaner Agrm ets. For short-
term water transfer the Board shall approve the peti-
tion unless it concludes that the proposed transfer:

(1) would result in significant injury to any
legal user of water: or

(21 would unreasonably affect fish.
wildlife, or other instream beneficial uses.

The petitioner shall have the burden of produc-
ing prima facie evidence that the proposed transfer
would comply with the standards set forth in this
subsection. The establishment of a prima facie case
shall shift the burden of proof to those parties (if
anyl that have filed protests in accordance with the
requirements of section 403 to prove that the pro-
posed transfer would not comply with the standards
set forth in this subsection. The standard of proof
shall be by a preponderance of the evidence.

b. Long-Trm Water Tmnsfer Agroments. For long-
term water transfers. the Board may approve the peti-
tion only if it concludes that the proposed transfer:

(1) would not result in significant injury to
any legal user of water; and

(2) would not unreasonably affect fish.
wildlife, or other instream beneficial uses.

The petitioner shall have the burden of proving
that the proposed transfer would comply with the
standards set forth in this subsection. The standard
of pr:cf shall be by a preponderance of the evidence.

c. Long-Term Agreements Based on Land-Fallowing or
Retirement. The Board may not approve a petition for a
long-term water transfer based on the fallowing or
retirement of previously irrigated land if it concludes
that the proposed transfer would cause substantial
harm to the economy in the area from which the water
is to be transferred. The prohibition set forth in this
subsection is in addition to the standards governing
long-term transfers set forth in subsection (b).
In determining whether a proposed water trans-
fer would violate the prohibition set forth in this sub-
section, the Board shall consider any actions that
the petitioner or other parties to the transfer agree-
ment have taken to mitigate harm to the economy in
the area from which the water is to be transferred.
The petitioner shall have the burden of proving
that the proposed transfer would comply with the
standards set forth in this subsection. The standard
of proof shall be by a preponderance of the evidence.


This subsection shall apply only to long-term
water transfers that: (1) would obtain water for
transfer by fallowing or retirement of land previ-
ously used for agricultural purposes; and (2) would
change the place of use or transfer the water to
uses outside the county or counties in which the
water previously has been used.
This subsection shall not apply to long-term
water transfers based on the fallowing or retirement
of previously irrigated land within the San loaquin
Valley Drainage Program study area-as defined in
U.S. Department of the Interior & California
Resources Agency. A Management Plan for
Agricultural Subsurface Drainage on the Westside of
the San loaquin Valley: Final Report of the San
loaquin Valley Drainage Program (1990)-that the
Board concludes would contribute to the reduction
of agricultural drainage that adversely affects sur-
face water or groundwater quality.

d. Transfers of Water Basd o Consumptiv Use or
Irretrievable Loss. To the extent that any petition to
transfer water includes water that, in the absence of
the change or transfer. would be consumed by the.
petitioner in applying the water to reasonable and
beneficial uses or would have been irretrievably lost
to all beneficial uses, the Board shall calculate the
quantity of such water in accordance with the stan-
dards set forth in section 503. The Board shall apply
a rebuttable presumption as to the water so quanti-
fied that the transfer would not result in significant
injury to any legal user of water or unreasonably
affect fish. wildlife. or other instream beneficial uses.
The burden of proving that a transfer of water
quantified pursuant to this subsection and section
503 would result in significant injury to any legal
user of water or unreasonably affect fish. wildlife.
or other instream beneficial uses shall be on those
parties (if any) that have filed protests in accor-
dance with the procedural requirements set forth
in section 403. The standard of proof shall be by a
preponderance of the evidence.
This subsection shall apply only at the option
of the petitioner.

e. Compliance With Permits and Licenses. If the
Board determines that both the release of water for
transfer and the diversion or rediversion of the trans-
ferred water would comply with the terms and condi-
tions of existing permits and licenses that protect
other legal water users, fish. wildlife, and other
instream beneficial uses affected by the appropriation
and use of the water that is the subject of the petition,
the proposed transfer shall be deemed to comply
with the requirements of subsections (a) and (b).


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CA 109A-







i


f. Caasatio. In applying the third-party protec-
tion standards set forth in this section, the Board
shall consider only the effects of the proposed trans-
fer of water on such third-party interests. The Board
shall not deny a petition to transfer water in order to
protect third-parties from iniury caused by factors
other than the proposed water transfer Nor shall the
Board impose any conditions on its approval of a
water transfer petition to mitigate adverse effects on
fish. wildlife, or other instream beneficial uses. or to
mitigate harm to the economyin the area from which
the water is to be transferred. that would be caused
by factors other than the proposed water transfer.
As used in this subsec:ion "fac:trs other than
the proccsed water transfer include but are nc:
limited to: drought or other water shortages
changes in the operation of water facilities not
controlled by the petitioner or the other parties to
the change in water rights or water transfer agree-
ment; changes in river flows. groundwater extrac-
tion. or groundwater recharge not related to the
proposed change in water right or water transfer:
changes in commodities prices, cost of goods and
services. or labor costs, changes in the general
economic conditions of the region: and other
hydrologic and economic conditions not related to
the proposed water transfer

g. Proof of Water Rights. In all cases, the petition-
er shall have the burden of proving by a preponder-
ance of the evidence that it has valid water rights to
the water included in the petition to transfer water.

Section 405 Transfers of Water Not Subject to
the jurisdiction of the State Water
Resources Control Board.
Transfers rf water that are not subject to the juris-
diction of the State Water Rescurces Control Board as
defined in section 402 shall comply with the proce-
dures set forth in this section. This section shall not
apply to transfers of water within a local water agency.

a. Notice. If the water transfer will alter the
purpose of use. place of use point of diversion, or
point of return flow from that of the existing use.
the water right holder or :'rasferor shall

(1) submit to the State Water Resources
Control Board a brief description of the proposed
water transfer and a written explanation of the
changes in water storage, timing and point of
diversion, place and purpose of use. consump-
tion. timing and point of return flow. and any
changes in water quality or instream flows that
are likely to occur as a result of the transfer: and


(2) provide a copy of the foregoing to the
California Department of Fish and Game and to
the Supervisors of the county or counties in which
the water right holder or transferor currently
stores or uses the water subject to the proposal.

b Efe:ive Date The water transfer shall not
become effective until the water right holder cr
transferor has complied with the notice require-
ments of subsection (a)

c. Compliance With Other Laws. Nothing in this
section shall be construed to alter any other law
:bat may be applicable to changes in '.vaer rights
:r transfers of water described i- :;-is sec::on. Th.s
section shall not be construed to expand the juris-
diction of the State Water Resources Contro;
Board over such changes in water rights or trans-
fers of water except as provided by this section.
Nor shall this section be construed to limit the
jurisdiction of the courts to review changes in
water rights or transfers of water.

Section 406. Optional Use of Expedited Transfer
Procedures.
If a petition to transfer water pursuant to this
Part includes conserved water astdefined in section
501. the petitioner may transfer such water in accor-
dance with the standards and procedures governing
expedited transfers of conserved water set forth in
Part E. In such a case. the portion of the petition
that pertains to the conserved water shall be gov-
erned by the requirements of Part E. and the
remainder of the petition shall be gover-ed by rhe
requirements of this Part

PART E: STANDARDS AND PROCEDURES FOR
EXPEDITED TRANSFERS OF CONSERVED
WATER

Section 501. Definition of Conserved Water.
Except as set forth in section 507. a water user who
seeks to transfer "conserved water" may use the expe-
dited procedures and standards set forth in this Part.
"Conserved water" is water that: (1) the transfer-
or is legally entitled to use during the term of the
transfer agreement pursuant to existing water rights.
contracts. or other legal authority: and (2) the trans-
feror has used within the five years immediately pre-
ceding the transfer agreement. Conserved water
includes, but is not limited to: water that the trans-
feror conserves through salvage of water irretriev-
ably lost to all consumptive uses during storage.
transportation. or distribution; increased efficiency
of irrigation or other use; changes in the acreage or


5.5.9.


%=ln 4 Nu4*A e









Fd 1996 UaddW~wkr


type of crop irrigated: land fallowing or retirement;
changes in operations; reduction in demand within
the transferor's place of use or service area: substi-
tution of reclaimed or recycled water; pricing
changes: and other conservation measures.

Section 502. Transfers of Conserved Water.
Transfers of conserved water shall not exceed.
for any water accounting year during the term of the
transfer, the lesser of: (1) the amount of water that
is both legally and physically available to the trans-
feror during the water year; or (2) the average annu-
al quantity of water consumed by the transferor, or
irretrievably lost to all consumptive uses, during the
ten water years immediately preceding the transfer.

Section 503. Quantification of Transferable Water.
The quantity of water that may be transferred
pursuant to the expedited procedures set forth in
the Part shall be calculated in accordance with the
following standards:

a. Changes in Acrage or Type of Crp irri at. For
water made available for transfer by changes in the
acreage or type of crop irrigated by the transferor or by
land fallowing or retirement, the "average annual quan-
tity of water consumed by the transferor" as set forth in
section 502 shall be calculated by reference to the
( "Water Consumption Table for Califomia Agriculture"
promulgated by the Department of Water Resources.
Actual consumption data shall not be used to calculate
the quantity of conserved irrigation water made avail-
able for transfer pursuant to this subsection.

1 The Department shall promulgate a rule
that sets forth the 'Water Consumption Table for
California Agriculture." The Department shall
promulgate the Table within one year of the effec-
tive date of this Act and shall revise the Table
whenever necessary to more accurately calculate
water consumption by irrigated agriculture in any
hydrologic region included in the Table.

2. The Department shall include in the
"Water Consumption Table for California
Agriculture" a calculation of the water con-
sumed in the irrigation and growth of each crop
grown in California. The Department shall pub-
lish such water consumption data for each
hydrologic region (as defined in Department of
Water Resources Bulletin 160-93).

b. Changes in Efficiency of Water Us. For water
made available for transfer by the salvage of water
f irretrievably lost to all consumptive uses. use of


reclaimed or recycled water, pricing changes. reduc-
tion in demand, or other methods of conservation.
the "average annual quantity of water consumed by
the transferor shall be calculated by reference to
actual water consumption or water loss data.

Section 504. Notice of Intent to Transfer and
Verification of Transferable
Quantities.
All notices of intent to transfer conserved water
on an expedited basis shall be filed by the water right
holder in accordance with the procedures set forth in
this section. If the proposed transfer is for the bene-
fit of a contractor or user supplied directly or indi-
rectly by the water right holder, the water right holder
may authorize the contractor or user to participate as
co-transferor. The water right holder shall notify the
Board in the petition of all co-transferors. Co-trans-
ferors shall have the same rights and responsibilities
under this section as the water right holder.

a. Notice. The transferor shall submit to the
State Water Resources Control Board a copy of the
water transfer agreement and a written explanation
of the changes in water storage, timing and point of
diversion, place and purpose of use, timing and point
of return flow, and any changes in water quality or
instream flows that are likely to occur as a result of
the agreement. The transferor shall provide copies of
these documents to the California Department of
Fish and Game and to the County Supervisors of the
county or counties from which the water will be
transferred. The transferor also shall cause to be pub-
lished in at least one newspaper of general circula-
tion in the county or counties from which the water
will be transferred a notice of the proposed transfer
and a brief description of the terms thereof.
The Board shall publish general notice of the
submission of the transfer proposal and of all sub-
sequent actions taken on the proposal.

b. Verifcation. The transferor shall submit to the
State Water Resources Control Board a declaration
under penalty of perjury that explains the method of
conservation and the transferor's calculation of the
conserved water made available for transfer. The dec-
laration shall include a verification that such calcula-
tions are accurate and consistent with the
requirements of this Part. For transfers of conserved
water from irrigation, the declaration also shall
describe the land from which the water was con-
served. the acreage subject to the transfer agreement,
and the types of crops irrigated by the transferor on
the land that is subject to the transfer agreement
before and during the term of the agreement.


11
; ....


5.5.10G.


F 1996


Mod iWtr iudi A








libNlmitg0


c. Comments. Any interested party may submit
written comments regarding the transfer proposal
to the State Water Resources Control Board.

d. Rmiew Within thirty days of receipt of the
dec'araticn set forth in subsection Ibl. the Board
sha': reveNw the transferor's calculation of the
quantity of conserved water available for transfer.
The Board shall approve the transferor's calcula-
tions if they are accurate and conform to the
requirements of this Part. The Board shall set forth
its findings and conclusions in a brief memoran-
dum. which the Board shall serve on the transfer-
or if the Board rejects any of the transferor's
calculations the Board shall state Ito the extent
feasible, its determination of the correct calcula-
tions and the quantity of conserved water that in
its judgment is available for transfer.

e. Certiicate of Transfer. If the Board approves
the transferors calculations, or if the transferor
accepts the Board's calculations, the Board shall
issue a "Certificate of Transfer to the transferor. The
Certificate of Transfer provides full legal authoriza-
tion for the transfer Where applicable, the Board
shall amend the transferors and transferee's permits
or licenses as required to accomplish the transfer.

Approval By Default. If the Board fails to act
on the transferor's declaration within thirty days of
receipt, the transferor's calculation of the quantity
of conserved water available for transfer shall be
deemed approved. Upon request of the transferor.
the Board shall immediately issue a Certificate of
Transfer based on the transferor's calculation of the
quantity of conserved water available for transfer.

g Notice of Decision. The Board shall explain its
decision to grant or to deny a Certificate of Transfer
in writing and shall provide copies of the decision
to the transferor, the Department of Fish and Game.
the Board of Supervisors of the county or. counties
described in subsection (a). the proposed transfer-
ee. and any party who has filed a written comment
pursuant to subsection !c).

h ludicial Reviewt The transferor may petition
the Superior Court for a writ of mandate to review
a decision of the Board rendered pursuant to this
section. The petition for writ of mandate shall be
filed no later than thirty days after receipt of the
decision of the Board. Venue shall be in the
County of Sacramento and in the county or coun-
ties in which the water that is proposed for trans-
fer is currently stored or used. The Superior Court


shall review the decision of the Board pursuant to
the requirements of section 1094.5 of the Code of
Civil Procedure, except that in all cases the court
shall sit without a iury and shall review the deci-
sion of the Board under the substantial evidence
standard set forth in subsection 1094 5'c:.
Except as required by the Califcr.ia
Constitution or by the Constitution of the United
States, the courts shall have no authority to award
damages or other monetary relief to the transferor or
to any other party alleged to be injured or aggrieved
by a decision of the Board pursuant to this section.

i. Limitation on Collateral Challenge Except as
provided in subsec::cn !h). the courts shall have no
authority to review a decision of the Board rendered
pursuant to this Part. Nor shall the courts have
authority to award damages or other monetary
relief to any party alleged to be injured or aggrieved
by a decision of the Board pursuant to this section.
A legal water user who is alleged to be injured or
aggrieved by a decision of the Board pursuant to
this section may file a claim for monetary compen-
sation in accordance with the standards and proce-
dures set forth in section 506.

j. Determination of Water Rights. Neither the
Board's approval of a transferor's calculation of con-
served water available for transfer, nor the issuance
of a Certificate of Transfer pursuant to subsections
(el or (F). shall constitute a determination or quan-
tification of the water rights of the transferor or of
the rights to use water by the transferor or any other
person, except for the purpose of authorizing :he
transfer of conserved 'water pursuant to :his secticn.

Section 505. Security.
a. Coverage. Except as provided in subsection
(b). every person or entity that acquires water trans-
ferred pursuant to this Part shall deposit with the
State Water Resources Control Board a security in
the amount of five dollars (S5.00) per acre foot of
transferred water. The security required by this sec-
tion shall be in the form of a cash deposit, money
order. certified check. or bond payable to the State
Water Resources Control Board.

b. Exemptions. If the transfer includes a Delta
carriage water requirement imposed by the Board
pursuant to section 206, the transferee may
exclude this water from its calculation of the
amount of the security required by this section.
Transfers of water between users located in the
same local water agency also are exempt from the
requirements of this section.


5.5.11









Fail1 "6 "111drld u~&t


c. Management of Securit Dposit. The transfer-
ee shall deposit the security with the Board at least
ten days before the date on which the physical
transfer of water commences. The Board shall hold
the security deposited for each transfer in a sepa-
rate account and shall not commingle the security
deposits from one transfer with the security
deposits from other transfers.
The California Treasurer shall invest the
money in each account in a prudent manner that
(1) does not place the principal in the fund at risk
and (2) provides adequate liquidity to pay claims
or to discharge the security in accordance with
section 506.

d. Price Adjustment. The Board annually shall
adjust the amount of the security required by this
section based on changes in the Consumer Price
Index published by the United States Department
of Commerce. The Board also shall have authority
by regulation to adjust the amount of the security
requirements if it determines that these require-
ments will generate insufficient or excess funds to
provide fair compensation to third-party claimants
under section 506. The Board shall have sole dis-
cretion to adjust the amount of the security
requirements set forth in this section.

e Restriction on Expenditures. The proceeds of
security deposited with the Board pursuant to
this section shall be used exclusively for the pur-
poses set forth in this Part. These funds shall not
be part of the general budget of the State and
shall not be impounded or used to meet general
State obligations

Section 506. Claims for Compensation.
Third-parties alleged to be injured by expe-
dited transfers of conserved water authorized by
this Part may file claims for compensation in
accordance with the procedures and standards
set forth in this section. The compensation sys-
tem established by this section shall not apply to
transfers of water between users located in the
same local water agency.

a. Eligibility. The California Department of
Fish and Game. the county or counties from
which water is transferred, and any legal water
user who is alleged to be injured by an expedited
transfer of conserved water may file a claim for
compensation.

b. Compensable injuries. Injuries that are com-
pensable under this section are limited as follows:


I. The California Department of Fish and
Game may seek compensation for reduction in
water quantity or flows and diminution in water
quality caused by the transfer that adversely affect
fish and wildlife, recreation, other instream uses.
aquatic and riparian habitat, or wetlands.

2. The county or counties from which
water is transferred may seek compensation for
loss of tax revenues and increased social ser-
vices costs caused by the transfer.

3. Other legal water users may seek com-
pensation for reduction in the supply of water
that the claimant is legally entitled to use.
diminution in water quality that adversely
affects the claimant's water use. and increased
pumping costs caused by the transfer.

c. Procedures. Except as provided in this sec-
tion. arbitration of disputes under this Part shall be
conducted pursuant to the provisions of sections
1280. 1280.1. 1281.9. 1282(e). and 1282 through
1284.2 of the Code of Civil Procedure.

I. The claimant shall file a claim with the
State Water Resources Control Board and serve
copies of the claim on parties to the transfer.
the California Department of Fish and Game.
the Supervisors of the.county or counties from
which the water is transferred, and other parties
designated by the Board.

2. The claimant shall publish notice of
the filing of the claim, along with a brief
description of the nature and legal basis of the
claim and the amount of damages the claimant
seeks, in at least one newspaper of general cir-
culation in the counties from which and to
which the water is transferred.

3. The Board shall publish general notice
of the filing of the claim and of all subsequent
actions taken on the claim.

4. The Board shall appoint a single neutral
arbitrator to adjudicate the claim and to render a final
judgment in accordance with the law and evidence

5. If more than one claim is filed with
respect to a single transfer, the Board shall assign
all such related claims to the same arbitrator The
arbitrator shall coordinate the arbitration of relat-
ed claims and shall have authority to consolidate
such related claims into a single arbitration.


13- :


B


37 -;.. "i ,


= .-


Fl 1996


Ibblmb2~la


.55.r2.:












ri


6. The parties to the transfer shall serve
the claimant with a response to the claim within
thirty days of receipt of the copy of the claim. The
response shall contain an admission or denial of
each element of the claim, with a brief explana-
tion of the reasons and legal bases for each
denial. The respondents also shall serve copies
of the response on the arbitrator, the Board. the
California Department of Fish and Game, the
Supervisors of the county or counties from which
the water is transferred, and other parties desig-
nated by the arbitrator or by the Board.

7 The arbitrator may extend the time in
which the respondents have to respond to the
claim if the arbitrator determines that addition-
al time is necessary to prepare the response.
The arbitrator also may require the parties to
file legal memoranda, motions, offers of proof,
and other legal and evidentiary documents that
in the arbitrator's judgment would assist the
arbitrator in rendering judgment on the claim.

d. Burden and Standard of Proof The burden of
proof shall be on the claimant. To prevail on the
merits of the claim, the claimant must establish by
a preponderance of the evidence that the claimant's
injuries were caused by the water transfer and not
by other factors. These other factors shall include.
but are not limited to: drought or other water short-
ages: changes in the operation of water facilities not
controlled by the parties to the transfer: changes in
river flows. groundwater extraction, or groundwater
recharge not related to the transfer; changes in
-:ommodities prices. cost of goods and services, or
'abor costs. changes in the general economic con-
ditions of the region, and other hydrologic and eco-
nomic conditions not related to the transfer.

e. judgment and Reli. The arbitrator shall render
judgment on the claims in accordance with the evi-
dence and the standards set forth in this section. The
arbitrator shall explain the judgment in a written opin-
ion and provide copies of the opinion and judgment
to the Board, the claimant, the respondents, the
California Department of Fish and Came, the
Supervisors of the county or counties from which the
water is transferred, and other parties designated by
the arbitrator or by the Board. The arbitrator shall have
no authority to provide any relief other than monetary
compensation as provided by subsection (f).

f. Compensation. A claimant who prevails on
the merits of the claim shall be entitled to monetary
damages in the amount that the arbitrator deter-


55; ir:


mines is adequate to compensate the claimant for
the injuries caused by the water transfer. The arbi-
trator shall not award damages in excess of the
amount of the security posted by the transferee in
accordance with the requirements of section 505.
In arbitrations involving multiple claims, if
the aggregate damages exceed the amount of the
security, the arbitrator shall apportion the avail-
able funds in an equitable manner among the pre-
vailing claimants.
Compensation received by the California
Department of Fish and Game shall be used by the
Department for the protection. restoration, and
enhancement of water quality. instream flows, fish
and wildlife, aquatic and riparian habitat, wet-
lands, and other features of the natural environ-
ment. The Department shall give first priority to
mitigation and restoration of harm to those
resources caused by the water transfer that were
the subject of the arbitration.

g. Disbursement of Funds. Following entry of
judgment, the arbitrator shall collect the pro-
ceeds of the security, and any interest or income
earned on the investment of the security. from the
Board and shall disburse such funds in accor-
dance with the judgment.

h. Finality. The judgment of the arbitrator shall
be final. Except as provided in subsection (i). the
courts shall have no jurisdiction to review the judg-
ment of the arbitrator

i. Enforcement. The judgment of the arbitrator
shall be enforceable in court as authorized by sec-
tions 1285 through 1294 2 of the Code of Civil
Procedure.

i. Limitation on Claims. All claims for compen-
sation must be filed within one hundred eighty days
of the date on which the alleged injury occurred.

k. Costs and Attorneys Fees. The reasonable fees
and expenses of the arbitrator, and the other costs
and attorneys fees incurred by the parties, shall be
borne by the parties. As directed by the Board, the
parties shall make periodic payments to the arbi-
trator for the reasonable fees and expenses
incurred during the arbitration.

1. Return of Security and Discharge of the Bond.
Following entry of arbitrator's judgment, the
Board shall ensure the return to the transferee of
all proceeds from the security, plus interest
earned on investment of the security, that are not


----
------- ------









Fdl 1996 M0odel wd1 0r


required to satisfy the judgment. If the transferee
posted a bond as security, the Board shall dis-
charge the bond after ensuring that all claimants
have been paid in accordance with the judgment
of the arbitrator.
if no claims are made pursuant to this section,
or if a claim is withdrawn before the judgment of
the arbitrator is entered, the Board shall return the
security to the transferee in accordance with the
following rules:

1. For short-term transfers, the security
shall be returned to the transferee (or the
bond discharged) one hundred eighty days
after the conclusion of the short-term water
transfer agreement.

2. For long-term transfers, the security
shall be returned to the transferee (or the
bond discharged) five years after the com-
mencement of the first physical transfer of
water pursuant to the long-term water transfer
agreement.

Section 507. Long-Term Transfers Based on Land
Fallowing or Retirement.
The provisions of this Part shall not apply to
( long-term agreements to transfer conserved water
that (1) would obtain water for transfer by fallow-
ing or retirement of land previously used for agri-
cultural purposes and (2) would transfer the water
to uses outside the county or counties in which
the water was used before the transfer occurred.
Such transfers shall not be eligible for the expe-
dited procedures set forth in this Part and instead
shall be governed by the standards and proce-
dures set forth in Part D.

PART F: TRANSFERS OF WATER TO
INSTREAM USES

Section 601. Transfers of Water to Instream Uses.
All water right holders and other legal users of
water may transfer all or a portion of their water or
water rights to instream uses. Transfers of water to
instream uses shall comply with the general stan-
dards and procedures governing transfers of water
set forth in Part D or the standards and proce-
dures governing expedited transfers of conserved
water set forth in Part E.
For purposes of this Part. the term "instream
uses" includes the restoration, protection, and
enhancement of water quality, instream flows, fish
S and wildlife, wetlands, riparian and estuarine habi-
tat. recreation, and other instream beneficial uses.


kt


Section 602. Relationship to Other Instream
Protection and Water Quality Laws.
Water that is transferred to instream uses pur-
suant to the authority granted in section 601 shall be
in addition to all water devoted to instream uses as
required by federal, state. and local regulatory
requirements governing water quality, instream flows.
fish and wildlife, wetlands, riparian and estuarine
habitat, recreation, and other instream beneficial
uses. Federal. state, and local agencies, as well as the
courts, shall exclude water transferred to instream
uses pursuant to section 601 from their determina-
tion of the amount of water or flows required to com-
ply with these regulatory requirements.
The regulatory requirements described in this
section include, but are not limited to, the following
laws and their implementing regulations: the Clean
Water Act. 33 U.S.C. 1251 et seq., as amended;
the Endangered Species Act. 16 U.S.C. 1531 et
seq.. as amended: the National Wild and Scenic
Rivers Act. 16 U.S.C. 1271 et seq.. as amended;
Article X. Section 2 of the California Constitution;
the California Wild and Scenic Rivers Act, Natural
Resources Code 5093.50 et seq.. as amended:
Fish and Game Code 5937; other applicable provi-
sions of this Code: terms and conditions imposed
by permit or license administered by the State
Water Resources Control Board; and other judicial
and administrative decisions respecting water
rights, water quality, and other beneficial uses.

Section 603. Transfers of Water to Comply With
Instream Protection and Water
Quality Laws.
Notwithstanding the provisions of section 602.
water right holders and other legal users of water
may transfer water to instream uses for the purpose
of satisfying, or partly satisfying, their obligations
under the regulatory requirements described in sec-
tion 602. If the water right holder or legal water user
so indicates, the water shall be credited to the water
right holder or legal water user and shall be included
in the determination of the amount of water or flows
required of the water right holder or legal water user
to comply with such regulator/ requirements.

PART G: WATER TRANSFER FEES

Section 701. Coverage.
a. Obligation to Pay Fees. Except as provided in
subsection (b). every person or entity that acquires
water transferred pursuant to Parts D or E shall pay
to the State Water Resources Control Board a fee
based on the Water Transfer Fee Schedule autho-
rized in section 702.


5-5.14-


i


....


;-~k Cc-
~C'Cr-~- ---~D
.t;









Volm4 l4.mnba


'1



C>'


Quantity
in acre-feet (at)
Up to 10.000
Next 10.000
to 49.999
Next 50.000 to
100.000

Increments
above 100.000


Part D
Transfers
S 1.00/af
S.75/af

S 50/af

S.25/af


Part E
Transfers

S.50/af
S.35/af

S. 2/af


S.25/af


c. Price Adjustment. The Board annually shall
revise the Water Transfer Fee Schedule based on
changes in the Consumer Price Index published by
the United States Department of Commerce. The
Board also shall revise the Water Transfer Fee
Schedule whenever it determines that the fees are


b. Ermptions. The water transfer fees shall not
be applicable to transfers of water over which the
Board has no jurisdiction as set forth in section 402.
unless the water right holder files a petition with the
Board pursuant to section 403. The water transfer fees
also shall not be applicable to dedications or trans-
fers of water to instream uses as authorized by Part F

c. Compliance Date. The transferee shall pay the
water transfer fees at least ten days before the date
on which the physical transfer of water commences.

d. Carriage Water If the transfer includes a Delta
carriage water requirement imposed by the Board
pursuant to section 206. the Board shall not include
such carriage water in its calculation of the amount
of the water transfer fees required by this section.

Section 702. Water Transfer Fee Schedule.
a. Creation of the Schdule. Within ninety days of
the effective date of this Act. the State Water
Resources Control Board shall promulgate regula-
tions that establish a "Water Transfer Fee Schedule"
in accordance with the requirements of this Part.
The fee schedule shall contain separate fees for
water transfers governed by Part D and for expedit-
ed transfers of conserved water governed by Part E.
and the fees shall decline as the quantity of water
proposed for transfer increases to account for
economies of scale in the review process.

b. Maximum Amounts of Fes. The water transfer
fees shall be adequate. but no greater than necessary.
to pay for all expenses incurred by the Board in its
review of water transfer petitions governed by Parts D
and E. The water transfer fees shall not exceed:


i55j~i*.


generating insufficient funds to fulfill the purposes of
this Part or are producing excess funds in light of the
purposes of this Part. The maximum fees set forth in
subsection (bl shall automatically adjust annually
based on changes in the Consumer Price Index

Section 703. Use of Funds.
The State Water Resources Control Board shall
use the water transfer fees to implement the require-
ments of Parts D and E. The Board may use the any
residual proceeds generated by the water transfer fees
to support its other administrative responsibilities.

Section 704. Restriction on Expenditures.
The proceeds of the water transfer fees shall be
used exclusively for the purposes set forth in this
Part. These funds shall not be part of the general
budget of the State and shall not be impounded or
used to meet general State obligations.

PART H: AUTHORITY OF LOCAL WATER
AGENCIES

Section 801: Transfers of Water By Local Water
Agencies.
Local water agencies shall have authority to
enter into contracts to transfer water to purchasers
located outside the service area of the local agency
and to transfer water according to the following rules:

a. Water Ownd by the Agency. A local water agency
may transfer: (1) water to which the agency has water
rights or contract rights that is in excess of the reasonable
and beneficial demands of its members and customers;
and !2) water that is made available for transfer by con-
servation measures undertaken or funded by the agency.
Without the consent of the member or customer.
the agency shall hot declare as "excess" water that a
member or customer of the agency has authority to
use, or to transfer pursuant to section 802. during the
term of the transfer proposed by the agency, if the
member or customer has applied the same quantity of
water to a beneficial use. or has transferred the same
quantity of water pursuant to the provisions of section
802. at least once during the preceding five years.

b. Water Made Available By Members or Customers of
the Agency. With the consent of individual members or
customers who make water available for transfer, a
local water agency may transfer water for the benefit
of such members and customers or for the benefit of
the agency. The financial terms and operational con-
ditions of such transfers shall be established by
agreement between the local agency and the mem-
bers or customers who participate in the transfer.


a'


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Fa 1996


c. Water Owned By Mem6ers or Customers of tir PART I:
Agency. Without the consent of the member or cus-
tomer. a local water agency shall not transfer or oth- Section
erwise claim water to which the member or a.
customer holds the water right or that the member who tra
or customer has the right to use by contract with a water m
party other than the local water agency. capacity
ed by
Section 802. Transfers of Water By Members and the wat
Customers of Local Water Agencies, to use
Members and customers of local water agencies system
may transferr water with the approval of the governing agree
beard of the agency The financial terms and opera-
ticnal conditions of such :ransfers shall be estab- b'
lished by agreement of the local agency and the ing tern
members or customers who participate in the transfer.

Section 803. Transfers of Water to Local Water inc
Agencies. age
Local water agencies may acquire transferred tre
water for distribution to the agency's members or cus- req
tomers. on behalf of the agency's members or cus- by
tomers. and for other reasonable and beneficial uses
within the agency's water storage and service areas.
the
Section 804. Transfers of Water to Members and su;
Customers of Local Water Agencies. dui
Members and customers of a local water agency to
may acquire transferred water from sources other than me
the local water agency. If the transfer requires use of the tra
agency's water supply system. the respective rights and tin
responsibilities of the agency and the members and cus- us<
towers who seek to use the water supply system shall be
governed by the provisions on wheeling set forth in Part
1. The agency shall not impose any conditions or charges inc
on the transfer of such water, except for the use of the Re
agency's water supply system as authorized by Part I. Wa
wa
Section 805. Definition of Local Water Agency. Ca
The term "local water agency" includes irrigation di
districts, county water districts. California water dis- dr
tricts. California water storage districts, reclamation tri
districts, county waterworks districts, county drainage wa
districts, water replenishment districts, levee districts, tie
municipal water districts, water conservation districts. cia
cities and counties, all water agencies authorized by th
the special legislation codified in the Appendices to an
this Code. mutual water companies. canal companies, lo
water supply cooperatives, groundwater management cu
districts, and other public agency or private water
company that provides local or regional water service Sectio
to members or customers. The term "local water
agency does not include the United States Bureau of Th
Reclamation, the Army Corps of Engineers. or the water
California Department of Water Resources. emed




." o -


WHEELING


901. Use of Water Supply Systems.
Authorization of Wheeling. A legal water user
nsfers water or who receives trairsferred
iay use up to seventy percent of the unused
y of water supply systems owned or operat-
public water supply agencies to transport
er. The legal water user shall have the right
this portion of the agency's water supply
throughout the term of the water transfer
ent.

Definitions. As used in this Part. the follow-
ns shall have the following meanings:

1. The term "water supply system" shall
lude all of the public water supply
'ncy's diversion, storage. transportation.
atment. distribution, and related facilities
luired to accomplish the transfer of water
the legal water user.

2. The term "unused capacity" shall mean
Portion of the public water supply agency's
apply system, if any. not required by the agency
ring the term of the water transfer agreement
supply water obtained by the agency or its
embers and customers from water rights, con-
cts. or other entitlements that exist at the
ie the legal water user requests permission to
e the agency's water supply system.

3. The term 'public water supply agency"
ludess the United States Bureau of
clamation. the California Department of
iter Resources, irrigation districts, county
ter districts. California water districts.
lifomia water storage districts, reclamation
itricts. county waterworks districts, county
ainage districts, water replenishment dis-
cts. levee districts, municipal water districts,
rter conservation districts, cities and coun-
s. all water agencies authorized by the spe-
Il legislation codified in the Appendices to
is Code. groundwater management districts.
d other public water agencies that provide
cal or regional water service to members or
stomers.

n 902. Procedures Governing Agency
Review of Wheeling Requests.
te use of water supply systems to transport
as authorized by section 901 shall be gov-
by the procedures set forth in this section. '


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(I


a. Rjiuest for Use of Sstesm. The legal water user
who seeks to use the public agency's water supply sys-
tem shall submit to the agency a written request to
use the system and to determine the amount of
unused capacity available to transport the water. The
request shall include a statement of the source and
destination of the water proposed for wheeling
through the agency's system, the dates on which the
legal water user seeks to use the agency's system, the
portion of the system included in the request, and
other information required to permit the agency to
evaluate the request in accordance with the provisions
of section 903. If the legal water user has obtained
authorization from the State Water Resources Control
Board to transfer water or has signed a water transfer
agreement. the user shall include a copy of the autho-
rization or agreement with the request.

b. Determination of Unused Capacity. The agency
shall promptly determine the amount of unused
capacity available for use by the legal water user
throughout period of requested use. The agency's
determination of unused capacity shall comply
with the definition of that term set forth in sub-
section 901(b)(2). The agency also shall define the
terms and conditions that will govern the use of its
water supply system in accordance with the stan-
dards set forth in section 903.

c. Decision and Notice. Within thirty days of
receipt of the request to use the system, the agency
shall provide written notice to the legal water user
of its determination of unused capacity available for
use by the legal water user. and of the terms and
conditions applicable to :he use of its water supply
system. The agency shall include an explanation of
the reasons for its decision, including all data used
to calculate unused capacity.

d. Good Faith. In raking the determinations or
calculations required by this section, the agency
shall act in a reasonable and good faith manner
consistent with the requirements of law to facilitate
the voluntary transfer of water.

Section 903. Standards Governing Agency
Review and Financial
Requirements.
The use of water supply systems to transport
water as authorized by section 901 shall be gov-
erned by the standards set forth in this section.
Except as authorized by this section, public water
supply agencies shall not impose any conditions.
charges, or taxes on the use of its water supply sys-
tem pursuant to the provisions of this Part.


,.1


a. Water Quality and Blending of Water The
agency shall have authority to deny, or to place
conditions on. requests to transport water
through the unused capacity of its water supply
system only in accordance with the following
standards.

I. If the transfer can be implemented
only by blending the transferred water with
other water in the agency's supply system, the
agency may charge the legal water user for any
additional costs of treatment of the blended
water attributable to the addition of the trans-
ferred water to the system.

2. If the transfer can be implemented
only by blending the transferred water with
other water in the agency's supply system, and
the addition of the transferred water would
diminish the quality of the water in the system
to such an extent that the blended water could
not be treated for distribution to the agency's
other members and customers using the
agency's existing water treatment facilities.
the agency may prohibit or place conditions
on the transfer as required to protect the water
quality within its system.

3. The agency may impose other reason-
able terms and conditions on the use of its
water supply system to comply with all applica-
ble water quality and environmental standards.

b Fair Rn&eimbrsemen The agency shail have
authority to charge the legal water user for the fol-
lowing costs attributable to the legal water user's
use of the unused capacity in the agency's water
supply system:

(1) the portion of the capital, operation.
maintenance, and replacement costs paid by
the agency for the portion of the unused capac-
ity made available by the agency for the trans-
fer of water by the legal water user;

(2) the cost of supplemental power pur-
chased or used by the local water agency to
transfer the additional water for the benefit of
the legal water user:

(3) the additional cost of treating the
water in the agency's water supply system
caused by the blending of the water transferred
by the legal water user with the other water in
the agency's system; and


I


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Ml"L Wle lidr h


(4) a reasonable fee for the administrative
costs incurred by the agency in its review of the
legal water user's request to use the unused
capacity in the agency's water supply system.

The agency shall credit to the legal water user
the value of any benefits to the agency's water sup-
ply system that result from the transport of water for
the benefit of the legal water user. including any
decrease in power or treatment costs.
As used in this subsection. "replacement costs"
are limited to the reasonable portion of costs asso-
ciated with material acquisition for the correction of
unrepairable wear or other deterioration of parts of
the water supply system that have an anticipated
life that is less than that of the water supply system
and which costs are attributable to the transfer of
water for the benefit of the legal water user.

c. Legal Restrictions. The agency shall have
authority to deny. or to place reasonable terms and
conditions on. the use of its water supply system by
private persons or private entities to ensure that the
private use of the agency's system does not jeopar-
dize the agency's tax-exempt status, affect the
agency's authority to issue tax-exempt bonds, or vio-
late the requirements or limitations of federal law.

Section 904. Arbitration and judicial Review.
a. Arbitration. Disputes arising under subsec-
tion 903(c) shall be subject to judicial review. All
other disputes arising under this Part shall be sub-
iect to binding arbitration

b Procedurs. Except as provided in this sec-
tion. arbitration of disputes under this Part shall be
conducted pursuant to the provisions of sections
1280. 1280.1. 1281.9. 1282(e), and 1282.2 through
1284.2 of the Code of Civil Procedure.

1. Arbitration proceedings may be com-
menced by either the agency or by the legal
water user who seeks to use the agency's sys-
tem to transport water pursuant to the authori-
ty granted in this Part.

2. The party that commences the arbitra-
tion shall serve a demand for arbitration on the
other party. The demand for arbitration shall
describe the nature and legal basis of the claim
and shall set forth the relief requested.

3. The party that commences the arbitra-
tion also shall file a copy of the demand for
arbitration with the State Water Resources


Control Board. Within ten days of receipt of the
copy of the demand, the Board shall appoint a
single neutral arbitrator to conduct the arbitra-
tion. If the parties have stipulated to the
appointment of a specific person, the Board
shall appoint that person as the arbitrator. if
the parties have not so stipulated, the Board
shall appoint the arbitrator from a list of poten-
tial arbitrators maintained by the Board.

4. The respondent shall serve a
response to the demand for arbitration on
the demanding party within twenty days of
receipt of the demand The response shall
contain an admission or denial of each of the
claims set forth in the demand, with a brief
explanation of the reasons and legal bases
for each denial. The respondent also shall file
a copy of the response with the Board and
with the arbitrator.

5. The arbitrator may allow the respon-
dent to file cross-demand for arbitration
against the demanding party The cross-
demand for arbitration shall describe the
nature and legal basis of the claim and shall set
forth the relief requested.

6. The arbitrator may require the parties to
file legal memoranda, motions, offers of proof.
and other legal and evidentiary documents that
in the arbitrator's opinion would assist the arbi-
trator in rendering judgment on the claims.

c. Burden and Standard of Proof in all proceed-
ings under this section, the public water supply
agency shall have the burden of proving its compli-
ance with the standards and procedures set forth in
this Part. The burden of proof shall be by a prepon-
derance of the evidence.

d. judgment and Reid. The arbitrator shall ren-
der judgment on the claims in accordance with the
law and evidence. If a party fails to respond to a
demand or cross-demand for arbitration, the arbitra-
tor shall enter judgment against the party by default.

1. The arbitrator shall have authority to
declare the rights and obligations of the parties
and to compel the parties to comply with the
requirements of this Part.

2. The arbitrator shall have authority to
award monetary damages only for violations of
subsections 903(a) and 903(b).


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F 1996


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3. The arbitrator shall have no authority
to award punitive damages or to impose any
other form of relief.

e. Finality. The judgment of the arbitrator shall
be final. Except as provided in subsection if). the
courts shall have no jurisdiction to review the judg-
ment of the arbitrator.

f. Enforcement. The judgment of the arbitrator
shall be enforceable in court as authorized by sections
1285 through 1294.2 of the Code of Civil Procedure.

g Limitation an Claims All demands for arbitra-
tion must be filed within one hundred eighty days of
the date of discovery of the alleged violation.

h. Costs and Attorneys Fas. The party that loses on
the merits of the arbitration claim, as determined by
the arbitrator, shall pay the opposing party's costs and
reasonable attorneys fees incurred in the arbitration.

Section 905. Rulemaking Authority.
Public water supply agencies may promul-
gate rules, bylaws, and other policies to govern
the transport or water through their water supply
systems that are consistent with the provisions
of this Part.

PART 1: WATER BANKS

Section 1001. State Water Bank.
a. Authorization. The Governor is authorized to
establish a State Water Bank to be administered by
the California Department of Water Resources. The
State Water Bank may be established on a tempo-
rary or permanent basis, at the discretion of the
Governor. based on the Governor's determination
that the allocation of water resources would be
improved by direct state participation in water
transfers through a State Water Bank.

b. Powers. The State Water Bank shall have
authority to take any action to facilitate voluntary
transfers of water, including the acquisition of
water or water rights for subsequent transfer to
willing buyers or for other state purposes, includ-
ing augmentation of water supplies to wetlands.
fish and wildlife, and other instream beneficial
uses. The Governor may assign additional respon-
sibilities to the State Water Bank.

c. Consistency with Water Transfer Laws. The pro-
visions of this Act shall govern all transfers of water
by or through the State Water Bank.


d. lursdiction. During its existence, the State
Water Bank shall not have exclusive jurisdiction over
water transfers. Any person or entity may transfer water
without the involvement of the State Water Bank.

e. California Environmental Quality Act. The
establishment and operation of the State Water
Bank. and all short-term agreements to transfer
water by or through the State Water Bank. shall be
exempt from the provisions of Division 13 (com-
mencing with Section 21000) of the Public
Resources Code.
The California Department of Water Resources
shall review and revise, at least once every five years
the 1993 environmental impact report entitled
"State Drought Water Bank: Program Environmental
Impact Report" to ensure the currency and accuracy
of information required to assess the environmental
consequences of State Water Bank operations.

f. Delegation of Authority. The Governor may del-
egate to the State Water Bank authority to adminis-
ter the provisions of Part E for expedited transfers of
conserved water by or through the State Water Bank.
When exercising this authority, the State Water Bank
shall perform all functions assigned to the State
Water Resources Control Board by the provisions of
Part E. and the Board shall have no authority over
such expedited water transfers.

Section 1002. Regional Water Banks.
a. Authorization. Local water agencies. cities.
counties. other local governmental agencies, and
other interested parties are authorized to establish
regional water banks. A regional water bank may be
established by a single party or by agreement
between two or more parties. A regional bank may
be established on a temporary or permanent basis.
The purpose of regional water banks is to facilitate
voluntary transfers of water within the region.

b Powers. Regional water banks shall have
authority to take any action to facilitate voluntary
transfers of water, including but not limited to:

(1) establishment of a list of current offers
to sell and to purchase water and water rights:

(2) acquisition of water for subsequent sale
or distribution to members of the water bank or
for sale to willing buyers outside the water bank;

(3) acquisition and storage of water dur-
ing periods of surplus for sale and distribution
during periods of shortage:








l 1996


(4) acquisition and sale of water transfer
options, water futures, subordination agree-
ments. and other types of arrangements to
transfer water for the benefit of the members of
the water bank;

(5) establishment of a local or regional
program for the conjunctive management and
use of surface and ground water supplies
owned or controlled by members of the water
bank:

(6) augmentation of water supplies to
wetlands, fish and wildlife, and other instream
beneficial uses;

(7) facilitation of transfers by manage-
ment of water storage, water delivery, account-
ing. financing, or other matters relevant to the
interests of the members of the water bank;

(8) provision of assistance to potential
transferors and transferees in the negotiation
and implementation of transfer agreements:
and

(9) creation of an insurance system to pay
'4 claims for compensation brought by third-par-
ties against water transfers implemented
through the bank on behalf of the members of
the bank.

c. Consistency with Water Transfer Laws. The pro-
visions of this Act shall govern all transfers of water
by or through regional water banks.

d. jurisdiction. Regional water banks shall not
have exclusive jurisdiction over water transfers. Any
person or entity may transfer water without the
involvement of a regional water bank.

e. California Environmental Quality Act. The
establishment of a regional water bank shall be
subject to the provisions of Division 13 (com-
mencing with Section 21000) of the Public
Resources Code. Short-term agreements to trans-
fer water by or through a regional water bank shall
be exempt from the provisions of Division 13
(commencing with Section 21000) of the Public
Resources Code.

f. Delegation of Authority. The State Water Re-
sources Control Board may delegate to a regional
water bank the authority to administer the provi-
sions of Part E for expedited transfers of conserved


water by or through the regional bank. When exer-
cising this authority, the regional bank shall per-
form all functions assigned to the State Water
Resources Control Board by the provisions of Part
E. and the Board shall have no authority over such
expedited water transfers. The Board may delegate
administrative authority pursuant to this subsec-
tion only if it concludes that the regional water bank
is capable of implementing and enforcing the
requirements of Part E.

PART K. STATE WATER RESOURCES
CONTROL BOARD

Section I101. Continuing Authority.
The State Water Resources Control Board shall
retain its full authority to enforce the terms and
conditions of water rights permits or licenses dur-
ing the term of all water transfers governed by this
Act. The Board also shall retain its full authority to
ensure that. throughout the term of all water trans-
fers. the impoundment, storage, diversion, distribu-
tion. use. and return flow of water comply with
applicable pollution control and water quality stan-
dards, are consistent with the requirements of
Article X. Section 2 of the California Constitution
and this Code. and comply with all other applicable
federal and state laws.

Section 1102. Water Transfer Registry.
The State Water Resources Control Board
shall create and maintain a "Water Transfer
Registry" of all final agreements to transfer water
and water transfers governed by this Act. The
Registry shall include the names of the parties to
the transfer, a brief description of the transfer, and
an explanation of the changes in water storage.
timing and point of diversion, place and purpose
of use, consumption, and timing and point of
return flow caused by the transfer.
The Board shall revise the Registry to incorpo-
rate each final water transfer agreement and each
water transfer governed by this Act. The Board shall
ensure that the Water Transfer Registry is available
in print form and over the Internet.

Section 1103. Rulemaking Authority.
Within one year of the effective date of this
Act. the State Water Resources Control Board shall
review its existing rules and policies and amend
such rules and policies as necessary to ensure that
they comply with the terms of this Act. The Board
also shall have authority to promulgate other rules
that it determines would assist in the implementa-
tion of the Act.


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PART L: MISCELLANEOUS

Section 1201. Repeal of Existing Law.
Upon the effective date of this Act. the follow-
ing sections of the Water Code are repealed: 109.
380-387. 470-484. 1020-1030. 1435-1442.
1700-1707. 1725-1745.11 & 1810-1814.


Section 1202. Judicial Authority.
The courts shall have authority to enforce the
requirements of this Act. The courts shall have no
authority to adjudicate disputes arising under Parts
D E. and I. .ex.rp as specifically provided therein.

Section 1203. Reference to Statutes.
Whenever reference is made in this Act to any
other statute, the reference shall apply to all
amendments to the other statute.


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