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December 2, 2020  |  Written by Kyler C. Rayden

Comment Period Opens for the State Water Commission’s Proposed Rulemaking Giving Applicants to Water Storage Investment Program a Second Opportunity at Early Funding

In 2014, the California Legislature passed Proposition 1 dedicating $2.7 billion for investments in water storage projects and giving the California Water Commission (Commission) new responsibilities such as distributing the funds set aside for those projects and developing regulations for quantifying and managing the associated public benefits.  The Commission implements Proposition 1, chapter 8 through the Water Storage Investment Program (WSIP) by adopting program regulations, initiating solicitation of applicants, and reviewing applications.  In 2018, the Commission made maximum conditional eligibility determinations (MCED) (i.e., the amount of program funds available to a given project) for eight projects that, when finished, will increase California’s water storage capacity by 4.3 million acre-feet.  The eight projects chosen by the Commission to receive program funds include the Chino Basin Conjunctive Use Environmental Storage/Exchange Program, Harvest Water Program, Kern Fan Groundwater Storage Project, Los Vaqueros Reservoir Expansion Project, Pacheco Reservoir Expansion Project, Sites Project, Temperance Flat Reservoir Project, and the Willow Springs Water Bank Conjunctive Use Project.

The Commission may only issue final awards to applicants who secure their entire share of the total cost of the project, enter into contracts with the applicable state agencies to ensure that the applicant uses program funds to achieve the public benefits identified in the application, and complete all environmental documentation and permitting for the project.  However, the Commission may provide early funding to applicants to help with the completion of environmental documentation and permits.  Early funding is limited to five percent (5%) of the MCED.  Section 6010 of title 23 of the California Code of Regulations contains the conditions that must be met before the Commission will award funds used to complete environmental documents and permits.  (Cal. Code Regs., tit. 23, § 6010(c).)  While program regulations originally required applicants to request early funding in their initial application, only the Los Vaqueros Reservoir Expansion Project, Sites Project, Temperance Flat Reservoir Project, Willow Springs Water Bank Conjunctive Use Project, and Pacheco Reservoir Expansion Project requested early funding.  The Commission granted all early funding requests except for the Temperance Flat Reservoir Project.

In May of 2020, multiple proponents of WSIP-funded projects voiced their concern to the Commission that the COVID-19 pandemic could create severe economic challenges that threaten the viability of their projects.  The proponents requested the Commission adopt emergency regulations that include, among others, modifying early funding conditions, increasing early funding flexibility, and incorporating COVID-19 related impacts into pre-established deadlines.  The Commission adopted emergency regulations in mid-August allowing WSIP applicants who did not previously receive early funding to apply for early funding to assist with completing environmental documents and permits.  The Office of Administrative Law approved the emergency regulations, and then the Commission filed a notice of proposed rulemaking in an effort to make the emergency regulations final.

The proposed amendments to Section 6010 would allow the Commission to make one additional early funding opportunity available to WSIP applicants who either did not apply for or did not receive early funding.  Notably, the new regulations will not modify the total amount of funding available to WSIP applicants.  The 45-day comment period for the proposed regulations closes on January 13, 2021.  Further, the Commission will hold a Zoom hearing on the proposed regulations on January 20, 2021.  You can view the Commission’s complete notice of proposed rulemaking here.

For additional information please contact Kyler Rayden at krayden@somachlaw.com.

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