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AMENDED IN SENATE MARCH 23, 2011

INTRODUCED BY Senator Simitian

DECEMBER 6, 2010

An act to add Part 10 (commencing with Section 12996) to
Division 6 of the Water Code, relating to water.
An
act to add Division 36 (commencing with Section 87000) to the Water
Code, relating to water, and making an appropriati
on
therefor.




LEGISLATIVE COUNSEL'S DIGEST


SB 34, as amended, Simitian. Water infrastructure
projects: fees.
California Water Resources Investment
Act of 2011.

(1) Under existing law, various measures provide funding for water
resources projects, facilities, and programs.

This bill would enact the California Water Resources Investment
Act of 2011 to finance a water resources investment program. To
finance the program, the bill would impose on each retail water
supplier in the state an annual charge based on the volume of water
provided in its service area that is provided for nonagricultural
uses and an annual charge based on each acre of land within its
service area that is irrigated for agricultural uses. The bill would
require the State Board of Equalization to collect the charges from
retail water suppliers in accordance with the Fee Collection
Procedures Law, and would authorize the State Board of Equalization
and the Department of Water Resources to adopt and enforce
regulations for the administration and enforcement of the charges and
related requirements as emergency regulations.

The bill would require the revenues of the charges collected for
purposes of the water resources investment program to be deposited in
the California Water Resources Investment Fund, which would be
established by the bill. The bill would establish a State Investment
Account and 11 regional investment accounts within the fund, and
would require 50% of the moneys deposited in the fund to be
continuously appropriated to the Controller for transfer to the State
Investment Account and 50% of the moneys deposited in the fund to be
continuously appropriated to the Controller for transfer to the
regional investment accounts based on the amount of charges collected
within each funding region established by the bill.

The bill would continuously appropriate the moneys in each of the
regional investment accounts to the Department of Water Resources for
purposes of providing financing for regional projects related to
water storage, water conservation, water conveyance, desalination,
wastewater recycling, levee improvements, safe drinking water, flood
plain management, and the restoration of fish and wildlife,
consistent with a specified integrated regional water management plan
that meets prescribed requirements. The bill would require the
Department of Water Resources to adopt regulations for the
preparation of integrated regional water management plans for these
purposes.

The bill would require the moneys in the State Investment Account
to be expended, upon appropriation by the Legislature, for
administration of the water resources investment program and to fund
specified programs proposed by the California Water Commission,
including statewide water resources projects, financing the operating
expenses of the Delta Stewardship Council and the Delta Plan adopted
by the council, projects that reduce the impacts of mercury
contamination in the Sacramento-San Joaquin Delta, and specified
scientific studies and assessments.

The bill would require the State Auditor to conduct a programmatic
review and audit of expenditures from the above-described funds and
annually report the findings of the review and audit to the Governor
and the Legislature. The bill would also require the California Water
Commission to annually review expenditures authorized pursuant to
the bill and to hold specified hearings relative to the water
resources investment program.

(2) By expanding the application of the Fee Collection Procedures
Law, the violation of which is a crime, this bill would impose a
state-mandated local program.

The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.

This bill would provide that no reimbursement is required by this
act for a specified reason.

(3) This bill would constitute a change in state statute that
would result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and this
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.

Under existing law, various water infrastructure projects are
undertaken by federal, state, and local public agencies in the
Sacramento-San Joaquin Delta and in other parts of the state.

This bill would declare the intent of the Legislature to enact
legislation to develop a fee-based system to pay for costs associated
with updating and modernizing water infrastructure projects in the
state. The bill would express legislative intent with respect to the
imposition of the fees and use of the fee revenues.

Vote: majority 2/3 . Appropriation:
no yes . Fiscal committee: no
yes . State-mandated local program: no
yes .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Division 36 (commencing with Section
87000) is added to the
Water Code , to read:


DIVISION 36. California Water Resources Investment Act


CHAPTER 1. GENERAL PROVISIONS


87000. This division shall be known and may be cited as the
California Water Resources Investment Act of 2011.
87010. The Legislature finds and declares all of the following:
(a) Safeguarding supplies of clean, safe drinking water to
California's homes, businesses, and farms is an essential
responsibility of government, and critical to protecting the quality
of life for Californians.
(b) Encouraging water conservation and recycling are commonsense
methods to make more efficient use of existing water supplies.
(c) Protecting lakes, rivers, and streams from pollution, cleaning
up polluted groundwater supplies, and protecting water sources that
supply the entire state are crucial to providing a reliable supply of
drinking water and protecting the state's natural resources.
(d) Existing revenue streams have proven insufficient to invest in
all of the following:
(1) Long-term planning and efficient management of the statewide
water system.
(2) Expanding access to necessary water services for underserved
and low-income communities.
(3) Ecosystem improvements.
(4) Management of water-related risks and major public
emergencies.
(5) Water system changes to improve recreation opportunities.
87020. The Legislature further finds and declares all of the
following:
(a) As the state's population continues to grow, it becomes more
important for California to have a stable funding source to meet
future water demand, improve water quality, and sustain the
environment.
(b) A close link between the generation of revenue and the
increased water supply reliability gained from the investment of this
revenue provides for measurable improvements in water management.
(c) The state's water resources management system has changed
significantly over the last 30 years in order to ensure that there is
a balance among economic, environmental, and ecosystem needs, while
also providing the water resources needed to meet local objectives.
(d) The state's water resources should be managed to meet the
coequal goals of providing a more reliable water supply for
California and protecting, restoring, and enhancing riverine
ecosystems.
(e) Managing water at the regional level is critical to meeting
local water resource objectives. These local objectives have recently
been promoted through regional water planning, including the use of
integrated regional water management plans.
(f) Integrated regional water management planning helps each
region of the state to become more self-sufficient with its water
supplies by planning, investing, building partnerships, and
diversifying water portfolios while considering all resources within
the regional planning area.
(g) Integrated regional water management provides an improved
method of managing and improving efficiency of water resources in the
state by integrating solutions to water supply, flood management,
water quality, and habitat concerns, while encouraging regional
entities to coordinate their activities.
(h) Significant funding is needed to ensure that state and local
water resources can continue to meet the demands of a growing
population and support endangered ecosystems.
(i) Over the past 10 years, voter-approved bonds have made
significant contributions to address state and local water resource
needs, and provided considerable incentives for local investment on
behalf of those needs.
(j) Although the issuance of voter-approved bonds has provided for
important improvements in the state's water management system, the
levels of available funding have fluctuated throughout the life of
each bond, while the types of projects and programs eligible for
funding have varied for each bond. This lack of stability in
incentive funding has inhibited local, regional, and state agencies
from developing and implementing long-term plans and investment
strategies.
(k) A new stable source of funding that can work in conjunction
with, or independently of, voter-approved bonds can provide the
financial foundation for resource planning and management,
construction of new facilities, managing the demand for water, and
maintenance of the water management system.
(l) The purpose of this division is to establish a fund that will
provide a stable source of revenue for integrated regional water
management to achieve clean, reliable, and sustainable water
supplies, in conjunction with local expenditures and other state and
federal funds.
87030. It is the intent of the Legislature that moneys collected
pursuant to this division should be used solely and exclusively for
the purposes provided in this division, to provide for all of the
following purposes and policies:
(a) The public share of planning and efficient management of the
statewide water system.
(b) Expanding access to necessary water services. The state should
fund programs to ensure that communities that would not otherwise do
so receive access to safe, clean drinking water, which includes
providing financial assistance to disadvantaged communities in
upgrading water quality infrastructure to meet state and federal
clean water standards and cleaning up contaminated groundwater
supplies in cases in which these costs cannot be recovered from
polluters.
(c) Ecosystem improvements. State activities for ecosystem
improvement can serve a public purpose by protecting and
rehabilitating ecosystems affected by other uses of the state's water
resources.
(d) Management of water-related risks and major public
emergencies. The state undertakes a wide range of activities that are
intended to protect public safety and resources, and to respond to
water-related emergency situations. These activities include
prevention and response to damage from floods, droughts, climate
change, and failures of water infrastructure such as levees.
(e) Water system changes that improve recreation opportunities.
State activities for this purpose are intended to serve a public
purpose by providing recreational opportunities to make California a
better place to live, do business, and visit.
CHAPTER 2. DEFINITIONS


87040. Unless the context otherwise requires, the following
definitions govern the construction of this division:
(a) "Applicant" means an entity that submits a regional proposal
for funding in accordance with this division on behalf of a region
defined in an integrated regional water management plan, enters into
a funding agreement with the department, and is any of the following:

(1) A public entity involved in water management, including a
city, county, city and county, district, joint powers authority, or
other political subdivision of the state.
(2) An accredited public or private university or college.
(3) A nonprofit organization.
(4) An Indian tribe.
(5) An incorporated mutual water company.
(6) An investor-owned utility regulated by the Public Utilities
Commission.
(7) A state agency.
(b) "Beneficial uses" include, but are not necessarily limited to,
domestic, municipal, agricultural, and industrial supply power
generation, recreation, aesthetic enjoyment, navigation, and
preservation and enhancement of fish, wildlife, and other aquatic
resources or preserves.
(c) "Commission" means the California Water Commission.
(d) "Delta" means the Sacramento-San Joaquin Delta, as defined in
Section 12220, and the Suisun Marsh, as defined in Section 29101 of
the Public Resources Code.
(e) "Delta conveyance facilities" means facilities that convey
water directly from the Sacramento River to the State Water Project
or the federal Central Valley Project pumping facilities in the south
Delta.
(f) "Delta counties" means the Counties of Contra Costa,
Sacramento, San Joaquin, Solano, and Yolo.
(g) "Delta Plan" has the same meaning as set forth in Section
85059.
(h) "Department" means the Department of Water Resources.
(i) "Director" means the Director of Water Resources.
(j) "Disadvantaged community" means a community located in one of
the funding regions identified pursuant to subdivision (n) that has a
median household income that is less than 80 percent of the median
household income for the funding region as a whole.
(k) "Economically distressed area" means a municipality with a
population of 20,000 persons or less, a rural county, or a reasonably
isolated and divisible segment of a larger municipality and the
segment of the population is 20,000 persons or less, with an annual
median household income that is less than 80 percent of the statewide
median household income, and with one or more of the following
conditions as determined by the department:
(1) Financial hardship.
(2) Unemployment rate at least 2 percent higher than the statewide
average.
(3) Low population density.
(l
) (1) "Funding region" means one of the following
hydrologic regions:
(A) North Coast Hydrologic Region.
(B) San Francisco Bay Hydrologic Region.
(C) Central Coast Hydrologic Region.
(D) South Coast Hydrologic Region: San Diego and southern Orange
County watersheds.
(E) South Coast Hydrologic Region: Santa Ana River watershed.
(F) South Coast Hydrologic Region: Los Angeles-Ventura County
watersheds.
(G) Sacramento River Hydrologic Region.
(H) San Joaquin River Hydrologic Region.
(I) Tulare Lake Hydrologic Region.
(J) Lahontan Hydrologic Region.
(K) Colorado River Hydrologic Region.
(2) For purposes of this division, the hydrologic regions shall be
delineated as set forth in Bulletin 160-05 of the Department of
Water Resources, with the following exceptions:
(A) The department shall divide South Coast Hydrologic Region into
three separate regions that reflect (i) the San Diego County and the
southern Orange County watersheds, (ii) the Santa Ana River
watershed, and (iii) the Los Angeles Ventura County watersheds,
respectively.
(B) The department shall combine the North Lahontan and South
Lahontan Hydrologic Regions, to be known as the Lahontan Hydrologic
Region.
(m) "Integrated regional water management plan" has the same
meaning as defined in Section 10534.
(n) "Investment fund" means the California Water Resources
Investment Fund established pursuant to Section 87070.
(o) "Nonprofit organization" means an organization qualified to do
business in California and exempt from taxation under Section 501(c)
(3) of Title 26 of the United States Code.
(p) "Participant" means an entity that is the sponsor or proponent
of a project or program included in a regional proposal for funding
submitted for the purposes of this chapter by an applicant, and is
one of the following:
(1) A public entity involved in water management, including a
city, county, city and county, district, joint powers authority, or
other political subdivision of the state.
(2) An accredited public or private university or college.
(3) A nonprofit organization.
(4) An Indian tribe.
(5) An incorporated mutual water company.
(6) An investor-owned utility regulated by the Public Utilities
Commission.
(7) A state agency.
(q) "Person" means any individual, estate, business or common law
trust, firm, joint stock company, joint venture, business concern,
corporation, including, but not necessarily limited to, a government
corporation, partnership, limited partnership, limited liability
partnership, limited liability company, and any other business
entity, and any social club, cooperative organization, fraternal
organization, or any other organization or association. "Person" also
includes any city, county, city and county, district, commission,
the state or any department, agency, or political subdivision
thereof, any interstate body, and the United States and its agencies
and instrumentalities to the extent permitted by law.
(r) "Public agency" means a state agency or department, a
district, a joint powers authority, a city, county, a city and
county, and any other political subdivision of the state.
(s) "Regional investment account" means any of the 11 accounts
established in the investment fund pursuant to Section 87070 and
corresponding to a region identified pursuant to subdivision (n).
(t) "Retail water service" means water service that is purchased
by municipal, industrial, or agricultural water customers without
further sale of water to other water customers.
(u) "Retail water supplier" means any local entity, including a
public agency, city, county, investor-owned utility, municipal water
company, or private water company or person that provides retail
water service to municipal, industrial, or agricultural water
customers.
(v) "Secretary" means the Secretary of the Natural Resources
Agency.
(w) "Water customer" means a person using water in this state that
is furnished by a retail water supplier.
CHAPTER 3. INVESTMENT IN CALIFORNIA WATER RESOURCES



Article 1. General Provisions


87050. It is the intent of the Legislature that the investment of
public funds pursuant to this division shall not be used for
strictly private purposes or obligations.
87051. Funds provided by this chapter shall not be expended to
support or pay for the costs of environmental mitigation measures or
compliance obligations of any person, except as part of the
environmental mitigation costs of projects financed by this chapter.
87053. Eligible applicants under this chapter are public
agencies, nonprofit organizations, public utilities, and mutual water
companies. To be eligible for funding under this chapter, a project
proposed by a public utility that is regulated by the Public
Utilities Commission or a mutual water company shall have a clear and
definite public purpose and shall benefit the customers of the water
system.
87054. An amount that is equal to not more than 3 percent of the
funds allocated for any financial assistance program pursuant to this
chapter may be used to pay the administrative costs of that program.

87055. Funds provided by this chapter shall not be expended to
pay the costs of the design, construction, operation, or maintenance
of Delta conveyance facilities.
87057. This chapter does not diminish, impair, or otherwise
affect in any manner whatsoever any area of origin, watershed of
origin, county of origin, or any other water rights protections,
including, but not limited to, rights to water appropriated prior to
December 19, 1914, provided under the law. This division does not
limit or otherwise affect the application of Article 1.7 (commencing
with Section 1215) of Chapter 1 of Part 2 of Division 2, Sections
10505, 10505.5, 11128, 11460, 11461, 11462, and 11463, and Sections
12200 to 12220, inclusive.
87059. (a) The State Auditor shall annually conduct a
programmatic review and an audit of expenditures from the accounts
established by this chapter.
(b) Notwithstanding Section 10231.5 of the Government Code, on or
before March 1 of each year, the State Auditor shall report the
findings of the annual review and audit to the Governor and the
Legislature, and shall make the findings available to the public.
(c) A report required to be submitted to the Legislature pursuant
to subdivision (b) shall be submitted in accordance with Section 9795
of the Government Code.

Article 2. Water Resources Assessment


87060. (a) Commencing July 1, 2012, an annual water resources
assessment shall be imposed on every retail water supplier in this
state for each calendar year, in accordance with the following
requirements:
(1) A charge of one hundred ten dollars ($110) per acre foot in
the form of a nonagricultural public good charge, for each acre foot
of water that is sold for nonagricultural uses.
(2) (A) Except as provided in subparagraph (B) and subdivision
(b), a charge of twenty dollars ($20) per acre of land that is
irrigated for agricultural purposes within the service area of the
retail water supplier. This charge shall apply to all land irrigated
for agricultural purposes, regardless of whether the source of the
irrigation water is surface or groundwater.
(B) For each acre of land that the department determines to be
utilizing best management practices for the crop and soil type
irrigated on that acre, as determined pursuant to subdivision (b),
the public good charge shall be ten dollars ($10).
(b) On or before July 1, 2013, the department shall adopt
regulations establishing a program to determine best management
practices for irrigated agriculture, based on crop and soil type. The
applicable public good charge pursuant to paragraph (2) of
subdivision (a) shall be ten dollars ($10), until such time as the
regulations establishing the best management practices are adopted.
87062. The imposition of the water resources assessment in
accordance with this article is a matter of statewide interest and
concern, and is applicable uniformly throughout the state.
87064. (a) The State Board of Equalization shall collect and
administer the water resources assessment imposed pursuant to Section
87060 in accordance with the Fee Collection Procedures Law (Part 30
(commencing with Section 55001) of Division 2 of the Revenue and
Taxation Code). For purposes of this section, "feepayer," within the
meaning of the Fee Collection Procedures Law, shall include a retail
water supplier.
(b) For each calendar year, the water resources assessment imposed
pursuant to Section 87060 shall be due and payable to the State
Board of Equalization by July 1 of the immediately following calendar
year. Payments shall be accompanied by a return in the form
prescribed by the State Board of Equalization, and may include, but
are not necessarily not limited to, electronic media.
(c) Notwithstanding subdivision (b), if the State Board of
Equalization deems it necessary in order to ensure payment or to
facilitate collection of the water resources assessment, the State
Board of Equalization may require annual returns and payment of the
water resources assessment for a different period from that set forth
in subdivision (b), as determined by the State Board of
Equalization.
(d) The State Board of Equalization may prescribe, adopt, and
enforce regulations for the administration and enforcement of the
water resources assessment pursuant to this article.
87065. A retail water supplier may collect the costs of the water
resources assessment from its customers by using the amounts set
forth in subdivision (a) of Section 87060 or by using an alternate
collection method consistent with the supplier's practices.
87066. (a) On or before March 1, 2012, each retail water supplier
in the state shall submit to the department a written statement
describing whether it is publicly or privately owned, its official
mailing address, a map of its service area, the connection categories
used in billing its water customers and the number of connections in
each category, the volume of water provided to its nonagricultural
customers in the immediately preceding calendar year, and the number
of acres irrigated for agricultural use within its service area.
(b) On or before July 1, 2012, the department shall provide the
State Board of Equalization with a list of each retail water supplier
in the state, including the information for each retail water
supplier collected pursuant to subdivision (a).
87068. (a) The department and the State Board of Equalization may
each adopt emergency regulations to implement and enforce this
article.
(b) The emergency regulations adopted pursuant to subdivision (a)
shall be adopted in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, and for the purposes of that chapter, including Section 11349.6
of the Government Code, the adoption of these regulations is an
emergency, and shall be considered by the Office of Administrative
Law as necessary for the immediate preservation of the public peace,
health, safety, and general welfare. Notwithstanding Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, any emergency regulations adopted by the
department or the State Board of Equalization pursuant to this
section shall be filed with, but not be repealed by, the Office of
Administrative Law, and shall remain in effect for a period of two
years or until revised by the department or the State Board of
Equalization, whichever occurs first.

Article 3. California Water Resources Investment Fund


87070. (a) The California Water Resources Investment Fund is
established in the State Treasury.
(b) The investment fund consists of 13 accounts, which are hereby
established as follows:
(1) The General Account for receipt of deposits from the State
Board of Equalization and for general expenditures.
(2) The State Investment Account.
(3) Eleven regional investment accounts, corresponding to the
funding regions specified in subdivision ( l ) of Section
87040.
(c) Water resources assessments and any penalties imposed on
retail water suppliers in connection with the collection of the
assessments by the State Board of Equalization, shall be remitted by
the State Board of Equalization, in accordance with Article 2
(commencing with Section 87060), and shall be deposited in the
investment fund. Notwithstanding Section 16305.7 of the Government
Code, all interest earned on moneys deposited in the investment fund
shall be maintained in the investment fund.
(d) Moneys deposited in the investment fund shall not be
appropriated for any purpose other than the purposes authorized by
this division.
87072. (a) All moneys collected pursuant to this chapter shall be
deposited by the State Board of Equalization into the General
Account in the investment fund.
(b) Notwithstanding Section 13340 of the Government Code, the
moneys deposited in the General Account are continuously appropriated
without regard to fiscal year to the Controller for transfer to the
State Investment Account and the regional investment accounts, as
follows:
(1) Fifty percent shall be transferred to the State Investment
Account.
(2) Fifty percent shall be transferred to the 11 regional
investment accounts on a pro rata basis that reflects the percentage
of the moneys collected from within each respective funding region.
(c) For purposes of calculating the amounts transferred pursuant
to paragraph (2) of subdivision (b), the State Board of Equalization
shall provide a statement of the percentage of the moneys collected
pursuant to this chapter that is attributable to each of the funding
regions to the Controller on a quarterly basis.
87074. (a) Notwithstanding any other law, the State Investment
Account and each of the regional investment accounts shall accumulate
the revenues deposited in the respective accounts in any year in
which those revenues are not expended.
(b) Notwithstanding Section 16305.7 of the Government Code, any
interest earned on moneys deposited in the State Investment Account
or any of the regional investment accounts shall be retained in the
respective account and may be expended for the authorized purposes of
the respective account.
87076. Expenditures from the investment fund shall not be used
for private, nonpublic purposes. It is the intent of the Legislature
that all expenditures pursuant to this chapter shall be guided by the
concepts of beneficiary pays and polluter pays.
87078. The department shall adopt, and the commission shall
review and approve, regulations relating to the administration of the
investment fund.

Article 4. Regional Investment Accounts


87080. (a) Notwithstanding Section 13340 of the Government Code,
the moneys in each regional investment account are continuously
appropriated to the department, without regard to fiscal year, for
expenditure in accordance with this article.
(b) The moneys in each regional investment account may be expended
by the department, in accordance with this article, to provide
financial assistance for projects within the applicable funding
region that accomplish any of the following purposes:
(1) Water storage.
(2) Water conservation.
(3) Water conveyance.
(4) Water desalination.
(5) Wastewater recycling.
(6) Levee improvements.
(7) Safe drinking water.
(8) Flood plain management.
(9) Restoration of populations of fish and wildlife, the listing
of which under the federal Endangered Species Act (16 U.S.C. Sec.
1531 et seq.) or the California Endangered Species Act (Chapter 1.5
(commencing with Section 2050) of Division 3 of the Fish and Game
Code) restricts the operation of local, state, or federal water
supply projects.
87082. In order to be eligible for financial assistance from a
regional investment account, a project shall be consistent with an
integrated regional water management plan that complies with
requirements adopted pursuant to Section 87085, and shall include one
or more of the following project elements:
(a) The project shall reduce water demand through agricultural and
urban water use efficiency.
(b) The project shall increase water supplies and may include, but
shall not be limited to, groundwater storage and conjunctive water
use, desalination, water
recycling, or regional and local surface storage.
(c) The project shall improve operational efficiency, including
conveyance facilities, system reoperation, and water transfers.
(d) The project shall improve water quality and may include, but
shall not be limited to, drinking water treatment and distribution,
groundwater and aquifer remediation, water pollution prevention, or
management of urban and agricultural runoff.
87084. In order to be eligible for financial assistance from a
regional investment account, an applicant submitting a proposal for
funding to the department shall meet all of the following
requirements:
(a) If the applicant is an urban water supplier, the applicant
shall prepare, adopt, and submit to the department an urban water
management plan in accordance with the Urban Water Management
Planning Act (Part 2.6 (commencing with Section 10610) of Division
6).
(b) If the applicant is an agricultural water supplier, the
applicant shall prepare, adopt, and submit to the department an
agricultural water management plan in accordance with Part 2.8
(commencing with Section 10800) of Division 6.
(c) If the applicant requests funding for a groundwater
management, storage, or recharge project, or a project with potential
groundwater impacts, the applicant shall demonstrate that one or
more of the following conditions have been met, as applicable:
(1) A groundwater management plan for the affected groundwater
basin has been prepared and implemented in accordance with Part 2.75
(commencing with Section 10750) of Division 6.
(2) The applicant participates in, or agrees to be subject to, a
groundwater management plan, basinwide management plan, or other
program or plan that meets the requirements of Section 10753.7.
(3) The applicant complies with the requirements of an
adjudication of water rights in affected groundwater basin. For
purposes of this paragraph, an "adjudication" includes an
adjudication under Section 2101, an administrative adjudication, and
an adjudication in state or federal court.
87085. (a) For purposes of this article, the department shall
adopt regulations for the preparation, amendment, and revision of
integrated regional water management plans pursuant to Part 2.2
(commencing with Section 10530) of Division 6, consistent with this
article.
(b) At a minimum, the regulations adopted by the department shall
require that integrated regional water management plans include all
of the following:
(1) Consideration of all of the resource management strategies
identified in the California Water Plan, as adopted or revised
pursuant to Part 1.5 (commencing with Section 10004) of Division 6.
(2) An integrated, multibenefit approach to selection and design
of projects that are eligible for funding pursuant to this article.
(3) Performance measures and monitoring to demonstrate progress
toward meeting regional objectives.
(4) Standards for developing priorities for regional projects that
are eligible for funding pursuant to this article.
(c) The department shall consult with the California Water
Commission, the State Water Resources Control Board, the California
regional water quality control boards, the State Department of Public
Health, the Department of Fish and Game, the Delta Stewardship
Council, and other state agencies with water management
responsibility, for purposes of adopting the regulations pursuant to
this section and reviewing integrated regional water management plans
pursuant to this article.
(d) The department shall verify that integrated regional water
management plans comply with the regulations adopted pursuant to this
section.
87086. (a) If in any funding region there is no integrated
regional water management plan that meets the requirements set forth
in regulations adopted pursuant to Section 87085, at the discretion
of the department, either (1) the moneys in the corresponding
regional investment account may remain in that account until there is
an applicable integrated regional water management plan meeting the
regulations adopted pursuant to Section 87085 or (2) the department
may allocate the moneys to benefit projects and activities within the
region in a manner that is consistent with this chapter regardless
of the existence of an applicable integrated regional water
management plan.
(b) The department's administrative costs incurred in connection
with expenditures under this section shall be paid from the
appropriate regional investment account.
87088. (a) The department shall establish and implement a plan to
monitor, track, and report on integrated regional water management
plan implementation and performance to demonstrate achievements
associated with expenditures from the regional investment accounts.
The department shall prepare an annual report, which shall include an
itemization of moneys expended on projects and programs and a
description with regard to the performance of those projects and
programs.
(b) Notwithstanding Section 10231.5 of the Government Code, the
department shall submit the report to the Legislature annually on or
before January 15.
(c) The report required to be submitted to the Legislature
pursuant to subdivision (b) shall be submitted in accordance with
Section 9795 of the Government Code.

Article 5. State Investment Account


87090. The moneys in the State Investment Account, upon
appropriation by the Legislature, shall be expended for all of the
following purposes:
(a) For allocation to the State Board of Equalization for payment
of refunds of the water resources assessment, interest, and
penalties, as authorized pursuant to Chapter 5 (commencing with
Section 55221) of Part 30 of Division 2 of the Revenue and Taxation
Code, including refunds due on account of judgments for the return of
charges that are unlawfully collected.
(b) For allocation to the State Board of Equalization, the
commission, and the department to ensure sufficient revenues for
those agencies to carry out the duties imposed upon each of them by
this division.
(c) For a reserve, not to exceed ____ dollars ($____), which shall
be maintained in the State Investment Account.
(d) The balance of the moneys in the State Investment Account,
after allocation for expenditure for all of the purposes set forth in
subdivisions (a) to (c), inclusive, shall be expended as provided in
Section 87092.
87092. The commission, in consultation with the Department of
Fish and Game, State Department of Public Health, Delta Stewardship
Council, and the State Water Resources Control Board, as part of its
annual budget request, shall annually develop a proposal for the
expenditure of the moneys in the State Investment Account according
to the following funding priorities:
(a) To fund projects of statewide and interregional significance.
(b) To fund operating expenses of the Delta Stewardship Council
and the Delta Plan adopted by the Delta Stewardship Council, and for
grants and direct expenditures to implement the Delta Plan.
(c) To fund projects that reduce the impacts of mercury
contamination of the Delta and its watersheds, and for remediation
and elimination of continuing sources of mercury contamination.
(d) To fund scientific studies and assessments that support
projects authorized under this section.
87095. Upon appropriation by the Legislature, ____ percent of the
moneys described in subdivision (d) of Section 87090 shall be made
available for grants to disadvantaged communities for purposes of
providing safe drinking water supplies, until such time as the State
Water Resources Control Board makes a finding that all communities in
California have drinking water that meets public health standards.
87097. Upon appropriation by the Legislature, moneys allocated
for interregional expenditures pursuant to subdivision (a) of Section
87092, may be expended, by the department for direct expenditures or
grants to address multiregional needs or state priorities,
including, but not limited to, any of the following:
(a) Investing in new water technology development and deployment.
(b) Meeting state water recycling and water conservation goals.
(c) Other water supply projects and activities designed to meet
the needs of disadvantaged communities or economically distressed
areas, including technical and grant writing assistance.
87099. Each state agency that receives funding under this article
shall track and document the manner in which the funds are used to
advance integrated regional water management within the state, and
submit that information to the department on at least an annual
basis.

Article 6. Additional Duties of the California Water
Commission


87100. (a) The commission shall review funding expenditures, and
prepare an annual summary of the actions that the department has
taken during each fiscal year to implement this division. On or
before December 31 of each year, the commission shall submit the
summary for the preceding fiscal year to the Secretary of the Natural
Resources Agency.
(b) The commission may request the Department of Finance to
conduct audits with regard to the manner in which the funds in the
regional investment accounts and the State Investment Account are
expended.
87102. At least quarterly, the commission shall hold publicly
noticed meetings regarding its duties under this division.
SEC. 2. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.

SECTION 1.
Part 10 (commencing with Section
12996) is added to Division 6 of the Water Code, to read:

PART 10. Water Infrastructure Project Fees


12996. It is the intent of the Legislature to enact legislation
to develop a fee-based system to pay for costs associated with
updating and modernizing water infrastructure projects in the state.
It is the intent of the Legislature that the fees should pay for
noncapital costs that are necessary to meet the coequal goals of
providing a more reliable water supply for the state and protecting,
restoring, and enhancing riverine-based ecosystems.
12997. It is the intent of the Legislature that a fee-based
system developed pursuant to Section 12996 be developed in accordance
with the following policies:
(a) The fees should cover the costs of public benefits of water
infrastructure projects, including the public share of surface and
subsurface water projects, habitat and water necessary for restoring
native flora and fauna that are at risk as a result of existing and
future water infrastructure projects, and water conservation programs
for agricultural, municipal, and industrial users.
(b) The fees should not cover the costs of projects that public or
private entities are required to fund under existing law, including,
but not limited to, any isolated water facility that conveys water
through or around the Sacramento-San Joaquin Delta.
(c) The fees should not be imposed in a manner that would
constitute a tax subject to Section 3 of Article XIII A of the
California Constitution.