At the June 24th meeting of Metropolitan’s Special Committee on the Bay Delta, committee members heard a presentation on the draft implementing agreement. In the presentation, Adam Kaer, Senior Deputy General Counsel for Metropolitan Water District, discussed what the Implementation Agreement is, as well as what the specific provisions are regarding regulatory assurances, funding, provisions regarding the decision tree, adaptive management, real time ops, and governance and decision making.
(Note: This is the second of two-part coverage from the meeting. The first part covered the seismic engineering aspects of the BDCP’s twin tunnels and is available here: Seismic design & performance considerations for the Bay Delta Conservation Plan’s twin tunnels )
Normally, an implementing agreement for a habitat conservation plan is a rather run-of-the-mill event, began Mr. Kear. “In this case, given the complicated and very ambitious nature of BDCP, the public draft release of a draft implementing agreement which occurred at the end of May is a big deal and a significant step, so we wanted to take some time explain what the implementing agreement is all about, and also to point out some of the key terms in the document.”
An implementing agreement is a legal document that describes the roles and responsibilities of the parties, he said. “It establishes the commitments of the parties, particularly with respect to funding, governance, and regulatory assurances. It also summarizes the plan in agreement form, so in that sense, it’s a vehicle that allows us to resolve any ambiguities in the plan and to clarify terms.”
The Bay Delta Conservation Plan is a Natural Communities Conservation Plan (NCCP) under state law, and it’s a requirement that the plan have an implementing agreement; it is often required for conservation plans under the federal Endangered Species Act as well, and particularly for large plans with multiple parties, he said.
Mr. Kear explained that the parties in the implementing agreement are divided into two basic groups: the permitting agencies (the US Fish and Wildlife Service, the National Marine Fisheries Service, and the California Department of Fish and Wildlife) and the authorized entities that are receiving the actual permits (DWR and the state and federal contractors). He noted that the Bureau of Reclamation is not a party to the implementing agreement because it cannot receive a section 10 permit under the federal Endangered Species Act; it’s also not subject to state law, so although it has a significant role, it’s not part of the implementing agreement.
“The agreement itself fairly routine, but it was a long time in coming and that’s because it does embody a number of very significant policy issues that had to be resolved,” he said. “We started developing an implementing agreement to try and get the ball rolling before 2012. We finally started having negotiations through the state in 2012. The state then began discussing with the federal parties late 2013, then 2014. Finally all three major groups of the parties got together to try and hammer this out, first amongst just the attorneys, but there were so many policy issues that had to be resolved, we didn’t really get to the public draft until the principals got together later in the spring and hammered out some of the more sticky details.”
He said he would not go through all of the provisions of the agreement, but would instead point out the provisions of particular significance: regulatory assurances, funding, provisions regarding the decision tree, adaptive management, real time ops, and governance and decision making.
Regulatory assurances
He began by giving some background information. Under state and federal law, there are basically two different approaches for permitting:
- a species by species approach, which is the existing approach in the Bay Delta and is permitted for federal actions under section 7 of the federal ESA, and a 2081 under the state ESA; and
- a Habitat Conservation Plan, a habitat-based approach, which is what BDCP plan is, and is permitted under Section 10 of the federal ESA and under California law as section 2835 under the NCCP.
There are many benefits with a habitat based approach, Mr. Kear explained. “You can cover much larger geographic areas, and you can cover non-listed species, meaning if you include a species not currently listed in the plan, once it does become listed, you’re basically automatically covered. Most importantly, you get long-term assurances with a habitat approach that you don’t get with the species based approaches, and it’s a one of the fundamental reasons we’re embarking on the BDCP.”
Under federal law, the assurances come out of the “no surprises rule,” he said. “What it says in shorthand is that as long as the plan is being fully implemented, the permittees – those responsible for the permit – will not be asked to contribute anything additional in terms of land, water, or resources for the life of the permit, and there is a similar corollary under the state NCCP law.”
“I do want to point out that every rule has its exceptions, and under the exception here with the no surprises rule is the federal permit revocation rule,” he said. “It means that if the species is heading towards jeopardy and there’s no way of avoiding jeopardy, the federal agencies can pull the permit, or the permittees can voluntarily agree to contribute more, but they’re not required to. So that’s the key.
Normally, this would be straightforward in a typical habitat conservation plan, but with multiple parties and governments responsible for implementation of the plan, the agreements spells out who is responsible for what, he explained. “The implementing agreement now separates the obligations of the authorized entities – the contractors, DWR, from the broader obligations of the CA and US. Now we have a clear line of responsibility between those two parties.”
Since the state and federal governments will fund additional portions of the plan, the implementing agreement provides that if the state or federal governments don’t meet their funding obligations, that shortfall in state and federal funding will alone not be grounds for revocation of the permits, he said.
“The other issue that’s particularly unique in BDCP is that it’s a hybrid plan,” he said. “I mentioned that Reclamation is not a party because they can’t get assurances under Section 10, and they can’t get a permit under Section 10, so they are going to be getting a permit under section 7, and under the no-surprises rule, there aren’t assurances for section 7 permittees. … [The Implementing Agreement] provides contractual protections to and the CVP contractors ‘no surprises-like assurances.’ It’s not absolute – the provisions provide that to the extent that the federal fish agencies can provide assurances, they will, but if law or regulation trump, then that’s how contractual assurances is somewhat tempered.”
Funding
In regards to funding, there are separate obligations between the authorized entities on one hand and the state and federal government on the other, and additionally, what’s the maximum exposure for those two different groups, he said. “Under the terms of the implementing agreement, the separation of the authorized entities from the state of California so you have clear lines of obligations, and then with respect to the authorized entities, the obligations are capped at the cost for completing conveyance, that’s conservation measure 1, plus a set amount for the remainder of the plan, conservation measure 2 through 22 and that set amount right now is estimated at $903 million.”
“Everything and anything in addition to that to implement the plan then becomes the responsibility of the state and the federal government,” he said.
Decision tree
There is some uncertainty, particularly with respect to the federal fish agencies, on the need for additional spring outflow to support the smelt species, both in terms of spring outflow and fall outflow, he said. “There are two triggers on each, giving four possible outcomes with respect to outflow requirements, which is, on an average annual basis, a difference in potential outflow of 800,000 acre-feet per year.”
He explained that there was some debate about whether the decision tree applies only to the smelt species or if it applied to salmonids. “The implementation agreement clarifies that the decision tree will only be with respect to outflow criteria and only with respect to the needs for Delta and longfin smelt. It clarifies that all of those decision tree outcomes can be permitted – there was some issue about only being able to permit the high outflow, which means potentially the lower export outcome. It also clarifies now that additional outflow can be met through both project operations or by other means, meaning that to the extent that we could provide additional outflow by acquiring water or transferring water, then we can do that rather than sacrificing project deliveries to meet outflow.”
Adaptive management
The implementation agreement addresses adaptive management limits, he said. “It’s an important counterpoint to assurances because adaptive management in a habitat conservation plan, particularly a long term plan like this, is saying that as we go forward, we’re going to need to be able to adjust the conservation measures in order to incorporate the latest scientific information to make sure that we’re headed on the right path as we learn more,” he said. “But we need to put boundaries around those adaptive management changes or otherwise our assurances are all for naught, because otherwise the adaptive management in and of itself, could require additional commitments towards conservation measures.”
The implementing agreement clarifies that the adaptive management changes will be guided by scheduled budget and available resources that somewhat sets a cap and a budget around adaptive management changes in order to protect assurances, he said. The agreement also limits adaptive management changes on conveyance to the specified four potential tools: adjusting operations on an inter-annual basis, sharing resources derived from water supply improvements, reallocating resources from less effective measures, or accessing the capped adaptive management fund, he said.
He noted that the implementation agreement specifies that the adaptive management team will include a representative from the State Water Project contractors and a representative from the Central Valley Project contractors.
Real time operations
On a day-to-day basis as particular events occur, the projects could be reoperated to respond to real time events, so the implementation agreement sets forth that the adjustments must be within the bounds that are established in BDCP for operation of conveyance, he said. “It also now is guided by a statement within the implementation agreement that the real time operating program will be guided by an overall purpose of maximizing conservation benefits to covered species as well as maximizing water supplies, so now real time operation is not just for fish purposes but also to try and generate additional water supply.”
Governance and decision making
Mr. Kear explained the governance structure of the BDCP. “In the center, the BDCP Implementation Office is managing the overall program, and it is guided by a stakeholder council and adaptive management team,” he said. “The adaptive management team would be providing recommendations to the implementation office on proposed adaptive management changes, also the real time operations group would also be providing recommendations. The overall governance of the implementation office is by the authorized entity group above, and the final regulatory oversight is by the permit oversight group, which are the fishery agencies.”
“The implementation agreement specifies that the decisions made with respect to adaptive management and real time ops will be by consensus,” he said. “With respect to a failure of consensus for proposed adaptive management changes, that gets elevated to the Authorized Entity Group and Permit Oversight Group. If they then have a further disagreement on adaptive management changes or any disagreement, that goes to a non binding review panel, and finally the decision is made by the entity with the final decision making authority, because it’s a non-binding panel.”
“With respect to a failure of consensus for proposed real-time operations, if the real time operating group cannot come to consensus on a real time operating change, then the change won’t be made,” Mr. Kaer said. “That’s important because that leaves some control to the project operators – DWR, Bureau – not to have to adopt a real time operating change that they disagree with.”
In summary
To summarize, the implementation agreement and its release is a significant step, he said. “A key term or concept within the implementation agreement is the separation of obligations between the authorized entities and the state and federal governments,” he said. “Also, the comment period on this draft is through July 29, coinciding with the BDCP and the EIR/EIS. The final implementation agreement will be signed at the time all of the agreements are signed at the ROD/NOD stage.”
“And with that … “
Discussion highlights
Director Fern Steiner, refers to slide 10, which says that if there’s a shortfall on state and federal funding alone, that that isn’t grounds for suspending or revoking the permits, and asks if it would it be a similar thing if there were a shortfall on the part of the other entities?
“If there is a shortfall on the part of the other entities, then that would be grounds, because remember no surprises or assurances applies as long as we are meeting all of our commitments to the plan,” he said. “If we are not providing the funding, then we’re not meeting our obligations to the plan and then we’re vulnerable.”
Director Steiner refers to $903 million cap for the authorized entities obligations and asks if there has been a determination on the allocation of those costs yet?
“There is not,” replied General Manager Jeff Kightlinger. “That’s the next order of business, and I just want to put a marker on the $903 million. We haven’t negotiated yet the size and the split on the adaptive management fund, but that’s an important piece and we need to do that, and then split between the projects, split between each project user.”
Director Steiner asks if the plan still is a 50/50 split between state and federal water contractors.
“It is, although we’ve been talking,” said Mr. Kightlinger. “That’s kind of code for splitting it based on the amount of water, which is kind of 50/50, but it’s more like 55/45, so but yes … “
Director Linda Ackerman said regarding the no surprise rule, there’s one exception where a permit could be pulled if a species is headed for trouble, and asked does that mean at any point during construction, that could happen?
“I should have been a little clearer,” responded Mr. Kear. “It can be pulled if the species is heading for jeopardy and there’s a determination that continuing the plan is contributing to the species going toward jeopardy. Then, what happens under the permit revocation rule is that first the federal agencies will do everything within their power to take care of the species. It can also during that period ask the permittees if they want to voluntarily contribute more in order to try and recover the species and save the plan. But again, by no surprises, absent that, there’s no requirement on the permittees to contribute more. If the species continues towards jeopardy, towards extinction, then the federal agencies have no choice but to pull the permit.”
Director Keith Lewinger notes that slide 10 talks about that a shortfall in state and federal funding alone is not grounds for losing the permit, but then on slide 9 it says that the take permit has been issued and can’t be removed if its terms and conditions are being fully implemented. “So fast forward, we sign the agreement, and the state and federal government don’t come up with their money. And now the terms and conditions are in jeopardy because we don’t have the full funding to do everything, so what happens?”
“That’s why it was important to have that additional term on slide 10,” responded Mr. Kear. “First off, in that scenario, we are fully meeting our obligations, so it’s only the failure in the state and federal funding, and by this agreement, the fishery agencies have agreed that that failure in state and federal failure in funding alone will not be a basis for revoking the permit. However, that’s not absolute – that’s why it’s not ‘alone’, so what the implementation agreement says is that as long as that failure in funding will not have a significant effect on the ability of the plan to achieve the overall biological goals and objectives, if it just a minimal effect, then the plan is safe.”
Director Lewinger counters: “If the state and federal government aren’t ponying up their money, is it reasonable to expect that’s only going to have a minimal effect on the goals and objectives?”
“It’s going to depend on the extent of the failure in funding and it’s going to depend on what has already been developed and what is left to be funded,” he said. “You’re right, it’s an unknown, but it’s the best way we can try and resolve the issue of meeting the assurances with the problem of such a comprehensive plan and the possibility that the state and federal governments may fail in meeting their obligations at some point in time.”
“This is pretty standard in HCPs and NCCPs,” added Mr. Kighlinger. “Metropolitan is a partner in a number of HCPs … this is pretty standard language about no surprises assurances. This came out in the Clinton years and was authorized by Secretary Babbitt as part of DOI regulatory rule making to encourage HCP planning and to date, there’s not been any HCP where the state or federal governments have not met their obligations, but it’s important to have all the assurances in place.”
For more information …
- For meeting materials and video, click here. This is agenda item 3-C.
- For Adam Kaer’s power point presentation, click here.
- This is the second of two-part coverage from the meeting. The first part covered the seismic engineering aspects of the BDCP’s twin tunnels and is available here: Seismic design & performance considerations for the Bay Delta Conservation Plan’s twin tunnels
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