Brief (1)
HB 2047 would enact the Kansas Water Banking Act. The bill would allow for the chartering of water banks which would be private not-for-profit corporations leasing water from holders of water rights that have been deposited in the bank. The water banks also shall provide safe deposit accounts for the deposit of unused water from a bankable water right which is placed in the bank for use in future years. A water bank may be a groundwater bank or a surface water bank, or both. Water banks may provide services to facilitate the sale or lease of water rights and would be prohibited from owning, buying, or selling water rights.
The bill would require that before a water bank is authorized to operate in the state, the bank's charter must be approved by the Chief Engineer of the Division of Water Resources. One of the features of the provisions relating to the charter of a water bank is that the operations of the bank will result in a savings of 10 percent or more in the total amount of groundwater consumed for a representative past period pursuant to water rights deposited in the bank. In addition, before water rights or portions of water rights could be accepted for deposit or deposited in a safe deposit account, the bank, with the assistance of the Division of Water Resources, must determine the water right to be bankable according to provisions of the bill. Another aspect of the bill would require that the charter ensure that the total amount of groundwater leased each year from each hydrologic unit does not exceed 90 percent of the historic average annual amount collectively diverted pursuant to all deposited water rights or portions of water rights from the unit for a representative past period. Water banks would be chartered for a period of not more than seven years at which time the bank would be subject to a review by an evaluation team described below. The governing body of a water bank would have at least five members who are reasonably representative of public and private interests in water within the bank boundary. The charter of the bank would need to provide a procedure for the dissolution of the bank, indicating how the remaining deposits and safe deposit accounts will be distributed.
The bill would provide that prior to July 1, 2002, there would be one groundwater bank chartered. After July 1, 2002, there may be another bank chartered that would have surface water as a component of the bank charter.
Water banks would contract with holders of water rights for deposit in the bank of all or a portion of any water right from a hydrologic unit within the bank boundary. A "bank boundary" would mean the geographic area where a water bank operates and conducts the function of a water bank and may encompass more than one hydrologic unit. A "hydrologic unit" would be defined to mean a defined area where water rights authorizing diversion of water from a source of supply may be deposited and water from the same source of supply may be leased, in accordance with the provisions of this bill, without causing impairment of existing water rights or a significantly different hydrological effect to other users of water from the same source or hydraulically connected sources of supply. Water rights must be deposited for a period of not more than five years; be subject to terms and conditions provided by contract; and be subject to terms and conditions imposed by the Chief Engineer.
When a water right, or a portion of a water right, has been deposited in the bank, water from that water right may be leased for use if it will be used within the bank boundary and in the same hydrologic unit from which the water right authorizing diversion of the water is deposited. Leased water would be subject to all provisions of the Kansas Water Appropriations Act, including all requirements relating to term permits. A water bank's decision of whether or not to lease water could not be based on the proposed use of the water.
With respect to safe deposit accounts in water banks, a holder of a water right may place unused water from the right for future withdrawal. The bill would limit the water to be deposited in the savings account to water that was unused in the immediate past calendar year. Only water from one water right would be placed in a safe deposit account and water from a water right could not be placed in more than one safe deposit account, except that water from linked water rights may be placed in a single safe deposit account. The bill would require that each calendar year that the water remains in a safe deposit account, the amount of water held in the account would decrease by a percentage established by the charter of the bank but in no case less than 10 percent annually of all amounts deposited. The bill would allow depositors of water in water safe deposit accounts to withdraw water subject to the provisions of the Kansas Water Appropriation Act, including but not limited to all requirements relating to term permits and other conditions outlined in the bill. The operation of safe deposit accounts could not result in an increase in the amount of net consumptive use of water in any hydrologic unit, computed on a long-term rolling average compared to a representative past period.
The bill would require on or before February 10 of each year a water bank to submit to the Chief Engineer a report containing various information outlined in the bill. The information to be contained in the report would be used to determine whether the conservation requirements of the bill were being reached. The Chief Engineer may require owners of water rights deposited in a water bank, owners of water rights that have placed water in safety deposit accounts, and persons leasing water from a water bank to file water use reports at a date earlier than March of each year.
The bill would authorize the Director of the Kansas Water Office (KWO) to convene a team to evaluate the operation of a water bank not later than five years after the establishment of a water bank. The team would consist of:
The staff of the KWO would provide staff assistance to the evaluation team.
The team would submit a report of its evaluation and recommendation to the Governor, the Kansas Water Office, the Kansas Water Authority, the Secretary of Agriculture, the Chief Engineer and the Senate Committee on Natural Resources and the House Environment Committee. In addition to other information required by the legislation to be contained in the report, it also must include the bank's impact on the entire area of all hydrologic units, any parts of which are encompassed in the bank's boundary.
Unless otherwise provided by law, the bill would permit the Chief Engineer to extend the charter of a water bank for an additional period not to exceed seven years or permit the bank charter to lapse under the terms recommended by the evaluation team.
Under the provisions of the bill, depositing a water right in a water bank or placing water in a safe deposit account in a water bank would constitute due and sufficient cause for failure to use water for a lawful, beneficial use. In addition, the Chief Engineer would be permitted to adopt rules and regulations to administer and enforce the act.
The bill would grant the Chief Engineer the authority to suspend the use of water for failure to comply with the provisions of the bill subject to notice and hearing in accordance with the provisions of the Kansas Administrative Procedure Act. An additional provision of the bill would require water banks to pay all costs incurred by the Division of Water Resources for assistance and services including costs for personnel. Payments received from the water banks would be deposited into the Water Resources Cost Fund, which would be created by the bill, to reimburse costs incurred by the Division of Water Resources.
Background
The concept of this bill was first introduced by the 1999 Special Committee on Environment which considered a variety of water-related issues during the interim. The concept of water banks as a potential water conservation tool was identified in the 1995 State Water Plan. The Water Plan identified the Division of Water Resources (DWR) of the Department of Agriculture as the appropriate agency to initiate work on water banking. As a result DWR formed a task force comprised of various interest groups to initiate work on water banking in 1996. The task force issued its final report in June of 1999, which was the document reviewed by the 1999 Special Committee on Environment. The concepts identified by the task force were incorporated into the legislation introduced in the 2000 Legislative Session.
At the hearing on the bill a spokesperson from the Water Protection Association of Central Kansas appeared and explained that water banking had one of the management strategies that had been considered in order to reduce water in that particular subbasin. Also appearing in support of the bill were representatives of the Kansas Livestock Association and the Kansas Farm Bureau. The Chief Engineer of the Division of Water Resources spoke on behalf of the Secretary of Agriculture. The Chief Engineer expressed support for the bill, but indicated the agency does not have sufficient resources available to make the concept of water banking work as intended. The Chief Engineer also indicated there was a need to ensure that water banking does not result in more water being used than now is the case. The Manager of Big Bend Groundwater Management District also appeared in support of the bill, but expressed concern about certain costs built into the legislation. A spokesperson for the Kansas Water Authority said that the Authority supported the development and implementation of pilot water banks. This conferee also stated that the Authority recommended the removal of the safety deposit account provision, a more comprehensive water right enforcement program to be administered by the Division of Water Resources, and that the evaluation of the pilot bank should be based on the entire hydrologic unit. Written testimony was received from the Lower Republican Water Association.
The Chairperson of the House Environment Committee assigned a subcommittee to work on the bill. The House Committee on Environment amended the bill to make safety deposit accounts optional rather than mandatory, to clarify that the savings of 10 percent or more in the total amount of groundwater consumed should be based on a representative past period, to require that the charter of the bank ensures that the total amount of groundwater leased each year from each hydrologic unit does not exceed 90 percent of the historic average annual amount collectively diverted pursuant to all deposited water rights or portions of water rights from the unit for a representative past period, to permit one groundwater water bank before July 1, 2002 and one bank that contains surface water after July 1, 2002.
The Senate Committee on Natural Resources amended the bill to:
The fiscal note on the original bill states that the Kansas Department of Agriculture indicates passage of HB 2047 would require 3.0 FTE positions and $105,591 from the State General Fund in FY 2002. This estimate includes $53,684 for an Environmental Scientist III position, $24,521 for an Environmental Scientist II position, $12,386 for an Office Assistant III position, and $15,000 for other operating expenditures. Of these 3.0 FTE positions, only the Environmental Scientist III position would be filled at the beginning of the fiscal year. The remaining 2.0 FTE positions would be filled in the middle of the fiscal year. The Department does not anticipate the receipt of reimbursable expenditures from the first established water bank in FY 2002. Any fiscal effect resulting from this bill would be in addition to the recommended expenditures included in The FY 2002 Governor's Budget Report. The Secretary of Agriculture indicated that this fiscal note would be revised to reflect the actions of the House Environment Committee.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi