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<br />III. Changes Needed In The Program Authorized By Act (SB 1030) <br /> <br />Protection/Predictability For Bank Users <br /> <br />* The Legislature should consider amending the Water Code to clarify and <br />lessen liability concerns of water sellers about long-tenn obligations resulting <br />from short-term transfers. Currently, sellers may be reluctant to enter into <br />such agreements because of the belief that they will be required to always <br />provide the water service, even if they, the seller, later need the water to <br />meet their own needs after the contract has expired. This could be <br />accomplished by adding a new section on water marketing to the Water <br />Code which requires, following the expiration of a contract for water sales or <br />the temporary transfer of a water right, that the purchaser would hold no <br />continued rights to a water supply under the contract or, in the case of a <br />temporary transfer, that the right would automatically revert, without <br />stipulations, to the original holder or seller of the right without any action by <br />the TNRCC, similar to Section 1731 of the Califomia Water Code'3. Such a <br />provision should necessarily require that certain steps be taken by the <br />purchaser, such as evaluating the costs of obtaining another supply or <br />renegotiating the expiring agreement, by a time certain, thereby allowing the <br />implementation of rates to provide the required replacement costs for a new <br />water supply by the purchaser. <br /> <br />* The procedures and standards described in the draft TNRCC regulatory <br />guidance document" provide an increased degree of certainty for what will <br />happen to amendments and new pennit applications. However, potential <br />depositors to the bank have previously expressed concerns about the level <br />of certainty regarding the TNRCC standards for decision-making, and as to <br />the amount of water purchasers will actually be authorized by TNRCC to use. <br />These concerns appear to hamper transfers in general, as well as use of the <br />water bank. Areas for which additional certainty may be needed include: <br /> <br />. how environmental flow needs will be determined <br />. how future diversion amounts will be authorized with interruptible <br />supplies included, <br />. the standards that will be used to evaluate interbasin transfer <br />applications, <br />. how possible transfers of nuisance species will be managed, and <br />. the standards that will be used to evaluate the effects of a transfer on <br />other water rights holders. <br /> <br />13 Califomia Water Code: '1731. Following the expiration of the temporary change periOd, <br />all rights shall automatically revert to the original holder of the right without any action by the board.', <br />downloaded 9/94, from the University of California at Santa Cruz, lnfoslug Gopher. <br /> <br />.. The draft regulatory guidance document cited has been revised as of October 4, 1994 <br />according to TNRCC staff (00 cit). It is anticipated that the final report will increase certainty and <br />will be finalized in early 1995. <br /> <br />9 <br />