Recycled Water & �Direct Potable Reuse

CALIFORNIA WATER LAW SYMPOSIUM, FEBRUARY 15, 2025

Touchstones for Today’s Talk

• Brief history on California recycled water
• Brief overview of key legal considerations for:
• Recycled Water
• Indirect & Direct Potable Reuse
• Key legal considerations for Governance and Financing of Projects

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California – Recycled Water Pioneer

• 1918: California adopted the first water reuse regulations in the United States - for agricultural use.
• Recycling ongoing for over 100 years for non-potable use or to meet discharge requirements.
• 1960s: Montebello Forebay Ground Water Recharge Project in Los Angeles made history by recharging a drinking water aquifer with purified recycled water. 
• 2014 & 2018: Indirect Potable Reuse (IPR) criteria established for groundwater recharge and surface water reservoirs. 
• 2024: New Direct Potable Reuse (DPR) regulations allow advanced purified water to be added directly into drinking water systems.

Laws Encourage Recycled Water

• Unreasonable Use: Its unreasonable to use potable water for non-potable uses if recycled water is available at a comparable price (Art. X, § 2; Wat. Code § 13551)
• Customers: Water retailers are to identify customers in their service area (Wat. Code § 13579 et seq.)
• Sanitary Districts can offer recycled water without retail supplier’s consent (Health & Safety Code § 6512)
• Water Rights Protected: Using recycled water does not jeopardize water rights (Wat. Code § 13552.4(a)(2))

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Regulatory Regime

• Recycled Water Projects must comply with:
• State Water Resource Control Board’s recycled water & DPR regulations;
• Regional Water Quality Control Board’s permit requirements; &
• California Department of Public Health’s health and safety requirements.
• Direct Portable Reuse regulations require a public water system ultimately be the agency responsible for ensuring regulatory compliance. (22 CCR 64669.00–64669.130.)

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�����Multi-Party Projects: Start with a Solid Governance Plan

• When planning a Recycled Water Project with multiple parties, need to decide on organizational structure early on:
• Cooperative Agreement: Agreements with detailed provisions can provide a framework; limited to their terms and enforcement issues can be costly and unpredictable.
• Joint Powers Authority: Member agencies contract to exercise power common to all members; requires addressing many detailed plans and procedures up front.
• Legislatively Created Independent Agency: Powerful tool ensuring political autonomy; requires the cities and agencies involved be comfortable a change to the current governance structure.

All successful projects have a Champion!

Government Agency Considerations

• Purpose – e.g. recycled water supply
• Powers – e.g. eminent domain
• Appointed v. Elected Board (e.g GMs or Elected Officials)
• Finances – voluntary dues, surcharges, bonds, debt service, how to fund operating budgets
• Voting - single vote v. weighted voting
• Who will be Managing Agency?
• Member compatibility

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Financing Considerations

• Is the project “affordable?”
• How the project financed and how are costs built into the rate structure?
• If project is multi-party, what partner actions needed to finance and build the project?
• What revenue stream applied to repay bonds?
• What is the security for the financing?
• Are there Proposition 218 concerns?

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Proposition 218

• Water, sewer and stormwater fees may be set to the amount required to provide the property-related service; provided:
• fee revenues cannot be used for any other purpose, and
• the amount of the fee or charge imposed cannot exceed the proportional cost of providing the service
• Proposition 218 is subject to ongoing active litigation

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Questions and Resources