Delta Levees and Canal Subsidence Fund.

Header updated to reflect passage: 'Passed the Senate August 20, 2026' and 'Passed the Assembly August 19, 2026' added; amendment history dates removed; coauthor list removed; Governor approval line added at the end.

Line numbering removed throughout the statutory text, which is standard formatting for an enrolled bill ready for the Governor's signature.

The digest footer was reduced from 'Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.' to simply 'Appropriation: yes.', which is standard when a bill reaches enrolled status.

Funds for Delta and Suisun Marsh levee improvement projects (Section 12997(c)(2)(A)) are now allocated to the Department of Water Resources instead of the Sacramento-San Joaquin Delta Conservancy. The department now administers grants and funding agreements from the conservancy's recommended project list.

The requirement for the conservancy to prepare an annual spending plan (detailing projects it intends to fund each fiscal year, publish it online, allow 45 days for public comment, hold community meetings, and obtain board approval) has been entirely removed.

The requirement for the conservancy, in conjunction with the Delta Stewardship Council and the department, to prepare a five-year spending plan by December 1, 2027, and biennially thereafter, has been removed.

Project prioritization for Delta/Suisun Marsh levee funds was changed from specific criteria (improving sustainability of local or state water supplies, improving instream, riparian, flood plain, and wetland habitat) to a single standard: consistency with the Delta Levees Investment Strategy.

The list of recommended projects developed by the conservancy's working group must now be consistent with the Delta Levees Investment Strategy (previously this consistency requirement was only in the spending plan section).

Authority to adopt guidelines for implementing Delta/Suisun Marsh levee project funding shifted from the conservancy to the Department of Water Resources, including the ability to impose additional requirements on projects to meet funding source conditions.

New Section 2 amends Water Code Section 12986 to establish a reimbursement program for local agencies maintaining or improving project and nonproject levees. Reimbursement is up to 75% of costs exceeding $2,500 per mile (urban) or $1,000 per mile (rural). A local agency demonstrating economic hardship can receive 100% reimbursement if the project addresses a threat to life, property, water supply, or habitat.

The fixed annual allocation of $150,000,000 each to the Department of Water Resources and the Conservancy, with a sunset through the 2046-47 fiscal year, was removed. Replaced with open-ended allocations subject to funding availability, with no specified dollar cap or end date.

The provision requiring proportional reduction of allocations if there are insufficient moneys in the fund was removed.

At least 15% of funds allocated to the conservancy for Delta or Suisun Marsh levee projects must go to projects recommended by a working group that improve flood risk, protect human health and safety, or protect agricultural interests.

The working group requirement was elevated from an advisory role during spending plan development to a project-listing function. The conservancy must now convene a working group (including local governments, landowners, reclamation districts, tribes, environmental groups, and environmental justice organizations) to develop a list of recommended projects, publish it on its website, allow 45 days for public comment, and hold at least one community meeting before board approval.

The Department of Water Resources is now required to administer any grants or funding agreements from the list of projects recommended by the conservancy's working group.

Fund allocation now must be made 'in proportion to need, as determined by the secretary, and based at least in part on seismic risk assessment,' adding a new criterion beyond the flat $150 million annual allocations to each recipient.

DWR is authorized to charge state water supply contractors for the actual and reasonable cost of developing the five-year spending plan required by the new reporting provision.

The conservancy must prepare a five-year spending plan to improve existing levees in the Delta, in conjunction with the Delta Stewardship Council and DWR, by December 1, 2027, and biennially thereafter, and publish it on its website.

The conservancy must convene a working group to provide recommendations during development of the annual spending plan, including representatives of local governments, landowners, reclamation districts, environmental groups, and environmental justice organizations.

The conservancy's annual spending plan must now consider the Delta Levees Investment Strategy (DLIS).

DWR must provide a report to the Assembly Committee on Budget and Senate Committee on Budget and Fiscal Review no later than May 1, 2027, and biennially thereafter, containing a five-year spending plan detailing engineering and capital improvements for state water conveyance systems impacted by land subsidence. The initial plan covers fiscal years 2027-28 through 2031-32.

Two new definitions added: 'Council' (Delta Stewardship Council, established pursuant to Section 85200) and 'State water supply contractor' (same meaning as used in Section 11975).

Legislative findings now explicitly reference the Delta Stewardship Council and its obligation to develop, adopt, and implement the Delta Plan, broadening the contextual framing of the bill.

The $150 million annual allocation to the conservancy now covers projects in both the Sacramento-San Joaquin Delta AND Suisun Marsh, rather than the Delta alone. A new definition of 'Suisun Marsh' was added referencing Section 29101 of the Public Resources Code.

A new provision allows the conservancy's governing board to establish an advisory committee to support development of the annual spending plan.

A new paragraph clarifies that conservancy-funded projects may include, but are not limited to, projects to address subsidence alongside levees and construction of seepage and stability berms on levees to correct underseepage, through-seepage, or structural instability.

A new annual spending plan requirement mandates that before expending funds for any project, the conservancy must prepare a spending plan detailing projects it intends to fund in that fiscal year. The plan must be approved by the conservancy's governing board, published on the conservancy's website, allow at least 45 days for public comment, and have at least one community meeting held before board approval.

Three new definitions were added: 'Board' (governing board of the conservancy), 'State water conveyance systems' (water conveyance facilities owned or maintained by the Department of Water Resources), and 'Suisun Marsh' (as defined in Section 29101 of the Public Resources Code).

The legislative findings section was expanded to reference the preservation of specified management areas of Suisun Marsh pursuant to a protection plan prepared by the San Francisco Bay Conservation and Development Commission.

Senator Cabaldon and Assembly Member Carrillo were added as coauthors.

The Department of Water Resources may now impose additional requirements on canal subsidence projects to meet any conditions of the funding source (e.g., federal grant stipulations). This is new subdivision (c)(1)(C)(ii) of Section 12997.

The Delta Conservancy may now impose additional requirements on levee improvement projects to meet any conditions of the funding source. This is new subdivision (c)(2)(C)(ii) of Section 12997.

A new reporting requirement (subdivision (f) of Section 12997) mandates that the Secretary of the Natural Resources Agency report to the Legislature no later than January 1, 2032, and by January 1 every five years thereafter, on expenditures from the Delta Levees and Canal Subsidence Fund and the public benefits received from those expenditures.

In Section 1(h) findings, 'date back to the 1800s' was changed to 'date back to the 19th century' for stylistic precision.

Removed the amendment to Section 39719.4 of the Health and Safety Code that would have required $150 million annually to DWR and $150 million annually to the Delta Conservancy as part of the Greenhouse Gas Reduction Fund's statutory allocation priorities beginning in fiscal year 2026-27.

The bill's scope narrowed from amending both the Health and Safety Code (Greenhouse Gas Reduction Fund allocations) and adding a new Water Code provision, to only adding Part 10 to Division 6 of the Water Code. The $300 million in annual allocations now exist only within the new fund structure rather than as a direct statutory carve-out from the Greenhouse Gas Reduction Fund.

The vote requirement was changed from two-thirds majority to simple majority, making it easier for the bill to pass the Senate.

Coauthor list expanded to include Senator Grayson, Senator Stern, Senator Umberg, Assembly Member Macedo, and Assembly Member Blanca Rubio, with Assembly Member Ransom designated as principal coauthor.

The amendment to Water Code Section 6203, which made a nonsubstantive change to dam and reservoir approval requirements, was removed entirely from the bill.

Coauthors were added: Senators Archuleta, Cortese, Hurtado, Ochoa Bogh, and Richardson; Assembly Members Harabedian and Wallis.

A new Delta Levees and Canal Subsidence Fund is established in the State Treasury (Water Code Sections 12996-12997). The fund may accept state moneys (General Fund, special funds, Greenhouse Gas Reduction Fund, bond funds) and nonstate moneys (federal and private). Nonstate funds are continuously appropriated without regard to fiscal year.

The new fund allocates $150 million annually through the 2046-47 fiscal year, subject to funding availability, to the Department of Water Resources for capital improvements to restore original design water conveyance capacity for state water conveyance systems impacted by land subsidence.

The new fund allocates $150 million annually through the 2046-47 fiscal year, subject to funding availability, to the Sacramento-San Joaquin Delta Conservancy for projects to improve existing levees, including multibenefit levee projects that protect, enhance, or restore habitat and improve water quality.

The bill's appropriation designation changed from 'no' to 'yes' and fiscal committee designation changed from 'no' to 'yes,' reflecting that the new fund structure makes a continuous appropriation.

Both the Department of Water Resources and the Delta Conservancy are authorized to adopt implementation guidelines exempt from the Administrative Procedure Act, but must provide public comment opportunity and at least one public workshop before adopting or revising those guidelines.

If there are insufficient moneys in the fund to fully provide for the allocations, amounts shall be proportionally reduced as determined by the Secretary of the Natural Resources Agency.

The bill now amends Section 39719.4 of the Health and Safety Code (Greenhouse Gas Reduction Fund) in addition to the original Water Code amendment, expanding its scope from a single nonsubstantive fix to a major climate funding measure.

Adds $150,000,000 per year to the Department of Water Resources for capital improvements to restore original design water conveyance capacity for state water conveyance systems impacted by land subsidence, from 2026-27 through 2046-47.

Adds $150,000,000 per year to the Sacramento-San Joaquin Delta Conservancy for projects to improve existing levees in the Delta, including multibenefit levee projects that protect habitat and improve water quality, from 2026-27 through 2046-47.

Prohibits the new funds from being used for design, construction, operation, mitigation, or maintenance of any additional Sacramento-San Joaquin Delta conveyance facilities; those costs must be borne by the water agencies that benefit.

Adds a legislative findings section (Section 1) documenting climate change impacts on California water systems, land subsidence threatening to reduce State Water Project capacity by 87 percent by 2040, energy consumption concerns, and Delta levee vulnerabilities.

The vote requirement changes from simple majority to two-thirds majority, and the appropriation designation changes from 'no' to 'yes.'

The original nonsubstantive Water Code amendment (changing 'Such Any other appropriate information' to 'Any other appropriate information') is retained but renumbered as Section 2.