The LHC report proposes spinning off the State Water Project to its own home, then combining the rest of DWR, the instream flows section of Fish and Game, and the water rights section of the State Board into one new Department of Water Management.
My first thought? But I don’t want to be a beaten, hollow-eyed wretch regulator. I’ve seen it lots. Bureaucrats with regulating authority become broken, twitchy husks defensive. They’ve been yelled at so many times, abused in public meetings and left to twist in the wind unsupported by high-up political appointees that they change. They start to pre-emptively self-censor, muttering caveats and qualifications like pleas to escape a beating. They hedge and cringe before they are challenged, and make bold proposals like ‘consider proposing a study to gather more data’. The poor things have learned fear, because the public actually pays attention to their work, hates them, and tries to undermine them in any political venue it can find. I can only assume the same thing would happen to me if I were back at a regulatory agency (says the pseudonymous blogger), so I’m not sure about working at a (new) DWM with authority over the outside world.
That said, from a less selfish perspective, if DWM is going to take on water rights authority, it should have water quality authority as well. Water rights and water quality are inextricably linked. The volume of water determines pollutant loads, both concentrations and temperature. The State and Regional Boards are putting a lot of effort into managing salts right now; moving water IS moving salts, so that goes straight back to permission to move water. The famous State Board decisions about water quality standards in the Delta are also flow decisions about how much water is required to push the salt concentrations westward. If Water Rights were to come over to (the proposed, new) DWM, I think it would rapidly become conspicuous that they still need to do their work hand in hand with Water Quality. Further, an emailer pointed out that the Regional Boards actually write Basin Plans, and Basin Plans should be tied into Integrated Regional Water Management Plans, shouldn’t they?
Frankly, I think that if we’re moving the project out of DWR, and combining the rest with the Water Rights, we should combine the rest of the State Board as well. Except maybe their weirdo appointed board/administrative court level, which is bizarre and does unpredictable things. I could do without that. I am all about picking up a group from Fish and Game, since everyone knows that Fish and Game staff are largely cooler than the rest of us. Maybe they could wear their uniforms around the office. I’m just saying.
On the public record 
Right on in your third paragraph! Water rights are inextricably linked with water quality….two examples (besides your delta example) come to mind immediately…
1) When the waste water resulting from exercising the rights cannot be practicably treated to maintain the quality of the waters (paying attention to both surface and groundwater impacts).
2) When water is exported from a basin without taking its historic salt load with it, or thought of another way, the remaining water is not sufficient to move its salt load to the ocean (or other sink).
Not saying anyones rights should be overridden…just that with rights come the responsibilities to not affect, or at least mitigate the effects on, others rights….or, in this context, their quality.
Comic water strategy.