I'm assuming this is the caterpillar of the Chestnut-marked Pondweed Moth, Parapoynx badiusalis. The little moths are all along the trails around Westwood Lake during July. It's the only moth that I've come across with aquatic caterpillars, though there are definitely others; I'm not sure any can be found around here.
I think many people are surprised to learn that certain moths have aquatic caterpillars. For some reason, on first thought, it doesn't seem like a "natural" fit. But really it's not at all unusual in the insect world for some to almost all of the members of a particular order to have an aquatic component to their life cycle. So why not moths?