BILL NUMBER: AB 1823 AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 16, 2002 AMENDED IN ASSEMBLY MARCH 19, 2002 INTRODUCED BY Assembly Members Papan and Simitian (Coauthor: AssemblyMemberMembers Alquist, Cohn, Corbett, Diaz, and Dutra) (Coauthor: Senator Sher) JANUARY 18, 2002 An act to add Division 20.5 (commencing with Section 73500) to the Water Code, relating to regional water systems. LEGISLATIVE COUNSEL'S DIGEST AB 1823, as amended, Papan. Regional water systems. (1) Under existing law, the City and County of San Francisco (city) operates the Hetch Hetchy Project as a regional water delivery system, supplying water to persons and entities in the city and the Counties of Alameda, San Mateo, and Santa Clara. This bill would enact the Wholesale Regional Water System Security and Reliability Act, which would impose various requirements on wholesale regional water systems, as defined, thereby imposing a state-mandated program. The bill would require the city, by February 1, 2003, to adopt a capital improvement program. The bill would require the city, in consultation with other entities, to adopt an emergency response plan by September 1, 2003. The bill would require a regional wholesale water supplier, as defined, to distribute available water during any interruption to all customers on an equitable basis. The bill would require the city to operate reservoirs in the Counties of Tuolumne and Stanislaus in a manner that assigns first priority to water delivery. The bill would require a regional wholesale water supplier, when shortage conditions exist, to make available the facilities of the regional water system for the conveyance of supplemental water. The bill would require the State Department of Health Services to conduct an audit relating to the bay area regional water system and an audit of other regional water systems. If the city and the bay area wholesale customers that are public agencies form a special district with authority to own, operate, and manage the bay area regional water system, the bill would impose the requirements of the act on that district instead of the city. The bill would require the State Department of Health Services to ensure that the bay area regional water system is operated in compliance with the California Safe Drinking Water Act, certain federal guidelines, and the act. The bill would require the city to prepare various reports in connection with its operation of the bay area regional water system. The new requirements established by the bill for the city would impose a state-mandated local program. The bill would require a regional wholesale water supplier to reimburse the State Department of Health Services and the department for costs incurred in connection with implementing the requirements imposed by the act. The bill would require the bay area wholesale customers to reimburse the city for their share of costs. The bill would require wholesale customers of other regional wholesale water suppliers to be responsible for reimbursing the regional wholesale water supplier for the proportional share of costs through the imposition of water charges. (2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature hereby finds and declares as follows: (a) The City and County of San Francisco has acquired or constructed a system of reservoirs, pipelines and tunnels, and treatment plants that provides water to 2.4 million Californians who live in San Francisco and in neighboring communities in the Counties of Alameda, San Mateo, and Santa Clara. (b) Over two-thirds of the Californians who rely on San Francisco' s regional water system, approximately 1.6 million persons, live outside San Francisco. A substantial majority of industrial, commercial, institutional, and governmental users are also located outside San Francisco. (c) The reliability of this water infrastructure system is of vital importance to the health, welfare, safety, and economy of the region that it supplies. (d) In turn, this region is of vital importance to the entire State of California, because of the resident industries, universities, and commercial enterprises that employ millions of Californians and generate billions of dollars in exports and tax revenues to the state. (e) The regional water system is old, and designed to outdated seismic safety standards. The system either crosses, is located on, or is adjacent to, three major active earthquake faults, including the Calaveras fault, the San Andreas fault and the Hayward fault. Engineering investigations have disclosed that the system is at risk of catastrophic failure in a major earthquake. Many areas in all four counties served by the system face interruptions in their supplies of potable water for up to 30 days, and some areas could be without water for as long as 60 days. (f) Interruptions in water supply of this magnitude and duration to a densely populated metropolitan region would be disastrous for public health and safety and for the regional and state economy. In addition, uncontrolled releases of water from pipelines, tunnels, and reservoirs could create severe flood damage and environmental harm to fish and wildlife habitat in the communities in which water facilities are located. (g) The City and County of San Francisco is not subject to oversight by the Public Utilities Commission in the operation of its water system. The substantial majority of Californians who rely on the system live outside the corporate limits of San Francisco and do not have the right to vote for the elected officials of San Francisco who manage, directly or by appointment, the regional water system. (h) There are other aspects of the operation of the regional water system that unfairly disadvantage legitimate interests of Californians in neighboring counties. These neighboring counties face exposure to severe water shortages due to drought and are not assured of the delivery of water that meets federal and state drinking water standards. These uncertainties and risks discourage industry from investing in the neighboring counties because access to a reliable supply of potable, fairly priced water is an important element in plant location decisions. (i) The state has concerns for the safety, health, and the economic strength of the region that warrant requiring San Francisco to take prudent steps in a timely manner to safeguard all Californians who live in the areas dependent on San Francisco's regional water system and to exercise stewardship over the system in a way that recognizes its regional nature and statewide importance. (j) The state has similar concerns with any other regional water system that is owned and operated by a local governmental agency that is not subject to the jurisdiction of the state Public Utilities Commission and that furnishes water on a wholesale basis to substantial geographic areas outside its boundaries, the residents of which are not entitled to vote for the local elected officials who control the regional water system. Specific provisions of Division 20.5 (commencing with Section 73500) of the Water Code, as added by this act, are intended to apply to any other regional wholesale water supplier that provides water to wholesale customers serving, in the aggregate, 1.5 million or more persons who are not residents of the regional wholesale water supplier. SEC. 2. Division 20.5 (commencing with Section 73500) is added to the Water Code, to read: DIVISION 20.5. WHOLESALE REGIONAL WATER SYSTEM SECURITY AND RELIABILITY ACT 73500. This division shall be known as and may be cited as the Wholesale Regional Water System Security and Reliability Act. 73501. (a) Unless the context otherwise requires, the definitions set forth in this section govern the construction of this division. (b) "Association" means the San Francisco Bay Area Water Users Association. (c) "Bay area regional water system" means the facilities for the storage, treatment, and transmission of water located in the Counties of Tuolumne, Stanislaus, San Joaquin, Alameda, Santa Clara, and San Mateo, together with three terminal reservoirs in the city. (d) "Bay area wholesale customers" means the 26 public agencies in the Counties of San Mateo, Alameda, and Santa Clara that purchase water from the city pursuant to the master water sales contract, including the Alameda County Water District, the City of Brisbane, the City of Burlingame, the Coastside County Water District, the City of Daly City, the City of East Palo Alto, the Estero Municipal Improvement District, Guadalupe Valley Municipal Improvement District, City of Hayward, the Town of Hillsborough, the Los Trancos County Water District, the City of Menlo Park, the Mid-Peninsula Water District, the City of Millbrae, the City of Milpitas, the City of Mountain View, the North Coast County Water District, the City of Palo Alto, the Purissima Hills Water District, the City of Redwood City, the City of San Bruno, the City of San Jose, the City of Santa Clara, the Skyline County Water District, the City of Sunnyvale, and the Westborough Water District, Stanford University, the California Water Service Company, and the Cordilleras Mutual Water Association. (e) "City" means the City and County of San Francisco. (f) "Master water sales contract" means the agreement entitled "Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers" entered into in 1984 by the city and the wholesale customers. (g) "Regional water system" means facilities for the storage, treatment, and transmission of water owned and operated by a regional wholesale water supplier, other than the city. (h) "Regional wholesale water supplier" means any city, county, or city and county, including the city, that operates a regional water system, and furnishes water on a wholesale basis to local government agencies and public utilities that, in turn, supply water to a combined population of 1.5 million or more residents of geographic areas outside the boundary of the regional wholesale water supplier. (i) "Wholesale customers" means local government agencies and public utilities, including, but not limited to, the bay area wholesale customers, that purchase water from a regional wholesale water supplier and distribute that water to retail customers in their respective service areas. 73502. (a) The city, on or before February 1, 2003, shall adopt the program of capital improvement projects designed to restore and improve the regional water system that are described in the capital improvement program report prepared by the San Francisco Public Utilities Commission dated August 2001. A copy of the program shall be submitted, on or before March 1, 2003, to the State Department of Health Services. The program shall include a schedule for the completion of design and award of contract, and commencement and completion of construction of each described project. The schedule shall require that projects representing 50 percent of the total program cost be completed on or before 2010 and that projects representing 100 percent of the total program cost be completed on or before 2015. The program shall also contain a financing plan. The city shall review the program every three years and update it as necessary, except that the percentage completion requirements set forth in this section may not be modified. (b) The plan shall require completion of the following projects by the following dates: Project Location Completion Date 1. Irvington Tunnel Alternative Alameda/Santa May 2007 Clara Counties 2. Crystal Springs Pump Station San Mateo County April 2011 & Pipeline 3. BDPL 1&2-Repair of Caissons/ Alameda/San Mateo December 2006 Pipe Bridge Mateo Counties 4. BDPL Pipeline Upgrades at Alameda County November 2007 Hayward Fault 5. Calaveras Fault Crossing Alameda County June 2009 Upgrade 6. Crystal Springs Bypass San Mateo County February 2008 Pipeline 7. BDPL Cross Connections 3&4 Alameda/Santa October 2004 Clara Counties 8. Conveyance Capacity West of Alameda/Santa Clara/ October 2008 Irvington Tunnel San Mateo Counties 9. Calaveras Dam Seismic Alameda County July 2007 Improvements (c) The city shall submit a report to the Legislature and the State Department of Health Services, on or before February 1 of each year, showing the progress made on each of the projects included in the program during the previous calendar year. (d) The city shall adhere to the schedule set forth in the plan. 73503. (a) The city, in consultation with the association and the offices of emergency services in Alameda County, Santa Clara County, and San Mateo County, shall prepare an emergency response plan describing how water service will be restored to the area served by the regional water system after an interruption caused by earthquake or other natural or manmade catastrophe. A draft of the plan shall be submitted to the Office of Emergency Services on or before July 1, 2003, for comment and shall be adopted by the city on or before September 1, 2003, and thereafter shall be implemented. (b) During any interruption in supply caused by earthquake, or other natural or manmade catastrophe, a regional wholesale water supplier shall distribute all available water to all customers on an equitable basis, without preference or discrimination based on a customer's geographic location within or outside the boundary of the regional wholesale water supplier. 73504. (a) Commencing in 2003, a regional wholesale water supplier shall submit a report to the Legislature and the State Department of Health Services, on or before February 1 of each year, describing the progress made during the previous calendar year on securing supplemental sources of water to augment existing supplies during dry years. (b) In order to assist in improving the bay area regional water system's reliability, the city shall operate the reservoirs located in the Counties of Tuolumne and Stanislaus in a manner that assigns first priority to water delivery, and second priority to the generation of hydroelectric energy. On or before February 1, 2004, the city shall submit its plan of operations ("rule curve") to the State Department of Health Services. The State Department of Health Services shall review the plan of operations, consult with the department and the association, and may order any changes it considers necessary or appropriate to implement this division. The city shall comply with the State Department of Health Services' orders , unless the Secretary of the Interior, in writing, notifies the city that doing so would violate the Raker Act (63 P.L. 41) . (c) During any period when shortage conditions exist, or would exist in absence of a transfer, a regional wholesale water supplier shall make regional water system facilities available to convey water secured by a joint powers authority of wholesale customers, a special district formed by wholesale customers, or one or more wholesale customers for use by one or more wholesale customers. 73505. The State Department of Health Services shall conduct an audit, or arrange for an audit to be performed by contract, of the city's program of maintenance of the bay area regional water system during 2003 and during each odd-numbered year thereafter through 2009. The audit shall include both of the following: (a) A review of the adequacy of the city's procedures and resources for all of the following: (1) Identifying needed maintenance. (2) Planning, budgeting, scheduling, and completing maintenance. (3) Recordkeeping of maintenance activities. (b) A field investigation of the major facilities of the bay area regional water system to determine the general condition of those facilities and the adequacy of existing maintenance efforts. The State Department of Health Services shall submit a report to the Legislature on its findings and recommendations based on the initial audit on or before February 1, 2004, and on or before February 1 of each even-numbered year thereafter through 2010. 73506. The State Department of Health Services shall conduct an audit of the regional water systems operated by all regional wholesale water suppliers, other than the city, subject to this division and shall submit to the Legislature a report thereon on or before February 1, 2006. 73507. The cost allocation methodology established by the master water sales contract shall remain in effect unless and until the city and the bay area wholesale customers amend that contract or enter into a successor contract. 73508. If the city and the bay area wholesale customers that are public agencies form a special district with authority and responsibility to own, operate, and manage the bay area regional water system and whose governing board's composition reflects the proportionate use of water delivered by the bay area regional water system within the city and within the aggregate geographic area served by the bay area wholesale customers, the obligations imposed on the city by this division shall be applicable to that district. The city shall be relieved of all obligations under this division at the time the ownership and control of the bay area regional water system are transferred to that district. 73509. This division may be enforced by any wholesale customer. 73510. Notwithstanding Section 116500 of the Health and Safety Code, the State Department of Health Services shall ensure that the bay area regional water system is operated in compliance with the California Safe Drinking Water Act (Chapter 4 (commencing with Section 116275) of Part 12 of Division 104 of the Health and Safety Code), the guidelines established by the United States Environmental Protection Agency for the purposes of administering the comparable provisions of the federal Safe Drinking Water Act (42 U.S.C. Sec. 300f et seq.), and this division. 73511. A special district composed of some or all of the bay area wholesale customers may receive state funds for the purpose of protecting the bay area regional water system against seismic risk, without regard to whether the city is a member of that district. 73512. A regional wholesale water supplier shall reimburse the state for all costs incurred by the State Department of Health Services or the department in carrying out the duties imposed by this division. The bay area wholesale customers shall reimburse the city for their share of those costs as provided in the master water sales contract. The wholesale customers of regional wholesale water suppliers other than the city are responsible for reimbursing the regional wholesale water supplier for their proportionate share of those costs, through the imposition of water charges. 73513. Nothing in this division affects the rights and obligations of the city, the Modesto Irrigation District, or the Turlock Irrigation District, as between themselves, whether arising from statute or contract. SEC. 3. The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.