BILL NUMBER: AB 1420 CHAPTERED BILL TEXT CHAPTER 628 FILED WITH SECRETARY OF STATE OCTOBER 13, 2007 APPROVED BY GOVERNOR OCTOBER 13, 2007 PASSED THE SENATE SEPTEMBER 11, 2007 PASSED THE ASSEMBLY SEPTEMBER 12, 2007 AMENDED IN SENATE SEPTEMBER 6, 2007 AMENDED IN SENATE AUGUST 31, 2007 AMENDED IN SENATE AUGUST 1, 2007 AMENDED IN SENATE JULY 17, 2007 AMENDED IN SENATE JULY 3, 2007 AMENDED IN SENATE JUNE 19, 2007 AMENDED IN ASSEMBLY APRIL 18, 2007 INTRODUCED BY Assembly Member Laird FEBRUARY 23, 2007 An act to amend Sections 10631.5 and 10644 of, and to add Section 10631.7 to, the Water Code, relating to water. LEGISLATIVE COUNSEL'S DIGEST AB 1420, Laird. Water demand management measures: water management grant or loan funds. (1) Existing law requires an urban water supplier to prepare and adopt an urban water management plan that includes a description of the supplier's water demand management measures that are currently being implemented or scheduled for implementation. Existing law requires the Department of Water Resources to take into consideration whether the urban water supplier is implementing or has scheduled for implementation the water demand management activities that the supplier identified in its urban water management plan in evaluating applications for grants and loans financed by specified bond funds. This bill would delete that provision relating to the evaluation of grant or loan applications financed by those specified bond funds. The bill, instead, would require the terms of, and eligibility for, any water management grant or loan made to an urban water supplier and awarded or administered by the department, the State Water Resources Control Board, or the California Bay-Delta Authority, with certain exceptions, to be conditioned on the implementation of the water demand management measures described in the urban water management plan, as determined by the department. The department would be required to convene an independent panel to provide information and recommendations to the department and the Legislature on new demand management measures, technologies, and approaches. The department would be required to identify in a specified report submitted to the Legislature water demand management measures that achieve water savings significantly above the levels established by the department to meet the requirements discussed above. (2) This bill would incorporate additional changes to Section 10644 of the Water Code proposed by SB 862, to be operative only if this bill and SB 862 are both enacted and become effective on or before January 1, 2008, and this bill is enacted last. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) Increased urban water conservation has the potential to result in significant annual water savings statewide, and therefore can play a fundamental role in promoting sustainable and reliable water supplies statewide. (b) The California Water Plan as updated in 2005 supports water use efficiency as a foundational action to ensure sustainable water uses. SEC. 2. Section 10631.5 of the Water Code is amended to read: 10631.5. (a) (1) Beginning January 1, 2009, the terms of, and eligibility for, a water management grant or loan made to an urban water supplier and awarded or administered by the department, state board, or California Bay-Delta Authority or its successor agency shall be conditioned on the implementation of the water demand management measures described in Section 10631, as determined by the department pursuant to subdivision (b). (2) For the purposes of this section, water management grants and loans include funding for programs and projects for surface water or groundwater storage, recycling, desalination, water conservation, water supply reliability, and water supply augmentation. This funding includes, but is not limited to, funds made available pursuant to Section 75026 of the Public Resources Code. (3) Notwithstanding paragraph (1), the department shall determine that an urban water supplier is eligible for a water management grant or loan even though the supplier is not implementing all of the water demand management measures described in Section 10631, if the urban water supplier has submitted to the department for approval a schedule, financing plan, and budget, to be included in the grant or loan agreement, for implementation of the water demand management measures. The supplier may request grant or loan funds to implement the water demand management measures to the extent the request is consistent with the eligibility requirements applicable to the water management funds. (4) (A) Notwithstanding paragraph (1), the department shall determine that an urban water supplier is eligible for a water management grant or loan even though the supplier is not implementing all of the water demand management measures described in Section 10631, if an urban water supplier submits to the department for approval documentation demonstrating that a water demand management measure is not locally cost effective. If the department determines that the documentation submitted by the urban water supplier fails to demonstrate that a water demand management measure is not locally cost effective, the department shall notify the urban water supplier and the agency administering the grant or loan program within 120 days that the documentation does not satisfy the requirements for an exemption, and include in that notification a detailed statement to support the determination. (B) For purposes of this paragraph, "not locally cost effective" means that the present value of the local benefits of implementing a water demand management measure is less than the present value of the local costs of implementing that measure. (b) (1) The department, in consultation with the state board and the California Bay-Delta Authority or its successor agency, and after soliciting public comment regarding eligibility requirements, shall develop eligibility requirements to implement the requirement of paragraph (1) of subdivision (a). In establishing these eligibility requirements, the department shall do both of the following: (A) Consider the conservation measures described in the Memorandum of Understanding Regarding Urban Water Conservation in California, and alternative conservation approaches that provide equal or greater water savings. (B) Recognize the different legal, technical, fiscal, and practical roles and responsibilities of wholesale water suppliers and retail water suppliers. (2) (A) For the purposes of this section, the department shall determine whether an urban water supplier is implementing all of the water demand management measures described in Section 10631 based on either, or a combination, of the following: (i) Compliance on an individual basis. (ii) Compliance on a regional basis. Regional compliance shall require participation in a regional conservation program consisting of two or more urban water suppliers that achieves the level of conservation or water efficiency savings equivalent to the amount of conservation or savings achieved if each of the participating urban water suppliers implemented the water demand management measures. The urban water supplier administering the regional program shall provide participating urban water suppliers and the department with data to demonstrate that the regional program is consistent with this clause. The department shall review the data to determine whether the urban water suppliers in the regional program are meeting the eligibility requirements. (B) The department may require additional information for any determination pursuant to this section. (3) The department shall not deny eligibility to an urban water supplier in compliance with the requirements of this section that is participating in a multiagency water project, or an integrated regional water management plan, developed pursuant to Section 75026 of the Public Resources Code, solely on the basis that one or more of the agencies participating in the project or plan is not implementing all of the water demand management measures described in Section 10631. (c) In establishing guidelines pursuant to the specific funding authorization for any water management grant or loan program subject to this section, the agency administering the grant or loan program shall include in the guidelines the eligibility requirements developed by the department pursuant to subdivision (b). (d) Upon receipt of a water management grant or loan application by an agency administering a grant and loan program subject to this section, the agency shall request an eligibility determination from the department with respect to the requirements of this section. The department shall respond to the request within 60 days of the request. (e) The urban water supplier may submit to the department copies of its annual reports and other relevant documents to assist the department in determining whether the urban water supplier is implementing or scheduling the implementation of water demand management activities. In addition, for urban water suppliers that are signatories to the Memorandum of Understanding Regarding Urban Water Conservation in California and submit biennial reports to the California Urban Water Conservation Council in accordance with the memorandum, the department may use these reports to assist in tracking the implementation of water demand management measures. SEC. 3. Section 10631.7 is added to the Water Code, to read: 10631.7. The department, in consultation with the California Urban Water Conservation Council, shall convene an independent technical panel to provide information and recommendations to the department and the Legislature on new demand management measures, technologies, and approaches. The panel shall consist of no more than seven members, who shall be selected by the department to reflect a balanced representation of experts. The panel shall have at least one, but no more than two, representatives from each of the following: retail water suppliers, environmental organizations, the business community, wholesale water suppliers, and academia. The panel shall be convened by January 1, 2009, and shall report to the Legislature no later than January 1, 2010, and every five years thereafter. The department shall review the panel report and include in the final report to the Legislature the department's recommendations and comments regarding the panel process and the panel's recommendations. SEC. 4. Section 10644 of the Water Code is amended to read: 10644. (a) An urban water supplier shall submit to the department, the California State Library, and any city or county within which the supplier provides water supplies a copy of its plan no later than 30 days after adoption. Copies of amendments or changes to the plans shall be submitted to the department, the California State Library, and any city or county within which the supplier provides water supplies within 30 days after adoption. (b) The department shall prepare and submit to the Legislature, on or before December 31, in the years ending in six and one, a report summarizing the status of the plans adopted pursuant to this part. The report prepared by the department shall identify the exemplary elements of the individual plans. The department shall provide a copy of the report to each urban water supplier that has submitted its plan to the department. The department shall also prepare reports and provide data for any legislative hearings designed to consider the effectiveness of plans submitted pursuant to this part. (c) (1) For the purpose of identifying the exemplary elements of the individual plans, the department shall identify in the report those water demand management measures adopted and implemented by specific urban water suppliers, and identified pursuant to Section 10631, that achieve water savings significantly above the levels established by the department to meet the requirements of Section 10631.5. (2) The department shall distribute to the panel convened pursuant to Section 10631.7 the results achieved by the implementation of those water demand management measures described in paragraph (1). (3) The department shall make available to the public the standard the department will use to identify exemplary water demand management measures. SEC. 5. Section 10644 of the Water Code is amended to read: 10644. (a) An urban water supplier shall submit to the entities listed in subdivision (b) a copy of its plan no later than 30 days after adoption. Copies of amendments or changes to the plans shall be submitted to the entities listed in subdivision (b) within 30 days after adoption. (b) An urban water supplier shall file a copy of its plan and amendments or changes with each of the following entities: (1) The department. (2) Any city or county within which the urban water supplier provides water supplies. (3) Any groundwater management entity within which the urban water supplier extracts or provides water supplies. (4) Any agricultural water supplier within which district the urban water supplier provides water supplies. (5) Any city or county library within which district the urban water supplier provides water supplies. (6) The California State Library. (7) Any local agency formation commission within which county the urban water supplier provides water supplies. (c) The department shall prepare and submit to the Legislature, on or before December 31, in the years ending in six or one, a report summarizing the status of the plans adopted pursuant to this part. The report prepared by the department shall identify the exemplary elements of the individual plans. The department shall provide a copy of the report to each urban water supplier that has submitted its plan to the department. The department shall also prepare reports and provide data for any legislative hearings designed to consider the effectiveness of plans submitted pursuant to this part. (d) (1) For the purpose of identifying the exemplary elements of the individual plans, the department shall identify in the report those water demand management measures adopted and implemented by specific urban water suppliers, and identified pursuant to Section 10631, that achieve water savings significantly above the levels established by the department to meet the requirements of Section 10631.5. (2) The department shall distribute to the panel convened pursuant to Section 10631.7 the results achieved by the implementation of those water demand management measures described in paragraph (1). (3) The department shall make available to the public the standard the department will use to identify exemplary water demand management measures. SEC. 6. Section 5 of this bill incorporates amendments to Section 10644 of the Water Code proposed by both this bill and SB 862. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2008, (2) each bill amends Section 10644 of the Water Code, and (3) this bill is enacted after SB 862, in which case Section 4 of this bill shall not become operative.