BILL ANALYSIS AB 153 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 153 (Hernandez and Eng) As Amended August 30, 2010 2/3 vote. Urgency ----------------------------------------------------------------- |ASSEMBLY: | |(May 11, 2009) |SENATE: |28-6 |(August 30, | | | | | | |2010) | ----------------------------------------------------------------- (vote not relevant) Original Committee Reference: TRANS. SUMMARY : Amends the proposed the Safe, Clean, and Reliable Drinking Water Supply Act of 2012 (Water Bond), to expand the eligible uses of the $100 for groundwater cleanup projects (Water Code Section 79770 (d)) so that funds would be available for "costs associated with projects, programs, or activities" rather than being limited to project costs. The Senate amendments delete the Assembly version of this bill, and instead: 1)Change the provisions governing Section 79770 (d) of the Water Bond. It would remove the restriction that the funds be used for projects authorized for funding by that subdivision, and instead allow the funds to be used for costs associated with projects, programs, or activities authorized for funding by that subdivision. 2)Add an urgency clause, allowing this bill to take effective immediately upon enactment. EXISTING LAW : 1)Authorizes, under SB 2 X7 (Cogdill), Chapter 3, Statutes of 2009, an $11 billion general obligation Water Bond to be placed on the general election ballot in November 2010. The Water Bond authorizes expenditures for a variety of water-related purposes. AB 1265 (Caballero), Chapter 126, Statutes of 2010, delays the vote on this proposed Water Bond measure until 2012. 2)States that funds authorized under the proposed Water Bond AB 153 Page 2 measure include $1 billion for groundwater protection, and of the $1 billion for groundwater protection, Section 79770 (d) provides not less than $100 million for groundwater cleanup projects that meet certain criteria. AS PASSED BY THE ASSEMBLY , this bill makes various technical changes that clarify and update the governance of the California High-Speed Rail Authority. FISCAL EFFECT : According to the Senate Appropriations Committee, by amending the proposed Water Bond to allow non-capital costs to be funded, the bill creates cost pressures on the proposed bond funds. By expanding the allowed uses to non-capital costs, the bill may reduce the availability of funds for other capital projects. The extent of this impact will depend on the allocation of funding for non-capital costs and whether there are other eligible capital projects for those bond funds. COMMENTS : This bill was substantially amended in the Senate and the Assembly approved provisions of this bill were deleted. San Gabriel Valley Groundwater Contamination . The Water Bond as approved by the Legislature in 2010 provides that at least $100 million be made available for projects that meet the both of the following criteria: 1) The project is part of a basin wide management and remediation plan for which federal funds have been allocated. 1) The project addresses contamination at a site on the list maintained by the Department of Toxic Substances Control pursuant to Health and Safety Code Section 25356 or a site listed on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Sec. 9601 et seq.). According to the Senate Natural Resources Committee, the only projects that meet the provisions of Section 79770 (d) of the Water Bond are those associated with superfund sites in the San Gabriel Valley, which include multiple areas of contaminated groundwater in the 170-square-mile San Gabriel Valley. The contaminated areas underlie significant portions of the cities AB 153 Page 3 of Alhambra, Arcadia, Azusa, Baldwin Park, Industry, Irwindale, El Monte, La Puente, Monrovia, Rosemead, South El Monte, and West Covina. According to the Federal Environmental Protection Agency (EPA) the groundwater contamination in the San Gabriel Valley was first detected in 1979. Following this discovery, the California Department of Health Services (DHS) initiated a well sampling program to assess the extent of contamination. By 1984, when EPA added four areas of contamination to the National Priorities List (NPL), 59 wells were known to be contaminated with high levels of volatile organic compounds (VOCs). The San Gabriel Basin aquifer is a major source of drinking water for Southern California. Despite the contamination, the Valley's groundwater continues to provide approximately 90% of the drinking water used by San Gabriel Valley businesses and residents. EPA's Superfund projects are assisting in restoring water supplies that have been affected by the contamination. Additional projects have been funded by federal grants, local assessments on water sales, and water rates. The intent of AB 153 is to allow bond funds to be used for ongoing treatment and remediation costs associated with the groundwater clean-up rather than just the costs to construct capital projects Use of Bond Proceeds for on-going program cost. The State General Obligation Bond (GO Bonds) Law provides the standards for GO Bonds (California Government Code Section 16720-16727). Proceeds from the sale of GO bonds shall be used only for costs of construction or acquisition of capital assets. "Capital assets" include: 1)Tangible physical property with an expected useful life of 15 years or more. 2)Major maintenance, reconstruction, demolition for purposes of reconstruction of facilities, and retrofitting work that is ordinarily done no more often than once every five to 15 years. 3)Expenditures that continue or enhance the useful life of the capital asset. AB 153 Page 4 4)Equipment with an expected useful life of two years or more. 5)Costs incidentally, but directly related to, construction or acquisition, including, but not limited to, planning, engineering, construction management, architectural, and other design work, environmental impact reports and assessments, required mitigation expenses, appraisals, legal expenses, site acquisitions, and necessary easements. Despite the requirements of the Government Code, because GO bond measures are approved by a vote of the people, a bond measure itself may override these statutory requirements. Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916) 319-3965 FN: 0006836