BILL ANALYSIS                                                                                                                                                                                                    

           AB 153
                                                                  Page 1

          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  
          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  

             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  

          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)  

          FN: 0006836