BILL ANALYSIS ----------------------------------------------------------------- | | | SENATE COMMITTEE ON NATURAL RESOURCES AND WATER | | Senator Fran Pavley, Chair | | 2009-2010 Regular Session | | | ----------------------------------------------------------------- BILL NO: AB 1265 HEARING DATE: August 9, 2010 AUTHOR: Caballero URGENCY: Yes VERSION: August 5, 2010 CONSULTANT: Dennis O'Connor DUAL REFERRAL: No FISCAL: Yes SUBJECT: Safe, Clean, and Reliable Drinking Water Supply Act of 2012 BACKGROUND AND EXISTING LAW 1.A part of the water package passed in the 2009/10 7th Extraordinary Session was SBX7 2 (Cogdill). That bill enacted the Safe, Clean, and Reliable Drinking Water Supply Act of 2010, which, if approved by the voters in November 2010, would authorize $11.14 billion in general obligation bonds to fund various water resources programs and project. The funding by chapter is as follows: $455 M Chapter 5. Drought Relief $1,050 Chapter 6.Water Supply Reliability $2,250 Chapter 7.Delta Sustainability $3,000 Chapter 8.Statewide Water System Operational Improvement $1,785 Chapter 9.Conservation And Watershed Protection $1,000 Chapter 10.Groundwater Protection And Water Quality $1,250 Chapter 11.Water Recycling Program $11,140 M Total 2.Chapter 8 would continuously appropriate $3.0 B to the California Water Commission for surface and groundwater storage projects. Chapter 8 specified, among other things, that funds allocated for construction of surface storage projects identified in the CALFED Bay-Delta Record of Decision may be provided for those purposes to local joint powers authorities formed by irrigation districts and other local water districts and local governments within the applicable 1 hydrologic region to design, acquire, and construct those projects. 3.Chapter 8 further specifies that the joint powers authorities (JPA) could include in their membership governmental and nongovernmental partners that are not located within their respective hydrologic regions in financing the surface storage projects, including, as appropriate, cost share participation or equity participation. Also the Department of Water Resources (DWR) would be an ex-officio member of each joint powers authority subject to this section, but the DWR would be prohibited from controlling the governance, management, or operation of the surface water storage projects. 4.Chapter 8 further requires that the California Water Commission, by December 15, 2012, develop and adopt regulations establishing methods for quantifying and managing public benefits associated with the water storage projects. 5.Chapter 8 prohibits the Water Commission from allocating funds provided by that chapter before by December 15, 2012, unless specific requirements have been met. These include: The Water Commission has adopted the regulations described above in 4. The Water Commission has quantified and made public the cost of the public benefits associated with the project. The Department of Water Resources (DWR) has entered into contracts that ensure the project sponsor(s) will pay its share of the total costs of the project. DWR has entered into contracts with the appropriate public agency(s) to ensure that the public contribution of funds pursuant to this chapter achieves the public benefits identified for the project. Feasibility studies have been completed. All environmental documentation associated with the project has been completed, and all other federal, state, and local approvals, certifications, and agreements required to be completed have been obtained. These provisions do not apply to grants for completing environmental documentation and permitting of a project. 1.Chapter 8 further prohibits the Water Commission from allocating funds provided by that chapter unless, by January 1, 2018, all of the following conditions are met: All feasibility studies are complete and draft environmental documentation is available for public review. 2 The Water Commission makes a finding that the project is feasible, and will advance the long-term objectives of restoring ecological health and improving water management for beneficial uses of the Delta. The director of DWR receives commitments for not less than 75 percent of the nonpublic benefit cost share of the project. PROPOSED LAW This bill would: 1.Amend SBX7 2 to delay the placement of the measure before voters to the November 6, 2012 general election, and would make conforming changes throughout the measure. 2.Change the language in Chapter 8 governing the JPA, to clarify that the JPA could not include in their membership any for-profit corporation, or any mutual water company whose shareholders and members include a for-profit corporation or any other private entity. 3.Declare that the bill is an urgency measure, the facts constituting the necessity being: In order to enable the Secretary of State to make the changes required by this act at the earliest possible date, and to ensure that the Safe, Clean, and Reliable Drinking Water Supply Act of 2012 is submitted to the voters at the November 6, 2012, statewide general election, it is necessary that this act take effect immediately. 4.Delete an incorrect reference to the elections code in the provisions of SBX7 2 governing placing the measure on the ballot. ARGUMENTS IN SUPPORT None Received ARGUMENTS IN OPPOSITION None Received COMMENTS Delays Many, But Not All Dates. While the bill proposes to change the dates governing the title of the measure, when the measure would be placed before the voters, etc, it does not 3 change all of the operative dates established in SBX7 2. Five dates in particular are not proposed to be changed. 1.Area of Origin Provisions. The general provisions of SBX7 2 establish, in 79713(b), that for purposes of this bond measure, an area outside of the Sacramento River hydrologic region or the Delta that receives water exported from the Sacramento River hydrologic region shall not be deemed to be immediately adjacent to or capable of being conveniently supplied with water therefrom if that water is delivered via facilities constructed for that purpose after January 1, 2010. It is not clear whether or not it is necessary or desirable to delay the application of the area of origin provision to 2012. 2.Promulgating Regulations. Chapter 8, in 79744, requires that the Water Commission, by December 15, 2012, develop and adopt regulations establishing methods for quantifying and managing public benefits associated with the water storage projects. That requirement does not become operative until ratified by the voters. If the voters approve the bond in the November 2012 general election, the Water Commission would have at most a matter of days to develop and adopt such regulations, regulations that often take years to develop and adopt. This seems highly unlikely. (See Amendment 1). 3.Early Allocations. Chapter 8, in 79745, prohibits the Water Commission from allocating funds provided by that chapter before by December 15, 2012, unless specific requirements have been met. These requirements include promulgating regulations (see 2. above). After that date, the more general requirements that must be met by January 1, 2018 are the only restrictions on the Water Commission's ability to allocate the funds continuously appropriated to them through Chapter 8. If the voters approve the bond in the November 2012 general election, the restrictions on early allocations would be in place for at most a matter of days. Given that it will take the Water Commission some time to develop the regulations necessary to implement Chapter 8, extending the provisions governing early allocations also seems desirable. (See Amendment 2). 4.Completed Storage Requirements. Chapter 8, in 79747, 4 prohibits the Water Commission from allocating funds provided by that chapter unless, by January 1, 2018, specific requirements have been met. If the voters approve the bond in the November 2012 general election, sponsors of storage projects would have six years to meet all the necessary requirements. It is not clear whether or not it is necessary or desirable to delay the final completion date two years to 2020. 5.Staged Release of Funds. The fiscal provisions of SBX7 2, in 79824, prohibit the Treasurer from selling more than half of the bonds authorized by SBX7 2 before July 1, 2015. It is not clear whether or not it is necessary or desirable to extend the date limiting the sale of bonds. Are These The Only Corrections Needed? The press periodically reports on one group or another asserting that the bond includes too much pork, is tilted too much towards environmental programs, includes too much money for traditional water projects, includes too many carve outs, or is simply too large. It is not clear whether additional amendments to the bond are necessary or desirable to address other perceived deficiencies. Related Bills AB 2775 (Huffman) would change the language in Chapter 8 governing the JPA, to clarify that the JPA could not include in their membership any for-profit corporation, or any mutual water company whose shareholders and members include a for-profit corporation or any other private entity. The relevant language AB1265 is identical to the language in the current (June 29, 2010) version of AB 2775. AB1260 (Fuller) would extend the terms of all the California Water Commissioners to May 15, 2014, and then resume the staggered terms established under current law. SUGGESTED AMENDMENTS AMENDMENT 1: On page 5, following line 4, insert: SEC. 5. Section 79744 of the Water Code, as added by Section 1 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2009, is amended to read: 79744. In consultation with the Department of Fish and Game, the State Water Resources Control Board, and the 5 department, the commission shall develop and adopt, by regulation, methods for quantification and management of public benefits described in Section 79743 by December 15,20122014 . The regulations shall include the priorities and relative environmental value of ecosystem benefits as provided by the Department of Fish and Game and the priorities and relative environmental value of water quality benefits as provided by the State Water Resources Control Board. AMENDMENT 2: On page 5, before line 5, insert: SEC. 6. Section 79745 of the Water Code, as added by Section 1 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2009, is amended to read: 79745. (a) Except as provided in subdivision (c), no funds allocated pursuant to this chapter may be allocated for a project before December 15,20122014 , and until the commission approves the project based on the commission's determination that all of the following have occurred: (1) The commission has adopted the regulations specified in Section 79744 and specifically quantified and made public the cost of the public benefits associated with the project. (2) The department has entered into a contract with each party that will derive benefits, other than public benefits, as defined in Section 79743, from the project that ensures the party will pay its share of the total costs of the project. The benefits available to a party shall be consistent with that party's share of total project costs. (3) The department has entered into a contract with each public agency identified in Section 79744 that administers the public benefits, after that agency makes a finding that the public benefits of the project for which that agency is responsible meet all the requirements of this chapter, to ensure that the public contribution of funds pursuant to this chapter achieves the public benefits identified for the project. (4) The commission has held a public hearing for the purposes of providing an opportunity for the public to review and comment on the information required to be prepared pursuant to this subdivision. (5) All of the following additional conditions are met: (A) Feasibility studies have been completed. (B) The commission has found and determined that the project is feasible, is consistent with all applicable laws and regulations, and will advance the long-term objectives 6 of restoring ecological health and improving water management for beneficial uses of the Delta. (C) All environmental documentation associated with the project has been completed, and all other federal, state, and local approvals, certifications, and agreements required to be completed have been obtained. (b) The commission shall submit to the Legislature its findings for each of the criteria identified in subdivision (a) for a project funded pursuant to this chapter. (c) Notwithstanding subdivision (a), funds may be made available under this chapter for the completion of environmental documentation and permitting of a project. AMENDMENT 3: Revise Section numbers on pages 5 through 8 as appropriate SUPPORT None Received OPPOSITION None Received 7