BILL ANALYSIS                                                                                                                                                                                                    





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          |                                                                 |
          |         SENATE COMMITTEE ON NATURAL RESOURCES AND WATER         |
          |                   Senator Fran Pavley, Chair                    |
          |                    2009-2010 Regular Session                    |
          |                                                                 |
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          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  
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            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.
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                 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  
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          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,  
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            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  
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               department, the commission shall develop and adopt, by  
               regulation, methods for quantification and management of  
               public benefits described in Section 79743 by December 15,  
                2012   2014  . 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,  2012   2014  , 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  
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               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


























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