BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                  AB 1265|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  AB 1265
          Author:   Caballero (D), et al
          Amended:  8/5/10 in Senate
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT 

           SENATE N.R.& W. COMMITTEE  :  Not available


           SUBJECT :    Safe, Clean, and Reliable Drinking Water Supply  
          Act of 
                      2012:  surface storage projects:  submission to  
          voters

           SOURCE  :     Author


           DIGEST  :    This bill amends SB 2 X7 (Cogdill), Chapter 3,  
          Statutes of 2009-10, Seventh Extraordinary Session, to  
          delay the placement of the measure before voters to the  
          November 6, 2012 general election, and makes conforming  
          changes throughout the measure. 

           ANALYSIS  :    

           Existing Law

           1. A part of the water package passed in the 2009-10  
             Seventh Extraordinary Session was SB 2 X7.  The bill  
             enacted the Safe, Clean, and Reliable Drinking Water  
             Supply Act of 2010, which, if approved by the voters in  
                                                           CONTINUED





                                                               AB 1265
                                                                Page  
          2

             November 2010, authorizes $11.14 billion in general  
             obligation bonds to fund various water resources  
             programs and project.  The funding (in millions) by  
             chapter is as follows:

                 $455   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          Total

          2. Chapter 8 would continuously appropriate $3.0 billion 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  
             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 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  

                                                           CONTINUED





                                                               AB 1265
                                                                Page  
          3

             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:

             A.    The Water Commission has adopted the regulations  
                described above in #4.

             B.    The Water Commission has quantified and made  
                public the cost of the public benefits associated  
                with the project.

             C.    DWR has entered into contracts that ensure the  
                project sponsor(s) will pay its share of the total  
                costs of the project.

             D.    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.

             E.    Feasibility studies have been completed.

             F.    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.

          6. 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: 

             A.    All feasibility studies are complete and draft  
                environmental documentation is available for public  
                review.

                                                           CONTINUED





                                                               AB 1265
                                                                Page  
          4


             B.    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.

             C.    The Director of DWR receives commitments for not  
                less than 75 percent of the nonpublic benefit cost  
                share of the project.

          This bill:

          1. Amends SB 2 X7 to delay the placement of the measure  
             before voters to the November 6, 2012 general election,  
             and make conforming changes throughout the measure.

          2. Changes 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. Deletes an incorrect reference to the elections code in  
             the provisions of SB 2 X7 governing placing the measure  
             on the ballot.

           Background 

           Area of Origin Provisions  .  The general provisions of SB 2  
          X7 establish, in Section 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.  

           Promulgating Regulations  .  Chapter 8, in Section 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  

                                                           CONTINUED





                                                               AB 1265
                                                                Page  
          5

          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.

           Early Allocations  .  Chapter 8, in Section 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.  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.  

           Completed Storage Requirements .  Chapter 8, in Section  
          79747, 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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/9/10)

          Association of California Water Agencies
          California Building Industry Association
          California Chamber of Commerce
          California Farm Bureau Federation
          California Municipal Utilities Association
          Dublin San Ramon Services District
          Eastern Municipal Water District

                                                           CONTINUED





                                                               AB 1265
                                                                Page  
          6

          Friant Water Authority
          Helix Water District
          Kern County Water Agency
          San Diego County Water Authority
          WateReuse California
          Western Municipal Water District

           ARGUMENTS IN SUPPORT  :    A coalition of supporters (see  
          list above) writes the following:

            "While the decision to seek a delay is a difficult one,  
            it should not affect the momentum surrounding  
            implementation of the 2009 Delta legislative package.   
            The successful implementation of the 2009 Delta  
            legislative package, including a bond to provide  
            appropriate public financing, is of paramount importance  
            to the future of California. We continue to support
            the package and its implementation moving forward.

            "We recognize that this decision was very difficult to  
            make. However, given the current economic climate and the  
            need to focus on the state's dire budget shortfall, we  
            recognize that the decision is intended to maximize  
            chances of success for the water package over the next  
            decade."


          CTW:mw  8/9/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****













                                                           CONTINUED