BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 565 (Pavley) Hearing Date: 05/28/2009 Amended: 05/04/2009 As proposed to be amended Consultant: Brendan McCarthy Policy Vote: EQ 5-2 _________________________________________________________________ ____ BILL SUMMARY: SB 565 requires the State Water Board to develop and implement a plan to ensure that 50 percent of the wastewater currently discharged into the ocean is recycled. The bill requires the State Water Board to impose fee on discharges of wastewater into the ocean to pay for the costs of developing and implementing the plan. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund Plan development Fully offset by fees Special * * Ocean Discharge Recycling Fund (new fund). _________________________________________________________________ ____ STAFF COMMENTS: Suspense file. As proposed to be amended. SB 565 requires the State Water Board, in collaboration with other state agencies and outside stakeholders, to develop a plan to ensure that 50 percent of the wastewater currently discharged into the ocean is recycled by 2030. The plan would identify any regulatory, financial, engineering, or other impediment to achieving the recycling goal. The plan would also include specific actions to remove those impediments. The State Water Board estimates the costs to develop the plan would be about $6 million over three years. While the bill requires that fees be assessed to cover the costs of developing the plan, there may be a gap between expenditures and the collection of fee revenues, depending on how long it takes to adopt regulations to impose the fee. The bill requires the State Water Board to adopt measures to implement the plan. It is not clear what the scope of implementation activities would be under the bill. The bill requires the State Water Board to impose an annual fee on discharges of wastewater into the ocean in an amount sufficient to pay for the costs to develop the plan and adopt any measures implementing the plan. In June 2003, a legislatively mandated taskforce on recycled water estimated that it would cost about $400 million per year to recycle about 1.5 million acre-feet of wastewater. The task force indicated that it would require about $300 million in financial assistance to achieve this level of recycling. It is not clear whether wastewater dischargers would be able to support fees sufficient to generate this level of revenue. As proposed to be amended by author, the bill would only require the development of a plan. The amendments also specify that the fee would also apply to dischargers into the San Francisco Bay and other inland waters, but would not apply to dischargers with a capacity less than 10 million gallons per day.