BILL ANALYSIS Ó
AB 467
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2011-2012 Regular Session
BILL NO: AB 467
AUTHOR: Eng
AMENDED: January 26, 2012
FISCAL: Yes HEARING DATE: May 14, 2012
URGENCY: Yes CONSULTANT: Rachel Wagoner
SUBJECT :SAFE DRINKING WATER, WATER QUALITY AND SUPPLY, FLOOD
CONTROL, RIVER AND COASTAL PROTECTION BOND ACT OF
2006
SUMMARY :
Existing law :
1) Under the California Safe Drinking Water Act (SDWA),
requires the Department of Public Health (DPH) to regulate
drinking water and enforce the federal Safe Drinking Water
Act and other regulations.
2) Under Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Bond Act of 2006
(Proposition 84):
a) Authorizes $5.388 billion in general obligation bonds
to fund safe drinking water, water quality and supply,
flood control, waterway and natural resource protection,
water pollution and contamination control, state and
local park improvements, public access to natural
resources, and water conservation efforts (Public
Resources Code §75001 et seq.).
b) Provides $60 million to DPH for loans and grants for
projects to prevent or reduce contamination of
groundwater that serves as a source of drinking water
for the San Gabriel Valley (§75025).
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c) Requires DPH, when implementing the provisions of
Proposition 84, among other things, to develop and adopt
guidelines and regulations for establishing a project,
grant, loan or other financial assistance program,
including specific provisions for the repayment of costs
that are subsequently recovered from parties responsible
for the contamination (Public Resources Code §§75100
-75101).
d) Requires repayment to DPH of costs that are
subsequently recovered from parties responsible for the
contamination. (Public Resources Code §75025).
This bill :
1) Authorizes DPH to enter into an agreement with a recipient
of a Proposition 84 grant that would require the grantee to
attempt to recover the costs from responsible parties and
would allow grantees to utilize the repayments to fund
other groundwater cleanup projects within the grantees
jurisdiction as authorized in the agreement as specified.
2) Specifies that the guidelines prepared by DPH for
allocation of Proposition 84 funds may include a provision
to allocate up to 3 percent of the recovered funds to pay
for DPH oversight costs to ensure the grantee expends the
recovered funds on additional groundwater cleanup
activities.
3) Makes the following findings and declarations:
a) When adopting guidelines pursuant to Section 75101 of
the Public Resources Code, address the criteria under
which a grantee may utilize the repayments recovered
from responsible parties to fund ongoing or additional
groundwater cleanup activities within its jurisdiction.
b) In determining the circumstances when repayments may
be utilized by a grantee for additional groundwater
cleanup activities, DPH give preference to projects that
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meet one or more of the following conditions:
i) The grant amount awarded to the grantee by
the department and the amount recovered from the
responsible party, in total, do not exceed the
grantee's total cost either to clean up the
contaminated groundwater or to prevent the
groundwater from becoming contaminated.
ii) The grantee has additional areas of
groundwater contamination within its jurisdiction
for which there is no potentially responsible
party, and the repayment will be used to clean up
groundwater contamination in one or more of those
locations.
iii) The repayment will be used to clean up areas
of groundwater contamination within the grantee's
jurisdiction where costs recovered from responsible
parties are insufficient to pay for the full costs
of cleanup.
iv) Groundwater is the primary source of drinking
water, and the grantee will use the repayment for
groundwater contamination cleanup activities at
additional sites within its jurisdiction that are
on the list maintained by the Department of Toxic
Substances Control pursuant to Health and Safety
Code §25356 or the National Priorities List
pursuant to the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sec. 9601 et seq.).
COMMENTS :
1) Purpose of Bill . According to the author, this bill is
needed to allow local agencies that have been awarded
Proposition 84 funds from DPH for groundwater projects that
are able to subsequently recover funds from responsible
parties to keep the money to fund additional groundwater
cleanup activities. Should local agencies be successful in
recovering the costs from responsible parties, this bill
will save significant state administrative costs and allow
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the local agencies to use all of the recovered funds for
groundwater cleanup.
2) Arguments in opposition . The opponents object to the
provision in AB 467 that would authorize DPH to require a
grantee "take appropriate action to attempt to recover the
costs of cleanup from the parties responsible for the
contamination." The opponents believe, similar to their
experience with state funding requirements for MTBE
cleanups, that this requirement could create an unintended
consequence of creating a disincentive for small and medium
water agencies to apply for state funding because the cost
of pursuing responsible parties would exceed the amount of
the grant available from the state.
3) Background . SB 1679 (Russell) Chapter 776, Statutes of
1992, enacted the San Gabriel Basin Water Quality Authority
Act. The State Water Resources Control Board and the Los
Angeles Regional Water Quality Control Board had
investigated the groundwater conditions since 1979. The
basin is the primary drinking water source for residents
and the U.S. Environmental Protection Agency (US EPA) had
placed four areas of the basin on its Superfund list in
1984. US EPA released a "San Gabriel Basinwide Technical
Plan" in 1990, describing a strategy to remediate
groundwater pollution. The above three entities prepared a
"white paper" describing institutional and financial
aspects of a comprehensive local groundwater management
program and concluded that a local program must possess
powers to construct and operate cleanup works, to
coordinate and regulate groundwater extraction and cleanup,
and to finance activities.
The three water agencies in the basin formed a joint powers
authority (JPA) and the watermaster ( i.e. , a judicially
created association of private and public groundwater
users) obtained authority to regulate pumping for water
quality protection. However, because of concerns that the
JPA was not effective, SB 1679 created the act with certain
powers to address the contamination problems.
In 1992, the Legislature was also considering SB 44 (Torres),
a bill giving the JPA more power to address the problem.
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AB 2173 (Margett) Chapter 281, Statutes of 1996, extended a
1998 sunset to 2002, reduced the cap on the annual pumping
right assessment from $35 to $20 per acre foot, and
established a "limited function status" provision. AB 2544
(Calderon) Chapter 905, Statutes of 2000, increased the
number of board members from five to seven and required two
members to be producer members, reduced the annual pumping
right assessment cap from $20 to $13, revised the board
voting practices for certain actions, and made various
other changes to the act. SB 334 (Romero) Chapter 192,
Statutes of 2003, reduced the annual pumping right
assessment cap from $13 to $10.
SB 822 (Margett) Chapter 271, Statutes of 2005, authorized the
San Gabriel Basin Water Quality Authority to receive state
funds for the purpose of meeting certain nonfederal
matching fund requirements.
4) AB 467 is inconsistent with Proposition 84 requirements .
Proposition 84 included specific language requiring the
repayment of funds from those persons or businesses that
caused the toxic contamination.
The sum of sixty million dollars ($60,000,000)
shall be available to the Department of Health
Services for the purpose of loans and grants for
projects to prevent or reduce contamination of
groundwater that serves as a source of drinking
water. The Department of Health Services shall
require repayment for costs that are subsequently
recovered from parties responsible for the
contamination. The Legislature may enact
legislation necessary to implement this section.
AB 467 now provides that any funds recovered by the local
agency may be deemed to be under the control and authority
of the state and therefore repaid to the state as required
by Proposition 84. However, the money will not be returned
to the state so this is inconsistent with the Proposition
84 requirement and may be legally challenged. Deeming the
funds to be under the control and authority of the state
does not qualify as repayment to the state. This is
inconsistent with the bond approved by state voters.
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5) Why Superfund sites and National Priority List Sites ? DPH
has criteria within the guidelines for awarding Proposition
84 funding that prioritizes the most immediate needs across
the state. When there is a responsible party available to
recoup costs, the bond states that the state's funds should
be returned for the state to use for the bond indebtedness
or to appropriate by the state's regulations for use of
recouped costs. AB 467 would allow for a grantee to keep
the funding, potentially use it for other sites within the
grantee's jurisdiction and use it for the sites that do not
necessarily meet the prioritization criteria that the state
has set pursuant to implementation of Proposition 84, but
rather sets new criteria by specifying use for federal
Superfund sites or National Priority List sites. This is
not consistent with Proposition 84 and with the intended
use of general obligation bonds funded by state taxpayers.
6) Prioritizes fund allocation in uncodified language . The
findings and declarations section of AB 467 goes into
specific detail as to how DPH must modify guidelines and
how DPH must prioritize funds collected from responsible
parties to be utilized by the grant recipient. This
language is uncodified. If the author intends for DPH to
follow this intent it needs to be incorporated into the
codified sections of this bill.
7) Impact to Proposition 84 funding . Of the $60 million
authorized under Proposition 84 to DPH for groundwater
cleanup grants $38,353,935 has been allocated in the first
round of projects. There is $14,546,065 remaining. The
cost of the second round of invited projects would be
$20,929,000, meaning that many of these projects will not
be funded. Is it appropriate to allow a grantee to keep
money recovered by responsible parties, who should have
paid for the project in the first place, and use it under a
separate set of spending criteria that is inconsistent with
the guidelines for Proposition 84?
8) Urgency clause . This bill contains an urgency clause. It
is not clear why this bill would need to take effect prior
to January 1, 2013.
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9) Potential amendments . While the current provisions of AB
467 are inconsistent with Proposition 84, it would not be
inconsistent to enact narrow legislation allowing costs to
be recouped from a responsible party to be used to continue
or finish projects that received initial funds from a state
grant for the capital costs of the project. Many of these
sites will require not only the capital infrastructure of a
treatment facility to be built but also ongoing
remediation, and the initial state grant only pays for
capital costs. The bill should therefore be amended to
allow for funds recouped from a responsible party to be
used for the added costs of treatment and remediation of
the site prior to reimbursing the state for the capital
costs. Any additional funds that are recouped beyond the
costs of the project should then be returned to the state.
SOURCE : San Gabriel Basin Water Quality Authority
SUPPORT : Association of California Water Agencies
California Water Association
San Gabriel Valley Civic Alliance
San Gabriel Valley Council of Governments
San Gabriel Valley Economic Partnership
San Gabriel Valley Legislative Caucus
San Gabriel Valley Water Association
Upper San Gabriel Valley Municipal Water
District
West Valley Water District
OPPOSITION : Desert Water Agency
East Valley Water District
Newhall County Water District
Orchard Dale Water District
Rowland Water District