BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                               SB 900
                                                                      

                     SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                       Senator S. Joseph Simitian, Chairman
                             2011-2012 Regular Session
                                          
          BILL NO:    SB 900
          AUTHOR:     Steinberg
          AMENDED:    April 6, 2011
          FISCAL:     Yes               HEARING DATE:     May 2, 2011
          URGENCY:    No                                  CONSULTANT:    
              Rachel Machi                                Wagoner
           
          SUBJECT  :    California Regional Water Quality
                      Control Boards 

           SUMMARY  :    
          
           Existing federal law  , under the Clean Water Act:

          1) Establishes a national objective, in conjunction with 
             numerous implementing provisions, to restore and maintain 
             the chemical, physical, and biological integrity of the 
             Nation's waters.

          2) Authorizes the U.S. Environmental Protection Agency (US 
             EPA) to delegate water pollution control responsibility to 
             the states; establishes procedures for US EPA approval of a 
             state program and the assignment of responsibilities; and 
             establishes procedures for the withdrawal of program 
             approval, including a failure to comply with requirements.

           Existing state law:
           
           1) Under the Porter-Cologne Water Quality Act  :

             a)    Provides for: 1) the establishment of water quality 
                policy; 2) the enforcement of water quality standards 
                for both surface and ground water; and 3) the regulation 
                of discharges of pollutants from point and non-point 
                sources. 

             b)    Provides that the State Water Resources Control Board 
                (SWRCB) and nine Regional Water Quality Control Boards 
                (RWQCBs) as the principal state agencies with the 









                                                               SB 900
                                                                Page 2

                responsibility for controlling water quality in 
                California.


             c)    Provides that the SWRCB be comprised of five 
                full-time salaried board members who each fill a 
                different specialized position based on expertise 
                (representing the public, engineering expertise, water 
                quality expertise and water supply).  The members are 
                appointed by the Governor and confirmed by the Senate.


             d)    Provides that the nine RWQCBs are semi-autonomous and 
                are comprised of nine part-time Board members who each 
                fill a different specialized position representing a 
                specific interest: ( water supply, conservation, and 
                production; irrigated agriculture; industrial water use; 
                municipal government; county government; recreation, 
                fish and wildlife; public; and two water quality 
                members).  The members are appointed by the Governor and 
                confirmed by the Senate.


             e)    Prohibits a person from being a member of SWRCB or a 
                RWQCB if that person receives or has received during the 
                previous two years a significant portion of his or her 
                income directly from a person subject to waste discharge 
                requirements or applicants for prescribed waste 
                discharge requirements.


             f)    Prohibits a SWRCB or RWQCB member from participating 
                in specified board actions that involve the member or 
                any waste discharger with which the member is connected 
                or in which the board member has a financial interest.


           2) Under the Political Reform Act (PRA)  , prohibits a public 
             official at any level of state or local government from 
             making, participate in making or in any way use or attempt 
             to use his/her official position to influence a 
             governmental decision in which he/she knows or has reason 
             to know he/she has a disqualifying conflict of interest.  A 









                                                               SB 900
                                                                Page 3

             public official has a conflict of interest if the decision 
             will have a reasonably foreseeable material financial 
             effect on one or more of his/her economic interests, unless 
             the public official can establish either: (a) that the 
             effect is indistinguishable from the effect on the public 
             generally, or (b) a public official's participation is 
             legally required.

           This bill  :  

          1) Deletes the provisions of the water code prohibiting a 
             board member from participating in actions that involve the 
             member or a waste discharger with which the member is 
             connected, and specifies that the limitation on a board 
             member's financial interest applies only to a disqualifying 
             financial interest within the meaning of the Political 
             Reform Act of 1974.

          2) Provides that a person would not be disqualified from being 
             a member of a RWQCB because that person receives, or has 
             received during the previous two years, a significant 
             portion of his or her income directly or indirectly from a 
             person subject to waste discharge requirements, or an 
             applicant for waste discharge requirements, that govern 
             discharges not within the jurisdiction of that RWQCB.  Also 
             provides that this revised eligibility provision relating 
             to members of a RWQCB must shall be implemented only if the 
             USEPA determines the provision complies with the federal 
             Clean Water Act.  


           COMMENTS  :

           1) Purpose of Bill  .  According to the sponsor and supporters:

             The primary impact this would have pertains to the "public 
             generally" exception where a board member may be a 
             discharger, but the impact of an order on the board member 
             is no different than the orders' impact on the "public 
             generally."  Under Porter-Cologne's conflict rules, the 
             Board member is prohibited from voting on such an order 
             that would affect them, even if it is a broad order that 
             affects a whole class of dischargers, of which the board 









                                                               SB 900
                                                                Page 4

             member is only one.  

             The PRA recognizes that these types of decisions will be 
             made affecting a members' economic interests, but that the 
             impact will be no different than the impact on the public 
             generally.  The act and its implementing regulations 
             establish a test for determining this impact.  If the 
             decision passes the test, then a board member may 
             participate. 

             Porter/Cologne conflict of interest requirements have 
             caused a tremendous amount of concern to the regulated 
             community as it is increasingly difficult to find qualified 
             people to serve.  Every RWQCB has a designated seat for a 
             member from "irrigated agriculture."  Clearly, the 
             Legislature in creating these entities sought to ensure 
             that farmers would be appointed to and serve as fully 
             voting members of these boards.  Yet over time, the effects 
             of stringent application of the conflict provisions in the 
             state water code have caused a dramatic reduction in the 
             pool of farmers eligible to be appointed, and have forced 
             non-participation of the few who are appointed when 
             regulatory proposals affecting agriculture are decided.  
             The result has been growing insulation of water regulators 
             from this important regulated community, and a concomitant 
             loss of confidence in, and support for, the actions of the 
             regional water boards relative to agriculture.

             The simple modifications proposed in this measure would 
             restore the full participation of agriculture on these 
             boards as was originally intended and serve to restore the 
             credibility of their regulatory programs and encourage 
             greater cooperation in their implementation.  

             Additionally, the 10 percent rule provision has likewise 
             been problematic in finding qualified people to serve.  
             This bill would apply the 10 percent rule provision to 
             income from persons/entities that receive NPDES permits 
             from the member's regional water board, and would not apply 
             the restriction to income that is from persons/entities 
             subject to an NPDES permit issued by the other RWQCB.  It 
             is our understanding this measure would address about 10-15 
             percent of the historical regional board 10 percent rule 









                                                               SB 900
                                                                Page 5

             conflicts.

           2) Arguments in Opposition  .  The opposition make the following 
             arguments against SB 900:

             First, Sections 1 and 2 of the bill would roll back 
             conflicts checks on industry-held Water Board seats 
             required under the Porter-Cologne Water Quality Control Act 
             (Stats. 1969, Ch. 482) to the weaker Political Reform Act 
             (PRA) standard.  These conflicts checks were specifically 
             enacted in the Porter-Cologne Act together with the 
             allocation of industry-specific Regional Water Board seats 
             in order to hold in check any potential actions by seat 
             holders that could be deemed a conflict of interest.  SB 
             900 would roll back that Legislature's wise decision to set 
             meaningful conflicts provisions without evidence to show 
             that such provisions are no longer needed to protect 
             waterway health.  Indeed, the contrary is true for the 
             issue most affecting the bill's sponsor - irrigated 
             agriculture pollution controls.  For example, in the past 
             permit cycle on these controls in the Central Valley, the 
             state Attorney General issued a stinging rebuke to the 
             appointee in the irrigated agriculture seat, who had taken 
             action to prevent adequate controls on polluted 
             agricultural runoff in the region from being adopted.  
             Currently, the Central Coast and Central Valley irrigated 
             agriculture permits are in a protracted process of 
             reissuance, with hundreds of stakeholders providing 
             detailed input and comment for the Boards' consideration.  
             The contested and critical nature of these proceedings, and 
             the chronic, serious pollution of the surface and ground 
             waters affected, demands continued - rather than weakened - 
             adherence to the Legislatively selected conflict 
             requirements.  The extremely high level of input from the 
             agricultural community on these permits (called "waivers of 
             waste discharge requirements") also contradicts the 
             argument that the irrigated agriculture appointee is needed 
             to provide one more voice of industry expertise to the 
             discussion.  The authors of the Porter-Cologne Act wisely 
             chose to protect the public's paramount interest in healthy 
             waterways by requiring sound conflicts requirements and 
             reliance on the public process - rather than the industry 
             seat appointee - to provide needed input to the Board as a 









                                                               SB 900
                                                                Page 6

             whole.

             Use of the PRA conflicts test is an inappropriate 
             alternative to the current Porter-Cologne Act conflicts 
             protections.  The Legislature specifically adopted the 
             Porter-Cologne Act conflicts requirements to reflect the 
             fact that they were placing the regulated industry in 
             positions of power over an essential and fundamental 
             element of a healthy population, economy and environment.  
             The views at the time Porter-Cologne was being adopted on 
             this issue are reflected in a 1969 Los Angeles Times 
             editorial, which correctly noted that allowing dischargers 
             to represent their industries on the Boards is a 
             "ridiculous, built-in conflict of interest," one which must 
             be reined in with strict requirements to avoid such 
             conflicts.  This sound decision should be upheld.

             Section 3 of the bill also would weaken other conflict of 
             interest requirements for no meaningful positive reason.  
             It has been our direct experience over many years of 
             seeking to fill Regional Water Board seats with qualified 
             members that this task can sometimes be challenging - but 
             for many reasons other than a potential business conflict 
             outside of the area where the appointee lives and works, as 
             described in SB 900.  The low pay ($100/day) and conflicts 
             with statewide permits (changes to which are unlikely to 
             pass federal U.S. EPA legal scrutiny) are the major 
             difficulties with filling seats, not other-region business 
             ties.  Moreover, contrary to the sponsor's assertion, it is 
             inaccurate to state that the federal 10% conflict 
             provisions have caused a "dramatic reduction" in the pool 
             of farmers eligible to be appointed.  In fact, because the 
             "10% rule" only applies to Clean Water Act NPDES permit 
             holders and the Act exempts irrigated agriculture return 
             flows, irrigated agriculture waiver holders are not bound 
             by this federal conflicts mandate.  

             In addition to being unnecessary from a legal or a 
             practical perspective in solving issues with filling 
             Regional Water Board seats, Section 3 raises significant 
             concerns from a policy perspective, in light of the close 
             manner in which the Regional Water Boards interact.  For 
             example, the Regional Boards pay close attention to and 









                                                               SB 900
                                                                Page 7

             react in numerous ways to each other's decisions, with 
             their permits and policies evolving regional act by 
             regional act.  Also, most Regional Water Board decisions 
             that are of any meaningful controversy are appealed to the 
             State Board, which can then act to create statewide 
             precedent.  Accordingly, income obtained from one region 
             can influence a Board member's actions and decisions in 
             another.  For such reasons, and in light of the fundamental 
             importance of water to the state's population, economy and 
             environment, we strongly urge that these proposed changes 
             be rejected.

           3) Previous Legislation  .  SB 1001 (Perata) of 2007: a) 
             restructured the membership of the nine RWQCB structure by 
             decreasing membership to 7 members, b) increased the 
             compensation of RWQCB membership and changed the 
             qualification criteria for appointment from specific 
             sectors to appointment based on his or her demonstrated 
             interest and proven ability in the field of water quality, 
             and c) established a process at the SWRCB to better ensure 
             RWQCBs are adequately carrying out the regulatory 
             requirements governing water quality in their respective 
             regions, and examined the adequacy of the SWRCB's fee-based 
             water quality programs.  SB 1001 was vetoed by Governor 
             Schwarzenegger.

           4) The Water Quality Improvement Initiative  .  In response to 
             the call for reform of the SWRCB and RWQCB's organizational 
             structure and operations, SWRCB released a Water Quality 
             Improvement Initiative in May 2008.  The initiative 
             contained 6 key recommendations: a) decrease the membership 
             of RWQCBs from 9 to 7; b) delegate National Pollutant 
             Discharge Elimination System permitting decisions to the 
             RWQCB Executive Officers; c) require RWQCBs to set 
             performance targets for water quality improvements; d) 
             streamline Total Maximum Daily Loads adoption process; e) 
             conform conflict-of-interest rules; and f) make various 
             changes to enforcement.  While this initiative received 
             wide opposition, it did incorporate some of the changes 
             that are proposed in this bill and acknowledged a need for 
             reform.

          5) The Little Hoover Commission Report -- Clearer Structure, 









                                                               SB 900
                                                                Page 8

             Cleaner Water:  Improving Performance and Outcomes at the 
             State Water Boards .  In 2009 the Little Hoover Commission 
             released a report finding that "the decentralized 
             governance structure, with nine regional water quality 
             boards operating with distinct policies and processes, 
             hinders accountability and transparency.  The result is a 
             system that has lost the confidence of most stakeholders."  
             The Commission's report made 4 overarching recommendations: 
             a) change the makeup of both SWRCB and RWQCBs; b) increase 
             the use of data and scientific research; c) increase 
             collaboration among government agencies; d) increase 
             economic analysis and analysis in decisionmaking.  This 
             report has not resulted in changes to the water boards to 
             date, however, its findings also point to a need for 
             changes to the boards' governance structure.
                
            6) Is This the Right Approach for Reform?   While there is a 
             wide ranging recognition for the need for reform to the 
             boards' organizational structure and operations, previous 
             efforts and recommendations have been for comprehensive 
             changes.  By taking on just one aspect of reform, changing 
             the conflict of interest provisions of the Porter-Cologne 
             Water Quality Act, this bill may alter RWQCB 
             decision-making processes in a way that favors particular 
             interests.  It may be more appropriate for the Legislature 
             to contemplate a more comprehensive reform package.  The 
             author may wish to consider striking sections 1 and 2 and 
             work with stakeholders to develop more comprehensive 
             reforms.  

             There is agreement among stakeholders that reaching a 
             quorum for RWQCB board meetings is a challenge.  Section 3 
             of the bill may increase the number of eligible appointees 
             for boards.

           SOURCE  :        Western Growers  

          SUPPORT  :       Alliance of Western Milk Producers
                         American Council of Engineering Companies of 
                         California
                         California Agricultural Irrigation Association
                         California Association of Sanitation Agencies
                         California Business Properties Association









                                                               SB 900
                                                                Page 9

                         California Citrus Mutual
                         California Cotton Ginners and Growers 
                         Associations
                         California Chamber of Commerce
                         California Grain and Feed Association
                         California Grape and Tree Fruit League
                         California Forestry Association
                         California League of Food Processors
                         California Manufacturers and Technology 
                         Association
                         California Metals Coalition
                         California Pear Growers
                         California Rice Commission
                         California Rice Industry Association
                         California Seed Association
                         California State Floral Association
                         California Trucking Association
                         California Warehouse Association
                         California Wheat Growers Association
                         Chemical Industry Council of California
                         East San Joaquin Water Quality Coalition
                         El Dorado Irrigation District
                         Grower-Shipper Association of Central 
                         California
                         Grower Shipper Association of Santa Barbara and 
                         San Luis Obispo Counties
                         Kings River Conservation District
                         Kings River Water Association
                         Monterey County Farm Bureau
                         Nisei Farmers League
                         Northern California Water Association
                         Pacific Egg and Poultry Association
                         Partnership for Sound Science in Environmental 
                         Policy
                         Paso Robles Wine Country Alliance
                         Regional Council of Rural Counties
                         Santa Barbara County Farm Bureau
                         Southern San Joaquin Valley Water Quality 
                         Coalition
                         Valley Ag Water Coalition
                         Western Agricultural Processors Association
                         Western Plant Health Association
                         Wine Institute









                                                               SB 900
                                                                Page 10

           
          OPPOSITION :    California Coastkeeper Alliance  
                         California Sportfishing Protection Alliance
                         Heal the Bay
                         Natural Resources Defense Council
                         Sierra Club California