BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 115| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 115 Author: Perea (D), et al. Amended: 9/6/13 in Senate Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE : 9-0, 6/12/13 AYES: Hill, Gaines, Calderon, Corbett, Fuller, Hancock, Jackson, Leno, Pavley SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13 AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg ASSEMBLY FLOOR : 76-0, 4/18/13 (Consent) - See last page for vote SUBJECT : Safe Drinking Water State Revolving Fund SOURCE : Author DIGEST : This bill limits the eligibility of multi-agency Safe Drinking Water State Revolving Fund (SDWSRF) applications or applications submitted by a legal entity on behalf of a community, as specified. Senate Floor Amendments of 9/6/13 allow multi-agency SDWSRF applications or applications submitted by a legal entity on behalf of a community for grant applications (not loan applications) for planning projects (not construction). ANALYSIS : CONTINUED AB 115 Page 2 Existing law: 1.Under the federal Safe Drinking Water Act: A. Requires the federal Environmental Protection Agency (U.S. EPA) to set standards for drinking water quality and oversee the states, localities, and water suppliers who implement those standards. California has authority over drinking water, delegated by U.S. EPA. B. Establishes the federal Drinking Water State Revolving Fund, which provides states with a financing mechanism to ensure safe drinking water to the public. 1.Under the California Safe Drinking Water Act (SDWA): A. Requires DPH to administer provisions relating to the regulation of drinking water to protect public health, including, but not limited to, conducting research, studies, and demonstration programs relating to the provision of a dependable, safe supply of drinking water, enforcing the federal SDWA, adopting and enforcing regulations, and conducting studies and investigations to assess the quality of water in domestic water supplies. B. Establishes the SDWSRF, which is continuously appropriated to the DPH for the provision of grants and revolving fund loans to provide for the design and construction of projects for public water systems that will enable suppliers to meet safe drinking water standards. Requires DPH to establish criteria for projects to be eligible for the grant and loan program, including that a legal entity exist that has the authority to enter into contracts and incur debt on behalf of the community to be served and owns the public water system or has the right to operate the public water system under a lease with a term of at least 20 years, unless otherwise authorized by DPH. This bill: 1.Authorizes a legal entity, as defined, to apply for grant funding on behalf of one or more public water systems serving disadvantaged or severely disadvantaged communities if CONTINUED AB 115 Page 3 specified requirements are met, including having a signed agreement with each public water system for which it is applying for funding. 2.Limits the eligibility of multi-agency SDWSRF applications or applications submitted by a legal entity on behalf of a community to: A. Only grant applications (not loan applications). B. Only grant funding for planning projects (not construction). 1.Delays the implementation if legislation is enacted in 2013 that transfers the statutory and regulatory authority for the SDWA from DPH. Background Many small disadvantaged communities throughout California suffer from contaminated ground water that residents use for drinking and other domestic uses. Consumption of contaminated groundwater has been linked to many medical conditions such as cancer and birth defects. Water treatment facilities are routinely installed to treat the contaminated groundwater, ensuring safe drinking water for residents. These water infrastructure improvements come with high capital costs and require financial assistance from outside sources such as state and federal funds. Beyond the capital costs of infrastructure, the costs to operate and maintain a water treatment facility are also very high for a small disadvantaged community to pay on its own. In these instances, alternative methods are needed to solve a community's water problems such as consolidating its water system with another nearby system. Consolidating water systems creates economies of scale, lowering the individual costs to each residential customer, making water systems more affordable to operate and maintain. Consolidating water systems involves multiple communities joining together to solve each other's similar water problems using a regional approach. Small disadvantaged communities seeking a regional solution can take years to appropriately apply for state funds, usually applying several times, until funds are finally awarded. This CONTINUED AB 115 Page 4 delay in funding can be attributed to the complexity of regional projects that include the consolidation of public water systems, private water systems, irrigation systems and other water systems. State funds for water systems vary, depending on the type of water system, it can be challenging for the state to find the appropriate funds for a regional project without using funds for unintended purposes outside of its authority. Regional projects often include multiple entities that are in state drinking water compliance and others that are in violation. Typically, the larger water system in a regional project applies as the lead applicant because the larger water system has greater resources, such as a board of directors and staff, to apply for state funds. In some cases the lead applicant applying for the regional water system is in compliance with drinking water standards while the smaller systems not designated as the lead applicant are in violation. Unfortunately the state awards funding to drinking water systems that are in violation of drinking water standards. In these cases the regional project becomes ineligible for state funding. The diversity of water systems throughout the state and the complexity of the state funding process for consolidating water systems have hindered the possibilities of regionalization of water systems. Because of this, small disadvantaged communities in violation of drinking water compliance are unable to receive funding for projects that could make water affordable by consolidating water systems. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No SUPPORT : (Verified 9/9/13) Association of California Water Agencies California Municipal Utilities Association California Rural Legal Assistance Foundation California Special Districts Association Clean Water Action Community Water Center East Bay Municipal Utility District Rural County Representatives of California Santa Clara Valley Water District Sierra Club California CONTINUED AB 115 Page 5 Silicon Valley Leadership Group Western Growers Association ASSEMBLY FLOOR : 76-0, 4/18/13 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor, Medina, Melendez, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Holden, Lowenthal, Mitchell, Vacancy RM:ej 9/9/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED