BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2451
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          Date of Hearing:  April 23, 2014

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                     AB 2451 (Daly) - As Amended:  April 10, 2014
           
          SUBJECT  :  Weights and measures: water submeters.

           SUMMARY  :  Makes a number of changes to law governing the  
          inspection, testing and certification of water submeters.   
          Specifically,  this bill  :  

          1)Requires a county sealer who possesses the appropriate  
            equipment to perform tests on water submeters to inspect,  
            calibrate, test, and certify to the accuracy of a water  
            submeter, within his or her county and upon written request of  
            the owner, user, or operator of the water submeter, if any of  
            the following circumstances exist:

             a)   The service is requested to be performed in addition to,  
               or according to a schedule different from, any inspection  
               frequency established by regulations adopted by the  
               Secretary of the Department of Food and Agriculture (DFA)  
               pursuant to current law governing the inspection frequency  
               of all commercially used weights, measures, and weighing  
               and measuring apparatus in the state;

             b)   The requested service pertains to a water submeter not  
               intended to be placed into service in the county within six  
               months; or,

             c)   The requested service pertains to a water submeter  
               intended to be placed into service in a different county.

          2)Allows the board of supervisors to authorize the sealer to  
            establish, from time to time, a schedule of fees to cover the  
            cost of services provided under 1), above, and to charge and  
            collect the fees. The fee schedule shall be limited to the  
            actual cost of performing those services and shall not exceed  
            the amount specified for water submeters in current law, which  
            is $2 per device per space or apartment.

          3)Requires a county sealer, within his or her county and upon  
            written request of the owner, user, or operator of the water  
            submeter, to authorize the installation of a water submeter  








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            that has been inspected, tested, and sealed by the county  
            sealer of another county if all of the following conditions  
            are met:

             a)   The meter bears a seal that represents the most recent  
               seal of the county in which the water submeter was  
               inspected, in accordance with current law, as specified;

             b)   The water submeter is installed no later than 12 months  
               after the water submeter was inspected, tested, and sealed;  
               and,

             c)   The county sealer does not have reason to believe the  
               water submeter has been tampered with, damaged, or  
               otherwise rendered inoperable since the inspection,  
               testing, and sealing by the other county sealer.

          4)Requires a water submeter submitted to a sealer by an owner,  
            user, or operator for inspection and testing before its  
            initial installation that is found to be incorrect, as defined  
            in current law, to be marked with the words, "Out of Order,"  
            in accordance with current law, and to be returned to a  
            service agent only if both of the following conditions are  
            met:

             a)   The water submeter has no signs of intentional tampering  
               by which to facilitate fraud; and,

             b)   The water submeter shall not be placed into service in  
               California.

          5)Deletes from the definition of "placed in service" the  
            submission of a device to a sealer for verification prior to  
            installation. 

          6)Provides that no reimbursement is required by this bill  
            pursuant to the California Constitution for certain costs that  
            may be incurred by a local agency or school district because a  
            local agency or school district has the authority to levy  
            service charges, fees, or assessments sufficient to pay for  
            the program or level of service mandated by this bill or  
            because costs that may be incurred by a local agency or school  
            district will be incurred because this bill creates a new  
            crime or infraction, eliminates a crime or infraction, or  
            changes the penalty for a crime or infraction, within the  








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            meaning of state law, or changes the definition of a crime  
            within the meaning of the California Constitution.  However,  
            if the Commission on State Mandates determines that this act  
            contains other costs mandated by the state, reimbursement to  
            local agencies and school districts for those costs shall be  
            made pursuant to current law governing state mandated local  
            costs.

           EXISTING LAW :

          1)Establishes the Division of Measurement Standards (DMS) within  
            DFA to establish tolerances, specifications, and other  
            technical requirements for commercial weighing and measuring. 

          2)Requires every person who uses, or intends to use, any weight  
            or measure, or weighing or measuring instrument for commercial  
            purposes, to have those instruments sealed by a sealer, unless  
            they are sealed prior to sale and used as specified.

          3)Requires that any weighing or measuring instrument that  
            requires assembly or setup after sale and before use, may be  
            sold without first being tested and sealed, but shall be  
            tested and sealed before use. 

          4)Makes it unlawful for any person to violate DFA's regulations,  
            tolerances, specifications, and standards, or to commercially  
            sell or use any weight, measure, or weighing, measuring, or  
            counting instrument or device not first approved by DFA,  
            unless otherwise exempted.

          5)Provides for the licensure and regulation of county sealers by  
            DFA and requires the sealer of a county to inspect and test  
            weighing and measuring devices, as specified, that are used or  
            sold for commercial purposes in the county. 

          6)Authorizes, until January 1, 2016, the county board of  
            supervisors to charge fees to recover the costs of the county  
            sealer to perform the sealer's duties.  
          7)Prohibits the device fee for water submeters from exceeding $2  
            per device per space or apartment for marinas, mobilehome  
            parks, recreational vehicle parks, and apartment complexes  
            where the owner is responsible for utility meters.

          8)Requires a sealer to seize and condemn, and authorizes the  
            sealer to destroy, incorrect weights and measures and weighing  








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            and measuring instruments used for commercial purposes which  
            are not susceptible of repair.

          9)Requires a sealer to mark incorrect devices, which are  
            susceptible of repair, with a tag or other device with the  
            words "Out of order."  For these purposes, existing law  
            defines "incorrect" as any instrument which fails to meet  
            prescribed tolerances and specifications and other technical  
            requirements for commercial weighing and measuring.

          10)Defines the term "placed in service" to mean to permit the  
            use of a device that has been tested and found to be correct,  
            as specified, and type approved, as provided, or to submit a  
            device to a sealer for verification prior to installation.  A  
            device may only be placed in service by a sealer or a service  
            agency.

           FISCAL EFFECT  :   This bill is keyed fiscal.

           COMMENTS  :   

           1)Purpose of this bill  .  This bill makes a number of changes to  
            laws governing testing and certification of water submeters in  
            order to increase their ready availability for new development  
            of multi-family housing.  This bill is sponsored by the  
            Utility Management and Conservation Association and the  
            California Apartment Association.

           2)Background  .  Water submeters are commercially utilized by  
            landlords in rental units, including apartment complexes,  
            mobile home parks, and marinas to allow each tenant to receive  
            a separate utility reading and be billed separately for water  
            consumption.  While residential and commercial water,  
            electric, and gas meters are regulated by the Public Utilities  
            Commission, water submeters are regulated by DMS under DFA in  
            collaboration with the local sealer of weights and measures.  

            Generally, a landlord of a rental property has a master water  
            meter, pays for the entire water bill for the property, and  
            bills the tenant by including water charges as part of the  
            rent.  Water submeters and direct billing of water consumption  
            encourages tenants to conserve water.  There is no state law  
            requiring the installation of water submeters, although some  
            counties, such as San Diego, have adopted ordinances to that  
            effect. 








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            In order for a manufacturer to sell and install a water  
            submeter in California, current law requires DMS to test a  
            type or design of a water submeter for approval, then  
            subsequently requires a local sealer to test a sample of  
            DMS-approved water submeters prior to installation in  
            counties.  Once DMS approves a prototype, the water submeter  
            manufacturer is allowed to produce water meters for  
            installation for counties.  

            The county sealer is the local weights and measures official  
            who checks all weighing, measuring, and timing devices used in  
            sales made to the public, and tests for accuracy to protect  
            both the buyer and seller.  The county sealer seals, or locks,  
            the adjusting mechanism of a device after the item has been  
            inspected and found accurate.  Sealing prevents an individual  
            from changing the instrument's calibration and notates when  
            the accuracy check was performed.  Before the meters are  
            installed in counties, a county sealer will test a 20% sample  
            of the water submeters (unless there are less than a hundred,  
            in which case all submeters are tested).  If the water  
            submeter manufacturer fails the county sealer's test of the  
            sample, the manufacturer can repair and retest the water  
            submeters for approval within DFA tolerance levels.

            Once water submeters are installed, property owners and  
            tenants can contact the county sealer if they suspect that a  
            water submeter's reading is inaccurate.  If the water submeter  
            needs to be replaced, the property owner is responsible for  
            any costs.  Water submeters are retested every ten years and,  
            at that time, are most likely replaced.  The current  
            requirement that county sealers test a sample of water  
            submeters may reduce the number of substandard or faulty  
            submeters that are installed.

            Service agents provide utility billing and submetering  
            services to owners and managers of multifamily housing.

           3)Author's statement  .  According to the author, "As water grows  
            increasingly scarce and expensive, water submeters - devices  
            that measure water use inside an individual tenancy - are  
            becoming increasingly popular in California.  The City of San  
            Diego passed an ordinance in 2010 mandating that submeters be  
            installed in all new rental housing construction.  The City of  
            Long Beach is developing a similar ordinance and, over the  








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            past several years, the state legislature has tried (and  
            failed) to enact a submeter mandate (like San Diego's).  

            "Over the years there have been complaints from housing  
            developers that it is often difficult to find submeters in  
            California when and where they're needed.  Manufacturers say  
            that the bottlenecks causing the availability problems are to  
            be found in the state's extensive regulatory program and they  
            have identified several specific concerns including quality  
            and reliability of state testing, the prospect of civil and  
            criminal liability associated with simply submitting submeters  
            to be tested, disposal requirements when a submeter fails  
            testing, (and) rigid requirements to prevent approved devices  
            - despite their need - to be used in counties outside the one  
            where the testing occurred.  Knowing that the testing fix is a  
            longer-term effort, submeter manufacturers (and billing  
            companies which also serve as service agents, responsible for  
            the installation, monitoring and maintenance of submeters)  
            believe that the lesser reforms (embodied in this bill) will  
            go a long way to reducing the level of uncertainty which was  
            making them reluctant to ship to California and frustrating  
            housing developers."

          4)This bill makes a number of changes to water submeter testing  
            and certification.  It allows service agents in one county,  
            where multifamily construction is to begin, to be able to  
            acquire tested and certified submeters from other counties.   
            The sponsors note that this flexibility will allow submeters,  
            like other materials and components associated with new  
            residential construction, to be available at the time  
            construction begins.  This bill also allows those certified  
            submeters up to 12 months before they must be reexamined or  
            retested by county sealers. 

            This bill also affirms the authority to collect fees by the  
            testing counties - even though the devices may be used in  
            other counties - ensuring that the testing county is fairly  
            compensated for its work.  This bill also clarifies that if a  
            submeter fails a test, it is to be returned to the relevant  
            service agent and is not to be used anywhere else in  
            California.

            Finally, according to the sponsor, this bill "resolves a flaw  
            in (current law) which today could result in  criminal and  
            civil liability to submeter manufacturers who merely ship what  








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            are later  determined to be inaccurate devices even though  
            they are never installed or 'placed into service.'   
            Unfortunately, the threat growing out of the existing  
            statutory language has been discouraging manufacturers from  
            shipping their products to California."

           5)Previous Legislation  .  SB 744 (Wyland) of 2011 would have  
            deemed, until January 1, 2016, any water submeter tested by  
            equipment that is regularly calibrated by tests that are  
            directly traceable to standards promulgated by the National  
            Institute of Standards and Technology to be tested, sealed,  
            and approved for commercial use, if specified conditions are  
            met.  SB 744 was vetoed.

            AB 19 (Fong) of 2011 would have mandated that water purveyors  
            adopt policies requiring that multiunit residential structures  
            or mixed use residential and commercial structures that apply  
            for water connections after January 1, 2014, have, as a  
            condition of new water service, submeters that measure the  
            water supplied to each individual dwelling unit.  AB 19 was  
            held in the Assembly Housing and Community Development  
            Committee.

            AB 1975 (Fong) of 2010 would have required multiunit  
            residential structures or mixed use residential and commercial  
            structures to add, as a condition of new service, water meters  
            or submeters that measure the water supplied to each  
            individual unit.  AB 1975 was held in the Senate  
            Appropriations Committee.

            AB 1173 (Keene) of 2007 would have required water suppliers to  
            require, for all multiunit residential structures (apartment  
            complexes) for which a construction permit is issued, the  
            installation of meters or submeters on each rental unit as a  
            condition for providing water service.  AB 1173 was held in  
            the Assembly Appropriations Committee.

            AB 2121 (Kehoe) of 2002 would have exempted submeters for  
            multifamily residential and multitenant commercial property  
            from county requirements specifying that water submeters must  
            be tested and sealed by a licensed county sealer before  
            installation.  AB 2121 was held in the Assembly Rules  
            Committee.

            SB 1368 (Kuehl) of 2002 would have provided that DFA adopt  








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            regulations by January 1, 2004, to establish tolerances and  
            specifications for water submetering devices used to determine  
            water usage in multifamily units that are served by a single  
            water meter of a regulated or municipally owned utility.  SB  
            1368 was held in the Assembly Rules Committee.

           6)State Mandate  .  This bill is keyed a state mandate, which  
            means the state could be required to reimburse local agencies  
            and school districts for implementing the bill's provisions if  
            the Commission on State Mandates determines that the bill  
            contains costs mandated by the state.  

           7)Arguments in support  .  The Utility Management and Conservation  
            Association and the California Apartment Association, sponsors  
            of this bill, state, "UMCA believes AB 2451 will help begin to  
            mainstream water submeters by reducing the uncertainty in  
            California associated with submeter availability and insuring  
            there is a ready supply when needed - at the time new  
            multifamily housing is about to begin construction.  In that  
            way, California can more systematically improve water  
            conservation while supporting the resurgence of housing  
            construction."

           8)Arguments in opposition  .  None on file.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Apartment Association [SPONSOR]
          Utility Management and Conservation Association [SPONSOR]
          American Utility Management
          Apartment Association of Greater Los Angeles
          California Association of Clerks and Elections Officials
          California Association of Realtors
          California Building Industry Association
          MeterNet USA
          Multifamily Utility Company
          Natural Resource Management, Inc.
          Northwestern Utility Billing Services, Inc.
          Santa Barbara Rental Property Association
          Urban Meters & Readers, Inc.
          Western Center on Law and Poverty

           Opposition 








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          None on file
           
          Analysis Prepared by  :    Angela Mapp / L. GOV. / (916) 319-3958