BILL ANALYSIS Ó SB 104 Page 1 ( Without Reference to File ) SENATE THIRD READING SB 104 (Budget and Fiscal Review Committee) As Amended February 26, 2014 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE :Vote not relevant Original Committee Reference: BUDGET SUMMARY : Contains necessary statutory and technical changes to implement SB 103 (Budget and Fiscal Review Committee), which amends the 2013-14 Budget Act related to urgent drought relief. This bill, along with SB 103, proposes $687.4 million in expenditures for drought relief activities. The Senate amendments delete the Assembly version of this bill, and instead: 1)Accelerate the appropriation of $472.5 million (Proposition 84) to the Department of Water Resources (DWR) for the remaining Integrated Regional Water Management (IRWM) grants. Specify that $200 million of these funds be used for drought preparedness/response projects. Allow $21.8 million of appropriated funds to be used for projects submitted prior to the enactment of this legislation. 2)Direct the Department of Public Health (DPH), by June 30, 2014, to adopt revised, emergency groundwater replenishment regulations using recycled water. 3)Authorize the use of $10 million (Housing Rehabilitation Loan Fund) by the Department of Housing and Community Development (HCD) for housing or utility subsidies for people who become un- or underemployed due to drought conditions. 4)Provide HCD flexibility to maximize migrant housing units for greater use, including extending the period of occupancy beyond the standard 180-day period and redefining persons and families eligible to occupy centers. 5)Enhance the State Water Resources Control Board (SWRCB) SB 104 Page 2 drought response authority by streamlining authority to enforce water rights laws and increasing penalty amounts for illegally diverting water during drought conditions. 6)Specify that this legislation is contingent on the enactment of SB 103. 7)Contain an appropriation allowing this bill to take effect immediately upon enactment. COMMENTS : This bill contains the statutory changes necessary to implement SB 103, the urgent drought relief legislation. It contains three main components: 1)Infrastructure Investments to Improve Water Supply. This legislation speeds up appropriation of funds for shovel ready water supply projects. The Governor's Water Action Plan in the 2014-15 budget calls for new appropriations of funds for projects that increase water supply reliability and address the current drought. Specifically, the bill accelerates IRWM, Local Assistance funds, to support a third and final round of the IRWM Implementation Grant Program and directs at least $200 million of these funds be used for drought preparedness/response projects. The California Water Plan identified IRWM as one of the key initiatives needed to address long-term water supply reliability for the state. The IRWM program provides incentives to regionally integrate and leverage local financial investment for water conservation efforts, habitat protection for local species, water recycling, stormwater capture, and desalination projects. 2)Housing Assistance. The bill authorizes HCD to administer rental vouchers to persons rendered homeless, or at risk of becoming homeless, due to unemployment or other economic hardship resulting from the drought. Further, the bill stipulates that HCD adopt guidelines establishing criteria for the program, including income limits, and subsidy amounts. 3)Enhanced State Water Resources Control Board Drought Response Authority. Under existing law, the SWRCB has authority to develop emergency drought regulations in a critically dry year following two dry years. Because of how narrowly the existing SB 104 Page 3 statute was crafted, this authority is not available to the SWRCB during this year, even though reservoir and drought conditions are the worst on record. The new authorities provided by the legislation would be more flexible and allow the SWRCB to invoke them in a critically dry year that follows two below normal, dry, or critically dry years, or if the Governor declares a drought emergency. The same drought definition is used in the streamlined water right enforcement and enhanced water right drought penalties contained elsewhere in the legislation. The bill expands current emergency drought rulemaking authority for the SWRCB. Currently, the Board can adopt emergency regulations to prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion or to promote conservation or water recycling. The legislation includes explicit authority for the SWRCB to issue emergency regulations requiring curtailment of water diversions when water is unavailable to satisfy a diverter's priority of water right and requiring reporting to the SWRCB. Any curtailment regulations would follow established California water right laws concerning priority. Those laws generally mean that senior water rights must be satisfied before junior water rights can divert anything. The legislation also allows the SWRCB to enforce its emergency drought regulations through cease and desist orders, and also authorizes local enforcement of the regulations as an infraction, subject to a fine of up to $500 per day of violation. The legislation establishes higher penalties for certain water rights violations in times of drought. Penalties for illegally diverting water during a drought would rise from the current amount of up to $500 per day. During a drought, the amounts would be up to $1,000 per day and up to $2,500 per acre-foot of water illegally diverted or used. Separately, if the SWRCB has issued a cease and desist order to a person and the person violates the cease and desist order, the person may be subject to penalties of up to $1,000 per day. During a drought, the authorized penalty amount for violation of a cease and desist order would rise up to $10,000 per day. SB 104 Page 4 The bill includes prudent changes to the Water Code designed to enhance SWRCB's ability to respond to drought. A key aspect of drought response is ensuring the existing water rights laws are followed. To facilitate compliance, the legislation includes streamlined authority to enforce water rights laws and heightened penalty amounts for illegally diverting water during drought conditions. In addition, the drought response requires the ability to effectively establish and enforce emergency drought regulations. The legislation builds on existing authority of the SWRCB to adopt emergency drought regulations to promote conservation and prevent waste and unreasonable use of water during times of drought. Analysis Prepared by : Gabrielle Meindl / BUDGET / (916) 319-2099 FN: 0003049