BILL ANALYSIS �
SB 620
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Date of Hearing: August 13, 2013
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Anthony Rendon, Chair
SB 620 (Wright) - As Amended: July 3, 2013
SENATE VOTE : 31-4
SUBJECT : Water Replenishment District of Southern California:
authorities
SUMMARY : Removes a requirement that the Water Replenishment
District of Southern California (WRD) spend 80% of its reserve
fund on water purchases, creates a committee to review WRD
replenishment assessments and budgets, increases penalties for
failure to report groundwater withdrawals or failure to pay WRD
assessments, and directs the courts to award attorney's fees to
the prevailing party in a suit to restrain a pumper from
operating a water producing facility due to nonpayment of
assessments or failure to properly report withdrawals.
Specifically, this bill :
1)Creates a seven-member budget advisory committee (BAC) for
purposes of reviewing replenishment assessments and the
district's annual operating budget.
a) Specifies the BAC members shall be elected from entities
subject to WRD's benefit assessment in accordance with
their pumping allocations as follows: two members from
entities pumping less than 5,000 acre-feet; two from
entities pumping 5,000 to under 10,000 acre-feet; and,
three from entities pumping over 10,000 acre-feet.
b) Specifies notice and ballot requirements for BAC
elections, which will occur every other February.
c) Requires WRD to consult with the BAC by April of each
year and keep records of BAC recommendations.
d) Repeals the BAC authority on June 30, 2019 unless that
date is deleted or extended by statute.
2)Defers, until the 2019-20 fiscal year, an existing requirement
that WRD spend 80 percent of its $10 million reserve on water
purchases.
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3)Increases the penalties from $150 to $1,000 for failing to
register, or report the production from a water-producing
facility, or knowingly fail to file other reports or
statements.
4)Directs the court to provide attorney's fees and costs to the
prevailing party in any litigation to enjoin a water-producer
from pumping.
EXISTING LAW :
1)Allows for the formation of a water replenishment district
(district) for the purposes of replenishing groundwater
supplies within its boundaries. WRD is the only water
replenishment district in California, so for all intents and
purposes the term "district" and "WRD" are interchangeable in
this bill.
2)States that a district may store, transport, recapture,
recycle, purify treat or otherwise manage and control water
for the beneficial use of persons or property within its
boundaries.
3)Authorizes a district to establish a reserve fund not to
exceed $10 million and requires that a minimum of 80% of the
reserve fund must be spent on water purchases.
4)Allows a district to charge an operator of a groundwater
producing facility (pumper) a penalty of $150 for knowingly
failing to register a groundwater producing facility or
failing to file or furnish required statements and reports,
including groundwater production statements.
5)Allows a district to file a petition or complaint in Superior
Court seeking a temporary restraining order and injunctive
relief against an operator of a water-producing facility which
has not been registered with the district or who is delinquent
in paying a replenishment assessment.
FISCAL EFFECT : Unknown. This bill was nonfiscal until the
July 3, 2013 amendments establishing a budget oversight
committee comprised of pumpers subject to WRD's assessments.
COMMENTS : This bill has two purposes. The first is to provide
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a 5-year period during which WRD, with the oversight of a budget
committee, will have flexibility to spend its $10 million
reserve for activities other than water purchases. The second
is to provide WRD with new tools to punish recalcitrant pumpers
who fail to register their facilities, pay replenishment
assessments, or accurately report groundwater use. It does,
however, exempt from the increased fines and attorney's fees
provisions any entity in existing litigation with WRD.
WRD was created by statute for the purpose of replenishing the
Central and West Coast Groundwater Basins. Over 45 years ago,
WRD's predecessor sued over 500 parties, resulting in a 1965
consent judgment declaring and establishing groundwater rights
in the Central and West Basins and enjoining groundwater
extractions in excess of specified quantities. WRD earns
revenue by charging water replenishment assessments to the
agencies, utilities, and companies that pump groundwater. The
District also gets property tax revenues from its share of the
1% property tax rate. WRD uses these funds to buy surface water
or, more recently treat recycled water, and then percolate its
acquired supplies into the groundwater basin. A December 1999
State Auditor's report found that WRD maintained high fiscal
reserves and didn't exercise strict fiscal controls. In
response to the audit, the Legislature amended the Water
Replenishment District Act to, among other things, cap the size
of WRD's reserve fund and require 80% of the fund to be used for
water purchases.
Relations among WRD and the two water districts within its
boundaries, the Central Basin Municipal Water District and the
West Basin Municipal Water District, have been rocky with
parties frequently seeking statutory changes and resorting to
litigation to remedy their conflicts. Last year WRD succeeded
with SB 1386 (Lowenthal), which prohibited the Central Basin MWD
from beginning to bank and sell its own groundwater supplies.
Meanwhile, a group of cities within the Central Basin prevailed
in litigation challenging WRD's replenishment assessments for
failing to meet the requirements of Proposition 218, codified as
California Constitutional article 13D. After the initially
favorable superior court ruling, some cities and other entities
stopped paying replenishment assessments to WRD. Litigation
over whether WRD may have to pay refunds to the cities is
pending. Because the West Basin and Central Basin are
interconnected and the WRD overlies both, one of the areas of
continuing tension has been whether the two basins have
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differing needs and if this is properly reflected in the levels
of their assessments. For example, the West Basin, which
borders the coast, is threatened with salinity intrusion while
the Central Basin is not. However, the West Basin parties
maintain that withdrawals from the Central Basin, which is up
gradient, affect the ability to manage their basin as well.
Prior legislation : In addition to SB 1386, which was
successful, there have been three prior bills on WRD-related
issues. AB 640 (De La Torre/2007) would have required the
Department of Water Resources to conduct a study to determine
the basin specific charges, including underflow, in each basin
within WRD. SB 701 (Ronald Calderon/2011) would have
established, among other provisions, that the Central Basin MWD
has primary oversight responsibility with respect to protecting
the public's interest in the Central Groundwater Basin. AB 954
(Charles Calderon/2011) would have required engineering surveys
and reports for the West Basin and the Central Basin,
separately, and then specified that the charges for replenishing
each groundwater basin, removing contaminants from each
groundwater basin, and administering each groundwater basin
would be calculated on actual costs. SB 1386 and AB 640 failed
to receive the votes necessary for passage. AB 954 was
introduced but not taken up for consideration.
Supporting arguments : The author states that "no other local
agency has a statutory limitation on its annual reserve fund"
and that much has changed since such a limit was recommended in
1999. The author claims the basic structure of the district's
expenses has changed from purchasing imported water to producing
its own recycled water for recharge and that, in addition, other
costs have increased such as groundwater monitoring, laboratory
testing, and litigation. The author also states that WRD's
existing penalty fee of $150 "is not sufficient to provide the
proper incentive for a groundwater producer to timely pay the
[replenishment assessment] or to file specified reports and
statements." Other supporters point to the importance of
protecting the stability of the groundwater supply for "over 10%
of our state's population" and that this bill will ensure "that
the agency is able to adhere to sound financing practices to
perform its groundwater management function and meet state
mandates." Those supporters state "the current 80% water
purchase requirement hinders the flexibility of the unrestricted
reserve fund and limits WRD's ability to adapt as necessary to
fulfill its important obligations."
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Opposing arguments : Opponents state that this bill "declares
WRD the victor in any assessment disputes" and was "introduced
to maneuver around court rulings" and "impose attorney's fees
provisions designed to intimidate those who would dare challenge
the legality of WRD's fees." Opponents maintain that
"communities overlying the Central Basin have complained for
many years about WRD's overcharges" and that the "Los Angeles
Superior Court has ruled twice in pending litigation that WRD's
[replenishment assessments] are illegal as a result of WRD's
complete failure to comply with the mandates of Proposition
218." Opponents state that "rather than take actions to protect
ratepayers from these excessive and illegal fees, [this bill]
proposes to lift fiscal restrictions that were put in place over
a decade ago," give WRD "unfettered discretion," and impose
"draconian increases in potential fines and penalties."
Opponents also state that this bill does not provide adequate
time for the BAC to "provide any meaningful review or comments
on the proposed budget."
This bill was heard in Assembly Local Government Committee on
June 26, 2013 and passed out unanimously.
REGISTERED SUPPORT / OPPOSITION :
Support
Water Replenishment District of Southern California (sponsor)
AFSCME Local 1902 Employees' Association of WRD
Association of California Water Agencies
City of Gardena
City of Hawthorne
City of Lawndale
Groundwater Resources Association of California
Latin Business Association
Los Angeles County Economic Development Corporation
Palos Verdes Peninsula Chamber of Commerce
Opposition
City of Huntington Park
City of Montebello (unless amended)
Maywood Mutual Water Company #1
Southeast Water Coalition
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Analysis Prepared by : Tina Cannon Leahy / W., P. & W. / (916)
319-2096