BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                        SB 866|
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                                    THIRD READING


          Bill No:  SB 866
          Author:   Wolk (D) and Steinberg (D)
          Amended:  8/13/14
          Vote:     27 - Urgency

           
          PRIOR VOTES NOT RELEVANT

           ASSEMBLY FLOOR  :  Not available


           SUBJECT  :    Water Quality, Supply, and Infrastructure  
          Improvement Act of
                      2014

           SOURCE  :     Author


           DIGEST  :    This bill removes the existing water bond from the  
          November 2014 ballot and replaces it with a new authorization  
          totaling $7.545 billion.  This bill reauthorizes $425 million in  
          unissued bonds, in addition to authorizing $7.120 billion in new  
          general obligation bonds, all to fund water resources related  
          programs and projects.

           Assembly Amendments  delete the prior version of the bill and  
          create a vehicle to replace the $11.14 billion bond currently on  
          the ballot as Proposition 43 with a new $7.545 billion measure.

           ANALYSIS  :    Existing law:

          1.Approved by the voters, enacted the Water Quality, Supply and  
            Safe Drinking Water Projects Act (Proposition (Prop) 50),  
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            which authorized $3.4 billion in general obligation bonds to  
            fund a variety of water projects. 

          2.Approved by voters, enacted the Safe Drinking Water, Water  
            Quality and Supply, Flood Control, River and Coastal  
            Protection Act of 2006 (Prop 84), which authorized $5.388  
            billion in general obligation bonds to fund safe drinking  
            water, water quality and supply, flood control, waterway and  
            natural resource protection, water pollution and contamination  
            control, state and local park improvements, public access to  
            natural resources, and water conservation efforts.  

          3.Approved by the Legislature and currently On November 2014  
            Ballot, SB 2X7 (Cogdill, Chapter 3, Statutes of 2009) provided  
            for the submission of a bond act, the Safe, Clean, and  
            Reliable Drinking Water Supply Act of 2010, to the voters at  
            the November 2, 2010, statewide general election.  However,  
            the bond act has been postponed twice and is currently  
            expected to be on the ballot for the November 4, 2014  
            election.  SB 2X7 provides a total of $11.14 billion to  
            finance a safe drinking water and water supply reliability  
            programs.

          This bill reallocates $425 million of unissued bonds (Prop 84  
          (2006):  $105 million; Prop 50 (2002):  $95 million; Prop 1E  
          (2006):  $100 million; Prop 44 (1986):  $13.5 million; Prop 204  
          (1996):  $25.5 million Prop 13 (2000):  $86 million) for the  
          purposes of a water quality, supply, and infrastructure  
          improvement program, subject to voter approval, and replaces the  
          $11.14 billion water bond that is currently on the November 2014  
          ballot with a new $7.120 billion general obligation bond Act as  
          follows:
           
          1.Clean, Safe and Reliable Drinking Water.   Authorizes $520  
            million for expenditures, grants and loans for projects that  
            improve water quality or help provide clean, safe, and  
            reliable drinking water to all Californians.

             A.   Provides that the projects eligible for funding pursuant  
               to this section shall help improve water quality for a  
               beneficial use.  The purposes of this section are to:

                     Reduce contaminants in drinking water supplies  
                 regardless of the source of the water or the  

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                 contamination.
                     Assess and prioritize the risk of contamination to  
                 drinking water supplies.
                     Address the critical and immediate needs of  
                 disadvantaged, rural, or small communities that suffer  
                 from contaminated drinking water supplies, including, but  
                 not limited to, projects that address a public health  
                 emergency.
                     Leverage other private, federal, state, and local  
                 drinking water quality and wastewater treatment funds.
                     Reduce contaminants in discharges to, and improve  
                 the quality of, waters of the state.
                     Prevent further contamination of drinking water  
                 supplies.
                     Provide disadvantaged communities with public  
                 drinking water infrastructure that provides clean, safe,  
                 and reliable drinking water supplies that the community  
                 can sustain over the long term.
                     Ensure access to clean, safe, reliable, and  
                 affordable drinking water for California's communities.
                     Meet primary and secondary safe drinking water  
                 standards or remove contaminants identified by the state  
                 or federal government for development of a primary or  
                 secondary drinking water standard.

             A.   $260 million shall be available for deposit into in the  
               State Water Pollution Control Revolving Fund Small  
               Community Grant Fund for grants for wastewater treatment  
               projects.  Priority shall be given to projects that serve  
               disadvantaged communities and severely disadvantaged  
               communities, and to projects that address public health  
               hazards.  Projects may include, but not be limited to,  
               projects that identify, plan, design, and implement  
               regional mechanisms to consolidate wastewater systems or  
               provide affordable treatment technologies.

             B.   $260 million shall be available for grants and loans for  
               public water system infrastructure improvements and related  
               actions to meet safe drinking water standards, ensure  
               affordable drinking water, or both.  Priority shall be  
               given to projects that provide treatment for contamination  
               or access to an alternate drinking water source or sources  
               for small community water systems or state small water  
               systems in disadvantaged communities whose drinking water  

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               source is impaired by chemical and nitrate contaminants and  
               other health hazards identified by the State Water  
               Resources Control Board (Board).

             C.   Specifies that at least 10% of the funds must be  
               allocated for severely disadvantaged communities and up to  
               15% of the funds to must be allocated for technical  
               assistance to disadvantaged communities.

           1.Protecting Rivers, Lakes, Streams, Coastal Waters, and  
            Watersheds  .  Authorizes $1.495 billion for competitive grants  
            for multibenefit ecosystem and watershed protection and  
            restoration projects in accordance with statewide priorities.

             A.   $327.5 million shall be available for multibenefit water  
               quality, water supply, and watershed protection and  
               restoration projects for the watersheds of the state in  
               accordance with the following schedule:

                     Baldwin Hills Conservancy, $10 million.
                     California Tahoe Conservancy, $15 million.
                     Coachella Valley Mountains Conservancy, $10 million.
                     Ocean Protection Council, $30 million.
                     San Diego River Conservancy, $17 million.
                     San Gabriel and Lower Los Angeles Rivers and  
                 Mountains Conservancy, $30 million.
                     San Joaquin River Conservancy, $10 million.
                     Santa Monica Mountains Conservancy, $30 million.
                     Sierra Nevada Conservancy, $25 million.
                     State Coastal Conservancy, $100.5 million. (Eligible  
                 watersheds for the funds allocated pursuant to this  
                 subdivision include, but are not limited to, those that  
                 are in the San Francisco Bay Conservancy region, the  
                 Santa Ana River watershed, the Tijuana River watershed,  
                 the Otay River watershed, Catalina Island, and the  
                 central coast region)
                     Sacramento-San Joaquin Delta Conservancy, $50  
                 million.

             A.   Provides that, in protecting and restoring California  
               rivers, lakes, streams, and watersheds, the purposes of  
               this section are to:

                     Protect and increase the economic benefits arising  

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                 from healthy watersheds, fishery resources, and instream  
                 flow.
                     Implement watershed adaptation projects in order to  
                 reduce the impacts of climate change on California's  
                 communities and ecosystems.
                     Restore river parkways throughout the state,  
                 including, but not limited to, projects pursuant to the  
                 California River Parkways Act of 2004, in the Urban  
                 Streams Restoration Program and urban river greenways.
                     Protect and restore aquatic, wetland, and migratory  
                 bird ecosystems, including fish and wildlife corridors  
                 and the acquisition of water rights for instream flow.
                     Fulfill the obligations of the State of California  
                 in complying with the terms of multiparty settlement  
                 agreements related to water resources.
                     Remove barriers to fish passage.
                     Collaborate with federal agencies in the protection  
                 of fish native to California and wetlands in the central  
                 valley of California.
                     Implement fuel treatment projects to reduce wildfire  
                 risks, protect watersheds tributary to water storage  
                 facilities, and promote watershed health.
                     Protect and restore rural and urban watershed health  
                 to improve watershed storage capacity, forest health,  
                 protection of life and property, stormwater resource  
                 management, and greenhouse gas reduction.
                     Protect and restore coastal watersheds, including,  
                 but not limited to, bays, marine estuaries, and nearshore  
                 ecosystems.
                     Reduce pollution or contamination of rivers, lakes,  
                 streams, or coastal waters, prevent and remediate mercury  
                 contamination from legacy mines, and protect or restore  
                 natural system functions that contribute to water supply,  
                 water quality, or flood management.
                     Assist in the recovery of endangered, threatened, or  
                 migratory species by improving watershed health, instream  
                 flows, fish passage, coastal or inland wetland  
                 restoration, or other means, such as natural community  
                 conservation plan and habitat conservation plan  
                 implementation.
                     Assist in water-related agricultural sustainability  
                 projects.

             A.   $200 million shall be administered by the Wildlife  

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               Conservation Board for projects that result in enhanced  
               stream flows.

             B.   $100 million shall be available, upon appropriation of  
               the Legislature, for projects to protect and enhance an  
               urban creek.

             C.   $20 million shall be made available to the Secretary of  
               the Natural Resources Agency for a competitive program to  
               fund multibenefit watershed and urban rivers enhancement  
               projects in urban watersheds that increase regional and  
               local water self-sufficiency and that meet at least two of  
               the following objectives:

                     Promote groundwater recharge and water reuse.
                     Reduce energy consumption.
                     Use soils, plants, and natural processes to treat  
                 runoff.
                     Create or restore native habitat.
                     Increase regional and local resiliency and  
                 adaptability to climate change.
                     Specifies that at least 25% of the funds listed in D  
                 and E above, shall be allocated for projects that benefit  
                 disadvantaged communities and up to 10% of the funds  
                 available may be allocated for project planning. 

             A.   $475 million shall be available to the Agency to support  
               projects that fulfill the obligations of the State of  
               California in complying with the terms of and of the  
               following:

                     Central Valley Project Improvement Act.
                     Intrastate compacts.
                     Intrastate or multiparty water quantification  
                 settlement agreement provisions, including ecosystem  
                 restoration projects.
                     The settlement agreement referenced.
                     Any intrastate or multiparty settlement agreement  
                 related to water acted upon or before December 31, 2013.   
                 Priority shall be given to projects that meet one or more  
                 of the following criteria:  

                  a)        The project is of statewide significance.  
                  b)        The project restores natural aquatic or  

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                    riparian functions, or wetlands habitat for birds and  
                    aquatic species.
                  c)        The project protects or promotes the  
                    restoration of endangered or threatened species.
                  d)        The project enhances the reliability of water  
                    supplies on a regional or interregional basis.
                  e)        The project provides significant regional or  
                    statewide economic benefits.

             A.   $285 million shall be available to the Department of  
               Fish and Wildlife for watershed restoration projects  
               statewide.

             B.   $87.5 million shall be available to the Department of  
               Fish and Wildlife for water quality, ecosystem restoration,  
               and fish protection facilities that benefit the Delta, as  
               specified. 

          1.Regional Water Security, Climate and Drought Preparedness  .   
            Authorizes $810 million, upon appropriation of the  
            Legislature, for expenditures on, and competitive grants and  
            loans to, projects that are included in and implemented in an  
            adopted integrated regional water management plan.

             A.   In order to improve regional water self-reliance  
               security and adapt to the effects on water supply arising  
               out of climate change, the purposes of this section is to:

                     Help water infrastructure systems adapt to climate  
                 change, including, but not limited to, sea level rise.
                     Provide incentives for water agencies throughout  
                 each watershed to collaborate in managing the region's  
                 water resources and setting regional priorities for water  
                 infrastructure.
                     Improve regional water self-reliance.

             A.   $510 million shall be allocated to the hydrologic  
               regions as identified in the California Water Plan.  Funds  
               made available by this chapter shall be allocated as  
               follows:

                     $26.5 million for the North Coast hydrologic region.
                     $65 million for the San Francisco Bay hydrologic  
                 region.

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                     $43 million for the Central Coast hydrologic region.
                     $98 million for the Los Angeles subregion.
                     $63 million for the Santa Ana subregion.
                     $52.5 million for the San Diego subregion.
                     $37 million for the Sacramento River hydrologic  
                 region.
                     $31 million for the San Joaquin River hydrologic  
                 region.
                     $34 million for the Tulare/Kern hydrologic region.
                     $24.5 million for the North/South Lahontan  
                 hydrologic region.
                     $22.5 million for the Colorado River Basin  
                 hydrologic region.
                     $13 million for the Mountain Counties Overlay.

             A.   Specifies that the Department of Water Resources shall  
               expend no less than 10% of funds from the regional  
               allocation of disadvantaged communities. 

             B.   $100 million shall be available for direct expenditures,  
               and for grants and loans, for specified water conservation  
               and water-use efficiency plans, projects, and programs.

             C.   $200 million shall be available for grants for  
               multibenefit stormwater management projects.  Eligible  
               projects may include, but shall not be limited to, green  
               infrastructure, rainwater and stormwater capture projects,  
               and stormwater treatment facilities. Development of plans  
               for stormwater projects shall address the entire watershed  
               and incorporate the perspectives of communities adjacent to  
               the affected waterways, especially disadvantaged  
               communities.

           1.Statewide Water System Operational Improvement and Drought  
            Preparedness.   Authorizes a $2.7 billion continuous  
            appropriation without regard to fiscal year for water storage,  
            to the California Water Commission for public benefits  
            associated with water storage projects that improve the  
            operation of the state water system, are cost effective, and  
            provide a net improvement in ecosystem and water quality  
            conditions. 

             A.   Requires projects to be selected by the California Water  
               Commission through a competitive public process that ranks  

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               potential projects based on the expected return for public  
               investment as measured by the magnitude of the public  
               benefits provided, pursuant to specified criteria. 

             B.   Specifies projects for which the public benefits are  
               eligible for funding under this section consist of only the  
               following:

                     Surface storage projects identified in the CALFED  
                 Bay-Delta Program Record of Decision, dated August 28,  
                 2000, except for specified prohibited projects.
                     Groundwater storage projects and groundwater  
                 contamination prevention or remediation projects that  
                 provide water storage benefits.
                     Conjunctive use and reservoir reoperation projects.
                     Local and regional surface storage projects that  
                 improve the operation of water systems in the state and  
                 provide public benefits.
           
          1.Water Recycling  .  Authorizes $725 million to be made available  
            to the Legislature for water recycling and advanced treatment  
            technology projects.

             A.   Provides that the grants or loans for water recycling  
               and advanced treatment technology projects, including all  
               of the following:

                     Water recycling projects, include, but not limited  
                 to, treatment, storage, conveyance, and distribution  
                 facilities for potable and nonpotable recycling projects.
                     Contaminant and salt removal projects, including,  
                 but not limited to, groundwater and seawater desalination  
                 and associated treatment, storage, conveyance, and  
                 distribution facilities.
                     Dedicated distribution infrastructure to serve  
                 residential, commercial, agricultural, and industrial  
                 end-user retrofit projects to allow use of recycled  
                 water.
                     Pilot projects for new potable reuse and other salt  
                 and contaminant removal technology.
                     Multibenefit recycled water projects that improve  
                 water quality.
                     Technical assistance and grant writing assistance  
                 for disadvantaged communities.

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             A.   Specifies that at least a 50% local cost share shall be  
               required for projects funded pursuant to this section.   
               That cost share may be suspended or reduced for  
               disadvantaged communities and economically distressed  
               areas.

             B.   Requires projects funded pursuant to this section to be  
               selected on a competitive basis, consistent with water  
               recycling programs, and considering all of the following  
               criteria:

                     Water supply reliability improvement.
                     Water quality and ecosystem benefits related to  
                 decreased reliance on diversions from the Delta or  
                 instream flows.
                     Public health benefits from improved drinking water  
                 quality or supply.
                     Cost-effectiveness.
                     Energy efficiency and greenhouse gas emission  
                 impacts.
                     Reasonable geographic allocation to eligible  
                 projects throughout the state, including both northern  
                 and southern California and coastal and inland regions.

            1. Groundwater Sustainability  .  Authorizes $900 million to be  
             made available to the Legislature for expenditures on, and  
             competitive grants, and loans for, projects to prevent or  
             clean up the contamination of groundwater that serves or has  
             served as a source of drinking water.  Funds appropriated  
             pursuant to this section shall be available to the State  
             Water Resources Control Board for projects necessary to  
             protect public health by preventing or reducing the  
             contamination of groundwater that serves or has served as a  
             major source of drinking water for a community.

             A.   Requires projects to be prioritized based upon the  
                                                                                    following criteria:

                     The threat posed by groundwater contamination to the  
                 affected community's overall drinking water supplies,  
                 including an urgent need for treatment of alternative  
                 supplies or increased water imports if groundwater is not  
                 available due to contamination.

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                     The potential for groundwater contamination to  
                 spread and impair drinking water supply and water storage  
                 for nearby population areas.
                     The potential of the project, if fully implemented,  
                 to enhance local water supply reliability.
                     The potential of the project to maximize  
                 opportunities to recharge vulnerable, high-use  
                 groundwater basins and optimize groundwater supplies.
                     The project addresses contamination at a site for  
                 which the courts or the appropriate regulatory authority  
                 has not yet identified responsible parties, or where the  
                 identified responsible parties are unwilling or unable to  
                 pay for the total cost of cleanup, including water supply  
                 reliability improvement for critical urban water supplies  
                 in designated superfund areas with groundwater  
                 contamination listed on the National Priorities list.

             A.   Specifies that at least 10% of the funds shall be  
               allocated for projects serving severely disadvantaged  
               communities.

             B.   $80 million shall be available for grants for treatment  
               and remediation activities that prevent or reduce the  
               contamination of groundwater that serves as a source of  
               drinking water.

             C.   $100 million shall be made available for competitive  
               grants for projects that develop and implement groundwater  
               plans and projects in accordance with groundwater planning  
               requirements. 

            1. Flood Management  .  Authorizes $395 million shall be  
             available, upon appropriation by the Legislature from the  
             fund, to the Department of Water Resources and the Central  
             Valley Flood Protection Board for the purpose of statewide  
             flood management projects and activities.  Funds shall be  
             allocated to multibenefit projects that achieve public safety  
             and include fish and wildlife habitat enhancement.  The  
             Department of Water Resources shall make its best effort to  
             coordinate this funding with proceeds from Propositions 84  
             and 1E.

             A.   $295 million shall be available to reduce the risk of  
               levee failure and flood in the Delta for any of the  

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               following:

                     Local assistance under the Delta levee maintenance  
                 subventions program, as specified. 
                     Special flood protection projects, as specified. 
                     Levee improvement projects that increase the  
                 resiliency of levees within the Delta to withstand  
                 earthquake, flooding, or sea level rise.
                     Emergency response and repair projects.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee:

           Annual debt service payments of $491 million (General Fund)  
            for 30 years for a total of $14.724 billion assuming an  
            interest rate of 5%.

           Unknown potential costs, likely in the low millions, to the  
            General Fund for the printing and mailing of a supplemental  
            budget. 

           SUPPORT  :   (Verified  8/13/14)

          American Rivers
          Association of California Water Agencies
          Audubon Society
          Azul
          Bay Area Business Council
          California Alliance for Jobs
          California Building Industry Association
          California Chamber of Commerce
          California Coalition of Utility Workers
          California Coastal Protection Network
          California Conference of Carpenters
          California Farm Bureau Federation
          California Labor Federation
          California League of Conservation Voters
          California State Pipe Trades
          California Trout
          California Waterfowl Association
          California-Nevada Conference of Operating Engineers
          Community Alliance with Family Farmers

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          Community Water Center
          Contra Costa Water District
          Defenders of Wildlife
          Ducks Unlimited
          Metropolitan Water District of Southern California
          Natural Resources Defense Council
          Ocean Conservancy
          San Diego County Water Authority
          Santa Clara Valley Water District
          Save Our Shores
          Silicon Valley Leadership Group
          Sonoma County Water Agency
          State Association of Electrical Workers
          State Building and Trades Council
          State Council of Laborers
          Surfrider Foundation
          The Nature Conservancy
          The Otter Project
          Trout Unlimited
          U.S. Green Building Council, California
          Upper San Gabriel Valley Municipal Water District
          Western Growers
          Westlands Water District
          WiLDCOAST
          Yuba County Water Agency



          RM:nl  8/13/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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