Senate BillNo. 936


Introduced by Senator Monning

(Principal coauthor: Senator Cannella)

(Principal coauthors: Assembly Members Alejo and Stone)

February 3, 2014


An act to amend Sections 955.1 and 3440.1 of the Civil Code, to amend Section 9109 of the Commercial Code, to add Section 6537 to the Government Code, to amend Section 1731 of, to add Section 1770 to, and to add Article 5.7 (commencing with Section 849) to Chapter 4 of Part 1 of Division 1 of, the Public Utilities Code, and to add Article 8 (commencing with Section 685) to Chapter 3 of Part 5 of the Monterey Peninsula Water Management District Law (Chapter 527 of the Statutes of 1977), relating to water.

LEGISLATIVE COUNSEL’S DIGEST

SB 936, as introduced, Monning. Monterey Peninsula Water Management District: financing orders and water rate relief bonds.

(1) Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including water corporations. Existing law authorizes the commission to fix just and reasonable rates and charges. The existing Monterey Peninsula Water Management District Law establishes the Monterey Peninsula Water Management District and provides for its powers and purposes.

This bill would authorize the commission to issue financing orders to facilitate the recovery, financing, or refinancing of water supply costs, defined to mean reasonable and necessary costs incurred or expected to be incurred by a qualifying water utility undertaking water supply activities, as specified. The bill would authorize the Monterey Peninsula Water Management District to issue water rate relief bonds if the commission finds that the bonds will provide savings to water customers on the Monterey Peninsula, as specified.

(2) This bill would make legislative findings and declarations as to the necessity of a special statute for the Monterey Peninsula, the California American Water, and the Monterey Peninsula Water Management District.

(3) Existing law makes any public utility, as defined, and any corporation other than a public utility that violates the Public Utilities Act guilty of a crime.

Because a violation of certain provisions of the bill would be a violation of the act, this bill would impose a state-mandated local program by creating a new crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) Under existing law, the Public Utilities Commission has
4regulatory authority over public utilities, including water utilities.
5Existing law authorizes the commission to fix just and reasonable
6rates and charges.

7(b) To address the unique needs for integrated water
8management on the Monterey Peninsula, the Legislature adopted
9special legislation creating the Monterey Peninsula Water
10Management District (Monterey Peninsula Water Management
11District Law, as added by Section 118 of Chapter 527 of the
12Statutes of 1977, as amended).

13(c) California American Water (CAW) is the water utility that
14provides water to most of the residents and businesses within the
15Monterey Peninsula.

16(d) CAW provides water to its customers from the surface water
17in the Carmel River and its tributaries, water in the Carmel Valley
18Alluvial Aquifer that underlies the Carmel River, and water in the
P3    1Seaside Groundwater Basin that includes the Northern and
2Southern Coastal Subunits and the Northern and Southern Inland
3Subareas.

4(e) CAW’s lawful right to obtain water supplies from the Carmel
5Valley Alluvial Aquifer was determined by the State Water
6Resources Control Board (SWRCB) in SWRCB Order No. WR
795-10, dated July 6, 1995. The SWRCB found that CAW does not
8possess the legal right to divert from the Carmel River system the
9amount of water historically, and presently, being diverted, and
10required CAW to diligently pursue a water supply to substitute for
11CAW’s unpermitted diversions. SWRCB Order No. WR 95-10
12limited CAW production from the Carmel River system to 10,308
13acre-feet annually (Water Year 2012), and ordered CAW to
14terminate its unpermitted diversions from the Carmel River, and
15in the interim, to maximize its production from the Seaside
16Groundwater Basin.

17(f) Subsequently, the SWRCB issued a cease and desist order
18(CDO) against CAW in October 2009 as Order No. WR 2009-0060.
19The CDO prescribed a series of significant cutbacks to CAW’s
20production from the Carmel River System from 2010 to December
212016, inclusive. Pursuant to the CDO, CAW’s customers are
22subject to a moratorium on water permits for new construction and
23remodels, and may be subject to water rationing, fines, or both if
24CAW production limits are exceeded.

25(g) CAW’s ability to produce water from the Seaside
26Groundwater Basin has also been limited by the adjudication of
27the Monterey County Superior Court. CAW’s right to groundwater
28from Coastal Subareas and the Laguna Seca Subarea of the Seaside
29Groundwater Basin, without causing adverse effects such as
30seawater intrusion, declining water levels, or land subsidence,
31characterized as a “safe yield,” was determined in California
32American Water Company v. City of Seaside (2010) (183
33Cal.App.4th 471). The 2006 final judgment imposes a series of
34pumping reductions designed to limit production of natural basin
35water to its safe yield, initially set at 3,000 acre-feet per year.
36CAW’s share of the safe yield is reduced proportionately at each
37stage.

38(h) The need for infrastructure to expand CAW sources of water
39has been heightened by the lack of legal water supplies resulting
40from the CDO, SWRCB Order WR 95-10, the listing of the
P4    1California red-legged frog and the steelhead trout as threatened
2species under the federal Endangered Species Act, and the
3 limitations on water from the Seaside Groundwater Basin
4adjudication.

5(i) These circumstances create a special and unique need to
6augment potable water supplies on the Monterey Peninsula.
7Potential infrastructure projects necessary to develop new sources
8of supply to resolve the critical water supply shortage within
9CAW’s Monterey County District include desalination, aquifer
10storage and recovery projects, and the production and use of
11recycled water.

12(j) It may benefit the customers of CAW to finance the capital
13costs associated with the construction and installation of water
14infrastructure, plants, and facilities necessary to resolve the critical
15water supply shortage through an alternative financing mechanism.

16(k) Alternative financing mechanisms exist that can result in
17lower costs to customers of CAW as compared to traditional utility
18financing mechanisms. To use alternative financing mechanisms,
19the Public Utilities Commission must be empowered to issue
20financing orders to allow the issuance of bonds secured by water
21supply property.

22(l) CAW customers may take advantage of additional costs
23savings if a public agency assists in the financing of water project
24capital costs on a tax-exempt basis. It is necessary for California
25to provide express authority for a public agency to issue bonds or
26other evidences of indebtedness on this basis.

27(m) In confirming the Public Utilities Commission’s authority
28to approve water supply property, including a dedicated rate
29component to support the issuance of water rate relief bonds, the
30Legislature is not ratifying or endorsing any particular outcome
31for proceeding A.12-04-019, but rather is authorizing a means by
32which the commission may reduce the cost impact on Monterey
33Peninsula customers if a water supply project is approved.

34

SEC. 2.  

Section 955.1 of the Civil Code is amended to read:

35

955.1.  

(a) Except as provided in Sections 954.5 and 955 and
36subject to subdivisions (b) and (c), a transfer other than one
37intended to create a security interestbegin delete (paragraphend deletebegin insert pursuant to
38paragraphend insert
(1) or (3) of subdivision (a) of Section 9109 of the
39Commercialbegin delete Code)end deletebegin insert Code,end insert of any paymentbegin delete intangible (Sectionend delete
40begin insert intangible, as defined in Sectionend insert 9102 of the Commercialbegin delete Code)end delete
P5    1begin insert Code,end insert and any transfer of accounts, chattel paper, payment
2intangibles, or promissory notes excluded from the coverage of
3Division 9 of the Commercial Code by paragraph (4) of subdivision
4(d) of Section 9109 of the Commercial Code shall be deemed
5perfected as against third persons upon there being executed and
6delivered to the transferee an assignment thereof in writing.

7(b) As between bona fide assignees of the same right for value
8without notice, the assignee first giving noticebegin delete thereofend deletebegin insert of the rightend insert
9 to the obligor in writing has priority.

10(c) The assignment is not, of itself, notice to the obligor so as
11to invalidate any payments made by the obligor to the transferor.

12(d) This section does not apply to transfers or assignments of
13transition property, as defined in Section 840 of the Public Utilities
14Code,begin delete or toend delete transfers or assignments of recovery property, as
15defined in Section 848 of the Public Utilitiesbegin delete Codeend deletebegin insert Code, or
16transfers or assignments of water supply property, as defined in
17Section 849 of the Public Utilities Codeend insert
.

18

SEC. 3.  

Section 3440.1 of the Civil Code is amended to read:

19

3440.1.  

This chapter does not apply to any of the following:

20(a) Things in action.

21(b) Ships or cargoes if either are at sea or in a foreign port.

22(c) The sale of accounts, chattel paper, payment intangibles, or
23promissory notes governed by the Uniform Commercial Code,
24security interests, and contracts of bottomry or respondentia.

25(d) Wines or brandies in the wineries, distilleries, or wine cellars
26of the makers or owners of the wines or brandies, or other persons
27having possession, care, and control of the wines or brandies, and
28the pipes, casks, and tanks in which the wines or brandies are
29contained, if the transfers are made in writing and executed and
30acknowledged, and if the transfers are recorded in the book of
31official records in the office of the county recorder of the county
32in which the wines, brandies, pipes, casks, and tanks are situated.

33(e) A transfer or assignment made for the benefit of creditors
34generally or bybegin delete anyend deletebegin insert anend insert assignee acting under an assignment for
35the benefit of creditors generally.

36(f) Property exempt from enforcement of a money judgment.

37(g) Standing timber.

38(h) Subject to the limitations in Section 3440.3, a transfer of
39personal property if all of the following conditions are satisfied:

P6    1(1) Prior to the date of the intended transfer, the transferor or
2the transferee files a financing statement, with respect to the
3property transferred, authorized in an authenticated record by the
4transferor. The financing statement shall be filed in the office of
5the Secretary of State in accordance with Chapter 5 (commencing
6with Section 9501) of Division 9 of the Commercial Code, but
7may use the terms “transferor” in lieu of “debtor” and “transferee”
8in lieu of “secured party.” The provisions of Chapter 5
9(commencing with Section 9501) of Division 9 of the Commercial
10Code shall apply as appropriate to the financing statement.

11(2) The transferor or the transferee publishes a notice of the
12intended transfer one time in a newspaper of general circulation
13published in the judicial district in which the personal property is
14 located, if there is one, and if there is none in the judicial district,
15then in a newspaper of general circulation in the county embracing
16the judicial district. The publication shall be completed not less
17than 10 days before the date the transfer occurs. The notice shall
18contain the name and address of the transferor and transferee and
19a general statement of the character of the personal property
20intended to be transferred, and shall indicate the place where the
21personal property is located and a date on or after which the transfer
22is to be made.

23(i) Personal property not located within this state at the time of
24the transfer or attachment of the lien if the provisions of this
25subdivision are not used for the purpose of evading this chapter.

26(j) A transfer of property that (1) is subject to a statute or treaty
27of the United States or a statute of this state that provides for the
28 registration of transfers of title or issuance of certificates of title
29and (2) is so far perfected under that statute or treaty that a bona
30fide purchaser cannot acquire an interest in the property transferred
31that is superior to the interest of the transferee.

32(k) A transfer of personal property in connection with a
33transaction in which the property is immediately thereafter leased
34by the transferor from the transferee provided the transferee
35purchased the property for value and in good faithbegin delete (subdivisionend delete
36begin insert pursuant to subdivisionend insert (c) of Section 10308 of the Commercial
37begin delete Code)end deletebegin insert Codeend insert.

38(l) Transition property, as defined in Section 840 of the Public
39Utilities Code,begin delete orend delete recovery property, as defined in Section 848 of
P7    1the Public Utilitiesbegin delete Codeend deletebegin insert Code, or water supply property, as defined
2in Section 849 of the Public Utilities Codeend insert
.

3(m) A transfer of property by any governmental entity.

4

SEC. 4.  

Section 9109 of the Commercial Code is amended to
5read:

6

9109.  

(a) Except as otherwise provided in subdivisions (c) and
7(d), this division applies to each of the following:

8(1) A transaction, regardless of its form, that creates a security
9interest in personal property or fixtures by contract.

10(2) An agricultural lien.

11(3) A sale of accounts, chattel paper, payment intangibles, or
12promissory notes.

13(4) A consignment.

14(5) A security interest arising under Section 2401 or 2505, begin delete or
15 underend delete
subdivision (3) of Section 2711, or subdivisionbegin delete (5)end deletebegin insert (e)end insert of
16Section 10508, as provided in Section 9110.

17(6) A security interest arising under Section 4210 or 5118.

18(b) The application of this division to a security interest in a
19secured obligation is not affected by the fact that the obligation is
20itself secured by a transaction or interest to which this division
21does not apply.

22(c) This division does not apply to the extent that either of the
23following conditions is satisfied:

24(1) A statute, regulation, or treaty of the United States preempts
25this division.

26(2) The rights of a transferee beneficiary or nominated person
27under a letter of credit are independent and superior under Section
285114.

29(d) This division does not apply to any of the following:

30(1) A landlord’s lien, other than an agricultural lien.

31(2) A lien, other than an agricultural lien, given by statute or
32other rule of law for services or materials,begin delete butend deletebegin insert howeverend insert Section
339333 applies with respect to priority of the lien.

34(3) An assignment of a claim for wages, salary, or other
35compensation of an employee.

36(4) A sale of accounts, chattel paper, payment intangibles, or
37promissory notes as part of a sale of the business out of which they
38arose.

P8    1(5) An assignment of accounts, chattel paper, payment
2intangibles, or promissory notes which is for the purpose of
3collection only.

4(6) An assignment of a right to payment under a contract to an
5assignee that is also obligated to perform under the contract.

6(7) An assignment of a single account, payment intangible, or
7promissory note to an assignee in full or partial satisfaction of a
8preexisting indebtedness.

9(8) begin deleteAny end deletebegin insertA end insertloan made by an insurance company pursuant to the
10provisions of a policy or contract issued by it and upon the sole
11security of the policy or contract.

12(9) An assignment of a right represented by a judgment, other
13than a judgment taken on a right to payment that was collateral.

14(10) A right of recoupment or setoff, provided that both of the
15following sections apply:

16(A) Section 9340 applies with respect to the effectiveness of
17rights of recoupment or setoff against deposit accounts.

18(B) Section 9404 applies with respect to defenses or claims of
19an account debtor.

20(11) The creation or transfer of an interest in or lien on real
21property, including a lease or rents thereunder, except to the extent
22that provision is made for each of the following:

23(A) Liens on real propertybegin delete inend deletebegin insert pursuant toend insert Sections 9203 and
249308.

25(B) Fixturesbegin delete inend deletebegin insert pursuant toend insert Section 9334.

26(C) Fixture filingsbegin delete inend deletebegin insert pursuant toend insert Sections 9501, 9502, 9512,
279516, and 9519.

28(D) Security agreements covering personal and real propertybegin delete inend delete
29begin insert pursuant toend insert Section 9604.

30(12) An assignment of a claim arising in tort, other than a
31commercial tort claim,begin delete butend deletebegin insert howeverend insert Sections 9315 and 9322 apply
32with respect to proceeds and priorities in proceeds.

33(13) An assignment of a deposit account in a consumer
34transaction,begin delete butend deletebegin insert howeverend insert Sections 9315 and 9322 apply with respect
35to proceeds and priorities in proceeds.

36(14) begin deleteAny end deletebegin insertA end insertsecurity interest created by the assignment of the
37benefits ofbegin delete anyend deletebegin insert aend insert public construction contract under the
38Improvement Act of 1911 (Division 7 (commencing with Section
395000) of the Streets and Highways Code).

P9    1(15) Transition property, as defined in Section 840 of the Public
2Utilities Code, except to the extent that the provisions of this
3division are referred to in Article 5.5 (commencing with Section
4840) of Chapter 4 of Part 1 of Division 1 of the Public Utilities
5Code,begin delete andend delete recovery property, as defined in Section 848 of the
6Public Utilities Code, except to the extent that the provisions of
7this division are referred to in Article 5.6 (commencing with
8Section 848) of Chapter 4 of Part 1 of Division 1 of the Public
9Utilitiesbegin delete Codeend deletebegin insert Code, and water supply property, as defined in
10Section 849 of the Public Utilities Code, except to the extent that
11the provisions of this division are referred to in Article 5.7
12(commencing with Section 849) of Chapter 4 of Part 1 of Division
131 of the Public Utilities Codeend insert
.

14(16) A claim or right of an employee or employee’s dependents
15to receive workers’ compensation under Division 1 (commencing
16with Section 50) or Division 4 (commencing with Section 3200)
17of the Labor Code.

18(17) A transfer by a government or governmental unit.

19

SEC. 5.  

Section 6537 is added to the Government Code, to
20read:

21

6537.  

(a) The Legislature finds that it is in the best interest of
22the communities on the Monterey Peninsula that any joint exercise
23of powers authority formed under this article to which the Monterey
24Peninsula Water Management District and one or more other public
25agencies are members is authorized to issue water rate relief bonds,
26hereafter “agency bonds,” the proceeds of which will be used to
27purchase water rate relief bonds that are authorized to be issued
28by an affiliate of a qualifying water utility in a financing order
29issued pursuant to Article 5.7 (commencing with Section 849) of
30Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, to
31fund any necessary reserves and to pay the costs of issuance of the
32agency bonds. The agency bonds may be issued only if the
33commission finds in a financing order that the issuance, due to the
34availability of a federal or state income tax exemption, will provide
35savings to water customers on the Monterey Peninsula.

36(b) Notwithstanding any other provision of law, the joint powers
37agency may issue bonds pursuant to Article 2 (commencing with
38Section 6540) or Article 4 (commencing with Section 6584). If
39the agency issues bonds under this section, the agency,
40notwithstanding Article 5 (commencing with Section 53760) of
P10   1Chapter 4 of Part 1 of Division 2 of Title 5, shall not be eligible
2to file for bankruptcy pursuant to Chapter 9 (commencing with
3Section 901) of Title 11 of the United States Code as long as the
4bonds and any related financing costs are outstanding and unpaid
5and shall remain ineligible for a period of one year and one day
6after repayment of the bonds and any related financing costs.

7

SEC. 6.  

Article 5.7 (commencing with Section 849) is added
8to Chapter 4 of Part 1 of Division 1 of the Public Utilities Code,
9to read:

10 

11Article 5.7.  Monterey Peninsula Water Supply Securitization
12Act
13

 

14

849.  

For purposes of this article, the following definitions shall
15apply:

16(a) “Ancillary agreement” means a bond insurance policy, letter
17of credit, reserve account, surety bond, swap arrangement, hedging
18arrangement, liquidity or credit support arrangement, or other
19similar agreement or arrangement entered into in connection with
20the issuance of water rate relief bonds that is designed to promote
21the credit quality and marketability of the bonds or to mitigate the
22risk of an increase in interest rates.

23(b) “Customer” means an individual, governmental body, trust,
24business entity, or nonprofit organization that is a customer of the
25qualifying water utility, has responsibility for a service address
26provided water service by the utility, or consumes water that has
27been transmitted or distributed by means of distribution facilities.

28(c) “District” means the Monterey Peninsula Water Management
29District, or its successor or assignee.

30(d) “Financing costs” means the costs to issue, service, repay,
31or refinance water rate relief bonds, whether incurred or paid upon
32issuance of the bonds or over the life of the bonds, and approved
33for recovery by the commission in a financing order. “Financing
34costs” may include any of the following:

35(1) Principal, interest, and redemption premiums that are payable
36on water rate relief bonds.

37(2) A payment required under an ancillary agreement and an
38amount required to fund or replenish a reserve account or other
39account established under an indenture, ancillary agreement, or
40other financing document relating to the water rate relief bonds.

P11   1(3) Costs of retiring or funding an existing debt and equity
2security of a qualifying water utility in connection with the issuance
3of water rate relief bonds to the extent the securities were issued
4for the purpose of financing water supply costs.

5(4) Costs incurred by, on behalf of, or allocated to, a qualifying
6water utility to obtain modifications of, or amendments to, an
7indenture, financing agreement, security agreement, or similar
8agreement or instrument relating to an existing secured or
9unsecured obligation of a qualifying water utility or an affiliate of
10a qualifying water utility, or any costs incurred by or allocated to
11a qualifying water utility to obtain the consent, release, waiver, or
12approval from the holder of the obligation, that are necessary to
13be incurred to permit a qualifying water utility to issue or cause
14the issuance of water rate relief bonds.

15(5) Taxes, franchise fees, or license fees imposed on water
16supply charges.

17(6) Costs related to issuing and servicing water rate relief bonds
18or the application for a financing order, including, without
19limitation, servicing fees and expenses, trustee fees and expenses,
20legal fees and expenses, accounting fees, administrative fees,
21underwriting and placement fees, financial advisory fees,
22capitalized interest, rating agency fees, and any other related costs
23that are approved for recovery in the financing order, including
24costs incurred by a public financing entity.

25(7) Other costs authorized by a financing order.

26(e) “Financing entity” means either or both of the following:

27(1) The qualifying water utility, or its subsidiary or affiliate,
28that is authorized by the commission to issue water rate relief
29bonds, or acquire water supply property, or both, pursuant to a
30financing order.

31(2) A public financing entity authorized to issue water rate relief
32bonds pursuant to a financing order.

33(f) “Financing order” means an order of the commission adopted
34in accordance with this article, which shall include, without
35limitation, a procedure to require the expeditious approval by the
36commission of periodic adjustments to water supply charges to
37ensure the full and timely recovery of all water supply costs and
38all financing costs authorized for recovery under the financing
39order.

P12   1(g) “Qualifying water utility” means California American Water,
2or any successor public entity described in Section 2701 of the
3Public Utilities Code that is engaged in the delivery of water to
4customers on the Monterey Peninsula.

5(h) “Public financing entity” means any of the following:

6(1) The district.

7(2) A joint exercise of powers authority in which the district is
8a member.

9(3) A public agency that is authorized to issue water rate relief
10bonds, or acquire water supply property, or both.

11(i) “Service territory” means the geographical area within or
12surrounding the Monterey Peninsula that the qualifying water
13utility provides water service to in accordance with its certificate
14of public convenience and necessity and within which water supply
15charges may be imposed and collected as further described in the
16financing order.

17(j) “Water rate relief bonds” means bonds, notes, certificates of
18participation or beneficial interest, or other evidences of
19indebtedness or ownership, issued pursuant to an executed
20indenture or other agreement of a financing entity, the proceeds
21of which are used, directly or indirectly, to provide, recover,
22finance, or refinance water supply costs and financing costs, and
23that are directly or indirectly secured by, or payable from, water
24supply property. Water rate relief bonds may be issued
25simultaneously by two financing entities.

26(k) “Water supply activity” means an activity or activities by
27or on behalf of a qualifying water utility in connection with the
28acquisition and construction of infrastructure, plants, including,
29without limitation, desalination facilities, pipelines, and other
30facilities, to develop new sources of supply.

31(l) “Water supply charges” means those nonbypassable rates
32and other charges, including, but not limited to, distribution,
33connection, disconnection, and termination rates and charges, that
34are authorized by the commission in a financing order to recover
35water supply costs and all financing costs specified in a financing
36order.

37(m) “Water supply costs” means any reasonable and necessary
38costs, including capitalized interest costs relating to regulatory
39assets and capitalized costs associated with permitting, design, and
40engineering work, approved in a financing order, incurred or
P13   1expected to be incurred by a qualifying water utility in undertaking
2water supply activities. Water supply costs include preliminary
3expenses and investments associated with water supply activities
4that are incurred prior to the issuance of a financing order and that
5are to be reimbursed from the proceeds of water rate relief bonds.

6(n) (1) “Water supply property” means the property right created
7pursuant to this article, including, without limitation, the right,
8title, and interest of the qualifying water utility or its transferee in
9all of the following:

10(A) In and to the water supply charges established pursuant to
11a financing order, including all rights to obtain adjustments to the
12water supply charges in accordance with Section 849.1 and the
13financing order.

14(B) To be paid the amount that is determined in a financing
15order to be the amount that the qualifying water utility or its
16transferee is lawfully entitled to receive pursuant to the provisions
17of this article and the proceeds thereof, and in and to all revenues,
18collections, claims, payments, money, or proceeds of or arising
19from the water supply charges that are the subject of a financing
20order.

21(2) “Water supply property” shall constitute a current property
22right notwithstanding the fact that the value of the property right
23will depend on customers using water or, in those instances where
24customers are customers of the qualifying water utility, the
25qualifying water utility performing certain services.

26

849.1.  

(a) (1) The commission may issue financing orders in
27accordance with this article to facilitate the recovery, financing,
28or refinancing of water supply costs. A financing order may be
29adopted only upon the application of the qualifying water utility
30and shall become effective in accordance with its terms.

31(2) Commencing January 1, 2015, the qualifying water utility
32may apply to the commission for a determination that some or all
33of the qualifying water utility’s water supply costs may be
34recovered through water supply charges, which would be water
35supply property under this article.

36(3) The qualifying water utility may request this determination
37by the commission in a separate proceeding or in an existing
38proceeding, or both. A public financing entity that proposes to
39issue water rate relief bonds pursuant to Article 8 of Chapter 3 of
40Part 5 of the Monterey Peninsula Water Management District Law,
P14   1as added by Chapter 527 of the Statutes of 1977, or Section 6537
2of the Government Code, shall provide information as requested
3by the commission in connection with the application and
4proceeding.

5(4) In its application the qualifying water utility shall specify
6how customers may benefit from reduced rates on a present value
7basis through the issuance of water rate relief bonds as compared
8to the use of traditional utility financing mechanisms. If a public
9financing entity proposes to issue water rate relief bonds, it shall
10provide evidence to the commission that the issuance of water rate
11relief bonds by the public financing entity, due to the availability
12of a federal or state income tax exemption, will provide savings
13to water customers on the Monterey Peninsula.

14(5) The commission shall establish procedures for the
15expeditious processing of financing order applications, including
16the approval or disapproval of the qualifying water utility’s
17application, within 120 days of the application submission.

18(6) The commission shall not refuse to allow the recovery of
19any costs associated with the performance of water supply activities
20by a qualifying water utility solely because the qualifying water
21utility has elected or may elect to finance the performance of those
22activities through a financing mechanism other than the issuance
23of water rate relief bonds as long as that alternative financing
24mechanism is reasonable and prudent.

25(b) The commission shall authorize the imposition and collection
26of water supply charges in one or more financing orders if the
27commission determines, as part of its findings in connection with
28the financing order, that the imposition and collection of the water
29supply charges, and the issuance of water rate relief bonds payable
30from those charges, would reduce the rates on a present value basis
31that customers within the qualifying water utility’s service territory
32would pay as compared to the use of traditional utility financing
33mechanisms. Water supply charges shall only be imposed on
34existing and future customers in the service territory as determined
35in the financing order. Customers within the service territory shall
36continue to pay water supply charges until the water rate relief
37bonds and all financing costs are paid in full by the financing entity.
38Once the water rate relief bonds and all financing costs have been
39paid in full, the payment by customers of water supply charges
40shall be terminated.

P15   1(c) The commission shall establish in a financing order an
2effective mechanism that ensures recovery of water supply costs
3and financing costs through water supply charges will be
4nonbypassable and will be recovered from existing and future
5customers in the service territory.

6(d) A financing order may specify how amounts collected from
7a customer shall be allocated between water supply charges and
8other charges of the qualifying water utility.

9(e) (1) Notwithstanding Section 455.5 or 1708, or any other
10provision of law, and except as otherwise provided in this
11subdivision with respect to adjustment of water supply charges
12pursuant to subdivision (g), water supply property that has been
13made the basis for the issuance of water rate relief bonds, the
14financing order, and the water supply charges shall be irrevocable.
15The commission shall not, either by rescinding, altering, or
16amending the financing order or otherwise, revalue or revise for
17ratemaking purposes the water supply costs or the financing costs,
18determine that the water supply charges are unjust or unreasonable,
19or in any way reduce or impair the value of water supply property
20either directly or indirectly by taking water supply charges into
21account when setting other rates for the qualifying water utility.
22The amount of revenues arising shall not be subject to reduction,
23impairment, postponement, or termination.

24(2) The State of California does hereby pledge and agree with
25the qualifying water utility, owners of water supply property, the
26financing entities, and owners of water rate relief bonds that the
27state shall neither limit nor alter, except as otherwise provided
28with respect to adjustment of water supply charges pursuant to
29subdivision (g), the water supply charges, water supply property,
30financing orders, or any rights under a financing order until the
31water rate relief bonds, together with the interest on the bonds,
32and all related financing costs are fully paid and discharged, or,
33in the alternative, have been refinanced through an additional issue
34of water rate relief bonds, provided nothing contained in this
35section shall preclude the limitation or alteration if and when
36adequate provision shall be made by law for the protection of the
37qualifying water utility, financing entities, and owners. The
38financing entity is authorized to include this pledge and undertaking
39for the state in the water rate relief bonds. Notwithstanding any
40other provision of this section, the commission shall approve
P16   1adjustments to the water supply charges as may be necessary to
2ensure timely payment of all water supply costs and all financing
3costs that are the subject of the financing order.

4(f) (1) Neither financing orders nor water rate relief bonds issued
5under this article shall constitute a debt or liability of the state or
6of any political subdivision of the state except a public financing
7entity, nor shall they constitute a pledge of the full faith and credit
8of the state or any of its political subdivisions, but are payable
9solely from the funds provided therefor under this article and shall
10be consistent with Sections 1 and 18 of Article XVI of the
11California Constitution. This subdivision shall not preclude bond
12guarantees or enhancements pursuant to this article or pursuant to
13Article 8 of Chapter 3 of Part 5 of the Monterey Peninsula Water
14Management District Law, as added by Chapter 527 of the Statutes
15of 1977, or Section 6537 of the Government Code. A water rate
16relief bond shall contain on the face of the bond a statement to the
17following effect: “Neither the full faith and credit nor the taxing
18power of the State of California is pledged to the payment of the
19principal of, or interest on, this bond.”

20(2) The issuance of water rate relief bonds under this article
21shall not directly, indirectly, or contingently obligate the state or
22any political subdivision of the state to levy or to pledge any form
23of taxation therefor or to make any appropriation for their payment.
24Nothing in this paragraph shall prevent or be construed to prevent
25a public financing entity from pledging water supply property, or
26payments made on water rate relief bonds, together with any
27reserves or overcollateralization amounts approved in a financing
28order, to the payment of the water rate relief bonds.

29(g) The commission shall, in any financing order, provide for
30a procedure for the expeditious approval by the commission of
31periodic adjustments to the water supply charges that are the subject
32of the financing order to ensure the full and timely recovery of all
33water supply costs and all financing costs authorized for recovery
34under the financing order. The procedure shall require the
35commission to determine whether adjustments are required on
36each anniversary of the issuance of the financing order, and at
37additional intervals, as may be provided for in the financing order,
38and shall require for the adjustments, if required, to be approved
39within 30 days of each anniversary of the issuance of the financing
P17   1order, or of each additional interval provided for in the financing
2order.

3(h) Water supply charges are water supply property when, and
4to the extent that, a financing order authorizing the water supply
5charges has become effective in accordance with this article, and
6the water supply property shall thereafter continuously exist as
7property for all purposes with all of the rights and privileges of
8this article for the period and to the extent provided in the financing
9order, but in any event until the water rate relief bonds, including
10all principal, premium, if any, and interest with respect to the bonds
11and all other financing costs are paid in full. A financing order
12may provide that the creation of water supply property shall be
13simultaneous with the sale of the water supply property to a
14transferee or assignee as provided in the application and the pledge
15of the water supply property to secure water rate relief bonds.

16(i) Any surplus water supply charges in excess of the necessary
17amounts to pay the principal premium, if any, and interest on the
18water rate relief bonds and all other financing costs shall be credited
19to customers through the adjustment mechanism described in
20subdivision (g) or used to prepay or defease water rate relief bonds,
21so long as this would not result in a recharacterization of the tax,
22accounting, and other intended characteristics of the financing,
23including, but not limited to, the following:

24(1) Avoiding the recognition of debt on the qualifying water
25utility’s balance sheet for financial accounting and regulatory
26purposes.

27(2) Treating the water rate relief bonds as debt of the qualifying
28water utility or its affiliates for federal income tax purposes.

29(3) Treating the transfer of the water supply property by the
30qualifying water utility as a true sale for bankruptcy purposes.

31(4) Avoiding any adverse impact of the financing on the
32qualifying water utility’s credit rating.

33

849.2.  

(a) A qualifying water utility for which a financing
34order has been issued shall cause the proceeds of any water rate
35relief bonds issued pursuant to a financing order to be placed in a
36separate account. A qualifying water utility may use the proceeds
37of the issuance of water rate relief bonds for paying water supply
38costs and financing costs and for no other purpose.

39(b) A financing order may require the qualifying utility to file
40with the commission a periodic report showing the receipt and
P18   1disbursement of proceeds of water rate relief bonds. A financing
2order may authorize the staff of the commission to review and
3audit the books and records of the qualifying water utility relating
4to the receipt and disbursement of proceeds of water rate relief
5bonds. The provisions of this subdivision shall not be construed
6to limit the authority of the commission to investigate the practices
7of the qualifying utility or to audit the books and records of the
8qualifying water utility.

9(c) A qualifying water utility for which a financing order has
10been issued shall annually provide to its customers a concise
11explanation of the water supply charges approved in a financing
12order, as modified by subsequent issuances of water rate relief
13bonds authorized under a financing order, if any, and by application
14of the adjustment mechanism as provided in the financing order.
15These explanations may be made by bill inserts, Internet Web site
16information, or other appropriate means. If water rate relief bonds
17are issued by a public financing entity, the public financing entity,
18or its trustee or representative, shall provide the information to the
19qualifying water utility as reasonably requested in order to comply
20with its obligations under this section.

21(d) The failure of a qualifying water utility to apply the proceeds
22of water rate relief bonds in a reasonable, prudent, and appropriate
23manner or otherwise comply with any provision of this section
24shall not invalidate, impair, or affect any financing order, water
25supply property, water supply charges, or water rate relief bonds.

26

849.3.  

(a) Financing entities may issue water rate relief bonds
27upon approval by the commission in the financing order. Water
28rate relief bonds shall be nonrecourse to the credit or any assets
29of the qualifying water utility, other than the water supply property
30as specified in the financing order.

31(b) A qualifying water utility may sell and assign all or portions
32of its interest in water supply property to an affiliate. A qualifying
33water utility or its affiliates may sell or assign their interests to one
34or more financing entities authorized under this article that make
35that property the basis for issuance of water rate relief bonds to
36the extent approved in the financing order. A qualifying water
37utility, its affiliates, or financing entities may pledge and assign
38water supply property as collateral, directly or indirectly, to the
39extent approved in the financing order providing for a security
40interest in the water supply property, in the manner set forth in
P19   1Section 849.4. In addition, water supply property may be sold or
2assigned by either of the following:

3(1) The financing entity or a trustee for the holders of water rate
4relief bonds or the holder of an ancillary agreement in connection
5with the exercise of remedies upon a default.

6(2) A person acquiring the water supply property after a sale or
7assignment made pursuant to this article.

8(c) To the extent that any interest in water supply property is
9sold, assigned, or pledged as collateral, the commission shall
10authorize the qualifying water utility to contract with the financing
11entity or entities that it will continue to operate its system to
12provide service to its customers, will collect water supply charges
13for the benefit and account of the financing entities and their
14pledgees, and will account for and remit these amounts to or for
15the account of the financing entities and their pledgees. Contracting
16with a financing entity in accordance with that authorization shall
17not impair or negate the characterization of the sale, assignment,
18or pledge as an absolute transfer, a true sale, or security interest,
19as applicable.

20(d) Water supply property that is specified in a financing order
21shall constitute an existing, present property right, notwithstanding
22the fact that the imposition and collection of water supply charges
23depend on the qualifying water utility continuing to provide water
24service or continuing to perform its servicing functions relating to
25the collection of water supply charges or on the level of future
26water consumption. Water supply property shall exist whether or
27not the water supply charges have been billed, have accrued, or
28have been collected and notwithstanding the fact that the value for
29a security interest in the water supply property, or amount of the
30water supply property, is dependent on the future provision of
31service to customers by the qualifying water utility. All water
32supply property specified in a financing order shall continue to
33exist until the water supply bonds issued pursuant to a financing
34order and all other financing costs are paid in full.

35(e) If a qualifying water utility defaults on any required payment
36of water supply charge revenues, a court, upon application by an
37interested party and without limiting any other remedies available
38to the applying party, shall order the sequestration and payment
39of the water supply charges, and the proceeds of the water supply
40charges, for the benefit of bondholders, any assignee and financing
P20   1entities or their pledgees, and the counterparties to any ancillary
2agreement. The order shall remain in full force and effect
3notwithstanding bankruptcy, reorganization, or other insolvency
4proceedings with respect to the qualifying water utility or any
5affiliate of the qualifying water utility.

6(f) Water supply property, water supply charges, and the
7interests of an assignee, bondholder or financing entity, or any
8pledgee in water supply property and water supply charges are not
9subject to setoff, counterclaim, surcharge, or defense by the
10qualifying utility or any other person or in connection with the
11bankruptcy, reorganization, or other insolvency proceeding of the
12qualifying water utility, any affiliate of the qualifying water utility,
13or any other entity.

14(g) Notwithstanding Section 1708 or any other provision of law,
15any requirement under this article, or a financing order that the
16 commission take action with respect to the subject matter of a
17financing order, shall be binding upon the commission, as it may
18be constituted from time to time, and any successor agency exerting
19functions similar to the commission. The commission shall not
20have authority to rescind, alter, or amend that requirement in a
21financing order. The approval by the commission in a financing
22order of the issuance by the qualifying water utility or a financing
23entity of water rate relief bonds shall include the approvals, if any,
24required by Article 5 (commencing with Section 816) and Section
25701.5. Section 701.5 shall not be construed to prohibit the issuance
26of water rate relief bonds upon the terms and conditions approved
27by the commission in a financing order. Section 851 is not
28applicable to the transfer or pledge of water supply property, the
29issuance of water rate relief bonds, or related transactions approved
30in a financing order.

31

849.4.  

(a) A security interest in water supply property is valid,
32is enforceable against the pledgor and third parties, is subject to
33the rights of any third party holding a security interest in the water
34supply property perfected in the manner described in this section,
35and attaches when all of the following occur:

36(1) The commission has issued the financing order authorizing
37the water supply charges included in the water supply property.

38(2) Value has been given by the pledgees of the water supply
39property.

P21   1(3) The pledgor has signed a security agreement that includes
2an indenture or financing agreement relating to the issuance of the
3water rater relief bonds covering the water supply property.

4(b) A valid and enforceable security interest in water supply
5property is perfected when it has attached and when a financing
6statement has been filed in accordance with Chapter 5
7(commencing with Section 9501) of Division 9 of the Commercial
8Code, naming the pledgor of the water supply property as “debtor”
9and identifying the water supply property. Any description of the
10water supply property shall be sufficient if it refers to the financing
11order creating the water supply property. A copy of the financing
12statement shall be filed with the commission by the qualifying
13water utility that is the pledgor or transferor of the water supply
14property, and the commission may require the qualifying water
15utility to make other filings with respect to the security interest in
16accordance with procedures it may establish, provided that the
17filings do not affect the perfection of the security interest.

18(c) A perfected security interest in water supply property is a
19continuously perfected security interest in all revenues and
20proceeds arising with respect to the water supply property, whether
21or not the revenues or proceeds have accrued. Conflicting security
22interests shall rank according to priority in time of perfection.
23Water supply property shall constitute property for all purposes,
24including for contracts securing water rate relief bonds, whether
25or not the revenues and proceeds arising with respect to the water
26supply property have accrued.

27(d) Subject to the terms of the security agreement covering the
28water supply property and the rights of any third party holding a
29security interest in the water supply property perfected in the
30manner described in this section, the validity and relative priority
31of a security interest created under this section is not defeated or
32adversely affected by the commingling of revenues arising with
33respect to the water supply property with other funds of the
34qualifying water utility that is the pledgor or transferor of the water
35supply property, or by any security interest in a deposit account
36of that qualifying water utility perfected under Division 9
37(commencing with Section 9101) of the Commercial Code into
38which the revenues are deposited. Subject to the terms of the
39security agreement, upon compliance with the requirements of
40subdivision (b) of Section 9312 of the Commercial Code, the
P22   1pledgees of the water supply property shall have a perfected
2security interest in all cash and deposit accounts of the qualifying
3water utility in which revenues arising with respect to the water
4supply property have been commingled with other funds, but the
5perfected security interest shall be limited to an amount not greater
6than the amount of the revenues with respect to the water supply
7property received by the qualifying water utility within 12 months
8before either of the following:

9(1) A default under the security agreement.

10(2) The institution of insolvency proceedings by or against the
11qualifying water utility, less payments from the revenues to the
12pledgees during that 12-month period.

13(e) If a default occurs under the security agreement covering
14the water supply property, the pledgees of the water supply
15property, subject to the terms of the security agreement, shall have
16all rights and remedies of a secured party upon default under
17Division 9 (commencing with Section 9101) of the Commercial
18Code, and shall be entitled to foreclose or otherwise enforce their
19security interest in the water supply property, subject to the rights
20of any third party holding a prior security interest in the water
21supply property perfected in the manner provided in this section.
22In addition, the commission may require, in the financing order
23creating the water supply property, that in the event of default by
24the qualifying water utility in payment of revenues arising with
25respect to the water supply property, the commission and any
26successor to the commission, upon the application by the pledgees
27or transferees, including transferees under Section 849.5, of the
28water supply property, and without limiting any other remedies
29available to the pledgees or transferees by reason of the default,
30shall order the sequestration and payment to the pledgees or
31transferees of revenues arising with respect to the water supply
32property. Any order shall remain in full force and effect
33notwithstanding bankruptcy, reorganization, or other insolvency
34proceedings with respect to the debtor, pledgor, or transferor of
35the water supply property. Any surplus in excess of amounts
36necessary to pay principal, premium, if any, interest on the water
37rate relief bonds, and other financing costs arising under the
38security agreement, shall be remitted to the debtor or to the pledgor
39or transferor.

P23   1(f) Sections 9204 and 9205 of the Commercial Code shall apply
2to a pledge of water supply property by a qualifying water utility,
3an affiliate of a qualifying water utility, or a financing entity, other
4than a public financing entity.

5(g) (1) This section sets forth the terms by which a consensual
6security interest shall be created and perfected in the water supply
7property. Unless otherwise ordered by the commission with respect
8to any series of water rate relief bonds on or prior to the issuance
9of the series, there shall exist a statutory lien as provided in this
10subdivision.

11(2) Upon the effective date of the financing order, there shall
12exist a first priority lien on all water supply property then existing
13or thereafter arising pursuant to the terms of the financing order.
14This lien shall automatically arise pursuant to this section without
15any action on the part of the qualifying water utility, any affiliate
16of the qualifying water utility, the issuing entity, or any other
17person. This lien shall secure all obligations, then existing and
18subsequently arising, to the holders of the water rate relief bonds
19issued pursuant to the financing order, the trustee or representative
20for the holders, and any other entity specified in the financing
21order. The persons for whose benefit this lien is established shall,
22upon occurrence of any defaults specified in the financing order,
23have all rights and remedies of a secured party upon default under
24Chapter 1 (commencing with Section 9101) of Division 9 of the
25Commercial Code, and shall be entitled to foreclose or otherwise
26enforce this statutory lien in the water supply property. This lien
27shall attach to the water supply property regardless of who shall
28own, or shall subsequently be determined to own, the water supply
29property, including any qualifying water utility, affiliate of the
30qualifying water utility, financing entity, or any other person. This
31lien shall be valid, perfected, and enforceable against the owner
32of the water supply property and all third parties upon the
33effectiveness of the financing order without any further public
34notice, provided, however, that any person may, but shall not be
35required to, file a financing statement in accordance with
36subdivision (b). These financing statements may be protective
37filings and shall not be evidence of the ownership of the water
38supply property.

39(h) Notwithstanding any other provision of law, Section 5451
40of the Government Code shall apply to any pledge by the public
P24   1financing entity of water supply property or other security for any
2water rate relief bonds issued by a public financing entity.

3

849.5.  

(a) A sale, assignment, or transfer of water supply
4property by a qualifying water utility to an affiliate or to a financing
5entity, or by an affiliate of a qualifying water utility or a financing
6entity to another financing entity, which the parties, in the
7governing documentation, have expressly stated to be a sale or
8other absolute transfer, in a transaction approved in a financing
9order, shall be treated as an absolute transfer of all of the
10transferor’s right, title, and interest, as in a true sale, and not as a
11pledge or other financing order of the water supply property, other
12than for federal and state income and franchise tax purposes.

13(b) The characterization of the sale, assignment, or transfer as
14an absolute transfer and true sale and the corresponding
15characterization of the property interest of the purchaser shall not
16be affected or impaired by, among other things, the occurrence of
17any of the following:

18(1) Commingling of water supply revenues with other amounts.

19(2) The retention by the seller of either of the following:

20(A) A partial or residual interest, including an equity interest,
21in the water supply property, whether direct or indirect, subordinate
22or otherwise.

23(B) The right to recover costs associated with taxes, franchise
24fees, or license fees imposed on the collection of water supply
25revenues.

26(3) Any recourse that the purchaser may have against the seller.

27(4) Any indemnification rights, obligations, or repurchase rights
28made or provided by the seller.

29(5) The obligation of the seller to collect water supply revenues
30on behalf of an assignee.

31(6) The treatment of the sale, assignment, or transfer for tax,
32financial reporting, or other purposes.

33(7) Any adjustment of the water supply charges as provided in
34the financing order.

35(c) A sale, assignment, or transfer of water supply property shall
36be deemed perfected against third persons when both of the
37following occur:

38(1) The commission issues the financing order authorizing the
39water supply charges included in the water supply property.

P25   1(2) An assignment of the water supply property in writing has
2been executed and delivered to the transferee.

3(d) As between bona fide assignees of the same right for value
4without notice, the assignee first filing a financing statement in
5accordance with Chapter 5 (commencing with Section 9501) of
6Division 9 of the Commercial Code naming the assignor of the
7water supply property as debtor and identifying the water supply
8property has priority. Any description of the water supply property
9shall be sufficient if it refers to the financing order creating the
10water supply property. A copy of the financing statement shall be
11filed by the assignee with the commission, and the commission
12may require the assignor or the assignee to make other filings with
13respect to the transfer in accordance with procedures it may
14establish, but these filings shall not affect the perfection of the
15transfer.

16

849.6.  

A successor to the qualified water utility, whether
17pursuant to bankruptcy, reorganization, or other insolvency
18proceeding, or pursuant to merger, sale, or transfer, by operation
19of law, or otherwise, shall perform and satisfy all obligations of
20the qualifying water utility pursuant to this article in the same
21manner and to the same extent as the qualified water utility,
22including, but not limited to, collecting and paying to the holders
23of water rate relief bonds or any financing entities or their pledgees
24revenues arising with respect to the water supply property sold to
25the applicable financing entity or pledged to secure water rate relief
26bonds.

27

SEC. 7.  

Section 1731 of the Public Utilities Code is amended
28to read:

29

1731.  

(a) The commission shall set an effective date when
30issuing an order or decision. The commission may set the effective
31date of an order or decision prior to the date of issuance of the
32order or decision.

33(b) (1) Afterbegin delete anyend deletebegin insert anend insert order or decision has been made by the
34commission,begin delete anyend deletebegin insert aend insert party to the action or proceeding, orbegin delete any
35stockholder or bondholderend delete
begin insert a stockholder, bondholder,end insert or other
36party pecuniarily interested in the public utility affectedbegin delete,end delete may apply
37for a rehearing in respect tobegin delete anyend delete matters determined in the action
38or proceeding and specified in the application for rehearing. The
39commission may grant and hold a rehearing on those matters, if
40in its judgment sufficient reason is made to appear.begin delete Noend deletebegin insert Aend insert cause of
P26   1action arising out of any order or decision of the commission shall
2begin insert notend insert accrue in any court to any corporation or person unless the
3corporation or person has filed an application to the commission
4for a rehearing within 30 days after the date of issuance or within
510 days after the date of issuance in the case of an order issued
6pursuant to either Article 5 (commencing with Section 816) or
7Article 6 (commencing with Section 851) of Chapter 4 relating to
8security transactions and the transfer or encumbrance of utility
9 property.

10(2) The commission shall notify the parties of the issuance of
11an order or decision by either mail or electronic transmission.
12Notification of the parties may be accomplished by one of the
13following methods:

14(A) Mailing the order or decision to the parties to the action or
15proceeding.

16(B) If a party to an action or proceeding consents in advance to
17receive notice of any order or decision related to the action or
18proceeding by electronic mail address, notification of the party
19may be accomplished by transmitting an electronic copy of the
20official version of the order or decision to the party if the party
21has provided an electronic mail address to the commission.

22(C) If a party to an action or proceeding consents in advance to
23receive notice of any order or decision related to the action or
24proceeding by electronic mail address, notification of the party
25may be accomplished by transmitting a link to an Internet Web
26site where the official version of the order or decision is readily
27available to the party if the party has provided an electronic mail
28address to the commission.

29(3) For the purposes of this article, “date of issuance” means
30the mailing or electronic transmission date that is stamped on the
31official version of the order or decision

32(c) begin deleteNo end deletebegin insertA end insertcause of action arising out ofbegin delete anyend deletebegin insert anend insert order or decision
33of the commission construing, applying, or implementing the
34provisions of Chapter 4 of the Statutes of the 2001-02 First
35Extraordinary Session that (1) relates to the determination or
36implementation of the department’s revenue requirements, or the
37establishment or implementation of bond or power charges
38necessary to recover those revenue requirements, or (2) in the sole
39determination of the Department of Water Resources, the expedited
40review of order or decision of the commission is necessary or
P27   1desirable, for the maintenance of any credit ratings on any bonds
2or notes of the department issued pursuant to Division 27
3(commencing with Section 80000) of the Water Code or for the
4department to meet its obligations with respect to any bonds or
5notes pursuant to that division, shallbegin insert notend insert accrue in any court to any
6corporation or person unless the corporation or person has filed
7an application with the commission for a rehearing within 10 days
8after the date of issuance of the order or decision. The Department
9of Water Resources shall notify the commission of any
10determination pursuant to paragraph (2) of this subdivision prior
11to the issuance by the commission of any order or decision
12construing, applying, or implementing the provisions of Chapter
134 of the Statutes of the 2001-02 First Extraordinary Session. The
14commission shall issue its decision and order on rehearing within
1520 days after the filing of the application.

begin insert

16(d) A cause of action arising out of an order or decision of the
17commission construing, applying, or implementing the provisions
18of Article 5.7 (commencing with Section 849) of Chapter 4 shall
19not accrue in any court to any entity or person unless the entity
20or person has filed an application to the commission for a
21rehearing within 10 days after the date of issuance of the order or
22decision. The commission shall issue its decision and order on
23rehearing within 20 days after the filing of that application.

end insert
24

SEC. 8.  

Section 1770 is added to the Public Utilities Code, to
25read:

26

1770.  

The following procedures shall apply to the judicial
27review of an order or decision of the commission in interpreting,
28implementing, or applying the provisions of Article 5.7
29(commencing with Section 849) of Chapter 4 of Part 1 of Division
301:

31(a) Within 30 days after the commission issues its order or
32decision denying the application for a rehearing or, if the
33application is granted, within 30 days after the commission issues
34its decision on rehearing, an aggrieved party may petition for a
35writ of review in the California Supreme Court for the purpose of
36determining the lawfulness of the original order or decision or of
37the order or decision on the rehearing. If the writ is issued, it shall
38be made returnable at a time and place specified by court order
39and shall direct the commission to certify its record in the case to
40the court within the time specified. No order of the commission
P28   1interpreting, implementing, or applying the provisions of Article
25.7 (commencing with Section 849) of Chapter 4 of Part 1 of
3Division 1 shall be subject to review in a court of appeals.

4(b) The petition for review shall be served upon the executive
5director of the commission either personally or by service at the
6office of the commission.

7(c) For purposes of this section, the issuance of a decision or
8the granting of an application shall be construed to have occurred
9on the date when the commission mails the decision or grant to
10the parties of the action or proceeding.

11(d) To the extent that the provisions do not conflict, provisions
12in this article shall apply to actions under this section.

13

SEC. 9.  

Article 8 (commencing with Section 685) is added to
14Chapter 3 of Part 5 of the Monterey Peninsula Water Management
15District Law
(Chapter 527 of the Statutes of 1977), to read:

16 

17Article 8.  Tax Exempt Water Relief Reduction Bonds
18

 

19

685.  

(a) The district may issue water rate relief bonds for the
20purpose of purchasing water rate relief bonds issued by another
21financing entity pursuant to a financing order authorized pursuant
22to Article 5.7 (commencing with Section 849) of Chapter 4 of Part
231 of Division 1 of the Public Utilities Code, to fund any necessary
24reserves and to pay the costs of issuance of the water rate relief
25bonds. These bonds may be issued only if the commission finds
26in the financing order that the issuance, due to the availability of
27a federal or state income tax exemption, will provide savings to
28water customers on the Monterey Peninsula. These bonds issued
29by the district, or “district bonds,” shall be denominated “Monterey
30Peninsula Water Management District Water Rate Relief Bonds.”
31These bonds shall have designations, details, and terms, be payable
32at times and places, and be sold in a manner as determined by the
33board. The resolution shall authorize the district to enter into a
34trust agreement or similar security agreement to secure payment
35of the district bonds.

36(b) The district bonds shall be special limited obligations of the
37district, and shall be payable solely from payments made on the
38water rate relief bonds purchased with the proceeds of the district
39bonds and any reserve funded from the proceeds of the district
40bonds. The bonds shall not be payable from any other funds or
P29   1assets of the district, and neither the full faith and credit nor taxing
2power of the district shall be pledged to or exercised for the
3payment of the bonds.

4

686.  

If the district authorizes the issuance of bonds under
5Section 685, the district, notwithstanding Article 5 (commencing
6with Section 53760) of Chapter 4 of Part 1 of Division 2 of Title
75 of the Government Code, shall not be eligible to file for
8bankruptcy pursuant to Chapter 9 (commencing with Section 901)
9of Title 11 of the United States Code as long as the district bonds
10and related financing costs are outstanding and unpaid and shall
11remain ineligible for a period of one year and one day following
12the full payment of the bonds and costs.

13

SEC. 10.  

The provisions of this act are severable. If any
14provision of this act or its application is held invalid, that invalidity
15shall not affect other provisions or applications that can be given
16effect without the invalid provision or application.

17

SEC. 11.  

The Legislature finds and declares that a special law
18is necessary and that a general law cannot be made applicable
19within the meaning of Section 16 of Article IV of the California
20Constitution because of the unique circumstances applicable only
21to the Monterey Peninsula, Californian American Water, and the
22Monterey Peninsula Water Management District. Therefore, this
23special statute is necessary.

24

SEC. 12.  

No reimbursement is required by this act pursuant to
25Section 6 of Article XIII B of the California Constitution because
26the only costs that may be incurred by a local agency or school
27district will be incurred because this act creates a new crime or
28infraction, eliminates a crime or infraction, or changes the penalty
29for a crime or infraction, within the meaning of Section 17556 of
30the Government Code, or changes the definition of a crime within
31the meaning of Section 6 of Article XIII B of the California
32Constitution.



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