BILL ANALYSIS Ó
SB 1130
Page 1
Date of Hearing: June 10, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
SB 1130 (Roth) - As Amended: April 21, 2014
SENATE VOTE : 36-0
SUBJECT : Drinking Water System: Liability
KEY ISSUE : Should public water districts that have been asked
by state and local health officials to assume operation of a
failing private water company be granted limited immunity from
liability for injuries attributable to the prior negligence of
the private company?
SYNOPSIS
This urgency measure seeks limited immunity for two public water
districts that will, in response to a joint request of the
County of Riverside and the Department of Public Health, assume
control of a failing and substandard private water system. The
County Water Company (CWC) - a private company despite its
public-sounding name - serves (or fails to serve) about 140
households in western Riverside County, in an area that falls
between the service areas of two public water systems: the
Eastern Municipal Water District (EMWD) and the Elsinore Valley
Municipal Water District (EVMWD). Not only do high nitrate
levels make the water undrinkable, low water pressure fails to
meet minimum fire-fighting requirements and failing
infrastructure has left customers without any water for extended
periods of time. EMWD and EVMWD have already provided a
temporary water tank for drinking and culinary purposes, and
they are prepared to reconstruct the CWC system and eventually
integrate the CWC customers into one or the other district.
However, the districts want to ensure that they will not assume
liability for damages attributable to the prior actions or
omissions of the CWC. This bill would also grant limited
immunity to two public water district "wholesalers" that will
provide supplemental water to CWC during the interim take-over
period. The author has worked closely and productively with
various stakeholders to craft language that will provide
desperately needed services to CWC customers without exposing
the water districts (and their ratepayers) to liability for the
negligence and irresponsibility of others. At the same time,
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the bill contains appropriate exceptions so that the immunity
provisions will not unintentionally relieve the districts from
liability for their own unreasonable conduct. Given the dire
circumstances faced by the CWC customers, this bill is an
urgency measure that will go into effect immediately if and when
it is signed by the Governor. The bill is sponsored by EMWD and
supported by several water districts and the County of
Riverside. There is no opposition to this measure, which has
not received any negative committee or floor votes to date.
SUMMARY : Exempts certain water districts in Southern California
from liability for claims by past or existing customers of the
privately-owned County Water Company of Riverside for injuries
that occurred prior to, or during, the districts' interim
operational period, as specified, and declares that this bill is
an urgency statute that shall take effect immediately.
Specifically, this bill :
1)Exempts the Elsinore Valley Municipal Water District (EVMWD),
the Eastern Municipal Water District (EMWD), the Western
Municipal Water District (WMWD), and the Metropolitan Water
District of Southern California (MWDSC) from liability, as
specified, for claims by past or existing County Water Company
of Riverside customers or those who consumed water provided by
the company prior to or during the interim operational period,
as specified; however the immunity shall only apply to the
WMWD and the MWDSC if the water supplied by these entities
meets or exceeds federal and state drinking water standards.
2)Specifies that the interim operational period shall commence
upon the connection of a temporary potable service pipeline to
the private water company system by either the EVMWD or EMWD,
or upon execution of an agreement, as specified, to provide
service to the customers of the private water company system,
whichever occurs first.
3)Specifies that the interim operational period shall last until
permanent replacement facilities are accepted by EVMWD and
EMWD with the concurrence of DPH, or December 31, 2015,
whichever comes first, unless the interim period is extended
by DPH for good cause.
4)Provides that immunity from liability created by this bill
only applies if water is provided to the private company
system in a manner that meets certain standards, as specified,
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and customers of the private water company receive written
notice of any change in the possession, control, or operation
of the water system.
5)Specifies that nothing in this bill shall be construed to
relieve any water district from the need to comply with state
or federal laws pertaining to drinking water quality; to
impair any cause of action by the Attorney General or public
prosecutor, or impair any other action or proceeding brought
on behalf of a regulatory agency; or to impair any claim
alleging the taking of property without compensation.
6)Declares that this is an urgency measure to provide safe and
reliable drinking water for customers of the private County
Water Company of Riverside at the earliest possible date and,
as such, the provisions of the bill shall take effect
immediately.
EXISTING LAW :
1)Guarantees every citizen of California the right to pure and
safe drinking water, provides for the operation of public
water systems, and imposes on the State Department of Public
Health (DPH) various responsibilities and duties relating to
the provision of safe and dependable drinking water.
Authorizes DPH to adopt regulations to implement the
California Safe Drinking Water Act and to enforce provisions
of the federal Safe Drinking Water Act. (Health & Safety Code
Sections 116270 to116293.)
2)Permits the DPH, if it determines that a public water system
is providing inadequate water service to its users, to
petition the appropriate superior court for the appointment of
a receiver to assume possession of the water system and
operate it according to terms and conditions set forth by the
court. Permits the court order to declare that the receiver
shall not be personally liable for any good faith, reasonable
effort to assume possession of, and to operate, the water
system in compliance with the court order. (Health & Safety
Code Section 116665.)
3)Provides, except as otherwise provided by statute, that a
public entity is not liable for an injury, whether such injury
arises out of an act or omission of the public entity or a
public employee or any other person. However, a public entity
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is liable for an injury proximately caused by an action or
omission of an employee acting within the scope of his or her
employment if the act or omission would have given rise to a
cause of action against the employee. (Government Code
Sections 815 and 815.2.)
4)Provides that where a public entity is under a mandatory duty
imposed by an enactment that is designed to protect against
risk of a particular kind of injury, the entity is liable if
its failure to perform this duty, except for reasons
specified, proximately causes the particular kind of injury
that the enactment was designed to protect against.
(Government Code Section 815.6.)
5)Provides that a public employee is liable for injury caused by
his or her act or omission to the same extent as a private
person. However, a public employee is not liable for an
injury resulting from his or her act or omission where the act
or omission was the result of the exercise of discretion
vested in him or her. (Government Code Sections 820 and
820.2.)
6)Provides that a public entity is liable for injury caused by a
dangerous condition of its property if the plaintiff
establishes that the property was in a dangerous condition at
the time of the injury, that the injury was proximately caused
by the dangerous condition, that the dangerous condition
created a reasonably foreseeable risk of the kind of injury
which was incurred, and either (a) a negligent or wrongful act
or omission of an employee of the public entity acting within
the scope of his or her employment created the dangerous
condition; or (b) the public entity had actual or constructive
notice of the dangerous condition and had sufficient time
prior to the injury to have taken measures to protect against
the dangerous condition. (Government Code Section 835.)
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
COMMENTS : This bill would grant limited immunity to public
water districts that will, in response to a joint request of the
County of Riverside and the State Department of Public Health
(DPH), assume control of a failing and substandard private water
system. The County Water Company (CWC) of Riverside, a private
water company, purportedly serves about 140 households in
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western Riverside County, in an area that falls between the
service areas of two public water systems: the Eastern Municipal
Water District (EMWD) and the Elsinore Valley Municipal Water
District (EVMWD). By all accounts, CWC's service has been
abysmal. Not only do high nitrate levels make the water
undrinkable, the system fails to provide adequate water flow to
meet minimum fire-fighting requirements - a failure that is even
more striking when one considers that CWC provides only a single
fire hydrant for the entire service area. Failing
infrastructure has left customers without any water for extended
periods of time. Even when the water is running, the customers
must buy bottled water for drinking and culinary purposes.
EMWD and EVMWD have already provided a temporary water tank to
the CWC customers for drinking and culinary purposes, and they
are prepared to connect a temporary pipeline for potable water,
reconstruct the CWC system, and eventually integrate CWC
customers into one of the other district. However, the
districts want to ensure that, in doing this, they will not
assume liability for damages attributable to the prior negligent
actions or omissions of the CWC. This bill, therefore, would
grant limited and temporary immunity to EMWD and EVMWD so that
they may begin the process of providing immediate relief and
securing a long-term solution for the CWC customers. During an
"interim operation period," the districts will first connect a
temporary potable water pipeline into the CWC system so that CWC
customers will no longer need to rely on bottled water or the
temporary water tank. The districts will then replace or repair
existing facilities; once completed, the facilities will become
part of the district systems with the concurrence of the DPH.
Although EMWD and EVMWD will play the primary role in
reconstructing CWC facilities and will eventually absorb the
current CWC customers, two other public water districts
"wholesalers" will also be involved and granted limited
immunity. The Western Municipal Water District (WMWD) and the
Metropolitan Water District of Southern California (MWDSC) will
provide supplemental water to CWC during the interim operation
period.
Bill Provides Limited Immunity to the Four Districts : This bill
does not provide blanket immunity for any damages that may
result from the effort to rehabilitate the flawed CWC system and
incorporate it into the public systems. Specifically, the bill
would provide immunity for two types of injuries: first, those
injuries that occur during the "interim operation period"-that
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is, while the districts provide an emergency pipeline and
reconstruct the existing facilities; and second, those injuries
that occur prior to the commencement of the interim operation
period.
The bill specifies that the immunity only applies during (not
beyond) the interim operation period and, moreover, only if the
districts meet certain standards and conditions. For example,
the immunity that applies to injuries that occur during the
interim period only apply "for any good faith, reasonable effort
using ordinary care to assume possession of, to operate, or to
supply water" to CWC. In addition, the immunity provided to
WMWD and MWDSC (who will provide supplemental water to CWC
during the interim) only applies if the water provided meets or
exceeds federal and state drinking standards. The immunity
provided to EMWD and EVMWD only applies if the districts comply
with terms and conditions established by DPH for emergency
funding; if the water provided through the temporary pipeline
meets or exceeds federal and state standards; if the water flow
and pressure are sufficient to maintain specified service levels
and fire-fight capacity; and if all customers receive written
notice about any change in possession, control, or operation of
the water system. In addition, the bill expressly states that
nothing in its provisions shall be construed to relieve a water
district from complying with any existing law or regulation or
prevent the Attorney General, or other public prosecutor, from
bringing actions on behalf of a regulatory agency. Finally,
nothing in the bill shall be construed to impair any claim
alleging the taking of private property without compensation.
In short, the intent of this bill is to provide districts with
immunity from liability for damages caused by poor water quality
or service; it is not intended to shield entities from actions
that might result in any taking or damaging of private property
that might result from the districts' undertaking.
Interim Operation Period : As noted above, the bill would
immunize districts from liability for injuries that occurred in
the past (i.e. while under CWC ownership and control) and, with
some exceptions, for injuries that occur during the "interim
operation period" - that is, the period during which the water
system will be reconstructed and transitioned from CWC to the
public water districts. Specifically, the bill states that the
interim operation period will begin when the EMWD and EVMWD
connect a temporary pipeline to the CWC system, or upon the
execution of an agreement between EMWD, EVMWD, and CWC to
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provide services to CWC customers, whichever comes first. The
interim operation period will come to end when the new
facilities are finally completed and accepted by the districts,
with DPH concurrence, or on December 31, 2015, whichever occurs
first. The bill would allow DPH to extend this date for good
cause.
Immunity Similar to Receivership Provisions : Under existing
law, if the DPH determines that a public water system is
providing unsafe or inadequate water service to its users, the
DPH may petition the appropriate superior court for the
appointment of a receiver. The receiver would assume possession
of the water system and operate it according to terms and
conditions set forth by the court. The court order may provide
that the receiver shall not be personally liable for any good
faith, reasonable effort to assume possession of, and to
operate, the water system in compliance with the court order.
(Health & Safety Code Section 116665.) This bill grants a quite
similar immunity, for substantially the same reason: that is,
that an entity that is required or authorized to take over a
failed water system and correct its inadequacies should not be
liable for injuries attributable to the negligent acts or
omissions of its predecessor.
SB 772 : This bill is similar to last year's SB 772 (Roth,
2012), by the same author. That bill was held in the Senate
Judiciary out of concern that the immunity granted was too broad
(e.g. early versions were not necessarily restricted to an
interim period) and that the bill might unintentionally shield
the districts from injuries for which they are responsible.
However, the author has worked closely and productively with
various stakeholders to craft the language so that the bill will
provide vitally needed services to CWC's customers without
exposing the water districts (and thus their ratepayers) to
liability for the actions and omissions of others. At the same
time, the bill contains appropriate exceptions so that the
immunity provisions will not unintentionally reach too broadly
and relieve the districts from liability for their own
unreasonable actions, and for which they should be held
accountable.
Governmental Immunity Generally - And Exemptions Thereto : As
government entities, the public water districts already enjoy
broad, though not absolute, immunity from liability for damages
that they may cause by their acts or omissions. Government Code
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Section 815, which codifies the common law rule of governmental
immunity, provides that a public entity is not liable for
injuries caused by its acts or omissions, unless liability is
expressly provided for by another statute . As the highlighted
qualifying clause suggests, the general immunity provided by
existing law is subject to several statutory exemptions. For
example:
A government entity is liable for injuries caused by a
"dangerous condition" on its property, assuming the injured
plaintiff can show, among other things, that the dangerous
condition proximately caused the injury, the injury was a
foreseeable result of the dangerous condition, and the public
entity knew or should have known of the dangerous condition
prior to the injury and, despite this knowledge, failed to
take corrective measures. (Government Code Section 835.)
Public employees are liable for injuries caused by their acts
or omissions to the same extent as a private person, and the
public entity is, subject to certain exceptions, required to
defend that public employee and pay any judgment if the injury
was done in the scope of employment. Public employees are
not, however, liable for any damages caused by "discretionary"
acts or omission. (Government Code Sections 815.2, 820,
820.2, and 825.)
Where a statute imposes a mandatory duty on a public entity,
the public entity is liable if its failure to perform this
duty, except for reasons specified, proximately causes the
particular kind of injury that the statute was designed to
protect against. (Government Code Section 815.6.)
In sum, despite the default rule of government immunity, the
sponsors of this bill are understandably concerned about the
prospects of liability under one of the statutory exceptions.
One could argue that it is highly unlikely that a water district
would be found liable under any of the exemptions without
committing some negligent act or omission. Given the
necessarily general nature of the exemptions, however, a finding
of liability cannot be entirely ruled out, either. For example,
the "dangerous condition" exemption requires that the dangerous
condition existed at the time of the injury and that the entity
failed to take reasonable steps to correct the condition. On
the one hand, therefore, the water districts could not be held
liable for conditions that existed prior to their taking control
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of the property so long as, once in control, they set out to
remedy those conditions with reasonable diligence. On the other
hand, a dangerous condition, even if caused by the acts or
omissions of CWC, would still be present on the property
(whoever caused them) during the interim reconstruction and
integration period. Similarly, the "mandatory duty" exemption
could create ambiguities. On the one hand, it does not seem
likely that water districts could be held liable for failure to
perform a "mandatory duty," given that they have no duty to
customers outside of their respective services area and are
voluntarily assuming responsibility for CWC at the request of
Riverside County and DPH. On the other hand, a statute
authorizing the district to take control of and integrate the
CWC could arguably, even if not likely, be construed as imposing
a mandatory duty of some sort. This bill would simply remove
potential ambiguity, making it clear that the public water
districts will not be liable for injuries attributable to CWC
failings while at the same time ensuring that the districts will
be liable for their own unreasonable acts or omissions. It may
be that no reasonable judge or jury would hold the districts
liable for things that were beyond their control, especially
given that the districts are voluntarily assuming responsibility
in response to what is clearly an unprecedented emergency. This
bill, the author and supporters believe, will provide reasonable
assurances so that the districts may proceed with the important
work of providing safe and reliable drinking water to customers
that have been poorly served - and indeed all but abandoned - by
a private water company.
Urgency Clause : Given the dire circumstances faced by the CWC
customers, who are presently without a safe and reliable water
supply, this bill contains an urgency clause so that its
provisions will go into effect immediately if and when the bill
is signed by the Governor.
ARGUMENTS IN SUPPORT : The Eastern Municipal Water District
(EMWD), the bill's sponsor, writes that, along with the Elsinore
Valley Municipal Water District (EVMWD), it has been involved
with local and state health officials and the County of
Riverside in efforts to provide service and assume ownership of
the failing, privately-owned County Water Company (CWC) of
Riverside. "This bill," EMWD writes, "which is narrow in scope,
would exempt the public municipal water districts [EMWD and
EVWMD] and two urban water wholesale agencies . . . from
liability associated with [the] existing owner's operation of
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the CWC system." The districts argue that this bill "is
necessary to protect our existing customers from potential legal
claims and financial exposure stemming from negligent acts that
may have occurred prior to the transfer of the ownership to the
public municipal water districts." EMWD stresses that this bill
does not seek "to provide on-going blanket liability
protections" for itself or for any of the other public water
districts. Not only is the immunity limited in time to the
interim period, but it also only applies if the public districts
operate reasonably and in good faith, and the water that the
districts supply meets or exceeds state and federal water
quality requirements. The purpose of the bill, in other words,
is simply to allow the districts to proceed with their work
without fear that they will be held liable for the bad acts of
CWC. Other public water entities support this bill for
substantially the same reasons.
Riverside County adds that "SB 1130 is necessary to provide
protections to the existing public water district customers,
while working to secure the health and safety of the CWC
customers." The intent of the bill is to provide the public
water districts with legal protections while they "move forward
with assisting those families in crisis."
Prior Related Legislation : SB 772 (Roth, 2013) would have
created new immunities for the Eastern Municipal Water District
and the Elsinore Valley Municipal Water District from liability
related to the reconstruction of a public water system in
Riverside County. This bill was referred to the Senate
Judiciary Committee, but it was never heard and returned to the
Secretary of the Senate pursuant to Joint Rule 56.
REGISTERED SUPPORT / OPPOSITION :
Support
Eastern Municipal Water District (sponsor)
Elsinore Valley Municipal Water District
Association of California Water Agencies
California Special Districts Association
Mesa Water District
Metropolitan Water District of Southern California
Riverside County Board of Supervisors
Western Municipal Water Districts
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Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334