BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1130
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          Date of Hearing:   June 17, 2014

           ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
                                  Luis Alejo, Chair
                     SB 1130 (Roth) - As Amended:  April 21, 2014

           SENATE VOTE  :   36-0
           
          SUBJECT  :   Drinking water:  County Water Company of Riverside  
          water system:  liability.

          SUMMARY  :   Provides limited immunities from liability for 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 (the Met) for claims by past or existing County Water  
          Company of Riverside (CWC) customers, or those who consumed  
          water provided through the CWC water system, prior to and during  
          an interim operation period.  Specifically,  this bill  :   

          1)Makes legislative findings that specify that the provisions of  
            this bill are tailored to address the unique circumstances  
            facing the customers of the CWC and are not intended to apply  
            to other water districts.

          2)Exempts the EVMWD, the EMWD, the WMWD, and the Met from  
            liability from claims by past or existing CWC customers, or by  
            those who consumed water provided through the CWC water  
            system, concerning the operation and supply of water from the  
            CWC water system during the interim operation period for any  
            good faith, reasonable effort using ordinary care to assume  
            possession of, to operate, or to supply water to the CWC water  
            system.

          3)Exempts the EVMWD, the EMWD, the WMWD, and the Met from  
            liability from claims by past or existing CWC customers, or by  
            those who consumed water provided through the CWC water  
            system, for any injury that occurred prior to the commencement  
            of the interim operation period.

          4)Specifies that the immunities from liability granted shall  
            only apply if the water supplied by the WMWD and the Met  
            through the temporary potable service pipeline to the CWC  
            water system meets or exceeds federal and state drinking water  
            quality standards.








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          5)Requires the interim operation period to commence upon the  
            connection of a temporary potable service pipeline by either  
            the EVMWD or the EMWD to the CWC water system, or upon the  
            execution of an agreement between the EVMWD, the EMWD, and the  
            CWC.

          6)Provides that the interim operation period shall last until  
            permanent replacement facilities are accepted by the EVMWD and  
            the EMWD with the concurrence of the State Department of  
            Public Health (DPH), or December 31, 2015, whichever occurs  
            first.

          7)Requires, upon the showing of good cause, the interim  
            operation period to be extended by DPH for up to three  
            successive one-year periods at the request of the EVMWD and  
            the EMWD.

          8)Requires the acceptance date of permanent replacement  
            facilities to be publicly noticed by the EVMWD and the EMWD.

          9)Specifies that the immunities from liability granted only  
            apply if the EVMWD and the EMWD provide water to the CWC water  
            system in accordance with all of the following conditions:

             a)   The EVMWD and the EMWD comply with the special terms and  
               conditions established by DPH safe drinking water emergency  
               for the interim operation period.

             b)   Water provided by the EVMWD and the EMWD through the  
               temporary potable service pipeline to the CWC water system  
               meets or exceeds federal and state drinking water quality  
               standards.

             c)   Reasonable water system flow and pressure through the  
               temporary potable service pipeline is maintained during the  
               interim operation period based upon the condition and  
               integrity of the existing CWC water system and any  
               disruptions to water delivery resulting from  
               construction-related activities associated with the  
               installation of permanent replacement facilities is  
               minimal.

             d)   The EVMWD and the EMWD notify Riverside County fire  
               officials serving the CWC service area of the condition and  








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               firefighting support capabilities of the existing CWC water  
               system and planned improvements with the installation of  
               permanent replacement facilities thereto.  The EVMWD and  
               the EMWD maintain or improve the condition and firefighting  
               support capabilities of the existing CWC water system  
               during the interim operation period.

             e)   Customers of the CWC receive written notice upon any  
               change in possession, control, or operation of the water  
               system.

          10)Specifies that the immunities granted in this bill do not:

             a)   Relieve any water district, water wholesaler, or any  
               other entity from complying with any provision of federal  
               or state law pertaining to drinking water quality.

             b)   Impair any cause of action by the Attorney General, a  
               district attorney, a city attorney, or any other public  
               prosecutor, or impair any other action or proceeding  
               brought by or on behalf of a regulatory agency.

             c)   Impair any claim alleging the taking of property without  
               compensation within the meaning of either the Fifth  
               Amendment to the United States Constitution or Section 19  
               of Article I of the California Constitution.

          11)Provides that this bill is an urgency statute.

          EXISTING LAW  :

          Establishes as the policy of the state that every human being  
          has the right to safe, clean, affordable, and accessible water  
          adequate for human consumption, cooking, and sanitary purposes.   
          (Water Code §106.3)

          Under the California Safe Drinking Water Act:

          1)Requires DPH to regulate drinking water and to enforce the  
            federal Safe Drinking Water Act and other related regulations  
            (Health and Safety Code §116275 et seq.).

          2)Authorizes, whenever DPH determines that any public water  
            system is unable or unwilling to adequately serve its users,  
            has been actually or effectively abandoned by its owners, or  








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            is unresponsive to its rules or orders, DPH to petition the  
            superior court, as specified, for the appointment of a  
            receiver to assume possession of its property and to operate  
            its system.   Authorizes the court to provide, as a condition  
            of its order, that the receiver appointed pursuant to the  
            order not be held personally liable for any good faith,  
            reasonable effort to assume possession of, and to operate the  
            system in compliance with the order.  (Health and Safety Code  
            §116665)

          3)Authorizes DPH to exempt a public water system from compliance  
            with a maximum containment (sic) level or treatment technique  
            requirement for up to two years if DPH finds, and continues to  
            find, that a plan submitted by the water system may reasonably  
            be expected to bring the water system into compliance by any  
            of the following means: the physical consolidation of the  
            system with one or more other systems; the consolidation of  
            significant management and administrative functions of the  
            system with one or more other systems; or, the transfer of  
            ownership of the system.  (Health and Safety Code §116425.  
            (h))  

          4)Upon a showing by DPH of specified violations, the superior  
            court shall enjoin the practices and may do any of the  
            following:  enforce a reasonable plan of compliance, including  
            the appointment of a competent person, to be approved by DPH,  
            and paid by the operator of the public water system, who shall  
            take charge of and operate the system so as to secure  
            compliance; enjoin further service connections to the public  
            water system; and, afford any further relief that may be  
            required to insure compliance with the Safe Drinking Water  
            Act. (Health and Safety Code §116660)

          Under the Government Claims Act:

          1)Provides 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.   
            Provides that the liability of a public entity, as specified,  
            is subject to any immunity of the public entity provided by  
            statute and is subject to any defenses that would be available  
            to the public entity if it were a private person.  (Government  
            Code §815)

          2)Provides that a public entity is not liable for an injury  








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            caused by adopting or failing to adopt an enactment or by  
            failing to enforce any law.  (Government Code §818.2)

          3)Provides, except as exempted by statute, 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 that either:

             a)   A negligent or wrongful act or omission of an employee  
               of the public entity within the scope of his employment  
               created the dangerous condition; or,

             b)   The public entity had actual or constructive notice of  
               the dangerous condition a sufficient time prior to the  
               injury to have taken measures to protect against the  
               dangerous condition.  (Gov. Code §835.)

          Under the Public Utilities Act:

          1)Authorizes, whenever the Public Utilities Commission (PUC)  
            determines that any water or sewer system corporation is  
            unable or unwilling to adequately serve its ratepayers, or has  
            been actually or effectively abandoned by its owners, or is  
            unresponsive to the rules or orders of the PUC, the PUC to  
            petition the superior court for the county within which the  
            corporation has its principal office or place of business for  
            the appointment of a receiver to assume possession of its  
            property and to operate its system upon such terms and  
            conditions as the court shall prescribe.  Requires the court  
            to provide for disposition of the facilities and system in  
            like manner as any other receivership proceeding in this  
            state.  (Public Utilities Code §855)  

           FISCAL EFFECT  :  Unknown.

           COMMENTS  :   

           Need for the bill  :  According to the author, "The County Water  
          Company of Riverside (CWC) is a small privately owned,  
          non-mutual water company located in western Riverside County.   
          For decades CWC has "flown under the radar" of any state or  
          local administrative oversight agency and has continually failed  








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          to deliver safe and reliable water to its customers due to  
          nitrate contamination and a failing infrastructure system.  The  
          residents of this community rely on either contaminated water,  
          bottled water or more recently, water from an emergency water  
          tank to service their daily needs.  County of Riverside health  
          officials and CDPH have asked the two adjacent public water  
          districts of Elsinore Valley Municipal Water District and  
          Eastern Municipal Water District for assistance in providing  
          both a short-term and a long-term solution to the health and  
          safety risks the CWC customers face as a result of this failing  
          water system.  Such assistance comes with the risk of liability  
          for past administrative actions or operational deficiencies of  
          the existing water system; as well as, potential costs to the  
          existing ratepayers of the water districts providing assistance.  
           In this situation, neither the County of Riverside nor CDPH are  
          willing/able to indemnify the public water districts from the  
          liability associated with taking over the CWC system.   
          Furthermore, the existing owners of CWC have already proceeded  
          to discontinue service to the community and are seeking to 'walk  
          away'? This bill would allow the public water districts of EMWD  
          and EVMWD to provide the necessary assistance to CWC customers  
          without being held liable for past administrative actions or  
          operational deficiencies of the existing water system.  This  
          legislation would provide necessary protections to the existing  
          public water district customers, while working to secure the  
          health and safety of the CWC customers. EMWD and EVMWD are  
          seeking legal protections for the two public water districts and  
          the two urban water wholesale agencies to move forward with  
          assisting those families in crisis."

           The situation in Riverside County  :  According to the EMWD, the  
          sponsor of the bill, the CWC currently serves approximately 140  
          customers near the communities of Wildomar and Menifee in  
          Riverside County from a single well that far exceeds the state's  
          standard for nitrate in drinking water.  This well is  
          operationally unreliable and occasionally unable to pump water  
          or meet fire flow criteria, leaving residents without a supply  
          of piped water or fire protection for extended periods of time.   
          Recently, CWC representatives announced the company is going  
          broke and getting out of the business, and the system is in  
          danger of complete failure.

          Responding to residents' complaints, EMWD and EVMWD, which  
          service nearby communities, have agreed to take over service to  
          the neighborhood.  According to DPH, DPH awarded Proposition 84  








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          (Safe Drinking Water, Water Quality and Supply, Flood Control,  
          River and Coastal Protection Bond Act of 2006) emergency funds  
          to EVMWD, on behalf of the CWC, on July 30, 2013, in the amount  
          of $250,000, for the purposes of constructing an emergency  
          intertie until a more permanent solution can be constructed.   
          Proposition 84 planning funds were also awarded on September 4,  
          2013, to EMWD in the amount of $500,000, to fund the planning  
          and design for the eventual split consolidation of CWC into EMWD  
          and EVMWD.  In addition, the SDWSRF program issued letters of  
          commitment to EMWD and EVMWD on October 31, 2013, for $6 million  
          ($3 million each) in construction funding for the eventual  
          construction of the split consolidation project pending  
          completion of the Proposition 84 funded planning project.

          While funds have been awarded to commence this project, both  
          EMWD and EVMWD have indicated that they are unable to connect to  
          CWC until SB 1130 is effective.  EMWD argues that during the  
          interim construction period during which they must continue to  
          supply water through the existing dilapidated system, they, and  
          therefore their existing customers, are vulnerable to lawsuits  
          potentially relating to water quality or quantity, or  
          insufficient pressure for fire protection.  They contend that  
          this bill is an effort to protect the public water agencies'  
          existing customers, while the districts work to secure the  
          health and safety of the CWC residents through reconstruction  
          and future operation of the system in a manner consistent with  
          all health and safety standards.  They maintain that these legal  
          protections will allow the public agencies to move forward with  
          assisting families in crisis, without financially jeopardizing  
          the existing customers of the public water agencies.

           Government immunity in California  :  California law generally  
          provides public entities with broad immunity that insulates them  
          from civil liability.  The Government Claims Act (Gov. Code §810  
          et seq.) states 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"  
          unless otherwise provided by statute.  (Gov. Code §815(a).)   
          Thus, in order to hold a public entity liable for any tort, a  
          plaintiff would first have to identify a specific relevant  
          statute that exposed it to liability.  

          Supporters of the bill argue that there are a number of statutes  
          that may expose public entities to civil liability.  For  
          example, Government Code §835 removes immunity when a public  








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          entity maintains its property in a dangerous condition, as  
          specified.  The risk of civil liability is a deterrent for  
          compliant water systems to provide assistance to failing or  
          non-compliant systems.

           Restructuring small water systems:   The January 2013, SWRCB  
          report "Communities that Rely on Contaminated Groundwater,"  
          identified 682 community public water systems (PWSs) in  
          California that rely on contaminated groundwater as a primary  
          source of drinking water.  These water systems serve nearly 21  
          milling people.  The SWRCB report also revealed that 265  
          community PWSs that rely on contaminated groundwater and serve a  
          little over two million people had received at least one  
          drinking water quality violation within the last DPH compliance  
          cycle.  The findings from this report and a January 2012,  
          University of California at Davis study, "Addressing Nitrate in  
          California's Drinking Water," suggest that drinking water  
          contamination in California disproportionally affects small,  
          rural, and low-income communities that depend mostly on  
          groundwater as their drinking water source.

          According to the United States Environmental Protection Agency,  
          restructuring can be an effective means to help small water  
          systems achieve and maintain technical, managerial, and  
          financial capacity, and to reduce the oversight and resources  
          that states need to devote to these systems.  AB 783 (Arambula),  
          Chapter 614, Statutes of 2007, requires DPH to prioritize  
          funding of water projects in disadvantaged communities and  
          directs DPH to encourage, provide funds for studies on, and  
          prioritize funding for projects which consolidate small public  
          water systems in certain situations.

          This intent of this bill is to encourage compliant water systems  
          to participate in the efforts to restructure a failing small  
          water system.  

           Double referral  :  This bill was double referred to the Assembly  
          Judiciary Committee, which heard it on June 10, 2014, and passed  
          it on a 9-0 vote.  

           Related legislation  :

          1)SB 772 (Roth, 2013).  Would have exempted the Elsinore Valley  
            Municipal Water District and the Eastern Municipal Water  
            District from liability for claims by customers or those  








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            consuming water provided through the County Water Company of  
            Riverside water system concerning the operation and supply of  
            water from the County Water Company of Riverside, as  
            specified, for any good faith, reasonable effort using  
            ordinary care to assume possession of, and to operate and  
            supply water to, the County Water Company of Riverside water  
            system.  This bill was referred to the Senate Committee on  
            Environmental Quality and Judiciary, but was never heard and  
            subsequently died.  

          2)AB 2442 (Gordon, 2014).  Provides the State Water Resources  
            Control Board and Regional Water Quality Control Boards with  
            explicit protection from civil liability related to water  
            quality cleanup actions.  This bill passed the Assembly floor  
            was referred to the Senate Environmental Quality and Judiciary  
            Committees.

           REGISTERED SUPPORT / OPPOSITION  :

           Support  :  
           
          California Special Districts Association
            Eastern Municipal Water District (co-sponsor)
          Elsinore Valley Municipal Water District (co-sponsor)
          Mesa Water District
          Metropolitan Water District of Southern California
          Riverside County Board of Supervisors
          Riverside LAFCO  
           Western Municipal Water District
           
          Opposition  :  
           
          None received.

           Analysis Prepared by  :  Shannon McKinney / E.S. & T.M. / (916)  
          319-3965