BILL ANALYSIS Ó SB 1130 Page 1 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. SB 1130 Page 2 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 SB 1130 Page 3 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 SB 1130 Page 4 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 SB 1130 Page 5 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 SB 1130 Page 6 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 SB 1130 Page 7 (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 SB 1130 Page 8 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 SB 1130 Page 9 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