BILL ANALYSIS Ó AB 957 Page 1 Date of Hearing: April 28, 2015 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair AB 957 (Mathis) - As Amended March 26, 2015 SUBJECT: Water Quality, Supply, and Infrastructure Improvement Act of 2014 SUMMARY: Amends the eligibility criteria for recycled water projects that are funded by Proposition 1, The Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Prop. 1), in order to give consideration to communities with groundwater problems. Specifically, this bill: 1)Makes findings related to the benefits recycled water projects could provide for groundwater-dependent communities affected by drought and lacking adequate safe, clean, and reliable water supplies. 2)Amends the meaning of "water supply reliability improvement" in the Prop. 1 recycled water project eligibility criteria to require consideration of whether the project is for a community that is heavily dependent on groundwater from a basin in overdraft. 3)Amends the meaning of "public health benefits from improved drinking water quality or supply" in the Prop. 1 recycled AB 957 Page 2 water project eligibility criteria to require consideration of whether the project is for a community that has extended, or is in the process of extending, its service delivery area to individuals, communities, or both, reliant on either contaminated groundwater or groundwater wells that have run dry. 4)Defines "contaminated groundwater" as groundwater that exceeds a primary or secondary drinking water standard. EXISTING LAW: 1)Authorizes $7.545 billion in general obligation bond funding for water-related projects and programs under Proposition 1. 2)Makes $725 million in Prop. 1 funding available, upon appropriation by the Legislature, for grants or loans for water recycling and advanced treatment technology projects, including: a) Water recycling projects that produce potable and nonpotable water. b) Contamination and salt removal projects including groundwater and seawater desalination. c) Pilot projects for potable reuse and other salt and contaminant removal technology. d) Multibenefit projects that improve water quality. AB 957 Page 3 e) Technical assistance and grant writing assistance for disadvantaged communities. 3)Requires, under Prop.1, at least a 50% local cost-share for recycled water projects unless the area is economically disadvantaged or distressed. 4)Specifies that recycled water projects funded by Prop. 1 must be selected on a competitive basis, considering all of the following criteria: a) Water supply reliability improvement. b) Water quality and ecosystem benefits related to decreased reliance on diversions from the Delta or instream flows. c) Public health benefits from improved drinking water quality or supply. d) Cost-effectiveness. e) Energy efficiency and greenhouse gas emission impacts. AB 957 Page 4 f) Reasonable geographic allocation to eligible projects throughout the state, including both northern and southern California and coastal and inland regions. 5)Requires recycled water competitive programs implemented under Prop. 1 to be consistent with the State Water Board's water recycling and contaminant and salt removal programs. FISCAL EFFECT: Unknown COMMENTS: This bill modifies Prop. 1 eligibility criteria for recycled water and contaminant and salt removal projects in order to give heightened consideration to communities heavily dependent on groundwater or communities who have, or are trying to, extend service to communities with contaminated water or whose wells are going dry 1)Author's statement: The author states that this bill seeks to maximize the beneficial use of scarce groundwater resources in overdrafted basins by promoting and incentivizing the funding of recycled water projects in those areas. The author states this bill adds additional factors to be considered when awarding Prop. 1 water bond recycling funds and that this bill will help provide communities with dry wells or contaminated aquifers access to water supplies. 2)Proposition 1 was heavily negotiated. In 2009, former Governor Schwarzenegger convened the Legislature in extraordinary session to take up issues related to protecting and restoring the Delta ecosystem and improving water reliability and management, including addressing water conveyance, storage, conservation and groundwater and considering a general obligation bond. Subsequently, an historic five-bill package of water legislation was passed and AB 957 Page 5 signed, including SB 2 (Cogdill), Chapter 3, Statutes of the 2009-10 Seventh Extraordinary Session (SB 2 X7). SB 2 X7 called for the Water Bond to be placed on the November 2010 ballot. If approved by the voters, the Water Bond would have authorized the issuance of $11.14 billion in general obligation bonds for a wide range of projects and purposes including water conservation and efficiency, groundwater protection and cleanup, integrated regional water management, ecosystem and watershed protection and restoration, water recycling, and water storage. However, in 2010, supporters of the Water Bond recognized that a sluggish economy coupled with the state's need to focus on its dire budget shortfall meant that delaying the bond vote could increase its chances of success. Subsequently, the Water Bond was moved to the 2012 general election. In 2012, polling revealed that an incomplete economic recovery meant the Water Bond was still unlikely to pass. In response, it was moved again, this time to the 2014 general election. In 2013, discussions began regarding whether the 2009 Water Bond needed to be reduced. On February 26, 2013 the Senate Natural Resources and Water Committee held a joint oversight hearing with the Senate Governance and Finance Committee entitled, Overview of California's Debt Condition: Priming the Pump for a Water Bond (joint hearing). The stated purpose of the joint hearing was to "inform members about the state's debt condition, its capacity to incur additional debt for water and other competing infrastructure needs, and issues regarding using debt finance to improve the state's water quality, supply, and infrastructure." Background documents for the joint hearing referenced the Governor's proposed AB 957 Page 6 2013-14 Budget, which acknowledges that since 2000 voters have authorized $100 billion in new general obligation bonds and the state has issued more than $28 billion since 2009. On March 12, 2013 the Senate Natural Resources and Water Committee held a second bond-related oversight hearing entitled: What's Changed Since the Legislature Passed the Safe, Clean, and Reliable Drinking Water Supply Act of 2010? The purpose of that hearing was to explore what modifications, if any, should be made to the Water Bond in light of circumstances which may have changed since it was originally approved by the Legislature in 2009. From October 2013 through May 2014 this Committee held multiple Capitol hearings on the bond as well as nine field hearings in various parts of the State. By the time AB 1471 (Rendon), Chapter 188, Statutes of 2014 placed Prop. 1 on the November 4, 2014 statewide ballot there had been nine different substantive bond proposals discussed in the Legislature ranging from $5.8 billion to over $10 billion. 1)The State Water Board is currently in the process of developing Prop. 1 recycled water and desalination guidelines: This year's emergency drought legislation, AB 92, among other actions, accelerated the governor's proposed January 10 budget allocation of $131.7 million in Prop. 1 funding for recycled water and appropriated it immediately. The State Water Board responded by issuing draft amended Water Recycling Funding Program (WRFP) guidelines and holding three workshops, one in Perris in southern California, one in Fresno in the Central Valley, and one in Sacramento in northern California. Public comments on the WRFP draft guidelines were due April 24, 2015. AB 957 Page 7 This bill would alter the recycled water criteria after the guidelines are developed. 3)Prior and related legislation: AB 1265 (Caballero), Chapter 126, Statutes of 2010, moved the Water Bond to the 2012 general election. AB 1265 both changed the timing of the Water Bond vote and deleted a provision allowing for-profit entities to be members of joint powers authorities for bond-funded surface water storage projects. AB 1422 (Perea), Chapter 74, Statutes of 2012 moved the Water Bond to the November 4, 2014 statewide general election but otherwise left the text unchanged. AB 92 (Committee on Budget), Chapter 1, Statutes of 2015 accelerated several funding provisions from Prop. 1 including the $131.7 million as mentioned above for the State Water Board to build on the existing water recycling grant program and $135.5 million for the State Water Board to improve access to clean drinking water for disadvantaged communities and help small communities pay for wastewater treatment. In addition there was $15 million from the General Fund and special funds for emergency drinking water projects, including hauled water, bottled water, design and construction of connections to adjacent public water systems, new wells and well rehabilitation and $4 million from the Cleanup and Abatement Account for the SWRCB to provide emergency safe drinking water to disadvantaged communities impacted by the drought. 4)Supporting arguments: Supporters state that this bill addresses the fact that several private drinking water wells in California have already gone dry or become heavily contaminated during our severe drought. Supporters state that in Kern County, for example, the Arvin Community Services District recently extended drinking water service to AB 957 Page 8 neighboring individual homeowners whose wells had gone dry. Supporters note that as the crisis deepens, statewide resources will be critical in enabling local communities to provide drinking water to those victimized by drought. REGISTERED SUPPORT / OPPOSITION: Support Kern County Board of Supervisors Opposition Association of California Water Agencies Analysis Prepared by:Tina Cannon Leahy / W., P., & W. / (916) 319-2096 AB 957 Page 9