BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 1588
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          |Author:    |Mathis and Alejo                                     |
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          |Version:   |6/15/2016              |Hearing      |6/29/2016       |
          |           |                       |Date:        |                |
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          |Urgency:   |Yes                    |Fiscal:      |Yes             |
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          |Consultant:|Rachel Machi Wagoner                                 |
          |           |                                                     |
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          SUBJECT:  Water and Wastewater Loan and Grant Program.

            ANALYSIS:
          
          Existing law:  
          
          1)Under the federal Clean Water Act: 


              a)    Establishes federal guidelines for surface water  
                quality protection. 


              b)    Authorizes water quality programs; requires federal  
                effluent limitations and state water quality standards;  
                requires permits for the discharge of pollutants into  
                navigable waters; provides enforcement mechanisms; and  
                authorizes funding for wastewater treatment works,  
                construction grants, and state revolving loan programs, as  
                well as funding to states and tribes for their water  
                quality programs. 


              c)    Establishes the Clean Water State Revolving Fund  
                (CWSRF) to offer financial assistance for water quality  
                projects. 


          2)Under the federal Safe Drinking Water Act (SDWA):








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              a)    Establishes federal standards for contaminants in  
                drinking water.


              b)    Authorizes states to enter into primacy agreements with  
                the federal United States Environmental Protection Agency  
                (US EPA) to enforce SDWA if the state establishes drinking  
                water standards that are at least as stringent as those  
                developed by US EPA, as required by SDWA.


              c)    Establishes the Safe Drinking Water State Revolving  
                Fund (SDWSRF) to offer financial assistance for safe  
                drinking water projects.


          3)Under the Porter-Cologne Water Quality Control Act: 


              a)    Establishes the State Water Resources Control Board  
                (SWRCB) and Regional Water Quality Control Boards to  
                regulate and protect water quality in California.


              b)    Establishes the State Water Pollution Control Revolving  
                Fund to, among other things, implement the federal CWSRF  
                program.


          4)Transferred the Drinking Water Program and the Safe Drinking  
            Water State Revolving Fund (SDWSRF) from the Department of  
            Public Health to SWRCB effective July 1, 2014.


          5)Under the California Safe Drinking Water Act,


                  a)        Requires SWRCB to protect the public from  
                    contaminants in drinking water. 


                  b)        Establishes the SDWSRF which is partially  
                    capitalized by federal contributions from the federal  








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                    Safe Drinking Water Act.  Specifies that the SDWSRF  
                    provide funding for public water systems to correct  
                    deficiencies and problems that pose public health risks  
                    and to meet safe drinking water standards.


          6)Proposition 1, the Water Quality, Supply, and Infrastructure  
            Improvement Act of 2014 (Prop. 1), includes $260 million, upon  
            appropriation by the Legislature to the SWRCB to be placed in  
            the CWSRF and used for grants for wastewater treatment  
            projects.  Prop. 1 also includes another $260 million, upon  
            appropriation by the Legislature (recipient agency not  
            specified) for public water system infrastructure improvements  
            and related actions to meet safe drinking water standards,  
            ensure affordable drinking water, or both.  


          7)AB 91 (Budget Committee, Chapter 1, Statutes of 2015)  
            appropriates $19 million to the SWRCB, for grants and direct  
            expenditures 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. 


          This bill:  transfers $10 million from the General Fund to a  
          newly created fund, and requires SWRCB to implement a  
          low-interest loan and grant pilot program for counties to fund  
          water and wastewaster facilities improvements.  Specifically,  
          this bill:


          1)Requires SWRCB to establish a program of low-interest loans and  
            grants for counties to provide funds to eligible applicants for  
            specified water or wastewater improvements.


          2)Establishes the Water and Wastewater Loan and Grant Fund (LGF).  
             Transfers $10 million from the General Fund to the LGF for  
            appropriation by the Legislature to the SWRCB for the purposes  
            of the bill.  


          3)Allows SWRCB to adopt guidelines for administering the program  








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            exempt from the Administrative Procedures Act (APA).  Requires  
            SWRCB to develop guidelines to apportion funds among the  
            counties.


          4)Allows a county to apply to SWRCB for funds to award grants  
            and/or loans to residents within its jurisdiction.


          5)Requires counties receiving LGF to annually provide specified  
            information to the board regarding projects and funding  
            recipients.


          6)Requires eligible loan applicants to meet the following  
            specified criteria:


                  a)        Requires loans to be secured by a mortgage on  
                    the residence and repaid within 20 years in accordance  
                    with terms established by SWRCB.  Limits the loan  
                    interest rate to 1%.  Requires loan recipients to  
                    maintain homeowners insurance during the life of the  
                    loan.  





                  b)        Allows counties to enter into contracts with  
                    private financial institutions to provide loans as  
                    specified.


          1)Requires eligible grant recipients to meet the following  
            specified criteria:


                  a)        Requires grant recipients to repay the county  
                    in full if the recipient sells the residence less than  
                    five years from signing the grant agreement.  Requires  
                    the grant recipient to repay the county any unused  
                    grant funds.









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                  b)        Exempts funding received from this program from  
                    certain requirements of the law that authorize the  
                    SWRCB to order consolidations and service extensions.   
                    Specifically, the provisions that prevent residents  
                    from receiving any future water-related state grant  
                    funding until written consent to consolidate or extend  
                    service is received.


          Background
          
          1) Privately owned property is not eligible under CWSRF or  
             SDWSRF.   The CWSRF program provides low-interest loans and  
             other financing mechanisms for publicly owned wastewater  
             treatment facilities, local sewers, sewer interceptors, water  
             recycling facilities, and storm water treatment facilities.  
             The SDWSRF provides funding for public water systems.  But  
             improvements to those parts of the water and wastewater  
             infrastructure that are on private property such as wells,  
             sewer laterals, or septic systems have not been funded by the  
             CWSRF or SDWSRF programs.


          Comments


          1) Purpose of Bill.  According to the author, Californians who  
             are reliant on groundwater wells need access to low-interest  
             financing and grants to undertake necessary repairs to provide  
             safer, reliable drinking water.  There are many state and  
             federal programs that provide financial assistance, such as  
             low-interest loans and grants, to communities to undertake  
             water and wastewater infrastructure improvement projects.   
             Unfortunately, there are very few resources available to  
             individual homeowners who are reliant on their own groundwater  
             wells.


             The author states that it is 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.  The CWSRF program provides  
             low-interest loans and other financing mechanisms for publicly  








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             owned wastewater treatment facilities, local sewers, sewer  
             interceptors, water recycling facilities, and storm water  
             treatment facilities.  The SDWSRF provides funding for public  
             water systems.  But improvements to those parts of the water  
             and wastewater infrastructure that are on private property  
             such as wells, sewer laterals, or septic systems have not been  
             funded by the CWSRF or SDWSRF programs.  This bill provides  
             for assistance on private property similar to what exists for  
             public systems.


          2) General Fund Appropriation.  This legislation identifies an  
             unfunded water quality need for Californians and appropriates  
             $10 million from the General Fund for this purpose.  Should  
             this legislation be approved by the Senate Environmental  
             Quality Committee, the Senate Appropriations Committee will  
             need to consider if this is an appropriation expenditure of  
             General Fund and if the revenue is available to fund this new  
             program.  AB 954 (Mathis, 2015), is substantially similar to  
             this bill and was held on the Senate suspense file.   
             Additionally, the Assembly Appropriations has identified  
             $700,000 to $800,000 administration costs for SWRCB to  
             administer this program annually.  Should this legislation  
             pass, the Legislature should be prepared to address this need  
             in the 2017-2018 and subsequent budgets.











            Related/Prior Legislation
          
          AB 954 (Mathis) of 2015 was held in the Senate Appropriations  
          Committee.  This bill is substantially similar to AB 954.  The  
          difference between the two bills is the process by which the  
          SWRCB will establish the programs and reporting requirements  
          under the programs to the SWRCB.  









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          AB 91 (Committee on Budget, Chapter 1, Statutes of 2015),  
          appropriates $19 million to SWRCB, for grants and direct  
          expenditures 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.


          AB 1471 (Rendon, Chapter 188, Statutes of 2014), placed  
          Proposition 1, a $7.545 billion general obligation bond for  
          water-related projects and programs on the November 4, 2014,  
          ballot where it passed with 67% of the vote.  


          AB 964 (Huffman), 2011, sought to improve water quality by financing  
          the installation of onsite sewer and septic improvements on private  
          property including the conversion of a property from a septic system  
          to community sewer collection and treatment service.  AB 964 was  
          later gutted and amended into a water rights bill concerning Small  
          Irrigation Registrations after the federal Environmental Protection  
          Agency interpreted private property improvements to be ineligible  
          for CWSRF money.   


            SOURCE:                    Author  

           SUPPORT:               

          Association of California Water Agencies
          California Food Policy Advocates
          California Association of Realtors 
          Clean Water Action 
          Community Water Center 
          El Quinto Sol De America 
          Environmental Working Group 
          Kings River Conservation District
          Kings River Water Association 
          Mission Springs Water District 
          Pacific Water Quality Association 
          Trust for Public Land 
           
           OPPOSITION:    None received   
                                           








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