Amended in Assembly May 17, 2016

Amended in Assembly July 7, 2015

Amended in Senate April 16, 2015

Senate Bill No. 552

Introduced by Senator Wolk

February 26, 2015

An act to amend Sections 116681 and 116682 begin delete of end delete begin insert of, and to add Section 116686 to, end insert the Health and Safety Code, relating to water.

LEGISLATIVE COUNSEL’S DIGEST

SB 552, as amended, Wolk. Public water systems: disadvantaged communities: consolidation or extension of begin delete service. end delete begin insert service: administrative and managerial services. end insert

Existing law, the California Safe Drinking Water Act, provides for the operation of public water systems, and imposes on the State Water Resources Control Board various responsibilities and duties. The act authorizes the state board to order consolidation with a receiving water system where a public water system, or a state small water system within a disadvantaged community, consistently fails to provide an adequate supply of safe drinking water. The act authorizes the state board to order the extension of service to an area that does not have access to an adequate supply of safe drinking water so long as the extension of service is an interim extension of service in preparation for consolidation. Existing law, for these purposes, defines “disadvantaged community” to mean a disadvantaged community that is in an unincorporated area or is served by a mutual water company.

This bill would begin delete allow end delete begin insert make end insert a community begin delete to be a “disadvantaged community” end delete begin insert disadvantaged for these purposes end insert if the community is in a mobilehome park even if it is not in an unincorporated area or served by a mutual water company. The bill would limit the authority of the state board to order consolidation or extension of service begin insert to provide that authority end insert only with regard to a disadvantaged community.

The act requires the state board, before ordering consolidation or extension of service, to hold at least one initial public meeting, as specified, and to obtain written consent from any domestic well owner for consolidation or extension of service. The act provides that any affected resident within the consolidation or extended service area who does not provide written consent is ineligible, until consent is provided, for any future water-related grant funding from the state, except as specified.

This bill would provide that an initial public meeting is not required for a potentially subsumed area that is served only by domestic wells. The bill would begin delete require any end delete begin insert apply to the end insert domestic well owner, instead of begin insert to end insert an affected resident, within the consolidation or extended service area begin delete who does not provide end delete begin insert the end insert written consent begin delete to be ineligible for future end delete begin insert requirement for eligibility for end insert water-related grant begin delete funding from the state. end delete begin insert funding. end insert

The act requires the state board, upon ordering the consolidation or extension of service, to adequately compensate the owners of a privately owned subsumed water system for the fair market value of the system as determined by the Public begin delete Unities end delete begin insert Utilities end insert Commission for water corporations subject to the commission’s jurisdiction or the state board for all other systems. The act prohibits a consolidated water system from increasing charges on existing customers of the receiving water system solely as a consequence of the consolidation or extension of service unless the customer receives a corresponding benefit.

This bill would instead authorize the Public Utilities Commission or the state board to determine the fair market begin delete value, end delete begin insert value of a subsumed water system, end insert without regard to whether the system is a water corporation subject to the commission’s jurisdiction. The bill would prohibit fees or charges imposed on a customer of a subsumed water system from exceeding the cost of consolidating the water system or the begin insert cost of end insert extension of service to the area.

begin insert

The act exempts the consolidation or extension of service pursuant to these provisions from the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, which governs the procedures for the formation and change of organization of cities and special districts.

end insert begin insert

This bill would instead exempt an action taken by the state board pursuant to these provisions from the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000.

end insert begin insert

This bill would authorize the state board, for the purpose of providing affordable, safe drinking water to disadvantaged communities and preventing fraud, waste, and abuse, to contract with an administrator to provide administrative and managerial services to a designated water system and to order the designated public water system to accept those services. The bill would define designated water system as a public water system that serves a disadvantaged community and that the state board finds consistently fails to provide an adequate and affordable supply of safe drinking water. The bill would require the state board to provide a public water system with notice, as specified, before determining that the public water system is a designated public water system. The bill would authorize the administrator of a designated public water system to expend available moneys for capital infrastructure improvements that the designated public water system needs to provide an adequate and affordable supply of safe drinking water, to set and collect user water rates and fees, and to expend available moneys for the operation and maintenance costs of the designated public water system.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 116681 of the Health and Safety Code
is amended to read:

116681.  

begin delete The end delete begin insert Except as provided in paragraph (2) of subdivision
(g) of Section 116686, the end insert following definitions shall apply to this
section and Sections begin delete 116682 and 116684: end delete begin insert 116682, 116684, and
116686: end insert

(a) “Adequate supply” means sufficient water to meet residents’
health and safety needs.

(b) “Affected residence” means a residence within a
disadvantaged community that is reliant on a water supply that is
either inadequate or unsafe.

(c) “Consistently fails” means a failure to provide an adequate
supply of safe drinking water.

(d) “Consolidated water system” means the public water system
resulting from the consolidation of a public water system with
another public water system, state small water system, or affected
residences not served by a public water system.

(e) “Consolidation” means joining two or more public water
systems, state small water systems, or affected residences not
served by a public water system, into a single public water system.

(f) “Disadvantaged community” means a disadvantaged
community, as defined in Section 79505.5 of the Water Code, that
is in an unincorporated area, begin insert is in a end insert mobilehome park, or is served
by a mutual water company.

(g) “Extension of service” means the provision of service
through any physical or operational infrastructure arrangement
other than consolidation.

(h) “Receiving water system” means the public water system
that provides service to a subsumed water system through
consolidation or extension of service.

(i) “Safe drinking water” means water that meets all primary
and secondary drinking water standards.

(j) “Subsumed water system” means the public water system,
state small water system, or affected residences not served by a
public water system consolidated into or receiving service from
the receiving water system.

SEC. 2.  

Section 116682 of the Health and Safety Code is
amended to read:

116682.  

(a) Where a public water system or a state small water
begin delete system end delete begin insert system, end insert within a disadvantaged begin delete community end delete begin insert community, end insert
consistently fails to provide an adequate supply of safe drinking
water, the begin delete State Water Resources Control Board end delete begin insert state board end insert may
order consolidation with a receiving water system as provided in
this section and Section 116684. The consolidation may be physical
or operational. The begin delete State Water Resources Control Board end delete begin insert state
board end insert may also order the extension of service to an area within a
disadvantaged community that does not have access to an adequate
supply of safe drinking water so long as the extension of service
is an interim extension of service in preparation for consolidation.
The begin delete State Water Resources Control Board end delete begin insert state board end insert may set
timelines and performance measures to facilitate completion of
consolidation.

(b) Before ordering consolidation or extension of service as
provided in this section, the begin delete State Water Resources Control Board end delete
begin insert state board end insert shall do all of the following:

(1) Encourage voluntary consolidation or extension of service.

(2) Consider other enforcement remedies specified in this article.

(3) Consult with, and fully consider input from, the relevant
local agency formation commission regarding the provision of
water service in the affected area, the recommendations for
improving service in a municipal service review, and any other
relevant information.

(4) Consult with, and fully consider input from, the Public
Utilities Commission when the consolidation would involve a
water corporation subject to the commission’s jurisdiction.

(5) Consult with, and fully consider input from, the local
government with land use planning authority over the affected
area, particularly regarding any information in the general plan
required by Section 65302.10 of the Government Code.

(6) Notify the potentially receiving water system and the
potentially subsumed water system, if any, and establish a
reasonable deadline of no less than six months, unless a shorter
period is justified, for the potentially receiving water system and
the potentially subsumed water system, if any, to negotiate
consolidation or another means of providing an adequate supply
of safe drinking water.

(A) During this period, the begin delete State Water Resources Control Board end delete
begin insert state board end insert shall provide technical assistance and work with the
potentially receiving water system and the potentially subsumed
water system to develop a financing package that benefits both the
receiving water system and the subsumed water system.

(B) Upon a showing of good cause, the deadline may be
extended by the begin delete State Water Resources Control Board end delete begin insert state board end insert
at the request of the potentially receiving water system, potentially
subsumed water system, or the local agency formation commission
with jurisdiction over the potentially subsumed water system.

(7) Obtain written consent from any domestic well owner for
consolidation or extension of service. Any domestic well owner
within the consolidation or extended service area who does not
provide written consent shall be ineligible, until the consent is
provided, for any future water-related grant funding from the state
other than funding to mitigate a well failure, disaster, or other
emergency.

(8) (A) Hold at least one public meeting at the initiation of this
process in a place as close as feasible to the affected areas. The
begin delete State Water Resources Control Board end delete begin insert state board end insert shall make
reasonable efforts to provide a 30-day notice of the meeting to the
ratepayers, renters, and property owners to receive water service
through service extension or in the area of the subsumed water
system and all affected local government agencies and drinking
water service providers. The meeting shall provide representatives
of the potentially subsumed water system, affected ratepayers,
renters, property owners, and the potentially receiving water system
an opportunity to present testimony. The meeting shall provide an
opportunity for public comment.

(B) An initial public meeting shall not be required for a
potentially subsumed area that is served only by domestic wells.

(c) Upon expiration of the deadline set by the begin delete State Water
Resources Control Board end delete begin insert state board end insert pursuant to paragraph (6) of
subdivision (b), the begin delete State Water Resources Control Board end delete begin insert state
board end insert shall do the following:

(1) Consult with the potentially receiving water system and the
potentially subsumed water system, if any.

(2) Conduct a public hearing, in a location as close as feasible
to the affected communities.

(A) The begin delete State Water Resources Control Board end delete begin insert state board end insert shall
make reasonable efforts to provide a 30-day notice of the hearing
to the ratepayers, renters, and property owners to receive water
service through service extension or in the area of the subsumed
water system and to all affected local government agencies and
drinking water service providers.

(B) The hearing shall provide representatives of the potentially
subsumed water system, affected ratepayers, renters, property
owners, and the potentially receiving water system an opportunity
to present testimony.

(C) The hearing shall provide an opportunity for public
comment.

(d) Before ordering consolidation or extension of service, the
begin delete State Water Resources Control Board end delete begin insert state board end insert shall find all of
the following:

(1) The potentially subsumed water system has consistently
failed to provide an adequate supply of safe drinking water.

(2) All reasonable efforts to negotiate consolidation or extension
of service were made.

(3) Consolidation of the receiving water system and subsumed
water system or extension of service is appropriate and technically
and economically feasible.

(4) There is no pending local agency formation commission
process that is likely to resolve the problem in a reasonable amount
of time.

(5) Concerns regarding water rights and water contracts of the
subsumed and receiving water systems have been adequately
addressed.

(6) Consolidation or extension of service is the most effective
and cost-effective means to provide an adequate supply of safe
drinking water.

(7) The capacity of the proposed interconnection needed to
accomplish the consolidation is limited to serving the current
customers of the subsumed water system.

(e) Upon ordering consolidation or extension of service, the
begin delete State Water Resources Control Board end delete begin insert state board end insert shall do all of
the following:

(1) As necessary and appropriate, make funds available, upon
appropriation by the Legislature, to the receiving water system for
the costs of completing the consolidation or extension of service,
including, but not limited to, replacing any capacity lost as a result
of the consolidation or extension of service, providing additional
capacity needed as a result of the consolidation or extension of
service, and legal fees. Funding pursuant to this paragraph is
available for the general purpose of providing financial assistance
for the infrastructure needed for the consolidation or extension of
service and does not need to be specific to each individual
consolidation project. The begin delete State Water Resources Control Board end delete
begin insert state board end insert shall provide appropriate financial assistance for the
infrastructure needed for the consolidation or extension of service.
The begin delete State Water Resources Control Board’s end delete begin insert state board’s end insert existing
financial assistance guidelines and policies shall be the basis for
the financial assistance.

(2) Ensure payment of standard local agency formation
commission fees caused by begin delete State Water Resources Control
Board-ordered end delete begin insert state board-ordered end insert consolidation or extension of
service.

(3) Adequately compensate the owners of a privately owned
subsumed water system for the fair market value of the system as
determined by the Public Utilities Commission or the begin delete State Water
Resources Control Board. end delete begin insert state board. end insert

(4) Coordinate with the appropriate local agency formation
commission and other relevant local agencies to facilitate the
change of organization or reorganization.

(f) (1) For the purposes of this section, the consolidated water
system shall not increase charges on existing customers of the
receiving water system solely as a consequence of the consolidation
or extension of service unless the customers receive a
corresponding benefit.

(2) For purposes of this section, fees or charges imposed on a
customer of a subsumed water system shall not exceed the cost of
consolidating the water system with a receiving system or the
extension of service to the area.

(g) Division 3 (commencing with Section 56000) of Title 5 of
the Government Code shall not apply to begin delete the consolidation or
extension of service required end delete begin insert an action taken by the state board end insert
pursuant to this section.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 116686 is added to the end insert begin insert Health and Safety Code end insert begin insert ,
to read: end insert

begin insert

begin insert 116686. end insert   

(a) (1) To provide affordable, safe drinking water to
disadvantaged communities and to prevent fraud, waste, and abuse,
the state board may do both of the following:

(A) Contract with an administrator to provide administrative
and managerial services to a designated public water system to
assist the designated public water system with the provision of an
adequate and affordable supply of safe drinking water.

(i) To fulfill the requirements of this section, the state board
may contract with more than one administrator, but only one
administrator may be assigned to provide services to a given
designated public water system.

(ii) An administrator may provide administrative and
managerial services to more than one designated public water
system.

(B) Order the designated public water system to accept
administrative and managerial services, including full management
and control, from an administrator selected by the state board.

(2) In performing its duties pursuant to paragraph (1), the state
board may use criteria from the policy handbook adopted pursuant
to Section 116760.43.

(b) Before the state board determines that a public water system
is a designated public water system, the state board shall provide
the public water system with notice and an opportunity to show
either of the following:

(1) That the public water system has not consistently failed to
provide an adequate and affordable supply of safe drinking water.

(2) That the public water system has taken steps to timely
address its failure to provide an adequate and affordable supply
of safe drinking water.

(c) The state board shall make financial assistance available
to an administrator for a designated public water system, as
appropriate and to the extent that funding is available.

(d) An administrator may do any of the following:

(1) Expend available moneys for capital infrastructure
improvements that the designated public water system needs to
provide an adequate and affordable supply of safe drinking water.

(2) Set and collect user water rates and fees.

(3) Expend available moneys for operation and maintenance
costs of the designated public water system.

(e) A designated public water system shall not be responsible
for any costs associated with an administrator.

(f) Administrative and managerial contracts pursuant to this
section shall be exempt from Chapter 2 (commencing with Section
10290) of Part 2 of Division 2 of the Public Contract Code and
may be awarded on a noncompetitive bid basis as necessary to
implement the purposes of this section.

(g) For purposes of this section, the following terms have the
following meanings:

(1) “Administrator” means a person that the state board has
determined is competent to perform the administrative and
managerial services of a public water system, as described in
subdivision (d). In determining competency, the state board may
consider demonstrated experience in managing and operating a
public water system.

(2) “Designated public water system” means a public water
system that serves a disadvantaged community, as defined in
Section 79505.5 of the Water Code, and that the state board finds
consistently fails to provide an adequate and affordable supply of
safe drinking water.

end insert