Amended in Assembly August 15, 2016

Amended in Assembly August 1, 2016

Amended in Assembly June 16, 2016

Amended in Assembly May 17, 2016

Amended in Assembly July 7, 2015

Amended in Senate April 16, 2015

Senate BillNo. 552


Introduced by Senator Wolk

February 26, 2015


An act to amend Sections 116681 and 116682 of, and to add Section 116686 to, 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 service: administrative and managerial services.

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 authorize the state board to order consolidation where a public water system or a state small water system is serving, rather than within, a disadvantaged community, and would limit the authority of the state board to order consolidation or extension of service to provide that authority only with regard to a disadvantaged community. This bill would make a community disadvantaged for these purposes 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 act requires the state board, before ordering consolidation or extension of service, to take certain actions, including consulting with specified entities, 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 also require the state board, before ordering consolidation or extension of service, to consult with public water systems in the chain of distribution of the potentially receiving water system. The 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 apply to the domestic well owner, instead of to an affected resident, within the consolidation or extended service area the written consent requirement for eligibility for water-related grant funding.

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 Utilities 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 value of a subsumed water system, 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 cost of extension of service to the area.

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.

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.

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 if sufficient funding is available and if the state board makes a certain finding. 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, and to conduct a public meeting, 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. The bill would require the state board to work with the administrator of the public water system and the communities served by that designated public water system to develop, within the shortest feasible timeframe,begin delete adequate,end deletebegin insert adequateend insert technical, managerial, and financial capacity to deliver safe drinking water so that the services of the administrator are no longer necessary.

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

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

P4    1

SECTION 1.  

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

3

116681.  

Except as provided in paragraph (2) of subdivision
4(h) of Section 116686, the following definitions shall apply to this
5section and Sections 116682, 116684, and 116686:

6(a) “Adequate supply” means sufficient water to meet residents’
7health and safety needs.

8(b) “Affected residence” means a residence within a
9disadvantaged community that is reliant on a water supply that is
10either inadequate or unsafe.

11(c) “Consistently fails” means a failure to provide an adequate
12supply of safe drinking water.

13(d) “Consolidated water system” means the public water system
14resulting from the consolidation of a public water system with
15another public water system, state small water system, or affected
16residences not served by a public water system.

17(e) “Consolidation” means joining two or more public water
18systems, state small water systems, or affected residences not
19served by a public water system, into a single public water system.

20(f) “Disadvantaged community” means a disadvantaged
21community, as defined in Section 79505.5 of the Water Code, that
22is in an unincorporated area, is in a mobilehome park, or is served
23by a mutual water company.

24(g) “Extension of service” means the provision of service
25through any physical or operational infrastructure arrangement
26other than consolidation.

27(h) “Receiving water system” means the public water system
28that provides service to a subsumed water system through
29consolidation or extension of service.

30(i) “Safe drinking water” means water that meets all primary
31and secondary drinking water standards.

32(j) “Subsumed water system” means the public water system,
33state small water system, or affected residences not served by a
34public water system consolidated into or receiving service from
35the receiving water system.

36

SEC. 2.  

Section 116682 of the Health and Safety Code is
37amended to read:

P5    1

116682.  

(a) Where a public water system or a state small water
2system, serving a disadvantaged community, consistently fails to
3provide an adequate supply of safe drinking water, the state board
4may order consolidation with a receiving water system as provided
5in this section and Section 116684. The consolidation may be
6physical or operational. The state board may also order the
7extension of service to an area within a disadvantaged community
8that does not have access to an adequate supply of safe drinking
9water so long as the extension of service is an interim extension
10of service in preparation for consolidation. The state board may
11set timelines and performance measures to facilitate completion
12of consolidation.

13(b) Before ordering consolidation or extension of service as
14provided in this section, the state board shall do all of the
15following:

16(1) Encourage voluntary consolidation or extension of service.

17(2) Consider other enforcement remedies specified in this article.

18(3) Consult with, and fully consider input from, the relevant
19local agency formation commission regarding the provision of
20water service in the affected area, the recommendations for
21improving service in a municipal service review, and any other
22relevant information.

23(4) Consult with, and fully consider input from, the Public
24Utilities Commission when the consolidation would involve a
25water corporation subject to the commission’s jurisdiction.

26(5) Consult with, and fully consider input from, the local
27government with land use planning authority over the affected
28area, particularly regarding any information in the general plan
29required by Section 65302.10 of the Government Code.

30(6) Consult with, and fully consider input from, all public water
31systems in the chain of distribution of the potentially receiving
32water systems.

33(7) (A) Notify the potentially receiving water system and the
34potentially subsumed water system, if any, and establish a
35reasonable deadline of no less than six months, unless a shorter
36period is justified, for the potentially receiving water system and
37the potentially subsumed water system, if any, to negotiate
38consolidation or another means of providing an adequate supply
39of safe drinking water.

P6    1(B) During this period, the state board shall provide technical
2assistance and work with the potentially receiving water system
3and the potentially subsumed water system to develop a financing
4package that benefits both the receiving water system and the
5subsumed water system.

6(C) Upon a showing of good cause, the deadline may be
7extended by the state board at the request of the potentially
8receiving water system, potentially subsumed water system, or the
9local agency formation commission with jurisdiction over the
10potentially subsumed water system.

11(8) Obtain written consent from any domestic well owner for
12consolidation or extension of service. Any domestic well owner
13within the consolidation or extended service area who does not
14provide written consent shall be ineligible, until the consent is
15provided, for any future water-related grant funding from the state
16other than funding to mitigate a well failure, disaster, or other
17emergency.

18(9) (A) Hold at least one public meeting at the initiation of this
19process in a place as close as feasible to the affected areas. The
20state board shall make reasonable efforts to provide a 30-day notice
21of the meeting to the ratepayers, renters, and property owners to
22receive water service through service extension or in the area of
23the subsumed water system and all affected local government
24agencies and drinking water service providers. The meeting shall
25provide representatives of the potentially subsumed water system,
26affected ratepayers, renters, property owners, and the potentially
27receiving water system an opportunity to present testimony. The
28meeting shall provide an opportunity for public comment.

29(B) An initial public meeting shall not be required for a
30potentially subsumed area that is served only by domestic wells.

31(c) Upon expiration of the deadline set by the state board
32pursuant to paragraph (7) of subdivision (b), the state board shall
33do the following:

34(1) Consult with the potentially receiving water system and the
35potentially subsumed water system, if any.

36(2) (A) Conduct a public hearing, in a location as close as
37feasible to the affected communities.

38(B) The state board shall make reasonable efforts to provide a
3930-day notice of the hearing to the ratepayers, renters, and property
40owners to receive water service through service extension or in
P7    1the area of the subsumed water system and to all affected local
2government agencies and drinking water service providers.

3(C) The hearing shall provide representatives of the potentially
4subsumed water system, affected ratepayers, renters, property
5owners, and the potentially receiving water system an opportunity
6to present testimony.

7(D) The hearing shall provide an opportunity for public
8comment.

9(d) Before ordering consolidation or extension of service, the
10 state board shall find all of the following:

11(1) The potentially subsumed water system has consistently
12failed to provide an adequate supply of safe drinking water.

13(2) All reasonable efforts to negotiate consolidation or extension
14of service were made.

15(3) Consolidation of the receiving water system and subsumed
16water system or extension of service is appropriate and technically
17and economically feasible.

18(4) There is no pending local agency formation commission
19process that is likely to resolve the problem in a reasonable amount
20of time.

21(5) Concerns regarding water rights and water contracts of the
22subsumed and receiving water systems have been adequately
23addressed.

24(6) Consolidation or extension of service is the most effective
25and cost-effective means to provide an adequate supply of safe
26drinking water.

27(7) The capacity of the proposed interconnection needed to
28accomplish the consolidation is limited to serving the current
29customers of the subsumed water system.

30(e) Upon ordering consolidation or extension of service, the
31state board shall do all of the following:

32(1) As necessary and appropriate, make funds available, upon
33appropriation by the Legislature, to the receiving water system for
34the costs of completing the consolidation or extension of service,
35including, but not limited to, replacing any capacity lost as a result
36of the consolidation or extension of service, providing additional
37capacity needed as a result of the consolidation or extension of
38service, and legal fees. Funding pursuant to this paragraph is
39available for the general purpose of providing financial assistance
40for the infrastructure needed for the consolidation or extension of
P8    1service and does not need to be specific to each individual
2consolidation project. The state board shall provide appropriate
3financial assistance for the infrastructure needed for the
4consolidation or extension of service. The state board’s existing
5financial assistance guidelines and policies shall be the basis for
6the financial assistance.

7(2) Ensure payment of standard local agency formation
8commission fees caused by state board-ordered consolidation or
9extension of service.

10(3) Adequately compensate the owners of a privately owned
11subsumed water system for the fair market value of thebegin delete systemend delete
12begin insert system,end insert as determined by the Public Utilities Commission or the
13state board.

14(4) Coordinate with the appropriate local agency formation
15commission and other relevant local agencies to facilitate the
16change of organization or reorganization.

17(f) (1) For the purposes of this section, the consolidated water
18system shall not increase charges on existing customers of the
19receiving water system solely as a consequence of the consolidation
20or extension of service unless the customers receive a
21corresponding benefit.

22(2) For purposes of this section, fees or charges imposed on a
23customer of a subsumed water system shall not exceed the cost of
24consolidating the water system with a receiving system or the
25extension of service to the area.

26(g) Division 3 (commencing with Section 56000) of Title 5 of
27the Government Code shall not apply to an action taken by the
28state board pursuant to this section.

29

SEC. 3.  

Section 116686 is added to the Health and Safety Code,
30to read:

31

116686.  

(a) (1) To provide affordable, safe drinking water to
32disadvantaged communities and to prevent fraud, waste, and abuse,
33the state board may do both of the following, if sufficient funding
34is available and if the state board finds that consolidation with
35another system or extension of service from another system is
36either not appropriate or not technically and economically feasible:

37(A) (i) Contract with an administrator to provide administrative
38and managerial services to a designated public water system to
39assist the designated public water system with the provision of an
40adequate and affordable supply of safe drinking water.

P9    1(ii) To fulfill the requirements of this section, the state board
2may contract with more than one administrator, but only one
3administrator may be assigned to provide services to a given
4designated public water system.

5(iii) An administrator may provide administrative and
6managerial services to more than one designated public water
7system.

8(B) Order the designated public water system to accept
9administrative and managerial services, including full management
10and control, from an administrator selected by the state board.

11(2) In performing its duties pursuant to paragraph (1), the state
12board may use criteria from the policy handbook adopted pursuant
13to Section 116760.43.

14(b) Before the state board determines that a public water system
15is a designated public water system, the state board shall do both
16of the following:

17 (1) Provide the public water system with notice and an
18opportunity to show either of the following:

19(A) That the public water system has not consistently failed to
20provide an adequate and affordable supply of safe drinking water.

21(B) That the public water system has taken steps to timely
22address its failure to provide an adequate and affordable supply
23of safe drinking water.

24(2) (A) Conduct a public meeting in a location as close as
25feasible to the affected community.

26(B) The state board shall make reasonable efforts to provide a
2730-day notice of the meeting to affected ratepayers, renters, and
28property owners.

29(C) Representatives of the public water system, affected
30ratepayers, renters, and property owners shall be provided an
31opportunity to present testimony at the meeting.

32(D) The meeting shall provide an opportunity for public
33comment.

34(c) The state board shall make financial assistance available to
35an administrator for a designated public water system, as
36appropriate and to the extent that funding is available.

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

38(1) Expend available moneys for capital infrastructure
39improvements that the designated public water system needs to
40provide an adequate and affordable supply of safe drinking water.

P10   1(2) Set and collect user water rates and fees, subject to approval
2by the state board. The provisions of this section are subject to all
3applicable constitutional requirements, including Article XIII D
4of the California Constitution.

5(3) Expend available moneys for operation and maintenance
6costs of the designated public water system.

7(e) The state board shall work with the administrator of a
8designated public water system and the communities served by
9that designated public water system to develop, within the shortest
10feasible timeframe,begin delete adequate,end deletebegin insert adequateend insert technical, managerial, and
11financial capacity to deliver safe drinking water so that the services
12of the administrator are no longer necessary.

13(f) A designated public water system shall not be responsible
14for any costs associated with an administrator.

15(g) Administrative and managerial contracts pursuant to this
16section shall be exempt from Chapter 2 (commencing with Section
1710290) of Part 2 of Division 2 of the Public Contract Code and
18may be awarded on a noncompetitive bid basis as necessary to
19implement the purposes of this section.

20(h) For purposes of this section, the following terms have the
21following meanings:

22(1) “Administrator” means a person whom the state board has
23determined is competent to perform the administrative and
24managerial services of a public water system, as described in
25subdivision (d). In determining competency, the state board may
26consider demonstrated experience in managing and operating a
27public water system.

28(2) “Designated public water system” means a public water
29system that serves a disadvantaged community, as defined in
30Section 79505.5 of the Water Code, and that the state board finds
31consistently fails to provide an adequate and affordable supply of
32safe drinking water.



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