Amended in Assembly August 19, 2016

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, adequate technical, managerial, and financial capacity to deliver safe drinking water so that the services of the administrator are no longer necessary.begin insert The bill would not apply these administrator provisions to a charter city, charter county, or charter city and county.end insert

begin insert

This bill would incorporate additional changes to Section 116681 of the Health and Safety Code proposed by AB 1611 and SB 839 that would become operative if this bill and one or both of those bills are enacted and this bill is chaptered last.

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:

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
4begin delete (h)end deletebegin insert (j)end insert of Section 116686, the following definitions shall apply to
5this section 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
P5    1public water system consolidated into or receiving service from
2the receiving water system.

3begin insert

begin insertSEC. 1.5.end insert  

end insert

begin insertSection 116681 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
4amended to read:end insert

5

116681.  

begin deleteThe end deletebegin insertExcept as provided in paragraph (2) of subdivision
6(j) of Section 116686, the end insert
following definitions shall apply to this
7section and Sectionsbegin delete 116682end deletebegin insert 116682, 116684,end insert andbegin delete 116684:end deletebegin insert 116686:end insert

8(a) “Adequate supply” means sufficient water to meet residents’
9health and safety needs.

10(b) “Affected residence” means a residencebegin insert end insertbegin insertwithin a
11disadvantaged community that isend insert
reliant on a water supply that is
12either inadequate or unsafe.

13(c) “Consistently fails” means a failure to provide an adequate
14supply of safe drinking water.

15(d) “Consolidated water system” means the public water system
16resulting from the consolidation of a public water system with
17another public water system, state small water system, or affected
18residences not served by a public water system.

19(e) “Consolidation” means joining two or more public water
20systems, state small water systems, or affected residences not
21served by a public water system, into a single public water system.

22(f) “Disadvantaged community” means a disadvantaged
23community, as defined in Section 79505.5 of the Water Code, that
24is in an unincorporatedbegin delete areaend deletebegin insert area, is in a mobilehome park,end insert or is
25served by a mutual waterbegin delete company.end deletebegin insert company or a small public
26water system.end insert

27(g) “Extension of service” means the provision of service
28through any physical or operational infrastructure arrangement
29other than consolidation.

30(h) “Receiving water system” means the public water system
31that provides service to a subsumed water system through
32consolidation or extension of service.

33(i) “Safe drinking water” means water that meets all primary
34and secondary drinking water standards.

begin insert

35
(j) “Small public water system” has the same meaning as
36provided in subdivision (b) of Section 116395.

end insert
begin delete

37(j)

end delete

38begin insert(k)end insert “Subsumed water system” means the public water system,
39state small water system, or affected residences not served by a
P6    1public water system consolidated into or receiving service from
2the receiving water system.

3

SEC. 2.  

Section 116682 of the Health and Safety Code is
4amended to read:

5

116682.  

(a) Where a public water system or a state small water
6system, serving a disadvantaged community, consistently fails to
7provide an adequate supply of safe drinking water, the state board
8may order consolidation with a receiving water system as provided
9in this section and Section 116684. The consolidation may be
10physical or operational. The state board may also order the
11extension of service to an area within a disadvantaged community
12that does not have access to an adequate supply of safe drinking
13water so long as the extension of service is an interim extension
14of service in preparation for consolidation. The state board may
15set timelines and performance measures to facilitate completion
16of consolidation.

17(b) Before ordering consolidation or extension of service as
18provided in this section, the state board shall do all of the
19following:

20(1) Encourage voluntary consolidation or extension of service.

21(2) Consider other enforcement remedies specified in this article.

22(3) Consult with, and fully consider input from, the relevant
23local agency formation commission regarding the provision of
24water service in the affected area, the recommendations for
25improving service in a municipal service review, and any other
26relevant information.

27(4) Consult with, and fully consider input from, the Public
28Utilities Commission when the consolidation would involve a
29water corporation subject to the commission’s jurisdiction.

30(5) Consult with, and fully consider input from, the local
31government with land use planning authority over the affected
32area, particularly regarding any information in the general plan
33required by Section 65302.10 of the Government Code.

34(6) Consult with, and fully consider input from, all public water
35systems in the chain of distribution of the potentially receiving
36water systems.

37(7) (A) Notify the potentially receiving water system and the
38potentially subsumed water system, if any, and establish a
39reasonable deadline of no less than six months, unless a shorter
40period is justified, for the potentially receiving water system and
P7    1the potentially subsumed water system, if any, to negotiate
2consolidation or another means of providing an adequate supply
3of safe drinking water.

4(B) During this period, the state board shall provide technical
5assistance and work with the potentially receiving water system
6and the potentially subsumed water system to develop a financing
7package that benefits both the receiving water system and the
8subsumed water system.

9(C) Upon a showing of good cause, the deadline may be
10extended by the state board at the request of the potentially
11receiving water system, potentially subsumed water system, or the
12local agency formation commission with jurisdiction over the
13potentially subsumed water system.

14(8) Obtain written consent from any domestic well owner for
15consolidation or extension of service. Any domestic well owner
16within the consolidation or extended service area who does not
17provide written consent shall be ineligible, until the consent is
18provided, for any future water-related grant funding from the state
19other than funding to mitigate a well failure, disaster, or other
20emergency.

21(9) (A) Hold at least one public meeting at the initiation of this
22process in a place as close as feasible to the affected areas. The
23state board shall make reasonable efforts to provide a 30-day notice
24of the meeting to the ratepayers, renters, and property owners to
25receive water service through service extension or in the area of
26the subsumed water system and all affected local government
27agencies and drinking water service providers. The meeting shall
28provide representatives of the potentially subsumed water system,
29affected ratepayers, renters, property owners, and the potentially
30receiving water system an opportunity to present testimony. The
31meeting shall provide an opportunity for public comment.

32(B) An initial public meeting shall not be required for a
33potentially subsumed area that is served only by domestic wells.

34(c) Upon expiration of the deadline set by the state board
35pursuant to paragraph (7) of subdivision (b), the state board shall
36do the following:

37(1) Consult with the potentially receiving water system and the
38potentially subsumed water system, if any.

39(2) (A) Conduct a public hearing, in a location as close as
40feasible to the affected communities.

P8    1(B) The state board shall make reasonable efforts to provide a
230-day notice of the hearing to the ratepayers, renters, and property
3owners to receive water service through service extension or in
4the area of the subsumed water system and to all affected local
5government agencies and drinking water service providers.

6(C) The hearing shall provide representatives of the potentially
7subsumed water system, affected ratepayers, renters, property
8owners, and the potentially receiving water system an opportunity
9to present testimony.

10(D) The hearing shall provide an opportunity for public
11comment.

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

14(1) The potentially subsumed water system has consistently
15failed to provide an adequate supply of safe drinking water.

16(2) All reasonable efforts to negotiate consolidation or extension
17of service were made.

18(3) Consolidation of the receiving water system and subsumed
19water system or extension of service is appropriate and technically
20and economically feasible.

21(4) There is no pending local agency formation commission
22process that is likely to resolve the problem in a reasonable amount
23of time.

24(5) Concerns regarding water rights and water contracts of the
25subsumed and receiving water systems have been adequately
26addressed.

27(6) Consolidation or extension of service is the most effective
28and cost-effective means to provide an adequate supply of safe
29drinking water.

30(7) The capacity of the proposed interconnection needed to
31accomplish the consolidation is limited to serving the current
32customers of the subsumed water system.

33(e) Upon ordering consolidation or extension of service, the
34state board shall do all of the following:

35(1) As necessary and appropriate, make funds available, upon
36appropriation by the Legislature, to the receiving water system for
37the costs of completing the consolidation or extension of service,
38including, but not limited to, replacing any capacity lost as a result
39of the consolidation or extension of service, providing additional
40capacity needed as a result of the consolidation or extension of
P9    1service, and legal fees. Funding pursuant to this paragraph is
2available for the general purpose of providing financial assistance
3for the infrastructure needed for the consolidation or extension of
4service and does not need to be specific to each individual
5consolidation project. The state board shall provide appropriate
6financial assistance for the infrastructure needed for the
7consolidation or extension of service. The state board’s existing
8financial assistance guidelines and policies shall be the basis for
9the financial assistance.

10(2) Ensure payment of standard local agency formation
11commission fees caused by state board-ordered consolidation or
12extension of service.

13(3) Adequately compensate the owners of a privately owned
14subsumed water system for the fair market value of the system, as
15determined by the Public Utilities Commission or the state board.

16(4) Coordinate with the appropriate local agency formation
17commission and other relevant local agencies to facilitate the
18change of organization or reorganization.

19(f) (1) For the purposes of this section, the consolidated water
20system shall not increase charges on existing customers of the
21receiving water system solely as a consequence of the consolidation
22or extension of service unless the customers receive a
23corresponding benefit.

24(2) For purposes of this section, fees or charges imposed on a
25customer of a subsumed water system shall not exceed the cost of
26consolidating the water system with a receiving system or the
27extension of service to the area.

28(g) Division 3 (commencing with Section 56000) of Title 5 of
29the Government Code shall not apply to an action taken by the
30state board pursuant to this section.

31

SEC. 3.  

Section 116686 is added to the Health and Safety Code,
32to read:

33

116686.  

(a) (1) To provide affordable, safe drinking water to
34disadvantaged communities and to prevent fraud, waste, and abuse,
35the state board may do both of the following, if sufficient funding
36is available and if the state board finds that consolidation with
37another system or extension of service from another system is
38either not appropriate or not technically and economically feasible:

39(A) (i) Contract with an administrator to provide administrative
40and managerial services to a designated public water system to
P10   1assist the designated public water system with the provision of an
2adequate and affordable supply of safe drinking water.

3(ii) To fulfill the requirements of this section, the state board
4may contract with more than one administrator, but only one
5administrator may be assigned to provide services to a given
6designated public water system.

7(iii) An administrator may provide administrative and
8managerial services to more than one designated public water
9system.

10(B) Order the designated public water system to accept
11administrative and managerial services, including full management
12and control, from an administrator selected by the state board.

13(2) In performing its duties pursuant to paragraph (1), the state
14board may use criteria from the policy handbook adopted pursuant
15to Section 116760.43.

16(b) Before the state board determines that a public water system
17is a designated public water system, the state board shall do both
18of the following:

19 (1) Provide the public water system with notice and an
20opportunity to show either of the following:

21(A) That the public water system has not consistently failed to
22provide an adequate and affordable supply of safe drinking water.

23(B) That the public water system has taken steps to timely
24address its failure to provide an adequate and affordable supply
25of safe drinking water.

26(2) (A) Conduct a public meeting in a location as close as
27feasible to the affected community.

28(B) The state board shall make reasonable efforts to provide a
2930-day notice of the meeting to affected ratepayers, renters, and
30property owners.

31(C) Representatives of the public water system, affected
32ratepayers, renters, and property owners shall be provided an
33opportunity to present testimony at the meeting.

34(D) The meeting shall provide an opportunity for public
35comment.

36(c) The state board shall make financial assistance available to
37an administrator for a designated public water system, as
38appropriate and to the extent that funding is available.

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

P11   1(1) Expend available moneys for capital infrastructure
2improvements that the designated public water system needs to
3provide an adequate and affordable supply of safe drinking water.

4(2) Set and collect user water rates and fees, subject to approval
5by the state board. The provisions of this section are subject to all
6applicable constitutional requirements, including Article XIII D
7of the California Constitution.

8(3) Expend available moneys for operation and maintenance
9costs of the designated public water system.

10(e) The state board shall work with the administrator of a
11designated public water system and the communities served by
12that designated public water system to develop, within the shortest
13feasible timeframe, adequate technical, managerial, and financial
14capacity to deliver safe drinking water so that the services of the
15administrator are no longer necessary.

16(f) A designated public water system shall not be responsible
17for any costs associated with an administrator.

18(g) Administrative and managerial contracts pursuant to this
19section shall be exempt from Chapter 2 (commencing with Section
2010290) of Part 2 of Division 2 of the Public Contract Code and
21may be awarded on a noncompetitive bid basis as necessary to
22implement the purposes of this section.

begin insert

23
(h) For purposes of this section, a local government, as defined
24in Article XIII C of the California Constitution, that sets water
25rates in accordance with Article XIII D of the California
26Constitution shall be deemed to be providing affordable water.

end insert
begin insert

27
(i) This section does not apply to a charter city, charter county,
28or charter city and county.

end insert
begin delete

29(h)

end delete

30begin insert(j)end insert For purposes of this section, the following terms have the
31following meanings:

32(1) “Administrator” means a person whom the state board has
33determined is competent to perform the administrative and
34managerial services of a public water system, as described in
35subdivision (d). In determining competency, the state board may
36consider demonstrated experience in managing and operating a
37public water system.

38(2) “Designated public water system” means a public water
39system that serves a disadvantaged community, as defined in
40Section 79505.5 of the Water Code, and that the state board finds
P12   1consistently fails to provide an adequate and affordable supply of
2safe drinking water.

3begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

Section 1.5 of this bill incorporates amendments to
4Section 116681 of the Health and Safety Code proposed by this
5bill, Assembly Bill 1611, and Senate Bill 839. It shall only become
6operative if (1) this bill and Assembly Bill 1611 or Senate Bill 839,
7or both of those bills, are enacted and become effective on or
8before January 1, 2017, (2) Assembly Bill 1611, Senate Bill 839,
9or both, as enacted, amend Section 116681 of the Health and Safety
10Code, and (3) this bill is enacted last of these bills that amend
11Section 116681 of the Health and Safety Code, in which case
12Section 116681 of the Health and Safety Code, as amended by
13Assembly Bill 1611 or Senate Bill 839, shall remain operative only
14until the operative date of this bill, at which time Section 1.5 of
15this bill shall become operative, and Section 1 of this bill shall not
16become operative.

end insert


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