BILL ANALYSIS Ó
SB 552
Page 1
Date of Hearing: June 14, 2016
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
SB
552 (Wolk) - As Amended May 17, 2016
SENATE VOTE: 31-5
SUBJECT: Public water systems: disadvantaged communities:
consolidation or extension of service: administrative and
managerial services
SUMMARY: Authorizes the State Water Resources Control Board
(State Water Board) to contract with an administrator to provide
administrative and managerial services to a designated public
water system, as defined, to assist with the provision of an
adequate and affordable supply of safe drinking water.
Specifically, this bill:
1)Updates, in statute referring to water system consolidation,
the definition of "affected residence" by stating that the
residence must be within a disadvantaged community.
2)Updates, in statute referring to water system consolidation,
the definition of "disadvantaged community," by adding a
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"mobilehome park" to the list of locations that a
disadvantaged community may be in.
3)Updates statute requiring public meetings at the initiation of
a consolidation process by providing that an initial public
meeting is not required for a potentially subsumed area that
is served only by domestic wells.
4)Clarifies that, in the case of an ordered consolidation, 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.
5)Defines "administrator" as a person that the State Water Board
has determined is competent to perform the administrative and
managerial services of a public water system, as specified.
Authorizes the State Water Board, in determining competency,
to consider demonstrated experience in managing and operating
a public water system.
6)Defines "designated public water system" as a public water
system that serves a disadvantaged community and that the
State Water Board finds consistently fails to provide an
adequate and affordable supply of safe drinking water.
7)Authorizes the State Water Board, in order to provide
affordable, safe drinking water to disadvantaged communities
and to prevent fraud, waste, and abuse, to do both of the
following:
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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; and,
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 Water Board.
8)Provides that the State Water 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.
9)Provides that an administrator may provide administrative and
managerial services to more than one designated public water
system.
10)Provides that in contracting with an administrator, the State
Water Board may use criteria from its policy handbook.
11)Requires the State Water Board, before it determines that a
public water system is a designated public water system, to
provide the public water system with notice and an opportunity
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to show either of the following:
a) That the public water system has not consistently failed
to provide an adequate and affordable supply of safe
drinking water; or,
b) That the public water system has taken steps to timely
address its failure to provide an adequate and affordable
supply of safe drinking water.
12)Requires the State Water Board to make financial assistance
available to an administrator for a designated public water
system, as appropriate and to the extent that funding is
available.
13)Authorizes an administrator to do the following:
a) 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;
b) Set and collect user water rates and fees; and,
c) Expend available moneys for operation and maintenance
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costs of the designated public water system.
14)Provides that a designated public water system is not
responsible for any costs associated with an administrator.
15)Provides that administrative and managerial contracts for
consolidations are exempt from state acquisition of goods and
services statute and may be awarded on a noncompetitive bid
basis.
16)Makes other clarifying and conforming changes to statute
referring to water system consolidation.
EXISTING LAW:
1)Pursuant to the federal Safe Drinking Water Act (SDWA),
authorizes the United States Environmental Protection Agency
(US EPA) to set standards for drinking water quality and to
oversee the states, localities, and water suppliers who
implement those standards.
2)Pursuant to the California SDWA, requires the State Water
Board to regulate drinking water and to enforce the federal
SDWA and other regulations. (Health and Safety Code (HSC) §
116275 et seq.)
3)Requires the State Water Board, in administering SDWA programs
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to fund improvements and expansions of small community water
systems, to encourage the consolidation of small community
water systems that serve disadvantaged communities, and
prioritize funding for construction projects that involve the
physical restructuring of two or more community water systems,
at least one of which is a small community water system that
serves a disadvantaged community, into a single, consolidated
system. (HSC § 116326)
4)Authorizes the State Water Board, 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, to order consolidation with a receiving
water system. Provides that the consolidation may be physical
or operational. (HSC § 116682 (a))
5)Limits the liability of a consolidated water system,
wholesaler, or any other agency in the chain of distribution
that delivers water to a consolidated water system, as
specified. (HSC § 116684)
6)Makes legislative findings that regional solutions to water
contamination problems are often more effective, efficient,
and economical than solutions designed to address solely the
problems of a single small public water system, and that it is
in the interest of the people of the State of California to
encourage the consolidation of the management and the
facilities of small water systems to enable those systems to
better address their water contamination problems. (HSC §
116760.10 (h))
7)Declares that it is the established 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. (Water Code § 106.3)
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FISCAL EFFECT: Unknown. This bill was substantially amended
since it was analyzed by the Senate Appropriations Committee.
COMMENTS:
Need for the bill: According to the author, "This bill would
authorize the State Water Resources Control Board to require
public water systems that serve disadvantaged communities and
that consistently fail to provide an adequate and affordable
source of safe drinking water, to obtain administrative and
managerial services from a third party administrator, selected
by the State Water Board. The bill also provides clean-up
language to SB 88, the 2015 trailer bill that permits the state
Water Board to order water system consolidation or extension of
services."
Drinking water contamination in disadvantaged communities: The
State Water Board report, "Communities that Rely on Contaminated
Groundwater," released in January 2013, reported that 682
community public water systems in California, which serve nearly
21 million people, rely on contaminated groundwater as a primary
source of drinking water. It also found that 265 community
public water systems that rely on contaminated groundwater,
which serve a little more than two million people, had received
at least one drinking water quality violation within the last
compliance cycle. The report points out that an additional two
million Californians rely on groundwater from a private domestic
well or a smaller groundwater-reliant system that is not
regulated by the state, of which the water quality is uncertain.
The findings from the State Water Board report, and a January
2012, University of California at Davis study, "Addressing
Nitrate in California's Drinking Water," suggest that drinking
water contamination in California disproportionally affects
small, rural, and low-income communities that depend mostly on
groundwater as their drinking water source.
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The recent drought has further compromised the state's drinking
water supplies. Since many rural households rely on shallow
domestic wells or small, poorly funded community water supply
systems, they have been hardest hit. According to the Public
Policy Institute of California, as of early July 2015, more than
2,000 domestic wells were reported to be dry, mostly in the
Central Valley and the Sierras. Emergency water supply needs
have also been identified for more than 100 small water
community water systems around the state. Indeed, the State
Water Board currently notes that the numbers of failing water
systems have increased since their comprehensive report
mentioned above, and estimates that now approximately 500
communities rely on public water systems that provide water that
does not meet drinking water standards.
Providing safe drinking water to disadvantaged communities:
According to the State Water Board, for common sources of
drinking water contamination, such as arsenic and nitrates,
expensive systems must be installed and operated to treat the
water to meet drinking water standards. In many cases,
technological advances have not yet been sufficient to make such
treatment systems affordable, especially to small, disadvantaged
communities. In addition, many small disadvantaged communities
do not have the technical, managerial, or financial capability
to operate what are sometimes complex drinking water systems.
Current sources of financial assistance, such as Proposition 1,
the Water Quality, Supply, and Infrastructure Improvement Act of
2014 (Rendon, Chapter 188, Statutes of 2014), and the Safe
Drinking Water State Revolving Fund (SDWSRF), do not provide
financial assistance for the long-term operation and maintenance
costs of drinking water systems, which the community must
provide in order to qualify for the capital improvement funding
that is available from those sources. Disadvantaged communities
often lack the rate base to pay for operation and maintenance
costs, meaning that they are effectively prohibited from
accessing capital improvement funding.
Consolidation in California: According to the US EPA,
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restructuring can be an effective means to help small water
systems achieve and maintain technical, managerial, and
financial capacity, and to reduce the oversight and resources
that states need to devote to these systems. The State Water
Board maintains that consolidating public water systems and
extending service from existing public water systems to
communities and areas which currently rely on under-performing
or failing small water systems, as well as private wells,
reduces costs and improves reliability. Consolidation does this
by extending costs to a larger pool of ratepayers.
The goal of drinking water system consolidation and regional
water projects was recognized in California during the inception
of the state's SDWSRF (SB 1307 (Costa and Thompson), Chapter
734, Statutes of 1997), which is the state program to implement
the federal SDWSRF program. With SB 1307 the legislature
declared that, "It is in the interest of the people of the State
of California to encourage the consolidation of the management
and the facilities of small water systems to enable those
systems to better address their water contamination problems."
(HSC § 116760.10 (h))
To promote consolidation, the California Department of Public
Health (CDPH), which managed that state's drinking water program
at the time, established the Consolidation Incentive Program
(Program). The Program provided an incentive to encourage
larger, compliant water systems to consolidate with nearby
noncompliant systems. Previously, CDPH only invited drinking
water systems that were out of compliance with drinking water
standards to submit applications for SDWSRF funding. However,
through the consolidation incentive process, lower-ranked
projects for compliant systems that hadn't previously received
SDWSRF invitations became eligible for SDWSRF funding. By
agreeing to consolidate with a neighboring noncompliant system,
CDPH re-ranked low-ranked, compliant system projects into a
fundable category.
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In order to provide further support and direction for the
state's consolidation efforts, AB 783 (Arambula, Chapter 614,
Statutes of 2007) required CDPH to prioritize funding of water
projects in disadvantaged communities, and directed CDPH to
encourage; provide funds for and studies on; and, prioritize
funding for projects that consolidate small public water systems
in certain situations.
The State Water Board received authority over the state's
drinking water program in July 2014, and since that time, the
consolidation of failing drinking water systems in order to
supply safe, affordable, and reliable drinking water has been a
priority for the State Water Board.
The Governor's safe drinking water framework: In May 2015,
Governor Jerry Brown released his "Resilient, Affordable, Safe
Drinking Water for Disadvantaged Communities Framework," the
goal of which is to, "ensure that every Californian has access
to an adequate supply of safe water for daily human needs." The
framework lays out steps that the Administration plans to take
to achieve this goal, one of which is to, "improve technical,
managerial, and financial capacity where possible, consolidating
as a second option, and if neither of those work, contracting
with a third party to manage the system with a commitment to
transitioning the system to a sustainable condition."
The Governor's 2015 consolidation budget trailer bill: SB 88
(Senate Committee on Budget and Fiscal Review, Chapter 27,
Statutes of 2015) enacted the Brown Administration's public
water system consolidation proposal. Governor Jerry Brown's
office summarized the intent of the bill as follows,
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"When a public water system, or state small water system
serving a disadvantaged unincorporated community or a water
mutual serving a disadvantaged community, consistently fails
to provide an adequate supply of safe drinking water, the
State Water Board may order that system to consolidate with,
or receive an extension of service from, another public water
system referred to as the receiving system. The receiving
system would not be held liable for claims resulting from the
subsumed system's actions prior to the consolidation or
extension of service. Before ordering consolidation or
extension of service the State Water Board must notify the
systems, consult with various entities, and allow time to
negotiate another means of providing an adequate supply of
safe drinking water. The State Water Board must also make
certain findings prior to mandating consolidation or extension
of service."
Effective June 24, 2015, SB 88 added HSC § 116680-116684, which
authorized the State Water Board to require certain water
systems that consistently fail to provide safe drinking water to
consolidate with, or receive an extension of service from,
another public water system. The consolidation can be physical
or managerial. While for many years the state's drinking water
program had encouraged voluntary consolidation of public water
systems, the new authority allows the state to mandate the
consolidation of water systems where appropriate.
This bill makes technical and clarifying changes to the
consolidation statute enacted by SB 88, including increasing the
State Water Board's authority to require consolidation or
extension of service of drinking water systems to apply to
mobilehome parks regardless of whether the mobilehome park is
located in an incorporated or unincorporated area.
New tools for addressing drinking water system failures: In
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addition to the consolidation authority provided by SB 88, SB
552 would give the State Water Board another tool to address the
systemic issues affecting public water systems serving small,
disadvantaged communities. SB 552 would authorize the State
Water Board to identify public water systems that are
consistently unable to provide an adequate and affordable supply
of safe drinking water and, once funding is available, to then
contract with a competent administrator to provide managerial
and technical expertise to that system. The bill provides that
the administrator may expend available capital funds necessary
to provide an adequate and affordable supply of safe drinking
water and may set and collect user water rates and fees. SB 552
also provides that a public water system designated for this
assistance will not be responsible for any costs associated with
contracting with an administrator.
The State Water Board notes that the use of a contracted entity,
in cases where public water systems have proven inadequate,
would provide technical and managerial capacity, economies of
scale, and other efficiencies such as web-based operating
systems. The use of a contracted entity would also provide
transparency and avoid fraud, waste, and abuse in the provision
of these services.
Arguments in opposition: The Association of California Water
Agencies (ACWA) writes in opposition,
"SB 552 does not specify what entity would be responsible for
costs associated with the required administrative and
managerial services in the bill? As ACWA expressed during the
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debate on SB 88 last year, the State Water Board does not have
subject-matter expertise in Cortese-Knox-Hertzberg local
government law or staff steeped in local agency organization.
There is a lack of specificity in the bill relating to funding
of the required administrative services and whether the
administrator would be subject to Proposition 218. This bill
would specify that customers of a subsumed water system may
not be charged an additional fee beyond the costs of the
consolidation itself. As the current structure of the bill
offers no funding for the predictable increase in operation,
maintenance, and administrative expenses, this bill would
place an undue burden on the receiving water system. Safe
drinking water is a right of every Californian, but it is a
cost that should not be paid in full by public water agencies
and their customers already in compliance with the law.
Additionally, this bill would remove the requirement for a
public meeting prior to consolidation for areas served only by
domestic wells. ACWA believes that this provision violates a
necessary opportunity for the public to comment on needed
consolidations and maintain public transparency of
consolidation efforts."
Double referral: This bill has been double referred to the
Assembly Committees on Environmental Safety and Toxic Materials
and on Water, Parks, and Wildlife.
Clarification needed: The Committee may wish to consider the
following technical amendment in order to clarify that statute
was intended to authorize the State Water Board to order the
consolidation of public water systems and state small water
systems that serve disadvantaged communities, not necessarily
those systems that are located within disadvantaged communities.
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1)HSC § 116682 (a) Where a public water system or a state small
water system, within serving a disadvantaged community,
consistently fails to provide an adequate supply of safe
drinking water, the State Water Resources Control Board may
order consolidation with a receiving water system as provided
in this section and Section 116684.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
Opposition
Association of California Water Agencies (ACWA)
Analysis Prepared by:Shannon McKinney / E.S. & T.M. / (916)
319-3965