BILL ANALYSIS Ó
SB 552
Page 1
SENATE THIRD READING
SB
552 (Wolk)
As Amended August 15, 2016
Majority vote
SENATE VOTE: 31-5
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+-------------------|
|Environmental |4-2 |Alejo, Arambula, |Beth Gaines, Gray |
|Safety | |Lopez, McCarty | |
| | | | |
|----------------+-----+-----------------------+-------------------|
|Water |10-5 |Levine, Dodd, Eggman, |Gallagher, |
| | | |Bigelow, Harper, |
| | | |Mathis, Olsen |
| | |Cristina Garcia, | |
| | |Eduardo Garcia, Gomez, | |
| | |Lopez, Nazarian, | |
| | |Salas, Williams | |
| | | | |
|----------------+-----+-----------------------+-------------------|
|Appropriations |11-4 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Jones, Obernolte |
| | |Eggman, Eduardo | |
| | |Garcia, Quirk, | |
SB 552
Page 2
| | |Santiago, Weber, Wood, | |
| | |McCarty | |
| | | | |
| | | | |
------------------------------------------------------------------
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)Adds definitions and makes clarifying and conforming changes
to water system consolidation statute.
2)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.
3)Prohibits, in the case of an ordered consolidation, fees or
charges imposed on a customer of a subsumed water system from
exceeding the cost of consolidating the water system with a
receiving system or the extension of service to the area.
4)Authorizes the State Water Board, in specified circumstances,
to do both of the following:
a) Contract with an administrator to provide administrative
and managerial services to a designated public water system
to assist with the provision of an adequate and affordable
supply of safe drinking water; and,
SB 552
Page 3
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.
5)Requires the State Water Board to meet specified criteria
before it determines that a public water system is a
designated public water system.
6)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.
7)Authorizes an administrator to expend available moneys for
capital infrastructure improvements; set and collect user
water rates and fees; and, expend available moneys for
operation and maintenance costs of the designated public water
system.
8)Requires the State Water Board to work with the administrator
and the communities served by the designated public water
system to develop adequate technical, managerial, and
financial capacity to deliver safe drinking water so that the
services of the administrator are no longer necessary.
9)Provides that a designated public water system is not
responsible for any costs associated with an administrator.
10)Provides that administrative and managerial contracts for
consolidations are exempt from the state acquisition of goods
and services statute and may be awarded on a noncompetitive
bid basis.
SB 552
Page 4
EXISTING LAW:
1)Requires the State Water Board, in administering Safe Drinking
Water Act programs to fund improvements and expansions of
small community water systems, to encourage the consolidation
of small community water systems that serve disadvantaged
communities, and to 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. (Health and Safety Code
(HSC) Section 116326)
2)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 Section 116682(a))
FISCAL EFFECT: According to the Assembly Appropriations
Committee, enactment of this bill could result in unknown,
potentially significant costs, depending upon the number of
public water systems placed under the control of, or provided
assistance by, an administrator, as well as the extent and
duration of the assistance. This bill does not identify a
funding source. According to the California Public Utilities
Commission, there will be increased annual costs of
approximately $130,000 to assist the State Water Board in
determining the fair market value of a privately-owned public
water system for consolidation purposes. However, it is unclear
if this bill actually increases costs or if the costs are
associated with the recently enacted consolidation legislation.
COMMENTS:
SB 552
Page 5
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 ((Budget and Fiscal Review Committee), Chapter
27, Statutes of 2015) trailer bill that permits the state Water
Board to order water system consolidation or extension of
services."
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.
Disadvantaged communities also often lack the rate base to pay
for operation and maintenance costs, meaning that they are
effectively prohibited from accessing capital improvement
funding that requires demonstration of ability to fund such
costs.
Consolidation of drinking water systems: According to the
United States Environmental Protection Agency, 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
SB 552
Page 6
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 Governor's 2015 consolidation budget trailer bill: SB 88 of
2015 enacted the Brown Administration's public water system
consolidation proposal. Effective June 24, 2015, SB 88
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
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 State Water Board
notes that the use of a contracted entity, in cases where public
SB 552
Page 7
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.
Analysis Prepared by:
Shannon McKinney / E.S. & T.M. / (916) 319-3965
FN:
0004168