BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 1170 |Hearing |3/30/16 |
| | |Date: | |
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|Author: |Wieckowski |Tax Levy: |No |
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|Version: |2/18/16 |Fiscal: |Yes |
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|Consultant|Favorini-Csorba |
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Public contracts: water pollution prevention plans:
delegation
Prohibits public agencies from requiring a contractor to prepare
or assume responsibility for certain plans that prevent
stormwater runoff from construction sites.
Background
Water Quality Regulation. In California, the federal Clean
Water Act and the state Porter-Cologne Water Quality Control Act
charge the State Water Resources Control Board (SWRCB) with
regulating water pollution. Under these statutes, discharges of
pollutants to surface waters are generally prohibited unless the
discharger obtains a permit from SWRCB. Many of the modern
requirements for regulating water pollution date to 1972, when
major amendments to the Clean Water Act created the National
Pollutant Discharge Elimination System (NPDES). These
requirements focused on eliminating pollutant discharges from
"point sources" of pollution such as sewage treatment and
wastewater from industrial and manufacturing facilities. After
1972, studies began showing that non-point sources, including
stormwater runoff, were a major contributor to surface water
pollution. This led to further amendments to the Clean Water
Act that created a framework for regulating stormwater. In
1990, the U.S. Environmental Protection Agency published final
regulations establishing permit requirements for stormwater
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discharges associated with industrial activities, including
construction activities. In response, the SWRCB adopted a
Construction General Permit (Permit) in 1992, which covers
construction activities statewide. The Permit is periodically
updated and was significantly revised in 2009.
Stormwater Pollution Prevention Plans. Public and private
owners of construction projects that disturb one or more acres
of land must comply with the Permit, which regulates the
discharge of stormwater and non-stormwater (such as improper
dumping, spills, or leakage from storage tanks) from certain
construction activities and is enforced by SWRCB's nine Regional
Water Quality Control Boards (regional boards). The Permit
requires, among other things, the development of a Stormwater
Pollution Prevention Plan (SWPPP) that demonstrates compliance
with the Permit. A SWPPPs is a comprehensive, detailed,
site-specific, written document that:
Identifies potential sources of stormwater pollution on
a construction site;
Describes stormwater control measures and Best
Management Practices (BMPs) that will be used to reduce or
eliminate pollutants in stormwater discharges from the
project site, and
Identifies the procedures the operator of the project
site will implement to comply with the terms and conditions
of the Permit.
A project's SWPPP may be developed by the project owner or
prepared by a contractor's SWPPP developer. The Permit requires
SWPPPs to be prepared and certified by a Qualified SWPPP
Developer (QSD), who must be a registered engineer or other
licensed professional. Many other SWPPP tasks (such as site
inspections) must be conducted directly by, or under the
supervision of, a QSD or Qualified SWPPP Practitioner (QSP), who
must also be certified. There are extensive qualification and
training requirements for both the QSD and QSP.
Typically, the owner of the construction site is designated the
"discharger" from the site and is therefore the "Legally
Responsible Person" under the Permit. Consequently, the party
required to ensure compliance with the terms of the Permit is
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the property owner, not the contractor. There are serious
potential costs for failure to comply with the Permit. Any
person who violates a condition of the Permit is subject to a
civil penalty, which could be as high as $37,500 per calendar
day of a violation, plus sanctions provided by the Clean Water
Act.
Public Contracting. The Public Contract Code spells out
requirements for public entities when contracting for public
works projects. The Local Agency Public Construction Act
requires local officials to invite bids for construction
projects and then award contracts to the lowest responsible
bidder. This design-bid-build method is the traditional, and
most widely-used, approach to public works construction.
However, over the last two decades, legislators have gradually
expanded local governments' authority to procure construction
projects using various alternatives to the design-bid-build
project delivery method, including "design-build," "construction
manager at risk," and "best value" contracting. Chief among the
potential benefits of these methods is that they transfer some
of the risk associated with the construction from the public
entity to the contractor.
State law also controls some aspects of project design and
execution. The Professional Engineers Act requires, among other
things, engineering and architectural plans to be developed by
licensed engineers or architects. Title 12 of the Civil Code
(commencing with Section 2772) governs indemnity generally and
provides that a contract requiring indemnification of a public
agency for that agency's willful misconduct or sole negligence
is void. However, Title 12 also provides that parties to a
contract, including a public agency, may negotiate liability
among themselves for design defects and any other liability
relating to the contract. Finally, the Public Contract Code
disallows public entities from requiring bidders to assume
responsibility for the completeness and accuracy of the designs
for public works projects, except on clearly designated
design-build projects.
Many public entities require contractors to include in their
bids the cost of preparing and implementing SWPPPs, and have
begun requiring contract provisions that indemnify the public
entity against penalties associated with violations of the
Permit and prohibit change orders associated with SWPPPs. In
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addition, construction costs in California declined sharply for
several years beginning in 2007, creating intense competition
for projects among contractors, reducing margins. Some
contractors want to restrict the ability of public agencies to
require contractors to prepare SWPPPs as part of a public works
contract.
Proposed Law
Senate Bill 1170 prohibits a public entity, charter city, or
charter county from delegating the development of certain plans
associated with public works projects and from requiring a
contractor on a public works contract to assume responsibility
for the completeness and accuracy of those plans. The bill
defines plan to include: a SWPPP, water pollution control
program, or any other plan required by the regional boards to
prevent or reduce water pollution or runoff on a public works
project. However, public entities, charter cities, and charter
counties may contract separately with a licensed architect or
engineer for design of a plan, and they may require a bidder to
review an applicable plan and report errors or omissions. The
bill limits those reviews to the contractor's capacity as a
contractor. The bill also states that the prohibitions and
exemptions apply regardless of the project delivery method
required in a public works contract.
SB 1170 also includes findings and declarations stating that the
bill's provisions are declaratory of existing law, including
certain provisions of law that regulate project design,
execution, and indemnity.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Public agencies that design
construction projects and put them out to bid have begun to
require contractors to develop SWPPPs, often in as little as
three weeks, as a part of a bid package for the project. Since
public agencies usually must award the contract to the lowest
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responsible bidder, some contractors lowball the cost and
contents of SWPPPs, resulting in ineffective SWPPPs that don't
serve their purpose to stop stormwater discharges. Public
agencies have responded by prohibiting change orders and
requiring contractors to indemnify the agency. This effectively
shifts legal responsibility for the plan onto contractors, even
though the Permit specifically says that contractors are not
qualified to be the legally responsible person. Public agencies
must receive other environmental permits prior to a project
going out to bid; current practice around SWPPPs is therefore
out of step with other laws. By ensuring that development and
compliance with the SWPPP rest with the public agency, SB 1170
furthers the intent of the Permit and existing laws that
prohibit holding contractors liable for the responsibilities of
public entities.
2. Practice makes perfect . Contractors work on multiple
construction projects over time, or even simultaneously.
Accordingly, many develop preexisting relationships with QSDs or
employ them within their own organization. Some larger public
agencies may also retain their own QSDs, but it doesn't make
sense for smaller ones that rarely build new public works to do
the same. SB 1170 allows local agencies to contract separately
with an engineer or architect for a SWPPP, but this simply puts
a public agency in the position of being the general contractor
for the project-requiring experience and relationships which
smaller agencies may not have. Moreover, SWPPPs are
ever-changing documents. Construction projects frequently
change in response to unforeseen circumstances or issues with
the site, and the SWPPP must be revised to reflect those
changes. Contractors who are actually performing work on a site
are in the best position to know when the plan must be modified.
Requiring the contractor to develop and maintain the SWPPP-and
ensuring that the contractor bears the risk of violating the
Permit-sets up the right incentives for the people performing
the work to ensure that the SWPPP effectively protects water
quality. SB 1170 would remove these incentives and increase
the burden on unprepared local agencies, potentially resulting
in illegal pollutant discharges, fines to the state and local
governments, and water quality problems.
4. Other procurement methods . The bill's prohibitions on
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delegation of SWPPPs and assigning responsibility for their
completeness and accuracy to a contractor apply regardless of
the procurement method used in a construction contract. But the
Legislature has expanded the authority of local agencies to use
design-build and construction manager at risk procurement
methods because of their potential to more efficiently deliver
projects. The ability to transfer risk from the public agency
to the contractor is fundamental to these procurement methods.
Thus, this bill may run contrary to the use of these other
methods. The Committee may wish to consider amending SB 1170 to
explicitly exempt from its provisions projects that use
design-build, construction manager at risk, and best value
procurement methods.
5. Charter city . The California Constitution allows cities and
counties that adopt charters to control their own "municipal
affairs." In all other matters, charter cities and counties
must follow the general, statewide laws. Because the
Constitution doesn't define "municipal affairs," the courts
determine whether a topic is a municipal affair or whether it's
an issue of statewide concern. SB 1170 says that it applies to
charter cities and counties. To support this assertion, the
bill includes a legislative finding and declaration that it is
of statewide concern to require a public entity, charter city,
or charter county to be responsible for the development of, and
completeness and accuracy of, a plan to prevent or reduce water
pollution or runoff on a public works project.
6. Mandate. The California Constitution generally requires the
state to reimburse local agencies for their costs when the state
imposes new programs or additional duties on them. According to
the Legislative Counsel's Office, SB 1170 creates a new
state-mandated local program. SB 1170 disclaims this mandate by
saying that the Legislature finds that there is no mandate in
the act. Ultimately, the Commission on State Mandates may make
the final determination on whether a mandate exists.
7. Double-referred . The Senate Rules Committee has ordered a
double-referral of SB 1170-first to the Senate Governance &
Finance Committee, which has jurisdiction over bills relating to
local governments' authority, and then to the Senate
Environmental Quality Committee, which has jurisdiction over
bills relating to water quality.
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8. Related legislation . The provisions of SB 1170 are virtually
identical to those of AB 1315 (Alejo, 2015), except that AB 1315
did not disclaim the state mandate and did not purport to be
declaratory of existing law. AB 1315 was held under submission
in the Assembly Appropriations Committee.
Support and
Opposition (3/24/2016)
Support : Association of General Contractors (sponsor); American
Subcontractors Association, California Chapter; California
Association of Sheet Metal and Air Conditioning Contractors,
National Association; California Chapters of the National
Electrical Contractors Association; California Legislative
Conference of the Plumbing, Heating, and Piping Industry;
California-Nevada Conference of Operating Engineers; California
Precast Concrete Association; California Professional
Association of Specialty Contractors; California State Council
of Laborers; Northern California Allied Trades; Southern
California Contractors Association; Union Roofing Contractors
Association; United Contractors; Wall and Ceiling Alliance.
Opposition : Association of California Healthcare Districts;
Association of California School Administrators; Association of
California Water Agencies; California Association of Sanitation
Agencies; California Association of School Business Officials;
California Special Districts Association; Coalition for Adequate
School Housing; California Municipal Utilities Association;
California State Association of Counties; California School
Boards Association; California State University; League of
California Cities; Rural County Representatives of California;
Three Valleys Municipal Water District; Urban Counties of
California.
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