BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1170
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|Author: |Wieckowski |
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|Version: |4/6/2016 |Hearing |4/20/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rachel Machi Wagoner |
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SUBJECT: Public contracts: water pollution prevention plans:
delegation
ANALYSIS:
Existing law:
1) Under the federal Clean Water Act and the state
Porter-Cologne Water Quality Control Act:
a) Charges the State Water Resources Control Board (SWRCB)
with the regulation and protection of water quality.
b) Prohibits the discharge of pollutants to surface waters
unless the discharger obtains a permit from SWRCB.
c) Establishes the National Pollutant Discharge
Elimination System (NPDES) permit program requiring the
SWRCB and the nine California regional water quality
control boards to prescribe waste discharge requirements
which, among other things, regulate the discharge of
pollutants in stormwater associated with construction
activity to waters of the United States from construction
sites that disturb one or more acres of land surface, or
that are part of a common plan of development or sale that
disturb more than one acre of land surface.
2) Prohibits a local public entity, charter city, or charter
county from requiring a bidder on a public works contract to
assume responsibility for the completeness and accuracy of
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architectural or engineering plans and specifications on
public works projects, except as specified.
This bill:
1) Prohibits a public entity, charter city, or charter county
from delegating to a contractor the development of a plan, as
defined, used to prevent or reduce water pollution or runoff
on a public works contract, except as provided.
2) Prohibits a public entity, charter city, or charter county
from requiring a contractor on a public works contract that
includes compliance with a plan to assume responsibility for
the completeness and accuracy of a plan developed by that
entity.
3) Provide that these prohibitions do not apply to contracts
that use:
a) Design-build.
b) Best value.
c) Construction manager at-risk contracts where the
construction manager is authorized to retain a plan
developer for the project owners.
Background
1) Stormwater Pollution Prevention Plans (SWPPP). Public and
private owners of construction projects that disturb one or
more acres of land must comply with the NPDES Permit
(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 an SWPPP that demonstrates
compliance with the Permit. An SWPPP is a comprehensive,
detailed, site-specific, written document that:
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a) Identifies potential sources of stormwater pollution on
a construction site;
b) 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
c) 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 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.
2) 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.
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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
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.
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
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1170 allows local agencies to contract separately with an
engineer or architect for an 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.
Comments
1) Purpose of Bill. According to the author, this bill "ensures
that adequate resources are allocated to the pollution
prevention planning process by clarifying that public owners
are responsible for the preparation of SWPPPs required on
public works projects. This bill prohibits public owners
from delegating responsibility to contractors for SWPPP
design."
The author further argues that "the bill clarifies existing
law which requires licensed design professionals to create
engineering and architectural plans." The author states that
existing law already bars public owners from making
contractors assume responsibility for the design of
stormwater plans.
The author asserts that this bill "clarifies the intent of
the permit designation of project owners as the Legally
Responsible Party."
2)Responsibility and Consequences. The Permit defines the
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"discharger" as "[t]he Legally Responsible Person or entity
subject to the General Permit." The Permit defines the
Legally Responsible Person as falling into specified eligible
categories, including "[a] person, company, agency or other
entity that possesses a real property interest . . . in the
land upon which the construction or land disturbance
activities will occur for the regulated site."
The Permit states a contractor is not qualified to be the
Legally Responsible Person, unless they fall into limited
categories (those employed and duly authorized on U.S. Army
Corp of Engineers Projects or those engaged in pollution and
remediation projects).
The Permit is typically held in the name of the property
owner. Consequently, the party required to ensure compliance
with the Permit is the property owner, not the contractor.
The Permit also requires the discharger (i.e., owner) to file
Permit registration documents, annual reports and other
compliance information. The discharger must certify that the
information provided regarding the project site is accurate
and complete. The discharger must allow entry to the project
site for inspections and provide records required to be kept
under 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.
3) Contracting Agencies' Perspective. According to staff at
SWRCB, the practice of delegating development of an SWPPP to
the contractor is neither new nor unusual. This is
frequently the practice they see in construction projects
that must obtain a Permit and develop an SWPPP. They note
that the discharger, or the responsible party for the Permit,
is named on the Permit and is always the owner/agency, not
the contractor. Thus, responsibility for compliance with the
Permit remains with the owner/agency, regardless of which
party develops the SWPPP.
SWRCB staff also asserts that most municipalities don't have
the expertise to develop SWPPPs and don't have the resources
to retain QSDs on staff. QSDs are typically employed by
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environmental consulting firms that perform the work of
developing SWPPPs under contract, either with a contractor
(which is more common), or with the owner/agency. (Some
large contracting firms keep QSDs on staff, but many smaller
firms don't have the resources to do so.)
Local contracting agencies indicate that they often require
contractors to design and submit SWPPPs because a contractor's
plan or approach for construction dictates the sequence of
excavation, backfill, and temporary stockpiling of material on
a typical project. They contend that a contractor-designed
SWPPP can incorporate an optimal construction sequence
selected by the contractor and incorporate it into their
SWPPP, thereby maximizing efficiency and reducing costs.
An owner-designed SWPPP would necessarily have to assume a
sequence of excavation, etc. (and effects upon drainage) that
might occur under one construction sequence/scenario. This
might not be the optimum sequence that the contractor would
elect to use (and would have incorporated into its own SWPPP
plan).
For this reason, it makes more sense to require the party
actually responsible for the construction sequence of
operations to be the one implementing its sequence into the
design of an SWPPP. An owner-designed SWPPP would
unnecessarily lock in all bidders to one single type of
construction sequence/plan envisioned by the owner prior to
the bid opening, one which may not necessarily be the lowest
cost option.
4) 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.
Related/Prior Legislation
The provisions of SB 1170 are similar to those of AB 1315
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(Alejo, 2015), except the amendments that were taken to SB 1170
limit the types of projects where the prohibitions apply, and
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.
DOUBLE REFERRAL:
This measure was heard in Senate Governance and Finance
Committee on March 30, 2016, and passed out of committee with a
vote of 7-0.
SOURCE: Associated General Contractors
SUPPORT:
American Subcontractors Association, California Chapter
California Legislative Conference of the Plumbing, Heating, and
Piping Industry
California Sheet Metal and Air Conditioning Contractors,
National Association California Chapters of the National
Electrical Contractors Association
California State Council of Laborers
California-Nevada Conference of Operating Engineers
Northern California Allied Trades
Southern California 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 Municipal Utilities Association
California School Boards Association
California Special Districts Association
California State Association of Counties
California State University
Coalition for Adequate School Housing
League of California Cities
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Rural County Representatives of California
Three Valleys Municipal Water District
Urban Counties of California
ARGUMENTS IN
SUPPORT: The support believes that SB 1170 "confirms that the
public owner is required to be the 'Legally Responsible Person'
under the Permit and this requirement will not be shifted to the
contractor. SWPPP design responsibility/risk will be maintained
with public owner that best knows the stormwater and drainage
characteristics of the site and surrounding areas. The bidding
contractor is far less familiar with the site and likely totally
unfamiliar with the surrounding area at the time a contract is
entered into."
ARGUMENTS IN
OPPOSITION: The opposition states that "on projects that
encompass at least one acre of land, SWPPPs must be developed to
ascertain potential sources of stormwater pollution on
construction sites and identify the control measures needed to
be taken during the construction process. SWPPPs must be
written, amended and certified by qualified personnel who are
knowledgeable in the principles and practice of erosion and
sediment controls and possess the skills needed to assess
conditions at the construction site that could impact stormwater
quality." The opposition argues that "public agencies rely on
the expertise of qualified SWPPP developers, known as QSDs, to
conduct this work. As agencies do not have the resources nor the
regular workload required to employ such personnel throughout
the year."
The opposition points out that "SWPPPs are currently in
accordance with the general contractor's construction plans. As
construction progresses, SWPPPs must often be modified to
accommodate the constantly changing conditions of a construction
site. The general contractor is in the best position to create
the construction plan and contract for the corresponding SWPPP.
A general contractor-developed SWPPP can incorporate an optimal
construction sequence selected by the contractor thereby
maximizing efficiency and reducing costs."
The opposition argues that, "SB 1170 would turn this standing
process on its head by prohibiting public agencies from
contracting with the general contractor to develop a SWPPP and
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statutorily restricting the agencies remaining options to an
engineer or architect. A separate entity developing a SWPPP
would have to assume a sequence of work that might occur under
one construction scenario but not another."
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