BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       SB 1328|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 1328
          Author:   Lara (D) 
          Amended:  8/18/16  
          Vote:     21 

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  7-0, 4/20/16
           AYES:  Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley

           SENATE APPROPRIATIONS COMMITTEE:  6-1, 5/27/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza
           NOES:  Nielsen

           SENATE FLOOR:  25-8, 5/31/16
           AYES:  Allen, Beall, Block, De León, Galgiani, Glazer, Hall,  
            Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,  
            Leno, Leyva, Liu, McGuire, Mendoza, Monning, Pan, Pavley,  
            Roth, Wieckowski, Wolk
           NOES:  Anderson, Berryhill, Fuller, Moorlach, Morrell, Nielsen,  
            Stone, Vidak
           NO VOTE RECORDED:  Bates, Cannella, Gaines, Huff, Mitchell,  
            Nguyen, Runner

           ASSEMBLY FLOOR:  77-2, 8/23/16 - See last page for vote

           SUBJECT:   Water delivery projects:  reduction of greenhouse  
                     gas emissions:  funding


          SOURCE:    Author
           
          DIGEST:  This bill authorizes the State Water Resources Control  
          Board (SWRCB) to expend moneys from the Greenhouse Gas Reduction  
          Fund (GGRF), upon appropriation by the Legislature, to provide  
          grants to public entities to implement stormwater and dry  
          weather runoff collection and treatment projects that are  








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          intended to reduce greenhouse gas (GHG) emissions by decreasing  
          the demand for electricity needed to pump, transport, and  
          deliver water from natural sources to serve water consumers, as  
          prescribed.


          Assembly Amendments add a community within one-half mile of a  
          channelized river for which a project may be located in in order  
          to be given preference in grants awarded and clarify the  
          parameters for receiving grants.


          ANALYSIS:   


          Existing law:  
          
          1) Establishes GGRF in the State Treasury, requires all moneys,  
             except for fines and penalties, collected pursuant to a  
             market-based mechanism be deposited in the fund and requires  
             the Department of Finance, in consultation with California  
             Air Resources Board (ARB) and any other relevant state  
             agency, to develop, as specified, a three-year investment  
             plan for the moneys deposited in the GGRF.  (Government Code  
             §16428.8).

          2) Prohibits the state from approving allocations for a measure  
             or program using GGRF moneys except after determining that  
             the use of those moneys furthers the regulatory purposes of  
             AB 32 (Nunez, Chapter 488, Statutes of 2006), and requires  
             moneys from the GGRF be used to facilitate the achievement of  
             reductions of GHG emissions in California.  (Health and  
             Safety Code §39712).

          3) Establishes the Stormwater Resource Planning Act, which  
             authorizes one or more public agencies to develop a  
             stormwater resource plan that meets specified standards to  
             address the capture, treatment, and storage of stormwater and  
             dry weather runoff.  (Water Code §10560 et seq.).

          This bill:  









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          1) Authorizes SWRCB to provide grants to public agencies to  
             implement stormwater and dry runoff collection and treatment  
             projects that are intended to reduce GHG emissions by  
             decreasing demand for electricity needs to pump, transport,  
             and deliver water to consumers. 

          2) Authorizes SWRCB to expend moneys from GGRF, upon  
             appropriation of the Legislature for these grants.

          3) Provides that eligible projects for funding include, but not  
             be limited to, green infrastructure, rainwater, stormwater,  
             and dry weather runoff capture projects, and stormwater  
             treatment facilities.

          4) Specifies that grant funds may be used for all phases of  
             planning, design, and project construction and  
             implementation.

          5) Requires SWRCB to establish criteria for funding projects  
             based on demonstration of GHG emissions reductions and  
             geographic conditions that facilitate stormwater and dry  
             weather runoff collection.

          6) Requires SWRCB to give preference to projects located in, and  
             provide benefits to, disadvantaged communities.


          Background
          
          1) Water and energy use.  According to the California Energy  
             Resources Conservation and Development Commission (CEC),  
             water-related energy use in the state consumes approximately  
             20% of the state's electricity and 30% of the state's  
             non-power plant natural gas (natural gas not used to produce  
             electricity).  The water sector uses electricity to pump,  
             treat, transport, deliver, and heat water.  CEC also found  
             that the most energy-intensive uses of water in California  
             are associated with end uses by the customer (e.g. heating,  
             processing, and pressurizing water), and 75% of the  
             electricity and nearly all of the natural gas use related to  
             water in California is associated with water heating.   
             Additionally, expected increases in groundwater pumping,  








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             water treatment, and water recycling, due to drought  
             conditions in the state, mean the energy intensity of water  
             will likely increase.

          According to the U.S. Environmental Protection Agency, energy is  
             used in five stages in the water cycle:

             a)    Extracting and conveying:  Extracting water from rivers  
                and streams or pumping it from aquifers, and then  
                conveying it over hills and into storage facilities is a  
                highly energy intensive process.  In California, the State  
                Water Project (SWP) pumps water almost 2,000 feet over the  
                Tehachapi Mountains.  The SWP is the largest single user  
                of energy in the state and consumes an average of five  
                billion kWh/yr, accounting for about 2-3% of all  
                electricity consumed in California.

             b)    Treating water:  Water treatment facilities use energy  
                to pump and process water.

             c)    Distributing water:  Energy is needed to transport  
                water.

             d)    Using water:  End users consume energy to treat water  
                with softeners or filters, to circulate and pressurize  
                water with circulation pumps and irrigation systems, and  
                to heat and cool water.

             e)    Collecting and treating wastewater:  Energy is used to  
                pump wastewater to the treatment plant, and to aerate and  
                filter it at the plant.  On average, wastewater treatment  
                in California uses 500 to 1,500 kilowatt-hours per  
                acre-foot.

             By reducing the amount of water we use, we lessen our demand  
             on the energy-intensive systems that deliver and treat water.

          2) Stormwater.  According to the U.S. Environmental Protection  
             Agency, stormwater runoff is a major cause of water pollution  
             in urban areas.  When rain falls on roofs, streets, and  
             parking lots in cities and their suburbs, the water cannot  
             soak into the ground as it should.  Stormwater drains through  








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             gutters, storm sewers, and other engineered collection  
             systems and is discharged into nearby water bodies.  The  
             stormwater runoff carries trash, bacteria, heavy metals, and  
             other pollutants from the urban landscape.  Higher flows  
             resulting from heavy rains also can cause erosion and  
             flooding in urban streams, damaging habitat property and  
             infrastructure.  When rain falls in natural, undeveloped  
             areas, the water is absorbed and filtered by soil and plants  
             - Stormwater runoff is cleaner and less of a problem.

          According to SWRCB, past approaches to stormwater management  
             have focused on limited treatment prior to conveyance  
             off-site and ultimately into receiving waters.  The municipal  
             separate storm sewer systems and flood control infrastructure  
             used for this purpose may have been successful in terms of  
             flood control and some degree of treatment; however many past  
             approaches have not been adequate to fully address the water  
             quality impacts of stormwater discharges while providing  
             multiple benefits such as water supply augmentation and  
             ecological enhancement of the local watershed.  In general,  
             the transport of stormwater from the location of rainfall via  
             constructed municipal storm drain systems (pipelines,  
             reinforced channels, outfalls, etc.) has caused downstream  
             hydromodification (unnatural alteration of natural drainage  
             features) and destabilization of water bodies, and impacted  
             beneficial uses of those receiving surface water bodies.

          More recent approaches to stormwater management seek to  
             replicate natural hydrology and watershed processes by  
             managing stormwater and dry weather runoff onsite or within  
             the watershed where rainfall occurs - and the pollutants it  
             contains - delivered to receiving waters.

          3) Storm Water Grant Program (SWGP).  According to SWRCB, the  
             purpose of SWGP is to fund stormwater and dry weather runoff  
             projects that best advance SWRCB's policy goals of improving  
             water quality and realizing multiple benefits from the use of  
             stormwater and dry weather runoff as resources.  The SWGP  
             Unit was established after the passage of Proposition 84, the  
             Safe Drinking Water, Water Quality and Supply, Flood Control,  
             River and Coastal Protection Bond Act of 2006.  In November  
             2014, California voters approved Proposition 1 (Prop. 1),  








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             Water Quality, Supply and Infrastructure Improvement Act of  
             2014 (AB 1471, Rendon, Chapter 188).  Of the $7.545 billion  
             in general obligation bonds for water projects, Prop. 1  
             provides $200 million in grants for multi-benefit stormwater  
             management projects.  

          4) Executive Order B-29-15.  Executive Order B-29-15 (Brown),  
             issued April 1, 2015, directed state agencies to perform  
             various actions regarding saving water to respond to severe  
             drought conditions in the state, including directing CEC,  
             jointly with the Department of Water Resources (DWR), to  
             implement a Water Energy Technology program to deploy  
             innovative water management technologies that achieve water  
             and energy savings and GHG emissions reductions - projects  
             must have direct water savings, direct energy savings, and  
             reduce GHG emissions.  In addition, projects must reduce  
             water use or improve water production.  The Executive Order  
             also directed CEC, jointly with DWR, to implement a limited  
             statewide appliance rebate program for inefficient  
             appliances.

          5) Water-Energy Grant Program.  The Water-Energy Grant Program  
             provides funds to implement water efficiency programs or  
             projects that reduce GHG emissions, and reduce water and  
             energy use.  The funding for this program is appropriated  
             from GGRF to DWR to establish a grant program; available  
             funding is $19 million (with an additional $10 million that  
             may be available).  Eligible applicants include local  
             agencies, joint power authorities, and nonprofit  
             organizations.  DWR is proposing to focus the 2016  
             solicitation on the following eligible programs/projects:

                 Commercial Water Efficiency or Institutional Water  
               Efficiency Programs.
                 Projects that reduce GHG, reduce water and energy use.
                 Only projects with water conservation measures that also  
               save energy.

          1) Cap-and-trade auction revenue.  Since November 2012, ARB has  
             conducted 14 cap-and-trade auctions, generating over $4  
             billion in proceeds to the state.  









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             State law specifies that the auction revenues must be used to  
             facilitate the achievement of GHG emissions reductions and  
             outlines various categories of allowable expenditures.   
             Statute further requires the Department of Finance, in  
             consultation with ARB and any other relevant state agency, to  
             develop a three-year investment plan for the auction  
             proceeds, which are deposited in the GGRF.  (NOTE: For more  
             background information regarding cap-and-trade revenue,  
             please refer to the Senate Environmental Quality Committee  
             analysis on this bill.)


          Comments
          
          1) Purpose of Bill.  According to the author:

               SB 1328 provides much needed assistance for the increased  
               deployment of stormwater capture and groundwater recharge  
               facilities.  Groundwater, which is located in geologic  
               formations called aquifers, is an important piece of  
               California's water supply, and is utilized for urban and  
               rural cities' water systems, agricultural irrigation, and  
               industry uses.

               Aquifers recharged naturally over time via the percolation  
               of stormwater through the soil, in addition to seepage from  
               rivers and creeks.  Disruption of the natural recharge  
               cycle of aquifers has been caused by overdrafting, which  
               occurs when water is extracted beyond the safe yield of an  
               aquifer.  

               Reduced groundwater levels impact communities in urban and  
               rural areas in regards to water access, quality, and  
               affordability, as the reliance on water imports, either by  
               conveyance system or transported by trucks, is increased.

               Despite the availability of Water Bond funds for stormwater  
               infrastructure there are still significant barriers to  
               increased implementation of stormwater projects.  Access to  
               funding is a key component to increased deployment, as  
               projects at various stages of development may require  
               assistance with startup and/or backfill expenses.  In  








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               addition, some projects may have limited access to  
               technical assistance to prove project feasibility, which in  
               turn if proven successful would prompt further assistance  
               to prove project feasibility, which in turn if proven  
               successful would prompt further community investment.   
               Current funds, available for stormwater infrastructure  
               require a 50% match, which can be difficult to reach for  
               some projects, depending on the level of access to capital  
               or stage of development.  All of these barriers are  
               compounded when applied to disadvantaged communities, along  
               with the negative impacts of aquifer overdrafting.

               SB 1328 would create an appropriation from [GGRF] to  
               facilitate the increased deployment of stormwater capture  
               projects and groundwater recharge facilities, while also  
               prioritizing projects located in disadvantaged communities  
               as defined by Section 39711 of the Health and Safety Code.   
               By increasing incentives for stormwater capture  
               infrastructure all communities can benefit from increased  
               resiliency in local water supplies, providing better access  
               and water quality.

          2) Stormwater capture and reuse.  Improving and increasing  
             stormwater capture and reuse may be especially beneficial in  
             southern California, which imports a significant amount of  
             its water supply from northern California.  As noted above,  
             SWP is the largest single user of energy in the state and  
             consumes an average of five billion kWh/yr, accounting for  
             about 2-3% of all electricity consumed in California.   
             Stormwater capture and reuse may create net benefits in  
             reductions of GHG emissions and energy use by supplying and  
             delivering water more locally.

          3) Piece by piece. GGRF investments must facilitate the  
             achievement of GHG emissions reductions.  However, after that  
             requirement is fulfilled, there are a number of other policy  
             goals that should be considered, including benefits to  
             environmental quality, resource protection, public health and  
             the economy, as well as benefits to disadvantaged  
             communities.  Various policy committees have been referred  
             proposals for investing GGRF moneys, and these committees  
             will likely consider whether proposals meet basic statutory  








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             requirements and align with legislative priorities.  However,  
             in order to create an optimized investment strategy from GGRF  
             moneys, proposals should not be considered in isolation, but  
             be assessed in aggregate to evaluate which set of proposals  
             best meets the requirements of the fund, uses resources most  
             efficiently, and maximizes policy objectives.  As the budget  
             committees are considering the Governor's proposal of GGRF  
             expenditures, the budget process may be an ideal way to  
             comprehensively consider the numerous policy bills that  
             propose new programs funded through the GGRF.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Assembly Appropriations Committee:

          1)Cost pressures, likely in the millions of dollars, to fund the  
            program (GGRF).


          2)Increased unknown administrative costs, likely 5% of the total  
            program funds, for SWRCB to implement the program.  According  
            to SWRCB, an amendment is necessary to allow the use of GGRF  
            for administrative costs rather than GF.


          3)Up to approximately $565,000 (GGRF) annually for the ARB to  
            coordinate with SWRCB in developing and updating guidelines,  
            developing quantification methodologies, and providing legal  
            review.




          SUPPORT:   (Verified8/23/16)


          Association of California Water Agencies
          Audubon California 
          California League of Conservation Voters
          City of Long Beach








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          Tree People
          Water Replenishment District of Southern California


          OPPOSITION:   (Verified8/23/16)


          CalTax

           ASSEMBLY FLOOR:  77-2, 8/23/16
           AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Gallagher,  
            Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,  
            Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández,  
            Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,  
            Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty,  
            Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,  
            Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,  
            Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,  
            Waldron, Weber, Wilk, Williams, Wood, Rendon
           NOES:  Beth Gaines, Harper
           NO VOTE RECORDED:  Frazier


          Prepared by:Joanne Roy / E.Q. / (916) 651-4108
          8/29/16 10:34:34


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