BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1328| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- VETO 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 SENATE FLOOR: 26-12, 8/30/16 AYES: Allen, Beall, Block, De León, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth, Wieckowski, Wolk NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff, Moorlach, Morrell, Nguyen, Nielsen, Stone, Vidak NO VOTE RECORDED: Cannella ASSEMBLY FLOOR: 77-2, 8/23/16 - See last page for vote SUBJECT: Water delivery projects: reduction of greenhouse gas emissions: funding SB 1328 Page 2 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 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. 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, 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: SB 1328 Page 3 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. SB 1328 Page 4 Additionally, expected increases in groundwater pumping, 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 (US EPA), 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 5 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 US EPA, 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. SB 1328 Page 5 Stormwater drains through 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 SB 1328 Page 6 2014, California voters approved Proposition 1 (Prop. 1), Water Quality, Supply and Infrastructure Improvement Act of 2014 (AB 1471, Rendon). 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 (WET) 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. (For more background SB 1328 Page 7 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 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 SB 1328 Page 8 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) 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 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, cost pressures, likely in the millions of dollars, to fund the SB 1328 Page 9 program (GGRF). 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. Up to approximately $565,000 (GGRF) annually for 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 Tree People Water Replenishment District of Southern California OPPOSITION: (Verified8/23/16) CalTax GOVERNOR'S VETO MESSAGE: I am returning Senate Bill 1328 without my signature. This bill creates a new Greenhouse Gas Reduction Fund program for stormwater projects. Rather than creating a potentially duplicative program, I am directing the Resources Agency to work with the State Water Resources Control Board to ensure that stormwater projects are included in the Urban Greening Program. SB 1328 Page 10 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 10/19/16 9:47:49 **** END ****