BILL ANALYSIS SB 60 Page 1 Date of Hearing: June 22, 1999 ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE Mike Machado, Chair SB 60 (Hayden) - As Introduced: December 7, 1998 SENATE VOTE : 33-0 SUBJECT : Metropolitan Water District of Southern California (MWD): ethics and water conservation SUMMARY : Prohibits MWD from using public funds on contracts to conduct political research on elected officials who vote on MWD policies, or on parties that may have matters pending before the Board of Directors (board). Requires MWD to establish and operate an Office of Ethics (office). Requires the office to adopt rules on specified subjects and seek to avoid potential ethical abuses relating to enumerated matters. Requires MWD to place increased emphasis on various environmentally sound, cost-effective water conservation programs. Specifically, this bill : Ethics Provisions : 1)Prohibits MWD and its member public agencies from spending public money on contracts to research the backgrounds or statements of economic interest of, or campaign contributions to, elected officials who vote on MWD policies. Prohibits similar contracts concerning advocacy groups or interested parties that may have matters pending before the board or its member public agencies. 2)Requires MWD to establish and operate an office to regulate the internal activities of its board members, officers, and employees. The rules of ethics (rules) would cover internal disclosure, lobbying, conflicts of interest, contracts, campaign contributions, and ethics. Requires that the rules: c) Prohibit any structure or identification that is likely to mislead the public as to the association's true identity, source of funding, or purpose if any association of individuals or entities that includes board members, officers, and employees, or of a member public agency of MWD, is known by a name other than that of MWD or the public agency. SB 60 Page 2 d) Be consistent with the intent and spirit of regulations of the Los Angeles City Ethics Commission, the Fair Political Practices Commission, and the Los Angeles County Metropolitan Transportation Authority. 5)Requires the office to operate as an independent entity free of political influence and be staffed with professional, qualified persons. Requires the office to do the following: f) Submit the rules to the board for approval, and to adopt procedures for protecting the confidentiality of sources, the job security of "whistle blowers", and the due process rights of the accused. g) Make publicly available the results of any investigation undertaken. h) Propose, and the board to adopt, a schedule of applicable penalties for rule violations by board members, officers, staff, or contractors. i) Educate the board, staff, contractors, and subcontractors concerning the rules and investigate complaints concerning the violation of the rules. 10)Requires that the rules seek to avoid potential ethics abuses relating to: aa) Business relationships between board members, contractors, and vendors, and between board members and public agency members. bb) Solicitation of campaign contributions by board members, officers, and employees, and receipt of contributions from bidders, contractors, and subcontractors. cc) Public notice and procedures for contracts of $50,000 or more. Water Conservation : 1)Makes legislative findings and declarations that: b) MWD reports conservation programs are 7% of the water SB 60 Page 3 resource mix for 1998, and has a 13% conservation goal for Year 2020. c) Conservation, water recycling, and groundwater recovery are 12% of the water resource mix for 1998 with a 25% goal for Year 2020. d) It is the intent of the Legislature that water conservation, water recycling, and groundwater recovery efforts be expanded by MWD. 5)Requires MWD to emphasize sustainable, environmentally sound, cost-effective water conservation, water recycling, and groundwater storage and replenishment measures. 6)Requires MWD to annually meet and review its Urban Water Management Plan (plan) for its ability to achieve an increased emphasis on cost-effective conservation, recycling and groundwater recharge and take action necessary to meet goals consistent with the plan. 7)Requires MWD to invite knowledgeable persons from the fields of water conservation and sustainability to the annual meetings to determine ways to achieve additional conservation, availability, water quality, regional self-sufficiency, environmental benefits, cost, employment, and economic benefits. 8)Requires the MWD to submit an annual progress report to the Legislature on or before February 1, 2001 or annually thereafter on its achievement on an increased emphasis on cost-effective conservation, recycling, and groundwater recharge. 9)Requires MWD, in cooperation with its member agencies and specified boundaries, the Water Replenishment District of Southern California, local municipal water suppliers, groundwater management entities, the County of Los Angeles, and the U.S. Army Corps of Engineers, to consider programs of groundwater recharge and replenishment, watershed management, habitat restoration, and environmentally compatible community development utilizing the resource potential of the Los Angeles and San Gabriel Rivers, including stormwater runoff from these rivers. SB 60 Page 4 EXISTING LAW 1)The Political Reform Act of 1974 applies to any state or local government agency, and to every member, officer, employee, or consultant of a state or local government agency, with specified expectations not relevant to MWD. The act, in part, requires the filing of campaign statements, imposes conflict of interest prohibitions, mandates the adoption of conflict of interest codes, the filing of statements of economic interests, and imposes gift limits and honoraria prohibitions. The act, however, does not prohibit a local agency from imposing additional requirements unless those requirements prevent compliance with the act. 2)State law requires other regional agencies, such as the Los Angeles County Metropolitan Transit Authority, to adopt additional regulations concerning gift limits, lobbying activities, filing of reports, and campaign contribution limits. 3)The Metropolitan Water District Act authorizes the creation of metropolitan water districts for the purpose of developing, storing, and distributing water for municipal and domestic purposes. Under this law, the Legislature created MWD as a supplemental water supplier to its 27 member agencies and cities that now serve nearly 16 million customers in southern California. FISCAL EFFECT : Undetermined. COMMENTS : Last session, a nearly identical bill, SB 1875 (Hayden), passed the Assembly Water, Parks and Wildlife Committee by a vote of 13-0 on July 8, 1998. The bill also passed both houses of the Legislature but was ultimately vetoed by the Governor. The Governor stated that the bill's water conservation provisions were unnecessary, citing MWD's investment of $8 billion since 1982 to save water. He also maintained that the bill unduly micromanaged MWD's programs and policies. Ethics Provisions: Last year, the Senate created a select committee to determine whether MWD should be restructured. Creation of the committee SB 60 Page 5 was prompted, in part, by reports that a partnership consisting of twelve (12) MWD member water agencies spent $12,000 in public funds to compile information on public officials in Riverside, San Diego, and Imperial Counties. The partnership apparently opposed the district's position on transferring surplus water from the Imperial Valley Irrigation District to the San Diego County Water Authority. The campaign was intended to search for possible conflicts of interest involving these officials and the Bass Brothers, a group of major Texas investors interested in the transfer. This bill seeks to prevent a repeat of these and other questionable public relations activities that MWD is alleged to have participated in from 1996-98. However, the district is already bound by the Political Reform Act of 1974. Thus, MWD must already file quarterly lobbying expenditure reports with the State and board members must also file statements of economic interest. Moreover, MWD's alleged violations are currently prosecutable under Penal Code provisions that prohibit the misuse of public funds. The bill also prohibits MWD from utilizing public funds to conduct political research. The author states that SB 60 does not prevent MWD from conducting its public awareness campaigns or legitimate advocacy, but rather attempts to ban covert and misleading approaches that essentially use taxpayer money to misinform ratepayers and their public representatives. MWD has, however, already drafted an action plan that will implement many of the ethics provisions contained in this bill, including the establishment of an Office of Ethics and procedures for protecting the confidentiality of sources, the job security of whistle blowers, and the due process rights of the accused. The General Manager is scheduled to present the action plan to the MWD board on July 13, 1999 for their consideration and approval. Water Conservation: MWD derives much of its water from the Colorado River. The control, development, and utilization of the water resources of that river is nevertheless governed by various compacts, laws, treaties, and documents collectively referred to as the Law of the River. California is allocated 4.4 million acre-feet (MAF), plus 50% of any excess surplus water pursuant to statutes, court SB 60 Page 6 decisions, and contractual provisions. California continues to use up to 5.3 MAF annually of Colorado River water by relying on apportioned, but unused water within the Colorado River Basin. SB 1082, Chapter 874, Statutes of 1997, required the Director of the Department of Water Resources to assist the Colorado River Board and the six California water agencies that derive water from the Colorado River in developing a plan for California to live within its 4.4 MAF entitlement. Negotiations are currently underway with the federal government and other affected states to finalize this plan. The author claims that one trillion gallons of Los Angeles regional storm water annually washes into the ocean, which is enough to meet the needs of 3,000,000 families. The author also states that MWD currently spends less than 1% on water recycling and groundwater recovery programs. There exists a huge potential, therefore, for conservation. SB 60 requires MWD to consider new water conservation programs and submit a report to the Legislature by February 1, 2001 or annually thereafter on its progress in achieving water conservation goals. As California's take of Colorado River water will likely be reduced in the near future, these conservation efforts will help replace that lost water. REGISTERED SUPPORT / OPPOSITION : Support California Municipal Utilities Association Metropolitan Water District of Southern California San Diego County Water Authority Opposition None on file. Analysis Prepared by : Mark Hennelly / wpw / (916)319-2096