BILL ANALYSIS
-----------------------------------------------------------------
| |
| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2009-2010 Regular Session |
| |
-----------------------------------------------------------------
BILL NO: AB 153 HEARING DATE: August 18, 2010
AUTHOR: Hernandez and Eng URGENCY: Yes
VERSION: August 12, 2010 CONSULTANT: Dennis O'Connor
DUAL REFERRAL: No FISCAL: Yes
SUBJECT: Safe, Clean, and Reliable Drinking Water Supply Act
BACKGROUND AND EXISTING LAW
1. A part of the water package passed in the 2009/10 7th
Extraordinary Session was SBX7 2 (Cogdill). That bill enacted
the Safe, Clean, and Reliable Drinking Water Supply Act of
2010, which, if approved by the voters in November 2010, would
authorize $11.14 billion in general obligation bonds to fund
various water resources programs and projects.
2.Chapter 10 of the water bond would provide $1 B for
expenditures, grants, and loans for projects to prevent or
reduce the contamination of groundwater that serves as a
source of drinking water. The Department of Health Services
is to prioritize projects based upon the following criteria:
The threat posed by groundwater contamination to the
affected community's overall drinking water supplies.
The potential for groundwater contamination to spread
and reduce drinking water supply and water storage for
nearby population areas.
The potential of the project, if fully implemented, to
enhance local water supply reliability.
The potential of the project to increase opportunities
for groundwater recharge and optimization of groundwater
supplies.
1.The Department of Public Health is to give additional
consideration to projects that meet any of the following
criteria:
The project is implemented pursuant to a comprehensive
basinwide groundwater quality management and remediation
plan or is necessary to develop a comprehensive groundwater
plan.
1
Affected groundwater provides a local supply that, if
contaminated and not remediated, will require import of
additional water from outside the region.
The project will serve an economically disadvantaged
community or an economically distressed area.
The project addresses contamination at a site where the
responsible parties have not been identified, or where the
responsible parties are unwilling or unable to pay for
cleanup.
1.Additionally, 79770 (d) provides that at least $100 M of the
funds provided by Chapter 10 be made available for projects
that meet the requirements of this section and both of the
following criteria:
The project is part of a basinwide management and
remediation plan for which federal funds have been
allocated.
The project addresses contamination at a site on the
list maintained by the Department of Toxic Substances
Control pursuant to Section 25356 of the Health and Safety
Code or a site listed on the National Priorities List
pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. Sec.
9601 et seq.).
1.It appears that the only projects that meet the provisions of
79770 (d) are those associated with superfund sites in the
San Gabriel Valley, which include multiple areas of
contaminated groundwater in the 170-square-mile San Gabriel
Valley. The contaminated areas underlie significant portions
of the cities of Alhambra, Arcadia, Azusa, Baldwin Park,
Industry, Irwindale, El Monte, La Puente, Monrovia, Rosemead,
South El Monte, and West Covina.
2.Under the General Obligation Bond Law, unless otherwise
specified in the specific bond authorization act, proceeds
from the sale of any general obligation bond shall be used
only for the following purposes:
a. The costs of construction or acquisition of "capital
assets."
"Capital assets" are tangible physical property with
an expected useful life of 15 years or more. Capital
assets can include tangible physical property with an
expected useful life of 10 to 15 years, but only if these
costs do not exceed 10 percent of the net bond proceeds.
"Capital assets" include major maintenance,
reconstruction, demolition for purposes of reconstruction
2
of facilities, and retrofitting work that is ordinarily
done no more often than once every 5 to 15 years or
expenditures that continue or enhance the useful life of
the capital asset.
"Capital assets" also include equipment with an
expected useful life of two years or more.
Allowable costs also include costs related to
construction or acquisition, such as planning,
engineering, construction management, design work,
environmental impact reports and assessments, required
mitigation expenses, appraisals, legal expenses, site
acquisitions, and necessary easements.
a. To make grants or loans, if the proceeds of the grants
or loans are used for the costs of construction or
acquisition of capital assets.
b. To repay funds borrowed in anticipation of the sale of
the bonds, including interest, or to pay interest on the
bonds themselves.
c. To pay the costs of a state agency with responsibility
for administering the bond program.
d. The costs of the Treasurer's office directly associated
with the sale and payment of the bonds.
1.On August 9, 2010, the legislature passed, and the next day
the governor signed, AB 1265 as an urgency measure. That bill
delayed the water bond until the November 2012 general
election.
PROPOSED LAW
This bill would:
1.Change the provisions governing 79770 (d) of the water bond.
It would remove the restriction that the funds be used for
"projects" authorized for funding by that subdivision, and
instead allow the funds to be used for "costs associated with
projects, programs, or activities" authorized for funding by
that subdivision.
2.Declare that the bill is an urgency measure, the facts
constituting the necessity being:
In order to enable the Secretary of State to make the changes
required by this act at the earliest possible date, it is
necessary that this act take effect immediately.
ARGUMENTS IN SUPPORT
Supporters assert that the amendments will "alleviate some of
3
the rate pressure on San Gabriel area residents as they seek to
maximize the use of their local water supplies, thus relieving
pressure on the Sacramento-San Joaquin Delta, the Colorado
River, and other imported water sources."
ARGUMENTS IN OPPOSITION: None Received
COMMENTS
What Will Be Funded? The bill would allow the bond proceeds to
fund any cost associated with the San Gabriel Valley groundwater
clean-up program. Presumably, this would include remediation
and treatment costs associated with the project. However, the
phrase "costs associated with projects, programs, or activities"
is quite broad. It is not clear what limits, if any, there are
on the use of the funds.
In 2005, the San Gabriel Basin Water Quality Authority sponsored
SB 822 (Margett). (The authority is authorized by the San
Gabriel Basin Water Quality Authority Act to coordinate
groundwater remediation planning and implementation activities;
control and remove hazardous substances from the basin;
construct, operate, and maintain water treatment facilities that
benefit the basin; receive and expend funds obtained from
various sources, including federal, state, or local
governments(the entity responsible of implementing the clean-up
project.) SB 822 would have authorized the authority to receive
state funds to reimburse the authority for costs incurred prior
to January 1, 2006, for projects undertaken in accordance with
the Act and for the purpose of meeting matching federal funds
appropriated to the federal San Gabriel Basin Restoration Fund.
The Environmental Quality Committee's analysis of proposal was
particularly critical of the proposal and the hearing was
subsequently canceled at the author's request. (Analysis of:
April 25, 2005, see in particular comment 4.)
It is not clear if this bill would authorize the bond funds also
to be used to reimburse costs in a manner similar to that
proposed in 2005.
What Is The Rush? The legislature just passed AB 1265, thereby
delaying the water bond to the November 2012 general election.
As a part of the hearing on AB 1265, this committee's analysis
noted the need for additional amendments to the water bond. The
committee also received testimony that next session the bond
will require additional amendments. If the water bond will need
additional amendments next session, it is not clear why this
4
bill's amendments to the water bond need to be acted upon now.
SUGGESTED AMENDMENTS: None
SUPPORT
California Water Association
OPPOSITION None Received
5