BILL ANALYSIS
AB 1438
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Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Wesley Chesbro, Chair
AB 1438 (Conway) - As Amended: April 13, 2009
SUBJECT: Safe Drinking Water State Revolving Fund.
SUMMARY : Revises requirements of the Safe Drinking Water State
Revolving Fund (State Revolving Fund), including eliminating the
maximum amount of a grant award for single projects.
Specifically, this bill :
1)Includes fire flow demand as criterion that must be considered
when determining "reasonable amount of growth" for project
funding under the State Revolving Fund.
2)Requires the California Department of Public Health (DPH), in
order to implement the State Revolving Fund, to establish a
wellhead protection account pursuant to Section 1452(a) (2) of
the federal Safe Drinking Water Act (SDWA).
3)Adds environmental documentation as an activity eligible for
funding under the State Revolving Fund.
4)Revises, from $1 million dollars to an amount established by
DPH, the maximum amount of a grant permitted under the State
Revolving Fund for the planning, engineering studies,
environmental documentation, design and construction of a
single project. Requires the amount to be published in the
Intended Use Plan (IUP) submitted annually to the federal
Environmental Protection Agency (US EPA).
EXISTING STATE LAW :
1)Under the California Safe Drinking Water Act (Health and
Safety Code Section 116275 et seq.), requires DPH to regulate
drinking water, including conducting research, studies, and
demonstration programs for a dependable, safe supply of
drinking water and to enforce the federal Safe Drinking Water
Act and other regulations.
2)Under the Safe Drinking Water State Revolving Fund Law of 1997
(Health and Safety Code Section 116760 et seq.):
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a) Creates the Safe Drinking Water State Revolving Fund in
the State Treasury and continuously appropriates the fund
to DPH to provide grants or revolving fund loans for the
design and construction of projects for public water
systems that will enable suppliers to meet safe drinking
water standards.
b) Defines "reasonable amount of growth" as an increase in
growth not to exceed 10 percent of the design capacity
needed, based on peak flow, to serve the water demand in
existence at the time plans and specifications for the
project are approved by DPH, over the 20-year useful life
of a project.
c) Authorizes DPH to undertake specified actions to
implement the State Revolving Fund, including establishing
separate accounts or subaccounts as required or allowed in
the federal act. Requires DPH, within the fund, to
establish specified accounts.
EXISTING FEDERAL LAW :
1)Under the federal Safe Drinking Water Act (SDWA):
a) Establishes the Wellhead Protection Program as a
pollution prevention and management program designed to
protect underground sources of drinking water.
b) Establishes the Drinking Water State Revolving Fund
(DWSRF) as part of the 1996 Safe Drinking Water Act (SDWA)
Amendments to provide states with a financing mechanism to
ensure safe drinking water to the public.
2)Under the American Recovery and Reinvestment Act of 2009
(ARRA), provides approximately $160 million to the State
Revolving Fund for infrastructure development for California's
drinking water systems.
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FISCAL EFFECT : Unknown.
COMMENTS :
Purpose and background : Sponsors of the bill assert, "The
California Drinking Water State Revolving Fund provides loans and
grants to public water systems throughout the state for
infrastructure and other projects that provide safe drinking water
to ratepayers. The Fund is capitalized by a mix of federal grants
and state funding matches (20% of the federal grant). Under
federal law, the bulk of the funding must be distributed as
low-interest loans to ensure the revolving nature of the fund.
However, a small portion of the Fund can be used to provide grants
to low-income communities who cannot otherwise maintain affordable
rates and upgrade their infrastructure...
?Currently, the state statute limits the size of such grant awards
to $1 million per project. This cap prevents the program from
funding larger, but potentially more sustainable, projects. AB
1458 moves the determination of a maximum grant award from statute
and instead requires DPH to establish a maximum through its annual
Intended Use Plan for the Fund. The Plan is a publicly noticed
document that must be submitted to US EPA annually in order to
qualify for the federal grant. This change will provide
flexibility to DPH in their administration of the program. At the
same time, the federal requirement that the Fund remain
sustainable will ensure that this power is not abused."
Small community wastewater challenges: The SWRCB, in its June
16, 2008, Water Boards' Draft Small Community Wastewater
Strategy, asserts that, "?Small communities face specific
challenges related to their drinking water and wastewater
systems. Many are currently on failing septic systems or have
old and undersized wastewater treatment plants that cannot meet
current water quality standards. Such systems can cause
significant health and safety problems, endanger surface water
uses, and pose a threat to groundwater supplies? Therefore,
more financial, technical, and regulatory assistance is needed
to bring small communities into compliance." This bill attempts
to provide additional assistance to communities in need by
enabling the DPH to award grants sufficient to fund necessary
drinking water and wastewater system projects.
State Revolving Fund : Congress established the Drinking Water
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State Revolving Fund (DWSRF) as part of the 1996 SDWA Amendments
to better enable public water systems to comply with national
primary drinking water standards and to protect public health.
The DWSRF provides financial assistance in the form of
capitalization grants to states to provide low interest loans
and other assistance to public water systems. In order to
receive these funds, states must provide a state match equal to
20% of the federal capitalization grants and must create a
drinking water state revolving fund program for public water
system infrastructure needs and other drinking water-related
activities. In response, California established the State
Revolving Fund through SB 1307 (Chapter 734, Statutes of 1997)
to help fund the state's drinking water needs.
On February 17, 2009, President Obama signed the American
Recovery and Reinvestment Act of 2009 (ARRA) into law. Among
its provisions, ARRA provides approximately $160 million to the
State Revolving Fund for infrastructure development for
California's drinking water systems. On March 27, 2009, the
Governor signed SBX3 27 (Negrete McLeod) Chapter 25, Statutes of
2009-10 Third Extraordinary Session, which expanded authorized
uses for clean drinking water and wastewater funding from the
federal government pursuant to the ARRA.
Intended Use Plans: To receive DWSRF funding approval from the
US EPA, states must submit a capitalization grant application
and an intended use plan (IUP) which describes the state plan
for utilization of program funding. Federal guidelines, and
related state statute, require that the IUP include a
description of how the program is structured, the planned use of
the funds, the criteria, and methods to be used for distribution
of the funds, the goals for the program, and a project priority
list. AB 1438 requires that DPH, when establishing the amount
of grant awards permitted for single projects under the State
Revolving Fund, to do so under the requirements of the IUP.
Statutory caps versus discretionary caps : AB 1438 removes the
statutory cap of $1 million for State Revolving Fund grant
awards for single projects, and instead authorizes DPH to set
the level of grant awards through a public process. Supporters
argue that this flexibility enables DPH to more effectively fund
drinking water projects in communities with diverse needs and
therefore best assist disadvantaged communities.
Technical amendment : The author may wish to consider combining
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subsections (a) and (b) in Health and Safety Code 116761.23, as
amended in the bill, to eliminate duplicative language.
Double referral : This bill is double-referred to the Assembly
Water, Parks and Wildlife Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation (Co-sponsor)
Clean Water Action (Co-sponsor)
Environmental Justice Coalition for Water (Co-sponsor)
Opposition
None on file.
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965