BILL ANALYSIS �
AB 54
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Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Bob Wieckowski, Chair
AB 54 (Solorio) - As Amended: April 14, 2011
SUBJECT : Drinking water.
SUMMARY : Establishes new requirements for mutual water
companies; establishes alternative penalties for violations of
the Safe Drinking Water Act; and authorizes payments from the
Safe Drinking Water State Revolving Fund for projects under
construction. Specifically, this bill :
1)Makes legislative findings about drinking water quality.
2)Establishes new requirements for organizing and operating
mutual water companies, including:
a) Specifies that any corporation organized for or engaged
in the business of selling, distributing, supplying, or
delivering water for irrigation purposes or for domestic
use shall be known as a mutual water company.
b) Requires each mutual water company operating as a public
water system to, no later than December 31, 2012, submit to
the Secretary of State and the local agency formation
commission (LAFCO) a map depicting the boundaries of the
property that the corporation serves.
c) Requires a mutual water company, if the LAFCO or a
county department requests information, the corporation,
to, within 45 days of the request, provide all reasonably
available information and explain, in writing, why any
requested information is not reasonably available.
d) Specifies that all Governmental Accounting Standards
Board (GASB) standards apply to mutual water companies.
e) Requires all construction on public water systems
operated by a mutual water company to be designed and
constructed to comply with the applicable California
Waterworks standards.
f) Requires all construction projects related to a public
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water system to comply with prevailing wage standards.
g) Authorizes the LAFCO to approve or disapprove the
annexation of territory served by a mutual water company
into the jurisdiction of a city, a public utility, or a
special district that operates a public water system.
h) Authorizes the LAFCO, in conducting a service review, to
include a review of whether the agencies under review,
including any public water system, are in compliance with
SDWA.
i) Authorizes the LAFCO to request information, as part of
a service review, from identified public or private
entities that provide wholesale or retail supply of
drinking water, including mutual water companies and
private utilities.
j) Requires each board member of a mutual water company
operated as a public water system to, within six months of
taking office, complete a four-hour course, as specified,
offered by a public water agency or a public utility that
operates a public water system regarding the duties of
board members of public water systems and the duties of
public water systems to provide clean drinking water that
complies with the federal and state Safe Drinking Water
Acts (SDWA).
aa) Authorizes fines pursuant to the SDWA to be imposed on
directors of a mutual water company if the mutual water
company has received notice of a violation of the SDWA more
than one year previously and has not taken action to
resolve the violation.
3)Establishes new penalty provisions for violations of the
California Safe Drinking Water Act (SDWA), specifically:
a) Authorizes DPH to, in lieu of assessing all or a portion
of the civil penalties, as specified, against a publicly
owned water system serving a small community, elect to
require the public water system to spend an equivalent
dollar amount towards the completion of a compliance
project proposed by the public water system, if DPH makes
specified findings.
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b) Defines "a publicly owned water system serving a small
community" as a public water system operated by a city,
county, or special district serving a population of 10,000
persons or fewer or a rural county, with a financial
hardship as determined by DPH after considering factors
including median income of the residents, rate of
unemployment, and low population density in the service
area of the public water system.
4)Authorizes a public water system to apply for Safe Drinking
Water State Revolving Fund (SDWSRF) funding for projects under
construction, specifically:
a) Authorizes a public water system that is a lead
applicant for a project that may be funded by the SDWSRF to
apply to the California Department of Public Health (DPH)
for a letter of no prejudice for the project or a component
of the project.
b) Authorizes DPH to approve the letter of no prejudice for
one or more projects or project components that DPH has
determined to be eligible for federal or state funding
pursuant to established funding priorities and has issued
an invitation to apply for funding from the SDWRF.
Requires the letter of no prejudice to reference the
project or component thereof and the maximum amount of bond
funding that may be allocated for that project or project
component.
c) Requires expenditures for the costs, up to the amount
set forth in the letter of no prejudice, of a project or
project component for which a letter of no prejudice has
been issued to be eligible for reimbursement from the SDWRF
if specified criteria are met.
d) Authorizes DPH and the public water system to enter into
an agreement or agreements governing reimbursement of
expended costs.
e) Defines "letter of no prejudice" as an agreement between
a public water system and DPH that makes eligible for
future reimbursement, as specified, from the SDWRF the
expenditure of funds under the control of the public water
system.
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EXISTING LAW :
1)Requires a corporation organized for or engaged in the
business of selling, distributing, supplying, or delivering
water for domestic use (i.e., mutual water company) to specify
in its articles or bylaws, its provision of water only to
owners of its shares and that these shares must be appurtenant
to specified lands.
2)Requires a mutual water company formed after January 1, 1998,
in connection with the sale or lease of lots within a
subdivision to meet specified standards including supply and
distribution system design standards and water service
standards. A mutual water company formed prior to January 1,
1998, may elect to meet all of these requirements.
3)Requires LAFCOs to conduct a service review of the municipal
services provided in the county or other appropriate area
designated by LAFCO.
4)Under the California Safe Drinking Water Act (SDWA):
a) Authorizes DPH to implement the California SWDA in
accordance with the requirements of the federal SDWA.
b) Establishes civil penalties for violations of the SDWA,
as specified.
c) Provides that each civil penalty imposed for any
violation under the SDWA is separate, and in addition to
any other civil penalty imposed pursuant to the SDWA or any
other provision of law.
5)Under the Safe Drinking Water State Revolving Fund Law of 1997
(SDWSRF):
a) Authorizes DPH to implement the SDWSRF, as specified.
b) Requires DPH to establish criteria for projects to be
eligible for consideration for funding, as specified.
c) Authorizes DPH to enter into contracts with applicants
for grants or loans in accordance with the SDWSRF.
FISCAL EFFECT : Unknown.
COMMENTS :
Need for the bill : According to the author, "As California has
grown and communities have merged into metropolitan areas, some
drinking water systems have not been able to keep pace.
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Infrastructure, built long ago, has deteriorated. Many water
sources have become contaminated. The economic base of some
communities has declined or stagnated, leading to less
investment in water infrastructure for basic maintenance and
modernization.
The state provides funding to public water systems to improve
drinking water quality through the Safe Drinking Water Revolving
Fund, but demand far exceeds the available funding. According
to the United States Environmental Protection Agency's Drinking
Water Infrastructure Needs Survey and Assessment, which was
performed in 2007, the California Department of Public Health
estimates that the 20-year drinking water infrastructure need
for California is $39 billion. Funding for such projects,
however, for 1997-2008, totaled only $1.2 billion.
Smaller public water systems, particularly those operated by
"mutual water companies," often lack the funding to improve
their systems and eliminate contamination. They rely on state
funding and cooperation by larger, neighboring water systems to
improve their systems, but sometimes suffer years of
contaminated water.
AB 54 would facilitate state and local funding for clean water
projects and level the playing field between public water
agencies and mutual water companies. It authorizes "letters of
no prejudice" which would allow local agencies, with their own
resources to get started on resolving water quality problems
before the State finalizes a loan or grant from the Safe
Drinking Water State Revolving Fund. AB 54 also allows mutual
water companies to be considered by "local agency formation
commissions" and requires mutual water companies operating
public water systems to follow some of the same rules as public
agencies. '
California Safe Drinking Water Act (SDWA) violation penalties :
AB 54 authorizes DPH to, in lieu of assessing all or a portion
of the civil penalties for SDWA violations against a publicly
owned water system serving a small community, elect to require
the public water system to spend an equivalent dollar amount
towards the completion of a compliance project. Similar
provisions exist in Water Code Section 13385(k)(1), which
authorizes the State or Regional Water Resources Control Board
to, in lieu of assessing all or a portion of mandatory minimum
penalties for Clean Water Act violations against a publicly
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owned treatment works serving a small community, to elect to
require the publicly owned treatment works to spend an
equivalent amount towards the completion of a compliance
project.
Safe Drinking Water State Revolving Fund (SDWSRF) funding :
Water systems that are seeking SDWSRF funding sometimes choose
to, or are required to, begin their improvement projects prior
to entering into funding agreements with CDPH for the SDWSRF
funds. There are a variety of reasons that a water system may
begin a project prior to receiving a funding agreement,
including an urgency to solve the problem as soon as possible;
limitations in the construction season (e.g., some projects can
only be constructed during drier months of the year); and the
need to expend other available funding within a specific time
period.
According to DPH, the SDWSRF includes provisions that allow an
applicant to receive a reimbursement for funds expended prior to
the issuance of the funding agreement. Reimbursement for such
expenditures is subject to specific requirements that are
explained to the public water system in advance of, an
expenditure. DPH makes an official determination on the
eligibility of each project expense in accordance with
established criteria pursuant to State and Federal requirements.
As part of the SDWSRF funding process, CDPH staff review
projects and applications for completeness. CDPH does not
reimburse for eligible project costs until a funding agreement
is in place.
The author responds that DPH has never indicated that this is a
relatively common practice and, in fact, has not offered to
allow the City of Santa Ana to proceed on a clean-up project
with its own funding before a funding agreement is signed.
Double referral : This bill was heard by the Assembly Local
Government Committee on April 13, 2011. It passed that
Committee on a 6 - 0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
CALAFCO
Mountain Counties Water Resources Association
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Tuolumne Utilities District
Opposition
American Society of Civil Engineers (ASCE,) Region 9
Central Basin Water Association
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965