BILL ANALYSIS �
AB 54
Page 1
Date of Hearing: May 27, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 54 (Solorio) - As Amended: May 19, 2011
Policy Committee: Environmental
Safety and Toxic Materials Vote: 6-3
Local Government 6-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
As proposed to be amended, this bill makes requirements of
mutual water companies (private companies), their members and
their operations; provides certain authority over mutual water
companies to local agency formation commissions (LAFCOs); and
makes provisions concerning reimbursement from the Safe Drinking
Water Revolving Fund and payment of civil penalties by a
publicly owned water system serving a small community.
Specifically this bill:
1)Relative to Public Water Systems and Mutual Water Companies :
a) Requires each board member of a mutual water company
operated as a public water system, to complete, within six
months of taking office or by 2013, a course on the duties
of a public water system to provide clean drinking water.
b) Requires mutual water companies to levy an assessement
on its shareholders to pay for a Safe Drinking Water fine
if the fine exceeds 5% of the mutual water companies
operating budget.
c) Requires all construction on public water systems
operated by a mutual water company to be designed and
constructed in compliance with California Waterworks
standards.
2)Relative to LAFCO Powers:
a) Requires each mutual water company operating as a public
AB 54
Page 2
water system to submit to the LAFCO a map showing the
boundaries of the property company serves.
b) Authorizes a LAFCO to consider whether agencies subject
to a service review are in compliance with the Safe
Drinking Water Act and to approve or disapprove annexation
to a city, public utility or special district of a
territory served by a mutual water company.
3)Relative to Funding System Improvements:
a) Authorizes a public water system that is a lead
applicant for a project to apply to DPH for a letter of no
prejudice, the project components of which, if the letter
is approved by DPH, shall be eligible for reimbursement
from the Safe Drinking Water Revolving Fund, if certain
conditions are met.
b) Allows DPH to require a publicly owned water system
serving a small community, meaning one serving a population
of no more than 10,000 people or a rural county, to spend
an amount equivalent to civil penalties towards completion
of water system projects that would remedy the violation.
FISCAL EFFECT
1)The bill will result in costs of an unknown amount, but likely
no more than tens of thousands of dollars annually, to DPH to
develop and review letters of no prejudice. (Special fund.)
COMMENTS
1)Rationale . According to the author, many areas of the state
rely on smaller public water systems, including mutual water
companies, that lack the funding or technical ability to
maintain and improve their systems to ensure water quality.
The author describes this bill as facilitating state and local
funding for clean water projects through letters of no
prejudice, which will allow a local agency to proceed with
system improvements, using its own funds, prior to signing a
funding agreement with DPH, and through authorizing use of
civil penalty monies to improve small community water systems.
AB 54
Page 3
The author also contends the bill creates a more level playing
field by authorizing LAFCOs to require mutual water companies
to provide information on their services and systems, as do
public water agencies. Finally, the author contends the bill
ensures that board members of mutual water companies are aware
of the companies' obligations under federal, state and local
laws.
2)Background .
a) Regulation of Drinking Water Systems. The DPH
administers a safe drinking water regulatory program for
all publicly and privately owned water systems of 15 or
more service connections. The department administers the
Safe Drinking Water Revolving Fund, which provides loans
and grants to local agencies for safe drinking water system
upgrades. The fund receives federal monies, 20% of which
the state has matched in recent years using proceeds from
bonds issued pursuant to Proposition 50 (the Water
Security, Clean Drinking Water, Coastal and Beach
Protection Act of 2002), which requires funded projects to
pay prevailing wages.
b) Mutual Water Company , a term this bill codifies in
specific terms, is a private association organized within a
particular area to deliver water to stockholders or members
at cost. Many mutual water companies are highly
functioning, well-funded operations. Some, however, are
small operations with unsophisticated board members unaware
of their obligations under the Clean Water Act and other
statutes. Historic relics of a less urbanized past, some
mutual water companies are defunct or unknown to local land
use planners. Many of these less-than-functional mutual
water companies have failed to maintain their water
treatment and delivery infrastructure, resulting in water
contamination.
In response, larger public water agencies have stepped in,
oftentimes with the help of state funding, to address the
water quality issues of mutual water companies. It is
common, because of the urgency of problems or seasonal
limitations, for water systems seeking state funding to
begin improvement work, using the systems own money, before
state funding for the work is finally approved.
AB 54
Page 4
c) LAFCO Municipal Service Reviews. The Legislature has
delegated much of its authority over the drawing of local
government boundaries to local agency formation commissions
(LAFCOs). The Cortese-Knox-Hertzberg Local Government
Reorganization Act of 2000 made numerous changes to LAFCOs'
responsibilities, among them addition of the requirement
that LAFCOs undertake periodic municipal service reviews
(MSRs).
An MSR is a comprehensive study designed to better inform
LAFCO, local agencies, and the community about the
provision of municipal services. These reviews capture and
analyze information about the governance structures and
efficiencies of service providers and identify
opportunities for greater coordination and cooperation
between providers.
3)Support . This bill is supported by the Mountain Counties
Water Association and the Tuolumne Utilities District, which
serve jurisdictions adjacent to many smaller mutual water
companies.
4)Opposition. This bill is opposed by the Central Basin Water
Association, which contends the bill subjects mutual water
companies to standards comparable to those applicable to
public agencies without providing the powers and benefits
available to public agencies.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081