BILL ANALYSIS �
AB 54
Page 1
ASSEMBLY THIRD READING
AB 54 (Solorio)
As Amended May 31, 2011
Majority vote
LOCAL GOVERNMENT 6-0 ENVIRONMENTAL SAFETY 6-3
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|Ayes:|Alejo, Bradford, Campos, |Ayes:|Wieckowski, Campos, |
| |Davis, Gordon, Hueso | |Chesbro, |
| | | |Davis, Feuer, Bonnie |
| | | |Lowenthal |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Miller, Morrell, Valadao |
| | | | |
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APPROPRIATIONS 17-0
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|Ayes:|Fuentes, Harkey, | | |
| |Blumenfield, Bradford, | | |
| |Charles Calderon, Campos, | | |
| |Davis, Donnelly, Gatto, | | |
| |Hall, Hill, Lara, | | |
| |Mitchell, Nielsen, Norby, | | |
| |Solorio, Wagner | | |
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SUMMARY : Adds additional requirements on mutual water
companies, authorizes a local agency formation commission
(LAFCO) to include mutual water companies in its municipal
service reviews, and provides the California Department of
Public Health (CDPH) more guidance regarding issuing Safe
Drinking Water Revolving Fund money to mutual water companies.
Specifically, this bill :
1)Specifies in statute that a corporation organized for or
engaged in the business of selling, distributing, supplying,
or delivering water for domestic use shall be known as a
mutual water company.
2)Requires, no later than December 31, 2012, each mutual water
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company operating as a public water system to submit to the
LAFCO a map depicting the approximate boundaries of the
property that the company serves.
3)States that if the LAFCO requests information, in connection
with the preparation of a municipal service review or spheres
of influence, from a mutual water company, the corporation
shall, within 45 days of the request, provide all reasonably
available information and explain, in writing, why any
requested information is not reasonably available.
4)Requires a mutual water company that operates a public water
system to maintain a financial reserve fund for repairs and
replacements to its water production, transmission, and
distribution facilities equal to the reserve fund for these
purposes required for a public water system or equal size.
5)Requires each board member of a mutual water company operated
as a public water system to, within six months of taking
office, complete a two-hour course offered by a qualified
trainer regarding the duties of board members of a mutual
water company, duties of a corporate director to avoid
financial conflicts of interest in contracts, and the duties
of public water systems to provide clean drinking water that
complies with the federal and state Safe Drinking Water Acts.
6)Defines the qualification requirements of a qualified trainer.
7)Requires a mutual water company to be liable for the payment
of any fines, penalties, expenses, and other amounts that may
be imposed.
8)Authorizes a mutual water company to levy an assessment in
order to pay the fines, penalties, expenses, and other amounts
so imposed and specifies that if these exceed 5% of the annual
budget of the mutual water company, then the assessment must
be imposed.
9)Requires all improvements to public water systems operated by
a mutual water company to be designed and constructed to
comply with the applicable California Water Works standards.
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10)Gives LAFCO the power to review and approve or disapprove, at
the LAFCO's discretion, 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, with the consent of the respective public agency
or public utility and mutual water company.
11)Specifies that any annexation approved shall be subject to
the state and federal constitutional prohibitions against the
taking of private property without the payment of just
compensation.
12)Gives LAFCO the power to request information, as part of a
municipal service review, from identified public or private
entities that provide wholesale or retail supply of drinking
water, including mutual water companies and private utilities.
13)Provides that in conducting a municipal service review, the
LAFCO may include a review
of whether the agencies under review, including any public water
system, are in compliance with the Safe Drinking Water Act.
14)States that a public may satisfy any request for information
as to compliance with the Safe Drinking Water Act by the
submission of the consumer confidence or water quality report
prepared by the public water system.
15)Authorizes the CDPH to issue a "letter of no prejudice" that
allows an applicant for Safe Drinking Water Revolving Fund
money to start clean drinking water project construction
before final approval of funding without prejudicing CDPH's
final decision on funding.
16)Allows CDPH to impose an alternative penalty on a small
public water system for violation of the Safe Drinking Water
Act that would require completion of a project that brings the
small public water system into compliance, instead of imposing
monetary fines.
17)Makes legislative findings regarding drinking water quality.
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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 any person who intends to sell or lease lots within a
subdivision involving a mutual water company to attach a
document with prescribed information to an application for a
public report.
4)Authorizes a corporation organized for or engaged in the
business of selling, distributing, supplying, or delivering
water for irrigation purposes or domestic use, and not as a
public utility, to levy assessments upon its shares.
5)Requires LAFCO to conduct a service review of the municipal
services provided in the county or other appropriate area
designated by LAFCO.
6)Requires LAFCO to include in the area designated for service
review the county, the region, the subregion, or any other
geographic area as is appropriate for an analysis of the
service or services to be reviewed.
7)Requires LAFCO to prepare a written statement of its
determinations with respect to each of the following:
a) Growth and population projections for the affected area;
b) Present and planned capacity of public facilities and
adequacy of public services, including infrastructure needs
or deficiencies;
c) Financial ability of agencies to provide services;
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d) Status of, and opportunities for, shared facilities;
e) Accountability for community service needs, including
governmental structure and operational efficiencies; and,
f) Any other matter related to effective or efficient
service delivery, as required by commission policy.
8)Requires LAFCO, in conducting a service review, to
comprehensively review all of the agencies that provide the
identified service or services within the designated
geographic area.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs of an unknown amount, but likely no more than
tens of thousands of dollars annually, to CDPH to develop and
review letters of no prejudice (Special fund).
COMMENTS : As California has grown and communities have merged
into metropolitan areas, some drinking water systems have not
been able to keep pace. 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 CDPH 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.
According to the author, 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.
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This bill 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. This bill also allows
mutual water companies to be considered by "LAFCOs" and requires
mutual water companies operating public water systems to follow
some of the same rules as public agencies.
Support arguments: Support may argue that mutual water
companies are under regulated and this bill is a small step in
trying to identify these often unknown water providers to local
governments in order to provide more awareness and
accountability to these entities that provide drinking water to
their constituents.
Opposition arguments: Opposition, the Central Basin Water
Association, argues this bill seeks to subject mutual water
companies to the same standards and requirements as public
agencies, without bestowing any of the benefits of a public
agency. Moreover, it gives LAFCO authority that should belong
to the CDPH.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
FN: 0000995