BILL ANALYSIS �
AB 54
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CONCURRENCE IN SENATE AMENDMENTS
AB 54 (Solorio)
As Amended August 30, 2011
Majority vote
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|ASSEMBLY: |77-0 |(June 2, 2011) |SENATE: |37-0 |(September 7, |
| | | | | |2011) |
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Original Committee Reference: L. GOV.
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.
The Senate amendments :
1)Clarify that the provisions of the bill apply to mutual water
companies that operate a public water system.
2)Clarify that LAFCO has the power to approve or disapprove, in
whole or in part, with or without conditions, the annexation of
territory served by a mutual water company that operates a public
water system into a city or a special district.
3)Remove provision regarding LAFCO's authority over public
utilities.
4)Remove letter of no prejudice provisions and instead specifies
authorization for pre-contract approval spending of Safe Drinking
Water Act funding.
5)Revise language to clarify that a mutual water company that
operates a public water system shall maintain a financial reserve
fund for repairs and replacements to its water production,
transmission, and distribution facilities at a level sufficient
for continuous operation of facilities in compliance with the
federal and state Safe Drinking Water Acts.
6)Remove alternative penalty provision.
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7)Make other technical and clarifying changes.
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;
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c) Financial ability of agencies to provide services;
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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Specified 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)Required, no later than December 31, 2012, each mutual water
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)Stated 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)Required 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)Required 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
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state Safe Drinking Water Acts.
6)Defined the qualification requirements of a qualified trainer.
7)Required a mutual water company to be liable for the payment of
any fines, penalties, expenses, and other amounts that may be
imposed.
8)Authorized 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)Required 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.
10)Gave 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)Specified 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)Gave 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)Provided 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)Stated 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)Authorized the CDPH to issue a "letter of no prejudice" that
allows an applicant for Safe Drinking Water Revolving Fund money
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to start clean drinking water project construction before final
approval of funding without prejudicing CDPH's final decision on
funding.
16)Allowed 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)Made legislative findings regarding drinking water quality.
FISCAL EFFECT : According to the Senate Appropriations Committee,
minor costs, up to $50,000 in order for the CDPH to review local
expenditures prior to allocating funds.
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.
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 establishes a pre-contract
authorization process 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
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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 may argue 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.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958
FN: 0002308