BILL ANALYSIS �
AB 2529
Page 1
ASSEMBLY THIRD READING
AB 2529 (Wieckowski and Beall)
As Amended May 1, 2012
Majority vote
ENVIRONMENTAL SAFETY 9-0APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Wieckowski, Miller, |Ayes:|Fuentes, Harkey, |
| |Campos, Chesbro, Davis, | |Blumenfield, Bradford, |
| |Donnelly, Feuer, Bonnie | |Charles Calderon, Campos, |
| |Lowenthal, Morrell | |Davis, Donnelly, Gatto, |
| | | |Ammiano, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
-----------------------------------------------------------------
SUMMARY : Authorizes the California Department of Public Health
(CDPH), when implementing the Safe Drinking Water State
Revolving Fund (SDWSRF), to adopt interim regulations and take
other actions to expedite the process of providing funds for
drinking water projects, especially to severely disadvantaged
communities. Specifically, this bill :
1)Authorizes CDPH to adopt interim regulations to implement the
SDWSRF and to meet the requirements of the federal Safe
Drinking Water Act (SDWA).
2)Makes several changes to CDPH criteria for project funding
through the SDWSRF.
3)Provides that planning and preliminary engineering studies,
project design, and construction costs incurred by community
and not-for-profit non-community public water systems may be
funded under the SDWSRF by loans, and, if these systems are
owned by public agencies or private not-for-profit water
companies, by grants, or a combination of grants and loans.
4)Deems as having no ability to repay a loan, a small community
water system or non-transient non-community water system that
is owned by a public agency or a private not-for-profit water
company and that serves a severely disadvantaged community.
5)Sets limits for grant expenditures from the capitalization
AB 2529
Page 2
grant, instead of from the total amount deposited in the
SDWSRF.
6) Authorizes an applicant to receive up to the full cost
of the project in the form of a loan bearing interest.
7) Requires CDPH, when it enters into contracts with
applicants for grants or loans from the SDWSRF, to include
in the contract the time for the completion of the project.
8)Adds several terms and conditions to those that CDPH is
authorized to require in contracts with applicants for grants
or loans from the SDWSRF.
9)Requires CDPH to annually establish in the Intended Use Plan
the amount of any administrative fee.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, enactment of this bill will result in the following:
1)Increased risk of default on loans made by CDPH to cover the
full cost of a project to be funded by interest-bearing loans.
(Current CDPH regulation limits interest-bearing loans to
projects of no more than $20 million. Under this bill CDPH
could make interest-bearing loans for the full cost of a
project, which could exceed $20 million, thereby increasing
financial consequences to the state, potentially by millions
of dollars, resulting from default. DPH reassures that
applicants authorized to receive interest-bearing loans from
the SDWSRF are those most capable of repaying the loans and,
therefore, least likely to default.)
2)Increased viability of maintaining the SDWSRF as a revolving
fund, resulting from limiting the proportion of grants from
the SDWSRF to no more than 30% of the annual capitalization
grant provided by the federal government. Current law limits
grants to no more than 30% of the overall amount deposited in
the fund, which may diminish fund amounts over time.
3)Minor, absorbable costs to CDPH, at least partially covered by
the administrative fee authorized by this bill, to:
a) Adopt interim regulations (SDWSRF). (CDPH reports that
AB 2529
Page 3
it completes the workload required to develop interim
regulations when it completes the initial work required to
develop standard regulations, which existing law still
requires CDPH to do. Therefore, development of interim
regulations should not significantly increase CDPH
workload);
b) Review applicant demonstrations of its technical,
managerial and financial capacity to operate and maintain
its water system or plan to achieve such capacity (SDWSRF);
and,
c) Adopt guidelines by which an applicant for SDWSRF
funding demonstrates it has technical, managerial and
financial capacity to operate and maintain its water system
(SDWSRF).
4)Possible workload reduction of a minor amount to CDPH
resulting from simplifying the process by which DPH determines
a community cannot afford a SDWSRF loan (SDWSRF).
COMMENTS :
Need for the bill : This bill is sponsored by the CDPH, which
contends, "The SDWSRF is largely federally funded and subject to
extensive federal law and regulations?. Since the SDWSRF was
implemented in 1997, changes have occurred in federal and state
laws that affect the infrastructure needs of public water
systems, the systems targeted for financial assistance and the
amount of funding available. To address these changes, it is
necessary that CDPH have greater flexibility in its rulemaking
process in order to be more responsive to changes in federal
laws and more responsive to the needs of the regulated utilities
(public water systems) and the communities they serve. This
bill would modify SDWSRF statutes to provide CDPH with the
flexibility necessary to assist the neediest water systems with
SDWSRF funding, while still complying with the SDWSRF federal
requirements. In addition, this bill would provide CDPH with
statutory authority to adopt interim regulations as necessary to
implement the changes to the SDWSRF."
Safe Drinking Water State Revolving Fund (SDWSRF) : Congress
established the SDWSRF as part of the SDWA Amendments of 1996 to
better enable public water systems to comply with national
AB 2529
Page 4
primary drinking water standards and to protect public health.
The SDWSRF 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 to this opportunity, California
established the SDWSRF through SB 1307 (Costa and Thompson),
Chapter 734, Statutes of 1997, to help fund projects to address
the state's drinking water needs. The CDPH, which administers
the SDWSRF, maintains that this bill will better enable them to
efficiently and effectively administer the SDWSRF.
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965
FN: 0003836