BILL ANALYSIS �
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2013-2014 Regular Session |
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BILL NO: AB 1043 HEARING DATE: June 25, 2013
AUTHOR: Chau URGENCY: No
VERSION: April 16, 2013 CONSULTANT: Dennis O'Connor
DUAL REFERRAL: Environmental QualityFISCAL: Yes
SUBJECT: Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Bond Act of 2006:
groundwater contamination.
BACKGROUND AND EXISTING LAW
The Safe Drinking Water, Water Quality and Supply, Flood
Control, River and Coastal Protection Bond Act of 2006 was an
initiative bond act ratified by the voters in 2006 as
Proposition 84. Among other things, it provided $60 M to the
Department of Health Services (now the Department of Public
Health) for loans and grants for projects to prevent or reduce
contamination of groundwater that serves as a source of drinking
water. The initiative specifically provided in PRC �75025 that
"The Department of Health Services shall require repayment for
costs that are subsequently recovered from parties responsible
for the contamination. The Legislature may enact legislation
necessary to implement this section."
Article II, Section 10 of the California Constitution provides,
in part, that the Legislature "may amend or repeal an initiative
statute by another statute that becomes effective only when
approved by the electors unless the initiative statute permits
amendment or repeal without their approval."
In 2008, the Legislature passed and the governor signed SB 732
(Steinberg). Among other things, that bill required the
Department of Public Health (DPH), in collaboration with the
Department of Toxic Substances Control (DTSC) and the state
water board, to "develop and adopt regulations governing the
repayment of costs that are subsequently recovered from parties
responsible for the [groundwater] contamination." DPH has not
promulgated those regulations.
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DPH has, however, awarded grants totaling nearly $46 million to
a variety of agencies, including: Cal Poly Pomona, City of Morro
Bay, City of Anaheim, Joshua Basin Water District, and the San
Gabriel Valley Water Company. The contracts between DPH and the
grant recipient (a.k.a. "Supplier") for the grants include,
among the "special terms and conditions," a provision stating:
Supplier understands and agrees that the purpose of this
Agreement is to provide funding to enable Supplier to
prevent or reduce contamination of groundwater that serves
as a source of drinking water and that Public Resources
Code section 75025 requires Supplier to repay costs that
are subsequently recovered from parties responsible for the
contamination. Supplier agrees to comply with regulations
now or hereafter adopted or amended governing the repayment
of costs subsequently recovered from parties responsible
for the contamination. (Emphasis in original)
PROPOSED LAW
This bill would delete the provisions enacted by SB 732 that
required DPH to develop and adopt regulations governing the
repayment of costs that are subsequently recovered from parties
responsible for the groundwater contamination, and would instead
provide that the grantee would be able to keep any costs
recovered from responsible parties, subject to the following:
1.The grant funded project meets both of the following
conditions:
The total of the grant amount awarded to the grantee
pursuant to Section 75025 and the funds recovered from a
responsible party under this subdivision do not exceed the
grantee's total cost of the project to clean up
contaminated groundwater or prevent the contamination of
groundwater.
The groundwater is a primary source of drinking water
and the grantee will use the funds recovered from a
responsible party for groundwater contamination cleanup
activities, including, but not limited to, ongoing
treatment and remediation activities in accordance with the
purposes of Section 75025.
1.Funds recovered from a responsible party are used in the
following priority order:
Projects to clean up areas of groundwater contamination
within the grantee's jurisdiction where the initial grant
awarded pursuant to Section 75025 is insufficient to pay
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for the full costs of the cleanup.
Projects to clean up additional areas of groundwater
contamination within the grantee's jurisdiction.
1.Before expending funds recovered from a responsible party, the
grantee submits an expenditure plan to the DTSC for its review
and concurrence that the proposed expenditures are consistent
with this bill.
2.Funds recovered from a responsible party that are in excess of
the costs to conduct a project or projects shall be remitted
to the DTSC. Such recovered funds shall be used by the DTSC
for orphan groundwater contamination cleanup projects.
3.By July 1, 2014, and annually thereafter, grantees post a list
on the grantee's Internet Web site, of projects that meet the
requirements of this bill and the amount of funds recovered
from a responsible party to be expended for the projects.
The bill would provide that funds recovered from a responsible
party by a grantee and used by the grantee for costs of a
project that complies with the provisions of this bill are
deemed to be repaid by the grantee to the state.
The bill would also move the other bond related provisions of SB
732 into separate sections of the code.
ARGUMENTS IN SUPPORT
According to the sponsor, "Pursuing cost recovery from
potentially responsible parties is both costly and time
consuming. The local agencies that are tasked with cost
recovery will make little or no effort to pursue responsible
parties if their efforts are unreimbursed and will not result in
any direct benefit for the resources expended. Conversely, such
efforts are likely to be most aggressive when the local agency
is the direct beneficiary of successful pursuit. AB 1043
squarely addresses this issue by incentivizing local cost
recovery efforts."
"In short, passage of AB 1043 is an essential step to allow the
San Gabriel Valley, and other areas which otherwise meet the
provisions contained in the bill, to fund the actual clean up
activities necessary to restore contaminated groundwater, thus
increasing local water supplies, and improving the management
and integration of all sources of water supply."
ARGUMENTS IN OPPOSITION: None received
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COMMENTS
Legislative Counsel Raises Constitutional Issues. In a February
22, 2013 letter to Asm. Chau regarding the drafting of this
bill, the Legislative Counsel raised serious constitutional
issues. In the letter, Counsel notes that "the Legislature may
only amend or repeal an initiative statute by another statute
that becomes effective when approved by the electors, unless the
initiative statute permits amendments or repeal without their
approval." Counsel further notes "Section 75025 of the Public
Resources Code expressly directs the department to require
repayment for costs that are subsequently recovered from parties
responsible for the contamination."
Counsel concludes "In our opinion, notwithstanding the provision
that deems funds that are recovered by an grantee and used by
the grantee as prescribed to be repaid by the grantee to the
state, by requiring the department to permit a grantee to retain
repayments from responsible parties to fund groundwater cleanup
activities and by requiring the grantee to remit funds recovered
from a responsible party to the Department of Toxic Substances
Control for other groundwater contamination cleanup projects,
the proposed measure may constitute an amendment of the
initiative bond act, and, as such, would require the approval of
the electors to become effective." (Citations omitted)
This bill does not include a provision to place this measure
before the voters for their approval.
Too late to affect most Prop 84 grants. As noted in the
background, DPH has already awarded grants totaling nearly $46
million of the $60 million provided by Proposition 84.
Moreover, DPH has pending grants for projects totaling over $13
million. Also, as noted in the background, the contracts for
these grants include a provision where the grantee specifically
understands and agrees that Proposition 84 requires the grantee
to repay costs that are subsequently recovered from parties
responsible for the contamination.
Should the constitutional issues be resolved and this bill
became enacted, it would still take some time before the
contracts could be amended or new regulations promulgated to
implement this bill. It seems likely that by such time, many if
not most of the projects funded by these grants would be
completed. Moreover, it is not clear that there would be
sufficient funds left to fund the contract amendments or
promulgation of regulations necessary to implement the
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provisions of the bill.
What problem are we solving? In the San Gabriel Valley, it is
the retail water suppliers that are applying for these
Proposition 84 grants, but it is the San Gabriel Basin Water
Quality Authority that is pursuing recovery of costs from
responsible parties. It is not clear how recovery of costs by
the Water Quality Authority would trigger a reimbursement by a
grantee such as the City of El Monte.
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2014 water bond. The water bond currently on the November 2014
ballot includes cost recovery provisions similar to those in
Proposition 84. It is not clear whether or how that bond will
be changed before the November 2014 election. However,
presuming the proponents of this bill are correct about the
disincentives to pursue responsible parties the cost recovery
provisions create, changing the cost recovery provisions in that
bond might be a better first course of action. Then, if the
proponents are persuasive and successful in that effort, they
might further attempt to use that bond proposal as a vehicle to
amending Section 75025.
SUGGESTED AMENDMENTS: None
SUPPORT
San Gabriel Basin Water Quality Authority (Sponsor)
Association of California Water Agencies
San Gabriel Valley Economic Partnership
San Gabriel Valley Municipal Water District
Three Valleys Municipal Water District
West Valley Water District
OPPOSITION
None Received
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