Amended in Assembly February 14, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1445

Introduced by Assembly Member Logue

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(Principal coauthor: Assembly Member Gaines)

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(Coauthor: Assembly Member Donnelly)

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January 6, 2014

An act to repeal and add Division 26.7 (commencing with Section 79700) of the Water Code, and to repeal Section 2 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2009, relating to begin delete a end delete public benefits associated with water storage begin delete projects program end delete begin insert and water quality improvement projects end insert , by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California, and for the handling and disposition of those funds, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1445, as amended, Logue. California Water Infrastructure Act of 2014.

(1) Existing law creates the Safe, Clean, and Reliable Drinking Water Supply Act of 2012, which, if approved by the voters, would authorize the issuance of bonds in the amount of $11,140,000,000 pursuant to the State General Obligation Bond Law to finance a safe drinking water and water supply reliability program. Existing law provides for the submission of the bond act to the voters at the November 4, 2014, statewide general election.

This bill would repeal these provisions.

(2) Under existing law, various measures have been approved by the voters to provide funds for water supply and protection facilities and programs.

This bill would enact the California Water Infrastructure Act of 2014, which, if adopted by the voters, would authorize the issuance of bonds in the amount of $5,800,000,000 pursuant to the State General Obligation Bond Law to finance begin delete a end delete public benefits associated with water storage begin insert and water quality improvement end insert projects begin delete program end delete .

This bill would provide for the submission of this bond act to the voters at the November 4, 2014, statewide general election.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Division 26.7 (commencing with Section 79700)
of the Water Code, as added by Section 1 of Chapter 3 of the
Seventh Extraordinary Session of the Statutes of 2009, is repealed.

SEC. 2.  

Division 26.7 (commencing with Section 79700) is
added to the Water Code, to read:

 

Division 26.7.  THE CALIFORNIA WATER
INFRASTRUCTURE ACT OF 2014

 

Chapter  1. Short Title

 

79700.  

This division shall be known, and may be cited, as the
California Water Infrastructure Act of 2014.

 

Chapter  2. Definitions

 

79702.  

Unless the context otherwise requires, the definitions
set forth in this section govern the construction of this division, as
follows:

(a) “CALFED Bay-Delta Program” means the program
described in the Record of Decision dated August 28, 2000.

(b) “Commission” means the California Water Commission.

(c) “Committee” means the California Water Infrastructure
Finance Committee created by Section 79812.

(d) “Delta” means the Sacramento-San Joaquin Delta, as defined
in Section 12220.

(e) “Delta conveyance facilities” means facilities that convey
water directly from the Sacramento River to the State Water Project
or the federal Central Valley Project pumping facilities in the south
Delta.

(f) “Department” means the Department of Water Resources.

(g) “Director” means the Director of Water Resources.

(h) “Fund” means the California Water Infrastructure Fund of
2014 created by Section 79716.

(i) “Nonprofit organization” means an organization qualified
to do business in California and qualified under Section 501(c)(3)
of Title 26 of the United States Code.

(j) “Public agency” means a state agency or department, district,
joint powers authority, city, county, city and county, or other
political subdivision of the state.

(k) “Secretary” means the Secretary of the Natural Resources
Agency.

(l) “State General Obligation Bond Law” means the State
General Obligation Bond Law (Chapter 4 (commencing with
Section 16720) of Part 3 of Division 4 of Title 2 of the Government
Code).

 

Chapter  3. General Provisions

 

79705.  

An amount that equals not more than 5 percent of the
funds allocated for a grant program pursuant to this division may
be used to pay the administrative costs of that program.

79706.  

Up to 10 percent of funds allocated for each program
funded by this division may be expended for planning and
monitoring necessary for the successful design, selection, and
implementation of the projects authorized under that program.
This section shall not otherwise restrict funds ordinarily used by
an agency for “preliminary plans,” “working drawings,” and
“construction” as defined in the annual Budget Act for a capital
outlay project or grant project. Water quality monitoring shall be
integrated into the surface water ambient monitoring program
administered by the State Water Resources Control Board.

79709.  

It is the intent of the people that the investment of public
funds pursuant to this division will result in public benefits.

79710.  

The California State Auditor shall annually conduct a
programmatic review and an audit of expenditures from the fund.
The California State Auditor shall report its findings annually on
or before March 1 to the Governor and the Legislature, and shall
make the findings available to the public.

79711.  

Funds provided by this division shall not be expended
to support or pay for the costs of environmental mitigation
measures or compliance obligations of any party except as part of
the environmental mitigation costs of projects financed by this
division. Funds provided by this division may be used for
environmental enhancements or other public benefits.

79712.  

Funds provided by this division shall not be expended
to pay the costs of the design, construction, operation, or
maintenance of Delta conveyance facilities. Those costs shall be
the responsibility of the water agencies that benefit from the design,
construction, operation, or maintenance of those facilities.

79713.  

(a) This division does not diminish, impair, or
otherwise affect in any manner whatsoever any area of origin,
watershed of origin, county of origin, or any other water rights
protections, including, but not limited to, rights to water
appropriated begin delete prior to end delete begin insert before end insert December 19, 1914, provided under
the law. This division does not limit or otherwise affect the
application of Article 1.7 (commencing with Section 1215) of
Chapter 1 of Part 2 of Division 2, Sections 10505, 10505.5, 11128,
11460, 11461, 11462, and 11463, and Sections 12200 to 12220,
inclusive.

(b) For purposes of this division, an area that utilizes water that
has been diverted and conveyed from the Sacramento River
hydrologic region, for use outside the Sacramento River hydrologic
region or the Delta, shall not be deemed to be immediately adjacent
thereto or capable of being conveniently supplied with water
therefrom by virtue or on account of the diversion and conveyance
of that water through facilities that may be constructed for that
purpose after January 1, 2015.

(c) Nothing in this division supersedes, limits, or otherwise
modifies the applicability of Chapter 10 (commencing with Section
1700) of Part 2 of Division 2, including petitions related to any
new conveyance constructed or operated in accordance with
Chapter 2 (commencing with Section 85320) of Part 4 of Division
35.

(d) Unless otherwise expressly provided, nothing in this division
supersedes, reduces, or otherwise affects existing legal protections,
both procedural and substantive, relating to the state board’s
regulation of diversion and use of water, including, but not limited
to, water right priorities, the protection provided to municipal
interests by Sections 106 and 106.5, and changes in water rights.
Nothing in this division expands or otherwise alters the state
board’s existing authority to regulate the diversion and use of water
or the courts’ existing concurrent jurisdiction over California water
rights.

79714.  

Eligible applicants under this division are public
agencies, nonprofit organizations, public utilities, and mutual water
companies. To be eligible for funding under this division, a project
proposed by a public utility that is regulated by the Public Utilities
Commission or a mutual water company shall have a clear and
definite public purpose and shall benefit the customers of the water
system.

79716.  

The proceeds of bonds issued and sold pursuant to this
division shall be deposited in the California Water Infrastructure
Fund of 2014, which is hereby created in the State Treasury.

 

Chapter  4. California Water Infrastructure

 

79740.  

(a) Notwithstanding Section 162, the commission may
make the determinations, findings, and recommendations required
of it by this chapter independent of the views of the director. All
final actions by the commission in implementing this chapter shall
be taken by a majority of the members of the commission at a
public meeting noticed and held pursuant to the Bagley-Keene
Open Meeting Act (Article 9 (commencing with Section 11120)
of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government
Code).

(b) Notwithstanding Section 13340 of the Government Code,
the sum of begin delete five end delete begin insert four end insert billion eight hundred million dollars
begin delete ($5,800,000,000) end delete begin insert ($4,800,000,000) end insert is hereby continuously
appropriated from the fund, without regard to fiscal years, to the
commission for public benefits associated with water storage
projects that improve the operation of the state water system, are
cost effective, and provide a net improvement in ecosystem and
water quality conditions, in accordance with this chapter. Funds
authorized for, or made available to, the commission pursuant to
this chapter shall be available and expended only for the purposes
provided in this chapter, and shall not be subject to appropriation
or transfer by the Legislature or the Governor for any other
purpose.

(c) Projects shall be selected by the commission through a
competitive public process that ranks potential projects based on
the expected return for public investment as measured by the
magnitude of the public benefits provided, pursuant to criteria
established under this chapter.

(d) Any project constructed with funds provided by this chapter
shall be subject to Section 11590.

79741.  

Projects for which the public benefits are eligible for
funding under this chapter consist of only the following:

(a) Surface storage projects identified in the CALFED Bay-Delta
Program Record of Decision, dated August 28, 2000, except for
projects prohibited by Chapter 1.4 (commencing with Section
5093.50) of Division 5 of the Public Resources Code.

(b) Groundwater storage projects and groundwater
contamination prevention or remediation projects that provide
water storage benefits.

(c) Conjunctive use and reservoir reoperation projects.

(d) Local and regional surface storage projects that improve the
operation of water systems in the state and provide public benefits.

79742.  

A project shall not be funded pursuant to this chapter
unless it provides measurable improvements to the Delta ecosystem
or to the tributaries to the Delta.

79743.  

(a) Funds allocated pursuant to this chapter may be
expended solely for the following public benefits associated with
water storage projects:

(1) Ecosystem improvements, including changing the timing of
water diversions, improvement in flow conditions, temperature,
or other benefits that contribute to restoration of aquatic ecosystems
and native fish and wildlife, including those ecosystems and fish
and wildlife in the Delta.

(2) Water quality improvements in the Delta, or in other river
systems, that provide significant public trust resources, or that
clean up and restore groundwater resources.

(3) Flood control benefits, including, but not limited to, increases
in flood reservation space in existing reservoirs by exchange for
existing or increased water storage capacity in response to the
effects of changing hydrology and decreasing snow pack on
California’s water and flood management system.

(4) Emergency response, including, but not limited to, securing
emergency water supplies and flows for dilution and salinity
repulsion following a natural disaster or act of terrorism.

(5) Recreational purposes, including, but not limited to, those
recreational pursuits generally associated with the outdoors.

(b) Funds shall not be expended pursuant to this chapter for the
costs of environmental mitigation measures or compliance
obligations except for those associated with providing the public
benefits as described in this section.

79744.  

In consultation with the Department of Fish and
Wildlife, the State Water Resources Control Board, and the
department, the commission shall develop and adopt, by regulation,
methods for quantification and management of public benefits
described in Section 79743 by December 15, 2016. The regulations
shall include the priorities and relative environmental value of
ecosystem benefits as provided by the Department of Fish and
Wildlife and the priorities and relative environmental value of
water quality benefits as provided by the State Water Resources
Control Board.

79745.  

(a) Except as provided in subdivision (c), begin delete no end delete funds
allocated pursuant to this chapter begin delete may end delete begin insert shall not end insert be allocated for a
project before December 15, 2016, and until the commission
approves the project based on the commission’s determination that
all of the following have occurred:

(1) The commission has adopted the regulations specified in
Section 79744 and specifically quantified and made public the cost
of the public benefits associated with the project.

(2) The department has entered into a contract with each party
that will derive benefits, other than public benefits, as defined in
Section 79743, from the project that ensures the party will pay its
share of the total costs of the project. The benefits available to a
party shall be consistent with that party’s share of total project
costs.

(3) The department has entered into a contract with each public
agency identified in Section 79744 that administers the public
benefits, after that agency makes a finding that the public benefits
of the project for which that agency is responsible meet all the
requirements of this chapter, to ensure that the public contribution
of funds pursuant to this chapter achieves the public benefits
identified for the project.

(4) The commission has held a public hearing for the begin delete purposes end delete
begin insert purpose end insert of providing an opportunity for the public to review and
comment on the information required to be prepared pursuant to
this subdivision.

(5) All of the following additional conditions are met:

(A) Feasibility studies have been completed.

(B) The commission has found and determined that the project
is feasible, is consistent with all applicable laws and regulations,
and will advance the long-term objectives of restoring ecological
health and improving water management for beneficial uses of the
Delta.

(C) All environmental documentation associated with the project
has been completed, and all other federal, state, and local approvals,
certifications, and agreements required to be completed have been
obtained.

(b) The commission shall submit to the Legislature its findings
for each of the criteria identified in subdivision (a) for a project
funded pursuant to this chapter.

(c) Notwithstanding subdivision (a), funds may be made
available under this chapter for the completion of environmental
documentation and permitting of a project.

79746.  

(a) The public benefit cost share of a project funded
pursuant to this chapter, other than a project described in
subdivision (c) of Section 79741, begin delete may end delete begin insert shall end insert not exceed 50 percent
of the total costs of any project funded under this chapter.

(b) A project shall not be funded unless it provides ecosystem
improvements as described in paragraph (1) of subdivision (a) of
Section 79743 that are at least 50 percent of total public benefits
of the project funded under this chapter.

79747.  

(a) A project is not eligible for funding under this
chapter unless, by January 1, 2022, all of the following conditions
are met:

(1) All feasibility studies are complete and draft environmental
documentation is available for public review.

(2) The commission makes a finding that the project is feasible,
and will advance the long-term objectives of restoring ecological
health and improving water management for beneficial uses of the
Delta.

(3) The director receives commitments for not less than 75
percent of the nonpublic benefit cost share of the project.

(b) If compliance with subdivision (a) is delayed by litigation
or failure to promulgate regulations, the date in subdivision (a)
shall be extended by the commission for a time period that is equal
to the time period of the delay, and funding under this chapter that
has been dedicated to the project shall be encumbered until the
time at which the litigation is completed or the regulations have
been promulgated.

79748.  

Surface storage projects funded pursuant to this chapter
and described in subdivision (a) of Section 79741 may be made a
unit of the Central Valley Project as provided in Section 11290
and may be financed, acquired, constructed, operated, and
maintained pursuant to Part 3 (commencing with Section 11100)
of Division 6.

79749.  

(a) The funds allocated for the design, acquisition, and
construction of surface storage projects identified in the CALFED
Bay-Delta Record of Decision, dated August 28, 2000, pursuant
to this chapter may be provided for those purposes to local joint
powers authorities formed by irrigation districts and other local
water districts and local governments within the applicable
hydrologic region to design, acquire, and construct those projects.

(b) The joint powers authorities described in subdivision (a)
may include in their membership governmental partners that are
not located within their respective hydrologic regions in financing
the surface storage projects, including, as appropriate, cost-share
participation or equity participation. Notwithstanding Section 6525
of the Government Code, the joint powers authorities described
in subdivision (a) shall not include in their membership any
for-profit corporation, or any mutual water company whose
shareholders and members include a for-profit corporation or any
other private entity. The department shall be an ex officio member
of each joint powers authority subject to this section, but the
department shall not control the governance, management, or
operation of the surface water storage projects.

(c) A joint powers authority subject to this section shall own,
govern, manage, and operate a surface water storage project,
subject to the requirement that the ownership, governance,
management, and operation of the surface water storage project
shall advance the purposes set forth in this chapter.

79749.5.  

(a) In approving the California Water Infrastructure
Act of 2014, the people were informed and hereby declare that the
provisions of this chapter are necessary, integral, and essential to
meeting the single object or work of the California Water
Infrastructure Act of 2014. As such, any amendment of the
provisions of this chapter by the Legislature without voter approval
would frustrate the scheme and design that induced voter approval
of this act. The people therefore find and declare that any
amendment of the provisions of this chapter by the Legislature
shall require an affirmative vote of two-thirds of the membership
in each house of the Legislature and voter approval.

(b) This section shall not govern or be used as authority for
determining whether the amendment of any other provision of this
act not contained in this chapter would constitute a substantial
change in the scheme and design of this act requiring voter
approval.

 

begin insert

Chapter   begin insert 5. end insert begin insert Water Quality and Safe Drinking Water end insert

end insert

 

begin insert

begin insert 79750. end insert   

The sum of one billion dollars ($1,000,000,000) shall
be available, upon appropriation by the Legislature, from the fund
for expenditures, grants, and loans for projects to improve water
quality or provide clean or safe drinking water to Californians.

end insert

 

Chapter   begin delete 5. end delete begin insert 6. end insert Fiscal Provisions

 

79810.  

(a) Bonds in the total amount of five billion eight
hundred million dollars ($5,800,000,000), not including the amount
of any refunding bonds issued in accordance with Section 79822,
or so much thereof as is necessary, may be issued and sold to
provide a fund to be used for carrying out the purposes expressed
in this division and to reimburse the General Obligation Bond
Expense Revolving Fund pursuant to Section 16724.5 of the
Government Code. The bonds, when sold, shall be and constitute
valid and binding obligations of the State of California, and the
full faith and credit of the State of California is hereby pledged
for the punctual payment of both the principal of, and interest on,
the bonds as the principal and interest become due and payable.

(b) The Treasurer shall sell the bonds authorized by the
committee pursuant to this section. The bonds shall be sold upon
the terms and conditions specified in a resolution to be adopted
by the committee pursuant to Section 16731 of the Government
Code.

79811.  

The bonds authorized by this division shall be prepared,
executed, issued, sold, paid, and redeemed as provided in the State
General Obligation Bond Law, and all of the provisions of that
law apply to the bonds and to this division and are hereby
incorporated in this division as though set forth in full in this
division, except that Section 16727 of the Government Code shall
not apply to the extent that it is inconsistent with any other
provision of this division.

79812.  

(a) Solely for the purpose of authorizing the issuance
and sale, pursuant to the State General Obligation Bond Law, of
the bonds authorized by this division, the California Water
Infrastructure Committee is hereby created. For purposes of this
division, the California Water Infrastructure Committee is “the
committee” as that term is used in the State General Obligation
Bond Law.

(b) The committee consists of the Director of Finance, the
Treasurer, the Controller, the Director of Water Resources, and
the Secretary of the Natural Resources Agency. Notwithstanding
any other law, any member may designate a deputy to act as that
member in his or her place for all purposes, as though the member
were personally present.

(c) The Treasurer shall serve as chairperson of the committee.

(d) A majority of the members of the committee shall constitute
a quorum of the committee, and may act for the committee.

79813.  

The committee shall determine whether or not it is
necessary or desirable to issue bonds authorized pursuant to this
division to carry out the actions specified in this division and, if
so, the amount of bonds to be issued and sold. Successive issues
of bonds may be authorized and sold to carry out those actions
progressively, and it is not necessary that all of the bonds
authorized to be issued be sold at any one time.

79814.  

“Board,” as defined in Section 16722 of the Government
Code for the purposes of compliance with the State General
Obligation Bond Law, means the department.

79815.  

There shall be collected each year and in the same
manner and at the same time as other state revenue is collected,
in addition to the ordinary revenues of the state, a sum in an amount
required to pay the principal of, and interest on, the bonds each
year, and it is the duty of all officers charged by law with any duty
in regard to the collection of the revenue to do and perform each
and every act that is necessary to collect that additional sum.

79816.  

Notwithstanding Section 13340 of the Government
Code, there is hereby appropriated from the General Fund in the
State Treasury, for the purposes of this division, an amount that
will equal the total of the following:

(a) The sum annually necessary to pay the principal of, and
interest on, bonds issued and sold pursuant to this division, as the
principal and interest become due and payable.

(b) The sum that is necessary to carry out the provisions of
Section 79819, appropriated without regard to fiscal years.

79817.  

The board may request the Pooled Money Investment
Board to make a loan from the Pooled Money Investment Account
in accordance with Section 16312 of the Government Code for the
purpose of carrying out this division. The amount of the request
shall not exceed the amount of the unsold bonds that the committee
has, by resolution, authorized to be sold for the purpose of carrying
out this division. The board shall execute those documents required
by the Pooled Money Investment Board to obtain and repay the
loan. Any amounts loaned shall be deposited in the fund to be
allocated in accordance with this division.

79818.  

Notwithstanding any other provision of this division,
or of the State General Obligation Bond Law, if the Treasurer sells
bonds that include a bond counsel opinion to the effect that the
interest on the bonds is excluded from gross income for federal
tax purposes under designated conditions, the Treasurer may
maintain separate accounts for the bond proceeds invested and for
the investment earnings on those proceeds, and may use or direct
the use of those proceeds or earnings to pay any rebate, penalty,
or other payment required under federal law or take any other
action with respect to the investment and use of those bond
proceeds, as may be required or desirable under federal law in
order to maintain the tax-exempt status of those bonds and to obtain
any other advantage under federal law on behalf of the funds of
this state.

79819.  

For purposes of carrying out this division, the Director
of Finance may authorize the withdrawal from the General Fund
of an amount or amounts not to exceed the amount of the unsold
bonds that have been authorized by the committee to be sold for
the purpose of carrying out this division. Any amounts withdrawn
shall be deposited in the fund. Any money made available under
this section shall be returned to the General Fund, with interest at
the rate earned by the money in the Pooled Money Investment
Account, from proceeds received from the sale of bonds for the
purpose of carrying out this division.

79820.  

All money deposited in the fund that is derived from
premiums and accrued interest on bonds sold pursuant to this
division shall be reserved in the fund and shall be available for
transfer to the General Fund as a credit to expenditures for bond
interest.

79821.  

Pursuant to Chapter 4 (commencing with Section
16720) of Part 3 of Division 4 of Title 2 of the Government Code,
the cost of bond issuance shall be paid out of the bond proceeds.
These costs shall be shared proportionately by each program funded
through this division.

79822.  

The bonds issued and sold pursuant to this division
may be refunded in accordance with Article 6 (commencing with
Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of
the Government Code, which is a part of the State General
Obligation Bond Law. Approval by the electors of the state for the
issuance of the bonds under this division shall include approval
of the issuance of any bonds issued to refund any bonds originally
issued under this division or any previously issued refunding bonds.

79823.  

The proceeds from the sale of bonds authorized by this
division are not “proceeds of taxes” as that term is used in Article
XIII B of the California Constitution, and the disbursement of
these proceeds is not subject to the limitations imposed by that
article.

79824.  

Of the five billion eight hundred million dollars
($5,800,000,000) in bonds authorized in this division, no more
than two billion nine hundred million dollars ($2,900,000,000)
shall be sold by the Treasurer before July 1, 2019.

SEC. 3.  

Section 2 of Chapter 3 of the Seventh Extraordinary
Session, of the Statutes of 2009, as amended by Section 1 of
Chapter 74 of the Statutes of 2012, is repealed.

SEC. 4.  

Section 2 of this act shall be submitted to the voters
at the November 4, 2014, statewide general election in accordance
with provisions of the Government Code and the Elections Code
governing the submission of a statewide measure to the voters.

SEC. 5.  

Section 2 of this act shall take effect upon the approval
by the voters of the California Water Infrastructure Act of 2014
as set forth in that section at the November 4, 2014, statewide
general election.

SEC. 6.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to ensure that the Safe, Clean, and Reliable Drinking
Water Supply Act of 2012 is removed from the November 4, 2014,
statewide general election, and to ensure that the California Water
Infrastructure Act of 2014 is placed on the November 4, 2014,
statewide general election, it is necessary that this act take effect
immediately.