BILL ANALYSIS �
AB 2189
Page 1
Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2189 (Garcia) - As Amended: April 22, 2014
SUBJECT : Water replenishment districts: replenishment
assessment.
SUMMARY : Makes a number of changes to the Water Replenishment
District of Southern California's (District) Act (Act) as to how
the Replenishment Assessment (RA) is calculated and imposed.
Specifically, this bill :
1)Revises requirements in the Act regarding the findings and
order required for the District's RA, as follows:
a) Changes the date in statute for when the Board of
Directors (Board) is required to, by resolution, make a
number of findings, from the second Tuesday in May (current
law) to the second Tuesday in March;
b) Requires, as part of the existing requirement for the
Board to make a finding on the changes during the preceding
water year in the pressure levels or piezometric heights
of the groundwater contained within pressure-level areas of
the district, that the Board additionally include the
effects of the changes in the pressure levels or
piezometric heights upon the groundwater supplies within
the District;
c) Requires, as part of the existing requirement for the
Board to make a finding on the estimated changes during the
current water year in the pressure levels or piezometric
heights of the groundwater contained within pressure-level
areas of the District, that the Board estimate the effects
of the changes in the pressure levels of piezometric
heights upon the groundwater supplies within the District;
and,
d) Requires, as part of the existing requirement for the
Board to make a finding on whether any contaminants should
be removed from groundwater supplies during the ensuing
fiscal year, the Board to estimate the costs of removing
contaminants from groundwater supplies of other actions
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under existing law related to the purposes and powers of
the District.
2)Places additional requirements on the Board of the District
to, on or before the second Tuesday in March of each year,
comply with the following:
a) The findings and order required for the District's RA,
including the additional requirements contained in 1),
above; and,
b) The findings and order required for the District's RA
pursuant to existing law which requires the Board, based in
the findings and order specified in a), by resolution, to
determine what portion, if any, of the estimated cost of
purchasing water for replenishment for the ensuing fiscal
year shall be paid for by an RA, and other determinations,
as specified in existing law.
3)Requires the Board, prior to publishing a notice that a public
hearing will be held for the purpose of determining whether
and to what extent the estimated costs for the ensuing year to
be paid for by the RA, if the Board by resolution determines
that all or a portion of the funds needed to purchase
replenishment water, or to remove contaminants from
groundwater shall be raised by the levy of an RA, to do the
following:
a) The Board must make findings and determinations as
specified in 1), and 2), above;
b) Determine, to what extent the estimated costs of
purchasing replenishment water, removing contaminants from
the groundwater supplies of the District, or exercising any
other powers under the section in the Act that enumerates
the purposes and powers of the District;
c) Deletes the date in existing law that specifies when the
public hearing will be held;
d) Requires the Board to identify the water-producing
facilities within the District from which the groundwater
is produced as the facilities that would be subject to the
proposed RA, and give written notice by mail to, owners of
those water-producing facilities. Requires the notice to
be provided at least 45 calendar days before the date of
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the hearing, and to include all of the following:
i) The rate of the RA proposed to be imposed on each
water-producing facility;
ii) The basis upon which the RA was calculated, as
determined by the Board, as specified;
iii) The reason for the RA; and,
iv) The date, time, and location of the public hearing,
as required by existing law.
e) Allows the owner of a water-producing facility that
would be subject to the proposed RA to submit a written
protest to the Board opposing the proposed RA, and requires
each protest to be weighted based on the amount of
groundwater produced from the water-producing facility in
the prior water year, as reported pursuant to existing law,
as applicable.
f) Requires, at the conclusion of the public hearing, the
Board to consider all written protests against the proposed
RA, and if a majority protest exists, the Board is
prohibited from imposing an RA that exceeds the rate of the
prior fiscal year, if the RA was in compliance with 4),
below. Provides that a majority protest exists if the
submitted written protests against the RA represent a
majority of the total weighted votes, determined by the
total amount of groundwater produced from the
water-producing facility in the prior year, as reported
pursuant to existing law, as applicable.
g) Requires the Board to determine the amount of the
proposed RA that would be imposed upon the water-producing
facilities within the District.
4)Prohibits an RA from being extended, imposed, or increased,
unless all of the following are met:
a) Revenue derived from the RA does not exceed the funds
required by the District to provide service to the
water-producing facilities within the District;
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b) Revenue derived from the RA is not used for any purpose
other than the purposes for which the RA was imposed; and,
c) The amount of the RA imposed upon a water-producing
facility does not exceed the proportional costs of the
service attributable to the water-producing facility.
5)Prohibits an RA from being imposed upon a water-producing
facility for a service unless that service is actually used
by, or immediately available to, that water-producing
facility.
6)Prohibits RAs based on the cost of potential or future
services.
7)Prohibits an RA from being imposed for general services that
are not directly related to the District's services to
water-producing facilities.
8)Requires the public hearing held by the Board for the RA to be
held by the second Tuesday of May (first Tuesday in May is
existing law).
9)Makes a number of changes to the findings and order related to
the RA, as follows:
a) Requires the District to comply with 3), above, if the
Board determines that an RA shall be levied upon the
production of groundwater from groundwater supplies within
the district; and,
b) Strikes existing law related to the imposition of the RA
that specifies that the RA shall be fixed by the Board at a
uniform rate per acre-foot of groundwater so produced and
the requirements that the producers of that groundwater
shall pay the RA to the District at the times and in the
manner provided in existing law, and instead, requires the
RA to be fixed by the Board at a rate per acre-foot of
groundwater that is produced in compliance with 4), through
7), above, inclusive.
10)Makes a number of technical corrections to provisions in the
Act.
11)Provides that if the Commission on State Mandates determines
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that this bill contains costs mandated by the state, that
reimbursement to local agencies and school districts for those
costs shall be made, as specified.
EXISTING LAW :
1)Provides, under the Water Replenishment District Act, for the
formation of a water replenishment district and grants
authority to a water replenishment district relating to the
replenishment, protection, and preservation of groundwater
supplies within that District.
2)Requires, not later than the second Tuesday in February of
each year, the Board to order an engineering survey and report
to be made regarding the ground water supplies of the
District, to include a list of specified records, data, and
other reports.
3)Requires, on or before the second Tuesday in March of each
year (provided the survey and report referenced in 2), above,
has been made), the Board to declare whether funds shall be
raised to purchase water for replenishment during the next
ensuing fiscal year and whether the funds shall be raised by a
water charge, a general assessment, an RA, or, a combination
of any two or more of the foregoing, and whether the funds
raised will benefit, directly or indirectly, all of the
persons or real property and improvements within the District.
4)Requires, if the Board, by resolution, determines that all or
a portion of the funds needed to purchase replenishment water,
or to remove contaminants from the groundwater supplies
of the District, or to exercise any other power under the Act
that specifies powers and duties of the District, shall be
raised by the levy of an RA, the Board to immediately publish
a notice that a public hearing will be held on the second
Tuesday of April for the purpose of determining whether and to
what extent the estimated costs thereof for the ensuing year
shall be paid for by an RA. The notice shall contain a copy of
the Board's resolution, the time and place of the hearing, and
an invitation to all interested parties to attend and be heard
in support or opposition to the proposed assessment, the
engineering survey and report, and the board's determination,
and shall invite inspection of the engineering survey and
report upon which the Board acted.
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5)Requires the hearing to be held before the Board and a quorum
to be present. Allows the hearing to be adjourned from time
to time by the president or presiding officer or hearing
officer but shall be completed by the first Tuesday in May
next following.
6)Requires, upon completing the hearing, but no later than the
second Tuesday in May, the Board to, by resolution, find all
of the following:
a) The annual overdraft for the preceding water year;
b) The estimated annual overdraft for the current water
year;
c) The estimated annual overdraft for the ensuing water
year;
d) The accumulated overdraft as of the last day of the
preceding water year;
e) The estimated accumulated overdraft as of the last day
of the current water year;
f) The total production of groundwater from the groundwater
supplies within the District during the preceding water
year;
g) The estimated total production of groundwater from the
groundwater supplies within the District for the current
water year;
h) The estimated total production of groundwater from the
groundwater supplies within the District for the ensuing
water year;
i) The changes during the preceding water year in the
pressure levels or piezometric heights of the groundwater
contained within pressure-level areas of the district, and
the effects thereof upon the groundwater supplies within
the district;
j) The estimated changes during the current water year in
the pressure levels or piezometric heights of the
groundwater contained within pressure-level areas of the
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district, and the estimated effects thereof upon the
groundwater supplies within the district;
aa) The quantity of water that should be purchased for the
replenishment of the groundwater supplies of the district
during the ensuing water year;
bb) The source and estimated cost of water available for the
replenishment;
cc) The estimated costs of replenishing the groundwater
supplies with the water so purchased;
dd) The estimated costs of purchasing, in water years
succeeding the ensuing water year, that portion of the
quantity of water which should be purchased for the
replenishment of the groundwater supplies of the District
during the ensuing water year, but which is estimated to be
unavailable for purchase during the ensuing water year;
estimated costs shall be based on the estimated price of
water for replenishment purposes during the ensuing water
year;
ee) The estimated rate of the RA required to be levied upon
the production of groundwater from the groundwater supplies
within the District during the ensuing fiscal year for the
purposes of accomplishing the replenishment and providing a
reserve fund to purchase in future years, when available,
that portion of the quantity of water which should be
purchased for the replenishment of the groundwater supplies
of the District during the ensuing water year, but which is
estimated to be unavailable for purchase during that
ensuing water year;
ff) Whether any contaminants should be removed from
groundwater supplies during the ensuing fiscal year, and
whether any other actions under Section 60224 should be
undertaken during the ensuing fiscal year, the estimated
costs thereof, and the estimated additional rate of an RA
required to be levied upon the production of groundwater
from the groundwater supplies within the District during
the ensuing fiscal year for those purposes;
gg) Whether any program for removal of contaminants or other
actions under Section 60224 should be a multiyear program
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or is a continuation of a previously authorized multiyear
program; and,
hh) The amount, if any, by which the estimated reserve funds
on hand at the end of the current fiscal year will exceed
the annual reserve fund limit determined pursuant to
Section 60290.
7)Requires, based on the findings pursuant to 6), above, the
Board to, by resolution, determine all of the following:
a) What portion, if any, of the estimated cost of
purchasing water for replenishment for the ensuing fiscal
year shall be paid for by an RA;
b) What portion, not exceeding 25% of the above portion, of
the estimated cost of purchasing in the future that
quantity of water which should be purchased during the
ensuing water year, but which is estimated to be
unavailable during that year, shall be raised by an RA;
c) What portion of the estimated costs of removing
contaminants from groundwater supplies and of taking other
actions under Section 60224 during the ensuing fiscal year
shall be paid for by an RA;
d) What portion, if any, of the cost of a capital
improvement project for replenishment purposes shall be
paid for by an RA; and,
e) What portion, if any, of the cost of a capital
improvement project undertaken pursuant to Section 60224
shall be paid for by an RA.
8)Requires, if the Board determines that an RA shall be levied
upon the production of groundwater from groundwater supplies
within the District during the ensuing fiscal year,
immediately following the making of that determination the
Board to levy an RA on the production of groundwater from the
groundwater supplies within the District during the fiscal
year commencing on July 1st next, and the RA shall be fixed by
the board at a uniform rate per acre-foot of groundwater so
produced.
9)Requires the producers of that groundwater shall pay the RA to
the District at the times and in the manner provided in this
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division.
FISCAL EFFECT : This bill is keyed fiscal
COMMENTS :
1)Background on the District . The Water Replenishment District
of Southern California, which was established by voters in Los
Angeles County in 1959, is the state's only water
replenishment district. The District was established while the
Los Angeles County court proceeded through adjudication of
groundwater rights in the Central Basin and West Coast Basin
aquifers. The main function of the District is to recharge
water into groundwater basins for later withdrawal by water
purveyors, and the District has certain legal authorities to
accomplish this purpose. The District earns revenue by
charging water RAs to the agencies, utilities, and companies
that pump groundwater. The District also gets property tax
revenues from its share of the 1% property tax rate. Funds
are used to buy surface water that then percolates into the
groundwater basin.
2)Purpose of this bill . This bill requires the District's Board
to make specified findings and determinations before holding a
public hearing and would require the Board to identify
water-producing facilities within the District that would be
subject to the proposed RA and give written notice by mail to
the owners of those water-producing facilities. The bill
would authorize an owner of a water-producing facility to
submit a written protest opposing the RA and would prohibit
the Board from imposing an RA that exceeds the rate of the
prior fiscal year, if a majority protest exists. The bill
also prohibits an RA from being extended, imposed, or
increased under certain conditions.
The bill is author-sponsored.
3)Author's statement . According to the author, "This bill
conforms the Replenishment Assessment statutory process to the
constitutional requirements of Proposition 218. It ensures
accountability and transparency of the Replenishment
Assessment. Water service providers and other pumpers will
now have meaningful review of WRD's proposed expenses and the
ability to adequately represent ratepayers in that process.
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"The Bill further prevents the yearly $500,000 notice expense.
Ratepayer funds should go towards water projects that benefit
ratepayers -- not administrative notice costs."
4)Replenishment Assessment . The District has, for the last 50
years, imposed the RA on a uniform basis which was negotiated
among the affected parties based on geotechnical data that
supports the existing practice and is consistent with the Act.
The Board is required to follow specified procedures and
processes when determining the amount of and whether to assess
an RA, and then has to hold a public hearing to determine
whether an RA should be levied. After the hearing, the Board
must make certain findings and determinations, and, if the
Board determines that an RA should be levied upon the
production of groundwater from groundwater supplies, the Act
requires the Board to fix the RA at a uniform rate per
acre-foot of groundwater produced.
5)Pending litigation . The District opposes the bill because the
bill interferes with pending litigation. According to the
District, "The April 25, 2011 writ hearing transcript on the
question as to whether Proposition 218 applies to the
replenishment assessment imposed under the Act in the Water
Code clearly states that while the trial court judge believes
Proposition 218 applies, he is not going to issue a final
order pending resolution of the damages phase of the trial.
So, no final ruling has been issued, the District is not
compelled by a final order to comply with Proposition 218, and
the District has not had an opportunity to appeal the
tentative ruling."
The District notes that "AB 2189 clearly presumes that a final
decision has been rendered by the courts or presumes that
Proposition 218 applies. Neither is correct; therefore, AB
2189 seeks a legislative resolution on the matter before the
court has reached a final conclusion."
6)Related legislation .
a) SB 620 (Wright), Chapter 638, Statues of 2013, repealed
a limitation on the expenditure of the District's annual
reserve fund for a five-year period and required the
District to establish a budget advisory committee for
purposes of reviewing the RA and the District's annual
operating budget. The District is required to consult with
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that advisory committee and to maintain records regarding
the recommendations of the budget advisory committee and
the final decisions made by the Board of the District.
Provisions related to the budget advisory committee become
inoperative on June 30, 2019, and are repealed as of
January 1, 2020.
b) AB 2259 (Ridley-Thomas) of 2014, requires actions to
challenge an RA for the District to be commenced within 120
days of the adoption of the resolution or motion to levy
the RA. The bill passed this Committee with a 9-0 vote on
April 9, 2014, and is currently pending in the Senate.
7)Prior legislation .
a) Early versions of AB 620 (De la Torre) of 2007 would
have required the District to compute its groundwater RA on
a per basin amount. The bill was later amended to require
the Department of Water Resources to conduct a study to
determine the basin specific charges, including underflow,
in each basin within the District. The bill was held in
the Senate Appropriations Committee.
b) AB 954 (Charles Calderon) of 2011 would have required
additional information in the engineering survey and report
undertaken by the District and would have made a number of
changes to the Act related to the RA. The bill was never
heard in a policy committee.
8)Arguments in support . Supporters argue that the District
refuses to comply with the argument that procedures written
into its Act in 1959 are incompatible with the constitutional
mandate passed in 1996 (Proposition 218) and that this bill
fixes that and takes away any excuse the District has to
continue violating the law. Supporters also argue that the
bill ensures the transparency and accountability owed to
groundwater pumpers (the water purveyors) and the residents.
Supporters additionally point to "what appellate courts have
clearly repeated over and over - that fees imposed upon
groundwater production such as [the District's RA] are subject
to Proposition 218" and that trial courts have recently
applied the appellate decisions to other groundwater pumping
fees similar to [the District's RA], including the following
cases: Great Oaks Water Company v. Santa Clara Valley Water
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District, City of Buenaventura v. United Conservation Water
District, and City of Cerritos, et al. v. WRD.
Supporters also argue that the bill is no different than
actions the Legislature has taken to incorporate the procedure
of Proposition 218 into other Acts, including municipal water
districts.
9)Arguments in opposition . Opponents argue that creating a
system where one entity pays a different assessment from
another would only create more litigation which would be
detrimental to the interests of ratepayers, who would foot the
bill for the fight. Additionally, the voting procedure called
for in the bill, whereby the operators of a water-producing
facility "may submit one written protest for each parcel with
a water-producing facility" would unduly bias the governance
process in favor of the basin with the most water-producing
facility.
Opponents also argue that since the RA is based on the
quantity of water extracted, not the costs associated with the
parcel of land or the operation, it is not appropriate for the
bill to convert this operating fee into a parcel-related
charge and that the bill would require the RA to be based on
the costs other than those associated with replenishing and
maintaining water quality in the basins, which by itself is
cause for opposition.
The District argues that changing to a proportional
assessment, where one water-producing facility pays one
assessment and another water-producing facility pays a
different assessment, which could lead to the imposition of a
different assessment for each facility,
will inevitably lead to litigation filed by the West Coast
Basin pumpers against the Central
Basin pumpers for the value of lost underflow from the Central
Basin to the West Coast Basin.
REGISTERED SUPPORT / OPPOSITION :
Support
Bell Residents Club
Cities of Bell, Bellflower, Cerritos, Downey, Montebello, Pico
Rivera, Signal Hill
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Downey Chamber of Commerce
Mothers of East Los Angeles
Opposition
AFSCME Local 1902 Employee's Association of the Water
Replenishment District
of Southern California
Association of California Water Agencies
California Groundwater Coalition
California Water Association
California Water Service Company
Cities of El Segundo, Lakewood, and Torrance
Councilmember Bill De Witt, City of Southgate
East Yard Communities for Environmental Justice
Groundwater Resources Association of California
Long Beach Board of Water Commissioners
Maywood Chamber of Commerce
Pico Water District
South Bay Latino Chamber of Commerce
Water Replenishment District of Southern California
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958