Amended in Assembly April 21, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2738

Introduced by Committee on Environmental Safety and Toxic Materials (Assembly Members Alejo (Chair), Bloom, Stone, and Ting)

February 26, 2014

An act to amend Sections begin insert 25249.7, end insert 116760.40, 116760.44, begin delete and end delete 116761.70 begin insert , and 116835 end insert of the Health and Safety Code, relating to drinking water, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 2738, as amended, Committee on Environmental Safety and Toxic Materials. Safe Drinking Water State Revolving Fund: accounts.

begin insert

(1) Existing law, the Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65), prohibits any person, in the course of doing business, from knowingly and intentionally exposing any individual to a chemical known to the state to cause cancer or reproductive toxicity without giving a specified warning, or from knowingly discharging or releasing that chemical into water or any source of drinking water, except as specified. The act imposes civil penalties of not more than $2,500 per day upon persons who violate those prohibitions, and provides for the enforcement of those prohibitions by the Attorney General, a district attorney, or specified city attorneys or prosecutors, and by any person in the public interest. Existing law, in an action brought by a person in the public interest, requires a person who serves notice of the alleged violation for an exposure to complete, as appropriate, and provides to the alleged violator a notice of special compliance procedure and proof of compliance form, as specified, and prohibits an action from being filed if specified circumstances are met, including the notice being timely served and the alleged violator correcting the alleged violation. Existing law requires the notice to allege that the alleged violator failed to provide clear and reasonable warning of specified exposures and no other violation.

end insert begin insert

This bill would require the notice of special compliance procedure and proof of compliance form to be provided to the alleged violator at the time the notice of the alleged violation is served. The bill would also require that the notice allege that the alleged violator failed to provide clear and reasonable warning regarding specified exposures.

end insert begin delete

Existing

end delete

begin insert (2) end insert begin insert   end insert begin insert Existing end insert law, the Safe Drinking Water State Revolving Fund Law of 1997, authorizes the State Department of Public Health to administer the Safe Drinking Water State Revolving Fund, which is established in the State Treasury and continuously appropriated to the department to provide grants or revolving fund loans for the design and construction of projects for public water systems, as defined, to enable compliance with safe drinking water standards. Existing law authorizes the department to enter into an agreement with the federal government for matching federal contributions into the fund. Existing law requires federal funds to be deposited in the special accounts that are continuously appropriated to the department.

This bill would, in addition, establish the fees and charges account within the fund for deposit of prescribed administrative fees to be expended for administrative costs of providing assistance under these provisions, to the extent consistent with federal law.

Existing law authorizes the department to establish a reasonable fee schedule of administrative fees for loans to be paid by grant applicants, not to exceed 4% of the capitation grant.

This bill would, instead, authorize the administrative fees to include an applicant fee to reimburse the department for the costs of reviewing and approving applications, and a loan disbursement fee to reimburse the department for all other costs. The bill would authorize the department to annually adjust the fee schedule.

Existing law requires payment of charges incurred by the Attorney General in protection of the state’s interest in the use of funds under these provisions, not to exceed1⁄2 of 1% of the fund, to be paid as program expenses rather than administrative costs.

This bill would delete this requirement.

By changing the purposes for which continuously appropriated funds may be expended, this bill would make an appropriation.

begin insert

(3) Existing law requires the State Department of Public Health to adopt regulations setting forth the criteria and procedures for certification of specified water treatment devices. Existing law prohibits the sale or distribution of a water treatment device for which a health or safety claim is made, unless the device is included on the list of water treatment devices published on the department’s Internet Web site and certified by an independent certified organization that has been accredited by the American National Standards Institute.

end insert begin insert

This bill would remove the requirement of certification by an independent certified organization.

end insert

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 25249.7 of the end insert begin insert Health and Safety Code end insert
begin insert is amended to read: end insert

25249.7.  

(a) A person who violates or threatens to violate
Section 25249.5 or 25249.6 may be enjoined in any court of
competent jurisdiction.

(b) (1) A person who has violated Section 25249.5 or 25249.6
is liable for a civil penalty not to exceed two thousand five hundred
dollars ($2,500) per day for each violation in addition to any other
penalty established by law. That civil penalty may be assessed and
recovered in a civil action brought in any court of competent
jurisdiction.

(2) In assessing the amount of a civil penalty for a violation of
this chapter, the court shall consider all of the following:

(A) The nature and extent of the violation.

(B) The number of, and severity of, the violations.

(C) The economic effect of the penalty on the violator.

(D) Whether the violator took good faith measures to comply
with this chapter and the time these measures were taken.

(E) The willfulness of the violator’s misconduct.

(F) The deterrent effect that the imposition of the penalty would
have on both the violator and the regulated community as a whole.

(G) Any other factor that justice may require.

(c) Actions pursuant to this section may be brought by the
Attorney General in the name of the people of the State of
California, by a district attorney, by a city attorney of a city having
a population in excess of 750,000, or, with the consent of the
district attorney, by a city prosecutor in a city or city and county
having a full-time city prosecutor, or as provided in subdivision
(d).

(d) Actions pursuant to this section may be brought by a person
in the public interest if both of the following requirements are met:

(1) The private action is commenced more than 60 days from
the date that the person has given notice of an alleged violation of
Section 25249.5 or 25249.6 that is the subject of the private action
to the Attorney General and the district attorney, city attorney, or
prosecutor in whose jurisdiction the violation is alleged to have
occurred, and to the alleged violator. If the notice alleges a
violation of Section 25249.6, the notice of the alleged violation
shall include a certificate of merit executed by the attorney for the
noticing party, or by the noticing party, if the noticing party is not
represented by an attorney. The certificate of merit shall state that
the person executing the certificate has consulted with one or more
persons with relevant and appropriate experience or expertise who
has reviewed facts, studies, or other data regarding the exposure
to the listed chemical that is the subject of the action, and that,
based on that information, the person executing the certificate
believes there is a reasonable and meritorious case for the private
action. Factual information sufficient to establish the basis of the
certificate of merit, including the information identified in
paragraph (2) of subdivision (h), shall be attached to the certificate
of merit that is served on the Attorney General.

(2) Neither the Attorney General, a district attorney, a city
attorney, nor a prosecutor has commenced and is diligently
prosecuting an action against the violation.

(e) A person bringing an action in the public interest pursuant
to subdivision (d) and a person filing an action in which a violation
of this chapter is alleged shall notify the Attorney General that the
action has been filed. Neither this subdivision nor the procedures
provided in subdivisions (f) to (k), inclusive, affect the
requirements imposed by statute or a court decision in existence
on January 1, 2002, concerning whether a person filing an action
in which a violation of this chapter is alleged is required to comply
with the requirements of subdivision (d).

(f) (1) A person filing an action in the public interest pursuant
to subdivision (d), a private person filing an action in which a
violation of this chapter is alleged, or a private person settling a
violation of this chapter alleged in a notice given pursuant to
paragraph (1) of subdivision (d), shall, after the action or violation
is subject either to a settlement or to a judgment, submit to the
Attorney General a reporting form that includes the results of that
settlement or judgment and the final disposition of the case, even
if dismissed. At the time of the filing of a judgment pursuant to
an action brought in the public interest pursuant to subdivision (d),
or an action brought by a private person in which a violation of
this chapter is alleged, the plaintiff shall file an affidavit verifying
that the report required by this subdivision has been accurately
completed and submitted to the Attorney General.

(2) A person bringing an action in the public interest pursuant
to subdivision (d), or a private person bringing an action in which
a violation of this chapter is alleged, shall, after the action is either
subject to a settlement, with or without court approval, or to a
judgment, submit to the Attorney General a report that includes
information on any corrective action being taken as a part of the
settlement or resolution of the action.

(3) The Attorney General shall develop a reporting form that
specifies the information that shall be reported, including, but not
limited to, for purposes of subdivision (e), the date the action was
filed, the nature of the relief sought, and for purposes of this
subdivision, the amount of the settlement or civil penalty assessed,
other financial terms of the settlement, and any other information
the Attorney General deems appropriate.

(4) If there is a settlement of an action brought by a person in
the public interest under subdivision (d), the plaintiff shall submit
the settlement, other than a voluntary dismissal in which no
consideration is received from the defendant, to the court for
approval upon noticed motion, and the court may approve the
settlement only if the court makes all of the following findings:

(A) The warning that is required by the settlement complies
with this chapter.

(B) The award of attorney’s fees is reasonable under California
law.

(C) The penalty amount is reasonable based on the criteria set
forth in paragraph (2) of subdivision (b).

(5) The plaintiff subject to paragraph (4) has the burden of
producing evidence sufficient to sustain each required finding.
The plaintiff shall serve the motion and all supporting papers on
the Attorney General, who may appear and participate in a
proceeding without intervening in the case.

(6) Neither this subdivision nor the procedures provided in
subdivision (e) and subdivisions (g) to (k), inclusive, affect the
requirements imposed by statute or a court decision in existence
on January 1, 2002, concerning whether claims raised by a person
or public prosecutor not a party to the action are precluded by a
settlement approved by the court.

(g) The Attorney General shall maintain a record of the
information submitted pursuant to subdivisions (e) and (f) and
shall make this information available to the public.

(h) (1) Except as provided in paragraph (2), the basis for the
certificate of merit required by subdivision (d) is not discoverable.
However, nothing in this subdivision precludes the discovery of
information related to the certificate of merit if that information
is relevant to the subject matter of the action and is otherwise
discoverable, solely on the ground that it was used in support of
the certificate of merit.

(2) Upon the conclusion of an action brought pursuant to
subdivision (d) with respect to a defendant, if the trial court
determines that there was no actual or threatened exposure to a
listed chemical, the court may, upon the motion of that alleged
violator or upon the court’s own motion, review the basis for the
belief of the person executing the certificate of merit, expressed
in the certificate of merit, that an exposure to a listed chemical had
occurred or was threatened. The information in the certificate of
merit, including the identity of the persons consulted with and
relied on by the certifier, and the facts, studies, or other data
reviewed by those persons, shall be disclosed to the court in an
in-camera proceeding at which the moving party shall not be
present. If the court finds that there was no credible factual basis
for the certifier’s belief that an exposure to a listed chemical had
occurred or was threatened, then the action shall be deemed
frivolous within the meaning of Section 128.7 of the Code of Civil
Procedure. The court shall not find a factual basis credible on the
basis of a legal theory of liability that is frivolous within the
meaning of Section 128.7 of the Code of Civil Procedure.

(i) The Attorney General may provide the factual information
submitted to establish the basis of the certificate of merit on request
to a district attorney, city attorney, or prosecutor within whose
jurisdiction the violation is alleged to have occurred, or to any
other state or federal government agency, but in all other respects
the Attorney General shall maintain, and ensure that all recipients
maintain, the submitted information as confidential official
information to the full extent authorized in Section 1040 of the
Evidence Code.

(j) In an action brought by the Attorney General, a district
attorney, a city attorney, or a prosecutor pursuant to this chapter,
the Attorney General, district attorney, city attorney, or prosecutor
may seek and recover costs and attorney’s fees on behalf of a party
who provides a notice pursuant to subdivision (d) and who renders
assistance in that action.

(k) Any person who serves a notice of alleged violation pursuant
to paragraph (1) of subdivision (d) for an exposure identified in
subparagraph (A), (B), (C), or (D) of paragraph (1) shall complete,
as appropriate, and provide to the alleged violator begin insert at the time the
notice of alleged violation is served end insert , a notice of special compliance
procedure and proof of compliance form pursuant to subdivision
(l) and shall not file an action for that exposure against the alleged
violator, or recover from the alleged violator in a settlement any
payment in lieu of penalties or any reimbursement for costs and
attorney’s fees, if all of the following conditions have been met:

(1) The notice given pursuant to paragraph (1) of subdivision
(d) was served on or after the effective date of the act amending
this section during the 2013-14 Regular Session and alleges that
the alleged violator failed to provide clear and reasonable warning
as required under Section 25249.6 regarding one or more of the
begin delete following, and no other violation end delete begin insert following end insert :

(A) An exposure to alcoholic beverages that are consumed on
the alleged violator’s premises to the extent onsite consumption
is permitted by law.

(B) An exposure to a chemical known to the state to cause cancer
or reproductive toxicity in a food or beverage prepared and sold
on the alleged violator’s premises primarily intended for immediate
consumption on or off premises, to the extent of both of the
following:

(i) The chemical was not intentionally added.

(ii) The chemical was formed by cooking or similar preparation
of food or beverage components necessary to render the food or
beverage palatable or to avoid microbiological contamination.

(C) An exposure to environmental tobacco smoke caused by
entry of persons (other than employees) on premises owned or
operated by the alleged violator where smoking is permitted at any
location on the premises.

(D) An exposure to chemicals known to the state to cause cancer
or reproductive toxicity in engine exhaust, to the extent the
exposure occurs inside a facility owned or operated by the alleged
violator and primarily intended for parking noncommercial
vehicles.

(2) Within 14 days after service of the notice, the alleged violator
has done all of the following:

(A) Corrected the alleged violation.

(B) (i) Agreed to pay a civil penalty for the alleged violation
of Section 25496.6 in the amount of five hundred dollars ($500),
to be adjusted quinquennially pursuant to clause (ii), per facility
or premises where the alleged violation occurred, of which 75
percent shall be deposited in the Safe Drinking Water and Toxic
Enforcement Fund, and 25 percent shall be paid to the person that
served the notice as provided in Section 25249.12.

(ii) On April 1, 2019, and at each five-year interval thereafter,
the dollar amount of the civil penalty provided pursuant to this
subparagraph shall be adjusted by the Judicial Council based on
the change in the annual California Consumer Price Index for All
Urban Consumers, published by the Department of Industrial
Relations, Division of Labor Statistics, for the most recent five-year
period ending on December 31 of the year preceding the year in
which the adjustment is made, rounded to the nearest five dollars
($5). The Judicial Council shall quinquennially publish the dollar
amount of the adjusted civil penalty provided pursuant to this
subparagraph, together with the date of the next scheduled
adjustment.

(C) Notified, in writing, the person that served the notice of the
alleged violation, that the violation has been corrected. The written
notice shall include the notice of special compliance procedure
and proof of compliance form specified in subdivision (l), which
was provided by the person serving notice of the alleged violation
and which shall be completed by the alleged violator as directed
in the notice.

(3) The alleged violator shall deliver the civil penalty to the
person that served the notice of the alleged violation within 30
days of service of that notice, and the person that served the notice
of violation shall remit the portion of the penalty due to the Safe
Drinking Water and Toxic Enforcement Fund within 30 days of
receipt of the funds from the alleged violator.

(l)  The notice required to be provided to an alleged violator
pursuant to subdivision (k) shall be presented as follows:

PRINTER PLEASE NOTE: TIP-IN MATERIAL TO BE
INSERTED

[2 pages]

(m) An alleged violator may satisfy the conditions set forth in
subdivision (k) only one time for a violation arising from the same
exposure in the same facility or on the same premises.

(n) Nothing in subdivision (k) shall prevent the Attorney
General, a district attorney, a city attorney, or a prosecutor in whose
jurisdiction the violation is alleged to have occurred from filing
an action pursuant to subdivision (c) against an alleged violator.
In any such action, the amount of any civil penalty for a violation
shall be reduced to reflect any payment made by the alleged
violator for the same alleged violation pursuant to subparagraph
(B) of paragraph (2) of subdivision (k).

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 116760.40 of the Health and Safety Code is
amended to read:

116760.40.  

The department may undertake any of the following
actions to implement the Safe Drinking Water State Revolving
Fund:

(a) Enter into agreements with the federal government for federal
contributions to the fund.

(b) Accept federal contributions to the fund.

(c) Use moneys in the fund for the purposes permitted by the
federal act.

(d) Provide for the deposit of matching funds and other available
and necessary moneys into the fund.

(e) Make requests, on behalf of the state, for deposit into the
fund of available federal moneys under the federal act.

(f) Determine, on behalf of the state, that public water systems
that receive financial assistance from the fund will meet the
requirements of, and otherwise be treated as required by, the federal
act.

(g) Provide for appropriate audit, accounting, and fiscal
management services, plans, and reports relative to the fund.

(h) Take additional incidental action as may be appropriate for
adequate administration and operation of the fund.

(i) Enter into an agreement with, and accept matching funds
from, a public water system. A public water system that seeks to
enter into an agreement with the department and provide matching
funds pursuant to this subdivision shall provide to the department
evidence of the availability of those funds in the form of a written
resolution, or equivalent document, from the public water system
before it requests a preliminary loan commitment.

(j) Charge public water systems that elect to provide matching
funds a fee to cover the actual cost of obtaining the federal funds
pursuant to Section 1452(e) of the federal act (42 U.S.C. Sec.
300j-12) and to process the loan application. The fee shall be
waived by the department if sufficient funds to cover those costs
are available from other sources.

(k) Use money returned to the fund under Section 116761.85
and any other source of matching funds, if not prohibited by statute,
as matching funds for the federal administrative allowance under
Section 1452(g) of the federal act (42 U.S.C. Sec. 300j-12).

(l) Establish separate accounts or subaccounts as required or
allowed in the federal act and related guidance, for funds to be
used for administration of the fund and other purposes. Within the
fund the department shall establish the following accounts,
including, but not limited to:

(1) A fund administration account for state expenses related to
administration of the fund pursuant to Section 1452(g)(2) of the
federal act.

(2) A water system reliability account for department expenses
pursuant to Section 1452(g)(2)(A), (B), (C), or (D) of the federal
act.

(3) A source protection account for state expenses pursuant to
Section 1452(k) of the federal act.

(4) A small system technical assistance account for department
expenses pursuant to Section 1452(g)(2) of the federal act.

(5) A state revolving loan account pursuant to Section 1452(a)(2)
of the federal act.

(6) A wellhead protection account established pursuant to
Section 1452(a)(2) of the federal act.

(7) A fees and charges account for state expenses in providing
assistance under this chapter.

(m) Deposit federal funds for administration and other purposes
into separate accounts or subaccounts as allowed by the federal
act.

(n) Determine, on behalf of the state, whether sufficient progress
is being made toward compliance with the enforceable deadlines,
goals, and requirements of the federal act and the California Safe
Drinking Water Act, Chapter 4 (commencing with Section 116270).

(o) To the extent permitted under federal law, including, but
not limited to, Section 1452(a)(2) and (f)(4) of the federal Safe
Drinking Water Act (42 U.S.C. Sec. 300j-12(a)(2) and (f)(4)), use
any and all amounts deposited in the fund, including, but not
limited to, loan repayments and interest earned on the loans, as a
source of reserve and security for the payment of principal and
interest on revenue bonds, the proceeds of which are deposited in
the fund.

(p) Request the Infrastructure and Economic Development Bank
(I-Bank), established under Chapter 2 (commencing with Section
63021) of Division 1 of Title 6.7 of the Government Code, to issue
revenue bonds, enter into agreements with the I-Bank, and take
all other actions necessary or convenient for the issuance and sale
of revenue bonds pursuant to Article 6.3 (commencing with Section
63048.55) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code. The purpose of the bonds is to augment the
fund.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 116760.44 of the Health and Safety Code is
amended to read:

116760.44.  

(a) The department may deposit administrative
fees and charges paid by public water systems and other available
and necessary money into the administrative account of the fund.

(b) (1) Notwithstanding subdivision (a), the department may
deposit the following moneys into the fees and charges account:

(A) Administrative fees received pursuant to Section 116761.70.

(B) Notwithstanding Section 16475 of the Government Code,
interest earned upon the moneys deposited into the fees and charges
account.

(2) The department may expend moneys in the fees and charges
account for administrative costs of providing assistance under this
chapter, to the extent consistent with federal law and regulations.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Section 116761.70 of the Health and Safety Code is
amended to read:

116761.70.  

(a)  Not more than 4 percent of the capitalization
grant may be used by the department for administering this chapter.
The department may establish a reasonable schedule of
administrative fees for loans, which shall be paid by the applicant
and recipient, as appropriate, to reimburse the state for the costs
of the state administration of this chapter.

(b) The fee schedule authorized pursuant to subdivision (a) shall
be designed to generate total annual revenue in an amount that, as
closely as practicable, approximates without exceeding, the total
annual cost to the department for administration of this chapter,
including, but not limited to, the costs of servicing loans made
pursuant to this chapter.

(c) The fee schedule may contain, and the department may
assess, both of the following administrative fees:

(1) An application fee, to be paid by all applicants, to reimburse
the department for the costs of reviewing and approving the
application. The application fee shall be collected at the time of
submission of the application.

(2) A loan disbursal fee, to be paid by loan recipients, to pay
all other costs of the department associated with administering this
chapter, including, but not limited to, costs associated with
servicing the loan. In total, the loan disbursal fee shall not exceed
1 percent of the principal loan amount and may be assessed on, or
at the time of, each disbursement of loan funds. The department
may invoice the funding recipient for the loan disbursement fee.
The fee shall be due and payable by the funding recipient within
90 days following the date of the invoice. Loan disbursal fees shall
not be deferred during project construction.

(d) Notwithstanding subdivision (a), (b), or (c), if a funding
recipient demonstrates to the department that the assessment of
administrative fees would make the costs of the loan unaffordable
to a recipient, the department shall waive or reduce the fees, as
appropriate.

(e) The department shall annually adjust the fee schedule of
charges for loans to be issued in that fiscal year to set the fees at
a rate that will generate total annual revenue in an amount that, as
closely as practicable, approximates without exceeding, the total
annual cost to the department for administration of this chapter
during that fiscal year, including, but not limited to, the costs of
servicing loans made pursuant to this chapter.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 116835 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

116835.  

(a) A water treatment device for which a health or
safety claim is made shall not be sold or otherwise distributed
unless the device is included on the list of water treatment devices
published on the department’s Internet Web site pursuant to Section
begin delete 116845 and has been certified by an independent certified
organization that has been accredited by the American National
Standards Institute end delete begin insert 116845 end insert .

(b) After July 1, 2015, the exterior packaging of a water
treatment device for which a health or safety claim is made, and
that is offered for sale in a retail establishment in California, shall
clearly identify the contaminant or contaminants that the device
has been certified pursuant to subdivision (a) to remove or reduce.
If a device has been certified to remove or reduce more than five
contaminants, at least five contaminants shall be listed on the
exterior packaging followed by a statement directing consumers
to visit the manufacturer’s Internet Web site to obtain information
regarding additional contaminants that the device is certified to
remove or reduce.

(c) After July 1, 2015, the manufacturer of a water treatment
device for which it makes a health or safety claim shall include
with each water treatment device offered for sale in California a
decal that may be affixed to the device by the consumer that states,
at a minimum, the following:

“Please refer to the owner’s manual for proper maintenance and
operation. If this device is not maintained and operated as specified
in the owner’s manual, there is a risk of exposure to contaminants.
For more information, visit the manufacturer’s Internet Web site
at
Manufacturer’s Internet Web Site or the California Department of
Public Health’s Internet Web site at www.cdph.ca.gov.”