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: SB 927 HEARING DATE: April 22, 2014
AUTHOR: Cannella and Vidak URGENCY: Yes
VERSION: January 29, 2014 CONSULTANT: Dennis O'Connor
REFERRALS: Environmental Quality & FISCAL: Yes
Governance and Finance
SUBJECT: Safe, Clean, and Reliable Drinking Water Supply Act of
2014
BACKGROUND AND EXISTING LAW
In November 2009, the legislature passed and the governor signed
SBX7 2 (Cogdill). Also known as the Safe, Clean, and Reliable
Drinking Water Supply Act of 2010, that law placed on the
November 2010 ballot an $11.14 B general obligation bond before
the voters to fund various water resources programs and
projects.
The legislature has amended the bond proposal three times,
including twice delaying the placement of the bond before the
voters. After initially being delayed to the November 2012
ballot, the bond was subsequently delayed to the November 2014
ballot, where it remains now.
Over the course of the last year or two, there has been much
discussion on whether the public would support the current
November 2014 bond proposal. Moreover, if the voters would not
support that bond proposal, what, if anything, should take its
place on the ballot?
To help answer those questions, this Committee held a joint
hearing in February with the Senate Governance and Finance
Committee titled "Overview of California's Debt Condition:
Priming the Pump for a Water Bond." That hearing explored
California's overall debt condition, the fund balances for
various bond funded programs, and the implications for the
November 2014 water bond.
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This was followed two weeks later by a second hearing on March
12, 2013, which asked the question "What's Changed Since the
Legislature Passed the Safe, Clean, and Reliable Drinking Water
Supply Act of 2010?" That hearing highlighted some of the
unanticipated developments that occurred since the drafting of
the bond, and posed the policy question "What changes, if any,
should be made to the bond in light of recent developments?"
Later, on September 24, 2013, the Senate Environmental Quality
and the Natural Resources and Water Committees held a joint
hearing titled "Setting the Stage for a 2014 Water Bond: Where
Are We and Where Do We Need To Go?" That hearing focused on
where the various legislative bond discussions stood, identified
issues that may need additional attention, and, where
appropriate, suggested alternative approaches for consideration
by the members.
As noted in the background brief for the March 12, 2013
information hearing, the $11.14 B water bond is organized as
follows:
Chapter 1.Short Title
Chapter 2 Findings and Declarations
Chapter 3.Definitions
Chapter 4.General Provisions
$ 455 M Chapter 5.Drought Relief
1,400 Chapter 6. Water Supply
Reliability
2,250 Chapter 7.Delta Sustainability
3,000 Chapter 8Statewide Water System
Operational Improvement
1,785 Chapter 9.Conservation and Watershed
Protection
1,000 Chapter 10.Groundwater Protection and
Water Quality
1,250 Chapter 11.Water Recycling Program
_________ Chapter 12.Fiscal Provisions
$11,140 M
Briefly, the provisions of each chapter are as follows:
Chapter 1. Short Title. Names the bond proposal the "Safe,
Clean, and Reliable Drinking Water Supply Act of 2012."
Chapter 2. Findings and Declarations. The findings generally
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extol the benefits of access to clean, safe and reliable water.
Chapter 3. Definitions. This chapter defines most of the
technical terms used in the bond, including definitions for
"disadvantaged community" and "economically distressed area."
Chapter 4. General Provisions. Establishes general conditions
for use of the bond funds, including:
Establishes limits on the amount of administrative costs that
may be funded by the bond.
Establishes the process for developing and adopting project
solicitation and evaluation guidelines for bond fund programs
and projects.
States that it is the intent of the people that the investment
of funds from the bond will result in public benefits.
Requires the State Auditor to conduct an annual programmatic
review and an audit of expenditures of bond funds.
Prohibits the use of bond funds to pay for the costs of
environmental mitigation measures or compliance obligations of
any party except as a part of the mitigation costs of projects
financed by the bond or for costs for groundwater cleanup.
Prohibits the use of bond funds to pay the costs of the
design, construction, operation, or maintenance of Delta
conveyance facilities. Additionally, explicitly states that
those costs are the responsibility of the water agencies that
benefit from the design, construction, operation, or
maintenance of those facilities.
States that the bond measure does not affect any area of
origin protections or any other water rights protections
provided under the law.
Chapter 5. Drought Relief. Provides $455 M for programs and
projects as follows:
$190 M for local and regional drought relief projects. Of
that amount, $100 M is for projects, including surface
storage projects, that provide emergency water supplies
and water supply reliability in drought conditions in
San Diego County.
90 M for grants to disadvantaged communities and
economically distressed areas for drought relief
projects and programs.
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75 M for grants for small community wastewater
treatment projects.
80 M for deposit into the Safe Drinking Water State
Revolving Fund. Of this amount, $8 M is for grants for
projects within the City of Maywood.
20 M for water quality and public health projects on
the New River, near Calexico.
Chapter 6. Water Supply Reliability. Provides $1,400 M for
programs and projects as follows:
$1,050 M for projects that implement an adopted integrated
regional water management plan. Of that amount, $1,000
M is distributed among 12 regions for competitive
grants within each region. The regional distribution
was a fixed amount per region with the balance
distributed by population. Of the remaining $50 M, $10
M is for a grant to the Sierra Nevada Research
Institute of the University of California to identify
and analyze water supply impacts of climate change on
the Sierra Nevada snow pack and runoff. The remaining
$40 M is to address multiregional needs or state
priorities.
350 Mfor the planning, design, and construction of local and
regional conveyance projects that support regional and
interregional connectivity and water management.
Chapter 7. Delta Sustainability. Provides $2,250 M for
programs and projects as follows:
$750 Mfor projects that support Delta sustainability
options. Of that amount, $50 M is for improvements to
wastewater treatment facilities upstream of the Delta
to improve Delta water quality, and $250 M is to
provide assistance to local governments and the local
agricultural economy due to loss of productive
agricultural lands for habitat and ecosystem
restoration within the Delta
$1,500 Mfor projects to protect and enhance the
sustainability of the Delta ecosystem, including
projects for the development and implementation of the
Bay Delta Conservation Plan and other projects to
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protect and restore native fish and wildlife dependent
on the Delta ecosystem.
Chapter 8 Statewide Water System Operational Improvement.
Provides $3,000 M 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, as follows:
Eligible projects consist of only the following:
Surface storage projects identified in the CALFED Bay-Delta
Program Record of Decision, dated August 28, 2000, not
including projects prohibited under the California Wild and
Scenic Rivers Act. That is, Sites Reservoir, Temperance Flat
Reservoir, the Delta Wetlands Project, and Los Vaqueros
Reservoirs are eligible projects.
Groundwater storage projects and groundwater contamination
prevention or remediation projects that provide water storage
benefits.
Conjunctive use and reservoir reoperation projects.
Local and regional surface storage projects that improve the
operation of water systems in the state and provide public
benefits.
Projects are to be selected by the California Water 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.
Public benefits to be considered are limited the following:
Ecosystem improvements.
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.
Flood control benefits.
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.
Recreational purposes, including, but not limited to, those
recreational pursuits generally associated with the outdoors.
Chapter 9. Conservation and Watershed Protection. Provides
$1,785 M for expenditures and grants for ecosystem and watershed
protection and restoration projects. The funds are distributed
to a variety of conservancies and watershed related programs,
including:
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Baldwin Hills Conservancy.
Lake Tahoe Conservancy.
San Diego River Conservancy.
San Gabriel and Lower Los Angeles Rivers and Mountains
Conservancy.
San Joaquin River Conservancy.
Santa Monica Mountains Conservancy.
Sierra Nevada Conservancy.
State Coastal Conservancy.
Wildlife Conservation Board.
California River Parkways Act of 2004.
California Waterfowl Habitat Program.
Department of Conservation for the California Farmland
Conservancy Program.
Department of Parks and Recreation for grants for watershed
education facilities.
Department of Forestry and Fire Protection for fuel treatment
and forest restoration projects.
Salton Sea restoration.
Dam removal and related measures in the Klamath River
watershed.
Siskiyou County for the purpose of economic development.
California State University for the California State
University Water Resources and Policy Initiatives.
Chapter 10. Groundwater Protection and Water Quality. Provides
$1,000 M for projects to prevent or reduce the contamination of
groundwater that serves as a source of drinking water. Of that
amount, $100 M is for costs associated with projects, programs,
or activities that address contamination of a site listed on the
National Priorities List pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
also known as superfund sites. An additional $100 M is set
aside to finance emergency and urgent actions on behalf of
disadvantaged communities and economically distressed areas.
Chapter 11. Water Recycling Program. Provides $1,250 M for
recycling and conservation projects as follows:
$1,000 Mfor water recycling and advanced treatment
technology projects. Of that amount $50 M is for
projects that are designed to help restore lost water
supply reliability in areas with widespread groundwater
contamination in locations that contain superfund
sites.
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$250 Mfor direct expenditures, grants, and loans for water
conservation and water use efficiency plans, projects,
and programs.
Chapter 12. Fiscal Provisions. Includes the technical
provisions authorizing the issuance of $11.14 B in general
obligation bonds to provide the financing of the bond. Also
includes provisions providing that no more than $5,570 M in
bonds shall be sold by the Treasurer before July 1, 2015
PROPOSED LAW
This bill would amend the existing $11.14 B water bond, reducing
it $9.217 B, as follows:
Deletes funding specific named earmarks, including:
$100 M for surface storage in San Diego County.
8 M for infrastructure upgrades in the City of Maywood
to provide safe drinking water.
20 Mfor water quality and public health projects on the
New River.
10 Mfor the Sierra Nevada Research Institute of UC to
research climate change impacts
on the Sierra Nevada snow pack.
Deletes Chapter 9. Conservation and Watershed Protection,
including all the funding and the programs authorized by that
chapter.
Additionally, this bill would amend the existing water bond as
follows:
Change the date in the title of the current bond, renaming it
the "Safe, Clean, and Reliable Drinking Water Supply Act of
2014"
Designates an additional $300 M for emergency and urgent
actions to ensure safe drinking supplies for disadvantaged and
economically distressed communities. The $300 M would come
from $800 M in undesignated uses authorized under Chapter 10.
Adjusts dates to reflect being on the November 2014 ballot and
other technical and conforming changes.
ARGUMENTS IN SUPPORT
According to the authors, "In the past few months, both houses
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of the Legislature have engaged in substantial efforts to
reanalyze and find a bond that voters will approve which
addresses California's most pressing water infrastructure needs.
The general consensus among a number of legislators is that the
current bond is simply too large for the voters to accept."
"Senate Bill 927 directly addresses the cost concerns that have
been raised about the current water bond on the November 2014
ballot, while not altering policy and fiscal issues that were
negotiated and agreed to in 2009."
"SB 927 amends the Safe, Clean, and Reliable Drinking Water
Supply Act of 2012 to reduce the cost of the bond from $11.14
billion to $9.217 billion. If approved SB 927 would reduce the
overall cost of the bond by $1.9 billion."
"All of the savings achieved in SB 927 are realized by removing
non-essential projects."
ARGUMENTS IN OPPOSITION: None Received
COMMENTS
Earmarks. Earmarks can be characterized as being one of two
types; overt and covert. Overt earmarks are those where a
specific project or small select set of projects are identified
by name. For example, $8 M for infrastructure upgrades in the
City of Maywood to provide safe drinking water. Covert earmarks
avoid clearly identifying the intended funding target. Instead,
under the illusion of establishing a competitive process, covert
earmarks impose conditions on the funds such that only one
project or a small select set of projects meets the
qualifications necessary for funding. This bill eliminates the
overt earmarks in the current water bond. It does not eliminate
any covert earmarks.
At least three covert earmarks remain in the water bond as
amended by this bill.
1.In the groundwater provisions of Chapter 10, the bond provides
not less than $100 M for costs associated with projects,
programs, or activities that meet the following criteria:
Are a part of a basinwide management and remediation
plan for which federal funds have been allocated.
The costs address contamination at a site on the list
maintained by the Department of Toxic Substances Control
pursuant to Section 25356 of the Health and Safety Code or
a site listed on the National Priorities List pursuant to
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the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. Sec. 9601 et seq.).
In this committee's analysis of AB 153 (Hernandez and Eng),
dated August 18, 2010, which added that provision (�79770(d))
to the bond:
It appears that the only projects that meet the provisions
of �79770 (d) are those associated with superfund sites in
the San Gabriel Valley, which include multiple areas of
contaminated groundwater in the 170-square-mile San Gabriel
Valley. The contaminated areas underlie significant
portions of the cities of Alhambra, Arcadia, Azusa, Baldwin
Park, Industry, Irwindale, El Monte, La Puente, Monrovia,
Rosemead, South El Monte, and West Covina.
1.There are similar provisions in the water recycling provisions
of Chapter 11. The bond provides not less than $50 M for
"projects that are designed to help restore lost water supply
reliability in areas with widespread groundwater contamination
in locations that contain sites that are listed by the
Department of Toxic Substances Control pursuant to Section
25356 of the Health and Safety Code or a site listed on the
National Priorities List pursuant to the federal Comprehensive
Environmental Response, Compensation, and Liability Act of
1980 (42 U.S.C. Section 9601 et seq.) and for which federal
funds have been allocated pursuant to Public Law 106-554."
The committee's comments under example 1 apply here as well.
2.Additionally, the bond provides $350 M in �79723 for planning,
design, and construction of local and regional conveyance
projects that support regional and interregional connectivity
and water management. Staff is aware of only one set of
projects that meets the requirements of that section, one or
more proposed bidirectional canal in the San Joaquin Valley to
connect the Central Valley Project's Friant-Kern Canal to the
State Water Project's California Aqueduct.
Is Storage A Covert Earmark? While the provisions in Chapter 8
do set up a competitive process, some contend that the deck is
stacked to approve only the 3 CalFed storage projects.
Specifically, by including recreation and emergency supplies as
public benefits, and further, by using the value of public
benefits as the criteria for selecting projects, some believe
that only the large surface storage projects could truly compete
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for funding. Indeed, it is difficult to imagine what the
recreational benefits of a groundwater recharge basin might be.
Additionally, projects funded under Chapter 8 are required to
provide "measurable improvements to the Delta ecosystem or to
the tributaries to the Delta.' This requirement effectively
eliminates funding for projects outside the Central Valley. If
the criteria for funding are skewed such that only the 3 large
storage projects can effectively compete for funding, one might
argue that Chapter 8 constitutes a covert earmark.
Throwing Out The Baby With The Bath Water? In deleting Chapter
9, Conservation and Watershed Protection, the author did delete
some overt earmarks, including $20 M for economic development in
Klamath County and $20 M grants for protection and restoration
of the Bolsa Chica wetlands and adjacent uplands and for
associated visitor and interpretive natural history or
archeological facilities. However, not all of the provisions of
that chapter were for funding earmarks. For example, chapter
included funding for the all the various state conservancies,
much of that funding being unrestricted in use or tied to the
conservancy's authorizing statute. Additionally, deleting that
chapter also eliminated funding for a variety of water resources
related projects which the state is obligated to pay under
various statutes, compacts, and settlements, including:
Klamath River Restoration
San Joaquin River Restoration
Salton Sea Restoration.
Other issues
BDCP - There is a general sense a successful bond would have
no direct connection to the Bay-Delta Conservation Plan. The
often repeated phrase is that a bond needs to be BDCP neutral.
As amended by this bill, the bond would continue to include
language in Delta provisions that explicitly make eligible for
funding "[p]rojects for the development and implementation of
the Bay Delta Conservation Plan ?"
Continuous Appropriation. This bill maintains the continuous
appropriation language in the bond. As noted in the committee
background for our September 25, 2013 informational hearing,
continuous appropriations eliminate one of the Legislature's
key checks on the powers of the executive branch, namely, the
power to appropriate funds.
Eligible Parties. This maintains the current limit on
eligibility to receive bond funds to public agencies,
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nonprofit organizations, public utilities, and mutual water
companies. Previous legislatively authorized water bonds also
made federally recognized Indian tribes that own or operate a
public water system eligible for bond funds.
Matching Rates. This bill requires a 50 percent cost share for
most grant programs, which can be reduced or waived for
disadvantaged communities. Some complain the 50% share is
difficult for smaller, though not disadvantaged, communities
to afford.
IRWMP Population. The allocation of funding across regions
doesn't reflect changes in population distribution due to the
2010 Census.
Related Measures:
SB 848 (Wolk) - would repeal the water bond currently on the
November 2014 and would replace it with the Safe Drinking
Water, Water Quality, and Water Supply Act of 2014, a $6.825 B
general obligation bond to finance a variety of water
resources related programs and projects.
SB 1250 (Hueso) - would repeal the water bond currently on the
November 2014 and would replace it with the Safe Drinking
Water, Water Quality, and Water Supply Act of 2014, a $9.45 B
general obligation bond to finance a variety of water
resources related programs and projects.
SB 1370 (Galgiani) would repeal the water bond currently on
the November 2014 the Reliable Water Supply Bond Act of 2014,
a $5.1 B general obligation bond to finance surface water
storage projects.
AB 1445 (Logue) - would repeal the water bond currently on the
November 2014 and would replace it with the California Water
Infrastructure Act of 2014, a $5.8 B general obligation bond
to finance public benefits associated with water storage
projects.
AB 1331 (Rendon) - would repeal the water bond currently on
the November 2014 and would replace it with the Clean and Safe
Drinking Water Act of 2014, a $8.0 B general obligation bond
to finance a variety of water resources related programs and
projects.
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AB 2043 (Bigelow and Conway) - would repeal the water bond
currently on the November 2014 and would replace it with the
Safe, Clean, and Reliable Drinking Water Supply Act of 2014, a
$7.935 B general obligation bond to finance a variety of water
resources related programs and projects.
AB 2554 (Rendon) - would repeal the water bond currently on
the November 2014 and would replace it with the California
Water Infrastructure Act of 2014, a $8.5 B general obligation
bond to finance public benefits associated with water storage
projects.
AB 2686 (Perea) - would repeal the water bond currently on the
November 2014 and would replace it with the Clean, Safe, and
Reliable Water Supply Act of 2014, a $9.25 B general
obligation bond to finance a variety of water resources
related programs and projects.
Referred to Environmental Quality Committee. This analysis does
not address issues within the purview of the Senate
Environmental Quality Committee. Issues likely to be raised by
that committee include:
Definitions of "disadvantaged community" and "severely
disadvantaged community."
Funds provided for safe drinking water needs including the use
of bond proceeds to fund operations and maintenance costs of
interim water treatment equipment and systems.
Sufficiency of funding to meet drinking water and water
quality needs.
Other water quality related issues raised in the committee
background for the September 25, 2013 joint hearing.
Referred to Governance and Finance Committee. This analysis
does not address issues within the purview of the Senate
Governance and Finance Committee. Issues likely to be raised by
that committee include:
The potential effect of this measure on the state's bonded
indebtedness.
Other issues associated with the authorization of general
obligation debt.
SUGGESTED AMENDMENTS: None
SUPPORT
Metropolitan Water District of Southern California (If amended)
Northern California Water Association
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San Diego County Water Authority (If amended)
OPPOSITION
None Received
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